We must recognize the danger in overreacting to all news – good or bad – regarding the US-China trade talks that have moved forward, very slowly of course, for over a year now. But with the next round of talks in Washington DC on 10-11 October, look for some equity market strength, until the talks collapse (the collapse is our view of course).
An article on CNBC suggests that the White House, the Treasury Department and Office of the US Trade Representative, all three did not respond to contacts from calls. Clearly there has been a gradual thaw in negotiations as the two economic superpowers discuss trade and future relations that will impact generations of their citizens.
But for now, the announcement by China to purchase a “considerable” amount of soybeans and pork before the these talks in Washington is a clear move by Beijing to start the talks off on the right footing. In return, the White House announced that it will move the increased tariffs on 250 billion dollars worth of goods (25% to 30%), from October 1st to October 15th.
Look for excessive market volatility in the coming weeks.