Weekly Market Commentary 04/06/2018

It was not exactly a Gilda Radner “never mind” moment, but early in the week the White House dialed down its bombastic trade rhetoric, suggesting that the array of stiff tariffs aimed at China was open to negotiation and not poised to go into effect any time soon. The softer tone on trade clearly brightened spirits in the financial markets, as stock prices staged the first three-day rally in over a month. However, the honeymoon was short-lived, as the market plunged on Friday in response to President Trump’s strident message that he was considering an additional $100 billion of tariffs on Chinese imports. We don’t know where this latest escalation in the war of words is heading; most likely, China will respond in kind as it had to the earlier U.S. threat of imposing tariffs on $50 billion of Chinese imports, but we still believe the endgame will be more anticlimactic than apocalyptic.