There could be a massive problem for markets.

Cooling trade war tensions may not be cooling after all.

Over the last month, markets pushed higher on hopes for a trade war resolution. That was until Larry Kudlow told Fox Business, “The president has indicated that he’s optimistic with respect to a potential trade deal. But we’ve got a pretty sizable distance to go here.”

With those three untimely words, “pretty sizable distance” markets fell apart.

Remember, if China and the U.S. cannot reach a deal by the start of March 2019, additional tariffs on Chinese goods will take effect. That’s likely to include tariffs on $200 billion on Chinese goods to 25% from 10%.

Should that happen, we could run into further global economic slowdown fears, and further market downside.  In short, if there’s no progress, markets could begin to pull back severely.  And we could see the Volatility Index (VIX) spike again as it did in December 2018.

Some of the best ways to safeguard your portfolio is with trades that spike along with volatility, including:

• Velocity Shares Daily 2x VIX Short-Term ETN (TVIX)
• The iPath S&P 500 VIX Short-Term Futures (VXX)
• ProShares Ultra VIX Short-Term Futures (UVXY)

Consider taking a position in each of the above-mentioned trades. All should do very well if the markets pull back, as many fear.