It’s been an odd morning for the market. Stocks sunk at the open but eventually recovered by noon. Several key events – all of which left investors feeling confused – kept equities trading “flat.”
House Democrats introduced two articles of impeachment earlier in the day, right before The Wall Street Journal reported that President Trump might delay his December 15th tariff deadline.
In the weeks prior, a tariff delay – even a rumored one – would send the market soaring. Now, though, after witnessing several trade war flip-flops, investors remain skeptical. Sentiment hasn’t really budged in the wake of the report, nor has it changed in response to the impeachment proceedings – another potentially crucial event that the market isn’t taking seriously.
If investors actually thought that Trump had a chance of getting removed, stocks would be spiraling.
But they’re not.
Instead, the market remains even-keel amidst the chaos in Washington. After more than a year of an on-again/off-again trade war, investors are exhausted.
Analysts believe that to get bulls excited again, the White House needs to announce something concrete, not just another suggestion that negotiations are going well.
“It’s nothing official yet. That’s the thing,” remarked Quincy Krosby, Prudential Financial’s chief market strategist.
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“Market participants are so used to headlines turn out to not be true that they are waiting to see what will be confirmed by administration officials.”
Mad Money’s Jim Cramer, meanwhile, thinks the report may have originated from a fake Chinese source.
“My understanding is the president doesn’t know anything about this right now,” he said on CNBC’s Squawk Box.
“I don’t want the viewers to be mistaken in thinking […] there’s a delay without hearing it from the president these days. I think it’s dangerous.”
“It seems that the Chinese are putting these stories out. The market wants any deal. Wall Street wants any deal.”
Cramer continued, adding that Apple (NASDAQ: AAPL) could be a valid proxy for the trade war moving forward.
“It is the key to this market because, without a statement from the president exempting Apple, Samsung becomes the cheapest cellphone company,” he said.
Cramer completed his comments on The Wall Street Journal’s report, asking:
“Why should there be a deal?”
It’s certainly a valid question.
After the U.S. Labor Bureau released a historic November jobs report on Friday, President Trump has reason to grill China further.
Why let Beijing off the hook when Washington holds all the cards? The whole point of the trade war isn’t for it to end…
It’s supposed to force China to change its tune, dramatically.
So, over the next week, don’t be surprised to see a few more rosy tariff projections, right before Trump tweets that more tariffs are going into effect.
The U.S. finally has an advantage in the trade war. Investors shouldn’t expect the White House to give it up so easily.
Nor should they make investment decisions based on unsubstantiated claims, resulting from what could potentially be Chinese misinformation.