The most awaited moment of global traders for the meeting at Buenos Aires, not for the G 20 Summit, but the two heads of largest economy in the world. The outcome has finally been determined on Saturday night (Asian hours). Most major news carriers called it a “ceasefire” between the two globally influential nations. Global markets are expected to cheer this outcome next week or so. But what does this outcome really mean to us as investors?
While there is a possible global market celebration next week or so, however, rational mind will set in to realize that a cease fire does not mean trade dispute resolution. It was just meant that US is not going to increase tariff hike from 10% to 25% next year for USD 200 Billion worth of Chinese products coming to US. But trade disputes between the two largest economies still persist with existing tariff. It will remain there until further talk for another 90 days. Trump was just delaying his tariff threat. There is in fact nothing much to be celebrated about.
Looking at the harm of global economy caused by trade war emerged from recent plan for factories closing down by General Motor, and the production slowing down from China PMI, the effect is already taking its toll.
On the other hand, technically speaking, there is still a strong support for the Bull Run to continue on. Both the S&P 500 and the DOW indexes are showing strong support at respective level through double bottoms. There is still a possibility that market will resume Bull Run and create the next new heights subsequently.
Looking at the strong recent US economic data, global market is yet to produce a new euphoria stage where most investors would rush in to be slaughtered. It is possible that the 90 days talk between the two heads of state will yield positive result and ended up in surprising trade war resolution. There is nothing impossible for global trade, economy and politics. If this scenario comes to pass, those sideline investors would most possibly disappointed. Because by then market would have already come up high, or half way to the sky. Those who cannot bear the pain of seeing themselves missing the train, would jump in but later only to be found out, they are heading to the butcher range.
Remember, only those who know reverse psychology in investing will win. When markets are running hot and flying, it is time to leave, instead of jumping in. If you have the last bull run in mind,possibly this will be the best time to jump in, not later after trade dispute resolution. If you don’t jump, better stick with your stubborn plan to stay at sideline no matter how attractive market would have turned out to be.
Thank you for reading and please take good care for your investment capital!
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The view and opinion expressed are personal views of the author and are subject to change based on market and other conditions. This write up does not constitute sole advice for investment decision. Investors are advised to do further reading and research to make up individual investment decision.