Last week was shaping up to be another typical week -- nothing too exciting, just normal ordinary trade. Come Friday, however, various news media headlines blasted that the phase-one trade agreement had been signed between the United States and China. Excitement soared throughout the market place and prices spiked. Those headlines were misleading though, because the phase-one trade agreement was not signed. President Donald Trump shared his excitement noting that progress had been made in trade conversation and that the two countries were looking forward to signing the agreement in the near future.
At this point you're probably thinking, "Well, what's the problem? I don't know many producers that grumble about prices going up?" True, but if the trade agreement wasn't signed, then what drove the market -- emotion? Allowing emotion to drive the market place is a scary situation to be in. If emotion is the sole factor driving the market, it's just as easy for the market to rally higher, as it is to fall lower. Markets work best with active and informed participants, and in understanding what's happening in the market place our job as analysts is to be transparent and help readers understand why the market moves the way it does.
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ShayLe Stewart can be reached at firstname.lastname@example.org
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