At least it feels that way
- Bet on a trade deal between the US and China
- Bet against a trade deal
- Wait for trade deal news
The best trade so far has been to bet on a deal because that's that the strong undercurrent in markets but it's tough not to get shaken out or have doubts. There have been many headlines dampening those hopes but aside from the odd pang of fear, the market rolls right over them. At the same time, every tick in a positive direction raises the risks of a sell-the-fact trade.
Meanwhile, you can make a good argument that the real trade is that the global economy -- or at least the consumer -- has proven that the trade war isn't the economic boogeyman that it's built up to be. Then there is the question of how lower interest rates fit into the picture.
At some point, you get so far down the rabbit hole that all that's left is more questions. That brings us to Trade 3, which is just to wait. There's a Dec 15 round of tariffs scheduled so we're not going to be waiting forever even if it feels that way.
I think yesterday's unscheduled meeting between Powell and Trump is a sign that the President is at least thinking about pulling the plug on talks. Democrats have been starting to attack him for being too soft on China so he won't want to get outflanked. As bad a the trade war may seem for markets, he may believe that it won't spill over to main street and may even give him more cover for some kind of economic stimulus down the road. I know there are lots of people who are on the other side of that and I'm sympathetic but Trump is unpredictable.
So it keeps coming back to wait-and-see.Ultimately, I don't think I'm the only one who feels this way. Aside from the drift in stocks, there isn't anything to latch onto in FX. Here are the moves over the past 30 days -- they look like something you might see on one single decent day of moves.
