With US stocks set to open higher on Thursday, traders’ blood pressure probably spiked when they saw headlines from an interview with White House trade advisor Peter Navarro hitting the tape (who can forget his infamous comments two week ago when he chided traders and Wall Street banks for pushing for a trade detente, warning that talks with China hadn’t yielded any progress).
Fortunately for equity bulls, stock futures remained in the green as Navarro offered a mix of bullish and bearish commentary during a brief chat with Fox Business’s Maria Bartiromo, where the notorious China hawk discussed the Trump administration’s goals in its negotiations with its trade war rival, and advised traders to “focus on March 1” instead of trying to read too deeply into every report “on the front page of the Wall Street Journal” (comments that, on the surface, would seem to undercut the impetus for yesterday’s rally).
“Investors shouldn’t get hung up on the day to day…Just focus on March 1 when we’ll have a complete offer from China that will be negotiated behind closed doors not on the front pages of the Wall Street Journal.”
However, Navarro’s comments weren’t all bad: He affirmed that China had restarted purchases of US soybeans, and that Beijing is making an effort to ease trade tensions with the US. This shouldn’t come as a surprise, Navarro said, because if China doesn’t buy our soybeans “they get inflation…they get riots in Tiananmen Square.”
Instead of focusing on trade policy, Navarro suggested that traders should focus instead on the Federal Reserve and its plans for raising interest rates.
In terms of the administration’s goals for its trade negotiations, Trump is trying for two objectives: pushing China to improve market access (buy more stuff and let us enter markets without forced IP transfer) and – more importantly – implement ‘structural’ reforms like ending cyberintrusions, state-directed investment and intellectual property theft that have been the target of the Section 301 trade investigations launched by the White House.
Moving on to a discussion of national security issues, Bartiromo moved on to the security topic du jour: China’s motives in arresting two Canadian nationals. Asked whether these arrests constituted retaliation for the arrest of Huawei CFO Meng Wanzhou, Navarro responded that “it is.”
That marks the first time a Western official has directly acknowledged what everybody already suspected.
Watch the full interview with Navarro below:
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