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Trump Said Seeking China Deal to Boost Stocks

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Wednesday, 09 January 2019 12:35 PM Current | Bio | Archive

U.S. – China Trade

Trade negotiations between the United States and China are continuing for an extra day in Beijing, with the Trump Twitter feed sounding upbeat about the prospects for a deal.

President Donald Trump wants a deal in order to boost the stock market, the Straits Times of Singapore reported. The president’s policy of taxing (tariffs) U.S. consumers who buy goods partially made in China has not been well received by equity markets, understandably, given the importance of trade to listed companies.

If the media reports are true, that would suggest that any deal that emerges is a “tweetable” moment rather than a substantial change in policy direction. In that sense it would perhaps be a partial unwind of what has happened so far and may be a return to the situation that existed in the first half of 2018, but probably not a comprehensive trade deal with “Rose Garden” signing ceremony.

All in All, Some More About the Wall

President Donald Trump has addressed the nation on the issue of the border crisis.

This is unlikely to have an immediate market relevance. Financial markets would care if this was seen as ending the government shutdown, but the chances of a presidential address immediately ending the government shutdown must be considered to be remote. An aggressive stance from President Trump might possibly cause markets to worry about a more prolonged government shutdown, but as there has been little visible movement towards an agreement so far, there is a limit to how much more negative things might get for markets.

If the presidential address would to change public opinion on the topic significantly, that may change probabilities around the budget shutdown, but that would not be evident for some days.

Germany - Trade Data

Germany released its trade data today. Given the political sensitivities of trade in the current global climate, this is not a number that should be ignored entirely.

The German trade surplus decreased to EUR 20.5 billion in November from EUR 23.8 billion in the same month a year earlier, as imports rose 3.6 percent while exports were nearly unchanged.

Considering January to November, the trade surplus narrowed to EUR 214.2 billion from EUR 229.5 billion in the corresponding period of the previous year.

Global trade was broadly stable as a share of the world economy in 2018.

Globalization has been stable for several years now and in a structural sense we probably hit “peak” globalization, but none of this reduces the political sensitivity of the topic.

Former Fed Economist Nellie Liang Withdraws Candidacy on the Fed’s Seven-Member Board

On the subject of political sensitivity topics, and according to the Wall Street Journal, one of President Trump’s nominees for a vacant Governorship at the Federal Reserve, Nellie Liang, has withdrawn her candidacy.

This may raise speculation about attempts to interfere with Fed independence again.


Finally, because we have to talk about it, the European Union (EU) – UK divorce process.

The UK government was defeated in a vote in the House of Commons yesterday.

This was a largely symbolic measure, but the vote has demonstrated clearly, for the first time, that there is an absolute majority in the House of Commons against having a “No-deal exit” from the European Union (EU).

This had been supposition in markets for some time anyway. The government’s defeat is probably actually welcomed by the government as they may now use this to bring some of the anti-European members of Parliament to back Prime Minister May’s “Withdrawal agreement”.

Parliament is still likely to reject that withdrawal agreement next week and a “No-deal exit” is still the “Default” position for the UK in law, but the vote yesterday may make winning a further vote on a negotiated exit a little easier to accomplish.

Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.

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President Donald Trump wants a deal in order to boost the stock market, the Straits Times of Singapore reported.
trump, china, trade, deal, stocks
Wednesday, 09 January 2019 12:35 PM
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