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Perfect Storm for Stock Correction, Our Views

Perfect Storm for Stock Correction, Our Views

The ongoing risk of a trade war induced selloff is increasing and some traders and investors are now preparing by reducing longs and hedging positions. With the sharp selloff last week, and the possibility of a follow through on the downside, it is now becoming clear that the Fed rate cut combined with their more hawkish-than-expected policy outlook will be looked at as a pivot by next month. This is how we view it – a Fed injected shock to global indices. The S&P 500 could fade to about 2,750 in the coming weeks as a result of this disruption in markets and the realization that the US and China are digging in for a long-term battle.

A major stock selloff is possible in the coming weeks – protect yourself.

Our Views: While the future of US-China relations are difficult to read, we know that it will not be cooperative. China has hard-liners in place who are strongly opposed to any deal that would put the future of the CCP and the nation in an awkward position – both sides want a deal but a deal that will allow them to position themselves for the future. President Xi has a lot on his plate and that includes the US relationship and the Hong Kong uprising, so expect the Chinese to move to a hard-line approach all all fronts. China is now on the center stage of world affairs. More market volatility is possible.



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Disclaimer: We do not provide investment advice or strategies, this article is not intended as such but only to provide you the reader with information. Please conduct your own research before any investment of any kind.

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