According to David P. Goldman, Donald Trump may have just secured his 2020 reelection with an armistice in the U.S.-China trade war. Goldman writes in Asia Times (abridged):
Investors greeted a prospective US trade deal with China by bidding for stocks that had suffered the worst in this year’s economic slowdown, including energy equipment, retail and transportation names. The small-capitalization Russell 2000 Index, which had lagged the S&P 500 all year, handily outperformed. The stock market is saying that the economy’s problem during the past year was the trade war, and that a resolution of trade will lead to faster economic growth.
It’s not over until it’s over, but President Donald Trump might have secured his re-election on Friday by calling an armistice in his trade war with China.
The best-performing sectors in today’s market rally are the ones most sensitive to the overall condition of the world economy and world trade, starting with energy equipment, energy exploration and development, retail, mining and transportation. These are sectors that are exposed to the indirect effects of trade war with China.
The small-capitalization Russell 2000 Index, whose members typically are exposed to the US economy rather than to China, rose by 2.4% at midday, outperforming the broad market indices, which rose by about 1.4%.
President Trump is on the right track, and future historians might cite today’s negotiations with China as a milestone on his way to a second term.