Just a week after U.S. Treasury Secretary Stephen Mnuchin declared  a “truce” in President Donald Trump’s tariff war with China, today the White House has announced that it plans to put a 25% tariff on $50 billion in Chinese exports to the United States.  By June 15, the Trump Administration will release a list of some $50 billion worth of Chinese goods that will be subject to a 25% percent tariff
Unless you’re invested in South Korean equities, President Donald Trump’s decision to cancel the June 12 summit with North Korea is a non-event in today’s financial markets. The iShares MSCI South Korea Capped ETF (EWY) was indeed down 1.60% as of 3 p.m. New York time, but the wider iShares MSCI Emerging Markets ETF (EEM) is off just 0.61% and U.S. indexes are lower by even small amounts with the Standard & Poor’s 500 down 0.18%
Remarks by Treasury Secretary Steve Mnuchin and White House economics advisor Larry Kudlow over the weekend have the market feeling that the United States and China may avert a full on trade war. The Standard & Poor’s 500 stock index was ahead 0.65% as of 2:30 p.m. in New York on Monday. The Dow Jones Industrial Average is up 1.11%.
It’s actually amazing to me that U.S. stock markets weren’t down more today given all the uncertainty regarding trade relations between United States and China, between the United States and its NAFTA partners Canada and Mexico, and between the United States and the European Union.
Today, House Speaker Paul Ryan announced a May 17 deadline for the Trump administration to submit a proposal NAFTA revision to Congress–if President Trump wants this Congress to vote on a revised agreement. The odds of an agreement emerging from current talks and moving on to Congress on that schedule are just about nil. At the same time news of significant horse trading is coming out of U.S.-China trade talks.
The is a week with plenty of potential economic trends–although none is so strong that geopolitics couldn’t seize control of the world’s financial markets
I know it’s hard to pay attention to NAFTA while we’re anticipating President Donald Trump’s sit down with North Korea’s President Kim and pondering the effects of the President’s decision to pull the U.S. out of the Iran nuclear deal, but the talks to negotiate a new deal with Mexico and Canada on NAFTA are getting very, very close to a deadline. Â And it looks like there won’t be an agreement in time for Congress to vote. No one, however, is quite sure what that would mean.
The U.S. negotiating team looking to put together a trade agreement with China that would avert a trade war headed back to Washington on Friday after two days of talks that saw the United States propose a $200 billion cut to the U.S. trade deficit with China by 2020–and the widely expected rejection of that proposal by China.
The Standard & Poor’s 500 stock index rose 1.07% to the highest level in four weeks, pushing above its 100-day moving average for the first time in  month. The Dow Jones Industrial average closed up 0.87% The gains in the index are in spite of continued chaos on the trade front between China and the United States
On Saturday in my Saturday Night Quarterback look ahead at the week on JubakAM.com I wrote that the week before the start of earnings reporting season–in other words, this week that we’re now in–was likely to see the market bounce from one idea to the next with one day’s worries sinking the market and the next day’s leading to gains. That’s exactly what we saw yesterday
Global financial markets rallied today on a speech by China’s President Xi Jinping at a regional economic meeting that seemed to pull China and the United States back from the cliff and a potential global trade war. Xi promised to open up China’s economy, to raise the limits on foreign ownership in the aircraft, shipbuilding and auto industries and to reduce tariffs on auto imports and on some other products.
The market didn’t reverse or fade today. The Standard & Poor’s 500 stock index hit 2656 by 10:30 and then, despite a dip that took 20 points off the index around 12:30 managed to close at 2656 for the day. That was a gain of 1.67% for the day and near the top that Monday’s market hit before its end of the day reversal. The Dow Jones Industrial Average finished up 1.79%; the NASDAQ Composite was higher by 2.07%.
