Monday, June 4, 2018

2 contrarian trades that will make you uncomfortable

Do you really want to be a contrarian investor? Most of the time, being contrarian means that your investment views are far from the crowd, and you will feel very isolated and uncomfortable.

With that preface in mind, I offer two uncomfortable contrarian trades, based purely on technical analysis.

Fading a NAFTA breakdown
Let's start with the latest developments in Trump's trade policy of imposing aluminum and steel tariffs on major allies. Canada's prime minister Justin Trudeau responded in a Meet the Press interview by characterizing the tariffs, which were imposed on national security grounds, as "frankly insulting".
The idea that the Canadian steel that’s in military, military vehicles in the United States, the Canadian aluminum that makes your, your fighter jets is somehow now a threat? Our soldiers who had fought and died together on the beaches of World War II... and the mountains of Afghanistan, and have stood shoulder to shoulder in some of the most difficult places in the world, that are always there for each other, somehow — this is insulting to them.
The reaction isn't just restricted to Canada. The latest G7 communique of finance ministers and central bankers was, well, more like a communique from the G6 plus one.
Addressing Global Risks and Promoting a More Level International Playing Field
Ministers and Governors had a frank exchange on the benefits of an open rules-based trading system and many highlighted the negative impact of unilateral trade actions by the United States. Ministers and Governors agreed that this discussion should continue at the Leaders’ Summit in Charlevoix, where decisive action is needed. The aim of this should be to restore collaborative partnerships to promote free, fair, predictable and mutually beneficial trade.
Trump hit back with this latest tweet.

How would you feel about fading trade fears, starting with the fears of a NAFTA breakdown?

The full post can be found at our new site here.

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