Back to top

Trump-Xi Meeting: Set Up for Success?

Read MoreHide Full Article

Friday, November 30, 2018

Meetings today and tomorrow at the Group of 20 (G20) Summit in Buenos Aires, Argentina are grabbing the lion’s share of headlines this morning, as we don’t see any new economic data until after today’s opening bell (Chicago PMI for November and a speech by voting Fed member John Williams). But the focus remains not on a group of 20, but of 2: the U.S. and China.

And the mood of U.S. officials going into the meetings — particularly the dinner scheduled between Presidents Trump and Xi Saturday — is quite positive, especially considering which side of the equation these officials have been on. U.S. Trade Rep Robert Lighthizer, known as hawkish on tariffs for imported Chinese goods, says this meeting is “set up for success.” In fact, he said he’d “be surprised if it wasn’t” a successful meeting.

These comments have led some in the media to speculate that a deal between the U.S. and China on trade tariffs is already in place, setting up the dinner meeting as little more than a formality. Yet with the two sides so far apart to this point in time — and with a major increase to 25% on Chinese imports scheduled for January 1st of next year — it’s hard to imagine just what sort of agreement would put this issue to bed.

Not that it wouldn’t be very well received by the market. Much of our recent trepidation in market investment can be traced directly to the tariff issue, especially regarding all the “known unknowns” an additional 25% tax would unleash on the indexes. Even a temporary truce on tariff policy — currently thought of by many analysts as a more likely outcome than a complete long-term agreement between Trump and Xi — would provide at least a near-term boost to market sentiment, although it would do little more than kick the can for the issue.

Should Trump continue to hold Xi’s feet to the fire on trade, odds of which improve by the presence of trade policy architect Peter Navarro assisting Trump at the G20, there is a smaller possibility that differences between the world’s top two economies actually gets inflamed by the meeting. But as world leaders tend not to complicate photo ops like the one tomorrow’s dinner would provide with the exacerbation of current difficulties (they’d rather “save face” in front of the cameras), it’s more tempting to count on diplomacy winning the day.

Of course, even if a handshake agreement does lead to a bid-up in the market indexes today and perhaps Monday, there would still be question marks surrounding a final trade deal, with January fast approaching. Right now, pre-market activity is decidedly mixed, with Dow futures down double-digits with the Nasdaq slightly in the green.

Mark Vickery
Senior Editor

Questions or comments about this article and/or its author? Click here>>

3 Medical Stocks to Buy Now

The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.

So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.

See them today for free >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

The full Ahead Of Wall Street article

SPDR-DJ IND AVG (DIA) - free report >>

NASDAQ-100 SHRS (QQQ) - free report >>

SPDR-SP 500 TR (SPY) - free report >>

More from Zacks Ahead of Wall Street

You May Like