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Tariff Fears? Get Ready to Buy the News

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The tariff war has been weighing on the stock market lately, but don’t be surprised if shares take a lunatic leap as soon as it blows over. My hunch is that regardless of how the dispute with China settles — or perhaps doesn’t — the mindless priorities of the market’s institutional sponsors will remain unchanged. They earn their bread-and-butter the old-fashioned way, after all, throwing Other People’s Money at stocks supported without limit by “research.” So what difference does it make, then, if higher tariffs suck a few hundred billion dollars from a ten-trillion-dollar shell game? With the Fed continuing to supply more or less unlimited credit, it’s not as though the entire sum can’t be magically replaced before it is even missed.

The real economy will get hurt, for sure, but who cares? Who would even know it, assuming the news media, economists and Wall Street’s spin doctors continue to direct our focus toward unemployment numbers that are likely to remain rosy in the months ahead. The stock market doesn’t need an assist from any source so stiff and mundane as “the economy”. It runs purely on financial fuel, and that’s why, for all of the hullabaloo about onerous new tariffs, the outcome of the negotiations will cease to have an effect on stocks a week from now, if that long. Sell the rumor, buy the news.

Please do not ask trading questions!

  • Thomas White May 10, 2019, 1:19 am

    A few questions, if I may… (1) While it is surely true that the “institutional sponsors” enjoy throwing Other People’s Money around, would you agree that, in general, these scumbags can make a ton more money (bonuses, etc.) when, despite the reality of things, they successfully manipulate the market upward? (2) If the influence of the tariffs will be nearly nil in a week, as you presage, why not begin loading up now before the premarket “news” prompts everything to gap up big at the opening?

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    Not sure what you’re asking, Thomas, since I already answered your questions explicitly on this page. Concerning the coming resurgence of stocks, I put out a 3095 target for the S&P 500 a couple of weeks ago. It is currently trading for 2870, so that would equate to an 8% rally. RA