Trade War 2019: The Last 12 Hours Have been the Most Bizarre

Investor’s heads are spinning.

At one point, Dow futures were down as much as 300 points last night. All after the South China Morning Post reported that high-level talks would only take place on Thursday, instead of Friday.  That meant there was little progress.  

By morning, futures were down only 50 points after the White House said the South China Morning Post report was inaccurate, and that they were not aware of any travel changes.

Now, there are reports the U.S. may suspend a tariff increase scheduled for next week in exchange for a currency pact. The U.S. also reported the Trump Administration may allow the sale of some supplies to Huawei again after restricting sales back in May 2019.

“We expect the WH to announce that progress has been made sufficient to put the Oct 15 tariff on ‘indefinite hold,’” said Donald Straszheim, head of China research at Evercore ISI, as quoted by CNBC. “If we are correct on these delays, the tariff war has already hit its peak intensity. That’s a plus. Both sides we believe want to turn down the heat.”

South China Morning Post Still Dim on Trade War Hopes

After all of this back and forth, the South China Morning Post does not expect to see a deal.

“The US has not changed its extensive and rigorous requests for China, nor has it responded to China’s core concerns,” Renmin University international relations professor Shi Yinhong said. “Even if there is a deal, it could only be a mini-deal, even a minimal mini-deal. A currency pact, if true, does not bring any substance.”

Unfortunately, we’re all in a state of limbo, as we wait for some sort of deal.

In the meantime, investor heads may continue to spin and spin.  Stay tuned.