Our President’s Comments

11/15/19

Internal Markets Commentary

The Tariffs Wars

  • China’s Ministry of Commerce spokesman Gao Feng said that “China has stated that the trade war has begun with tariffs and should end with removing tariffs. To remove existing additional tariffs is an important condition for reaching a deal.” This encouraged the belief that China’s negotiating stance is for a rollback of existing tariffs, rather than just a delay of pending ones. If agreed, this would presumably be a more positive outcome for markets, but it will also be harder to finalize. Nevertheless, late US session breaking headlines suggested that the two countries held a deputy-level call yesterday, which ended up boosting risk assets into the New York close.

11/14/19

Internal Markets Commentary

The State of the Markets

  • Risk assets started off weak yesterday but progressively rallied as the day progressed with the US ending up in positive territory turning the day around even if the trade news has been more uncertain this week. The initial culprit for the risk off appeared to be the overnight WSJ article which suggested that tariffs remained a “stumbling block” in the US and China coming “to a limited trade deal”. The article went on to say that “the log-jam centers on whether the US has agreed to remove existing tariffs in the so-called “phase one” deal that the two countries have been working toward, or whether the U.S. would only cancel tariffs set to take effect December 15th”. The S&P 500 managed to rally back to positive territory after opening down -0.43%, but then there was then a second bout of risk aversion later in the session. Reports suggested that agriculture purchases are the main stumbling block, sending the index back down -0.33% from the highs, since most have assumed that the agriculture issue is one of the least-difficult to resolve. The potential for auto tariffs continues to lingers as well, at the USTR has reportedly sent its report on negotiations with Europe and Japan to the White House, which could allow the President to implement tariffs if he chooses.
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