Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa Bay news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Charlotte news in your inbox

Catch up on the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Lazaro Gamio/Axios

As news about a possible truce between the U.S. and China in the trade war flowed last week the U.S. market was remarkably unshaken.

Why it matters: That's because investors aren't concerned about President Trump taking a hard line on a deal with China — one that would involve major reforms to their economy and the way the Asian nation does business.

  • Investors have determined that Trump is either a great deal maker or a studio gangster. His tough talk about major changes in the end become incremental tweaks.

The big picture: A deal in which 3 major trade issues — expanded market access, reduction of the trade deficit, reform of IP theft — are addressed with credible enforcement procedures in place is "the ideal situation," writes former macro hedge fund manager Tom Essaye in his Sevens Report market analysis, "and it's also the least likely (say 20%)."

Between the lines: Betting that Trump will not to follow-through on the extreme rhetoric of his campaign pledges has worked out well for fund managers over the past two years.

What they said: "Our view was that (Trump’s) economic threats were not credible," Federico Garcia Zamora, who manages the Dreyfus Emerging Markets Debt Local Currency Fund, told me in September 2017. Acting accordingly, he increased his holdings of peso-denominated Mexican bonds and his fund outperformed 90% of its peers.

  • "It was what he had to say to get elected, given his space and the people he was talking to. But it made no economic sense."

That didn't change much last year.

"Our basic view is that it's really just a lot of noise," Brendan Murphy, head of global and multi-sector fixed income for Standish Mellon, a BNY Mellon subsidiary, told me in April 2018.

But, but, but: Not every Trump-is-a-studio-gangster trade worked out well. Investors bought into emerging markets in late 2017 and early 2018 and lost big as both EM debt and equity were crushed.

  • However, most analysts believe that was due more to the Fed's rate hikes and expectations for global quantitative tightening to take effect in 2019 than the trade war.
  • And that trade is quickly reversing.

What's really happening: The U.S. market has been driven by Fed Chair Jerome Powell. Stocks swooned to near a bear market after Powell said the U.S. central bank was poised to keep hiking rates and draining liquidity by paring its $4 trillion balance sheet. It has marched higher since his U-turn in late December and January.

U.S. Treasury yields initially spiked after Trump's election but have come back to earth as inflation expectations were "pretty much diminished because we didn't get a much stronger economy," Joseph Trevisani, senior analyst at FXStreet, said in April.

Go deeper

Trump to issue at least 100 pardons and commutations before leaving office

Photo: Mandel Ngan/AFP via Getty Images

President Trump plans to issue at least 100 pardons and commutations on his final full day in office Tuesday, sources familiar with the matter told Axios.

Why it matters: This is a continuation of the president's controversial December spree that saw full pardons granted to more than two dozen people — including former Trump campaign chair Paul Manafort, longtime associate Roger Stone and Charles Kushner, the father of Trump's senior adviser and son-in-law, Jared Kushner.

  • The pardons set to be issued before Trump exits the White House will be a mix of criminal justice ones and pardons for people connected to the president, the sources said.
  • CNN first reported this news.

Go deeper: Convicts turn to D.C. fixers for Trump pardons

Schumer's m(aj)ority checklist

Senate Minority Leader Chuck Schumer. Photo: Tasos Katopodis/Getty Images

Capitalizing on the Georgia runoffs, achieving a 50-50 Senate and launching an impeachment trial are weighty to-dos for getting Joe Biden's administration up and running on Day One.

What to watch: A blend of ceremonies, hearings and legal timelines will come into play on Tuesday and Wednesday so Chuck Schumer can actually claim the Senate majority and propel the new president's agenda.

The dark new reality in Congress

National Guard troops keep watch at security fencing. Photo: Kent Nishimura/Los Angeles Times via Getty Images

This is how bad things are for elected officials and others working in a post-insurrection Congress:

  • Rep. Norma Torres (D-Calif.) said she had a panic attack while grocery shopping back home.
  • Rep. Jim McGovern (D-Mass.) said police may also have to be at his constituent meetings.
  • Rep. Adam Kinzinger (R-Ill.) told a podcaster he brought a gun to his office on Capitol Hill on Jan. 6 because he anticipated trouble with the proceedings that day.