Trade, tariffs, tweets or facts, fundamentals and the Fed. I think I would choose the latter, and hopefully that’s the direction we will begin to take as we look at the markets—and, more importantly, the economy. We are starting off the earnings season at the end of this week with a few of the big five banks reporting. By all accounts, this should be a very good earnings season.
Chinese President Xi Jinping should have given the markets a bit of a boost, as he has taken away some of the negative uncertainty in and around tariffs and trade and the looming potential of a trade war. His 40-minute speech last night was certainly conciliatory and will be very helpful in easing some of the fears. His positions and commitment to economic liberalization was clear, opening up automobile imports by reducing tariffs on automobiles and opening up access to Chinese financial and manufacturing sectors to foreign corporations.
Furthermore, Jinping did not mention any friction between the U.S or point to any comments made by President Donald Trump, which I’m sure Trump will take as a victory. If nothing else, from a negotiation tactics viewpoint, it certainly should be looked upon as a bit of a victory, without ever sitting down across the table to negotiate. It would appear as though China has realized that the relationship between the U.S and China is certainly a beneficial one. The export nation that it is, China is highly dependent upon the eurozone and the U.S for its own manufacturing and economic success.
China’s imports to the U.S alone are about five times more than the U.S exports to China. And let’s not forget this is Communist China, which is depending upon its dictator regime to continue in power—understanding it would not be able to withstand a revolt of one billion unemployed people. Perhaps the real negotiating tool with Communist China is coming from within. As amazing as it might seem, one thing is certain—President Trump has done more to change the trade relationship with China in a more positive direction for America than any president since Richard Nixon.
Dan Celia is president and CEO of Financial Issues Stewardship Ministries, Inc., and host of the nationally syndicated radio and television program “Financial Issues,” heard daily on about 650 stations across the country and reaching millions of households on the National Religious Broadcasters Network, BizTV, Dove-TV and others. Visit www.financialissues.org.