President Trumps blinks first on the trade issue

Ok, my job is to analyze the markets...but I obviously have to pay close attention to politics in order to do this. Besides, it's something I've been doing all of my life. (I've always enjoyed following politics closely...since I was a kid.) In other words, I cannot claim to be an insider in Washington DC, but from everything I've read and heard about what took place this weekend, it sure looks like Trump did more than just "blink" this past weekend (which is the way I described it in "The Weekly Top 10" piece Saturday). The more I investigate it, the more I realize that he gave away a lot...and basically got nothing in return.

Kudlow basically admits the U.S. got nothing in return for concessions

From what I can gather from what I've read today and what I've heard on the "Sunday talk shows", the President did not receive anything significant for delaying the new tariffs and allowing some U.S. companies to sell products to Huawei. Listening to Larry Kudlow on "Face the Nation" this morning, he was asked directly, "What did the U.S. get for these concessions?" Mr. Kudlow (whom we have great respect for) stumbled through his answer...and basically admitted that the U.S. really isn't getting anything in return.

He started by saying that we are getting a resumption of the trade talks. (Really? We had to make a concession...just to get the talks restarted???) Then he made some rambling comments about what the change in Administration's stance toward Huawei. He later stated on Fox News, "This is not a general amnesty. Huawei will remain on the so-called entity list where there are serious export controls."......To be honest, it sounded like he doesn't know what the President's policy is towards Huawei...or what it will be going forward!

Congressional Leaders also confused about the change towards Huawei

Listening to Senators from both sides of the aisle, there seems to be just as much confusion on <g>Capital</g> Hill about what the President has decided to do in terms of Huawei. Senator Graham was interviewed...and said that he wasn't sure how many of the restrictions would be lifted. If the change is a small one, it won't be a big deal, he said. However, if the changes are far-reaching, Sen Graham indicated that it would be a mistake. Also, both Minority Leader Schumer and Senator Rubio of Florida echoed what we said yesterday...by saying that the President was giving away his best bargaining chip by lifting the restrictions on Huawei. Rubio went as far to say that Congress would pass legislation that would re-impose the restrictions on Huawei!

Ag products: No promises (much less an agreement)

The final item that Mr. Kudlow said that the U.S. had received in return for the President's concessions was an expectation that China would engage in large purchases of America farm products & farm services. It was not even a promise, it was just an expectation! Kudlow said that they were simply "hoping and expecting" China to make those purchases! He admitted that the talks have not resulted in any agreement for the Chinese to buy these agricultural products, but if it did, "it would be a show of good faith that these are serious negotiations."

The large scale purchasing of ag products has been on the table from China, so this is nothing new...and the fact that Mr. Kudlow says it's only something that MIGHT happen...tells us that they really did not get anything in return for the U.S. concessions.

Kim Jong Un raises his profile without giving anything away

We also have a situation where the President met with North Korea's leader Kim Jong Un. We can't find anything Mr. Trump got in return for elevating Mr. Kim's stature on the world stage either by meeting with him in North Korea either. Don't get us wrong, the fact that it looks like there will be a return to the negotiating table on this issue (as well) is certainly positive. However, simply "getting back to the negotiating" table...with two countries who have the reputation of "negotiating, but never really giving-in on anything"...is hardly something to get overly excited about. This is especially true since we had to make some concessions to get them back to the negotiating table...and they didn't have to make any.

More erratic than usual

These comments are not intended to be an attack on President Trump. As someone who gets a paycheck from the markets, I always want every President to succeed...no matter what party they come from. However, it just seems to me that President is becoming quite erratic on two issues that are vitally important right now......Of course, "erratic" is a word that the President's detractors have been using to describe Mr. Trump for a long time. However, the confusion surrounding the recent announcement about Huawei has taken this to a whole new level IMHO. It just seems to me that nobody really knows what the administration's policy on this issue is right now...including senior members of the administration and senior members of Congress.

Matthew J. Maley

Chief Market Strategist

Miller Tabak + Co., LLC

Founder/CEO--BTFNow.com

275 Grove St. Suite 2-400

Newton, MA 02466

617-663-5381

mmaley@millertabak.com

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