Prepare for a 'sell the news' scenario once a U.S.-China trade deal is signed, says HowardRGold
The big run-up in U.S. stocks since their Christmas Eve lows was propelled by the strong economy and a pause in interest-rate increases by the Federal Reserve.
Yet I think this sell-off would have happened even if a deal had been struck. Months of positive comments from administration officials had led investors to expect an imminent trade deal between the world’s two economic superpowers. Pundits had speculated Chinese President Xi Jinping would fly to Mar-a-Lago as early as June to affix his signature to a freshly minted bargain, sealing a triumph for President Trump a year and a half before the 2020 election.
Just last week, Mnuchin expressed hope the two sides would make “substantial progress” in coming negotiations, including a visit by chief Chinese negotiator, Vice Premier Liu He, to Washington, D.C., this week. Why? Because we’ve seen this movie before. Just before the 2016 presidential election, the S&P 500 bottomed at 2085.18 points. When Wall Street, which had overwhelmingly backed Democrat Hillary Clinton, realized that a Trump administration would enact massive tax cuts for businesses , stocks began a nearly 15-month-long rally.
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