We’ll do this week’s Livestream Q&A Chat at 12pm noon ET tomorrow (Wednesday). You’ll be able to watch it on the Facebook Trading With Cody page and on my YouTube Channel. I’ll also take questions over the phone on our conference call line (Dial-in: 641-715-0700 Access Code: 709981), in the Trading With Cody chat room or just email us your question to firstname.lastname@example.org. Now onto today’s post.
We’re starting to see some friendly fire casualties as The Great Global Trade Wars of the 21st Century escalate. Trade Wars are like any war in that there will be Fog of War mistakes made by all sides, there will be unintended consequences, there will be economic pain.
As I’ve been saying since Trump started The Great Global Trade Wars of the 21st Century, such a global Trade War is a net bearish factor on the economy and the stock market. But when the Global Trade Wars broke out a few months ago, I wrote something that has been ringing in my head in a recall memory for the last week. Note the commentary in the bold, because I want to come back to it:
“Tarriffs start trading wars and trading wars by definition impact trade negatively and when global economic trading starts to grow less than people are used to (or if it were to actually shrink which would mean we’d be back in official recession territory) then stock prices will likely head lower.
It’s not like these things are tangibly affecting the economy or the stock market right now. And as I’ve said for the last eight years, the strong Bubble-Blowing Bull Market forces resulting from the corporatist focus by the governments and central banks of the developed economies around the world and here in the US (at the Federal Reserve and in the Republican Democrat Regime) have been worth betting big on. And I’ve talked repeatedly about why we should just keep riding the Bubble-Blowing Bull Market.
But stocks and stock multiples are at much higher levels. As is complacency and greed.
Here’s the upshot. I think there is some higher risk to the steadily growing corporate earnings and Bubble-Blowing Bull Market than there has been in a long time. I also think there’s a good chance even if these burgeoning Trading Wars blow over and the steadily growing corporate earnings cycle continues apace that the stock market trades in a range and/or downward in the near-term.“
Back in March, I noted that The Great Global Trade Wars of the 21st Century weren’t “tangibly affecting the economy or the stock market right now. That’s no longer the case, is it?
We are starting to see some real economic impact from the escalation of those trade wars in the last few months and we’re certainly starting to see the stock market take the risks of the trade wars more seriously too.
And for the second part of in bold there about there being a good chance for what were burgeoning trade wars “blowing over” was wrong.
So what’s the upshot? I think we have to be even more cautious about the overall stock market and how much money we’re risking in it than we have been.
That doesn’t mean there won’t be opportunities to invest in Revolutionary companies or that we should sell everything and move to cash.
I know many of you, especially new Trading With Cody subscribers, are anxious for new ideas to make big money. You want the next Twitter at $14 or Axogen at $5 or Nvidia at $30 or one of our big winners RIGHT NOW.
But that’s not the way it works. There’s value in being patient, vigilant, cautious and cool.