Trump did a Reagan, cut Hanoi Summit short minus deal. Stocks shrug
WASHINGTON. Consensus is that Michael Cohen made a fool out of himself in House testimony Wednesday, barely nicking President Trump in the process, much to the Democrats’ disappointment. Meanwhile, the Washington distraction game failed to take the President off his game during his Hanoi Summit with North Korea’s Communist boss Kim Jong-un. Lacking meaningful concessions from Kim Jong-un this go-around, Trump did a Reagan, cutting the meeting short and walking away without a deal.
Deal or No Deal: The Hanoi Summit collapse
Reuters just posted the following synopsis of the inconclusive Hanoi summit.
“U.S. President Donald Trump said he had walked away from a nuclear deal at his summit with Kim Jong-Un in Vietnam on Thursday because of unacceptable demands from the North Korean leader to lift punishing U.S.-led sanctions.
“Trump said two days of talks in the Vietnamese capital Hanoi had made good progress in building relations and on the key issue of denuclearization, but it was important not to rush into a bad deal.
“‘It was all about the sanctions,’ Trump said at a news conference after the talks were cut short. ‘Basically, they wanted the sanctions lifted in their entirety, and we couldn’t do that.’”
Surprise! Trump did a Reagan
Former President Ronald Reagan’s similar actions during his negotiations with Mikhail Gorbachev ultimately did result in a landmark nuclear arms reduction treaty.
Sadly, but for good reasons, Trump just terminated that longstanding treaty due to Putin’s consistent and open violation of its terms.
In agreements, contracts and treaties, ultimately both parties have to play fair. Which is undoubtedly what Trump told Kim in Hanoi. The North Koreans are used to extorting stupid deals from ready-to-appease American presidents who want to pretend they got a real deal. But Kim miscalculated. He got no deal here.
A message for the Chi-coms
In walking away from the Hanoi Summit, Trump also likely changed the optics for his ongoing and thus far generally stalemated trade negotiations with Beijing.
China, it seems, is happy to concede Trump’s unfair trade practices complaint. They’ve offered to buy a lot more or our stuff. But only if Trump will drop his tariff regime. Apparently, they have no intention of even considering America’s request to stop stealing our industrial and technological secrets. They seem to regard this as a cost of doing business with them.
But then, Trump did a Reagan.
Trump’s message to both Xi and Kim: The Art of the Deal involves win-win scenarios. And the US never gets a win when it concedes its most important needs right up front without getting anything in return. So you guys will never get the deal you want unless you seriously address our most serious issues with your regimes. Mainly, property, technology and trade secret theft (China). And unprovoked nuclear threats against neighbors and even the USA (Kim).
All this is pretty important stuff on both the diplomatic and business fronts. America simply must cease letting rogue nations steal our economic lifeblood, destroying American jobs and American products and exports with impunity. And America must, as well, re-affirm its sovereignty (immigration and free flow of information included) and its ability to look out for its own citizens’ jobs and interests first, not as an afterthought.
Hill Democrats take a break in their Impeach Trump Sweepstakes
Politically, even the Democrats seem to have been brought up short by the stunning outcome of the Hanoi Summit. It was just yesterday that the House Democrats busied themselves by wallowing, unproductively, in the Michael Cohen “scandal” that’s not going to topple the President. And once again, they found no smoking gun.
That’s why at least a few leading Hill Democrats “broadly praised President Donald Trump for walking away from his second summit with North Korean dictator Kim Jong Un on Thursday.”
Say what you want about this President. He never ceases to flummox his adversaries. As they did decades ago with that dumb Hollywood B-list actor Ronald Reagan, Democrat elitists and Deep Staters consistently underestimate the abilities of Trump even as they get upstaged and defeated by him again and again.
Headline risk: More important today than financials when it comes to choosing investments
Even though this is a column about stocks and bonds, we live in a time where, due to mass media and computerized trading algorithms frequently turn American and world markets for stocks and bonds into a reactive business where profits, losses and historical charts mean far less to stock prices than the kind of key political and economic headlines – true and false – we’ve been getting assaulted with this week.
The news headlines today often influence the direction and the price of many investments far more than financial analysts do. News that Trump did a Reagan is simply another case in point. For sure, that’s the wrong way to choose investing ideas. And it’s a shame. But that’s the way it is, at least for now.
That’s why it’s important to look at how markets react, or overreact, to key news items each week. Markets rallied impressively for most of February for a number of reasons, though the most frequently cited reason was optimism on the China trade front. Then, market averages fizzled this week on news that the Chinese were apparently still unprepared to make any meaningful concessions on the technical patent theft front.
Mr. Market on the last day of February 2019
So how’s Mr. Market reacting today on the much-ballyhooed Hanoi Summit failure? Not with a bang but a whimper as T.S. Eliot famously wrote. Perhaps investors felt that Trump’s summit walkout would probably be the only logical conclusion to the event. None of North Korea’s hereditary line of psychopathic Kims has ever really negotiated with any country to any serious extent. So what’s different today? At least the US and the Norkies are talking.
Major averages are behaving Thursday much like they did Wednesday, more or less down, but minimally so, hovering near flatline as of 1:15 p.m. ET. The NASDAQ is showing a bit of perkiness at the moment. It’s up an unimpressive 2,63 points for a barely detectible 0.04 percent gain.
But the broader based S&P 500 is currently down an invisible 0.66 points for a 0.2 percent loss. And the Dow Jones Industrials – whose export businesses figure prominently in any international trade discussions — are getting the worst of it today, down 32.55 points at the moment for a 0.13 percent loss.
Volume, as it was Wednesday, is generally low. That indicates a moderate lack of interest in general. Additionally, today’s flatlining averages seems to be telling us two things. Namely that both the bizarre Cohen hearings and the Hanoi Summit Flop failed to frighten or impress investors. It’s as if Wall Street gurus and small investors saw nothing here to warrent buying or selling panics.
Today’s final thoughts
That’s probably good news for stocks as well as President Trump. The Michael Cohen-led three-ring circus got lower political ratings than this year’s half-time extravaganza at Super Bowl LIII. And as for that Hanoi Summit non-agreement. Most investors apparently never felt we’d get much out of this round. But they were moderately surprised and even slightly impressed that Trump did a Reagan.
So unless something big shows up before the closing bell, we’re not going to do a thing with our portfolios today. Low volume. Not enough information. Nothing exciting. Or terrifying. Maybe tomorrow, when a new month begins. But likely not today.
Keywords: President Trump, Ronald Reagan, Mikhail Gorbachev, Kim Jong-un, Hanoi Summit, Beijing, China, North Korea, headline risk, Michael Cohen, Congressional Democrats
— Headline image: Unhappy North Korean leader Kim Jong-un and an unsatisfied President Donald Trump. They appeared together after Trump terminated the Hanoi Summit rather than cave to North Korean instransigence. (Screen capture, Reuters video)