WASHINGTON (MaceNews) – World capitals and trading centers Monday are trying to figure out how competent U.S. President Donald Trump is to manage trade relations with China now that he has tweeted away market serenity.
For those willing to give Trump the benefit of the doubt the leanings are as follow:
- Trump, the savvy negotiator, is applying new pressure to China to get last-minute concessions as the months of talks approach a conclusion.
- Trump, the wily and intuitive non-politician politician, tries to prolong the China negotiations to avoid losing a key battle cry – saving middle America from China – he’ll need as the 2020 election approaches.
- Trump, the strategic thinker, senses heightened U.S. leverage with stellar reports on first-quarter GDP, jobs and productivity and moves to preempt any new China recalcitrance based on signs its economy is stabilizing despite existing tariffs.
- Trump, the impulsive, from-the-gut counterpuncher, issues typically sweeping declarations for effect that will eventually be scaled back in the days ahead by arguments from his informal coterie of off-site advisors as well as some of his formal White House, USTR, State Department, National Security Council and Treasury counselors.
However those less willing to extend to Trump the benefit of the doubt see another picture:
- Trump, the trade policy rookie, can’t calculate the depth of damage to the U.S. that results from raising and widening tariffs on China, underestimates the pushback he’ll face from the business community and Congress, miscalculates China’s political capacity to absorb his bullying and risks the rest of his presidency if China relations are frozen into adversarial encampments. Again in his latest tweets, he misstates the way tariffs actually work.
- Trump, the diplomatic naif, perhaps is not getting the feedback he expected from the hour and a half call to Vladimir Putin he initiated last week nor from Japan’s Abe in his White House visit, wants to distract from the Mueller report’s stubborn afterlife and feels the need to amplify his presence on center stage as he and his tweets are increasingly discounted. Even Saturday Night Live this time gave him only glancing attention.
For those who focus on outcomes rather than motivations the stir-the-pot presidential tweets can be accepted as a given, as necessary to their originator as sonar as long as the route ahead is murky and threatening. For them, the challenge is to construct action plans for the range of possibilities that ensue, so market trading priorities can be recalibrated instantly as the latest signals are received.
Among the signals that can be anticipated, China’s media will be unlocked as soon as the country’s leadership finishes weighing the possibilities outlined in Trump’s tweets. Last September, Trump’s tweets triggered a pause in the China talks and that is a reflex response that has few downsides for either side. Less likely is a “walk away,” the move Trump thought was the best posture in front of North Korea’s Kim Jong-un and which would be an extreme turnabout for China.
Any relevant remark will rocket around the world from within the hierarchy of Trump reflectors, with Lighthizer/Mnuchin/Pompeo/Sanders at the top, expanded to include second tier Bolton/Mulvaney/Kudlow and at the third tier, the few congressional Republicans who actually talk to Trump regularly, particularly Lindsey Graham or his twitter feed.
Filling out the picture as the first week in May gets underway, a global noise level has become loud enough to easily intrude into the intelligence briefing books in world capitals. The Gaza cease-fire’s fragility, the drop of the Turkish lira to more than 6 to the dollar, the safe-haven drop in U.S. credit market yields might take second place to any untoward deviation in the path of oil prices in view of all the countercurrents among oil producers, including Venezuela and Iran, the target of newly tightened U.S. sanctions taking operational effect this week. Should the U.S. enforce its “zero” waivers oil sanctions policy on China shipments any time soon, that alone could severely alter the context of U.S.-China relations.
As Iran’s IRNA news service headlines, Iran talks are resuming in Belgrade at the expert level among the G-4 +1, with none of the participants – Russia, China, Britain, France and Germany – on the same page with the United States on oil or nuclear sanctions among other issues. All the participants will be assessing the message the U.S. is sending on the back of the carrier and bomber groups now publicly acknowledged as being positioned in Iran’s neighborhood.
On Venezuela,would-be leader Juan Guaido tells the BBC it is “responsible to consider” asking the U.S. to intervene militarily now that his public protest movement has proven to be ineffective in ousting Nicolas Maduro. Trump Friday, though, said his conversation with Putin suggested they both agree there is no cause for any such intervention.
Asian markets sank overnight in the wake of Trump’s tweets, with the Shanghai composite down more than 5%; Midday U.S. stocks showed a vast improvement from overnight futures levels, with the Dow down 175 or 0.68%, the S&P 500 off 22 or 0.77% and the Nasdaq 63, 0.77%. The U.S 10-year yield was down to 2.486%, somewhat more elevated than earlier.
And in Washington, Trump’s convicted one-time fixer Michael Cohen began serving his three-year sentence, but not before saying he hoped that when he gets out, there will no longer be “lies at the helm of our country.”
Trump, having tweeted only seven times since midnight, said in midmorning he had just had a “very good conversation” on the telephone with Japan’s Prime Minister Abe, providing no other details. His other tweets were comprised of two saying Puerto Rico and congressional Democrats should be happy with what relief funding the island has already gotten, that Republicans should wake up to what he said is a state-by-state Democratic “power grab,” that, in an overstatement, the U.S. “loses” $500 billion a year to China in trade, and that in the absence of collusion and obstruction, House Democrats should not be able to impeach a president for creating “the best economy in our country’s history.”