Stocks have exploded higher after Trump once again was reminded of the White House “trading” strategy we laid out several days ago, according to which the US will deny trade deal is dead during US hours sending US stocks higher, confirm no deal ahead of China open crashing Shanghai Composite.
White House new trading strategy: deny trade deal is dead during US hours sending US stocks higher, confirm no deal ahead of China open crashing Shanghai Composite
— zerohedge (@zerohedge) May 6, 2019
Speaking ahead of China VP Liu’s arrival, President Trump told reporters that he had received a letter from Chinese President Xi urging them to work together, and suggested the two may speak on the phone. Additionally, Trump claimed a trade deal this week was still possible but he has “an excellent alternative” to the China deal.
“I think it’ll be a very strong day,” Trump said Thursday at the White House.
But the U.S.’s alternative to reaching a deal “is an excellent one,” the president added.
Adding fuel to the rally, Trump also said that “a deal with China is still possible this week”, and clarified that in the letter from Xi, the Chinese emperor for life (and beyond) urged Trump to “work together”, although with Trump making it seems like China is seeking concessions, it is virtually guaranteed that no deal is forthcoming.
As a reminder, China’s top trade envoy, Vice Premier Liu He, will land in DC on Thursday afternoon and immediately begin discussions with Trump’s top negotiator, Robert Lighthizer. U.S. tariffs on some $200 billion in Chinese goods are set to increase to 25% just hours later in a move that economists and businesses say risks being the most economically consequential of all of Trump’s tariff moves so far.
Trump’s comments were positive enough to get the machines into a buying frenzy, with the S&P spiking in moments…
… although by now the White House trading strategy is clear to all but the algos, and we have seen these bounces before this week, and we fully expect them to be promptly faded.
How long before we hear a walk-back?
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