“Just a little slip-up” – Donald Trump describes the collapse of the US stock market in December, the biggest fall since 2009. But this is no reason for concern from the point of view of the President, since an agreement in trade war with China will turn the stock market back to the top. The Confidence had been won, Trump is apparently in a telephone conversation with Chinese Premier Xi Jinping as he summed up on Twitter with “great progress”.
The financial markets were aware of the alleged progress, otherwise they would not have been corrected before the end of the year as sharp. Trumps positive assessment of the situation is likely to also have the American negotiators by surprise. The fact is that the negotiations are interrupted since the beginning of December, after a three-month ceasefire was agreed, in order to prevent an escalation. Next week should be exploratory talks.
But in the meantime, both the Chinese as well as the American economy showing strong signs of. Apple made on Wednesday for a nasty Surprise, as Tim Cook reported solid lower sales for the iPhone and this is explicitly connected to the lower demand in China. In addition, the purchasing index for the manufacturing industry declined in China in December, below the threshold of 50 points. This was the weakest performance of China since the beginning of 2016, and it indicates a shrinking economy.
The weakness of China had already, prices for commodities from copper to Oil to fall sharply, while production in the U.S. regions was for the first time in may 2016 in all of the Central Bank-observed economy in decline. And this despite the fact that China had promised in the fall, additional imports of soya and meat from the United States.
Trump is standing in your own way
Today, it is not clear that this concession more than the paper value. Measurable progress had been made in the negotiations so far, say Economists, and one reason is the Person Trump. The U.S. President had turned his Position since September of 180 degrees, said Derek Scissors, a China expert at the conservative American Enterprise Institute. “At the beginning he charge on all and any import duties, and now he wants to make the biggest Deal of all time.” Meanwhile, China had not fulfilled its claims. “It is hard to believe that this will change before the end of the ceasefire in March.”
Also in Beijing the skepticism about an agreement prevails in the face of Chaos in the White house. “The biggest obstacle to a Deal is the fear that the United States make endless demands,” says Lu Xiang, foreign trade expert of the government of the middle Academy of Social Sciences.
stock market crash after Christmas: The SMI reached on 27. December, a new low for the year. Image: Google
The uncertainty is weighing heavy as lead on the US stock market, with its height of flight, Trump boasted last year, and whose fall he wants to push now, the head of the Central Bank, Jerome Powell, in the shoes. The lack of any sense of responsibility on the part of the President is also a Problem for American negotiators, Robert Lighthizer. He fears that Trump could be buckling because of the shaky stock market. Friends Lighthizer, according to the “New York Times, said” that he wanted to prevent Trump to move China further “empty promises”, so how was it with the soy – and bovine meat imports.
China, and Democrats are rubbing their hands
Lighthizer follow a very simple strategy, explained in the previous trading William Reinsch officer. “He wants to force China simply to surrender.” Similar with Mexico and Canada in the Nafta negotiations, he confronted China with a maximum number of claims and attempts to humiliate the other side. This confrontation brought but already with the two neighbouring States of the USA, little progress.
Big improvements to the benefit of the United States, as Trump had promised, don’t expect most Economists to all cases. For that, Trump was engaged too little. With its chaotic trading strategy he had undermined the negotiations with the unions and the Democrats, whose approval is for the new Treaty with Mexico and Canada necessary. The Democrats can use now thanks to their new majority in the house of representatives their agreement as a pledge to move to Trump domestic political concessions.
These games and the weakened Position of Trump are the Chinese negotiators barely escaped. A rapid agreement is likely to be illusory square, and Lighthizer frustration. Amazing, given the fickle President, makes a mockery of the democratic Senator Sherrod Brown, “a President, in the know, what do you think of his belly, but not a lot of brains to trade needs”. (Editorial Tamedia)
Created: 03.01.2019, 10:24 PM
