The weaker Jobs number does matter for the credit markets. That will be overshadowed by yet-another market purge. And that too will likely be attempted to be recovered from but don't be sure of it just running back up like Wednesday, writes Gene Inger in The Inger Letter.
Thursday I bemoaned the Larry Kudlow commentary (despite agreeing with it) regarding this president being a free trader at heart, to use Larry’s words.
My concern, especially given the S&P 500 (SPX) very dramatic down-and-then-up turnaround was that it would embolden a tougher line with China, because of the belief the rally wouldn’t be a trade war.
Bloomberg: Stock selloff deepens Friday amid Trump trade jabs, jobs.
Well, the way to get a trade war is for the officials to keep saying there’s not going to be one.
The market rallies; Boeing (BA) leads. Washington again isn't taken seriously and Thursday’s China Daily (official newspaper)…guess what…they headlined putting it the context of the United States blinking in the standoff on trade.
They even singled-out Kudlow. (I just knew that would result in trouble as I have few problems with his perspective other than being a rampant Keynesian we all know. But you just can’t refer to barely-begun negotiations with what in this case was interpreted as a capitulation by the Chinese.)
It’s part of a limitation of what an official can say, not an observer on CNBC.
Trump himself went too far by saying in advance: “We’ll have a beautiful NAFTA deal; close to it; and oh if we don't get it then we'll cancel NAFTA.” But for now, this is mostly about China; and not to be overlooked, the EU role.
China seeks EU's support in standing up to US trade threat: Bloomberg Friday.
***
Bottom line: This is still the pattern I’ve talked of: take the market up just enough to confound many (they did); when in reality it was yet-another of the massive short-squeezes, with some capitulating money coming in as they gave up on sensible assessments of the market.
That’s because this is not a controversial or confusing market. It’s very closely following the technical parameters we’ve laid-out (best we can do in what is of course a wide-swinging market) as well as the post-topping phases desperately trying to keep the market together.
