With Tariff’s all data is backward looking now....WATCH MAY 18TH (auto tariffs)
Monday’s price action saw the S&P rally 1.9% from the lows after the Trump tweet on Sunday, which was surprising but there were many holidays. Then we fell 3% over the next few days as the price action was delayed and it feels like we could be seeing the same thing possibly now Trump talking about Tariffing $325B @ 20% (not priced in) & a China Commerce Dept statement saying “China deeply regrets that it will have to take necessary countermeasures.” Liu He told Lighthizer & Mnuchin there is nothing more he can do and that it is up to Trump & Xi so it doesn’t seem like much will come out of any talks today.
So, more and more unlikely we will see a deal near term vs consensus just 5 days ago that we were (so does more need to be priced in?). We also have to think about US Section 232 auto tariffs on Europe…REMEMBER Europe INSISTS ON keeping Agriculture out of trade talks with the US (I’m sure Lighthizer LOVES that). What’s great is we just got this headline *ROSS SAYS NEED TO FOCUS ON CARS, CHINA TO REDUCE TRADE DEFICIT & Ross said Trump will make a decision on Auto Tariffs by May 18th.
IS GROWTH THAT SLOW IN ASIA? I think people need to focus on the fact that the Philippines cut by 25bp this morning this follows New Zealand & Malaysia cutting 25bps earlier this week & RBA downgraded growth/inflation today.
PRICE ACTION: HK/China equities crashed after they re-opened for the afternoon session before a sudden strong V-shaped rally which was followed by State Fund intervention….and the China gains made LITTLE TO NO SENSE given the headline (head scratching). Japan underperformed on heavy volume w/ the index taking a leg lower after tariffs were hiked and they did NOT recover despite the China Bounce.
ON THE POSITIVE: Negotiators have 2-4 weeks to reach agreement before these goods reach the US & new tariffs are actually paid & Consumers won’t TRULY feel the pinch for a few months.
Submitted May 10, 2019 at 10:12AM by ElysianEuphoria http://bit.ly/2VvEokE
