US equities are tanking at the open, led by Dow Transports (autos) following a confirmation from White House economic advisor Larry Kudlow that if a deal is not reached with China within 90 days, then the trade-war will re-escalate.
Pointedly, Kudlow said that if a deal with China is not reached then US would increase tariff rates to 25%, adding that Washington could add to that.
Stocks don't like it...
Overnight saw Dow futures erase all the trade-truce gains, bounce, and are now fading again...
Seems like the yield curve is on to something..
Kudlow's reality-check comments come as President Trump attempted to talk up the 'deal' - and the market - once again, noting that "negotiations have started..."
The negotiations with China have already started. Unless extended, they will end 90 days from the date of our wonderful and very warm dinner with President Xi in Argentina. Bob Lighthizer will be working closely with Steve Mnuchin, Larry Kudlow, Wilbur Ross and Peter Navarro.....— Donald J. Trump (@realDonaldTrump) December 4, 2018
But even Trump admits to uncertainty on the 'deal': "seeing whether or not a REAL deal with China is actually possible..."
......on seeing whether or not a REAL deal with China is actually possible. If it is, we will get it done. China is supposed to start buying Agricultural product and more immediately. President Xi and I want this deal to happen, and it probably will. But if not remember,......— Donald J. Trump (@realDonaldTrump) December 4, 2018
"President Xi and I want this deal to happen, and it probably will..." ... Or not...
And finally, Trump confirms he is not afraid to re-escalate: "Remember, I am a Tariff man."
....I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN— Donald J. Trump (@realDonaldTrump) December 4, 2018
"We are right now taking in $billions in Tariffs." He is not wrong...
The question is, who is paying it?
However, Trump ends on a positive note.
.....But if a fair deal is able to be made with China, one that does all of the many things we know must be finally done, I will happily sign. Let the negotiations begin. MAKE AMERICA GREAT AGAIN!— Donald J. Trump (@realDonaldTrump) December 4, 2018