Trump Shakes Up Markets With Dizzying String Of China, Huawei, Fed, Dollar Comments

Donald Trump was all over the wires on Friday morning, pushing around stocks and other assets with a dizzying array of soundbites spanning a wide array of topics.

One lingering question this week and last amid heightened tensions between Washington and Beijing was whether planned trade talks with China would go ahead next month. The answer to that would appear to be no, or at least probably not.

“We’ll se whether or not we keep our meeting in September”, Trump told reporters. “If we don’t that’s fine, if we do that’s fine”.

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“It’s time that somebody does what we’re doing”, Trump continued, before again insisting that “the American taxpayer is not paying for it”.

Of course, China is not paying the tariffs. Trump (and Peter Navarro) continue to try and perpetuate that myth, increasingly by pointing to the Chinese yuan, but no matter how many times they try to spin the narrative, the simple fact of the matter is that Beijing isn’t paying.

Trump also made sure to boast about Thursday’s equity market gains. He didn’t mention the ~6% drawdown that played out from July 31 through August 5. On August 1, shortly after he threatened China with more tariffs, the president said he “wasn’t concerned” about the market impact. Fast forward a few days to Monday afternoon, and US stocks were in free fall following a retaliatory devaluation by the PBoC.

“As I said – and everybody questioned it – in the case of China, the tariffs have been amazing”, the president went on to declare.

Suffice to say “everybody” is still “questioning it”.

That wasn’t the end of it. In comments carried by Reuters, Trump said he’d “like to see a full one-point cut from the Fed” and said the central bank should stop quantitative tightening. (The Fed ceased balance sheet runoff on August 1.)

He also mused that he’ll probably have another meeting with Kim Jong-Un despite multiple recent missile tests and half-heartedly said he “hopes” Japan and South Korea will resolve their worsening diplomatic row, which is adding to global trade uncertainty at the worst possible time and has South Korean assets in a veritable tailspin.

The president’s comments on China come amid reports that the US is freezing license applications for US tech firms to resume sales to Huawei. That news already had risk assets on the defensive Friday and Trump’s new rhetoric won’t help.

Read more: Trump Ponders Freezing Huawei Licenses In Retaliation For China Farm Insult

Against all odds, Trump somehow managed to muddy the waters further. “I really made the decision, it’s much simpler not to do any business with Huawei”, he said, without clarifying whether that means federal contractors or US corporates. Then he added another dash of ambiguity: “That doesn’t mean we won’t agree to something if and when we make a trade deal”.

As if all of this weren’t enough for the market to digest, the president also commented on the dollar.

“I won’t devalue, we don’t have to”, he said. Stocks fell with yields on the China remarks, while USDJPY gyrated as traders attempted to sort out the contradictory messages (i.e., flight-to-safety from no China deal and the promise of no dollar intervention).

Those are your markets on Trump.