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Trump proving again he has no clue and he is mentally stuck in 1930

S&P 500  2,662.84 +18.15 (+0.69%)  Dow 30  24,505.22 +240.92 (+0.99%)  Nasdaq  7,076.55 +34.44 (+0.49%)
 

Baby TrumpThe market were finally on the path of recovery, the chart was clear, markets calm, shrugged the trade war, and going higher. Yesterday we saw dip buyers jumping in and buying cheap stocks recovering a market which was down 35 points finishing 35 points up.

It no longer matters as Trump announced new tariffs against China, this time on $100 billion of goods. It appears china hurt his little ego by “unfair retaliation”. evidently, this man is taking it personally, has no clue how trade wars usually end, and he is mentally stuck in 1930. His new tariffs are no longer a national interest issue saving or protecting Americans’ jobs but his personal vengeance.

 

 

Let’s hope Chinese will stay aside of Trump’s tariff tantrum and end this up as a bigger man in the room proving that the guy who has no clue how trade wars work and usually end is the President of the United States and not China.

As soon as we were finally rebounding, Trump announced a new round of tariffs and Futures sank immediately:

 
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All we can do now is hope that this will recover the same way as we witnessed yesterday. If not embrace yourself for more selling.

Given Trump’s complete economic ignorance, I am not longer convinced about this market sustaining Trump and staying bullish. Trump will kill this economy and this bull market. I wish I will be wrong but markets do not like uncertainty and investors are learning quickly to distrust Trump.

All it takes is to look into history how previous trade wars and retaliations worked. It never ended well. and not just for the USA but for everybody. In the global world economy as we have today, trade wars and tariffs are tools of 19th century which didn’t work before and will not work today either.

From the first reaction across all political and business scene it seems, everyone is horrified. Even the steel and aluminum industry leaders no longer agree with Trump as they are realizing that these rounds of new tariffs are going to hurt their clients more than protecting them. In this light who cares what raw steel or aluminum costs to the industry when their customers will be ruined.

The problem is that Trump and his uneducated supporters do not see the consequences. But the logic is simple.

Adding tariffs to variety of goods will increase the price on imports. Retaliated exports will be losing markets and people will be losing jobs. Increased prices will raise inflation. Higher inflation will require increasing interest rates. Increased interest rates will slow down economy. Growth will be killed, people will stop spending due to uncertainty, higher prices, losing jobs, and we will be in a recession in a no time.

Trump is playing a game with fire which he cannot win and extinguish.

 

 · Trading activity today

 

A summary of opening and closing trades.
(premiums received / paid: + $1045.00)

Note: This is a cash flow of credits, not profits!
 

Today, I was managing existing trades against AMZN and some SPX trades. I also opened a new IC with SPX and tomorrow’s expiration. However, with the new Trump’s economic escapade it seems that those adjustments will now hurt our portfolio. i rolled many calls, which were in the money into puts. If the market opens down as the futures seems to predict, all those puts will be in the money and I will have to roll them again.

However, given the futures behavior I have a feeling that we may not see a violent sell off tomorrow. So it pays to wait and do nothing until absolutely necessary. This market may rebound intraday. However, if China announces a retaliation, it may all turn around and tank heavily.

 
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 · Dividend stocks to buy

 

Out of our watch list of 37 dividend stocks the following ones are a good buy at today’s prices (04/05/2018):

 
S&P500
 


Disclaimer: The list above is based on calculated fair value and 52wk high offset valuation. The values are subjective to our calculations and opinion and may differ from your own. If you decide to trade or buy these stocks, do so on your own risk and do your own homework. The list is not our recommendation to you.

 





2 responses to “Trump proving again he has no clue and he is mentally stuck in 1930”

  1. jack daniels says:

    right because China had no tariff on US goods in 2017 prior to the trade war nor ever had any tariff on US goods. DURRR I be smart I don’t believe in history

    the fact is china tariff US goods harshly and got away with it from Clinton, Bush, and Obama. in the mean time you liberals sold out the manufacturing base under NAFTA even after republican Nader told you it would happen. you liberals sold out the US and now you’re playing ignorant of history

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