Trade Wars Are Going To Crash This Market
By: Avi Gilburt
GoldSeek.com
Monday, 17 September 2018
This week, I am going to bring back the list of reasons that have been paraded before you over the last three-plus years as to why the stock market rally is over:
Brexit – NOPE
Frexit – NOPE
Grexit – NOPE
Italian referendum – NOPE
Rise in interest rates – NOPE
Cessation of QE – NOPE
Terrorist attacks – NOPE
Crimea – NOPE
Trump – NOPE
Market not trading on fundamentals – NOPE
Low volatility – NOPE
Record-high margin debt – NOPE
Hindenburg omens – NOPE
Syrian missile attack – NOPE
North Korea – NOPE
Record hurricane damage in Houston, Florida, and Puerto Rico – NOPE
Spanish referendum – NOPE
Las Vegas attack – NOPE
New York terrorist attack – NOPE (market even rallied strongly)
If we adopt the exogenous causation theory proposed by the analysts that expected these events to cause a stock market crash, then it leads us to the exact opposite conclusion: these events “caused” a 50% rally in the stock market during the last three-plus years.
Many of you are shaking your heads right now, thinking my point simply preposterous. If you think about it, that means you are willing to accept this exogenous causation theory when the narrative fits the facts, but ignore it when it does not. But, if you are consistent in your analysis, then you must come to the same conclusion I noted above. Otherwise, your analysis is simply faulty. I clearly adopt the latter perspective. We will address this again below.
As I do from time to time, I read some of the articles out there from authors who have been bearish for years, as I always wonder if they will turn bullish as we approach a market high of significance. With some of them, you see hints of bullishness beginning to seep into their analysis of late, whereas others will always be bearish. But, the one thing they all have in common is that they have all used the items in the list posted above as the latest and greatest reasons they will be proven right in their bearish assumptions, even though the market has rallied over 50% against their expectations.
The latest and greatest reason that the market will crash is the current trade war. In fact, one such bearish author, who has remained staunchly bearish for years, wrote this recently:
“The trade war could bring down the U.S. stock market in so many ways. It could further hit emerging market economies and cause global contagion and recession. China could further devalue the yuan . . . China could sell Treasuries or announce their true, and massively understated, Gold holdings. Tariffs could impact American companies’ costs and, therefore, their earnings. They could also cause a spike in consumer inflation and higher interest rates and yields, hurting consumer spending and increasing consumer debt defaults.”
The Rest…HERE
