Talk of trade wars became a reality this last week but many still hold out to the view that these are skirmishes, irregular, unplanned fights, that ultimately will lead to a better deal for U.S. trade policy as free trade changes into fair trade, says Bob Savage Friday.

The EU/US talks about auto tariffs being a case in point. The trouble is in the hit to confidence and doubt that this process takes as it impedes more obvious investment plans and the ease of just-in-time inventory management.

One cost of the skirmish over trade may be in larger inventories as companies hoard in anticipation of higher costs. This creates a larger boom and bust cycle risk on top of the already expected freezing of global investments and supply chain disruptions.

There is a sinking feeling to the summer trading in July – wildly expected to produce the best of results, perversely filled with the darkest of fears.

The seasonality of July appears to be clashing with the falling bricks from the wall of worry over trade and central bank policy reactions to data and confidence.

How the next week plays out will pivot on the U.S. earnings, U.S. bond sales, what the ECB minutes say, what the ECB speeches focus upon and what the Fed says, but the most important driver remains how Trump handles the ongoing fights over trade and the upcoming NATO summit followed by his Putin meeting.

There is plenty for fear, less for greed, but the risk markets remain stubbornly bid in Europe and the U.S. while Asia suffers.

View Bob Savage at TradersExpo New York in brief video interviews recorded Feb. 9:

How to create a risk parity portfolio

Duration: 3:25

How I pick assets on the basis of highest yield

Duration: 3:31

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