After a week dominated by the FED meeting, investors will now turn their eyes into the G20 event at the end of this week, which paradoxically could be a trap for unwary traders, why? Well, to start with, let’s say Trump and Xi Jinping do strike a deal, immediately one might think it’s a good sign, Bulls will storm the market next week, right? however let’s keep in mind that so far, “bad” news have been much better for stocks than “good” ones.
For instance, a deal could mean the FED might not need to cut rates on July and that would be a real disappointment. On the other hand, if they don’t seal any form of understanding it will be hard for Bulls to keep the market going into new record highs, unless of course the outcome is the same of last December, no deal but since they had a meeting, Trump will give “negotiations” a couple more months. That is the rosier scenario for the markets, since it just keeps things as they are, until next FED meeting and the rate cut, especially since Trump already gave a moratorium in the Huawei case.
Photo by Mein Deal.