Reprint of a DataTrek report on Zero Hedge:
“Submitted by Nick Colas of DataTrek Research
Markets continue to ignore rising trade tensions, essentially hanging their hat on a “Trump Tariff Put”. If stocks begin to worry that the President’s policies truly endanger economic and corporate profit growth and sell off, the administration will recalibrate. That works well now; we aren’t so sure it will hold next year. Bottom line: stay long US stocks with an eye to seeing this issue resolved before earnings growth slows next year.
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Since the middle of June we have argued that US equities have an embedded “Trump Tariff Put” and posited this was one important reason to stay long domestic stocks. The idea here: President Trump measures his administration’s success in part by how the S&P 500 and Dow perform. If market fears of a real and lasting trade war were to sharply hit US stocks, he would moderate his position quickly. In principle our idea is similar to the “Fed put” – the notion that the US central bank eases policy whenever American stock markets swoon”…..
Read the whole piece here on Zero Hedge!