This aerial view shows workers loading imported soybeans from cargo ships at a port in Nantong in China's eastern Jiangsu province. Photo: AFP

The market volatility index (VIX) calmed down through Obama’s last year (2016) and Trump’s first year (2017), but spiked in 2018 and 2019. There is no sign that market volatility of the past two Trump years is calming down.

The market liquidity index (which looks at the breadth of futures contracts) rose through Obama’s last year and Trump’s first year in a show of confidence. Then it plummeted in 2018 and has stayed low thus far in 2019.

When volatility spikes and liquidity dries up and the yield curve is inverted, people run for shelters. Recall that the 10 year Treasury yield went from 3.237% in November 2018 to 1.470% in August 2019. That is a huge drop-off. Market confidence is deteriorating fast.

Bad signs. Really bad signs. Trump is desperate and China – which did say Thursday that it would return to trade talks in Washington – knows it.

Should China help Trump and offer him a trade deal before the election or should China just watch the farm states and the financial markets turn against him? Notice that consumer confidence, which underlines over 60% of US GDP, just took a dip.

Does China benefit from four more years of US decline and Russian ascendance (under Trump) or does China benefit from a return to a more sane global trading system (under Biden & team)?

Trump is not the only one eyeballing the financial market signs. So are the Chinese and they are better at it than the Russians.

Matt Aizawa, a Tokyo securities analyst for decades, now watches and comments on markets from the shores of a mountain lake a couple of hours north of the city.

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