{"id":42970,"date":"2018-03-08T00:03:56","date_gmt":"2018-03-08T08:03:56","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=42970"},"modified":"2018-03-08T00:17:51","modified_gmt":"2018-03-08T08:17:51","slug":"t2108-update-180307","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2018\/03\/08\/t2108-update-180307\/","title":{"rendered":"Above the 40 (March 7, 2018) – A Lagging S&P 500 Stops Short Even As Trade War Tripwire Defuses"},"content":{"rendered":"

AT40<\/strong> = 39.3% of stocks are trading above their respective 40-day moving averages (DMAs)
\nAT200<\/strong> = 49.7% of stocks are trading above their respective 200DMAs
\nVIX<\/strong> = 17.8%
\nShort-term Trading Call<\/strong>: neutral<\/p>\n

Commentary<\/strong><\/p>\n

“Dear President Trump:<\/p>\n

We are writing to express deep concern about the prospect of broad, global tariffs on aluminum and steel imports. Because tariffs are taxes that make U.S. businesses less competitive and U.S. consumers poorer, any tariffs that are imposed should be designed to address specific distortions caused by unfair trade practices.” – letter to POTUS signed by 100 House Republicans<\/a>. <\/p><\/blockquote>\n

This quote is from the beginning of a short letter 100 House Republicans sent to President Trump urging him to reconsider what initially appeared to be a willingness to launch a broad scale trade war against countries with whom the U.S. has trade deficits. The letter ended with specific recommendations for very limited and constrained conditions for implementing tariffs. With this letter, and other developments, the tripwire that the President pulled on a trade war<\/a> is gradually getting defused. Accordingly, the risk to the stock market is fading. Of course, the President reserves the opportunity to upset the apple cart at any time for any reason, but for now, it seems very likely that the President will be constrained by multiple political and economic forces.<\/p>\n

On the economic side, there is evidence that prices are already soaring in anticipation of tariffs. In a brief but fascinating interview on Marketplace<\/a>, Delaware Steel CEO Lisa Goldenberg talked about how the price of steel her company delivers into the non-residential construction market spiked 30% in immediate response to Trump’s declaration of trade war<\/a>. Goldenberg also emphatically predicted that Trump will rein in the most heated part of his rhetoric on tariffs; she is running her business as if the sudden windfall from tariff-inspired price gains will not last.<\/p>\n

“This is once in a lifetime, this is where you make money. The question is, when this ‘falls apart,’ when this changes, I don’t want to be left with extraordinarily high-priced inventory. So I need to be extra, extra cautious. Let’s remember, there are no new tariffs. This is a conversation…<\/p>\n

Of course they’re going to be pulled back, and they may be pulled back before they even happen. We will have tariffs….Do I think they will look like what’s proposed? No, I do not.”<\/p><\/blockquote>\n