Ep. 119A – US-China Trade War: Who’s Playing Who?

The Kapital News
The Kapital News
Ep. 119A - US-China Trade War: Who's Playing Who?

The Chinese trade delegation did make their way to Washington, DC for two-days of talks, however, their trip was cut short. It was expected that the trade delegation would be visiting some US farms, which was seen by many as an act of “goodwill.” These farm visits have been cancelled. This led to a market sell-off with the major indexes closing in the red. The question is, was this a planned action or perhaps a power-play by China? Basically saying to the US, look, we’re in control and we know that if we walk away the markets will sell-off and they did – a direct shot at the President due to his focus on markets. Or is this a power-play by President Trump, because earlier in the day, he stated that he wants a complete deal with China, not a partial deal. Recall, only a week ago, the President claimed that he was willing to consider a partial deal. Well that appears to be off the table for now, but the President is known to change his mind quickly – so time shall tell. The President also noted that he does not need a trade deal before the 2020 election. While the President has hinted at this before, he is now explicitly making this claim. So, did the Chinese cancel their farm field-trip because of the President’s comments, or was it already planned? Also, The Kapital News has been saying for quite some time that the President is going to want as many bogeymen as he can get during the 2020 campaign. With no trade deal, the President can cite the Chinese as a continuing problem, as well as the Federal Reserve, amongst others – allowing him to play the “strong-man,” which his base loves. If he signs a deal with China, the President has to be concerned with China backing away or pulling out, right before the election. Which we imagine would cause a market sell-off and provide ammunition to the Democratic nominee to exploit the lack of a deal and its subsequent volatility. So we are perhaps in a shifting paradigm with these trade negotiations, but we’ll have to wait and see what transpires during the next round of talks in October when higher-level discussions take place. In other news, the Fed has continued with repo market operations for the 4th straight day and is now extending the program until at least 10 October. There has also been an increase of $75 billion to the Fed’s balance sheet over the last week – begging the question, is this stealth QE? And if so, then it’s only a matter of time before they make QE4 official. The repo market has not been utilized since the Great Financial Crisis of 2008. And with $1.3 trillion in excess reserves in the system, why are financial firms needing to seek out refuge from the Fed? Could this be a lack of trust and confidence in the system? And if so, then something serious may be brewing just beneath the surface. Additionally, the President has authorized US forces to be sent to Saudi Arabia for “defensive” purposes only – at least for now. Recall that there are already US military forces in the area – so this is an additional installment of forces. Lastly, the UN General Assembly gathers in New York next week and we imagine quite a bit of breaking news will be made. Stay diversified, stay vigilant, and stay with The Kapital News. #USChina #TradeWar #EndTheFed #Recession #Economy #Invest #Finance #Peace #WakeUpAmerica

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