May 7th 2019
In 1993, a hilarious movie with Bill Murray, who played a T.V. weatherman, found himself reliving the same day repeatedly. It was an instant classic; Bill Murray movies are the best.
Today, when something goes wrong in the same fashion twice in a row, everyone says. "It's like Groundhog Day."
Quick recap before I address the two elephants stomping around D.C. Remember last October when everything went straight down?
I wrote about the X factor, Fed Chairman Powell, and why he caused the markets to crash.
Powell had his monthly planned meeting on May 2nd in typical Fed Chair fashion. Reporting there was no inflation and no reason to raise rates. Everything was going smoothly until he had to search for the correct word when asked by a reporter about future inflation. His response was, "Inflation is transitional."
Which means it could and will come back.
In December, I mentioned algorithms are programmed to sell on specific words from the Fed Chairman. Well, good old Powell can't keep his mouth shut.
Not to rant like some 80-year-old in a rocking chair, but I have been doing this long enough to remember the last three Fed chairs: Yellen, Bernanke, and Greenspan.
The one thing they all learned very quickly is to keep quiet. Give data, then zip it. Explanation, unless it's an emergency, only confuses. Powell still doesn't get this, and Trump is right: Powell needs to go. He's like the Empire in Star Wars; it keeps returning to ruin your day.
This leads me to another double dose of trouble: Trump and China 2.0
If you are on Twitter like me, you will read from credible sources that China and the U.S. have made real progress on a deal. Even the market has been rotating money into sectors that will benefit from an agreement in anticipation.
Monday, Trump and the U.S. delegation team did a 180, threatening more tariffs; why?
The WSJ had the reasons in length, but the big one for a quick summary is China had agreed to curb and control efforts to steal our technology. They had decided to do something, but now they won't.
It is hard to get total clarity out of the situation for obvious reasons, but this is not a good development; intellectual property theft is a big deal.
Some people have also speculated that Trump is doing his standard negotiation tactics and playing hardball in a last-minute push before Friday's deadline. Who knows! But I do know that if he is to get elected again, it will be because the economy is improving and people are working.
A no-deal on China would be an economic and political disaster and lead to a new President.
That's it
Fingers crossed on a deal.
Christopher R. Lakian
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