On Thursday, Trump tweeted that he had a good conversation with China President Xi Jinping
Bloomberg reported on Friday that Trump had drafted a U.S.-China trade pact ahead of a late-November summit
CNBC reported that a trade deal was far off, refuting Bloomberg’s report
Check out this tweet from CNBC’s Eamon Javers:
NEW: A senior administration official tells me that the report president Trump is ready to cut a trade deal with China is not true. “There is a long way to go” on negotiations, the official said. — Eamon Javers (@EamonJavers) November 2, 2018
Other market participants were throwing more cold water on recent reports, questioning the likelihood the Trump administration was drafting an accord with China. Investors also have harbored doubts about the timing of upbeat reports on imminent trade pacts ahead of important midterm election on Nov. 6. Those elections are likely to shift the balance of power on Congress.
That is reflected in the following tweet from Joe Brusuelas, chief economist with RSM:
Rumors of a US-China trade truce look more like an attempt to talk up the market ahead of the election rather than real progress on the trade spat. I'm still telling client to prepare for a full 25% tariff on $517 billion of Chinese imports by mid-2019.
— Joseph Brusuelas (@joebrusuelas) November 2, 2018
Friday afternoon, Larry Kudlow, a top economic adviser for President Donald Trump, refuted the Bloomberg report, sending shares to fresh lows.
Chris Senyek, chief investment strategist at Wolfe Research, earlier this week highlighted the notion, echoed by many previously, that trade issues remain at the forefront of investors’ minds:
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Trade has been a key driver of the global growth outlook in recent years. More specifically, competitive devaluations created stiff headwinds for trade and the world economy throughout 2015. We believe that the end of this destructive process was a key catalyst behind strong synchronized global growth in 2016-17. More recently, it appears that President Trump’s trade actions created a major drag on trade in the first half of this year, before activity levels started to recover as U.S. was making progress in renegotiating deals with Canada, Mexico, Europe, and South Korea.
Trade issues have been at the center of Wall Street’s concerns because they have the potential to ripple into every other issue that has been besieging investors, if it escalates. That includes the growth outlook for U.S. corporations, an economic slowdown in China, the pace of rate hikes and the health of the U.S. economy and stock market, market participants have said.
