June 30, 2019
June 2019 Newsletter
Deal or No Deal

In the game show Deal or No Deal a game show contestant chooses a briefcase to eliminate from 26 briefcases all containing some amount of money inside ranging from $0.01 to $1,000,000. As the number of remaining suitcases dwindles the stakes get higher and a mysterious banker begins to make cash offers to buy out the contestant. The contestant faces the famous “Deal or No Deal” decision. Sometimes holding out is very lucrative and other times a bust. The pressure on the contestant builds as suitcases are eliminated. (As an aside, Megan Markle, the wife of Prince Harry and new Duchess of Sussex, was one of the “suitcase” girls in season 2.)

This weekend President Trump is in Osaka, Japan for a G-20 meeting. The real action will be a side meeting with Chinese President Xi to discuss the ongoing trade war between the two countries. President Trump has placed sanctions on a broad range of Chinese imports and he is threatening to increase them should China fail to reach an agreement. These on-and-off again negotiations have whipsawed the equity markets with every announcement. So far, the tariffs have not had a material impact on the US economy, but concerns are starting to build that they will. As we approach the election the pressure on President Trump will build.

Our expectation is that No Deal will be forth coming this weekend. The Chinese play a long game and have built their economy around a host of unfair trade practices. While the current administration is the first to tackle these issues head on and is trying to force China to the table, China is unlikely to reverse course. China’s style of dragging out negotiations in the hopes of the upcoming election cycle both puts pressure on President Trump to declare victory and go home or the hope it may usher in the possibility of a new President to negotiate with.

With the US equity markets at all-time highs and the US economy still doing well our guess is the headlines next Monday will be “No Deal”.

-The Leisure Capital Management Team

 

← Back to Insights

Principal & Financial Advisor
Senior Financial Advisor

Start investing in your future today.

Contact Us