What You Need to Know Today

 China is prepared to fight

  • Trump declares a national emergency threat against US Technology

  • Mkts yawn - Asia mixed, Europe slightly lower and US Futs slightly higher 

Stocks cautiously advanced for a second day - even in the face of some weaker macro data (retail sales and industrial production - think - accommodative FED) after Donny announced that he was delaying tariffs on European auto makers - so, investors/traders/ and algo’s continue to dissect and digest the latest rhetoric surrounding trade, tariffs and policy. The Dow added 117 pts or 0.45%, the S&P tacked on 15 pts or 0.58% the Russell 2000 added 5 pts or 0.34% and the Nasdaq surged by 85 pts or 1.13%! - and again that makes sense, right....TECH has been the leader - with the Nasdaq up over 20% ytd.....so when the tide turns - we can expect TECH to get punished harder when the mkt falls and rewarded more when the excitement builds.....

The message coming out of DC continues to be that ‘it’s all good’! (Helping stocks to rebound after the Monday beating). Stevey (Mnuchin) and Bobby (Lighthizer) have done an ‘amazing job’ (his words not mine), it’s the Chinese who ‘moved the cheese’.....causing the latest action by the administration to impose even more tariffs upon them.....Trump using any outlet he can to get this message out.....contrast that with the fact that the Chinese have been noticeably mute on the topic - refusing to engage in a Twitter Debate with the ‘leader of the free world’.....that was until this week - when bits and pieces began to surface -  

Commerce Ministry spokesman - Gao Feng - has begun a slow but methodical response to all of the hyperbole plastered across the globe - saying essentially that the Chinese are happy to negotiate but would respond with the ‘necessary countermeasures’ if forced against the wall. And then in a news broadcast last evening on state run TV - the announcer made this bold statement.....(see translation below)

“Regarding the trade war instigated by the U.S. side, China made its attitude clear early on: Unwilling to fight, but not afraid to fight; must fight when necessary, (If the U.S. wants to) talk, our door is wide open; (if the U.S. wants to fight), we will accompany to the end. Having experienced more than 5,000 years of disturbances, what kind of battle formation have the Chinese people not seen?"

- ‘Trade war instigated by the US, Unwilling to fight BUT not afraid to fight and must fight when necessary’ - hmmmm - And so it goes.....Can you see the cold open on SNL this weekend? 

Essentially - both sides are still at the table - no matter what the impression is - but both sides now need to save face - they need to convince the world that they each won (something) - without looking like they got bullied....and so it will be a delicate dance as we move into summer. Recall that these trade talks were supposed to have been resolved in January, then March and now some expect that they will go on for another 4 or 5 months...taking us to early fall.....so at the very least - we can all expect continued volatility as the headlines hit the tape day in and day out.  

My suspicion is that trade will at times be moved now to the back burner during this time - allowing analyts/strategists/investors and traders a chance to focus on the underlying macro data points around the world - to determine what exactly is going on....Is the global economy really slowing down? Is the US economy on the verge of a slowdown as well? And if so - how much of that is attributable to the trade war? And the questions pile up....

And if that isn’t enough - last night Donny declared a National Emergency over threats to American Technology - calling out Huawei - the Chinese Telecom giant (that does all the spying) - putting that company back in the spotlight and making it more difficult for them to do business in the US with US companies....(just turning up the heat a bit more....). Expect that this latest salvo could be highly disruptive to US-China trade talks (and to our longer term relationship). China is sure to view this as ‘poke in the eye’, as a ‘hostile act and a major provocation’. Expect some kind of response in the days ahead..... this latest move is not going to be helpful to the trade talks - but I also understand that under the circumstances - privacy, spying and cyber concerns are front and center and Huawei  has been under a cloud lately - so should we be supportive of Donny’s efforts to protect America or should we call him out for being a bully?  

This morning European stocks are under just a bit of pressure as the algo’s sift thru the headlines - looking for any word that would signal that ‘Hope is Alive’. 

US futures are UP this morning showing gains of +0.25% to + 0.50% across the 4 major indexes. Eco data today includes Initial Jobless Claims, Continuing Claims, Housing Starts and the Philly Fed Survey. Once the day gets started we can expect to hear more about the National Emergency declaration and what that might mean for the progress of trade talks.  

We are once again kissing up against resistance on the S&P - so it will be an interesting day - will we find resistance or not? Can the algos’ just dismiss the latest headlines? We are about to find out.


Grilled Cheese

Who doesn’t love a warm and gooey grilled cheese? Today’s has Turkey, Cheese and fried sweet Italian peppers on two slices of Pane Di Casa. 

Lay out the bread on the cutting board - smear with mayo and then add in layers the cheese of your choice, the turkey and then the sweet fried Italian peppers. - Next - warm up the frying pan and add a dollop of butter - once melted - place the sandwich in the pan cover with tin foil and then but another pan on top to act as a weight. Once browned - flip and repeat....allow time for the cheese to get all melty and gooey. Remove - slice in half on a diagonal and serve with a small side salad or chips.  

(Ok - I’m on a train to DC - so have to wing it....Enjoy)

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