Trump is going to have to cave on some major issues as it appears China is gearing up to play hardball and is ready to rumble in the next round of negotiations. The Ministry of Commerce announced this morning the “talks will be held in the spirit of equality and mutual respect, and that China’s core issues must be resolved.”
But even the doves in the Trump administration seem to be growing increasingly pessimistic and lowering expectations.
Kudlow: U.S. may never reach trade deal with China
“When you get down to the last 10 percent, seven-yard line, it’s tough,” he added, referring to the negotiations. – Larry Kudlow, Politico
China is sensing that patience is running thin in America over Trump’s trade war.
While rural Americans were some of Trump’s biggest supporters, they are losing patience with a year long trade war that the Trump administration has reached an impasse without closing a deal with China. – Global Times
China can play the long game and Xi is also probably studying U.S. political polls, smells blood, and sees a president growing desperate for a deal. Moreover, the polls in the states that matter most for re-election continue to get worse for the President.
This story just broke tonight in the Washington Post,
The Trump administration is increasingly concerned about prospects for a trade deal with China, amid an unexpected reshuffling of the Chinese negotiating team and a lack of progress on core issues since the Group of 20 summit in Japan, according to U.S. officials and senior Republicans briefed on the discussions.
…“This has to be seen as a loss of confidence in Liu He and the desire of the leadership to bring in someone more politically savvy,” said Dennis Wilder, a former China analyst at the Central Intelligence Agency. “I am sure his instructions are to get tougher with the U.S.” –Washington Post
Can Trump afford to cave now going into the campaign?
The only thing predictable about the President is he doesn’t like to appear weak. But, then again, he has the ability to convince himself that weakness is strength in the classic Orwellian sense.
Go no further than taking a few steps north of the 38th parallel if you need confirmation. Bloomberg now reports that the Trump administration is mulling over suspending some sanctions on North Korea,
That is a big concession and far cry from total denuclearization,
President Trump said late Saturday that North Korea must “denuke” before any talks with the U.S.. – The Hill, March 4, 2018
It is clear, at least to us, politics is driving President Trump to make concessions in order to announce another Potemkin deal and declare victory. You can’t entirely rule out the same with a China deal but the President will likely be hammered from both sides for caving on trade.
We are getting very close to sequel time, folks – Get Shorty 2.0 Everyone is lathered up over the Fed and very few realize the extreme valuations levels of the major macro metrics.
It’s also unprecedented for the Fed to begin cutting rates so close to an all-time high in the stock market. The exception was July 1995 but we don’t sense the economy is on the eve of another 1990’s economic and technological boom.
Give them a little more room to run, set your entry and stop levels, and place your finger on the trigger. Let the market then tell you when it’s time to fire.
Finally, if you need more comfort for the bear view, we advise never betting against the hedge fund great, Paul Singer.
via ZeroHedge News https://ift.tt/2LjJLho Tyler Durden