Bad China news is good China news. That is if you believe that would could help stocks the most in 2019 is a trade deal that is mutually agreed upon and good for both countries, something that I do believe is possible.
So when I see the market down big on weakness in China I think, wait a second, if there is strength then what would occur? Simple: we would hear that the Chinese would not do a trade deal because they don't have to do one. They are strong, we are weak, it's all over but the shouting.
How can the bear have it both ways? How can it be tails the bear wins, heads the bull loses?
Pretty simple: mindset and machines. It doesn't take a genius to know that 2019 is already a hated year. You read any research and the assumptions are: 1. Liquidity draining, 2. World slowing, 3. Trade talks failing, 4. Fed wants to raise the unemployment rate so there is more slack.
In that combination of things is it any wonder that we come in down, especially when the machines are set for oil and oil's not rebounding?
I am not saying the market is phony. I am saying that it is just too darned pat. Weaker data means the Chinese may have to concede that they have been not playing fair with anyone.
What would hasten this? If the president were to simply call some of the heads of Europe. Just call them. Get their temperature. I bet they are plenty worried, too. Their worry could be to our advantage in any trade talk possibilities.
So, while the bear can have it both ways for the beginning of the year, especially after last week's comeback, have no illusions. When everyone hates a year on the first day of trading it rarely turns out as hated as you think!
