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No Deal

By Colin Twiggs
May 10, 2019 9:30 p.m. ET (11:30 a.m. AEST)

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It looks like there will be no trade deal any time soon.

"Trade talks between China and the United States ended on Friday without a deal as President Trump raised tariffs on $200 billion worth of Chinese imports and signaled he was prepared for a prolonged economic fight..... Trump is now moving ahead with plans to impose 25 percent tariffs on all remaining Chinese imports. Those new tariffs could go into effect in a matter of weeks." (New York Times)

Signature of a document was always going to be more theater than substance. Earlier in Bloomberg:

"U.S. President Donald Trump has good reason to be skeptical about China's willingness to live up to its commitments in any trade deal. Seasoned foreign business executives on the mainland know that any agreement there represents the start of a bargaining process, not the end...."

Response of stock markets, to signs that negotiations had reached an impasse, were muted. The pull-back on the S&P 500 is modest.

S&P 500

The Nasdaq 100 retreated below its new support level at 7700 but the Trend Index remains strong.

Nasdaq 100

China's Shanghai Composite is undergoing a correction but this week's long tail suggests selling pressure is moderate.

Shanghai Composite Index

The yuan fell sharply, acting as a shock-absorber.

Chinese Yuan/US Dollar

Stocks like Boeing and Apple may be re-rated but the broad view of the market seems largely unchanged.

Everything happened as I had foreseen. I was dead right and - I lost every cent I had.

~ Jesse Livermore

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Colin Twiggs is director of The Patient Investor Pty Ltd, an Authorised Representative (no. 1256439) of MoneySherpa Pty Limited which holds Australian Financial Services Licence No. 451289.

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