Update 1205ET: We warned that this was old news and it appeared that humans took a little longer to realize that fact than the algos that bid The Dow into the green for the day. Once those stops were hit, The Dow has reversed all the gains...
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Stocks turned higher just before noon on Tuesday after the South China Morning Post published a story claiming that China is expected to agree to buy more products from American farmers in hopes of sweetening the deal and increasing the chances of an accord when the two trade delegations meet next month.
US stocks turned flat on the day, erasing earlier losses on the report, which is the latest example of optimistic trade talk coming out of Beijing.
Citing "a source familiar with the situation," the SCMP reported that working-level officials were discussing the text of a deal, which would be form the baseline of a tentative agreement when Chinese Vice-Premier Liu He meets US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington in October.
The text is based on a draft that the two sides negotiated back in April, the anonymous sources said.
China is reportedly preparing to offer to buy more ag products in exchange for the US delaying a series of US tariffs, as well as easing the supply ban on Chinese telecoms giant Huawei.
In addition, the source said China could improve market access, offer better IP protections and reduce excess industrial capacity. On the other hand, the source said Beijing is still reluctant to compromise on subsidies, industrial policy and reforming state-owned enterprises.
Chinese Premier Li Keqiang told a group of US business representatives on Tuesday that Beijing is insistent on a "mutually acceptable solution" to the trade dispute. He added that China would welcome FDI by US companies.
Trade talks collapsed initially in early May as Washington insisted that Beijing had reneged on its word, prompting Washington to walk away from a deal that it said was 90% completed. The primary sticking point remains Beijing's demand that Washington remove all of its trade war tariffs, something President Trump has flatly refused to do.
Finally, we warn investors that this story is actually old news that was reported first last week by Politico, so perhaps chasing stocks higher here is not the best plan.