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Trade Wars 2: Revenge of the China

The Dow was set to fall more than 300 points Monday morning after China escalated the trade war with the United States.

The Chinese government devalued the yuan to fall below its 7-to-1 ratio with the US dollar for the first time in a decade Monday. A weaker currency could soften the blow the United States has dealt China with its tariffs.

On the other hand, bond rates are plummeting, so the deficit will be a tiny bit better than expected. And car + mortgage rates will be lower...

I sure hope our President has some words of wisdom to help soothe the... fuck

I feel like for the first time in history I could affect actual policy by tweeting at a president.

Leisher wrote: I feel like for the first time in history I could affect actual policy by tweeting at a president.

You'd do better to be on Fox News, but yes, conceivable.

TheCatt wrote: I sure hope our President has some words of wisdom to help soothe the... fuck

This made me laugh. This is so ridiculous it's funny at this point.

Yield curve collapsing. Very inverted. 30 year almost as low as the 3 month

Interest rate inversion

As the article points out, there are many kinds of inversion, based on which points you are comparing.

One things I would say. If your portfolio has long-dated bonds (10 years+) in mutual funds/ETFs/direct, I would look at replacing them with shorter duration bonds to minimize interest rate exposure.

In fact, loaning to Uncle Sam for 10 years only earns a long-term bond investor 1.76%, just 13 basis points — or 0.13 percentage points — above the expected return on the much-shorter 2-year Treasury note, currently trading at 1.63%.

This tiny interest rate risk premium is absurd. And, while unlikely given current conditions, an interest rate spike would lead to a large bond bear market.

TheCatt wrote: Trump keeps up the trade war.

I would be so on board with this if Trump would just call out China publicly for industrial espionage, environmental crimes, and piracy. He could shame other countries to get on board.

Trump's economic advisor says China's economy is crumbling.

I mean, hasn't that been said by everyone for a few years now?

Leisher wrote: Trump's economic advisor says China's economy is crumbling.

I mean, hasn't that been said by everyone for a few years now?

Kudlow has the credibility of a 4chan meme.

TheCatt wrote: Kudlow has the credibility of a 4chan meme.

I figured. That's why I sort of mocked the news pointing out that China's economy being in bad shape has been news for a while.

TheCatt wrote: Some tariffs delayed, stonks happy.

Stocks surged higher in a sudden move after the U.S. said it was delaying tariffs until December 15 on items including cellphones and clothing. The U.S. also removed some items from list of new China tariffs outright.

Guess Trump didn't want to take on Santa Claus.

So glad we're bowing to China in order to keep Apple happy.

GORDON wrote: So glad we're bowing to China in order to keep Apple happy.

Don't forget all the people excited about their Google Pixel 4 this Fall! HAHAHAHAHAHHAHAHAHAHAHAHA

So after the election? Holy crap, if that holds then Trump is the luckiest SOB on earth.

Vince wrote: So after the election? Holy crap, if that holds then Trump is the luckiest SOB on earth.

The variance is large. Could be 6 months, could be 12... it's not a precise signal.

Honestly, part of the problem we have right now is that EVERYONE thinks it's a signal, as is selling just due to the signal.

Here's a better set of signals to use

Yeah, I just mean the average time puts it after the election. And I think most have seen it coming since before Trump won. I'm more shocked it hasn't hit yet.

I just saw a chart showing that the 30 yr has been dropping pretty steady since the 80's. I can't imagine the agreement to lift the debt ceiling caps helped much.