Where are we on US-China trade?

Clearing the Fog: Where Are We on U.S.-China Trade?

The headline noise surrounding U.S.-China trade and phase one has intensified over the past week, as conflicting headlines on the progress of negotiations are now hitting the tape daily.

On Friday, Larry Kudlow repeated his perma-optimistic commentary of a deal being close but added that phase one might not need to be signed by Trump and Xi. He instead implied ministers could sign it, and if that’s the case, it removes a huge logistical hurdle as finding a place and time for a signing ceremony between the two most important men in the world is difficult.

Then on Monday, CNBC reported that Chinese officials had become “pessimistic” about a phase one deal, although that was countered today by a Bloomberg article that stated the U.S. and China were considering a more substantial tariff rollback than previously expected.

U.S.-China trade remains the singularly important driver of the melt-up rally, and given these conflicting headlines we wanted to take a minute to explain 1) What the market currently has priced in, 2) What would constitute a significant disappointment (meaning the S&P 500 back below 3000) and 3) What would constitute a legitimate positive surprise (S&P 500 above 3200).