Perhaps sensing an opportunity to seize the moment after Mario Draghi essentially promised more ECB stimulus in the face of flagging global growth and plunging inflation expectations, Donald Trump announced that he and Xi will in fact be meeting at the G20.
“Had a very good telephone conversation with President Xi of China”, Trump tweeted, literally 9 minutes after the opening bell on Wall Street. “We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.”
CCTV subsequently confirmed the meeting. Xi and Trump will “discuss fundamental China-US issues”, Chinese media said.
Last week, Trump ramped up the hostile rhetoric, going so far as to say, on Friday, that it “doesn’t matter” whether Xi agrees to meet him at the G20 or not. Wilbur Ross, meanwhile, threw cold water on the notion that anything more than an agreement to restart talks would come out of a prospective face-to-face.
Trump’s decision to escalate tensions with China catalyzed a brutal May for stocks, but, when he threatened tariffs on Mexico on May 31, equities proceeded to rally on the assumption that the threat against America’s southern neighbor was the last straw for the Fed and likely cemented the case for insurance cuts.
Between Draghi’s dovish remarks in Sintra and a Fed that looks boxed in by market pricing in front-end rates, all stocks needed to surge was a promise from Trump that he and Xi will in fact chat in Japan.
@realDonaldTrump was happy to oblige.
That, apparently, is what “markets” look like.
Of course, this could prove ephemeral if the Fed disappoints or if markets decide to take a “fool me once” approach to any handshake deal at the G20.