Also interested in Phase One fate... It would have been pretty inflammatory if the Chinese hadn't committed to accelerating purchases after the Hawaii meeting.... since they're very far behind target already! Anything other than re-commitment is tantamount to saying it's dead in the water. Good site here which tracks trade deal progress:
Also interested in Phase One fate... It would have been pretty inflammatory if the Chinese hadn't committed to accelerating purchases after the Hawaii meeting.... since they're very far behind target already! Anything other than re-commitment is tantamount to saying it's dead in the water. Good site here which tracks trade deal progress:
Seems to me that Trump retains 'option value' on the deal at the moment running into the election. Either it 'works', in which case he can tout it as an achievement/getting tough on China, or else it doesn't and he pulls the plug with: "too bad, it was a great deal but they didn't live up to it".
Wonder whether the Bolton book - and more importantly the political capital the Dems will make out of it - alters the landscape materially on Phase One? I.e. Trump has to do something to show that he's really 'tough' and not depending on Xi's good offices for re-election via agricultural purchases.
Hypothetically, if China was warming to the idea of a Trump re-election (on the basis that he's a bigger threat to US alliances/power structure/credibility than Xi ever could be) then they might work harder to prop up the deal. But then the Dems can say 'look, Xi's supporting his friend Trump for re-election'!
My view is that Trump's actions on China in 2020 are basically hollow and designed to preserve the Phase 1 deal and prop up the stock market.
The only reaction to the Bolton book seems to have been his signing the Xiuger act which happened the same day. The uniform condemnation of Bolton from other people in the room buries this I believe. Lighthizer was asked a "gotcha" question by Menendez and did seem candid and honest.
As to Trump's political calculations on Phase 1 and how they could change, the key overarching determinant is whether he is willing to crush the stock market. Any movement toward increased tariffs or restricting market access would be very negative for stock prices. He still talks about the market almost every day and thinks that it helps him politically.
I don't know the answer on that question (based on voter data) but I tend to believe that people voting for Trump based on China, immigration, and other non-establishment core beliefs he brought to the Republican mainstream don't own stocks and don't care about the market.
My view is that if Trump focuses on the S&P he will lose the election. If he refocuses on China's failings on the virus and general bad behavior he will win.
Agreed on the market angle and given the disconnect between SPX and the real economy a stock market focus is unlikely to pay big dividends (pun not intended) electorally! Deal collapse would be a big general risk-off trigger. Not least because the Phase One deal feels like a bit of a dam, holding back a more aggressive showdown - once it goes, all the other things which the national security apparatus want to apply follow quickly. Ironically it is the person who has set themselves up as the China hawk (ie Trump) that is - for the time being - holding back... the China hawks.
If the deal and market performance are intertwined on the way up, the danger is then presumably that if the market were to fall for some other reason - the rationale for keeping the deal intact is correspondingly weaker. Ie reflexive.
Interesting thought on Trump's reflexivity. There are arguments for and against I think.
For: Trump reacts reflexively to almost everything...often to his detriment.
Against: Narrowly on China, Trump has tweeted impulsively but done very little else impulsively. His moves on tariffs, Huawei, Taiwan, etc seem highly calculated and carefully considered.
My feeling is that ala 2019, Trump is more likely to act on China when the market is high - so he has some breathing room. He has always folded his hand and come back to the table with China after the markets convulsed (4Q 2018, 3Q 2019).
So, I'm sticking to my view that so far this year he hasn't done anything substantive on China because of the proximity of the election and weak market. What has now changed is that the market is nearly at all time highs and his poll numbers look terrible.
Also interested in Phase One fate... It would have been pretty inflammatory if the Chinese hadn't committed to accelerating purchases after the Hawaii meeting.... since they're very far behind target already! Anything other than re-commitment is tantamount to saying it's dead in the water. Good site here which tracks trade deal progress:
https://www.piie.com/research/piie-charts/us-china-phase-one-tracker-chinas-purchases-us-goods
Seems to me that Trump retains 'option value' on the deal at the moment running into the election. Either it 'works', in which case he can tout it as an achievement/getting tough on China, or else it doesn't and he pulls the plug with: "too bad, it was a great deal but they didn't live up to it".
Wonder whether the Bolton book - and more importantly the political capital the Dems will make out of it - alters the landscape materially on Phase One? I.e. Trump has to do something to show that he's really 'tough' and not depending on Xi's good offices for re-election via agricultural purchases.
Hypothetically, if China was warming to the idea of a Trump re-election (on the basis that he's a bigger threat to US alliances/power structure/credibility than Xi ever could be) then they might work harder to prop up the deal. But then the Dems can say 'look, Xi's supporting his friend Trump for re-election'!
Any thoughts gratefully received.
Thanks guys.
My view is that Trump's actions on China in 2020 are basically hollow and designed to preserve the Phase 1 deal and prop up the stock market.
The only reaction to the Bolton book seems to have been his signing the Xiuger act which happened the same day. The uniform condemnation of Bolton from other people in the room buries this I believe. Lighthizer was asked a "gotcha" question by Menendez and did seem candid and honest.
As to Trump's political calculations on Phase 1 and how they could change, the key overarching determinant is whether he is willing to crush the stock market. Any movement toward increased tariffs or restricting market access would be very negative for stock prices. He still talks about the market almost every day and thinks that it helps him politically.
I don't know the answer on that question (based on voter data) but I tend to believe that people voting for Trump based on China, immigration, and other non-establishment core beliefs he brought to the Republican mainstream don't own stocks and don't care about the market.
My view is that if Trump focuses on the S&P he will lose the election. If he refocuses on China's failings on the virus and general bad behavior he will win.
Thanks Ned. Interesting on the Bolton feedback.
Agreed on the market angle and given the disconnect between SPX and the real economy a stock market focus is unlikely to pay big dividends (pun not intended) electorally! Deal collapse would be a big general risk-off trigger. Not least because the Phase One deal feels like a bit of a dam, holding back a more aggressive showdown - once it goes, all the other things which the national security apparatus want to apply follow quickly. Ironically it is the person who has set themselves up as the China hawk (ie Trump) that is - for the time being - holding back... the China hawks.
If the deal and market performance are intertwined on the way up, the danger is then presumably that if the market were to fall for some other reason - the rationale for keeping the deal intact is correspondingly weaker. Ie reflexive.
Interesting thought on Trump's reflexivity. There are arguments for and against I think.
For: Trump reacts reflexively to almost everything...often to his detriment.
Against: Narrowly on China, Trump has tweeted impulsively but done very little else impulsively. His moves on tariffs, Huawei, Taiwan, etc seem highly calculated and carefully considered.
My feeling is that ala 2019, Trump is more likely to act on China when the market is high - so he has some breathing room. He has always folded his hand and come back to the table with China after the markets convulsed (4Q 2018, 3Q 2019).
So, I'm sticking to my view that so far this year he hasn't done anything substantive on China because of the proximity of the election and weak market. What has now changed is that the market is nearly at all time highs and his poll numbers look terrible.