S&P 500: Does The Trade War Even Matter Anymore?
Jani Ziedins | Dec 12, 2019 12:17AM ET
Despite what the naysayers claim, the S&P 500 continues defying gravity and is hovering near all-time highs. This is even more impressive since the next round of tariff hikes are scheduled to take effect this Sunday. The list of reasons this market should be down is a mile long, yet here we stand.
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Bears claim it is only a matter of time before the crowd realizes how bad the situation really is. But here's the thing: none of these bearish claims are secret. Everyone knows about the slowing global economy. The trade war between the world’s two largest economies has been raging for nearly two years. Impeachment—does anyone actually care?
Everything is out there and the crowd already knows about it. There is no waiting for the other shoe to drop. The shoe already dropped. And most importantly, no one cared.
We trade what the market does, not what we think it should do. If this market doesn’t want to go down, we only have two choices, jump aboard, or get out of the way. Fighting it is only going to get you killed.
As for this weekend’s trade war escalation, the market has been growing bored of these headlines and every escalation and resolution has been received with a smaller and smaller reaction. Deal or no deal, it really doesn’t matter. We pop 1% if we get a deal, we dip 1% if we don’t.
The days of five and ten percent moves are long behind us. The people who fear the trade war sold a long time ago and confident dip buyers took their place. If these dip buyers were not bothered by Trade War 1.0, 2.0, 3.0, or 4.0, chances are 5.0 won’t bother them either.
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