U.S Markets Analysis — 11/07/2019

Golden Dragon
Nov 7 · 3 min read

The earning season today and minor problems like reports of the Alphabet board investigating executives relationships are entirely overshadowed by reports from China that the U.S agreed to rollback tariffs if a deal be reached, sharply lifting hopes that negotiations are reaching concrete signs of progress, as the principal demand of China that was the removal of the punitive tariffs, it’s starting to be accepted by the U.S.

The apparent agreement establishes that if both sides should retreat their tariffs proportionally and simultaneously. If these rules can be grounded, they might set a guideline for the diminishing of Trade War tensions. A bullish context for the market that sees any lifting of the Trade War pressure as hope for more room to economic growth, also as a relief for companies earnings that have been damaged by the ongoing exchange os hostilities in these last quarters. If the U.S were able to keep pulling off the good economic numbers that have shown lately, amid these negotiations with a friendly tone, the market tends to keep been optimistic about the U.S economy.

The concerning aspect of this development of the Trade War relies on how Trump administration will react to this gradual decrease of punitive measures, since even if they might accept the terms of China in order to score a win for U.S farmers and give traction to Trump popularity to the 2020 election. Doesn’t necessarily mean that the U.S has any intention to cooperate in further phases of the deal if Trump got reelected or if the polls show the need, things can quickly change the pace towards a new impasse. Let’s remember how Trump always addressed that he only would accept a unique and closed deal; this change of strategy could corroborate this idea.

The perspective that matter here it’s also how much the U.S can give in at the negotiations without its offensive becoming worthless or so weak that only another increase of aggressions would hold enough leverage to the U.S has an increase its chance to achieve its goals of obtaining the so advantageous deal that Trump promised multiple times to obtain.

These are questions and theories that only time will answer. Still, for now, until further notice, even the glimpse of progress on the deal will remain bullish for the market, and setbacks proportionally bearish, their much water to go under the bridge until December that could drastically change things, but for now its the bulls day.

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