By Denny Gulino
THE WHITE HOUSE (MaceNews) – The statement from China’s Ministry of Commerce could have been more definitive yet it certainly wasn’t the negative declaration some had anticipated, so it was off to the “risk on” races Thursday.
The Dow industrials and the S&P 500 held gains of around 1.4% through mid afternoon, the Nasdaq did a little better and for a while the persistent 2-year to 10-year curve inversion almost disappeared as yields rose somewhat.
While there were presidential tweets – James Comey ”has been thoroughly disgraced and excoriated” – there was nothing having to do with China to spoil the fun.
The White House, seeing clear blue skies above, moved the president’s late afternoon inauguration of the new Space Force outside to the Rose Garden and opened it up to general press coverage.
Traders were more than content to accept the characterization of what brought sunshine to the markets, the statement by the spokesman for China’s Ministry of Commerce, in which he indicated his country would not retaliate at least immediately for President Trump’s additional five percentage points of tariffs to be imposed on more than $100 billion in products on Sunday, with another phase hitting Oct. 1.
While the tit-for-tat trade war was seemingly stabilized with the latest “tat” from the U.S. everyone remained aware that with President Trump, the status quo is always fragile. He could either suspend the latest 5 percentage points sometime before the Sunday deadline or do something else, perhaps roiling a peaceful Saturday, but for now there was a green light.
About that statement, however, there was a lot of ambiguity to find if anyone wanted to look, which they didn’t.
Translations of Ministry spokesman Gao Feng remarks differed in small details but he seemed to say, “We firmly reject an escalation of the trade war, and are willing to negotiate and collaborate in order to solve this problem with a calm attitude,” echoing what the Vice Premier said over the weekend that prompted a earlier surge of market optimism.
He refused to say whether President Trump was correct in saying telephone calls at the “highest level” had taken place during the G-7 gathering.
The key words seemed to confirm that preparations were under way for more talks next month, without any specifics. Previously various China officials had said future talks would depend upon the U.S. tariffs being suspended..
“”It is of great importance right now,” Gao said, “to create the necessary conditions for the two sides to continue consultations.”
The state news service Xinhua’s translation introduced the world “solemn” regarding the objection to the intensification of the U.S. tariffs, as in, “China is lodging solemn representations with the United States over the latter’s decision to raise the additional tariffs.”
Yet Gao did not seem to threaten any new action from the Chinese side any time soon.
Finally Gao repeated what the Chinese have said before, that, “We hope the United States can meet China halfway and properly solve the economic and trade disputes between the two countries on the basis of equality and mutual respect.”
Various commentators reminded that that was no exactly has President Trump has seen any eventual agreement. He has said that instead of meeting China “halfway” that any deal must end up favoring the United States, better, he has said, than 50-50, to make up for past disadvantages he has said China has imposed on the U.S. for years.
Nevertheless, traders said, it appears both sides are going to be talking again. Until another tweet or statement from Beijing spoils that outlook, what’s not to like?, they asked.
With one more trading day remaining before a long holiday weekend, after which the latest U.S. tariffs are scheduled to be firmly in place, no one be begging for an answer to that question.