Monday Market Madness – Denial is Not Just a River in Egypt

September 17, 2018 at 08:27 AM EDT

Holy cow! I guess it's because I'm one of the last macro fundamentalists left in the markets that I am surprised – no, shocked, by the complete and utter denial the bulls are in regarding what is already the biggest Trade War since the 1930s and will very soon be the biggest Trade War in human history. As noted on the chart to the right though, it's a very normal psychological phenomena – especially when experienced by those unprepared for a loss and, after 10 years of stimulus – there's a whole generation of traders who don't even know what a market loss is… The market is clearly in denial and the Financial Media is merely a tool of the Investment Banks, so don't expect them to explain things to you and, unfortunately, very few people know what a Trade War actually is or what it does – thanks to a very poor education system – especially when it comes to Finance in this country. China does know what a Trade War is and, just this weekend, the Chinese Government's Global Times said " China will not be content to only play defense in an escalating trade war with the United States. It is nothing new for the U.S. to try to escalate tensions so as to exploit more gains at the negotiating table ." Beijing may also decline to participate in proposed trade talks with Washington later this month if the Trump administration goes ahead with the additional tariffs, the Wall Street Journal reported on Sunday , citing Chinese officials. The Journal report quoted one senior Chinese advisory official saying China would not negotiate " with a gun pointed to its head ." Besides retaliating with tariffs, China could also restrict export of goods, raw materials and components core to U.S. manufacturing supply chains, former finance minister Lou Jiwei told a Beijing forum on Sunday, according to an attendee. " Lou Jiwei's approach would feed the most hawkish sentiments in the U.S. government ," the person said, declining to be identified given the sensitivity of the matter. As I have warned since Trump first began…

Image result for stages of death Holy cow!

I guess it's because I'm one of the last macro fundamentalists left in the markets that I am surprised – no, shocked, by the complete and utter denial the bulls are in regarding what is already the biggest Trade War since the 1930s and will very soon be the biggest Trade War in human history. As noted on the chart to the right though, it's a very normal psychological phenomena – especially when experienced by those unprepared for a loss and, after 10 years of stimulus – there's a whole generation of traders who don't even know what a market loss is…

The market is clearly in denial and the Financial Media is merely a tool of the Investment Banks, so don't expect them to explain things to you and, unfortunately, very few people know what a Trade War actually is or what it does – thanks to a very poor education system – especially when it comes to Finance in this country.

Image result for china trade war cartoon China does know what a Trade War is and, just this weekend, the Chinese Government's Global Times said "China will not be content to only play defense in an escalating trade war with the United States. It is nothing new for the U.S. to try to escalate tensions so as to exploit more gains at the negotiating table." Beijing may also decline to participate in proposed trade talks with Washington later this month if the Trump administration goes ahead with the additional tariffs, the Wall Street Journal reported on Sunday, citing Chinese officials.

The Journal report quoted one senior Chinese advisory official saying China would not negotiate "with a gun pointed to its head." Besides retaliating with tariffs, China could also restrict export of goods, raw materials and components core to U.S. manufacturing supply chains, former finance minister Lou Jiwei told a Beijing forum on Sunday, according to an attendee. "Lou Jiwei's approach would feed the most hawkish sentiments in the U.S. government," the person said, declining to be identified given the sensitivity of the matter.

Image result for china rare earth trade war As I have warned since Trump first began…