The Weekly Economic & Market Recap
Equity markets have rallied over the last several weeks as both the United States and China have made several conciliatory gestures in the trade war. China has decided to exempt purchases of U.S. soybeans and pork from punitive tariffs. Relief on soybeans and pork certainly removes some political pressure on President Trump. Chinese agriculture imports of U.S. products are down dramatically since the trade war began hurting farmers, which are an important Trump constituency. The move by the Chinese follows the Trump administration’s two-week postponement of tariff increases on $250 billion of Chinese goods that were scheduled for October 1st. There has been some speculation in the press that an interim trade deal may be in the works that is limited in scope and focuses strictly on trade issues. An agreement, even an interim one, would partially remove some of our concern regarding corporate profits and margins in 2020 and would allow market valuations to continue to lift.