Stocks climbed to fresh session highs Tuesday afternoon after yet another bullish – if repetitive – trade-related headline hit the tape. Responding to a question posed by a reporter following the start of the latest round of US-China trade talks, Trump said that the March 1 “hard deadline” for raising tariffs on $200 billion on Chinese goods is not a “magical date” for reaching a trade deal with China – yet another hint that the White House is planning to extend the talks, to the consternation of China hardliners like US trade rep Robert Lighthizer, who has been charged with leading the US delegation.
Following reports last week that the White House has been weighing a 60-day extension of the trade deadline, some Wall Street analysts have posited that an extension would be the best-case scenario for stocks (since Trump has warned that there won’t be a deal at least until he has a chance to sit down with President Xi).
Trump has repeatedly insisted that the talks are going “well”, even as leaks from the talks suggest that the two sides have yet to reach a memorandum of understanding – a framework on what a deal should look like.
In addition to the “positive” trade news, Cleveland Fed President Loretta Mester did her part to pump the market by chiming in on the other big topic that the market cares about right now – namely whether the Fed is planning to pause its quantitative tightening plans – when she said the central bank should pause its balance sheet runoff, becoming the second Fed member after governor Lael Brainard to urge a hard stop to QT in 2019.
“There are very complex talks,” Trump says about ongoing negotiations with the world’s second-largest economy “They are going well. We are asking for everything that anyone has ever suggested.”
As markets build on their best start to a year in decades, and prepare for the 9th consecutive week of gains, this headline was just the latest reminder for Trump that all he needs to do to pump stocks higher is remind the market just how “well” talks are going, no details necessary. And, since it keeps on working, Trump will keep on saying just that, day after day, until the S&P hits 2,800 on nothing but hope.