Market Insights

It’s Fourth of July week, and the fireworks may have already begun.

The last few days have featured even more bangs and flashes between U.S. and other countries. The spectacles continue to revolve around trade as the Trump Administration looks to narrow the gap between American exports and imports.

While this has been a theme for the better part of a year, events seem to be coming at a quicker pace and gaining in ferocity. Here’s a quick recap of developments in the last two weeks:

• June 18: Trump threatens tariffs on $200 billion of Chinese goods. Beijing promises to retaliate.
• June 22: Trump threatens a 20 percent tariff on European autos.
• June 25: Harley Davidson (HOG) announces it will move some jobs overseas to access foreign markets more easily.
• June 25: Widely followed market strategist Art Hogan of B. Riley FBR says trade worries may force him to cut his outlook on the S&P 500.
• June 27: The Alliance of Automobile Manufacturers says tariffs could eliminate jobs and raise car prices by $5,800.
• June 29: Canada announces tariffs on $12.6 billion of U.S. goods including steel and whisky.
• July 1: News reports says Trump is drafting a plan to withdraw the U.S. from the World Trade Organization.
• July 2: The U.S. Chamber of Commerce reportedly launches a campaign to oppose Trump’s tariffs.
• July 2: U.S. Commerce Secretary dismisses business leaders’ worries and says the White House doesn’t care if the stock market falls.

Despite all those risks, there have been calming developments like the White House taking a soft line on Chinese investment in U.S. technology. Trump persuaded Saudi Arabia to boost oil production in the hope of offsetting a supply shock from his sanctions against Iran. There are signs of peace between German Chancellor Angela Merkel and Italy’s new government, while Mexico’s new leftist president wants to give Trump the benefit of the doubt. A strong U.S. economy is the other positive in favor of market bulls.

But at the end of the day it seems that the war of words is intensifying. Withdrawal from the WTO? Wilbur Ross not worried about the S&P 500 crashing? Neither side is backing down and both think they can win. The fireworks are getting louder.