Why I Know the "Tariff Tantrums" Will Blow Over

Here are a few things markets don't like: Geopolitical leadership that doesn't follow a logical path Uncertainty of any kind The prospect of contracting economies On Monday, we got truckloads of all three. And they all came from the trade war news headlines. The effect was self-reinforcing - and profound. There was no shortage of illogical geopolitical leadership on display: The U.S. and Chinese presidents (with some European Union officials thrown into the fray for good measure) exchanged barbs about tariffs that sounded more like pregame locker-room posturing than international statesmanship. And, as we've seen, when emotion enters the process, traders and investors get worried that it could add to the uncertainty. And one pithy quote sums up the uncertainty the markets felt yesterday. The Wall Street Journal reported a quote from President Xi of China: "In the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek," Xi said in the report, according to people briefed on his remarks. "In our culture, we punch back." A biblical analogy: Check. Open-ended, ominous threat: Check. That's the height of uncertainty. Of course, at the root of all this is the prospect of contracting economies. That's the ultimate goal of a trade war, after all - to do such damage to the "other guy's" economy that they blink first. If tariffs stick (and tens of billions of dollars' worth are already in force), we'll see the real economic slowdown. Goods will become more expensive for consumers, so they'll buy less of them. Pretty simple stuff from that perspective. And so, with that triumvirate of market-rocking news, the major U.S. indexes had their biggest down day since... ...The last tariff tantrum on May 29th. So the big question before every investor this week is: Is this all coincidence? Or is the "Trump growth" narrative asserting its dominance? I think it's the latter, and I'll show you why that's important with a few charts here... Tags: washington To get full access to all Money Morning content, click here About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free . Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors. Disclaimer: © 2018 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201. The post Why I Know the "Tariff Tantrums" Will Blow Over appeared first on Money Morning - We Make Investing Profitable .