President Donald Trump delivers keynote comments at the Shale Insight 2019 conference in Pittsburgh, Pennsylvania, October 23, 2019.
Leah Millis | Reuters
It all comes down to President Donald Trump and the trade war in China if the market can close the year with gains, according to Wall Street strategists and investors.
Trump has repeatedly promoted stock gains and the blame for sales on the Federal Reserve and his inquiry. But some Wall Street analysts say any losses from now on will be on him after the central bank deducted the full 1
"The Fed has stuck the ball in President Trump's court," Matthew Maley, chief marketing strategist at Miller Tabak, said in a note Thursday. "They have cut interest rates THREE times … and they have started a QE program (even though they say it is a non-QE program). What more can Mr. Trump ask for?"
The central bank has cut interest rates by a total of 75 basis points this year, after increasing its borrowing costs four times in 2018. The interest rate increase in December was seen as the culprit for a strong sales sale, but a simpler monetary policy this year has provided the economy with some cushion against the damage from Trump's trade war with China.
"Trump's trade policy has definitely softened the US economy and the Fed is responding with three cuts saying it is back in Trump's court, so everyone is watching what is happening now with this trade agreement," said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
"The Fed gave the market what it expected, and they're not going to give them any more at any time. It's about China," Boockvar said.
& # 39; VERY disappointed & # 39;  The third movement this year did not stop Trump from railing against Chairman Jerome Powell. The president said "people are VERY disappointed" in Powell a day after the announcement.
"China is not our problem, it is the Federal Reserve!" Trump tweeted Thursday. "We will win anyway."
In fact, the markets on Wednesday cheered Powell's interest rate cut and his clear signal that it would be a while before any hikes. Shares only became angry after a report saying that China casts doubt on the possibility of a long-term trade deal because of Trump's "impulsive nature."
"The Fed is doing its job; I think the Fed has been dynamic and responsive," said Mike Loewengart, Vice President of Investment Strategy at E * TRADE Financial. "The markets will be bound by the daily news cycle of any kind of progress in trading."
Trump said Thursday he will sign a "phase one" trade agreement with Chinese leader Xi Jinping "soon," and it will make up 60% of a long-term deal. Earlier this month, the two nations reached a ceasefire and began drafting a limited agreement that includes a break in toll escalation and a pledge for China to buy US agricultural products.
However, many experts said the deal is less specific and important than what Trump originally wanted to pursue.
"Phase one is very cosmetic, rather than any substance from what we see so far," Boockvar said. "Even if Trump signs Phase 1, will it be enough to relieve business concerns? We don't know yet."
The S&P 500 hit another high point Monday on the back of strong earnings and trade gains when the US and China said they were close to completing a partial agreement. The reference is up 20% this year and the future will largely be linked to Trump's stance on trade.
"If the stock market declines in any meaningful way during the 12 months leading up to the 2020 election, President Trump will not be able to blame the Fed," Maley said. "Yes, he WILL try to blame them if a correction occurs … but it won't work anymore … now that the Fed has completely reversed itself over the last ten months."
In addition to the Fed, Trump has also indicated that the weakness in the stock market is related to the Democrats' impeachment probe. "Impeachment hoax is hurting our stock market," Trump said in a tweet Thursday.