KINGSTON, NY 11 April 2018As we have repeatedly warned, it's not trade wars, or any of the other single-cause reasons the media blames for driving the markets on a daily basis.
For example, on Tuesday, the main reason given for the Dow closing up 429 points was the easing of trade war fears, following pledges by China's president to "open" its economy by lowering tariffs on automobile imports, enforcing legal intellectual property laws and reducing duties on other consumer products.
But as we had long detailed, there are greater factors driving markets than trade disputes. We noted that, at most, trade war/tariff threats would have minimal impact on the markets' bottom line and that media and investor reaction to it was overblown.
We stated repeatedly that China had too much to lose in a trade war and that negotiation and compromise between the US and China would ultimately prevail.
IT'S FACTS THAT MAKE TRENDS
It is a fact that if Trump's proposed $150 billion in tariffs were imposed on China, according to Fitch Ratings, it would knock off a mere 0.3 percent of China's Gross Domestic Product. And, according to Goldman-Sachs, even if even a 10 percent import tariff were enacted six times greater than what is being threatened the net effect on the U.S.' GDP is .02 percent. And they noted that under that extreme scenario inflation would rise just 0.2 percent.
The Trends Journal was first to forecast the Trump Rally and the market correction, emphasizing how overleveraged and overvalued markets are and how vulnerable they are to threats of aggressive interest rate increases.
We also warned that a wild card event would turn the market correction into a market crash, and that there was no greater a wild card then "The Trump Card."
As forecast in our February Trends Monthly, the high-danger trend we identified that would shock markets is now emerging. We wrote that "we are concerned that a black swan/wild card event will crash already unstable markets. Most notable are the United States and Israel ramping up the war in Syria
Following unverified reports this weekend that Syria unleashed a chemical weapons attack that killed dozens of people in the outskirts of Damascus, Israel was blamed for launching an air strike against Syrian military installations that killed Iranian troops.
And, in a tweet this morning, President Trump warned Russia that missile strikes against Syria were coming and they will be "nice and new and smart." And yesterday, in response to Trump's previous threat against Russia and Iran for backing "Animal Assad," President Vladimir Putin warned Russia would shoot down any US missiles.
Should Trump follow through on his threat, we forecast massive US/Israel/Saudi Arabia attacks against Syria and possibly Iran would not only trigger war throughout the Middle East, it may well ignite World War III.
TREND FORECAST: When war breaks out, equity markets across the globe will crash... along with the dollar, euro, yen, yuan and other fiat currencies. Under such conditions, gold, the ultimate safe haven asset, will spike sharply.