No one wins a trade war. President Trump seems to be oblivious to this well established fact. His tariffs on European imports have barely been addressed.
By James DiGeorgia
The central strategy of pressing a trade war against all of our allies is to hit them hard with huge tariffs until they submit under the pain to all of President Trump’s demands. Much like a bully that beats you up every day for lunch money and when you just give up and give it to him without any argument the bully decided you coat and sneakers are just too good for you to keep, so he takes your lunch money, sneakers, and coat.
Trump’s tariffs are beginning to hurt our European allies; economic growth in the eurozone has fallen to its slowest pace in more than four years. Italy is not growing at all, according to figures released Tuesday. The snapshot of the economic slowdown underway is likely to sharpen political divisions in the European Union and is making Europe’s equity and bond markets even more vulnerable than they are dealing with BREXIT.
Eurozone growth in the quarter was running just half as fast as it had been in the previous three-month period, but they ugly reality is the rate of growth has fallen each of the last three quarters.
Italy’s stagnation is especially worse as it’s not just dealing with increased U.S. tariffs and Great Britain Brexit but is likely also tied to the heighten dispute between the populist government in Rome and officials in Brussels.
The European Commission has said that Italy’s proposed budget — full of debt-financed welfare programs — flouts spending limits that countries in the European Union are supposed to observe.
You don’t have to be Italian to be worried about the economic and social repercussions of President Trump’s disastrous trade war. Italy’s potential finances are likely to touch off a new round of economic and political turmoil.
The fact is President Trump’s trade war, Britain’s exit from the European Union and a broad slowdown in global growth is setting the stage for a financial crisis along the lines of the 2008-2009 economic slow-downs that hammered the economies of Europe.
Richard Portes, a professor of economics at London Business School, is very concerned about a European economic crisis…
“Central banks around the world have used up much of their crisis-fighting tools coping with the last meltdown in 2008 and 2009. Europe’s central banks may not be able to come to the rescue this time.”
Financial crises tend to arrive every decade or so, and Italy is near the top of a list of regarding the steady stream on the repeated financial crisis. However, this time around Europe is without the tools to it had available to them during the financial crisis that began in 2008. Mr. Portes said, referring to the president of the European Central Bank…
“It would be challenging for Mario Draghi to think of another way to get out of the mess,”
Italy, the currency bloc’s third-largest economy, accounts for 11 percent of the European Union’s gross domestic product — 10 times as much as Greece — and as a result, has the potential to create far more damage if it melts-down.
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Geoff Garbacz the “world’s most secretive trader” who is the chief trading analyst for the Gold and Energy Options Trader is focused like a laser on equity and index options that could jump 5, 10 even 20 times if Italy and the European Union is confronted by another financial crisis.
Color us skeptical of yesterday’s “bounce back rally.” We believe the trouble on Wall Street isn’t over either in Europe or the United States. Many analysts, investors, professional traders are also warning that this down move isn’t over.
We at Wall Street Rebel expect one big wash out ahead.
We’re still looking to go long on any down move that amounts to a full 13%-16% correction from the market highs in the S&P and DOW. At that point, we fully intend to go long, with a leveraged ETF like the Direxion Daily S&P 500 BULL
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Conversely, if the market continues Thursday's Rally other 1%-2% up move (Thursday) we are inclined to go the other way, shorting the Direxion Daily S&P 500 Bear 3X ETF (SPXS) which is a 3 to 1 upside leveraged trading vehicle.
The financial markets around the world appear to reflect what can only be described as the approach of a coordinated recession. The major equity markets around the world have fallen over 10% as of Wednesday, China’s stock market is down 20%.
Trump’s trade wars with China, Europe and the rest of the world and his immigration war here in the United States is literally “up ending” the euphoria that has existed in the markets since election day 2016 making a 15% or greater correction on Wall Streett possible.
Between higher interest rates and the dramatic obstacles being created by Trump Administration, Wall Street Rebel we expect our quantitative indicators to signal either a bottom we can go long on or another short opportunity.
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