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May 6, 5:00 pm EST Late last week, the White House floated the idea that a trade agreement with China could come by this coming Friday (May 10). And then Trump did this yesterday …
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Why would Trump risk complicating a deal, even more, by threatening China with a deadline/ tariff increase? Because he has leverage. He has a stock market near record highs, and a strong economy and the winds of ultra-easy global monetary policy at his back. China, on the other hand, has an economy running in recession-like territory, with key data just (recently) bouncing from global financial crisis era levels. And Chinese stocks, after soaring 34% since January 4th, have given back 12% from the highs, in just seven days. And they’ve just fired a ton of fiscal and monetary policy bullets to stimulate the economy – which could be diluted by a more expensive and indefinite trade war. So, Trump has a win-win going into the week. If the threat works, he gets a deal done, and likely gives less to get it done. If China backs off, stocks go down, and he gets the Fed’s rate cut he’s been looking for – stocks go back up. If you haven’t signed up for my Billionaire’s Portfolio, don’t delay … we’ve just had another big exit in our portfolio, and we’ve replaced it with the favorite stock of the most revered investor in corporate America — it’s a stock with double potential. Join now and get your risk free access by signing up here. |