Welcome in, everyone. What a fascinating week in the markets. Stocks are climbing while tariff news seems contradictory—a perfect time to apply some game theory to what's happening.
Let's get into it.
The market continues to climb despite the President reversing tariff exemptions that were just announced. Confusing, right? Not when you look deeper. Having navigated through three market downturns, I'm seeing something strategic unfolding here.
I believe the market is starting to price in an imminent US-China deal.
This weekend revealed a classic negotiation dance between the two economic superpowers. The US sent what I call an "Easter egg" on Saturday by temporarily adjusting tariffs on tech products. This wasn't random—it was signaling to China: "AI, chips, iPhones—these are our priorities."
China's response? A textbook anchoring move.
When you're negotiating, anchoring means starting with an extreme position. The US anchored at aggressive 145% tariffs. China countered with what they're calling the "long march ahead"—essentially saying, "We're patient, no rush, and we want zero tariffs."
Both sides are under pressure to make a deal:
The US faces political pressure
China faces economic pressure (factory closures, shipping containers abandoned, population decline)
The biggest risk for both? The other side forming alliances elsewhere. If either the US or China starts making separate deals with the EU or ASEAN countries while these tariff negotiations are delayed, it creates leverage the other side can't ignore.
This is why I think we'll see movement soon. Neither side can afford a prolonged standoff—it's a potential lose-lose for both countries and global trade.
The next 1-2 weeks are critical. If we don't see progress toward a deal soon, we could witness significant market corrections. But right now, the smart money seems to be betting on a resolution.
I'll share more detailed analysis this week, including what specific sectors might benefit most from a potential trade deal.
Until then, keep watching those negotiation signals—they often tell us more than the official statements.
Talk soon and good luck out there.
Derrick
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