Rebel Traders 054 : Trade Wars – Winners & Losers

Are we actually in a trade war? Is this really a high-stakes game of chicken? Who are the winners and losers going to be? That’s what we’re tackling in this week’s show...

So, we’ve been getting a TON of questions about the Trade War and if we are actually in a Trade War, what exactly is going on and when the BS-O-Meter rises sky high and the financial news networks hype up the rhetoric, it’s time for the Rebel Traders to actually break it down and cut through the smoke, mirrors and 7 layers of horse crap to get to the REAL deal…

Also, in this week’s show, Sean and Phil are joined by their resident expert of futures and commodities to get DEEP into where the opportunities, risks and reality actually are. So, buckle up, it’s going to be a helluva ride!

Time Stamped Show Notes

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Sean Donahoe: Are we actually in a trade war? Is this really a high stakes game of chicken? Who are the winners? Who are the losers? Let's rock.
Automated: Rebel Traders takes you inside the world of two underground master traders who take an entertaining and contrarian look at the markets, to cut through the noise of Wall Street and help you navigate the trading mine field. Together, Sean Donahoe and Phil Newton are in a mission to give the unfair advantage of a Rebel Trader. And now here are your hosts, Sean Donahoe and Mister Phil Newton.
Sean Donahoe: Hey, hey, hey this is Sean Donahoe and welcome to a very special, and I think timely, podcast. And today we've got the Three Musketeers together here. I don't know if this is Aramis and, I can't remember the bloody other name. I know I'm probably Porthos, who is the roundly, certainly rotund version. Let's see, Athos, Aramis, and Porthos. Right? Am I correct, Phil?
Phil Newton: I'm just going to nod my head and feign ignorance, and let you struggle on in the corner there.
Sean Donahoe: I appreciate the support. So anyway, I am joined by Andrew and Mister Phil Newton here, who are my, I would say associates here because obviously the Three Musketeers reference was dying on the vine. But we are going to be all-
Phil Newton: Well, I was just going to say, I was trying to think about what kind of had made my brain fog was not necessarily the modern, or the most recent version, the TV series is it, of the Three Musketeers. What I was trying to remember which one, because there's been a few iterations of the Three Musketeers, isn't there. Do we want to be the ones out of the Raquel Welch one from the '70s or, I was trying to think about the actor, bear with me a second. He's quickly doodled it but still can't find a suitable answer. It was one of the actors, Jeremy-
Sean Donahoe: Oh, well. If it's involving Raquel Welch I'm good for it.
Phil Newton: I keep thinking it's Jeremy Irons. Is it Jeremy Irons was in one of them, or is ... I'm vaguely getting confused with Michael Ironside, but it's not Michael Ironside. It was Jeremy Irons, wasn't it?
Andrew Page: It was. I'm pretty sure it was.
Sean Donahoe: Yeah, there was Jeremy Irons. There was also, what was it, the Keith Sutherland version as well, which was way back when. But yeah, I was going classic literary, but then it kind of all fell apart. So anyway-
Phil Newton: Yeah, it all fell apart. If I could play the part of Jeremy Irons, because I quite like his sturdy British accents.
Sean Donahoe: Well, indeed. But if we could be involved with the one with Raquel Welch, I'm going for that version because just, well Raquel Welch, who is still a fox today. But ...
Phil Newton: Moving swiftly on.
Sean Donahoe: Nothing to do with trade wars. This is more like testosterone wars, but we are going to talk about the looming ... Basically, are we in a trade war? Are we actually facing that? Are we really in a high stakes game of chicken? I mean, really breaking down who are the winners, who are the losers going to be?
Phil Newton: One for all. Is it going to be one for all, or all for one with this game?
Sean Donahoe: Well, indeed. You never know. I mean, we're going to be tackling that in this week's show. Like I said, we've got the full band back together here, to dive into this.
Phil Newton: Well, we've also got the Rebel Trader Mailbag. It's your trading questions are answered. We've got the Bullshit of the Week, my favorite section continues to always amuse and titillate me. We call out the hype, the hype of all the shenanigans of the industry. And even, maybe we'll put some fake news in there just for the fun of it. We've also got the core question-
Sean Donahoe: There you go, indeed.
Phil Newton: trade, which is pretty much what the whole show's going to be about, from what I can gather. It's going to be, where's the opportunity?
Sean Donahoe: Absolutely. Guys, we gotta do this right off the bat. This is one thing that basically the news networks and the finance networks will not answer, because that's the question they want everyone asking to get to the networks. But first of all, are we actually in a trade war? Now I've got my opinion. Andrew, what do you think?
Andrew Page: Okay. So if you're watching any of the major news networks, obviously people have been talking about this quote, "trade war," for three and a half, four months now?
Sean Donahoe: I was going to say, at least January. January was when they started initiating the washing machine tax and tariffs. I mean, yeah, it's been a while. It's been a while.
Andrew Page: There's been a lot of talk. There hasn't really been a lot of activity. There really have only been-
Sean Donahoe: I'm surprised that those two phrases are together in the same sentence when we talk about politics.
Andrew Page: I know, but-
Sean Donahoe: Lots of talk and little action.
Andrew Page: Basically there have been some tariffs placed on steel and aluminum, which it affected mainly the EU, Canada, and Mexico. And then there has been the tariff placed on Chinese goods, a 25 percent tariff on a variety of goods. And then the Chinese have retaliated against the U.S. with 25 percent tariffs on a variety of agricultural U.S. products. And that's it.
Sean Donahoe: But that's going to get into effect until July.
Andrew Page: Right.
Sean Donahoe: These are slated. They're not implemented yet.
Andrew Page: Yeah, they're slated to happen, but they actually
Phil Newton: Sounds kind of like a, "My dad's better than your dad," type of argument. "Well, if you're going to do this, we're going to do that."
Andrew Page: Oh, of course. That's how it is.
Phil Newton: And it's not actually just happened, again, just for the poor farm boy in the room.
Andrew Page: Yeah. It's not actually happened. They are going, most likely to be implemented here, unless trade talks start
Phil Newton: Yes, I like the phrasing there: might be, might happen, most likely to happen. It could still change is what I hear, there.
Andrew Page: Yes, exactly.
Phil Newton: It's possible. It's highly possible that it will happen. But, unless something clever and creative happens at the negotiation table, then it could still change again.
Andrew Page: Yeah. I mean Sean nailed it on the head last week, saying this is a big game of chicken. That's exactly what it is. And honestly, you don't lose a chicken until you crash. If somebody turns away at the second now, we could really pull out of this and things could go back to business as usual. I really hope that they do. And again, we've seen so much talk and so much hype, but at the end of the day the tariffs, so far, have been pretty small. Now, there has been talk of increasing these tariffs a lot, but that's just talk.
Sean Donahoe: It's rhetoric. It's really, yeah, it really is. I mean, let's go back. It is defiant, tit for tat rhetoric to say, basically, up the ante.
Phil Newton: Schoolyard pushing, isn't it? Yeah.
Andrew Page: Yeah.
Sean Donahoe: It is. You know, we were talking about this in the last Happening Now report, saying this is like a game of high stakes Texas hold 'em. Everyone's upping and check-raising in the pot, waiting to see what the turn of the river card is as July 6, which is when they're proposing that this first round of $50 billion. I mean, it went from $34 billion to adding an extra $16 billion to take it up to $50 billion, and then trying to retaliate with the same measure. Here's the thing that really, to me, is very much proving that it's a negotiation. It's not that they're raising it, they're matching.
  They're matching the tariffs exactly. Saying, "Well, if you're going to do that, we're not going to be the ones to up the pot by, say well, if you go for $50, we're going to go for $100, and what have you." It's though they're match for match.
Phil Newton: To stay with this analogy of the card table, it's almost like ... In the game of the cards of poker that we're talking about, there's five hands, there's five rounds. There is a conclusion to it. But to stay with the example, it's like there's no end to this. It's an infinite amount of card turning. The next card is this, check-raise, next card is this, check-raise. No one's calling. No one's saying, "Okay, well let's actually start making decisions." It's just, they're kicking the can down the road to see what the next person in the next round of negotiations is going to do.
  It just seems fruitless. No one's going to get close to what they want because no one's trying to take control of the negotiation, and even compromise maybe, to try and get some sort of sense or deal on the table that will actually come to a conclusion of all this nonsense.
Sean Donahoe: Well, the one thing I would say with that is, I think there is an end in sight. I think what we're doing here, though, is behind closed doors. I mean, let's first start with answering the question.
Phil Newton: It's the public perception, though. That's the thing. I mean, we don't truly know what's going on behind closed doors. I think that's the key phrase that you're saying there. But from the public's point of view it's, nothing's being done. It's like having that employee that walks around with a sheet of paper to look busy, you know, just to be seen to be doing something.
Sean Donahoe: Well, there is an element of that, but let's just establish first of all, we are not in a trade war yet. Okay? Despite what the news media likes to hype up and cycle around, and all the panic they like to generate and hype, I think that's more damaging than anything else right now. But really, technically, we are not in a trade war, yet.
Phil Newton: Markets haven't reacted.
Andrew Page: Not yet. And you know, if we see either side implement another round of larger or escalating tariffs, I would say we're in a trade war. But until that happens, again, it's been a lot of talk, six months of talk and just a little bit of action, so I'm still pretty optimistic. I think the market is really starting to beginning to realize it's going to be a much longer and more protracted event than they had anticipated, and we see the Dow Jones really starting to take a decent hit here. But again, we're still doing quite a bit better than the Chinese markets, which are down over 20 percent for the year, now.
Sean Donahoe: Well, the one thing that strikes at me that this is again the intense negotiation is -- and this is something we talked about in the Happening Now report -- was that they were coming to the table with, "Yes, we're going to implement this, and here's why." A lot in the past has been just rhetoric, just talk, and it's allowed a lot of weird inaction to keep the process going, and the deficit diverging and growing and growing. But one thing that you were talking about there, Andrew, was with the Dow Jones taking a hit.
  I've actually got a chart that I was going to put on the show notes that shows the divergence between the small caps, the S&P 500, the Dow Jones, which obviously the small caps don't have as much foreign exposure, as I think we talked about in the Happening Now report. But the S&P with partial exposure, the Dow Jones, which has quite a number of the 30, so to speak, which have international exposure, and then also the one I have, which is the VXUS, which is the Vanguard Total International Stock ETF, which is kind of a measure of all foreign stocks, which is down quite a lot year-to-date and dropping like a bloody brick because of these fears of implementation of these trade tariffs.
  But again, a lot of it is concern of continuation, and certainly caused a big divergence. But again, you gotta come back to reality, which is it's mostly pressure being applied in negotiations. But the point that you made about the Chinese economy taking the biggest hit and being down 20 percent year-to-date is significant, because we're nowhere near that. The pressure is on that side of the poker table, so to speak. I think that a lot of that pressure for Xi and the administration over there is really where they've got to ...
  I mean, the pressure on them is to fold the hand, and that is mounting pressure with every time this administration ... And again, I'm not taking this from a political, whether you love Trump, hate Trump, or are completely agnostic, the reality is this administration is applying a lot of pressure and I gotta say, China is starting to buckle economically.
Andrew Page: Yeah. In the short term, China is definitely going to be in the hot seat if they want to continue to match the tariff rhetoric and go down this path. If they do manage to survive in the short term, in the long term it's the U.S. that's really going to have to make some hard choices because, as we know, we all know we have a large trade deficit with China. If we shrink that, there's going to be some reciprocal effects. Specifically, China will begin to buy less U.S. Treasury, which will begin to push up interest rates here in U.S., quickly.
  Now that we have a much larger deficit each year, that's going to really cost us in the long run. But yeah, again, in the short term China is definitely going to be taking, getting the poorer side of this trade.
Sean Donahoe: Now, one of the things here, let's talk about facts and timelines. They started January 18th with the announcement of solar panels and washing machines. The U.S. then placed a 25 percent tariff on steel and 10 percent on aluminum, or aluminium, depending on which side of the pond you're on, with the EU, Canada, and Mexico, with South Korea being exempted. Now, that's an estimated 4.1 of U.S. imports when you put all that together, as of March 2018. Now, on July 6 the U.S. plans to implement $34 billion in China tariffs on 818 Chinese imports.
  What we're doing here is, guys, we're cutting through the shit. Let's get to the real facts, okay, which is a 25 duty on a variety of industrial items. This can negatively impact companies such as 3M, Apple, Boeing, Caterpillar, General Electric, and some like United Technologies as an example. Then the Chinese State Council's Commission -- that's a mouthful -- on tariffs and customs said that there's going to be a retaliatory 25 percent tariff. It will take effect on July 6, exactly the same day. In other words, we'll check on this one and match the ante, so to speak, primarily on agricultural products, automobiles, and, and I put this in quotes, "aquatic products" such as soybeans, electric vehicles-
Phil Newton: Rubber ducks.
Sean Donahoe: ... a range of hybrid ... Yeah, I was going to say, that went over my head.
Phil Newton: You know, I've been biting my lip all the way through that.
Sean Donahoe: I know, I know. I was going to say it's rubber ducks and goggles, snorkeling equipment.
Phil Newton: Rubber ducks, snorkels, flippers.
Sean Donahoe: Yeah, that's it.
Phil Newton: they're going to have, they're going to have to increase the budget on them.
Andrew Page: Jesus.
Sean Donahoe: There's a range of hybrid electric vehicles and a variety of seafood and pork. Okay. Now we've talked about this in the Happening Now report, and the effect this has had on the soybean-
Andrew Page:  
Sean Donahoe: ... futures expectations. It has been significant, certainly. And then the U.S. has announced duties on an additional $16 billion of goods from China, which will need to undergo public review, which I find is one of the quite likely the stupidest phrases, because that almost makes you think, "Well, we'll just put it out to the news media, let the public review it, panic," and you know it's obviously not the case, but that's the way it feels. If approved, that would bring the total to $50 billion.
  And then, again, China's State Council said, "Well, there's an extra 659 that will be worth $50 billion. Okay, boom-boom-boom," and then it just goes on like that. Now, outside of the Dow Jones, manufacturing companies like Deere, Harley Davidson, Valcom and a few others obviously, anyone with that kind of exposure for not only industrial but the within that 659 U.S. goods are also going to be likely pushed and pressured a little bit.
  In fact Harley Davidson have announced that they're going to be switching some production to Europe and everything else, to get around certain tariffs and everything else. They kind of had a little bit of a public spat on Twitter. Guess who with, I'm not even going there. But there are an additional $216 billion worth of China tariffs under review. In other words, sit the hell down, shut the hell up, or else. And obviously, if you've seen this much impact on the Chinese economy from what has been announced ...
  I mean really, everything is baked into the cake here, but the fears and the concerns are based on what hasn't been implemented yet, and what could be coming down the pipeline if there is implementation. That's just going to be continued pressure. I mean, with a 25 percent tariff possibly on automobiles, SUVs, and , that's a lot of pressure. I mean, those are the real facts.
  That's the facts on the bloody ground, despite what you're hearing in the news media that you would think all of this has actually already been implemented, that it's a great big Rock 'Em Sock 'Em Robots type deal going on here. But you were talking about the Fed and interest rates. Well, Jerome Powell has said -- he's the Chairman of the Fed -- has said this week that the developing trade pressures and war may cause the Fed to revisit its U.S. economic outlook to the downside, as many businesses are delaying investment decisions until this trade outlook is less uncertain.
  What you were talking about there, with interest rates going up, obviously if things change and we have had a very buoyant and rosy economy despite, since January, a lot of uncertainty in the market which added all the volatility we'd been so wanting for a while, the pressure relief so to speak. If this does continue and the pressure goes down, because we've wiped out any gains for the year, just in the last few days with this volatility and, I would say, negative outlook.
  But we have said, "No, we're probably not in bear territory," but we're back to tickling that 200 day moving average, midweek last week, you know, when we were actually recording the show.
Phil Newton: This is a point where I feel I can contribute my .
Sean Donahoe: What do you think there?
Phil Newton: I just found the one point that I can contribute to this. I'm not ashamed to admit it, this is not my area of expertise. That's why I'm attempting to stay quiet. But as soon as you got back to price and things are going down, it's buy that dip. You know, price is behaving in a very particular way, from my point of view. News to one side, that's what I've been doing this week. It's buy the dip territory, or it's going to be very short term. It's not hold onto it for another 12 months type of trade. It's going to be a quick punt, maybe retest the recent eyes. That's it.
  I'm just literally looking for those fluctuations in price. I think about the big thing, with the fundamental influence, I don't know what's going to happen next but what I do know is, when there is some sort of conclusion from the news, the details, personally I'm not going to concern myself with. I'm happy with that decision. But this is going to be a big, fundamental change when some agreement is made, and then that's going to be impacted in the markets.
  I'm going to wait and see how price reacts, because the one thing that I do know with fundamentals is, while long term there is typical expectations of what happened in history when something similar has happened. We can look back to have a best guess of what will happen next. Price ultimately is going to tell me how the markets think of whatever deals and negotiations will ultimately be made, simply by the price behavior and the price movements, and I will make my decisions on how to adjust my portfolio moving forward.
Sean Donahoe: Oh, I couldn't agree more. I mean, looking at this, it is buy the dip territory and all of the pressure signs are pretty ... I mean, Andrew will talk to this. The 200 day moving average has been the guiding light for a lot of people, especially with the Dow, specifically with the Dow which has the most exposure to international pressures, so to speak. But Andrew, what do you think. I mean, I know we've been talking about this in the Happening Now report, but what are you seeing right now in terms of how the general market is reacting, and what's baked in?
Andrew Page: I think the markets are just worried that there is going to be another round of tariffs, and that we are actually going to enter into a trade war, which is a legitimate concern. You know, there's been a lot of talk, especially from the Trump administration, but really not a lot of implementation. People are, they're just uncertain. There's a lot of unknown out there, and again, when you said that companies are holding back on investing, direct investment here in the U.S., and I know that companies especially, and this is one of the reasons the Chinese stock market is dropping, is that U.S. companies over there are taking the cash and repatriating it to the U.S. instead of investing it back into China, because they're just
Sean Donahoe: Yeah. We had, what's it, $300 billion that's been repatriated recently?
Andrew Page: Yeah, it's a pretty staggering number. It's just because there's so much uncertainty out there, and so much risk of things going sideways very quickly.
Phil Newton: I think what's interesting is that usual, is that flight to safety is a phrase that would typically be touted around at times like this, because there is very obvious economic global uncertainty around this and what's going to happen next. Personally, I'll be looking to wait to see how the markets will react to then make course corrections and adjustments with what I'm doing. Because even if it's a favorable agreement, the markets might still have over exaggerated what could happen and react negatively.
  Because that's the one thing that I do know is certain, because anything can happen with a fundamental when its debt becomes , so when it moves a possibility and negotiations like you see now, to this has happened and it then becomes set in stone. Because it can be, it's like the weather. It might rain. But until it does rain you don't know if there will be rain. And if it's not heavy rain, do you need the big coats or the light coats or rain mack. You can overcompensate because of it.
  That's the thing with the markets and how they react and respond to fundamentals. I've got to admit, I'm not smart enough to have figured that out. People try and figure that out all the time and look for patterns in that regard. I'm sorry. Kind of got off the beaten track, there. But if I was thinking about how price is behaving right now, to interpret what is the reaction from the crowds, the behavior aspects of, since basically the beginning of April price has been very labored.
  I'm looking at the S&P for this. Let me just switch over to the Dow because that's pretty much the reactive market. Well, even looking at the Dow, it's been very labored. It's very tentatively-
Andrew Page:  
Phil Newton: It's very tentatively trying to move higher. It's two, three, four steps forwards, but it's one step back, but it's one giant jump back, if that makes sense to try and paint the picture of two, three, four, five baby steps. They would be up days. But then when the markets do move downwards it's a very big jump and a very big reactionary movement to move down. There's not that similar type of movement to the upside than we see to the downside. The line of least resistance. Another way of saying it would be to the downside compared to the upside.
  It's struggling to move higher, which is a concern which highlights that skittishness, that uncertainty. Again, if we were trying to interpret the price chart, and try and put some descriptors to it, that would be how I would be viewing the charts and that's kind of how people is viewing this fundamental situation that's unfolding in front of our eyes. I mean, from a learning point of view this is definitely a Dear Diary moment to write all these observations down.
Sean Donahoe: Absolutely. I mean, you look at the divergence between the small caps and, again, the blue chips.
Phil Newton: Everything's doing its own thing. Yeah, literally everything's doing its own thing.
Sean Donahoe: Yeah. Absolutely.
Phil Newton: I mean, you've got-
Sean Donahoe: Absolutely.
Phil Newton: ... S&P pretty much in a quagmire. You've got the Dow even more in a quagmire. And then you skip over to the Russell, and the Russell's like, "Oh, it's sunshine everywhere. They're skipping through the fields. There's nothing going on, nothing's wrong." You know, that middle-
Sean Donahoe: You know, the Nasdaq is doing the same thing.
Phil Newton: ... America experience, and then the Nasdaq is, it's on acid. It's up a day, down a day. It's trying new highs but then it's kind of reacting quite heavily in the opposite direction. Literally, everything's doing its own thing. And that lack of harmonious behavior between the indexes, that's also a concern. Again, try not to think about how price is interpreting the fundamentals because this is how I view the fundamentals.
  From my chair, I don't need to know the details because the way the price is behaving across all the indexes, which is that kind of representation of a basket of stocks, it's not harmonious. Because normally, everything kind of moves and swings and ebbs and flows in the same direction. Occasionally they're off kilter with each other for a few days at a time, maybe a few weeks. But for several months, everything's off kilter. And that is a concern.
  No one really knows what's going to happen next and that's why it's, it's a very nervous time, certainly from the market's point of view and how price is behaving. And when we can draw a line on the ... This is why I joke and say they're kicking the can down the road and no decisions are being made because that's how price is behaving, as if no decision is being made, and as if no decision is in place, even on the horizon. There's just no definition on what to expect.
  That uncertainty is certainly being translated across the markets. That flight to safety that we were just talking about, I mean, the usual thing when something weird like this is going, it'd be money out of stocks, traditionally speaking, it's where are you going to put it? It looks like everyone's sitting on cash, because it's not going anywhere else. Volumes aren't increasing anywhere else. The money's not going into gold. Is it going into bonds? Let me just have a quick look.
Sean Donahoe: Not really. I mean, there's a little pickup today. But, yeah. I was going to say, it's not really.
Phil Newton: Yeah. I mean, just have a look at the 30 year, the 10 year. Again, that's kind of sideways for most of this year. The money's not going anywhere.
Andrew Page: It's cash.
Phil Newton: It's cash. We know with individual companies, the bigger companies, they're not putting investments anywhere. Like you were saying, they're taking the money, and what are they doing with it? Sitting on cash reserves. Exactly.
Sean Donahoe: It's under the mattress. It's under the mattress. They're
Phil Newton: offshore funds, wink-wink. The markets are just not behaving like there's any future. It's like they're kind of stocking up the basement for that rainy day, or some type of global thermonuclear war.
Sean Donahoe:  
Andrew Page: You know, the trade wars, we may come out on top versus China, but we're still going to be hurt by it. Everyone loses in a trade war. It's really bad for business. When global trade starts to slow down, everybody's going to feel that, especially larger companies.
Sean Donahoe: Flipping that script though, we are seeing the highest manufacturing output. We are seeing the buoyant economy. And that's one thing, we are a consumer economy. I mean, we are one of the most consumer focused economies in the world. With a buoyant and thriving economy there's more disposable income. And I'm again taking this from the man on the street kind of view. You know, the average man on the street has more money in his pocket. Wages are increasing. There's tax relief so to speak, which has been in people's pockets. People have more optimism.
  There's maximum unemployment, so people have more money, which means they're buying more stuff, which means there's going to be more demand for imported goods as well as created within the United States manufacturing and everything else. So it's kind of the devil and the deep blue sea. There's more money to spend, thus more demand, thus there's worries about trade wars but more people with more money in their pockets. There's pressure on the interest rates to go up because, hey, more people have got more money in their pockets. Let's raise the rates.
  But then again, if there's negative trade talks and fears and everything else that's going to push it down, which one is going to win out, the pressure up or the pressure down? Something has got to give.
Phil Newton: I think what's also doing it, and it's something that we've commented on in the past. I think because of this, we have seen the technological shifts since the millennium, this millennium. You know, in the last 18 years we've seen technology make leaps and bounds. Everyone has access to discount brokerage, frontage information, trade in the markets, at anywhere in the world at any time that you want to look at these things and make investment type decisions.
  I'm just trying to phrase the thought. The ability to make decisions is infinite. The financial markets have changed. We've spoken about this before in the past where, because of technological advances the speed of information-
Sean Donahoe: The speed of information, is that the way-
Phil Newton: ... the way that the markets behave and react is deviating from the traditional way that they have done, say 80 years ago. Because normally, yeah exactly, yeah.
Sean Donahoe: Are you talking about the cycles of the markets? Because that's one thing we've talked about, is the width of the cycles may be increasing because information is being disseminated that much quicker in the markets.
Phil Newton: But, yes. But normally it would be cash out of stocks, it goes into bonds or gold, which is what we ... You know, traditionally that's what you would expect, but that's not happening, which is thing. And I think that's one of the big things that's changing because of this ... Well, to shove it all into one kind of block, it's technological advances have just meant that ... Well, actually we can see that maybe the best thing is to hold cash. And maybe that's more of an education thing as well.
  The man on the street, to use your phrase, is more educated. Just because you bring money out of stocks doesn't automatically mean that you should put it into bonds or gold or that flight to safety, which is what people would have done 100 years ago. Because hey, that was what you did 100 years ago. Now, maybe cash is the best thing to sit on for most people, and they're waiting for the wind of change to eventually pick up a direction. That's what I'm trying to say. Yeah.
Sean Donahoe: I would agree with that. I mean, if you look at the ... And this is one thing that, again I'm going to include this chart on the notes, but if you look at the balance of trade, and I've got two charts comparing back to 1950 to today versus the last 10 years. If you look at the two charts -- again you can look at the show notes, ladies and gentlemen, you can go back, refer back to -- you see that from the 1990s, huge growth in the balance of trade. Or should I say huge decline?
  Huge growth in imports and a massive drop in U.S. manufacturing, obviously production, which again, after 2008-ish that got a little bit crushed and what have you through 2015. It's kind of leveled out. But again, we've had a big dip in recent, the last few years, of imports versus what we've manufacturing and producing. The balance of trade has been all over the bloody place. That is one of the things that a lot of this is trying to readdress, I think.
  Because one thing with this administration, this is going back to the beginning of one the reasons that this administration was the winner of the election was Trump on the trail, on the stump, Trump on the stump ... I mean, that's a whole, that's a Doctor Seuss novel right there.
Phil Newton: You took the words out of my mouth.
Sean Donahoe: They're funny. But I mean, one of his campaign promises was to reenergize manufacturing in this country, to redress the balances of trade. And a lot of this, obviously there's going to be a little bit of pain and everything else, but one thing that we've talked about in the Happening Now report is, this is very much America elbowing its way back to the table to say, "Hey, we may be consumers but we're also producers, and we want to address this issue where we're not getting a fair shake," as is the opinion on the global markets.
Phil Newton: And from the markets' point of view things are not interpreted the way that they would have traditionally done 100 years ago, which is what I was kind of inching toward. So maybe we're moving into a new phase of how the financial markets are traded, because traditional expectations, they're clearly not unfolding. Clearly.
Sean Donahoe: No, very much so and this is something that, again, we have talked about here in different terms and in different ways. But Andrew, what are you thinking about this in terms of, okay, cutting through all the fog and the noise, and we've talked about a lot of facts and figures here, but ultimately, what is the end goal here, and how do you feel it's going to roll out?
Andrew Page: I think that the Trump administration wanting to reduce the balance of the deficit, trade deficit with China, is not a bad thing on face value. But I think that a lot of people fail to understand that the balance of trade is part of something called the current account balance, which it's in overall a balance between two countries. As the name implies, it does balance to zero. So if we are giving them all these goods, or we're buying all these goods and giving them all as cash, there is a reciprocating factor on the other end.
  Now, China doesn't have a lot of foreign direct investment in the U.S., something like $27 billion for last year. Which, to put that in perspective is 5 times less foreign direct investment than Ireland gave to U.S. It's pretty minuscule. So the vast majority of the difference is they're owning Treasuries, U.S. Treasuries. They own 20 percent of all outstanding Treasury debt to the United States, so that's pretty significant. And obviously, they do this to keep their currency artificially low.
Sean Donahoe: Yeah, that's something we have talked about in the Happening Now, is that that side of the little bit of manipulation to
Andrew Page: Yeah. What you will notice is if you look at that U.S. balance of trade, historically, you'll also notice a pretty interesting trend with the fiscal deficit of the United States, that has also started to rapidly increase starting in the '90s, starting in what, '98, something like that is when it peaked?
Sean Donahoe: Sounds about right, yeah.
Andrew Page: And all the after that, pretty much in line with the balance of trade. That was because China has allowed us to keep our borrowing costs artificially low. I think that if we do reduce the trade balance, China is going to buy less Treasuries. That is going to hurt us in the long run, as I said earlier. Our borrowing costs will increase. I mean, they own $1.3 trillion in U.S. debt? I'm not saying they're going to dump it all.
Sean Donahoe: Yeah, that's the number we talked about
Andrew Page: Yeah. They're not going to dump it all overnight. That would be suicide. But all they have to do is ease off the gas a little bit and we will see interest rates start to move up quite a bit quicker over the medium and long term.
Sean Donahoe: Now, the flip side of that is ... And, again let me know your thoughts on this because I always look, "Okay, what's the other side of the trade?" If we are a stronger economy with stronger exports, manufacturing is peaking, general economy is ... I mean, we're seeing an increase in the dollar, right now. That might be under threat in, obviously, continued trade war scenarios. But we're seeing strengthening of the dollar. We're not seeing the flight to safety, which means there's a lot more cash being repatriated. We're seeing a lot more cash being held.
  In a more favorable trade environment for the U.S., does that then create less reliance on selling off debt? I mean, we know that the Fed is holding trillions of dollars in debt, that they're releasing into the markets bit by bit, but do you feel there'll be less reliance on selling off debt if the economy is stronger? Maybe we can buy back some of our own debt, so to speak.
Andrew Page: We could, but I don't foresee any politicians in Washington doing that. I mean, the Trump-
Sean Donahoe: No. Okay, you've got me there. That's a very good point. I always think from the numbers, but as soon as you bring politicians into the mix, everything always changes.
Phil Newton: You're assuming a certain level of competence that the-
Andrew Page: Yeah.
Phil Newton:  
Sean Donahoe: That's my problem. That's my problem right there.
Andrew Page: I mean, we haven't had a tax increase in this country in quite a long time, but we've had major spending increases. In fact, we just had one of the largest tax cuts in recent history. You know, that really did increase the yearly deficit by a lot. It's a short term gain. Politics is really all about short term gains, those next four years, those next eight years, where the economic effects of these tax cuts are really not going to be felt for quite a while after that, maybe 20 years down the road in our next economic crisis, when we have an even more bloated deficit and we need to bail out some banks again, or some other BS.
  Then we're really going to feel the pain again. So it's just like putting the frog in the water and turning the gas up slowly. Eventually you'll feel that pain, if not right away.
Sean Donahoe: Yeah, yeah. Okay. And you can tell what he did as a child.
Andrew Page: Yeah, watching in class about that, like everybody else?
Sean Donahoe: Yeah, I'm joking. I'm teasing. But, yeah. Absolutely. I think you're dead on. The one thing that I'm seeing again right now, and this is the one thing that I think is, for the immediate, the short term, is going to be the pressure valve is ... I'm looking at, for example, the U.S. dollar versus the yuan. I mean, the pressure there is a mess. Right now-
Andrew Page: It is.
Sean Donahoe: ... that is the one-
Andrew Page: Again, yeah. In the short term, we have the upper hand in the short term, for sure. If we can batter the Chinese government down and get them to agree to whatever terms we want, in the short term that would be really beneficial for us.
Sean Donahoe: But the long term, the long term is where the concern is, certainly.
Andrew Page: Yeah.
Sean Donahoe: Now the thing is, and this is one of the reasons why we're swing traders is, we kind of look to the short term because the future could have all sorts of other things going on that affect that long term outlook. Right now I think this is, and to use Phil's phrasing, it's the shoving in the playground, so to speak, to get that little bit of hierarchal dominance. And right now, yeah, I would agree with Andrew on it. We do have the upper hand in the short term.
  Long term, there could be absolute ramifications. Anything can happen, but also on the flip side of that is we all ... We've talked about this. I think I've mentioned it more, the China's long term infrastructure plans. Again, long term, what's the end goal? The end goal I think for the U.S. is more favorable trade terms, more exports or more opportunities for the manufacturing increase in this country, and also redressing some of what is considered unfavorable trade export policies on the international stage for the U.S.
  Now, China-
Phil Newton: Uncertainty is not healthy, but that's really what it comes down to-
Andrew Page: Yeah.
Phil Newton: ... that the longer that any negotiation is dragged out for, whether it's a good thing or a bad thing, whether it's a good deal or a bad deal for whichever side, that uncertainty is bad. The longer it takes to come to some sort of conclusion then the more hurt in the short term is what we're going to experience. And that's what we're seeing in the financial markets. That's what I see. Again, we've already got an example. Two years, Brexit, two years.
Andrew Page: Yeah.
Phil Newton: Just rip the Bandaid off.
Sean Donahoe: Yes, indeed.
Phil Newton: Just do it. Do it.
Sean Donahoe: Indeed.
Phil Newton: Just make a decision, Europe, U.K., we're spinning wheels and we're looking at the ... Just, we want out. Let's go. The vote has been, the die has been set, however you want to phrase it, just get it over with. Just do it. The longer any type of negotiation takes then the more short term pain the man on the street is going to experience.
Sean Donahoe: No, I agree with that 100 percent. You have certainly ... Brexit is a good example of-
Phil Newton: So they're taking too long.
Sean Donahoe: ... of this. Yeah. And again, this negotiation, here's the thing that I do see. I think short term, I think China is going to concede. I mean, if I was a betting man I would say I think China is going to concede, that there are going to be, America's going to come out of this on top of these negotiations. Once they do, markets are going to rebound, certainty's going to feel corrected, but China doesn't-
Phil Newton: Yes. The markets going to do whatever they were going to do before-
Sean Donahoe: Exactly.
Phil Newton: ... but they'll do it with and that's the, that's the-
Sean Donahoe: That is the key point.
Phil Newton: Uncertainty's the killer. When you look at the markets, that's why everyone sitting on cash, like we were talking about before, because they just can't see what's going to happen next, because there's no direction. The wind, the weather vane is just spinning round and round and round. There's no wind of change is developing. You just can't pick. But again, it comes back to what we were trying to say earlier. People are sitting on cash because there's no flight to safety anymore, because previously, 100 years ago you wouldn't have known about these negotiations. You wouldn't have got a blow-by-blow.
  You would have found out six months later that six months ago this deal happened, and here's the signatures, and look, here's all the photos. You know, you would have had that 100 years ago. It was easier to have that flight to safety. Oop, something's going on funky with the stock market. Let's put it in gold. It was easy to take the money, 100 years ago for example, and to be fair when I say 100 years ago we're only talking about 1930s. It seems like such a long time ago. Sorry, 1920s.
  It does seem like a long time ago.
Sean Donahoe: It does.
Phil Newton: Well, it was. It was 100 years ago. But relatively speaking, it's not that long ago. But it was easy back then to have that flight to safety experience while you were waiting six months to see what was going to happen. I don't think we can do that, because there's technological advances, there's speed of information. We are literally
Andrew Page: so quickly.
Phil Newton: ... as soon as Donald Trump does something he's tweeting about it. We know instantly what's been said and what he likes and what he doesn't like. On one hand it's good, but it's also creating this uncertainty because these negotiations are being dragged out and we're getting the blow by blow. It's being dragged out, and that's creating perhaps more uncertainty. Maybe it's being put under the magnifying glass. Again, comparing it to something similar 100 years ago, there's not, that flight to safety doesn't exist anymore while people figure out what's going to happen next.
Sean Donahoe: Andrew, what's your conclusion from this. I mean, where do you think we go from here?
Andrew Page: Well, I hope we go up. I hope the markets go up. I really don't know. China has been pretty quiet. We really only hear from them when the Trump administration implements something, or says something outrageous. China will be like, "Well, if they do that we'll do the exact same thing." They've been playing their cards pretty close to their chests.
  And then again, just like what Sean was saying about Trump's tweets, some days we hear that Trump is happy to come to the table with China and work on implementing some policies, and then the other day he's talking about cutting foreign direct investment and adding additional tariffs on $200 billon of products, but it's all just talk. It's just muddying the water. I think that's one of the reasons that companies are really sitting on cash is, they just don't know what the Trump administration is really going to do.
  So far, the response has been pretty muted, which I think is reassuring. But all the rhetoric and the tweets, I just think it really concerns people. I know it concerns me, trying to figure out what direction the market wants to take. And in the last four, almost five months now, we've been in this sideways channel on the S&P 500 and the Dow. And so I think they're basically in the same boat that I am.
Sean Donahoe: Yeah, very much so. Well, the one thing that I would say that my conclusion from this is, because the world, not only is the market over here watching his tweets, China's watching his tweets. And it's a way of direct, I would say direct negotiation pressure without being behind those closed doors. It's telegraphed to the world. I mean, good or bad, it's a new paradigm in politics, that direct unfiltered.
  It's not playing a game funnily enough we played in the U.K., and it used to be called Chinese Whispers. It goes through one person to another person to another person to another person. By the time it actually gets to your intended target, it's all been diluted down and changed. Well, this is direct.
Andrew Page: Hashtag fake news. Yeah, but this is right from the horses mouth. Yeah.
Sean Donahoe: Yeah. But the interesting flip side of this is that, in terms of a negotiation there is a lot of hype, and obviously a lot of speculation and uncertainty, but this is direct, "Look, this is the way it's going to be." Rather than just rhetoric or political grandstanding like we've seen across the board, there's actually action happening. There was the, again, washing machines, solar panels, there's what's happening on July 6th.
Phil Newton: There's no fluid transparency, to use the buzzwords, which is what we're dancing around I suppose, that transparency of information which is coming straight from the Commander-in-Chief.
Sean Donahoe: Yeah, very much so. It's actually, rather than just rhetoric, this stuff could happen. This is something that we talked about in Happening Now is, because there's stuff that has happened, and is going to happen, rather than just rhetoric it's all like, "Ooh, shit. This is going to take place." We've seen that with the Chinese economy taking a dive, because they suddenly, rather than just being talked about like has been over the last 20, 30 years, there's actually stuff actually going into action.
  I think that's making everyone take a step back. It's like, "Oh, crap. It's not just talk. They're actually doing stuff." That's created the uncertainty because that's new territory for everyone. But ultimately, I mean-
Andrew Page: Yeah. Yes, I know.
Phil Newton: Surprise, surprise.
Sean Donahoe: I know.
Phil Newton: You say you're going to do something and then you go and do it. Who would have thought? Who would have thought that created such the turmoil that we're seeing right now?
Sean Donahoe: Well, everyone's used to politicians not actually doing anything. I hate to say it. Love him or hate him, and again I'm trying to be agnostic in terms of anything in terms of politics one way or another because politicians just get in the way of pretty much bloody everything, but when you actually have a politician who is, and has been seen to enact all of his campaign promises, and this is just another one of them-
Phil Newton: It's a refreshing change, to say the least.
Sean Donahoe: It's a refreshing change, whether you agree with it or not, that a politician is actually doing something that they said they would do, whether you love it or hate it, again keeping the politics out of it, it's a new paradigm for people. They're like, "Oh, shit. He actually is doing what he said." Whether it was Obama, Bush, Clinton, doesn't matter. If they actually start enacting what they're saying-
Phil Newton: You expect a politician to backpedal on promises, because it happens every time, everywhere in the world.
Sean Donahoe: Exactly.
Phil Newton: We see it all the time. We just had that in the U.K. "Oh, you were going to do, oh, you've changed your mind have you? Oh, right. Okay. Surprise, surprise."
Sean Donahoe: It is ridiculous. This is why, as a politician, just get the hell out of the way. Let business do its damn thing. But at the end of the day this is ultimately a negotiation. I think, again there's a phrase when it comes to negotiations that always comes to mind is, the ideal negotiation is, no one gets exactly what they want, but they get a situation they can live with. I think that's what is ultimately going to come out of this. I think the hostilities will end. Stability will return. And I think both sides will have a situation they can live with.
  But again it's a case of a little bit of that game of chicken that we mentioned at the very start. Everyone gets a little nervous, especially as we get closer and closer to that impact, but it's going to be a case of, "Okay, who's going to slap who first as they pass in the wind," so to speak. But ultimately I think this is short term. It's going to ratify. I would give it another couple of months. But in the short term there's going to be a little more uncertainty until that point. Certainly as we get up to that July 6th deadline, that is going to be, to me, the critical factor.
  See what's happening right around that time as they either go into effect or they're rescinded. But I really think they are going to go into place because they need that as a negotiation tactic to say, "Yeah. No, we were serious." Then put that on the negotiation table. But really, $50 billion is not that much. A lot of people are jumping up and down about it but $50 billion, in real terms, ain't that much at all. And that's, I think, something that's lost in perspective.
Andrew Page: . Again, so far what we've seen implemented is pretty minimal. I think it's just a worry of escalation into a full blown trade war that still has people on the sidelines.
Phil Newton: I don't have a pony in this race. Honestly, I don't care one way or the other and I go to great lengths to remain in, essentially, ignorance about a lot of fundamental things. I always play it down. I do keep a finger on the pulse, just so that I've got some sort of awareness of what things are going on. But the details, I go out of my way not to look at them. It has no impact on my day to day life. It has no impact on my day to day trading and investment decisions. When it does, I will pay more attention to it.
Sean Donahoe: Fair enough. Okay. So bottom line from The Three Musketeers here, ultimately we're not in a trade war yet. America tends to have the upper hand in this negotiation. The amount that is being proposed to go into effect on July 6th really isn't that much, and it's more of a negotiation. If these negotiations end, and it's a reasonable outcome for both parties, stability will return and markets will find their new level.
Phil Newton: Hashtag, buy the dip.
Andrew Page: Yeah.
Sean Donahoe: Hashtag, buy the dip.
Andrew Page: Yeah.
Sean Donahoe: There you go. Funny stuff. Anyway, outside of that we'll rock the hell on.
Automated: And now it's time for the Rebel Trader Tip of the Week, brought to you by Ready to take your trading game to the next level? Discover where smarter traders come to get coached by the best, and learning to trade just got way easier. Trade Canyon, smarter traders live here.
Sean Donahoe: Okay. Here's the Rebel Trader Tip of the Week. Cut the shit and check the numbers. Okay. That's a bit brutal, but it's a drum we bang on a lot. There's a lot of BS spouted by the news media with their own agenda, which is your eyeballs on their ad sources and their own market shifting agenda. Pro or against them, and whatever the media's source agenda may be, ultimately look at the damn numbers. It's what we've done here today.
  The real numbers of any given situations and any aspects that could affect a decision, be your own filter, without the bias, and remove the politics, the hype, and all the other crap that clouds the way. It's what we do every week, let's face it, and that's what we're doing exactly here. It's our focus, and it's what makes us the most money. To bastardize the famous phrase of General George S. Patton and Lee Iacocca, trade, don't follow the hype, and get the hell out of your own way.
  Ladies and gentlemen, what do you think about that sentiment? Would you have any further comment on that? Well, let's start with Andrew.
Phil Newton: Ladies first, waiting for that. We were both keeping silent-
Andrew Page: I was like, oh my God.
Phil Newton: ... until you said ladies and gentlemen. It had to be Andrew you went to first. After you. Ladies first, Andrew.
Sean Donahoe: Age before beauty? Oh, yes, yes. Dear me. Okay, so Andrew, outside of the crap that's flying around right now, what would you say about that?
Andrew Page: I'd say that, again focusing on the major news networks all the time, at least in the media, can be a little misleading. I think that varying your news source . Print journalism definitely has quite a bit less hype, I feel, because it's not about instant selling. It's more of a delayed gratification where you have to read the whole article to really get the full picture. I think a lot of the times a little less BS, a little more substance.
  And fact checking is really important. In this day and age of ours where news agencies are really selling the hype, and there's a lot of fake news out there, websites like, using multiple news sources to verify information is required. It requires
Phil Newton: I suppose to get polarized viewpoints on the same topic. I mean, if you're going to ... I always bang the news, and I'd say I shouldn't do it, but it is from the mainstream media. But if you are going to explore, I mean, what you said Andrew, that's exactly the way to do it. Get as close to the source as you can. Get opposing viewpoints so that you can make an informed and balanced decision on the fundamentals. And if that's your thing -- it's not mine, but if it's your thing -- that's exactly the way that you should do it.
Andrew Page: Yeah. I think that getting to the meat of the article and just trying to stay away from editorials, and just finding the information and coming to your own conclusion as opposed to letting your favorite news organization, or your least favorite news organization, make up your mind for you.
Phil Newton: Because they're trying to rattle your emotions, so that you'll get angered or informed. Not informed. But you get angered and emotional about it, so that you can agree with them, or don't agree with them, but it's eyeballs on their products because they're selling advertising. But if you're going to do it, get close to the source. The sad thing is that the closer you get to the source ... Well, the good thing is that there is the less opinions and editorial and emotion-evoking descriptions of how it's done, which is, to be fair, it's what people enjoy. It's entertainment. That's what they're buying into. But the closer you get to the source the less you have of that, which is a good thing but it makes it very dry to read.
Andrew Page: Yeah. Well, that's the thing.
Sean Donahoe: Oh, yes.
Andrew Page: It should be as dry as possible. And what this also really requires is an open mind. Just like in trading, you have to admit when you're wrong when you see new information come out, and go with it. If you fight it and say, "No, I'm right. Everybody else is wrong-
Phil Newton: has my favorite quote on that and it's, "Always be prepared to change your mind."
Andrew Page: Yes. A closed mind is a wonderful thing to lose.
Phil Newton: I mean, there's so many clichéd phrases, but I think if you just have that childlike mindset when it comes to this, with anything in life, but just have that open mind. I mean, while I always bash the fundamentals I've got a full appreciation on the importance of them. I just made my choice not to use them. And I'm okay with that. I've got that open mind to appreciate that they are viable and they can be used when you exclude the fake news and the mainstream elements, which is what my argument against it is. That's what I try to avoid.
  But I don't want to spend the time that it takes to do what you're suggesting, Andrew. Again, I'm fine with that, but if it is your thing that's the way to do it. Just cut the crap and get straight to the meat of the facts, the figures, and formulate a nice, balanced, rounded viewpoint. As soon as you get new information, is that going to change your viewpoint on the subject? I think if you have that approach then you'll do very, very well with the fundamental side and, to be fair, with just life in general.
Andrew Page: Even with technicals, too. I mean, sometimes you've got it set up and, oop, it changes. It's like, "No, I still want to stick to the original setup," and then you lose your shirt.
Phil Newton: Yes.
Andrew Page: Why? Because you wanted to be right? We're not here to be right. We're here to make money.
Phil Newton: Yeah. Has the situation changed?
Sean Donahoe: Well said, well said. We're not here to be right, we're here to make money. I think that's the perfect underscore for this entire set. Yeah, well done there, sir. Okay, with that being said, let's rock on.
Automated: If you've got questions, they've got answers. Sean and Phil dive into the virtual mailbag for this week's Rebel Trader's Quick Fire Round.
Sean Donahoe: Okay, so diving into the Rebel Trader mailbag, I'm going to fire this first one at Mister Phil here. I've been using-
Andrew Page: Mrs. Phil.
Phil Newton: Mrs. Phil. Okay, I'll take that seeing as I have ... We're doing the bitch slapping, slapping the .
Andrew Page: and answer the question.
Phil Newton: What was it, please?
Sean Donahoe: Phyllis.
Andrew Page: Phyllis, yes.
Sean Donahoe: He's going to be Phyllis. That's it.
Phil Newton: The Three Stooges. We should change the show, give up the Musketeers.
Sean Donahoe: There you go. That's actually probably more accurate
Phil Newton: slaps me in the face.
Sean Donahoe: Okay, so here's the question. Yeah, and I'm Moe in the middle going, "Woo-woo-wah." Okay, so anyway. "I've been using the same strategy for years," is the question, "but it's not working anymore. How can I fix it? What steps should I take to analyze where I've gone wrong?"
Phil Newton: I think this is a tough one.
Sean Donahoe: This is a wide question, as well, so many variables.
Phil Newton: I actually, I've answered this a few times to various people in various different ways, over the last couple of weeks, in fairness. It's not necessarily that you're wrong, because there could be many reasons for, I wouldn't say underperformance, but a vastly different performance to what you've currently experienced. It might be that. Like we're seeing at the moment, it could be an extended period of market conditions that are not favorable to your strategy.
  Does that mean that your strategy doesn't work anymore? No. It just means that right this moment the current market conditions aren't favorable for your style of trading, and you need to be aware of that. It might be that it's, if it's not working anymore. If it has worked, and you've got a testing period that has looked back over several years, and hopefully several decades if you've got the data, then there'll be a variety of different market conditions all in there. What you've not seen likely is having traded through the draw down phase of your strategy.
  That's probably all this is, because I'm experiencing that right now. I'm a trend trader, and the markets, broadly speaking, are in a contraction phase. They have been for about two and a half months. That means that my strategy is underperforming, but I'm aware of what's going on. I know that market conditions are not favorable. My action and my resolve to what I'm experiencing is to trade through bad periods of market conditions because I don't know when those market conditions are going to change back to my favor.
  What I do know is, because I've back-tested my strategy over long periods of time, many years and many decades, I've also got real data, also from many years and many decades, I know that on average 65 percent I'm going to make money. The question mark against any strategy, with whatever your performance expectation is, is which 65 percent are going to make money? Right now I'm experiencing that period of time in my strategy where I'm in the 35 percent of the time my strategy's not great.
  I'm okay with that, but that's just like any other business. Not every business makes money every day. Sometimes you get days with no customers and all refunds. That's what I'm experiencing right now. How do you deal with it? You need to evaluate, is it market conditions? Am I doing everything that I'm supposed to be doing when it comes to strategy? Am I overlooking something? You need to ask all those questions. What steps should you take?
  The first thing that you should do is do nothing, because if you're doing everything right, and it is just market conditions, then likely there's no action for you to take. It's difficult to trade through those periods of draw-down, but when you've back-tested your strategy it was just a number on spreadsheets and you didn't have that emotional experience. You just look, "Oh, that's a draw-down I can handle. It's a good strategy," you know, when you've tested and back-tested and all the rest of it.
  But when you trade through it and experience it in real time, that's where it becomes difficult. My response is do nothing. You don't trade through it, and that's the difficult thing to do but, for me, it's the right thing to do.
Sean Donahoe: Okay. Andrew, any comments on that?
Andrew Page: I think you really nailed it on the head there, specifically the point about strategies working under certain conditions. I have noticed throughout my trading experience and my time is that some strategies work really, really well in certain market conditions, and then they're just dog shit in other ones.
Phil Newton: Volatility strategy is a good example of that.
Andrew Page: Yeah, exactly. You have-
Phil Newton: It requires very specific circumstances. You couldn't trade it every day.
Andrew Page: No way, but I trade it three or four times a year, and it almost always makes a home run. But it's all about the waiting. It's like being a spider in a web, waiting for that fly to come to you. If you have a specific strategy like the volatility strategy that I use, and you're trying to apply that to every situation, you're going to lose every time. It won't matter if you've got all the luck in the world. But if you have the patience and the discipline to wait. Give up some trades that may look good, but aren't meeting your criteria, you're going to have a lot more success.
  I think a lot of people, they develop one stratey that did well over a couple months, and they think, "Oh, this is it. I've got it." There is no Holy Grail strategy for every situation. I know everyone's always looking for it, but it's not there. You have to have an arsenal of strategies. That's what I really like about our Trade Canyon platform, we've got all these different viewpoints coming in, different expertises, and these different strategies that work at different times. That's what you need to be a successful trader.
  So I would say people, develop more one than one strategy. Be really honest with yourself about your testing, and about how you're going to perform with your emotions when real money's on the line. Because I guarantee you, your mindset is going to change from the paper trading to when you have real cash on the line.
Phil Newton: Perfect.
Sean Donahoe: Very much so. Perfect. Couldn't put it better myself. Okay, so next question. I'm going to throw this one at Andrew. "With all this market turmoil, do you think we're heading to a bear market?" We get that almost on a daily basis. Again, it's indicative of a lot of the instability and the uncertainty in this market. It's something we almost address every week on the Happening Now report.
Phil Newton: Another way of saying this is, is it too late to buy, which is another along the same vein.
Sean Donahoe: Very true, yes. So Andrew, what do you think, sir? I mean, I know we've talked about this a lot, almost every week of the Happening Now.
Andrew Page: Well, if I knew to a certainty, if I knew to a certainty, I would be a very rich person if I knew to a certainty where the market was going on any given day. I will say that there is a lot of uncertainty out there and that just really makes the question difficult to answer. I mean, for the last five months the smartest minds in the world have basically let the market drift sideways. I think that I couldn't give you a clear conclusion.
  If we see a trade war form, I think the chances of a bear market are really high, because the last couple times we've had trade wars, the most recent one was in 2002 to 2003, we saw the market fall at 40 percent. Now, is that going to happen this time? I don't know, but chances are that if a trade war does form we're definitely going to enter bear territory, if it doesn't-
Phil Newton: Probably quite speedy, as well, if that
Andrew Page: Sorry, what?
Phil Newton: Probably quite speedy, as well, if that scenario is to happen.
Andrew Page: Yeah, yeah. It'll be much quicker than they were in the past, that's for sure. I mean, movements that were taking weeks in the past are taking hours now. So, yeah. I'm sorry I can't give you a much more clear answer than that. I wish I could. I would say that if you're really worried, or if you need the money for retirement, to be careful. If you're going to need the money in the next couple years, if things go completely sideways, how much trouble are you going to be in if your money vanishes?
Sean Donahoe: That's a very good point.
Andrew Page: You know, if you've got a long time horizon, buy and wait. And if the trade war happens, buy more. That's .
Sean Donahoe: Yeah, that's exactly it.
Andrew Page: Because 20 years from now the market will recover. If it doesn't, and we've been in a 20 year depression, you're going to have a lot bigger problems than worrying about your retirement account.
Sean Donahoe: I would say be aware, as well. Be aware of the market. Keep an eye on it. Look at the sentiment. But also I think if you want a good indication of whether we're going into bear territory, look at the levels where the main indexes are hovering around. Like, the S&P 500, it was tickling the 200 day moving average. Right now it's a little more confident. It's hovering around the 50 day moving average. I'm just using that as a point of interest. The Dow has been consistent around the 200 day moving average.
  I think if it pushes down below that much more, or if it punches through that and stays below there, that would be a big warning sign from a general market. But those are my two things. And then again, if we see a steady increase in volatility or anything like that, that's where I would start, then, being a little more concerned. Right now, it hovering around that, using that as a resistance to ... I hate to use that phrase because it's a phrase that we absolutely do not, but I'll do it as a point of interest.
Phil Newton: I think without visuals, though, it does help as a descriptor for what you're talking about. I'll let you off on this occasion, Sean.
Sean Donahoe: Well, thank you very much. Very kind of you. But yeah, as a resistance point it is fairly much adhering to that. If it pushes through I think you're going to see -- because I think everyone's using that as a marker so it's kind of a self-fulfilling prophecy -- but if it punches through that I think that's when people are going to now say, oh, that's when the question is really going to be asked, "Are we moving into bear territory?" And I think that can create a sentiment shift which might, again, then start a self-fulfilling prophecy. But it's going to take a significant event to push through that, I believe.
Phil Newton: That's what we've seen develop and unfold, in front of our eyes, with the trade wars. This is going to be the, I think, the big key event that's going to determine what's going to happen over the next few years.
Sean Donahoe: Which we have been calling for for a long time, and we're saying, "Hey, we need a healthy," and I emphasize, underscore, put it in ... Yes.
Phil Newton: A slow, healthy bear market is what we've advocated. That would be a good thing. Now, if it's a bad thing ... Sorry. If the trade war happens, as Andrew is suggesting, we're going to see a fast bear market, which is going to be, I think it would be a bad thing. I mean, it's going to be great for profits, and I know I'm going to make a lot of money in a very short space of time.
Sean Donahoe: Absolutely.
Phil Newton: But from an economic point of view it's going to be a bad thing. While healthy bear markets can be painful, slow, lazy, everyone gets to adjust, or a shock to the market like we saw in 2008, that's going to be bad. Bad-bad-bad. Profitable, but bad.
Sean Donahoe: Okay. There you go. Okay, last question. I'll put this out to the entire audience. I'm including myself here. "Do you think crypto will make a comeback?" We've seen a lot of people crying in their crypto-Wheaties, stroking their crypto-kitties, and hoping for the best, trying to spend those Bitcoins and no one picking up the ball because all of the real world adoption is slowing down. Obviously the bubble has burst.
Phil Newton: I might even attempt a serious answer to this question, Sean. What do you reckon?
Sean Donahoe: Oh my God. Okay everyone, drum roll please. Serious answer from Mister Newton. Go ahead.
Phil Newton: Cryptocurrencies. Generally speaking, the problem was it was new, shiny, hot button, everything was hyped. Now what we're seeing is that reset button is being kind of set. The hype train bubble has kind of been popped. There's still certain hype around the whole crypto markets. From a technology point of view, it's very, very interesting. As a currency point of view, I'm still not as excited. Will it make a comeback? I don't think we're going to see the heady heights that we saw onto the Bitcoin get back there, as regards to a comeback, so I don't think that will happen.
  But to be taken as a serious digital currency, to have that as a viable alternative to traditional currency, it needs stability. Volatility, great. Everyone's fine. We can remortgage the house. Everyone's been through that. That's hype. That's not good. That's not good for healthy markets. So some stability is needed, and maybe almost a little bit of stagnation in the volatile movements is needed for it to get some serious traction to be used as a currency.
  What's not helping the situation is where ... Was it China has just banned one of these? I can't remember which country it was, but I did see an article the other day about it, which is preventing mainstream use of currency in certain areas of the world. That's what we need to see is that transition from overexcited investment type opportunities, and it transitioning into a stable alternative for mainstream use.
  Just to put it into perspective, right now to use as a mainstream currency I can literally buy it now and then try and pay and buy a physical good in five minutes time, and the price may be several hundred dollars difference. And that's going to dramatically impact the price of goods or services, either for you or against you as the buyer or seller, and that's not good for business. That's what we need is stability. Will it make a comeback? No, I don't think it will. Will there be a future in cryptocurrency? Possibly.
  You know my view, Sean. I am anti-cryptocurrency as a currency. Technology, great for the future, but as a currency, I'm still not happy with it but I'm just trying to kind of give it a little bit of a serious answer of what needs to happen.
Sean Donahoe: Andrew, what do you think, sir?
Andrew Page: I agree with what Phil was saying about the hype. There's definitely way too much hype for what it is right now. I think going into the future what I would like to see is, a lot of these shitty -- excuse my French for that -- but those terrible ICOs go away. A lot of them are scammy. They don't really have a ...
Phil Newton: Well, but seeing the FDC -- is it the FDC -- clamp down on that. I think they're going to start to really shake the
Sean Donahoe: Yes, absolutely. And the SEC.
Phil Newton: They're really going to start to shake it up in the next few months, so your wish is granted in the next few months, maybe.
Andrew Page: Good, good. Because if we can get some serious players in there, obviously some of the larger coins: Bitcoin, Litecoin, Ethereum, Ripple. Those are just the ones off the top of my head. If we can see those survive and really become used in day-to-day activities, not just fringe transactions, which really they still are. I mean, I know that Bitcoin is becoming more useful and people are using it for a lot more things, but I'm just not seeing it.
Phil Newton: There's not mainstream usage. That's
Andrew Page: Yeah. It's a currency. It needs to be mainstream, it needs to.
Sean Donahoe: Yeah. It needs that stability, but the one thing is, again because of the devaluation of Bitcoin there's less demand for people to switch and start accepting it. There's less-
Phil Newton: No, it's not sexy anymore. Yeah.
Andrew Page: Yeah.
Sean Donahoe: Well, the volume has dropped out of Bitcoin altogether. Processing of it, again there's a couple of guys I know who were actively, I mean really heavy into the mining of cryptocurrencies and Bitcoin. They sold all their equipment. They're just trading cryptocurrencies now, and that's all they're doing. But at the end of the day the demand for Bitcoin has just tanked. Volume and trading has tanked. The price has tanked. And Bitcoin is the tide that lifts your boat.
Andrew Page: Yeah.
Sean Donahoe: Funnily enough. The problem is, while there's a lot of hype around ... Well, it's not so much cryptocurrency, no it's blockchain. And we've said, yeah, blockchain is actually a really interesting technology, but even Steve Wozniak came out the other day and said, "Blockchain is really overhyped." It's almost like blockchain is the new bubble in some ways, but we're going to also talk about ICOs in the BS of the Week in a moment. But at the end of the day I think crypto has a place, but that place has-
Phil Newton: No, not in its current iteration. Yeah.
Sean Donahoe: ... not been defined. No, because a lot of the, like you said is, the hype was around, "Oh, look bro. Here's my Bitcoins. I've got all these coins with a Z." You know, that, "Check my gains, bro. Check my coins, bro." Because it was the bubble thing. It was the investment, the, "Oh, look at the money I'm making." Well, did you realize any of that money? Did you sell, or has it all crashed now and now you're negative? Well, yeah.
Phil Newton: Big shit, bro.
Sean Donahoe: I'm sorry, bro. Yeah. I mean that has pretty much evaporated. The problem is that people are now, because the hype and the interest is gone. I think that's going to be the challenge for any crypto coming back is, in reality, where does the stability and the growth actually be realized? And is there going to be enough interest to make that happen? That's the transition period. I think long term there is a place for a token-ized economy, and I've got to put this out of what I would call cryptocurrency.
  Let's take it as some sort of token-ized unit and the technology behind it, but how that ratifies out and grows is going to be very different. But then again, it wasn't too long ago, a few years ago, that Bitcoin and crypto had another bubble that burst. It then grew into this bubble, which was more wide-stream, that burst. Over time there's going to be some iteration that is going to rise up. And again, let's hope it doesn't become another hype bubble. But stable growth over time I think is potentially there, absolutely, but it's got to go through a transitional and perception evolution first.
Phil Newton: Price stability, mainstream usage, they're the two key components to that I think.
Sean Donahoe: Now the interesting thing is, if one of these big entities, and this would force the adoption if Amazon, Google, or Facebook tried to do this in the past, but if they did something along those lines of coming up with their own-
Phil Newton: Facebook tried their own. What I find interesting is Facebook did actually talk about this, sort of 2007-ish-
Sean Donahoe: Yeah, yeah.
Phil Newton: ... as a Facebook poll, and I actually thought that was quite exciting back then. I don't know if you remember, because we were doing trade runs at the time. We were talking ... I was really excited. You can earn digital money from nothing, playing games on Facebook, essentially, and convert them to physical goods on Amazon. That, for me, even now that's quite revolutionary, but back then that was groundbreaking. And they just dropped it, they really did. If they'd stuck with it ...
Sean Donahoe: Yeah, that would've been interesting. But I think there is a potential, and the one that strikes me as the one that's going do this is probably Amazon, because obviously that's the buyer environment, rather than Facebook which is a social environment. But if anyone's going to do it, my money, my money, my digital currency would be on Amazon because again, if there was a way for them to token-ize and do something in there-
Phil Newton: They've got the buyer infrastructure to make it mainstream.
Sean Donahoe: Yes, exactly.
Andrew Page: I agree.
Phil Newton: And they've got the ability to offer incentives for usage, as well. Sorry, Sean. I get quite excited because, if it went mainstream it would probably be Amazon that did it, taking it mainstream, because they've got the infrastructure as you were rightly saying.
Sean Donahoe: Yeah. Now with their AWS services, which is their technology services, and the gig economy, again with their Prime Now and everything else, can you imagine that they have their own currency on a credit card, that you can then buy and mine? And yeah.
Phil Newton: It's exciting.
Sean Donahoe: That would be the technology.
Phil Newton: And they've got a stable price as well for it. That's when it becomes really exciting for me.
Sean Donahoe: Yeah, no. Again, guys this is pure speculation. This is me futurist a little, putting on my futurism hat here.
Phil Newton: No, I'm with you. I'm kind of with you on this one. I've never been anti an alternative currency. It's just in its current iteration, it's just the hype train behind the current iteration that makes my eyes roll. But the technology and the prospect ... I hate carrying cash. I truly hate it. It's filthy. It's dirty. There's just something about it. I mean-
Andrew Page: If you want to give me your cash then, that's fine.
Phil Newton: To be fair, I did a brief stint very early on in my teenage years as a cash teller, and on the first day I was handed, literally, a mountain of cash. "Look at all that money." None of it was mine was the first realization. And then an hour later I'm counting it by hand, it was like my hands were, I was like, "Oh my God. Where's this been?"
Sean Donahoe: It's been in the guy's pocket, next to his crotch all day.
Phil Newton: Yeah. Yeah, you get the point.
Sean Donahoe: He's now realizing just how dirty that was. Now, all these years later.
Phil Newton: The point is, so debit cards, this cashless society, for me, I'm really behind that. You know, you can plug your phone into your debit card and credit card these days and scan your phone. You know, there's going to be a chip implant soon, where it bio-confirms that it's genuinely you. You've got to cut someone's finger off to try and scam someone. Ultimately, that technology, that future, that really does kind of excite me, the possibility of which way it's going to go.
  I mean, there's going to be people that argue against freedom. I mean, I did minority reports. The world in the future, in maybe 20, 30 years time is eyeball scans, DNA scans. "Welcome back, Mister Newton. Did you enjoy your purchase?" I'm looking forward to that day, I really am because I'm quite happy with the fact that, hey, there's no such thing as privacy anymore. People are going to be jumping on that bandwagon about privacy not existing anymore. It went many years ago. Just give up. Give it up and just embrace what the future's going to hold. That's when it becomes really exciting for me.
Sean Donahoe: Absolutely. Now, to take the Amazon thing just one step further, and again, further consideration here, think about this. Amazon is global. Amazon is a hub for every vendor manufacturer on the planet, and the outlet source to direct consumer. If you take that, and then we'll say even the other big player in the world, Alibaba, and look at
Phil Newton: His 40 thieves.
Sean Donahoe: And his 40 thieves, there you go. Let's not go there.
Phil Newton: I like that.
Sean Donahoe: But you get the idea. It's again that they are the central hubs for global economies and, if you think about it, that's what cryptocurrency is ideally aimed at is the globalization as a decentralized currency. If Amazon created, almost like a Ripple I hate to say, which is more centralized than decentralized, but it was an open type transactional ledger, faster transactional processing, I think there's a huge opportunity there but it would take something like that, monumentally, to create a global acceptance of cryptocurrency. But a lot of these micro, I mean there's literally hundreds and hundreds and hundreds of these microcurrencies right now, which are just there for ... It's playing Pokemon.
Andrew Page: Yeah, speculation.
Sean Donahoe: It's speculative. Absolutely. I think-
Phil Newton: If Elon Musk has his way, and we are soon to be transported to Mars, we're going to need an easier way to pay for things, and it's going to be a digital currency.
Sean Donahoe:  
Phil Newton: No one's carrying cash around with them.
Sean Donahoe: Absolutely. That's a very valid point. So anyway, yeah. I think there is a future for it, but it needs to go through a massive relaunch. Okay, rock on.
Automated: Don't forget, if you have a question you want to ask Sean and Phil just go to and your question may be featured on a future show. Uh-oh. What's that smell? It's time to call out the Wall Street shenanigans, mainstream confusion, and outright high jinks and hokum of so-called experts. Yep, it's time for Bullshit of the Week.
Sean Donahoe: All right, Bullshit of the Week. Okay, and this is kind of crypto released and related. Facebook, funnily enough, a few months ago decided, "Hey, anything to do with cryptocurrency or ICOs or binary options, anything dodgy in the finance base is bad." Then Google followed suit and said, "Well, if they're banning it, we better ban it too." They did a blanket ban on all cryptocurrency ads, their social media site. That is, until yesterday. Facebook announced that it's revising its blanket ban of all cryptocurrency ads.
  The announcement highlights that this is a revision of their overall policy, rather than a removal of the policy. It's just a revision. So, for example, advertising binary options and ICOs is still banned, but ... This is a direct quote from their press release and announcement, and again I'll link those in the show notes.
  "In the last few months we've looked at the best way to refine this policy," in other words, much money was changed hands behind the scenes, "to allow some ads, while also working to ensure that they're safe. So starting June 26 we will be updating our policy to allow ads that promote cryptocurrency and related content from pre-approved advertisers, but will continue to prohibit ads that promote binary options and ICOs."
  Now, what this basically means is, and I'll translate it for the poor farm boy in the room over there.
Phil Newton: Are you trying to tell me that maybe there's been big fat brown envelopes being involved somewhere, Sean?
Sean Donahoe: Well, I think so, in dark garages and what have you. Very beat and trading places, I'm sure.
Phil Newton: Yes.
Sean Donahoe: I think what's happened is there's been a lot of lobbying, and I'll put it in quotes with a question mark next to it, that has happened behind the scenes. But that, again, pre-approved means there's going to be a very rigorous validation process.
Phil Newton: I think that's a good thing, personally. I think it's a good thing. You know, they didn't have enough information. They put a blanket ban out. And they've taken our advice, which is what? With new information, they're making revisions. I think that's a good thing. It's bullshit, because maybe Brian and blokes have been involved, and how do you get pre-approved? They don't make what they require to become some type of approved person, they don't make these things known if you don't have a big fat brown envelope to hand over, somewhere. They don't make it easy.
Sean Donahoe: Well, they've got an application. Actually, you could look at that I think. But again, it's pretty extensive, but it's phase one of several. I mean, they've got questions-
Phil Newton: Does it look likely to pass?
Sean Donahoe: Yes. "Why are you applying?" That's an example. I've actually got the application form up in front of me. It's because it's educational cryptocurrency. It's crypto industry news. It's other content related to it. "Okay, please briefly describe the products or service. What's your account ID? What's your website," so they can check it. "Do you currently hold any of the required licenses and certifications," for securities and trading, obviously, if you're doing any of that. "Is your company publicly traded? Any additional information?" And then provide all of your business name and address. And then boom-boom-boom.
  I'm sure that's then the first step in a larger conversation for validation, and that you're not a shell for another company or an ICO .
Phil Newton: I think it's a good thing.
Sean Donahoe: I think it's a good thing on one hand, but I think again, it's one of those ...
Phil Newton: It's open to abuse, as well.
Andrew Page: Oh, yeah.
Sean Donahoe: Yeah. And I think it's, I honestly do think it's a brown envelope. I mean, that's got to have been a brown envelope thing to back off. But I think also they did get a lot of pressure because there are people who are interested in cryptocurrency news and everything else. But if you remember when this was first enacted, and the same when Google did the same thing, again it just shows the volatility and the susceptibility of Bitcoin. Those markets dropped, quite hard, on those days that they were announced. So it's going to be interesting to see. It's another kick in the balls, but-
Phil Newton: That just pilots the liquid market's behavior.
Andrew Page: Yeah, very much so.
Phil Newton: Because, to be fair, not advertising on various courses and whatnots on an advertising platform. That should not impact a liquid market the way that it did.
Sean Donahoe: Yeah. That's exactly it. I mean, it does. It's a highlight of the problem that we've been banging on about for months.
Phil Newton: It's not ready to take as a serious trading opportunity. Again, I'm using the wording, trading, as post-investing. It's not a trading vehicle yet, for me. It's too volatile. You can't stand at both sides of the market. It's not ready yet. It's immature, from a markets point of view, to be viably traded on a regular basis by any serious player.
Sean Donahoe: Agreed. Agreed 100 percent. Andrew, any comments on-
Andrew Page: You can take both sides on certain coins through futures contracts for Bitcoin, but that's just Bitcoin.
Sean Donahoe: And it's not actually ratified in Bitcoin. It's cash settled.
Andrew Page: Yeah.
Sean Donahoe: At the end of the day, it's a side bet. it's
Phil Newton: So it comes back to, it comes back to, if Beanie Bears become popular to trade on Ebay again, and that's a bad use of my time, then that's what I'll be doing.
Sean Donahoe: Indeed. Indeed, indeed. But yeah, there's the BS of the week, is Facebook's policy backpedaling? Quite likely. I'm not saying anything definitive, that there's any real brown envelopes and-
Phil Newton: Are you trying to tell me that you're going to be starting fake news, Sean? Is that what you're trying to say?
Sean Donahoe: You never know, right here. But let's just say there's a speculation that there's a little bit of funding play behind the scenes, a little bit of lobbying. Let's qualify it as lobbying.
Phil Newton: A nudge is as good as a wink to a blind man?
Sean Donahoe: Indeed. Indeed. So, yeah. All good fun. Anyway, with that being said, ladies and gentlemen that is the end of the show. Thank you for listening, do appreciate it. Please remember this show is not free. It will cost you a five star review. Just go to, where you can subscribe and review us. You'll also find some free training there, basically what we do, how we do it, why we do it, and the exact ways we do it.
  If you also review and subscribe, it'll also help us get this training and talking and conversations out to more traders and traders and investors just like you.
Phil Newton: Yes. If you'd like to connect with us on Facebook, while our accounts are still active on Facebook after the giving us ... If our Facebook page is suddenly disappearing, you'll know why.
Sean Donahoe: Yes.
Phil Newton: But while it's still there, if you'd like to connect with us on Facebook or Twitter, you can get to us on the same link, And then what have we got coming up in next week's show, Sean?
Sean Donahoe: Well, next week we're going to be talking about a little bit, we're going to go rawhide here. We're going to do a little bit of portfolio wrangling. I could burst into the Blues Brothers rendition of that song, but I'm not going to.
Phil Newton: Please don't.
Sean Donahoe: Yeah. Please, for the love of God, do not do it. But, yeah. How to get your portfolio under control. How to rein them in and get those dogies rolling. We'll be covering that next week. Any last words, gentlemen? I'll start with Andrew.
Andrew Page: Oh, you know. Just make sure ... I think really one of the big takeaways from today's show was just, do your research.
Phil Newton: Surprise, surprise.
Andrew Page: Don't let other people tell you what's going on. Get in there, get your hands a little dirty, do some research, and keep an open mind. The market likes to change on a dime, so be ready to change your outspecs and your outlooks your prospects.
Sean Donahoe: Your outspecs.
Phil Newton: I don't know .
Andrew Page: Outspecs. Here we go.
Sean Donahoe: That's a good new word.
Andrew Page: I'm just trying to be more efficient, combine the words.
Sean Donahoe: That's it. I like it. I like it.
Phil Newton: I think that's a perfect place to end the show. That's an excellent final thought.
Sean Donahoe: Perfect. Okay. Rock and roll, ladies and gentlemen. See you next time. Take care for now.
Phil Newton: Bye for now.
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(Click the time stamp to jump directly to that point in the episode.)

[00:10] Show Introduction

[00:02:41] Sean: We are going to talk ‘are we in a trade war?’ We’re going to be tackling that in this week’s show and we’ve got the band together to tackle this.

What started all this? - Let’s go back to thebeginning with Trump on the Stump (Campaign promises)

[00:03:49] Sean: First of all, are we actually in a trade war? Andrew, what do you think?

[00:03:58] Andrew: If you’re watching any of the major news networks, people have been talking abut this ‘trade war’ for three and a half to four months now.

[00:04:12] Sean: At least January.

[00:04:18] Andrew: There’s been a lot of talk, there hasn’t really been a lot of activity. There have been tariffs placed on steel and aluminum which have affected mainly the EU, Canada, and Mexico and then there has been the tariff placed on Chinese goods, a 25% tariff on a variety of goods and then the Chinese have retaliated against the US with 5% tariffs on a variety of agricultural products.

[00:05:04] Sean: They’re slated, they’re not implemented yet.

[00:05:27] Andrew: Yes, they are most likely going to be implemented less trade talks happen.

[00:05:34] Phil: It could still change from what I hear. It’s entirely possible it will happen but unless something clever happens at the negotiation table then it could still change again.

[00:05:50] Andrew: Sean nailed it on the head last week by saying it’s like a big game of chicken.

[00:07:04] Sean: Here’s the thing that to me is a very much proving it’s negotiation, it’s not that they’re raising it, they are matching the tariffs exactly.

[00:08:52] Sean: Let’s just establish, we are not in a trade war yet. Despite what the news media likes to hype up and all the panic they like to generate, I think that’s more damaging than anything else right now.

[00:09:12] Phil: Markets haven’t reacted.

[00:09:15] Andrew: If we see another round of escalating tariffs then I would say were in a trade war.

[00:12:00] Sean: The reality is, this administration is applying a lot of pressure and China is starting to buckle economically.

[00:12:10] Andrew: yes, in the short-term China is definitely going to be in the hot seat if they want to continue to down this path.

[00:16:40] Sean: The fears and the concerns are based on what hasn’t been implemented yet and what could be coming down the pipeline.

[00:18:48] Phil: Price is behaving in a very particular way. From my point of view - news to one side - that’s what I’ve been doing this week, it’s very short-term, it’s not hold on to it type of trade.

[00:21:43] Phil: Personally, I’ll be waiting to see how the markets react to then make course corrections and adjustments.

[00:27:17] Andrew: You know the trade wars, we may come out on top versus China but we’re still going to be hurt by it. Everyone loses in a trade war.

[00:30:19] Phil: One of the big things that’s changing, technological advances have meant that the man on the street is more educated.

[00:31:16] Sean: If you look at the balance of trade, I’ve got two charts comparing back to 1950 versus the last ten years, you can look on the show notes ladies and gentlemen to refer back. You can see from the 1990s, huge growth in imports and a massive drop in US manufacturing production.

[00:33:25] Phil: Maybe we’re moving into a new phase of how the financial markets are traded because traditional expectations that are clearly not unfolding.

[00:33:54] Andrew: I think the Trump administration wanting to reduce the trade deficit with China is not a bad thing but I think a lot of people fail to understand is that the balance of trade was part of something called the Current Account Balance which is an overall balance between two countries and it does balance to zero. So if we are giving them all these goods, there is a reciprocating factor on the other end.

[00:38:53] Andrew: We have the upper hand in the short-term for sure, if we can batter the Chinese government down and get them to agree to whatever terms we want, in the short-term that’ll be really beneficial for us.

[00:39:54] Sean: The end goal I think, for the US is more favorable trade terms, more exports or more opportunities for the manufacturing increase in this country, and also redressing what is considered unfavorable trade export policies on the international stage.

[00:46:53] Phil: There’s more fluid transparency. That transparency of information which is coming from straight from the Commander-in-Chief.

[00:50:09] Sean: Ultimately, I think this is going to be short-term. I would give it a couple of months. Certainly, as we get up to that July 6th deadline, that to me is going to be the critical factor to see what’s happening around that time.

[00:52:20] Rebel Trader Tip of the Week

[00:52:43] Sean: Cut the shit and check the numbers. It’s a drum we bang a lot but there is a lot of BS spouted by news media with their own agenda, which is your eyeballs on their ad sources and their own market shifting agenda. Pro or against and media source or agenda, look to the numbers, the REAL numbers of any given situations and any aspects that could affect adecision. Be your own filter without the bias and remove the politics and hype. That’s what we do every week and that’s our focus and it’s what makes us the most money.Tobastardize the famous phrase ofGeneral George S. Patton & Lee Iacocca,“Trade, Don’t follow hype and get the hell out of your own way.”

[00:54:06] Andrew: Focusing on the major news networks all the time can be a little misleading. Varying your news sources up, print journalism definitely has a quite a bit less hype because it’s not about instant selling.

[00:55:08] Phil: Get as close to the source as you can, get opposing viewpoints so that you can make an informed and balanced decision on the fundamentals.

[00:56:30] Andrew: What this also requires is an open mind. You have to admit when you’re wrong when you see new information come out and go with it.

[00:58:00] Andrew: We’re not here to be right, we’re here to make money.

[00:58:23] Quickfire Round

[00:59:03] Sean: I've been using the same strategy for years but it’s not working any more, how can I fix it, what steps should I take?

[00:59:27] Phil: It’s not necessarily that you’re wrong because there could be many reasons for a different performance for what you’ve currently experienced. It could be an extended period of market conditions that are not favorable to your strategy.

[01:00:52] Phil: What I do know is because I’ve tested my strategy over long periods of time, many years, many decades, I’ve got real data, I know that on average 65% I’m going to make money.

[01:03:03] Andrew: It’s all about the waiting. If you have a specific strategy like the volatility strategy that you use and you’re trying apply that to every situation you’re going to lose every time. If you have the patience and discipline to wait, you’re going to have a lot more success.

[01:04:30] Sean: With all this market turmoil do you think we are heading to a bare market?

[01:05:05] Andrew: If I knew to a certainty I would be a very rich person. There is a lot of uncertainty out there so it makes the question difficult to answer. If we see a trade war form, the chances of a bare market are really high.

[01:08:16] Sean: Everyone’s using that as a market so if it’s kind of a self-fulfilling prophecy but if it punches through that I think that’s when the question is really going to be asked, are we moving into bare territory.

[01:09:47] Sean: Do you think Crypto will make a comeback?

[01:10:18] Sean: The bubble has burst.

[01:10:21] Phil: Generally speaking, the problem was it was new, everything was hyped. Now what we’re seeing that reset button being set. From a technology point of view, it’s very interesting, as a currency point of view I’m still not as excited.

[01:12:36] Phil: Will it make a comeback? No, I don’t think it will. Will there be a future in Cryptocurency, possibly.

[01:12:52] Andrew: I agree with what Phil was seeing, there was definitely way too much hype. What I would like to see is these s***** ICOs go away. I know Bitcoing is becoming more useful and people are using it for a lot more things but I’m just not seeing it. It’s a currency, it needs to be mainstream.

[01:14:38] Sean: The demand for cryptocurrency has tanked. Bitcoin is the tide that lifts all boats. I think crypto has its place but that place has yet to be defined.

[01:17:58] Sean: I think there is a potential and the one that strikes me is probably Amazon because that’s the buyer environment.

[01:18:23] Phil: They’ve got the buyer infrastructure to make it mainstream and the ability to offer incentives as well.

[01:23:00] Sean: There is a future for it but it needs to go through a massive evolution.

[01:23:19] Bulls**t of the Week

[01:23:40] Sean: Facebook a few months ago decided, anything to do with Cryptocurrency or ICOs or anything dodgy in the finance space is banned. Then Google followed suit, they did a blanket ban until yesterday Facebook announced it revising into blanket ban. The announcement highlights that this is a revision of Facebook’s overall policy, rather than a removal of the policy altogether.

"In the last few months, we’ve looked at the best way to refine this policy — to allow some ads while also working to ensure that they’re safe. So starting June 26th, we’ll be updating our policy to allow ads that promote cryptocurrency and related content from pre-approved advertisers. But we’ll continue to prohibit ads that promote binary options and initial coin offerings.”

[01:25:30] Sean: I think what’s happened, there’s been a lot of lobbying that has happened behind the scenes.

[01:26:00] Phil: I think that’s a good thing personally. With new information they are making revisions.

[01:26:20] Sean: They’ve got an application but it’s pretty extension and it’s phase one of several.

[01:29:27] Sean: There’s this week’s bulls**t of the week, Facebook’s back-pedalling. I’m not saying anything definitive, that there’s any brown envelopes, let’s just say there’s a bit of speculation that there’s a bit of fun being played behind the scenes, let’s qualify it as a lobbying.

[01:30:00] Sean: Okay, that is the end of the show. Thank you for listening to the show!Please remember that this show is not free.It will cost you a five-star review, just go to you can get access to previous and future shows. And if your review and subscribe it’ll help us get this training, talking, and conversations out to more traders and investors like you.

[01:30:34] Phil: If you’d like to connect with us on Facebook or Twitter, you can get to us atthe same link: What have we got coming up in next week’s show Sean?

[01:31:00] Sean: We’ve got a bit of portfolio wrangling. How to get your portfolio under control and reign them in. Any last words?

[01:31:26] Andrew: One of the big takeaways from today, do your research and keep an open mind. The market likes to change on a dime.

Resources & Links Mentioned in This Week's Show

3 Key Takeaways From This Show

  • Vary your sources of information to try and avoid the bias - It allows you to take a REAL perspective.
  • Don't be afraid to dig deep and cut to the facts and not the opinions.
  • Recognize the twists of negotiations and the bigger picture. See how everything is interconnected and position accordingly.

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