- US could be pulling out of the WTO and NAFTA’s trade
- European markets to remain flat
Donald Trump, president of the United States of America, reminded the world again with his new threat that there is no need for North American Free Trade Agreement NAFTA. Last week, Trump failed to form any kind of deal with Canada. Just for record, investors were very optimistic that Trump is going to get things done his way after a trade deal with Mexico. He named it is as American- Mexico trade agreement. However, Wall Street still closed relatively strong enough. The most intriguing aspect is that despite these serious and grave concerns about the trade agreement (which can trigger a global recession without any doubt), for some reason investors still hold fairly handsome appetite for risk.
To put things in perspective, the month of August has been full with headlines about trade war, but if you look at the performance of the US market, the equity markets celebrated the best August going back all the way to 2014. As for the NASDAQ index, who ever said that FANG stocks have valuation problems, they need to see the performance of the index, the best monthly gain since 2000- a headline worth paying attention to.
We are living in a new era, the president of the United States is making comments/tweets like a spoil child in a candy shop. His recent remarks about Canada was “it’s going to be so insulting they’re not going to be able to make a deal”.
Your text book trade is not working, US could be pulling out of the WTO and NAFTA’s trade agreement has limited days and the US equity markets are roaring. It seems like that there is only one way for the equity market- upside and more upside- at least for now. Greed is written all over this and it may lead us to the bubble of all time. The consequence of this could be so devastating that for years people will talk about it.
We are expecting the European markets to remain flat as traders may not show the same kind of enthusiasm as we have seen over on Wall Street on Friday. Investors are likely to keep their fingers on the news as the US and Canada will start their trade talks on Wednesday. This particular event would be the biggest event for this and even to some extent, this event could even influence the US-NFP report.