Actually, I do not want to go far deeper into the current trade war details, nor the running “Tariffs Auction” between US and China “34%, 104%, 125% … or whatever it can ends too.
But let’s talk about the trading ideas and what we can base on to trade, as an useful outcome of these arrogance war issues unfazing of the global economic outlook and the current stagflation materializing.

We need to know that it is become clear that we are ahead of higher prices and lower economic activity persistence in US and this is a favorable atmosphere for Gold as a hedge against inflation and safe haven option in the same time with difficulty to have higher interest rate to contain the inflation upside risks or lower rate to stimulate growth in US.

We have seen also that US President Donald Trump is now able to fire members of independent agencies, after April 9 when US Supreme Court Chief Justice John Roberts allowed him to that “temporarily”.
Trump may not exercise that option currently, but he can press further to cut rates next FOMC’s members meeting in May and that can happen. It was lonely enough reason why the gold could make such recent quick rebounding.
While the inflation pressure is looking coming down by a faster way currently as we had seen US CPI coming yesterday lower than expected at 2.6 yearly and also March US PPI coming also lower than expected at 2.7% year on year.

The current money flows stance is also good for boosting demand for gold, amid the current great deal of uncertainty, while the investors are seeking for a stable financial instrument and downloading risks.
While Equities are depressed by unknown future, while the current running volatility appears only good opportunity for hot money to trade not economical to last for long term.

Anyways, Trump’s setback was good and important for the equities rebounding we have seen this week as the cost of returning can go higher and higher without that rapid response to give let for 90 days for unretaliating countries within the past 2 days before that setback!!
We could see the market later between optimism driving equities up, as there can be opportunities for reaching real deals and worries about recession from the other side on stagflation fear because of the higher imported prices with no available substitution in US meanwhile can make the inflation rising transitory or even by smooth way, amid the current running “Tariffs Auction” among US and its trade partners!

The former Fed’s Chief Yellen has criticized aggressively the new adopted economic policy of Trump yesterday in here meeting with CNN and surely, if the older former Fed’s Chief Alan Greenspan had been asked about the current running war, he will answer by the same massage mantra he was giving during his testifies before the house financial committee and senate banking committee that this is working in benefits of the American people prosperity with the strong dollar policy.
Anyways, there was a well-known growing trade deficit between the 2 countries in the benefit of China which was loading UST in the same time making it overall looking as US buys from it on account and that’s it. It was better in hand of US than what it is facing right now and what it could face in the future of setbacks by God’s will.



Have a good day

 

Kind Regards
Global Market Strategist
Walid Salah El din