Blog: Tipping Point or False Alarm?

How long to the point of no return? -Kansas

I seriously thought of putting off this post for a day or two. When a big event happens on a Friday, it can either be important or just a false alarm. But since this has the potential to be the tipping point of this cycle, some commentary seemed appropriate.

The US stock market had its worst day since April's Liberation Day. Interestingly the cause was similar to last time. On Liberation Day the administration announced massive tariffs on Chinese goods (among other countries). The Chinese government followed with retaliatory tariffs. The tariffs were so massive that trade would basically cease between the two economic super-powers. But, afterwards the worst of the tariffs were postponed as trade talks progressed and the implemented tariffs were much more modest than the initial announcement. The market rebounded and has gone to new highs, as has gold and bitcoin. Since the original sell-off was largely tied to a US/China trade war, it's reasonable to ask if the new sell-off will turn out to be a false alarm, like the Liberation Day sell-off or just the beginning of worse action.