Trump's Trade Spat with China is Generating Additional Volatility for Equity Markets

Riskier assets have experienced an uptick in volatility during the fall for several reasons.

CHART: Money Morning/Oxford Economics

(SALEM, Ore.) - The mid-term vote, and the loss of the House of Representatives by the Republicans, initially generated a relief rally.

Traders soon turned their attention back to the US trade spat and higher interest rates. Fed Chair Powell seems dead set on increasing interest rates which will provide additional leverage if the economy turns south. Unfortunately, this is coming as President Trump faces intense scrutiny on his trade policy and his global standing.

Trump’s Mood is Worsening

During the week, President Trump made his way France to commemorate the US soldiers that were killed during World War 1. He did not make any mention of his appointments and appeared to be in a very bad mood, isolated from the rest of the world leaders.

When he returned to the United States, he unleashed his disappointment with a barrage of tweets directed to the special council Robert Mueller.

The Mueller probe continues to move forward, and it also appears that Trump’s new acting Attorney General is providing him with information that is making him very upset. The investigation is reaching the critical stage and there are likely to be several close Trump allies that are to be charged with a crime before the Christmas Holiday.

The Trade Spat Continues

U.S. Trade Representative Bob Lighthizer said there was no truth to reports that another round of US tariffs would-be put-on hold until China and the US pursued talks. The plan, according to Lighthizer, has not changed.

He said any reports to the contrary are incorrect. Wilbur Ross, the Commerce Secretary concurred and said the tariffs on Chinese imports are scheduled to move forward in January. He said that President Trump and China’s Xi Jinping at best will agree on a framework for further talks to resolve trade tensions.

Before Trump and Xi meet, China put in writing potential concessions that U.S. officials said would not be enough. Items on Beijing’s list that are untouchable which were received Monday night by US officials, were deemed unacceptable, according to reports.

There is some good news on trade for Trump. The United States, Mexico and Canada were expected to sign the agreement by November 30 during a G20 meeting of governments and central bank governors in Argentina. Congress, and the representatives in both Mexico and Canada need to approve the trade deal before it can be official.

North Korea is Back in the Headlines

The testing of this new powerful weapon marks North Korea’s first public announcement of continued military advancement since a diplomatic process. Despite this slap in the face, Vice President Pence, said the Trump administration will proceed with a second Trump-Kim Jong Un summit in 2019.

Trump is not catching a break. Riskier assets are under pressure as live rates move lower, as shown on the Vestle website. Higher interest rates, geopolitics, the Mueller investigation and a trade spat are weighing on the market which is how the Trump administration gauges their progress in real-time.

Source(s): Salem-News.com Special Features Dept; CNN; MSNBC; other historical sources