3 days Ago
Richard Harris, Entrepreneurial Fund Manager, Investment Strategist and Analyst, Port Shelter Investment Management, says The Chinese, in many ways, are looking much more like the adults in the room than the Americans at the moment, where decisions are being changed every few minutes, according to the whim of one man. But, the Chinese too have their own constituency and have to save face as well and they do not want to be seen to be giving up without anything on the other side. 90 days is a long way away but a great deal of damage has been done that at the moment is irreparable.
Finally, it seems that China is willing to talk, sit across the table, though it is going to be a hard bargain. They want everything from sanctions to Taiwan to be talked about.Richard Harris: Well, that is right.
China has taken very much a standoff position. And you can see why, because they do not want to be seen to be bullied by Trump although many other countries appear to be willing to do so. But China will not.
Obviously, discussion is sensible. The Chinese, in many ways, are looking much more like the adults in the room than the Americans at the moment, with decisions being changed every few minutes, according to the whim of one man. So, the Chinese have started to show a little bit of statesmanship in terms of saying, yes, we will come to the table.
But of course, they too have their own constituency and save face as well and they do not want to be seen to be giving up without anything on the other side. So, what the Chinese are looking at doing is saying, yes, we will come to the table but we want to come with respect. We want discussions on what we have already been talking about in the past and that is how it is going to be.
For now, we are seeing a positive reaction, at least on the Dow Jones futures. Help us understand in the short term, how do you see the markets reacting when it comes to some of the emerging markets? How will they cheer this news as well as what could be the likely impact on the US markets when they open today?Richard Harris: Any form of discussion is going to be a positive thing. But do not forget that we have been seeing changes quite dramatically.
We honestly do not know how Trump is going to react to this. We know that when somebody stands up to him, he generally backs down. So, he may take a rather aggressive view or he may take one where he is saying, well, I am quite happy to go along with some of these things, but maybe not all of them and there will be some negotiation there.
At the moment we do not really know. But I feel that it is positive. The two sides have to meet and talk.
They will have negotiations about how they are going to have negotiations and we are at that stage of the moment and on balance, it is positive. Of late we are seeing gold prices touching all-time highs day in and day out and on the other side, crude is falling down on the back of risk related to global growth slowdown. If the news flow is on the incremental side, can we expect the reverse reactions in both commodities? Richard Harris: I do not think we are likely to see a reversal in news anytime soon.
Yes, Trump is delaying tariffs. Yes, he tends to water down quite dramatically a lot of his initial pronouncements. But we are not out of the woods.
The direction of travel is more tariffs. It is likely to happen. What we have not seen so far is the kind of economic indicators coming out that we would expect in this sort of situation.
For instance, we have seen very good Chinese growth. We have seen good growth in the UK. Everybody has been front loading their economic growth ahead of tariffs.
We have not seen the kind of decline that we would generally expect in this sort of environment. Where is this headed and do you think this 90-day pause from the Trump administration on tariffs could be taken as a signal of a policy U-turn by any chance? It is really not resolving the debt crisis given the way the bond markets have been reacting?Richard Harris: Trump has made so many U-turns, he must be spinning in his head. 90 days is a long way away.
Remember, we had quite a long time to wait before 2nd of April and things can change a lot in that time. So, I would not put much store on the 90 days’ pause. We are going to see bilateral deals occurring between various countries.
But what we are still talking about is tariffs being imposed that were not imposed, say, 12 months ago. This generally cannot be good for trade. We know that supply chains are frozen in many areas and in many businesses.
We are hearing about Chinese companies with massive inventories even looking to discard cargoes or trying to divert them to other places. So, 90 days is a long way away but a great deal of damage has been done that at the moment is irreparable..
