The Finance 202: Trump's deal with China offers less than meets the eye
By Tory Newmyer
July 1 at 7:28 AM
The trade truce that President Trump negotiated with Chinese President Xi Jinping in Japan over the weekend offers less than meets the eye.
Business leaders are sighing with relief that the agreement forestalls the imposition of tariffs on an additional $300 billion of Chinese goods. But otherwise it mostly appeared to lock in place a status quo that could augur an extended economic cold war between the worlds two largest economies.
The proof of that, analysts say, will be evident in the results the truce produces. Among other things, look for those results to include a stock market bump thats short-lived; no new clarity for Federal Reserve officials trying to determine whether to cut interest rates; a continuing escalation between the United States and China in tensions over technology; and corporate chiefs holding back on major investments and continuing to migrate supply chains out of China.
1. The stock market.
The market just concluded a strong half-year, with the S&P 500 up 17 percent over that period and the Dow Jones industrial average climbing 14 percent. That represents the Dow's strongest first-half performance in two decades, capped by its best June since 1938. Investor bullishness came despite Trump's intensifying trade war with China, and threatening escalations on other fronts, including Mexico and the European Union. But several Wall Street watchers, weighing in over the weekend, said the Osaka cease-fire wont translate into a sustained rally for stocks, because investors probably will recognize its limits.
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