The United States and China signed a Part 1 trade deal today that contained little in the way of positive surprises and an expected lack of detail.
As analysts and economists struggled to fill in the blanks, much of the deeper dive wound up stressing the negatives in the deal.
For example, although China pledged to buy a total of $32 billion in agricultural products over the next two years (and to strive for another $10 billion in purchases) in oil seeds, meat, cereals, ethanol and cotton. and to buy $52.4 billion in U.S. energy products such as liquified natural gas, crude oil, and coal, the terms of the deal don’t specify how much of each product China will buy or offer any details about when or if China will lift retaliatory tariffs imposed on American products such as soybeans and LNG.
Most agricultural markets fell on the signing of the deal as traders and farmers were left scratching their heads about when or if they might see additional purchases from China. Typical was the reaction from the National Farmers Union, which represents about 200,000 farm families: “Given the numerous deals that have been reached and then breached in the past two years, we are also skeptical,” the group said. “And without more concrete details, we are deeply concerned that all of this pain may not have been worth it.”
The Standard & Poor’s 500 closed down today by 0.15% but the Dow Jones Industrial Average gained 0.11%. The NASDAQ Composite fell 0.24% but the Russell 2000 small cap index gained 0.37%. the iShares MSCI Emerging Markets ETF (EEM) was lower by 0.80%.
Bank stocks that had rallied yesterday on good earnings news from JPMorgan Chase (JPM) and Citigroup (C) gave back those gains today on the lackluster action in the general market and on disappointing forecasts from Bank of America (BAC). JPMorgan Chase dropped 1.80% at the close. Wells Fargo (WFC), which had disappointed yesterday, continued its retreat, falling 1.99%. Citigroup slid 0.82% and Bank of America closed lower by 1.84%.
