What a difference a week makes yet again.
On the news of advancing trade talks with China and a deferral of tariffs for 90 days you had the S&P 500 climb back over the 200 day moving average.
This came on the heels of an outline to an agreement with the UK.
I would say that any real deal will take months to hammer out.
Not to be skeptical, but China does not negotiate in good faith.
It is a big comeback from where we were after “Liberation Day.”
It does however, one more time, show the pent up demand for U.S. equities. Not only that, but the dollar gained strength.
All the talk by analysts about moving your money overseas may well go by the wayside.
While the news is good, it does not deal with the debt crisis looming.
It does help that there may not be a recession, allowing the economy to expand, which does produce tax revenue.
The ability for companies like Taiwan Semi to produce chips in the U.S. will be the next hurdle.
These plants do not come on line overnight, but at least they are being constructed.
The next step will be the extent that new jobs are created for Americans.
It would be my hope that this administration can find some means to negotiate a real free trade policy with our neighbors to the north and south.
Canada should be the easiest no matter how much they bluster.
Mexico is a whole different problem with the influence of the drug cartels.
No matter, we need to shore this side of the pond and admit that there are jobs that most laborers in the U.S. don’t want to do.
Mexico is just sitting at our border with the populace that needs work.
Possibly we can finally come up with a real immigration policy that allows green card workers to come and we all benefit.
I am not sure that we can avoid having manufacturing south of the border either.
As if the news from the weekend was not enough, you will have the CPI and PPI numbers announced this week.
With the Fed holding rates steady and most of the earnings reports in for the first quarter, we might have a bit of time to digest all that has transpired.
Truthfully, I am looking forward to all the prognosticators that have gotten this all wrong.
I wonder what spin they will have for it this time.
We have once again put in a V-bottom recovery.
After you have done this almost a half a dozen times, it is not unique and becomes a trend.
I have been flat wrong on thinking that it would finally turn into a real correction testing some significant support levels.
Over the last 4 to 5 years we have routinely bounced back.
We are not back to record highs, but we are certainly not challenging lows. I suppose the next great news issue will be the budget bill.
Each side is stating their case.
The right sees a booming economy putting people to work and generating taxes.
The left sees nothing but a insurmountable debt load.
I will say though that a prosperous economy does drown out he naysayers.
Only time will tell where we land.
The real impact outside your pocketbook will be on the midterm elections.
As investors, the recent news certainly supports those touting the Mag 7.
The NASDAQ significantly jumped on the news about the trade talks with China.
So much for the multiples pulling back to historic levels.
There will be more talk about how things are truly different this time.
Being of an older vintage, I am not convinced but things are happening that I haven’t seen in my 50 years plus of investing.
It does though show that patience and ignoring emotion have paid off over and over again.
