The economy looks good, the trade war with China is having a minor measurable impact, the market's at an all time high, why's everyone so nervous? Like the Cold War's mutually assured destruction, the trade war is keeping us stable yet uneasy. More of the same is expected so this is what you should buy today.
The trade war right now exists in a real sense and in the sense of threats of additional tariffs in both directions. That’s the Cold War bit, the threat of escalation. But, both of these have the effect of dampening corporate spending, and are forcing companies around the world to make different choices about their supply chains. It’s not that American companies just decide to buy the stuff from home, but rather they have to find other sources, probably in Asia, and the same is true for the Chinese concerns, who start building permanent relationships with South American sources of goods.
The US economy is still on strong footing here today. All this consternation is about what could be. What additional tariffs could mean. It does have some of the hallmarks of mutually assured destruction, but we haven’t figured out what our financial version of duck and cover are. Maybe that’s what a 2% selloff really is, a duck and cover drill. While a 20% correction is something more akin to the Cuban Missile Crisis.
To hear about a company we like in this environment, listen to our latest podcast, Duck and Cover - It's a Cold Trade War.