That Time of Year

As we approach the holiday season I realized that one of the most frustrating periods of my life is upon me. No, not the endless hunt for the perfect present or a radio station that doesn’t play A Wonderful Christmas Time, I’m talking about my wife bringing out towels that for some strange reason I CAN’T USE. That’s right, Holiday Towels, the decorative laced one’s that sit in my bathroom mocking me from their rack. “La La, you can’t use me, your wife will yell at you if you even touch me.” Sigh. It’s a towel for crying out loud, why do they make one’s that are so fancy they don’t even perform their primary function?  I’m raging right now. You know what else is this frustrating? Trade War headlines.  

Stocks fell yesterday because we’re overbought but they accelerated to the downside because of, you guessed it, negative Trade War comments. Like Phil Connors in Punxsutawney Pennsylvania we are never going to escape this story. Endless analysts keep dropping hot takes on us that a “skinny deal will happen” or “a Phase 1 deal is imminent” yet 6:00am hits and the radio plays Sonny and Cher. Again…and again….and again (Is this Bill Murray’s best performance in a movie? I think it may be). 

We need to consider two questions here:1) Will a trade deal ever happen and 2) do we actually NEED one to happen for the market to go higher? I am of the opinion that the Trade War is a lot like the Cold War, an event that is just going to be with us for the foreseeable future, so I don’t think a meaningful deal gets done. My answer to the second questions is “no” with one caveat. I think the economies and stock markets of the World can muddle through as long as the Trade War doesn’t meaningfully deteriorate. It’s like having a head cold.  Sure, you are blowing your nose all the time and your co-workers hate you but you can still do your job and get your kids to swim practice. However, if the head cold turns into pneumonia that’s when things go haywire.

I was asked by my friend Helene Meisler when I would get worried about a selloff. For me it would be a drop thru the old highs which took FOREVER to get through. This level right here because that would imply a failed breakout and a return to hand wringing over Global growth. Let me end with one final thought: seasonality has worked well this year and right now, according to this great chart by Steve Holt, we are in a typically weak period before a final year end push. Again, seasonality isn’t a prediction it’s just how stocks have tended to act historically. Will they reward us with one last bout of holiday joy or frustrate us like decorative towels….MY ARCH-NEMESIS.

News Highlights:

I’m going to end tonight on quick video with a great plot twist at the end

Have a good night