I was wrong. The market does not (for now) care about the US - China trade war.
Of the $500bn China exports to the US, Trump slapped a 10% tariff on $50bn of it and has asked for a list of another $200bn worth of items that could be similarly tariffed. Xi is responding in in kind and nobody cares. The mainstream view is I guess to kick the can down the road and take another look at this in several months time.
The other major can kick is the decision of Draghi to defer new EU banking rules until 2021. If the rules had been imposed as planned, Italy's banking system would simply collapse. Maybe it will collapse anyway but I guess that Draghi is hoping that the Eurozone will remain stitched together at least until his term of office expires next year. Then it becomes someone else's problem, responsibility and fault.
The problem with all of this is that tightened lending policies, higher interest rates and lowered global growth will turn loans that are already bad into loans that are clearly already bad …. and thus require write off under anyone's accounting standard.
The fable of the ants and the grasshopper comes to mind. Until the season changes (and it may certainly change very quickly) the grasshoppers will continue to play in bliss.
