Trade War Damaging Global Demand

U.S. officials are hoping that U.S. tariffs on Chinese goods, set to take effect this coming Sunday, will be delayed. That said, the damage to global demand has already occurred, with Chinese exports shrinking for the fourth straight month, caused by the ongoing trade war which is now in it’s 17th month. The Dec 15th deadline will usher in $156 billion in U.S. tariffs unless it’s delayed as has been expected. Meanwhile, the UK is in election mode on Thursday, which could be a decisive vote for Britain’s plan to leave the EU. This may also have ramifications to the North American trade pact.

Last week’s great U.S. job’s report helped investors bid up equities. But while equity markets are still technically in an uptrend, we’re starting to see cracks appearing. Gold (GLD) maintained its value over the last two weeks while investors try to gauge trade war concerns and the resulting market reaction. Oil (USO) has seen some wild moves these last couple of weeks but finished essentially flat today. So, we’re in a kind of “Wait-and-See” period. While we wait, I would take some profits off the top to build up a bit of cash reserves, and rebalance into safer assets including short term bonds, a bit of gold, and some Canadian REITs.