It’s too bad markets aren’t open, because one would think risk assets would be staging a knee-jerk rally right now.
Following reports out late in the work week that the Chinese had offered Trump a $200 billion reduction in the trade deficit (or, more to the point, offered to hit his number as communicated to Beijing when Mnuchin went for a visit earlier this month), the White House is saying China has agreed to “significantly increase” their purchases of U.S. goods.
That comes from the following joint statement:
Note who isn’t mentioned there. This guy:
You’re reminded that negotiations had been complicated by the involvement of Navarro who reportedly got into a shouting match with Mnuchin in Beijing and who for the past week, was living under the cloud of rumors that he’d been sidelined in negotiations with Chinese Vice Premier Liu He.
Now the question is whether he’ll be part of the “team” that the above statement indicates will be dispatched to Beijing.
That bit about “advancing” relevant patent protection laws is obviously a big deal and may help to de-escalate the situation materially if it means forestalling the release of another list tied to the 301 investigation.
Of course what isn’t mentioned there is what, if anything, was discussed with regard to Xi’s “Made In China 2025” initiative which the Trump administration has specifically targeted.
So while the statement is a bit short on specifics, it’s long on the “constructive” messaging which is probably all that’s necessary to catalyze a bit of a relief rally to the extent the trade war threat was still hanging over markets like smog on a particularly polluted morning in Beijing.
Caveat emptor for Monday: knee-jerk reactions are by definition myopic.