Despite the clear facts the markets have still maintained the hope of an early agreement between the US and China – but now there is obviously silence as the Chinese media report!
Strong accusations against the USA
This is what it says in the Social Media Account Taoran which Beijing is primarily using to formulate its assessment of its relationship with the USA:
„If there is no real concrete action by the United States, it will be meaningless for you (Mnuchin) to come and talk. It is better to suspend the consultation completely and return to the normal working track… The US does not show any sincerity in continuing talks… Instead, it is extending its pressure tactics. The US on one hand says it engages in talks, but on the other hand keeps using petty tricks to destroy the atmosphere for talks.“ (cited from „South China Morning Post“)
Now Mnuchin and Lighthizer have to stay at home – it is unclear when and whether the talks will be continued. One can assume however that this silence will now last longer – so long that Mnuchin and Lighthizer will perhaps be able to take a Boeing 737Max again on their next trip to Beijing.
Signs of deterioration
How will the markets react today? Today the “Small decay day” could possibly have a supporting effect again but the US futures are clearly in the red at the start of European trading. In view of the current situation a tweet of hope from the big market tax man Trump who could then trigger the 7398th “we’ll have a deal – hope rally”, is rather unlikely – but the Americans as we know are not squeamish when it comes to conjuring up a rally reason.
Speaking about the Americans: With yesterday’s figures from Walmart, Cisco and Nvidia the US reporting season has finally ended. It was generally mixed but better than feared in December. So now we actually need new impulses – and the next political impulse will come from Trump in terms of tariffs against the EU or its deferment (or import restrictions).
We assume that the direction of the markets for the coming weeks will only visible after the “Small decay day” and still see a greater downward potential than upward opportunities…