Unfortunately, I think we all need to get used to this sort of headline. Yesterday, both the U.S. and China took additional steps to further their own trade agendas. It would seem that these steps are moving our two nations further away from finding an agreement.
In the short-term, this will certainly mean more stock market volatility. But, it does not necessarily mean the beginning of a long-term downward trend for U.S. corporate earnings, or stock prices. In order to better help our clients understand the real issues associated with the "trade deal", or lack thereof, I put together this 10 minute video to help explain what is really at stake.
Here are the key takeaways from the video: - It is not likely we will see this issue go away for many years. - In the short run, stock prices may spike down (or up) on each development in the trade debate. - It is ok if we get volatility; we have a plan to deal with market volatility. - Wall Street will want a short term resolution because markets don't like uncertainty. If this lingers on, expect the market to react negatively. - It is important that we keep our focus on the long term ramifications of this issue, so to better our children's futures.
We believe this video will help you make more sense of all the political rhetoric on this topic and also help you better understand how each development is connected to your investment portfolio's short-term results.