Tariffs… I have a feeling we’re all going to really hate that word before this is all said and done. With the new announcement that the Trump administration has identified 200 billion more in Chinese imports to potentially slap a 10% tariff on, markets are not liking it. Futures were doing as much as 1.5% early morning but have come back a bit in early trading. Many markets around the world weren’t so lucky though with the Chinese stock market really taking a hit.
1 year chart of the Shanghai Composite index
Down nearly -4% today and maybe more alarming was over 20% of the individual names that make up the index were down the maximum “limit down” of -10%. Any company with a perceived vulnerability to the effects of a trade war were destroyed. I’ll do a full write up soon on what tariffs actually are and why a “trade war” if it were to materialize may be a lose / lose situation for everyone involved. I’ll keep it non political of course and just stick to the economics of trade deficits.
For now though we’ll just take what the markets give us and be prepared to move to safety positions on a single day notice. That’s the key to our long-term success. There’s nothing wrong with going long stocks and shorting volatility to ride the uptrend as far as it will take us, but we definitely have to remain nimble and ready to bail out if the signals deteriorate. Today we’ll take some risk off the table and move to a few safety positions and reassess on a day to day basis.
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Temporarily paused: VTS Tactical Volatility Strategy
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