This bull market is over nine years old. The data suggest that a recession is not on the horizon. This correction will end and the market will go on to make new highs. How long and how low the correction goes on is yet to be seen. The next few weeks will be telling for me as I watch the price action. As I have been saying for the last few weeks, you should accumulate stocks during this correction.
A world trade war will definitely hurt the stock market and the global economy. However, I do not believe a trade war will occur.
It should be remembered that the headlines of “TRADE WAR” and current panic surrounding the market were started by Trump. This is part of Trumps negotiating style. Trump sends out his tweets to catch headlines and attention of key players. Than at the table he walks back a lot of his rhetoric. He is obsessed with renegotiating NAFTA. I suspect he wants his “brand” on the trade deal.
It should also be remembered that the tariffs themselves are tiny. They only effect a small slice of the US imports. Now if this snowballs into other countries putting tariffs on US products and a tick for tack mentality takes place, things can get out of hand quickly. I do not believe this will happen. The rest of the world will come to the table and a deal will be agreed upon.
Like all other corrections in this bull market, it will end. The “TRADE WAR” frenzy will vanish from the headlines. Looking in the rear view mirror this correction will be remembered as a buying opportunity.