Help, the trade war is escalating, say mainstream media, this must be very bad and stock markets will be crashing. The stock market crash of 2018 must be near because today’s headlines are very bearish:
EC cuts growth forecasts as trade war looms; US inflation hits six year high – as it happened
Trump’s trade war with China is about to start hitting your wallet
Threat of trade war blamed for fall in UK, EU growth forecasts
Right?
Wrong!
We are in a perfect stock market uptrend, not any sign of damage is visible on the leading charts, so why worry?
Investors get worried as they listen to the news. One of the most misleading things they hear or read is how journalists add the results of markets in their news updates. It goes like this: “The trade war between the U.S. and China continues to escalate. Mr Trump … Markets reacted negatively with the S&P 500 leading today’s decline.”
So there must be a link between the trade war and markets, and as the escalation is ongoing this will become worse. Maybe a stock market crash is near.
This is the typical ‘train of thoughts’ of investors.
As said earlier today in The Ultimate Winner Of This Trade War? Defense Stocks! there are political games being played. Defense companies should sell more. Maybe THAT is the underlying objective of this ‘trade war in disguise’.
Regardless, we are not here to speculate on political games, we do not have the time nor energy nor willingness to do so. We are here to analyze markets, and identify winning trades.
The message from the market on this whole trade war farce? Very simple, markets are set to go higher as signaled by below chart, the leading indicator for ‘risk on’.
