Rejoice, the next round of trade talks between the US and China has been tentatively scheduled.
The Chinese Ministry of Commerce said Liu He spoke to Bob Lighthizer and Steve Mnuchin over the phone on Thursday morning (Beijing time). Working-level talks will take place over the next two weeks, with the goal of laying the groundwork for principal-level negotiations in “early October”.
The news comes on the heels of inflammatory comments from Donald Trump, who spent Tuesday lambasting the Chinese on Twitter.
Read more: Trump Piles On, Threatens To ‘Crumble’ China’s Supply Chain, Create Massive Job Losses
US equity futures and USDJPY jumped on the latest headlines, reflecting predictable, knee-jerk risk-on behavior from traders, both carbon-based and otherwise.
On Wednesday, Trump said the Dow would be “10,000 points higher” if it weren’t for the tariffs, but insisted that “somebody had to do this”, where “this” meant confront China on trade at the possible expense of a recession.
“They agreed to hold meetings at the ministerial level in Washington in the coming weeks”, a statement from the White House describing the call between Liu, Lighthizer and Mnuchin reads. “In advance of these discussions, deputy-level meetings will take place in mid-September to lay the ground work for meaningful progress”.
The fact that Lighthizer and Liu are still on speaking terms is good news and perhaps suggests Beijing has learned to ignore Trump’s daily balderdash as long as it doesn’t result in actual tariffs or other escalations. Still, the incessant threats can’t be helping.
Since August 23, when China retaliated to the latest US duties prompting Trump to hike the tariff rate on more than $500 billion in products, investors have fretted about the feasibility of planned September talks between the two sides.
As of Monday, reports suggested there was no agreement even on the terms for discussions.
Given that, news that the talks are apparently still on will likely be enough to help buoy risk assets – at least until Trump opens his Twitter app.
Rip Van Winkle just woke up and discovered nothing has changed during his slumber. Man, I don’t know who’s the ‘Rope’ and who is the ‘Dope’ any longer…
When I see these types of headlines, I keep going back to Jim Carrey’s line in Dumb & Dumber: “…So you’re tellin’ me there’s a chaaaance.”
I’ll take a 2-5 week rally… honestly, the bearish narrative needs a brooding period. It has become too mainstream
Keep your eye on the ball. Remember the wise words of Admiral Ackbar… “It’s a trap”!