By Denny Gulino
THE WHITE HOUSE (MaceNews) – The Phase One trade agreement with China is readied for signing, Sunday’s additional tariffs are scrapped, some existing tariffs are set to be trimmed and the Dow closes up a measly 3.3 points?
Wasn’t the U.S.-China trade battle the most market-sensitive development of all, just like Federal Reserve Chair Jay Powell told us Wednesday? What’s going on?
Enough questions, the market sophisticates say. It’s simply “Buy the rumor, sell the … .” Wait a minute. Could it be the deal with China, taken in total and considering the two years of costs, to farmers, to business planning and capital investment, suggest it’s a disappointment and underwhelming?
There go those questions again. Or perhaps the immediate reaction of the markets is to fixate on the details, to be skeptical China will be able to buy $32 billion or $40 billion or $65 billion a year in additional U.S. agriculture products, manufactured goods, services and financial products.
Holy logistics. With that many billions involved why on Earth would Maersk’s shares drop 2.4%? Yes, another question. You would think shipping industry offices would be working late, with executives running to the phones to say “Stop those layoffs.” And for good measure, quick, get some container ships out of mothballs.
Or could it be tweet fright? Remember, all the way back in late August, President Trump told the nation’s business community that he was ordering them to start leaving China. Then he lit up the phones to the corporate counsels’ offices across the country when he tweeted he wasn’t kidding, he had the authority to do it.
“For all of the Fake News Reporters that don’t have a clue as to what the law is relative to Presidential powers, China, etc., try looking at the Emergency Economic Powers Act of 1977. Case closed!,” he wrote.
And so corporate America was given a lesson in IEEPA permits. That was when the boss developed that involuntary twitch. No, great God above, what next? Was that the murmur you think you kept hearing?
Since then the president and his tweetmeister Dan Scavino have only stepped up the pace. Reader of The Hill newspaper and web site Thursday saw that in total, in one 24-houir period, Trump and Scavino sent 123 tweets. That beat Trump’s previous record of 105 that was reached just a few days before. Scavino does mostly retweets, it seems, with his spelling usually correct.
So, the grim-faced realists can say, a new Cold War with China, despite all Friday’s happy talk, could still be just a tweet away.
China’s sensitivities about Taiwan, those continuing education addicts, the Uighurs, and those new resort islands – see the fighter planes on the runways – in the South China sea are ready tinder that can be set alight with a certain kind of tweet.
Putting aside tweet fright, reflex skepticism, the fact of a trade agreement rather than the rumor and you may have something else, what looks like an authentic paradigm shift for the U.S.-China relationship.
Of course it was President Trump who brought on the first paradigm shift to begin with, demonizing China day and night,encouraging everyone else to pile on, even if it hurt.
Sure, now there will be interminable talks in Phase Two, and stories about how soybean purchases are falling short, and more lawsuits charging China firms with appropriating software, trade secrets and maybe Facebook posts.
Democratic presidential candidates may be tempted to threaten to be even tougher on China than that patsy Trump, who caved too soon. Their words, again, maybe.
The larger reality seems to be, well, larger. Much larger. The world’s two largest economies will be talking, not decoupling. Too bad, Vietnam, but all those supply lines won’t be severed after all. You would think that should be worth at least 20 points on the Dow.
Meanwhile, its Friday evening and there are an unusual number of news freaks still in attendance here in the press room, even though the White House declared a “lid” for reporters shortly after 5 p.m. ET.
Reflex skepticism again? Not believing President Trump on the night of his massive trade accomplishment won’t use the Christmas reception later on to share some more factoids about Phase One?
Or will his focus still be where it overwhelmingly was at his two earlier availabilities during the day, on the impeachment effort that goes to a House vote next week?
Or, as at Thursday’s night’s Congressional Ball, will the president be brief, wishing the partygoers Merry Christmas and saying, “We’re going to have a fantastic year.”
—
Contact this reporter: denny@macenews.com