I think we all have a pretty good idea why the trade deal between China and the US was signed when it was. It was also quite telling that the Chinese leader was not present at the signing ceremony….
…. You would have thought that the Chinese leader would be there in all his glory if it was such a big deal.
But for the Trump administration, it deflected some of the attention away from the impeached president. And for China, it could lessen some of the embarrassment from its imminent annual economic report card that has, as expected, registered the slowest growth rate for nearly three decades.
The presidents of the two countries can try to spin the “phase one” deal in any positive way they would like. But the harsh reality is that both countries are groaning under the strain from the protracted trade war. And the war is far from over.
It is hard to tell which country is coming off worse. America’s economic growth rate hasn’t been this slow since the second quarter of 2017. China’s economic growth rate is the worst for 29 years….
…. what a mess. The two leaders should be ashamed of themselves. But that is what can happen when too much unaccountable power is put into the hands of people who believe that hanging onto control is more important than common sense.
Laughably, Trump has called the agreement the biggest deal anyone has ever seen. Oh really?
Could the extra $200 billion of goods that China might buy from the US really be bigger than the Trans-Pacific Partnership (TPP) that brought together 11 countries with a combined GDP of almost $80 trillion? Now, that’s what I call a “huge” deal, which, by the way, Donald Trump pulled out of.
We need to remember that the deal between China and the US only spans two years. If I was an American farmer, I certainly wouldn’t be rushing out to buy new harvesting equipment based on hyperbole from The White House….
…. And as income investors, we should not allow ourselves to be distracted from our long-term goals, which means looking for companies with growing cash flows that can cover dividends far into the future.
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Disclosure: David Kuo does not own shares in any companies mentioned.