Shortly after insisting that there was nothing which could prevent tariffs against Canada and Mexico, Trump called off the tariffs.

No amount of political or diplomatic pressure had worked. But, the market – which Trump dearly cares about – called BS on the assertion that tariffs aren’t inflationary.

The S&P500’s 2% gap down was apparently more convincing than scores of economists.

At this point, we’re left with the expectation of a 10% tariff on some Chinese imports and vague rumblings about tariffs on European imports.

continued for members…While ES hasn’t left its falling white channel behind just yet…

…SPX managed to remain broken out after backtesting its falling white channel a second time. It’s back above its SMA50 – though the SMA10 rolled over very slightly.

EURUSD has just about reached our 1.0203 target, so will potentially offer support soon.

Providing an assist, CL is off over 3% and RB is hanging by a thread to a rising TL – both after rejecting recent breakout attempts.

Interestingly, though, the 10Y is slightly higher. Maybe it’s just bond money flowing back into equities, but it marks the first time TNX has returns to above its SMA10 in over 2 weeks.

The 2s10s is currently sitting at 31 bps, so this model has calmed down somewhat even though the 2Y still looks like it might roll over as the 10Y doesn’t. The market might have dodged two bullets, but the impact of trade wars with China and potentially Europe has yet to take hold. And, if nothing else, this whole exercise is a reminder of the chaos wrought by presiding by tweet and bluster. I remain wary.

Stay tuned…