Trade Rally Crash Just One Tweet Away

Written by Swiss America

business 3150423 640This Trade Rally Is One Tweet Away From a Crash -Bloomberg
"The sense that a trade deal may finally be on the cards sent stocks and crude soaring in the U.S. Thursday...'If there's a phase one trade deal, there are going to be tariff agreements and concessions,' White House economic adviser Larry Kudlow told Bloomberg. 'If China, U.S. reach a phase-one deal, both sides should roll back existing additional tariffs,' China's Ministry of Commerce spokesman Gao Feng said earlier.

There’s a laconic warning buried inside both of those statements: 'If.' It's certainly possible that President Trump is tiring of the trade war and as desperate to get an agreement on the table as Beijing seems to think. But the current febrile atmosphere appears to have left the fundamentals of this dispute behind. A single tweet from @realdonaldtrump could be enough to puncture the party mood....China is well aware of the importance of the bilateral trade deficit in Washington, and one of the most promising areas for any agreement is to sharply increase imports of American agricultural and mineral products. Yet China's biggest oil producer, state-owned PetroChina Co., is behaving as if the opposite plan is underway....All this comes before even touching on issues around intellectual property, technology transfer and state involvement in the economy, which were ostensibly the reasons for this trade war in the first place....It's quite as likely that, in the white heat of a breakdown, the levies suspended last month are reinstated, only to be followed by the final round still due to kick in Dec. 15. Should that come about, the current exuberance could turn into a hangover awfully quick."

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