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Here's How to Play the U.S. and China Trade War

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The trade war between China and the U.S. has weighed on investor sentiment for the past 18 months, and while the market remains mostly resilient, as evidenced by Wall Street approaching new highs, trade tensions remain part of the market narrative.

"If you talk to corporations, they don't know what's going to happen. We don't know what's gonna happen. But as this trade war has gone on and on, there's been a kind of a solidification of views that the tariffs are permanent," said Bluford Putnam, chief economist of the CME Group.

Industrial giants like Caterpillar (CAT) have been hindered by the trade war. Earlier this week, the company reported lower third-quarter results and reduced its guidance. This might be the new normal, according to Putnam.

"A lot of what's happened in the trade war is not going to ever reverse. I mean, if you're not in China and not in the U.S. you're looking at these two countries battle it out and you're thinking, 'I better diversify my supply chain. I've got to prepare for the unknown unknowns,'" Putnam said.

Putnam's comments were part of TheStreet's CME Webinar - How to Trade the Fed, Trade Wars, Brexit, Oil and Gold Using Futures - where experts can help you beat market volatility by using futures and options as part of your trading strategy.

The panel:

  • Bluford Putnam, chief economist of the CME Group, who is responsible for leading local economic analysis and monitoring developments and the price patterns, volatility and correlations of futures and options markets.
  • Carley Garner, futures and options broker with DeCarley Trading. She also is the author of the book "Higher Probability Commodity Trading."
  • Bob Iaccino, the chief market strategist of Path Trading Partners, who has spent the last 22 years in the commodities, futures and forex markets.

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