STOCKS RUN UP ON ABENOMICS TRIUMPH OVER TRUMP BUT BAD SIGN FOR GOLD $SPY $GLD $SLV $GDX $GDXJ $NUGT $DUST $AAPL $BA $AVGO $NVDA $SWKS $EWY $KF

Donald Trump has accused countries including China and Japan of manipulating their currencies and running large trade deficits with the U.S.

Investors in Asia were on edge leading into the meeting between Japanese Prime Minister Shinzo Abe and Trump late last week. The economic policies of Abe, known as Abenomics, rely in part on a weak Japanese yen and exports to the U.S.

There is a clear conflict between Abenomics and Trump’s policies.

The news was that the meeting between Abe and Trump ended with handshakes, hugs, golf and a statement by Trump that he supports Japan “100%.” But the real news here is that there was no mention of a weak yen and Japan running a trade deficit.

 Trump vs Abe

There is a clear conflict between Abenomics and Trump’s policies.

In 2016, Japan ran a $68.9 billion trade deficit with the U.S., ranking second after China. So it appears that Abenomics has triumphed over Trump’s policies. Trump might have been influenced by geopolitical considerations to forgo the flashpoint of a weak yen and a trade deficit. While Trump and Abe were meeting, North Korea challenged them by launching a ballistic missile in the Sea of Japan.

Markets are responding. This shift in Trump’s policies is good for U.S. stocks, good for Japanese and Asian stocks, good for the dollar, and bad for gold and silver.

The reaction in U.S. stocks is best illustrated in the annotated chart of Dow Jones Industrial Average DJIA  futures. Please click here for the annotated chart of DJIA futures.  Read more at MarketWatch.

 

 

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