Oct 4, 2019

The upcoming U.S.-China trade talks are huge

Illustration: Aïda Amer/Axios

Investors will be closely watching today's U.S. nonfarm payroll report, but they will also have 1 eye out for news on a potentially pivotal meeting between U.S. and Chinese negotiators next week.

What's happening: President Trump downplayed the importance of the meeting on Thursday, telling reporters he has "a lot of options on China. But if they don’t do what we want, we have tremendous power."

  • It's becoming clear the market doesn't see it that way.

Reality check: The U.S. economy continues to grow, but is increasingly struggling to do so. By the day, more economic indicators — from manufacturing to consumer and business sentiment and now the all-important services sector — are turning negative with more industries beginning to follow manufacturing, trade and transportation into outright contractions.

  • The trade talks are "the main concern" Bernard Baumohl, chief global economist at The Economic Outlook Group, has about the stock market.
  • "If once again nothing gets accomplished we could see another substantial fall," he tells Axios.

Where it stands: U.S. equities rebounded on Thursday, as traders continued to buy the dip despite data showing growth in the U.S. services sector badly missed expectations.

  • Investors increased bets that the Fed would step in next month with rate cuts to help stabilize the economy.
  • However, many are losing faith in the power of monetary policy to help steady the ship, especially in light of the continued struggles in the eurozone and Japan, which have instituted negative interest rates and considerable stimulus.

"Monetary policy is not going to do a damn thing," Baumohl says. "Monetary policy is being held hostage to this trade conflict."

But, but, but: There may be nothing Trump can do to get a meaningful deal with China at this point, as Beijing seems to be participating in negotiations "with the primary intention of staving off further tariff hikes,” Eleanor Olcott, China policy analyst at independent consultancy TS Lombard, told the South China Morning Post.

  • “Trump’s actions throughout the trade war, escalating tensions in a wildly unpredictable manner, has made the U.S. an unreliable negotiating partner in the eyes of the Chinese political elite. This, in turn, has relieved pressure on Xi to strike a deal because he is able to convincingly lay the blame for derailment on the U.S."
  • “The impeachment proceedings tie Trump’s hands when it comes to his domestic agenda, so his attention will be focused on his foreign policy stance, meaning we are likely entering a period of more volatile trade war news.”

Go deeper: U.S. and China agree to restart trade talks in D.C.

Go deeper

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 3 a.m. ET: 5,410,228 — Total deaths: 345,105 — Total recoveries — 2,169,005Map.
  2. U.S.: Total confirmed cases as of 3 a.m. ET: 1,643,499 — Total deaths: 97,722 — Total recoveries: 366,736 — Total tested: 14,163,915Map.
  3. World: White House announces travel restrictions on Brazil, coronavirus hotspot in Southern Hemisphere Over 100 coronavirus cases in Germany tied to single day of church services — Boris Johnson backs top aide amid reports that he broke U.K. lockdown while exhibiting symptoms.
  4. Public health: Officials are urging Americans to wear masks headed into Memorial Day weekend Report finds "little evidence" coronavirus under control in most statesHurricanes, wildfires, the flu could strain COVID-19 response
  5. Economy: White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Public employees brace for layoffs.
  6. Federal government: Trump attacks a Columbia University study that suggests earlier lockdown could have saved 36,000 American lives.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 2 hours ago - Politics & Policy

U.S. coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios. This graphic includes "probable deaths" that New York City began reporting on April 14.

The CDC is warning of potentially "aggressive rodent behavior" amid a rise in reports of rat activity in several areas, as the animals search further for food while Americans stay home more during the coronavirus pandemic.

By the numbers: More than 97,700 people have died from COVID-19 and over 1.6 million have tested positive in the U.S. Over 366,700 Americans have recovered and more than 14.1 million tests have been conducted.

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

Japan's economy minister outlined plans on Monday to end the nationwide state of emergency as the number of new novel coronavirus cases continues to decline to fewer than 50 a day, per Bloomberg. Japan has reported 16,550 cases and 820 deaths.

By the numbers: Over 5.4 million people have tested positive for the virus as of Monday, and more than 2.1 million have recovered. The U.S. has reported the most cases in the world (over 1.6 million from 13.7 million tests). The U.K. is reporting over 36,800 deaths from the coronavirus — the most fatalities outside the U.S.