In said commentary I suggested that if the two leaders couldn’t produce credible evidence that the trade war will soon be coming to its end that “today’s gains are soon to be obliterated, and some.”
Well, in response to President Trump’s Sunday evening comments, the market woke up yesterday morning (Dow up 400 right out of the gates) thinking that a grand deal was in the works. Since then, however, other than confirmation of no escalation pending further negotiations, the specifics on China’s purchase of ag products and reduction of auto tariffs that the President laid out were met by dead silence from China and clear discomfort among his top advisers when they were called out for confirmation.
So then, while indeed a 90-day truce is a positive, it’s a long way from the credible commitment the market was looking for. Thus, today’s selloff makes perfect sense.
For now, we should view this morning’s action as global markets (traders in the aggregate) voicing their displeasure and sending yet another strong signal to the powers that be that a protracted trade war is in nobody’s best interest.