News from Iran and China Sending Markets to Higher Highs

So much for that escalating crisis with Iran.

“Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world,” Trump said. He also noted the U.S. would implement additional sanctions on Iran and has demanded that Iran “abandon its nuclear ambitions and end its support for terrorism,” as quoted by National Review.

In addition, Iran’s Foreign Minister Mohammad Javad Zarif has said the strikes “concluded” Tehran’s response to the killing of its general.  “Iran took & concluded proportionate measures in self-defense under Article 51 of UN Charter targeting base from which cowardly armed attack against our citizens & senior officials were launched. We do not seek escalation or war, but will defend ourselves against any aggression,” tweeted Zarif.

While that news is fueling higher highs in the markets, so is the phase-one deal with China.

Vice Premier Liu He will visit Washington D.C. next week to sign the interim trade deal.  The two sides said on Dec. 13, 2019 they had reached an agreement where China will substantially increase its purchases of U.S. agricultural products, pledge not to devalue its currency, and help to better protect U.S. intellectual property.

In return, the Trump Administration canceled new tariffs on $156 billion worth of Chinese imports that were set to take effect Dec. 15.  The President also agreed to cut in half the current 15% tariffs on nearly $120 billion worth of Chinese goods.

While that’s certainly good news, there are doubts over a phase two deal.

According to Jia Qingguo, one of Beijing’s top foreign policy experts, as noted by the South China Morning Post, “Despite the recent announcement that we are going to have the first phase agreement, [the] relationship between China and the US is still in deep trouble and is heading south rather than north. It is getting worse.”

All on concerns about “excessive” demands from the U.S., which have left Chinese officials feeling “useless” to engage, as also reported. 

He also noted it “very unreasonable” for the US to demand that China buy its products in huge quantities, even though Beijing has made “concessions” such as agreeing in December to buy $50 billion worth of agricultural goods.

Hopefully, such concerns can be ironed out as we move forward.