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Dow tumbled early Tuesday as 'Tariff Man' Trump may delay China trade deal till U.S. election late next year

calendar 03/12/2019 - 15:04 UTC

On early Tuesday, Dow further tumbled over -1% as Trump said he may delay the China trade deal until the 2020 election as he is not in a ‘hurry’. On Tuesday, Trump said in a presser in London, on the sideline of NATO summit:

On China trade deal talks--progress is being made, but that it was up to me to decide whether to make a deal. I have no deadline, no. In some ways, I think it’s better to wait until after the election with China. I just tell you, in some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we’ll see whether or not the deal is going to be right, it’s gotta be right----It’s not if they want to make it, it’s if I want to make it, and we’ll see what happens. I don’t know what I want to make it, but we’re going to find out pretty soon, we’ll surprise everybody.

China had been ripping off the United States for many, many years, and this had been done to a lack of past leadership. We are doing very well with China right now, and we can do even better with the flick of a pen. China, in turn, is having the worst year by far in 57 years. China had targeted U.S. farmers and my administration decided to dole out $28 billion over a two-year period to make sure the agriculture sector wasn’t hit in the pocket. That got them whole—now the trade deal with China only depends on one thing — whether I want to make it or not.

Trump’s comments followed a roller-coaster U.S. trade policy day Monday when Trump imposed (by twitter) ‘immediate’ tariffs on steel and aluminum (metal) imports from Brazil and Argentina and threatened 100% duties on French goods – including champagne, cheese, and handbags. Trump also said that the Hong Kong Human Rights and Democracy Act, which he signed last week, might hamper his chances of securing a trade deal with China. On Tuesday Trump also said the EU is treating the U.S. ‘very badly’ on trade.

Bottom line:

The much-awaited U.S.-China Phase One trade deal may happen in Feb’20 if Trump agrees to roll back the Sep’19 tariffs on around $100B along with postponement of his proposed Dec 15 tariffs on around $160B of Chinese consumer goods.

But, as Trump’s trade policies are depending on his whims and fancies and his sudden move to re-impose metal tariffs on Brazil and Argentina on the excuse of intentional currency devaluation, China may now further express concern over his credibility and sustainability of any trade deal. The China trade deal uncertainty will remain at least till Jan’20 until Fed cuts again.

Technical Outlook: SPX-500, DJ-30, and NQ-100

Technically, whatever may be the narrative, SPX-500 now has to sustain over 3145 for a further rally to 3165*/3200-3230/3255* and further to 3285/3305*-3330/3350* in the near term (under bullish case scenario).

On the flip side, sustaining below 3135, SPX-500 may fall to 3095/3070*-3050/3025* and further to 3005/2985*-2960/2920* in the near term (under bear case scenario).

Technically, whatever may be the narrative, DJ-30 now has to sustain over 28350 for a further rally to 28615/ 28800-28955*/29100-29300/29555* in the near term (under bullish case scenario).

On the flip side, sustaining below 28300-28250 DJ-30 may fall to 28150/28000*-27700*/27500 and further to 27300*/27000-26700/26550* in the near term (under bear case scenario).

Technically, whatever may be the narrative, NQ-100 now has to sustain above 8405 for a further rally to 8455/8510*-8575/8645 and further to 8705/8795-8880/8925* in the near term (under bullish case scenario).

On the flip side, sustaining below 8385, NQ-100 may fall to 8275/8220*-8120/8050* and further to 7955*/7895-7800/7700* in the near term (under bear case scenario).

 

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