Perception vs reality in markets
The opportunity presented by the gap between the two is that traders can go long while they prepare to exit fast when the market pulls back
THE gap between perception and reality is called opportunity. It has been many years since the gap has been quite as large as it is now in US markets. How we react to this gap determines both trading and long-term investment outcomes.
Many economic commentators in the US appear to believe that the US is winning the President Trump-initiated trade war with not just China, but also the world. Trump tells the media that he has concluded more than 200 deals as a result of his tariff mayhem.
All markets rebounded rapidly after the initial collapse immediately following his “Liberation Day” announcement on Apr 2. In US markets, the rebound followed Trump’s pullback on tariffs. Whether that is evidence of winning remains an open question. However, the narrative favoured by Trump and his trade advisors like Peter Navarro is that America is winning the tariff war, and that despite a small pullback in GDP, the future for the economy is very good.
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