Market Reverses on China Update to Trump's 'Done Deal'
Reports indicate China's new trade deal with the U.S. is less cut and dry than the president suggested.
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The market gave up its gains earlier on Wednesday following reports that China is putting a six-month limit on rare-earth export licenses for U.S. automakers and manufacturers.
Not quite the “done deal” President Trump trumpeted earlier in the day, and it points to China aiming to keep some negotiating leverage as the touted U.S.-China trade deal framework moves toward final approvals. We’d like to say we’re surprised, but if you’ve been closely following our comments, you know we are not shocked to see this wrinkle.
Other reports suggest the U.S. and China have until August to negotiate a broader trade agreement, and that deadline could be extended. Given our comments to you in Monday’s video, we are not surprised to learn this largely given the complex nature of these negotiations that take time. This timing reaffirms our view that we are likely to see companies issue cautious guidance when they report their June quarter earnings season. Should we see U.S.-China trade discussions get extended as well, the potential for which we flagged in Wednesday morning’s comments, it would support corporate guidance skewing more conservatively.
As we wait for a clearer picture of the trade deal front to emerge, we’ll turn our focus to the investor conferences we identified in Friday’s Weekly Roundup, aiming to “connect the dots” back to the Portfolio as we do so.
