Stocks sold off Friday on Trump's comments that he "didn't need a trade war deal before the 2020 election," along with Chinese trade officials canceling scheduled trips to the US as the seemingly never ending trade war continues to exhaust traders. It was a pivotal moment for markets as hopes were high of a trade deal, with these comments being seen as a major setback for any progress made.
The Fed cut interest rates Wednesday by a quarter point and Trump was quick to lash out at Fed Chair Jerome Powell, as he desired a larger rate cut. The setback in the trade war coinciding with Trumps dissatisfaction with interest rate levels could definitely be more than just a coincidence. General consensus is that he's kicking the can down the road with China to force Powell's hand into further rate cuts. He knows stocks will pop whenever the trade war is settled so he has an automatic bullish catalyst in his back pocket right in time for campaign season. So while stocks are at highs it makes sense to see him push the trade war further. We'll see how this mess transpires.
There are murmurs of another cycle of Quantitative Easing to begin as the fed bought bonds for the second week in a row, after 250 straight weeks without buying as monetary policy tightened. This would be extremely bullish for the market.
You have to continue to be ultra selective in this market, as we're very likely to continue with this type of chop for months. Earnings season is just a few weeks away.