December 13, 2019
Yesterday morning Trump tweeted, we are very close to a big deal.
Yesterday afternoon, we had reports that both the U.S. and China had agreed to terms on a deal.
And this morning, both parties ANNOUNCED that a deal is done and in writing. For those questioning whether or not China is fully on board: they held a live, televised press conference, in China … at midnight (local time in China)!
Predictably, those that have never understood why Trump started the fight with China, are now scrutinizing the merits of the deal. Bottom line: Any movement from where we have been with China over the past three decades is a win! And the Trump plan seems to be, take this win, de-escalate, and begin work on more demands (i.e. his “Phase Two”).
Add to this, we have more clarity on Brexit today. This, along with central bank tailwinds, sets up for further melt-up in stocks into the year-end. And it sets up for a rebound in business confidence in the New Year. That would drive positive surprises in data, within which the expectations bar has been set low.
Let’s take a look at the chart that should benefit the most from this outlook over the next twelve months: Commodities.