Trade War for Dummies

Promise a great deal.  Extend deadline.  Get mad.  Add tariffs.  Promise another great deal.  Extend deadline.  Get mad.  Add more tariffs.  

We were supposed to have a trade deal with China already and the SPX was supposed to top out and selloff after the good news spike.  Instead, we are getting the worse possible outcome if you are a bear.  An extension of a trade deal positive catalyst, kicking that "positive" catalyst can further down the road so the market can still have that carrot hanging in front of it.  The supposed nirvana of a stock market that doesn't have to worry about a trade war and can keep going higher because Powell folded like a cheap lawn chair and promised not to raise rates.

You have to give China credit for waiting Trump out, making him mad, and realizing that the US consumer will just bite the bullet and buy cheap Chinese goods because even after a 25% price hike, its still cheaper than the alternative.  At least until US corporations move their supply chains to another country, something that will take years to get done, and probably something they would rather not spend money on, instead focusing on more important things, like using their cash on stock buybacks to boost stock prices so insiders can dump shares at inflated prices, and to meet stock price based incentive bonuses.  

Don't expect a trade deal anytime soon, as long as the SPX stays above 2800.  If we start going down violently, which is possible because this market is so overextended and it seems like hedge funds are finally back in the pool, then you can start thinking about Trump panicking and putting together a China friendly deal he will brag about as being a great deal.  

Expecting weakness in the 2nd half of the day, no one wants to hold longs over the weekend, with most now realizing there will be no trade deal progress.  The Chinese are waiting it out, shrewdly, to get under Trump's skin and force his hand.