Is the Trade War Finally Over?
The trade war between the U.S. and China might finally be over, Reuters claims in scoop reported late last night.
The two parties have “started to outline commitments in principle on the stickiest issues in their trade dispute, marking the most significant progress yet toward ending a seven-month trade war,” Reuters reports, citing some anonymous sources close to the negotiations.
Trade talks are scheduled today and tomorrow in Washington, so it’s entirely possible that we hear news of some sort of deal by the weekend. If I never have to write another word about the trade war again as of Monday, I can die a happy man.
Still, we’ll need to see how the market reacts should a deal go through. Anything is possible — including a trade deal becoming a “sell the news” event. Stocks have had little trouble rallying so far this year despite plenty of negative news, so it wouldn’t surprise me if the averages retreated (at least temporarily) once the trade war skies clear.
“No matter what happens,” a reader note says, “King Donald will somehow describe the result of trade talks with China as The Best Trade Deal of ALL TIME!!!”
No doubt, my friend. I just hope the stock market agrees.
Turning to the markets, I’m keeping a close eye on Nike Inc. (NYSE:NKE) after a high-profile shoe failure went viral last night.
I usually relegate my worn-out sneakers to lawn-mowing duty. But I don’t think Duke basketball sensation Zion Williamson will have that option after completely obliterating his Nike shoe during last night’s highly-anticipated Duke-North Carolina matchup.
Here’s a close-up of the sneaker carnage from The Chronicle:
“For a shoe to fall apart – completely fall apart – came in one of the most highly anticipated games in a long time,” legendary sports executive Sonny Vaccaro told USA TODAY Sports. “This magnifies it. There was no NBA game going on and Zion had as much hype as anyone in a while. Tickets were going for thousands of dollars. The moon and the stars aligned and everyone in the world saw it.”
To make matters worse, Williamson suffered from a knee sprain as he fell. He did not return to the game.
From a trading standpoint, the timing couldn’t be worse for Nike. Shares are up almost 14% year-to-date and knocking on the door to new all-time highs:
Nike stock is already selling off in pre-market trade (it will probably open near $83). While this decline isn’t the end of the world, I’d like to see some buyers step in at these levels to mitigate some of the damage. Remember, we always like to see stocks react positively after getting hit with bad news. If NKE can mitigate this damage and stabilize, it will have its crack at new highs sooner rather than later.
Finally, precious metals are taking a breather today following some powerful moves posted earlier this week.
Gold is down about $10 early this morning as it retreats from resistance at $1,350. Silver has dropped almost 2%. Heck, even palladium is sinking into the red. It’s sitting on an early loss of about 1.5% this morning.
We knew we weren’t the only ones watching the metals as they streaked toward important levels — especially palladium as it zoomed past gold for the for the first time ever earlier this year. Now the market will have to absorb some volatility as speculators jockey for position.
While I don’t believe this fresh bull run in precious metals has run its course just yet, we could see some whipsaw action before any strong trading opportunities develop.
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