No March Meeting On Trade Deal For Trump And Xi

A potential end of March meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an agreement to end their trade war won’t take place this month after all. Media are reporting that multiple sources are now post to April at the earliest.If it takes place at all, of course.

The delay reflects just how much still needs to be settled before there’s a deal to sign. This week U.S. Trade Representative Robert Lighthizer said major issues are still unresolved with the remaining big lists focused on ending technology transfers as a requirement for joint ventures with Chinese companies and the agreement’s enforcement mechanism and the question of whether one side (the United State) or both sides would be able to reimposed tariffs if the agreement is violated.

President Trump’s walk out from talks with North Korea has also made the Chinese very nervous. The prospect of the U.S. president walking out on President Xi is just too humiliating for Chinese officials to contemplate. Which has led China to push for a completed agreement before the leaders meet and an formal state visit in Washington (rather than a more informal meeting in Mar-a-Largo) on the theory that it would be harder for the U.S. President to walk out of a formal state visit.

The financial markets have taken the postponement in stride. The Standard & Poor’s 500 was off just 0.06% to 2809–holding then important 2800 level–at 3:30 p.m. New York time. The Dow Jones Industrial Average was up 0.03%. The NASDAQ Composite slid 0.11% and the Russell 2000 small company index was lower by 0.37%.Overnight the Shanghai Composite continued its sell off after a strong 2019 rally by dropping 1.2%.

Frankly, I’d be happier if the markets showed a bit more negative reaction to this news. Today’s “shrug” at what would have once been major market moving news argues that investors and traders don’t care about much as long as the Federal Reserve is committed, as they see it, to supporting the financial markets with steady or lower interest rates. The Fed meets on rates and other matters (the balance sheet run-off, for example) next week with a press release and press conference scheduled for March 20.