“Trade Wars are Good, and Easy to Win”

It’s been 15 weeks since Trump declared war on its major trading partners.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweeted Friday morning. “When we are down $100 billion with a certain country and they get cute, don’t trade anymore – we win big. It’s easy!”

We’re about to find out just how “good” trade wars are. As a net importer, with CPI at 2.80% and PPI at 3.10%, the US will likely see inflation continue to leak beyond its comfort zone.

Futures are currently off 14 points.continued for members…At least we’ll finally see a backtest of some sort — with the nearest being SPX’s SMA10 at 2767.90 and a variety of targets below that.If the trade wars do increase inflation, CL and RB will be under even more pressure to reverse their inflationary breakouts.EURUSD bounced at its channel bottom, so is safe for now. USDJPY continued its bullish meltup.This left DXY with a near breakout.UPDATE: 11:42 AM

SPX is currently off 15, a 5-pt bounce above the lows of the day……since VIX reversed off the white channel midline and SMA20. DJI just backtested the neckline of an IH&S, but the channel bottoms (incl ES and SPX) are likely to be tested… …as RB still has a little further to go in order for the SMA100 to be tagged.

I wouldn’t be surprised to see a convincing looking bounce off RB’s SMA100. But, the fact that gas at the pump hasn’t moved much yet argues for a drop to at least 1.9647 and then the SMA200 – currently at 1.8623 – probably around the end of the month.

My back of the envelope calculations suggest 2.52 gas would get CPI to 2%. But, I still think that’s not terribly likely. I believe they’ll try to hold the rising red channel shown below. It’s bottom is currently around 2.62, and will be closer to 2.65-2.67 by the end of June. This would probably get CPI down to 2.3-2.4%, which is likely good enough to avert a panic.

UPDATE: 3:45 PM

Thoughts going into the close…

RB and CL are both down over 3%. But, VIX is targeting its TL of support again. I wouldn’t be shocked if it closes below 12. This has stocks well off their lows reached ealirer. DXY is hanging where it’s been most of the day. Note that gold finally broke down and is making new lows after the bounce on the yellow TL.I’m fairly confident about RB and CL going lower (although potentially with a bounce in between.) Stocks are another matter, as they’ve been easily manipulated lately. But, my gut tells me we’ll see further follow through.