All eyes are on the G20 summit meeting between Trump and Xi. This might very well be the most important event before the end of the year. If the trade deal with China falls apart, the Markets may call it a day and the Santa rally will come to a screeching halt!
October was a bad month for the Markets and November did what it was supposed to do. Markets got some shine back as Midterm election results came as expected. Further, Fed chair Powell threw in the towel as he succumbed to the rising pressure from Trump and Markets. He pretty much aborted his hawkish plan on raising interest rates for now. This was just the perfect icing on the cake and Markets rallied hard. Now the third and final checkbox left to nail this rally is today’s G20 meeting between US and China where Trump will meet his counterpart Xi over dinner. There are a lot of issues at hand like intellectual property theft, trade imbalance, currency valuation etc. but the most important of all is Tariff. Currently US has 10% tariff on China which is scheduled to jump to 25% come Jan 1st. In addition to that there is a potential of additional tariffs on another $285B worth of goods imported from China. While it is too much to expect anything concrete over a dinner meeting, if there is no positivity between the two, expect Markets to sell-off pretty hard.
While we all can guess all day long what will transpire at the dinner meeting, the outcome might very well be in the hands of the Chef! Hopefully the food is good to keep up their mood. Have a nice weekend.
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