Loading ...Neither China nor the U.S. is ready to blink. Both sides think the other guy has more to lose. If that is the case, then there will be a lot more pain in the financial markets before the problem is resolved.
Time to lighten up
Over the past few months, I have been somewhat more bullish on equities than many of my hedge-fund-brethren. Yet, for the first time in a while, I am worried. I hear all sorts of calls for a year end rally that they are planning on selling into.
Could this happen? For sure. But I am not nearly as confident anymore.
And especially when it comes to the American market. It has been screaming higher versus the rest of the world for the past couple of years. It’s due for a pause.
And I think this Chinese trade war will get much worse before it gets better. All of this adds up to a market where I am willing to starting leaning to the dark side. I have been waiting to write this piece for the past couple of days because I didn’t want to sell into the hole, but we have gotten the bounce from the lows, and now the risks of the downtrend continuing are rising.
What will make me shift my mind? Obviously either side caving and coming to terms on a trade deal would cause me to abandon my thesis. Yet absent that, I think rallies should be sold.
I have a bunch of other trades that I want to implement based on this theory, but I will save that for another day… except to say, gold priced in CNH is breaking out for a reason…
Thanks for reading,
Kevin Muir
the MacroTourist
East West Investment Management
Global Select Opportunities Fund