Headlines:
- Trump open to deal with Xi at dinner but with conditions: Kudlow
U.S. President Donald Trump is open to reaching a deal on U.S.-China trade irritants over dinner on Saturday with Chinese leader Xi Jinping but is ready to hike tariffs on Chinese imports if there is no breakthrough, White House economic adviser Larry Kudlow said on Tuesday. Days before the high-stakes dinner, it was unclear whether the two sides had agreed on a formal agenda for the leaders’ conversation after the G20 summit in Buenos Aires. Kudlow said there were no scheduled talks on the ground for their advisers. Kudlow said Trump had told advisers that “in his view, there is a good possibility that a deal can be made, and that he is open to that.” But he said “certain conditions have to be met,” listing intellectual property theft, forced technology transfer, ownership of American companies in China, high tariffs and non-tariff barriers on commodities, and commercial hacking as examples of issues that “must be solved.” Kudlow declined to comment on whether China had made offers of concessions. The White House sees the dinner, which Kudlow hinted would involve Argentine beef, as an opportunity to “turn the page” on a trade war with China. But he said the White House has been disappointed so far in the Chinese response to trade issues.
- Fed’s Powell, in dovish shift, says rates near neutral
Federal Reserve Chair Jerome Powell on Wednesday appeared to signal the U.S. central bank is nearing an end to its interest-rate hikes, saying the Fed’s policy rate is now “just below” a level that neither brakes nor boosts a healthy economy. Stocks and interest-rate futures jumped in response. The comments were a reversal from early last month, when Powell had said rates were probably still a “long way” from a so-called neutral level and that the Fed may even go beyond that level. Those remarks sent stocks down as investors bet the Fed would need more rate hikes to prevent the economy from overheating. Powell’s dovish shift in language came as U.S. President Donald Trump stepped up attacks on Powell for rate hikes Trump sees as undercutting his economic and trade policies, telling the Washington Post just yesterday that he is “not even a little bit happy” with the Fed chief.
Summary:
Optimism ruled the roost ahead of the G20 Summit meeting scheduled to begin this Friday. Soybean prices rallied as looming trade negotiation talks between the US and Chinese representatives are set to kick off. Presidents Trump and Xi Jinping are scheduled to meet on Dec. 1, and while market-watchers aren’t optimistic a full-on deal will be agreed upon, some movement between the countries is expected. At the very least, the presidents will want to agree on some items even if they’re only cursory. Both Corn and Wheat were carried higher by the Soybean momentum. Also, a USDA flash sale report of 268,748 tons of Soybeans for the 2018-19 marketing year to unknown destination help in the Soybean price lift. Generally speaking, there has not been much of a change as far as the rhetoric is concerned, ahead of the G20 meeting. Perhaps money managers are laying off some risk and covering short positions ahead of the proposed negotiation talks.
