Stocks Down Again On Trade Uncertainty  Stocks closed lower again yesterday amid trade uncertainty.
The markets were already under pressure after Monday's lower close over whether the U.S. would not only scrap the new December 15th tariffs from taking effect, but also roll back existing tariffs, as China is demanding.
Then on Tuesday, President Trump said that maybe he should wait until "after the election for the China deal."
Both the U.S. and China have expressed their desire for a phase one trade deal. And plenty are chalking-up the President's comments to a negotiating tactic. Just like China is pushing on the U.S. to abrogate all tariffs.
Nevertheless, since a nearly done trade deal had broken down before, there is a real concern that it could happen again.
But with China's economy getting hit much, much harder than the U.S. (the U.S. economy, in spite of the near 2-year long trade impasse, is the envy of the world), it's believed China really does want and need a trade deal.
The fate of the USMCA trade deal is also creating uncertainty. Will the House vote on it this year, or next? Who knows. But whether it's this year or next year, it sure sounds like it's close. And that's because it's believed to have widespread bipartisan support. With an overwhelming number of both Democrats and Republicans supporting it, it can't stay in limbo forever as both parties stand to gain with its passage. But again, the question of when (and if) just adds to the ongoing trade uncertainty.
Throw in renewed steel and aluminum tariffs on Argentina and Brazil, and then possibly new tariffs on France, in retaliation for their interest in taxing U.S. tech companies with their digital tax, and you now have a myriad of new trade issues to 'worry' about.
The U.S. economy is doing great, even though none of the major trade issues listed above have been resolved yet. So if these things drag on for a bit, I don't expect it to hurt the U.S. economy that much.
But once these issues finally do get resolved, that could usher in a whole new wave of prosperity, and make the U.S. economy even stronger. That goes for our trading partners as well.
So there's a lot to be gained for getting these trade deals done. But quite frankly, the U.S. has much less to lose.
Hopefully we'll get some positive movement on the U.S.-China trade deal in the coming days and weeks, and the USMCA trade deal as well.
In the meantime, I'd be a buyer on any dips, because our economy looks great, and the markets could explode higher once these deals are signed.
See you tomorrow, 
Kevin Matras Executive Vice President, Zacks Investment Research |
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