Stocks Tick Higher As Trump, Liu Announce “Substantial Phase 1 Deal”
Stocks cemented their best performance since June on Friday after President Trump and Chinese Vice Premier Liu He – in a replay of their joint press conference from April (where the two men announced that the two sides were ‘close’ to a deal, and that one would likely be reached within 4 weeks) – revealed that Washington and Beijing had achieved what Trump called a “substantial phase one deal with China.”
He added that the deal – which involved IP, financial services and big agricultural purchases – would take three weeks to get written. China has agreed to make between $40 and $50 billion in agricultural purchases. Trump added that a currency agreement is also going to be part of the deal.
The announcement came 20 minutes before the market close. Traders were beginning to wonder whether an announcement would be out before the long weekend.
A White House factsheet about Liu claimed that he had been granted “special envoy” status (contrary to reports from earlier this week), granting him the authority to negotiate on Xi’s behalf.
During a press conference Friday afternoon where he sworn he wouldn’t talk about China, Mnuchin let slip that talks on Thursday and Friday had been “productive”, and that he and Lighthizer were heading to the Oval Office after this to brief the president ahead of his meeting with Liu.
Many had wondered whether the two sides would agree to suspend the next tariff escalation, set for early next week (Oct. 15), as well as the following escalation set for Dec. 15. Many suspected that forestalling the imposition of new tariffs, and hikes on previous tariff rates, would be a top priority for the Chinese.
Of course, anything could happen over the weekend, let alone during the intervening five weeks. After all, the White House’s “substantial” deal still needs to be written.
Fri, 10/11/2019 – 15:41