Risks to the market this week will be the decision President Trump makes about the tariffs on $200 Billion of Chinese exports. Here at the Options Edge, we do not think that the decision will be as bad as everyone thinks. During the summer, trade negotiations were simultaneously happening with the EU, Mexico, and potentially Canada. These are on the road to resolution. With strong economic news and strong earnings being projected, the tariffs will not be enough to push over the market.
Let’s break down what it could mean for the market with a good, bad, and ugly scenario:
Good – Tariffs decision are postponed or dropped. The Market quickly returns to a rally.
Bad – A subset of tariffs implemented and more negotiations take place. The Market should not react that much unless tech selling continues. US Dollar would raise, but not to new highs. 10 year will decline, but not to a new low.
Ugly – Tariffs on the $200 Billion Chinese imports into the U. S. the Dollar and the 10-year not would test recent highs and low respectively. The pullback again will be determined by the tech selling.
The tariff decision will trigger volatility in the market. As options traders, when volatility is high, selling options makes more sense. Look to the U. S. Dollar to determine if the market top is in like January or if there is more room to run. Pay attention to the level of negotiations that will precede the announcement.
Football Season is Back
Yes here at the Options Edge, we watch Football and we are excited that the games is back. Mark Guthner is a Michigan Fan. Brad Holt is a University of Texas fan.
Global Spotlight
A Tale of Two Koreas. North and South Korea set the dates for their fifth inter-Korean summit, which will coincide with the start of the U.N. General Assembly on Sept. 18.
Syria, Stalled. A trilateral summit between Russia, Turkey and Iran as part of the Syrian peace process failed to deliver a breakthrough on the question of Idlib.
Trade Talks Begin. Trade frictions between the United States and the European Union have calmed down in recent weeks, but it doesn’t mean they are over.
A Partnership in Defense. The United States and India achieved a milestone in their burgeoning defense partnership on Sept. 6 by signing the Communications Compatibility and Security Agreement.
Stratfor.com
Economic Calendar
There is a big calendar this week and the mid term election will be competeing with it. Watch specifically for inflation related results this week, like the CPI and the PPI. Inflation is where everyone will be looking, but is that were the enphasis shold be?
Here isa a list of the U.S. economic events happening this week.
Briefing.com
Review Last weeks numbers here.
Earnings
Earnings will return October 14th, 2018.
Thomson Reuters I/B/E/S
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