Get Ready For "Markets Rally On Hopes Of A Phase 2 Trade Deal"
It was July 6, 2018 when you could argue the U.S.-China trade war officially began. On that day, American tariffs on $34 billion of Chinese goods came into effect. China immediately struck back with tariffs of its own. The two sides began going tit-for-tat and the trade war we have all grown to love so much was in full force.
Friday, 526 days later, the U.S. and China reached a "phase one" trade deal. As Market Crumbs mentioned last week, this is the second time in two months that the two sides agreed to a phase one trade deal following more than a year of touting a comprehensive trade deal as being very close.
The main issues that were "resolved" as part of the deal reached Friday include tariff relief, increased agricultural purchases and changes to intellectual property and technology issues. As has been the norm, the details of all of these issues and how they will be enforced are not exactly clear.
The U.S. agreed to not implement the tariffs that were set to go into effect yesterday, with China agreeing to not institute retaliatory tariffs in exchange. U.S. President Donald Trump tweeted "The 25% Tariffs will remain as is, with 7 1/2% put on much of the remainder. The Penalty Tariffs set for December 15th will not be charged because of the fact that we made the deal."
"Beijing will increase agricultural purchases significantly," according to Vice Minister of Agriculture and Rural Affairs Han Jun. The only issue is he did not detail exactly what "significantly" equates to. Trump separately said he "thought China would hit $50 billion in agricultural purchases."
U.S. Trade Representative Robert Lighthizer said the two sides are aiming to sign the deal in early January in Washington. Ironically, on October 11 when the two sides first agreed to a phase one trade deal, they said the deal could be signed "as soon as next month."
If you thought the days of waking up to "markets rally on hopes of a trade deal" headlines would become a distant memory, tough luck. Trump tweeted "We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election." With the administration immediately beginning negotiations on a phase two deal, their go-to tool to pump the stock market can continue to be played whenever markets fall 0.50%.
So while the details of this deal are sparse, it appears the trade war will continue to drag on for the foreseeable future. As Market Crumbs has said all along, this entire debacle doesn't seem to be accomplishing anything for those it intended to, but rather has become perhaps one of the greatest market manipulation schemes of all time. But just maybe that was the goal all along.
They aren't forgetting about vegans. A few months ago, McDonald's announced it would test a veggie burger in Canada called the P.L.T., which stands for Plant. Lettuce. Tomato. The company is now introducing Veggie Dippers, a vegan meal, in the U.K. next month. The breaded dippers, which contain red pepper, rice, sundried tomato pesto and split peas, will come with a drink and fries approved by The Vegan Society. McDonald's will also offer the Veggie Dippers as a Happy Meal. "The Veggie Dippers are the same goujons as those used within The Spicy Veggie One but are prepared in a way that avoids contamination with any dairy ingredients, making this product fully vegan," McDonald's said.
They'll be used by the celebrities who are worried about climate change. Delta Air Lines is merging its private-jet business with Wheels Up to create one of the world's largest fleets of private airplanes. Terms of the deal were not disclosed, but as part of the deal Wheels Up will take over Delta's private-jet business while Delta will take an equity stake in Wheels Up. "This groundbreaking partnership will democratize private aviation, making the convenience of private jet travel accessible to more consumers," Delta CEO Ed Bastian said in a statement.
Back to the drawing board. California Governor Gavin Newsom rejected PG&E's bankruptcy reorganization plan, arguing it fails to meet the requirements of Assembly Bill 1054, which was passed in July. The utility now has until tomorrow to come up with a revised plan for Newsom to approve. "In my judgment, the amended plan and the restructuring transactions do not result in a reorganized company positioned to provide safe, reliable and affordable service to its customers, as required by AB 1054," Newsom wrote in his letter to PG&E. PG&E responded saying "We believe it does and is the best course forward for all stakeholders."
Jamie Dimon is on damage control. Following an exposé in the New York Times detailing racial discrimination at JPMorgan Chase branches in the Phoenix area, CEO Jamie Dimon has penned an internal memo to the bank's employees saying he's "disgusted by racism and hate in any form." "Racism has existed for too long — in our country, in our communities — and unfortunately, at times, even at our company. We will use this moment as an opportunity to do better — as leaders, as employees and as human beings," Dimon said in the memo.
This won't help their case in the U.S. A unit of ByteDance, the company behind the popular app TikTok that Market Crumbs profiled last month, has struck a partnership with a Chinese state media group. The partnership is the latest in a series of partnerships ByteDance has struck with state media organizations. While separate from TikTok, this may not be what U.S. lawmakers want to see after previously asking if TikTok could pose a "national security risk." "The joint venture will focus on partnership in the digital rights of short videos," a ByteDance spokeswoman said.