Moments after stocks stumbled after the latest disappointing, and rather stagflationary Manufacturing ISM print, the S&P spiked higher following a Trump tweet in which the president said he just had a “very good” conversation with Chinese’ president Xi, in which the emphasis was on trade and added that “discussions are moving along nicely.”
Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!
— Donald J. Trump (@realDonaldTrump) November 1, 2018
The optimistic tweet reversed much of the early morning pessimism, which had nearly brought the Dow to the unchanged line, and sent the Dow Jones to session highs, up as much as 150 points, as sentiment once again shifts on trade, this time with markets now expecting a favorable outcome from the G-20 meeting between the two presidents.
The Chinese Yuan also spiked to session highs following Trump’s tweet:
Ironically, the news comes at the very same time that AG Jeff Sessions is said to announce a new initiative in response to China’s economic espionage, according to a U.S. official. The Initiative will be led by agency’s National Security Division Head John Demers and will increase the use of DOJ tools to counter China’s activities.
According to Bloomberg, Sessions is ordering the FBI and NSD to step up enforcement, and DOJ will select five U.S. attorneys to be part of the initiative. The announcement will be coupled with unsealing today of a criminal case by the U.S. Attorney for the Northern District of California that involves a Chinese co. that stole trade secrets from a U.S. company.
However, as shown above, stocks are ignoring the DOJ news and focusing solely on Trump’s tweet as the market’s bipolar nature once again emerges to the surface.
