The State of the Markets:
Don't look now fans, but the S&P 500 is up three days in a row and has finished in the green five of the last seven sessions. This in the face of all the trade fears and hand wringing about the potential impact an extended trade war would have on the economy. As such, investors appear to have a little more spring in their step right now.
Some folks are calling the recent string of green screens a result of a little something known as "buy the rumor and sell the news." Only this time the adage has been turned on its head as traders sold on trade war fears and now appear to be buying on the idea that reality won't be as bad as expected.
Yet, as I opined on Monday, I think there is a lot more at work here than some age-old Wall Street trading strategy. As in, growth trumps trade fears. In fact, it's been my experience that growth can trump just about any problem a business or economy might have.
Got a financial problem? No worries. If your revenue is growing, the problem will likely shrink or even disappear over time.
So, despite the fact that there has been no movement on the trade front with China and the Europeans appear to be hopping mad about the current tariffs, the stock market is advancing. Why? Because in short, growth can fix everything.
We Can Afford the Trade War
Another way to look at this situation is that with the economy humming along, the U.S. can actually afford to mess around with a trade war for a while. So what if GDP loses a few tenths of a percent this year? It looks like we've got a few extra tenths ...