Hawaii Six O - Gary Wagner
The Trade War, It Ain’t Over till the Fat Lady Sings
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
According to Wikipedia, it ain’t over till (or until) the fat lady sings is a colloquialism which is often uses a proverb. It means that one should not presume to know the outcome of an event which is still in progress. More specifically, the phrase is used when a situation is (or appears to be) nearing its conclusion.
On Friday of last week, the president of the United States along with his trade delegation and negotiating members of China announced that they had reached an accord or agreement on “phase one” of resolving the current trade war between our two superpowers. However, it seems as though the extreme optimism that was prevalent on the day of the announcement has cooled down noticeably as analysts and market participants focus more deeply on what was said and what the agreement potentially involves.
“Even as market participants await more news as the verbal agreement is put to paper, and then signed by both presidents of the United States and China, questions and concerns are already beginning to surface. The Chinese state media warned the U.S. over the weekend to “avoid backpedaling” on a partial trade agreement, and expressed caution about the initial phase of the deal which President Donald Trump called very substantial.” This according to a report in CNBC.
The report also spoke about the fact that on Friday, “the Trump administration announced it was suspending a tariff increase to 30% from 25% on at least $250 billion in Chinese goods which were set to take effect on Tuesday. However, a tariff hike implemented in September was not rolled back and plans for another hike just before the end of the Christmas holiday on December 15 remains in place.”
The cold hard facts are that on multiple occasions over the last 15 months of this trade war both sides have made commitments which they later took back. It is also a fact that both sides have at one point or another simply left the negotiation table after they believed there was no real solid progress to be made. Simply based upon past negotiations the fact that the two superpowers were able to at least in theory agree upon actions that would move these two countries closer to a resolution is to be commended. However, the truth of the matter is that talk is cheap and results are needed to resolve the tremendous chasm of differences between the United States and China.
Also, it has been announced that China desires another round of talks before signing phase one of the trade deal. This according to a source and told by CNBC’s Kayle Tausche. It has also been suggested that China wants the United States to scrap a tariff hike scheduled for December, this according to Bloomberg News.
What has absolutely emerged is the fact that a partial trade deal simply titled “phase one”, is in no way a done deal. As bits and pieces are revealed to the public as to the content and actions that both countries plan to implement to resolve the crisis become known, we will have a much clearer idea whether or not there is any truth in the statement by President Trump that a “very substantial phase one deal” has been agreed upon. Because from where many analysts and market participants are sitting, they still hear a clear and loud voice of a fat lady singing.
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