The rhetoric is officially over and as the tariffs kick in with China the market is reacting very loudly.
It's important to understand that, on the daily chart, this is setting up to be a strong EVENING STAR pattern which could trigger a large sell-off.
While I believe that the escalating trade war could be the catalyst that triggers a market crash, it is not the tariffs that concern me. Don't get me wrong, I believe the age of CHEAP CHINESE GOODS is about to end for Americans. But it is the SYSTEMIC RISK in the markets that is most concerning. In other words, the market is going to have pullbacks. But if the market cannot sustain a sharp pullback without triggering market contagion, them something is wrong... and SOMETHING IS VERY WRONG.
This is not anything I haven't been saying for a while. If you won't listen to me, maybe you'll listen to Jim Rickards.
https://www.zerohedge.com/news/2018-07-10/rickards-heres-where-next-crisis-starts
And if you won't listen to Jim, maybe you'll listen to Moody's.
https://www.cnbc.com/2018/05/25/moodys-warns-of-particularly-large-wave-of-junk-bond-defaults.html
And if you won't listen to Moody's then maybe, just maybe, you'll listen to the IMF.
https://www.zerohedge.com/news/2018-07-10/global-debt-hits-record-247-trillion-iif-issues-warning
And if you won't listen to the IMF, then slap yourself because you are too STUBBORN to accept the fact that we are living in the largest credit bubble in the history of mankind...
I'll say it again. This is what happens when we reward TBTF banks and let them create an even larger credit bubble than we had in 2008. The markets are full of systemic risk and when one big bank goes, they all go!!!
Act accordingly,
The Market Vigilante
Correction: Tariffs are still in their preliminary stages. They are not scheduled to go into effect until August 30th. In addition, it appears that the US Congress is working on a bill to stop these tariffs which appears to have widespread bipartisan support.
https://www.zerohedge.com/news/2018-07-10/us-equity-futures-tumble-us-readies-200-billion-china-tariff-list?page=2#comment-11985856