President Trump and his team have signed trade deals with a growing list of trading partners that have responded well to the US negotiators. Now the two largest economies in the world (outside of the US), China and Japan, are deep in trade talks. In May and June, we could see meaningful and very long-term deals signed by these partners. Trump may be traveling or receiving guests, but the White House is quiet right now.
As the relationship between the US and Japan continues to expand on all levels, despite the trade talks, the US China talks are secret and more importantly there is talk that the Chinese leadership want a meeting with Trump, some say a summit. This would only mean that the US and China are making progress on the trading talks but no one knows. Both the White House and the Chinese side are quiet. What we do know is that President Trump is working on deals with both Japan and China that will surely impact his travel plans in May of 2019. This could be good for US trade negotiators.
Confirming a trip seems to be something that is being kept for a Trump-Abe announcement. It is unclear about the exact timing but it might mean that Japan wants to seal a deal with the US before China to solidify the Trump-Abe relationship and allow both leaders to please their base back at home. PM Abe has, what seems to be a strong relationship with President Trump, stronger than Xi and Germany`s Merkel. Japan is proud of its US ties, as they share security responsibility in the Asia-Pacific Region.
President Xi said that if he does visit the US, it would be on official business that implies an announcement of a trade agreement and that the meetings would take place at Mar-a-Largo as the Chinese President does not want Chinese reporters to have access, as they would in New York. For Xi, Florida is private and secure. In the coming weeks, Trump will likely get a boost in ratings as deals with Asian powers carry weight for the future of US labor markets. These issues are all connected.
We have been spending a lot of time on ideas and it seems that the S&P 500 could rally in the coming weeks on news of a “deal” with China but outside of specific sectors that will be directly impacted by the deal, markets could fade once this news is fully priced in to major indices.