Markets are rallying to new highs as many investors are expecting a breakthrough in trade talks between the US and China. But are thee guys really making headway or is this just political theater? As the two economic superpowers continue to meet and talk there are clearly those who are just begging for any partial solution called a “phase one” handshake – a mini deal that would likely send markets much higher. But again, while impeachment discussions are taking place, the idea that China would sign a deal and make President Trump look like a winner would be odd in our humble view.
Clearly a short-term solution or step in that direction would be great for global trade and would reduce tensions, but does China really want to help Trump get re-elected? The answer is NO. So in our view China will think of its own interests and make the US and Trump look weak – likely in the form of not getting a deal done.
So while these talks continue the Hong Kong protestors are building walls within the local university under threats of live ammunition which was approved by the powers in Beijing. And with the city leadership asking for calm, Carrie Lam is asking for a peaceful solution, many are concerned that the sometimes violent marches may provoke the government in Beijing to come down with an iron fist. For now, markets remain robust and with hopes – these are hope – of a short-term solution to the trade talks, investors continue to buy shares.