��I Don��t Know About You, but I��m Worried��

��What trade war?�� asked an Op-Ed writer in Tuesday��s Washington Post, triumphantly.

��Investors on Monday continued shrugging off fears that President Trump’s escalation of trade hostilities will put a dent in share prices.��

We almost pity the poor fellow �� all that egg he had scrape from his face.

The Dow Jones tumbled 219 trade-warring points yesterday �� and once again turned negative on the year.

Damage spread far�� and wide… like a virus unleashed in a busy airport:

S&P �� down.

Nasdaq �� down.

Global stock markets �� down.

Oil, gold, commodities in general �� down.

Copper, which many consider a true barometer of global growth, plunged as much as 4% yesterday.

The one major exception?

The dollar �� the dollar was up �� which partly explains the commodities shellacking.

But the central reason for yesterday��s far-flung panic is trade��

The president threatened additional tariffs on another $200 billion of imported Chinese goods.

This, coming days after the U.S. and China imposed $34 billion of tariffs on the other��s goods.

This, coming as Trump harrumphs he may seek tariffs on over $450 billion of Chinese wares.

Markets made good many of yesterday��s losses today.

They nonetheless remain, to cadge a hackneyed phrase, ��on edge.��

��We view the White House��s announcement of an additional $200 billion round of tariffs as significant in escalating the tensions closer to a full-blown tit-for-tat trade war,�� warns Bart Melek of TD Securities.

Commerzbank analysts affirm:

��There is growing concern among market participants that the trade war will affect the real economy and put the brakes on global economic growth.��

The way ahead is a gauntlet… and arrows come zinging from every direction��

To trade wars we must add rate hikes. Quantitative tightening. Inverting yield curves. Overvalued stocks. Sky-shooting deficits. More.

��I don��t know about you, but I��m worried,�� confesses Kevin Muir, market strategist at East West Investment Management, listing a parade of horribles:

The economic cycle is long in the tooth. Equity valuations are stretched. The yield curve is flattening. Emerging markets and other liquidity-sensitive markets are sagging. The Federal Reserve is raising rates while also attempting the never-before-accomplished feat of reversing a decade of quantitative easing �� seemingly oblivious to the hornet��s nest they are walking into. And President Trump seems determined to antagonize as many trading partners as possible before the summer holidays begin in earnest.

Sell everything is the message �� include the sink in the kitchen, the floorboards, the wife, the children.

But is that the message?

��Although every bone in my body wants to sell this market,�� Muir anguishes, ��I am petrified this trade is so obvious, it can��t be right.��

It can’t be right?

What about the economic cycle you mentioned�� equity valuations�� the yield curve�� emerging markets�� the Federal Reserve�� Donald Trump��s antagonizings?

I know all the reasons why the stock market should go down. The investor in me agrees 100% with the skeptics who worry we are late-cycle and that risks are rising. But the trader in me is even more concerned that everyone is already positioned for this outcome�� I don��t think the Market Gods will allow this many to catch the top. Markets don��t roll over with the vast majority of market participants calling for a correction. No, they top with buyers being absolutely convinced the only way is up.

The consensus-busting conclusion?

��That path is higher �� not lower.��

A contrarian we have here.

Many boastful types bellow contrarian gloats and gurgles �� ��I never follow the crowd. I always do the opposite. I��m my own man.��

In reality�� few can summon the courage to stray from the herd��s comforting embrace.

The pull proves irresistible for most.

Do you have the nerve?

Regards,

Brian Maher
Managing editor, The Daily Reckoning