Did Trump Just Save Christmas?

And just like that, the market is back to its winning ways. The U.S. announced this morning that it would delay the September China tariffs on hot-ticket items (like smartphones and clothing) until December, and that tariffs on some goods are to be removed altogether.

It’s just another shocking twist in the ongoing trade war saga – one that had investors worried about yet another escalation.

But now, after some soul searching, President Trump has a new agenda.

Which, according to Mad Money’s Jim Cramer, came about for one reason:

“I think this is the president saying, ‘I don’t want the stock market to go down anymore and this is traumatic.’”

Better yet, Chinese officials announced this morning that they spoke with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on a phone call about trade terms.

“Everybody blinked,” said Cramer.

“This is exactly what the bears’ worst nightmare is.”

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And it truly is a bad time for bears as of midday. The Dow (+1.60%), S&P (+1.65%), and Nasdaq Composite (+1.90%) all rocketed upwards after opening today’s trading session slightly lower.

Cramer, who has shown in the past to have his finger firmly on the pulse of the market, may be correct in assuming that Trump simply wanted stocks to rise.

But Trump’s official reasoning for the tariff delay is something else entirely, and somewhat surprising to analysts.

“We’re doing this for the Christmas season,” Trump said to reporters.

“Just in case some of the tariffs would have an impact on U.S. customers. But so far they’ve had virtually none.”

So, while the trade war is by no means over, we’re witnessing a micro-de-escalation at the very least.

Which, as evidenced by today’s gains, is providing a pleasant reprieve to beleaguered investors.

But outside of equities, there’s still plenty of fear to go around. It just happens to be located in the far less “sexy” bond markets which have analysts feeling nervous.

“I think there’s a lot of fear embedded in the bond market,” said Jim Paulsen, chief investment strategist at The Leuthold Group.

“[The inverted yield curve] is the biggest risk right now. It’s my number one worry but I think it’s overdone. If economic reports continue to improve, then I think people will decide this doesn’t look like a recession.”

“The fact that we have negative yields around the world makes this somewhat a different signal. The fact we inverted on underheat rather than the normal inversion on overheat makes it somewhat different.”

Paulsen raises a great point with his statement.

Yes, the yield curve has inverted.

But it’s done so while the economy continues to show signs of moderate strength.

If investors keep seeing economic growth quarter-after-quarter, not only will a recession be staved off, but equities will likely avoid a major correction as well.

Even if the U.S. and China are still locked into a trade war.

That’s not to say that the time between now and the December tariffs will be 100% positive for the market. Tensions in Hong Kong are still simmering, and China will undoubtedly manipulate their currency further.

As of this morning, they dropped the yuan midpoint to 7.0326 per U.S. dollar, just below the psychological 7-yuan-per-dollar level. The last time that happened, the market sunk.

Today, though, the yuan devaluation doesn’t matter.

Because Trump saved Christmas, and to investors, that’s something to celebrate.

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