As
2019 gets underway, mainland Chinese equities are now outperforming the S&P 500. Trump faces an angry, opposition Congress that makes him a lame duck president who may see his polling numbers slip into the thirties by the summer. Democrats won the house on an anti-Trump wave. Impeachment is a real possibility.
The economy is not what it was in 2017. Fiscal stimulus is wearing off, and there will surely be no more of it.
Everybody knows the rest: The business cycle is getting tired. Economic expansion is now in its tenth year. By the start of the third quarter, if the economy is still growing, the U.S. would be witnessing a record long economic expansion. Few doubt this can keep on forever.
A weaker economy gives Trump less ammo to fight the trade war.
The hawks in Trump’s cabinet surely know this and might want to divide loyalties, with Mnuchin the easiest target thanks to his Goldman Sachs liberal economics background.
Assuming there is some friction among those negotiating with China, a weaker stock market could easily put a stop to the threat of more tariffs.
On Friday, Bloomberg summarized a 42-page report by mutual fund firm GMO, saying that a multiyear bubble in U.S. equities was deflating. Investors should go underweight the S&P 500, was Bloomberg’s takeaway. The report, loaded with mathematical equations, did not mention China.---Forbes
https://www.forbes.com/sites/kenrapoza/2019/01/18/trade-war-update-is-the-door-closing-on-future-china-tariffs/#38628b185d32