Increased costs from Chinese tariffs were frequently mentioned in fourth quarter earnings conference calls. Analyst water downed their earnings estimates as a result. During first quarter earnings announcements most companies have reported beating these watered down earnings estimates. The good news is they beat. The bad news is the bar was lowered so that they could.

Overall, the economy is very strong. The unemployment rate is remarkably low. Markets reached an all time high last week but are down today because of renewed tariff disagreements between China and the USA.

As I see it, the Chinese know Trump will be running for re-election based on the strength of the economy. As a result, Trump is coming to the negotiating table with a weakened hand to play. China’s economy is weakening, but very soon Trump will need to get trade resolved.