The benchmark S&P 500 hit a fresh all-time record today. Stocks and risk appetite are on the rise as investors remain hopeful that a U.S./China trade agreement will be reached. Over the weekend, President Trump met with Chinese Leader Xi Jinping at the G20 meetings in Japan, and the two leaders essentially called a truce. The U.S. agreed not to raise levies on additional Chinese goods, while China reportedly agreed to purchase more U.S. agricultural products. With the two sides seemingly back at the bargaining table, the question is whether they will be able to formalize a viable long-term deal.
Although stocks came out of the gate strong to start the trading week, gains had been cut down significantly by mid-day.
With so much negative sentiment heading into the meeting over the weekend, stock investors may simply be cheering on a lack of fresh bad news rather than getting increasingly bullish on good news.
To be sure, a long-term agreement is likely still quite a ways off, and there may be tense negotiations along the way. Some analysts have suggested that a long-term deal may not be reached until 2021, after the next U.S. presidential election. If Trump were to lose the election, all bets for a deal could be off.
During his trip overseas, President Trump also made history, becoming the first sitting U.S. President to set foot into North Korea. Trump had a short meeting with Kim Jong Un, and the two nations are reportedly set to continue talks over North Korea’s nuclear program.
In another part of the globe, the situation with Iran remains tense. Headlines have been quiet over the last several days, but with a major global oil choke point in play and the country’s nuclear ambitions at the heart of the matter, the conflict could potentially get worse before it gets better.
The bottom line?
There are numerous economic and geopolitical issues at work that could send the economy and global markets lower, sharply lower. The U.S. Fed is already expected to cut rates this month in order to combat the ongoing global slowdown, and a July cut could be the first of a series of cuts the central bank is forced to make.
As the current economic expansion gets longer and longer in the tooth, the next major recession could be getting closer, and there may be little the Fed can do to fight it.
With the economy on the brink of the next major recession and with so many geopolitical issues that could send waves through financial markets, now may be the ideal time to add significant diversity elsewhere. Given the potential for rising inflation, lower rates, a weaker dollar and a bear market in stocks, there may be o better asset class to look to than physical gold.
Adding gold to your portfolio has never been easier, and perhaps never more important. Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation on this key asset class using an IRA account.
Don’t wait for the next major recession to take hold or for stocks to crater again before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: bottom line, china trade, chinese goods, global oil, global slowdown, kim jong un, next recession, north korea, nuclear program, president trump