Do not underestimate how important a trade deal with China might be. When we get a rally like we did today it's all about how the economies around the world could return to sustainable global growth, something that's highly unlikely without a resolution.
There's a lot of cynicism out there. I know it. The cynicism is about what a trade deal will really mean and how it won't reverse the trajectory of slowing earnings, which have become a given among most economists who opine on these things.
I disagree. I think that if we get a deal the stocks of many of the international companies can rally because numbers at this point are probably too low and we know that the correlations between estimates going higher and stocks rallying is pretty darned high.
Today's a bizarre day because we didn't just get a rally in the stocks of companies with a ton of business in China. We also got many of the retailers and the techs soaring higher. The winning techs, though, did not include FAANG, which remains a source of funds, first because they are over-owned by hedge funds but second, because they don't have any China exposure. Again, that points to how important this trade deal might be.
Now I have been adamant that there will not be an instant shake and bake deal. There's a lot of negotiation ahead. But the idea that there will be no deal and the tariffs are going from 10% to 25% may be too dire, hence the gigantic rally we had today.