How to Score Next Week from a Trade War “Mini-Deal”

For weeks, the markets have been tossed and turned by news about the trade dispute with China. Both sides have raised tariffs on the other. China even blocked the NBA from airing in the country after an ill-received tweet from the owner of the Houston Rockets.

The head of China’s delegation, Vice Premier Liu He, said that key issues such as subsidies are off the table.

Then, this past Monday, the U.S. Commerce Department made it illegal for eight Chinese companies and 20 Chinese government agencies to do business with American firms. Chinese surveillance technology and AI companies were especially hit hard, as they rely on American parts.

This was followed up by several Chinese officials being placed under visa restrictions, making it impossible for them to travel to the U.S.

Which brings us to yesterday, when China’s trade delegation arrived in Washington, D.C., for the first high-level trade talks since July.

With all these tit-for-tat negotiating tactics, things didn’t look very rosy.

That was until Presidential tweets on Thursday and Friday sent the markets kicking higher on both days.

The stakes are high – President Trump’s next set of sanctions on China are set to go into effect on Tuesday next week.

But despite the tough stance taken by both sides recently, there’s reason to think a deal could be made.

This could continue to drive markets higher.

Here’s what to look for…

China Trade Signposts

Some of the key trade issues President Trump has raised in the past are China’s currency manipulation, its government subsidies, and theft of intellectual property from American companies doing business in China.

Now, the currency issue was largely worked out during negotiations way back in February, but no deal has been signed yet.

And with China keeping the most contentious issues of subsidies and intellectual property off the table, there’s actually a smaller, interim deal to be made.

Both sides would benefit: Chinese President Xi Jinping would save face, and get a win at a time when the Hong Kong protests against perceived Chinese overreach and the tariff-induced economic slowdown in the Chinese economy are threatening to tarnish his image.

President Trump, meanwhile, would have a reason to not raise tariffs as planned next week. This would save Americans a lot of pain this holiday season as they bought tech gadgets, toys, and other China-made goods to put under their trees. And with his re-election campaign well underway, any good news on this front is a boost.

The interim deal would have to be centered on an issue where both sides can meet. The prime candidate for that is agriculture.

Just yesterday, the Department of Agriculture reported surprise sales of 389,000 tonnes of soybeans to China, as well as a record-high 18,810 tonnes of pork to be shipped this year, and 123,362 tonnes next year.

With U.S. agricultural exports to China already down by more than 24%, any increase is welcome news to U.S. farmers, as well as for the food and agriculture companies that supply them.

As you can see in this chart, major U.S. pork exporter Tyson Foods Inc. (TSN) soared on this news:

If this goodwill gesture is followed by a more extensive deal on agriculture and tech tariffs, expect the agriculture and tech sectors, and the market as a whole, to create some great trading opportunities.

But that wouldn’t be the end of the story…

More Work To Do…

Even with a “mini-deal” that saves face and helps U.S. farmers and holiday shoppers in hand, the thorny issues of intellectual property and government subsidies in China would remain.

As the parties have been doing for 15 months now, these issue would get kicked down the road, to be dealt with later.

Now, that’s better than giving up, and starting a full trade war.

But as we’ve seen over the last 15 months, the uncertainty over what’s going to happen with trade and tariffs hangs over the markets.

At the slight hint of the dispute worsening, the markets over-react and go into a tailspin, before they recover.

Without a “mini-deal” by early next week, this volatility would increase.

So stay on your toes. Keep your trades on a short leash, and don’t get too bullish or bearish when trade news comes out. In fact, in recent months playing the rebound after bad trade news and the eventual drop after good trade news has been a profitable strategy. We’ll look for an opportunity to trade the good news of any “mini-deal”, while staying wary of over-reactions.

Regardless of what happens in the next few days, the China tariffs will be controlling the market narrative for longer still, and we’ll be there to benefit from the volatility – like we did just this morning on a 211% profit opportunity in under three trading days in my premium trading research service, Stealth Profits Trader.

Want to know how you could join the ranks of subscribers that have the chance to make 100% gains or more, often in just a matter of days? Click here to read more about the incredible success my subscribers have had, and how you could soon be sharing your own success story…

Great trading and God bless you,

D.R. Barton, Jr.

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[…] week, the trade war between the U.S and China took a step in the right direction. As I predicted would be the case right here in 10-Minute Millionaire, a “mini-deal” was reached whereby the U.S. agreed […]

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