Another Pointless Photo-op!

The G20 is happening as I write this, located in steel town USA, Pittsburgh Pennsylvania, one of the most depressing places to be at the moment as its 15% unemployed sit on the sides watching the rich and powerful converge on their domain.

The idea that this meeting is going to accomplish anything substantial is obscene, the recent G20’s were nothing more than a show, a photo-op for the leaders of the World to look like they were getting along and doing something – but time has proven that this was nothing more than a charade.

The interesting issue at hand here is the Forex traders, who have been anxiously awaiting what will happen in Pittsburgh. The tabloids want to know the dirt, while the finance people want to know the scoop – but in the end, there will just be a bunch of bull.

The fact is, these guys need to look like they are working together and that they get along, but in reality they do not. The old adage of “what’s good for me is not necessarily good for you” is very much at play here.

Take the China-US argument over tire tariffs as an example. These two mammoth nations, arguably the largest economies around, are trying to work together to solve global economic problems and here they have a fundamental disagreement over US policy.

China wants to sell the US tires, they are cheaper and they (Chinese tire imports) make up about 30% of the overall US tire industry.

But the US, under pressure from unions and interest groups just issued a special tariff on the tires that China equates with protectionism.

Now, as global leaders working toward a common goal, one would think that they could find common ground – but they cannot.

If the G20 decide that the US must lift the tariff (this is not their call – but use this as an example) do you think the US really would? Of course not.

So how can the world of Forex trading and equity markets hold their breath waiting for something tangible. Everyone in that room is interested in their own issues – and if a policy proposal is in contrast with those issues, there can be no agreement.

Bottom line, keep to the numbers – don’t rely on the words being spoken by the world’s leaders – keep your eyes on how their economies are fairing and trade accordingly. This is the only true smart play.

Trade safe.