Market pros are more skeptical about a trade deal with China, which they say may require President Trump to cave on tariffs.
"It's always been a risk that the phase one deal was not a done deal. The president said as much last week. It's a noisy process," said Jon Hill, rate strategist at BMO. "If you look at the S&P 500, it's still 1% from an all-time record. That's not exactly screaming concerns. It's a super noisy process and we'll probably get some conflicting development in about 30 minutes.
"To reach such a deal, some tariff reduction is likely to be necessary, as statements from Chinese officials suggest that they expect a tariff reduction to be part of a 'phase one' agreement," noted the Goldman Sachs economists. Market players have become frustrated with the timing of the phase one deal. It was expected to have been signed at the Asia-Pacific Economic Cooperation meeting in Chile, which was to have been held earlier this week before it was canceled by Chile's government. The later phase deal would deal with much thornier issues of intellectual property and technology transfers.
"I would give it a high percentage because Trump does want it, but I don't think he's willing to do it at any price. He sees everything through the lens of what he can say at his rallies," said Block. "If they take away his applause line, then they're overreaching."
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