Talks with Canada indeed did commence as indicated. Hard to say how they conclude although I’ve been consistently optimistic on how the trade situation resolves. Some say trade is a play to divert from DC issues, writes our roving Trader Gene Inger Thursday from Malta.

But more likely all is happening more or less concurrently. And the U.S. really is trying to sort the trade issue out satisfactorily.

How much better this will be for the U.S. versus NAFTA in the past is probably the hot potato that will emerge politically.

chart 1

If the gains are merely nominal, politicians will argue it wasn’t worth the entire effort. I think the speculation about the number of total vehicles exportable to the USA from Mexico (MXN), and the percentage of U.S. content in all will improve. Canada dollar (CAD).

Reuters: Trade worries drag on Wall Street Thursday. Tech socks keep Nasdaq afloat.

chart 2 

In-sum: Instead of sobering limits on high-level commitments. a few firms just hike targets. Morgan Stanley with Amazon (AMZN) is an example. I’ve seen it before in frothy markets. This doesn’t mean the macro cycle ends, but it often occurs in the process of an old topping process for the intermediate term. That’s part of why I warn of shakeouts or correction. Not catastrophe.  

At press-time: Turkish Finance Minister just resigned and their lira (TRY) is again being severely hit. S&P (SPX) futures are off about 6 handles an hour and a half before New York opens. and the Dow’s (DJIA) implied opening is roughly 60 off.

chart 3  

There’s also a report here in Italy that the EU now is ready to totally scrap all tariffs on American cars imported to Europe. The proviso of reciprocity by the United States. This is what Trump asked for: 100% no tariffs with Europe. And it is possible this early-reveal story is valid.

And that’s bullish not just for markets (which are already high) but for a successful resolution to the nasty friction. And incidentally it helps companies like Tesla (TSLA) that do a fair bit of export business to Europe.  

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The Chinese electric car IPO does not inspire hopes for Tesla as somehow being a dominant player long term as they fight to maintain their lead. I’ve forewarned about a slew of electric competitors especially from Germany. and I’ll see more of those at IFA in Berlin this weekend, plus plan to attend a panel discussion on autonomous driving and sensors’ importance in autos during the event.    

chart 4   

Conclusion: For now the market is marking time ahead of the trade talk outcomes, and a sort of mixed-indecision holding-action mode. Stretched and dicey, I am looking for a soft opening on Thursday which will be fought with a rebound before midday, although it may not be sustainable in this semi-holiday time ahead of the long-weekend.

Incidentally, my long tour-d-force cruise of Greek and Italian islands is at last in the final day. Mykonos and Santorini were a joy. while Malta was the most impressive.

Malta is very historical given its strategic location (latitude a bit below Tunis). While a tourist and money haven, they still fire big guns a couple times daily for the tourists. It’s certainly giving an idea of battles fought against Turkish attacks, the British Liberation and preceding fights.

Britain gave Malta independence over 50 years ago. and never surrendered it to the Germans, when the Nazi s bombed it during World War II. Even though Rommel was in North Africa and the Luftwaffe in Sicily (we also did a brief stop in Palermo), the RAF and Royal Navy were able to hang onto Malta.  

  chart 5

I have been hanging onto the ship a bit slightly under the weather (play as well as checking markets throughout) but better. Friday we disembark and fly to Berlin and then immediately begin IFA, the technology show through the weekend. It’s chilly and raining in Berlin, opposite of Italy-Greece by far of course. Ironically, I need a vacation from this so-called vacation already, but I’m afraid that will have to await returning to Florida.     

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