Remember, just a few weeks ago we hit a trade-war flashpoint.
China threatened to choke off rare earths from the rest of the world, and Trump responded with a threat to jack up tariffs on China by another 100 percentage points.
Bessent framed it as "China against the world," and even uttered the word "decouple." With that, the market’s perception of the risk environment recalibrated.
But now, we have another truce.
As we discussed heading into the Trump/Xi meeting, it seemed the Trump administration would be happy to kick the can down the road again on tariff escalations — to buy time to execute the domestic agenda under some relative global stability.
Jamieson Greer said as much today, in describing the one-year deal struck overnight. First, the deal, importantly, clears China's threat of restricting rare earths. Secondly, Greer said the communication is open, they will continue to meet and work together, and it gives them time to "get our own house in order, with respect to our reindustrialization."
With the above in mind, that risk overhang is now cleared for markets.
And as we discussed yesterday, we have a Fed rate cut, into big tech earnings that have clearly demonstrated that the AI boom is healthy and well intact.
