Top US and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute...Of course U.S. equity futures immediately went from red to green on the above newsflash. Thing is, the Dow future contract, for example went from down 50 to up 40, not from down 50 to up 400 (and some [a bunch]), as you might expect on such news.
Upon reading the article, it became clear to me why the muted reaction.
Here's what I'm getting at: emphasis mine...
Although an agreement was within reach, the two sides remain apart on two key issues — the fate of existing US levies on Chinese goods, which Beijing wants to see removed, and the terms of an enforcement mechanism demanded by Washington to ensure that China abides by the deal.
“We’re getting into the end-game stage,” said Myron Brilliant, executive vice-president for international affairs at the US Chamber of Commerce. “Ninety per cent of the deal is done, but the last 10 per cent is the hardest part, it’s the trickiest part and it will require trade-offs on both sides,” he told reporters on Tuesday.Yep, that last 10% is THE issue, make no mistake! As I've been emphasizing herein, while a signed deal may indeed give the market a nice boost, if it does not do away with the economically-damaging existing tariffs, it will not produce the lasting stock market reaction the Administration is hoping for -- I can virtually assure you.
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