Generally speaking, it doesn’t feel like Beijing is keen to let the bipartisan Hong Kong bill which breezed through the US House on Wednesday, derail the trade discussions. Or at least not altogether.
Yes, Chinese officials chastised US lawmakers this week for meddling in the country’s “internal” affairs, and Hong Kong’s government delivered some predictable pushback, but there was no indication on Thursday that the trade talks will be called off if Donald Trump signs the bill, as he’s expected to do.
It’s likely that the White House will communicate to Beijing (if they haven’t already) that Trump has little choice in the matter. Refusing would risk Congress pushing the issue – it’s already veto-proof, in theory. More importantly, Trump likely doesn’t want to irritate the Senate just a month on from the Syria fiasco and a month ahead of a potential trial following assumed impeachment in the House.
Nevertheless, Xi’s media man Hu Xijin (the editor of the Global Times who tweets on the Party’s behalf) took the opportunity to deliver one of his trademark zingers on Thursday.
“Most people in the world can see [the] insanity of Hong Kong rioters, the restraint of the Hong Kong police and Beijing’s respect [for] Hong Kong’s autonomy”, Hu said, referencing the increasingly violent and extreme tactics of some demonstrators and the fact that the PLA hasn’t intervened to “fix” the situation.
Hu promptly got to the punchline. “But US lawmakers have gone blind all together”, he said, adding that “President Trump needs to sign the bill using braille”.
Hu’s snide remarks came amid competing trade headlines which suggested that in a worst-case scenario, the December 15 tariff escalation will likely be delayed.
For now, US equities are “pinned” thanks to helpful greeks – at least until something really bad happens. “The fact remains that SPX will stay ‘sticky’ up here between the enormous 3100- ($9.4B $Gamma) and 3150- ($8.4B $Gamma) strikes until the introduction of a fresh macro ‘shock-down’ catalyst”, Nomura’s Charlie McElligott wrote Thursday, adding that “the current ‘Long $Gamma’ does not ‘flip’ until down at 3055, while the current ‘Long $Delta’ would flip until even lower at 3030”.
In theory, that should keep things under control but, again, that’s subject to no major negative catalyst coming along and pushing spot sharply lower.
The S&P was on track Thursday for a third consecutive daily loss. It would be the first “real” three-day losing streak since early August, when the combination of Trump’s new tariffs and the yuan being allowed to weaken through the psychologically-important 7-handle precipitated a six-day rout.
In a subsequent tweet, Hu wrote that although the US “has the upper hand, allow[ing] it to decide when to end the [conflict]”, Trump doesn’t have enough leverage “to decide how to end the trade war”.
“[If] the US side wants both, then it needs to change an adversary”, he said.