You knew it was coming, right? After more than two months in which the S&P 500 inched its way higher nearly each and every day, and stock market volatility looked to be a thing of the past, the bears came out of hiding on Friday. With a fresh round of trade tit-for-tat between China and the U.S. traders decided it was time. Time to sell the stock market darlings. Time to run to the safety of bonds. Time buy vol. And time to push the fear narrative to anyone and everyone who would listen.
Frankly, I’m a little surprised that traders bit on the news of the day. From my seat, there really wasn’t much in the way of new news. With a meeting coming up between Xi Jinping and Donald Trump, some posturing on both sides was to be expected. So, when I read that Beijing said it will start putting export controls on rare earths, begin levying fees on US cargo ships docking at its ports, and increase customs scrutiny for chip imports, I chalked it up to just that. Posturing. You know, an attempt to improve your bargaining position before a big meeting by reminding the other side of the table that you too have some cards to play.
However, the President, who never met an argument he didn’t like to escalate, decided to up the ante. Trump first took to social media deeming the Chinese trade attitude
Has the Trade War Returned?
