By Denny Gulino
THE WHITE HOUSE (MaceNews) – President Trump waited until Wednesday evening to unveil an unexpected goodwill gesture to China, a reverse retaliation for a similar signal from Beijing.
“We have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th,” Trump tweeted. The move, he wrote, was, “at the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary on October 1st.”
Earlier China released a list of exemptions to its tariffs on U.S. goods imposed after an earlier round of U.S. levies that spared the U.S. pharmaceutical industry while allowing tariffs against soybeans and pork to be imposed.
A two-week reprieve by itself is fairly insignificant in the context of eventual U.S. tariffs on virtually every product exported by China that will be in place after Dec. 15. Yet it raises the possibility of more relaxation to come and improves the atmosphere before talks resume in October.
In a day filled with the somber observance of the Sept. 11 anniversary, a possible Iran contact, the reasons for John Bolton’s separation, the dangers of vaping, all raised by Trump in the Oval Office Wednesday, the China development waited until Asia markets had opened. The offshore yuan modestly improved on the news.
Still not resolved is whether Trump is actually ready to consider relaxing sanctions on Iran – a potential boost for energy stocks, and whether the expectation for more Federal Reserve rate cuts are as baked in to the degree the market assumes.
In the background, a positive tone in the day’s U.S. stock markets, even with this week’s largely inexplicable rotation away from momentum names to value, only to see momentum stocks surge again in the afternoon. The VIX? Even more serene, slipping below 15, the lowest for the “fear index” since the end of July.
The morning’s Producer Price Index, as usual, generated no market ripples with its 0.1% increase for August and a 0.3% above-expectations core rate. Its overall annual change is a1.8% increase through August.
A few hours after he and the First Lady observed a moment of silence on the South Lawn and then traveled to the Pentagon memorial observance, the president summoned White House pool reporters. The main topic was to say the administration is working on restrictions on certain kinds vaping products and as is always the case, President Trump ventured into several of his other frequent topics.
One topic not touched on was his new name for Federal Reserve officials, “Boneheads,” in a tweet that called for interest rates to be cut even “to ZERO, or less.” He again attacked the Fed chairman by name as his constant criticism of late devolved into ridicule. “It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing,” that is, cutting rates, he wrote.
The CME Fedwatch Tool Wednesday had the odds of another quarter point rate cut as overwhelmingly in favor, at 88.8%, even though some market participants and other Fedwatchers have become increasingly vocal about the reasons not to cut.
On China, in his afternoon chat with reporters in the Oval Office Trump was anything but amiable and did not hint at the gesture he was to announced in the evening.“China’s supply chain is breaking up,” Trump told pool reporters in his afternoon remarks. “It was this unbreakable, powerful tool that they had, it’s breaking up like a toy because companies are moving out and China wants to make a deal.”
Once again Trump said China has been “literally ripping off the United States in the worst manner,” equating the $350 billion a year U.S. purchases above U.S. exports to China to be a malicious predation instead of one country buying a lot at bargain prices to balance its importation of capital.
Trump ran through reasons he said he wanted John Bolton gone and repeated that he instigated the departure while saying he expected Bolton to “spin” the episode to his advantage. Bolton has insisted he offered his resignation and that Trump did not ask for it.
For all the reasons – like saying North Korea would be handled as per the Libyan model – which Trump said was a “disaster” and a good reason for Kim Jong Un to object – what actually triggered Bolton’s move now has not been completely explained. “He wasn’t getting along with people in the administration who I consider very important,” Trump said.
“I don’t blame Kim Jong Un for what he said after that,” Trump said. “And he wanted nothing to do with John Bolton. And that’s not a question of being tough, that’s a question of being not smart saying something like that.”
Stories that now Iran sanctions might be moderated had helped oil stocks but were not confirmed in Trump’s latest comments. Wednesday’s West Texas Intermediate dropped 2.6% despite an oil stocks report that showed a bigger than expected drawdown.
The man who were for many was the public face of the energy industry and a long-time campaigner for domestic natural gas production, T. Boone Pickens, passed away during the day, having seen his dream largely accomplished through the fracking revolution.
“Would you consider easing sanctions on Iran?” Trump was asked. “We’ll see what happens. I think Iran has potential and I think North Korea … . I think Iran has a tremendous potential. They’re incredible people. We’re not looking for regime change.”
Trump repeated that talks with the Taliban “are dead,” and that it was he who decided to kill the Camp David meeting this past weekend because of another Taliban attack. He repeated the Taliban is being hit by U.S. attacks as never before and that will continue.
On vaping, the primary reason for inviting reporters into the Oval, Trump cited concerns by the First Lady and that, “There have been deaths.” Some state regulators have indicated they are ready to move faster than the federal government and the federal ban on flavored vaping products Trump said would take effect in a few weeks would presumably preempt those efforts.
Four of five tobacco stocks were not fazed by the negative vibes, seeing their stock prices increase Wednesday.
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This story was updated Wednesday evening with news of the delay in Oct. 1 tariffs.