President Trump hailed the preliminary trade agreement struck by American and Chinese negotiators as “one of the biggest deals." It's “by far, the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country," he trumpeted.

Closer inspection reveals there’s less to it than the presidential hype suggests. And the news this morning that the Chinese want to hold more talks this month before President Xi Jinping signs an agreement is adding to investor skepticism.

Here’s what it does: 

  • Suspends a tariff increase, set to bite this week, that would have raised duties on $250 billion of Chinese imports from 25 percent to 30 percent. 
  • Pencils in $40 to $50 billion in new Chinese purchases of U.S. farm products, though Beijing has yet to confirm this. 
  • Gives American financial services firms expanded access to the Chinese market, according to Trump. This process was already underway
  • Addresses U.S. concerns about Chinese currency manipulation, though U.S. officials offered no details. 

Here’s what it doesn’t do: 

  • Lay out its terms on paper. (“I don’t think it should be a problem getting it papered,” Trump said.)
  • Address structural reforms that the United States has demanded of the Chinese, including an end to forced technology transfers and state subsidies for favored industries. 
  • Specify steps the Chinese will take to enforce intellectual property protections for U.S. companies.
  • Include enforcement mechanisms to ensure the Chinese abide by the terms of a final deal.
  • Remove tariffs already in place on $360 billion of Chinese imports. 
  • Suspend a major tariff escalation, of 15 percent on $156 billion of Chinese goods — many of them consumer products — set for Dec. 15. 

In short, then, it appears the U.S. traded suspension of the next round of tariffs for stepped-up agricultural purchases — though the Chinese haven’t confirmed their commitment and the timing of the purchases remains sketchy. Most everything else remains to be determined. Or as Derek Scissors, a China expert at the American Enterprise Institute who advises the White House, put it to The Post’s David Lynch, “It’s basically some purchases and a bunch of fluff because no one in the administration really wants to go through with the tariffs anyway.”

Scott Kennedy, of the Center for Strategic and International Studies noted that the Chinese aren't touting the agreement, a potentially worrying sign of their commitment to it: 

Chad Bown, trade expert at the Peterson Institute for International Economics, noted the agreement mostly preserves the status quo: 

Georgetown Law professor Jennifer Hillman argued the deal will take weeks to wrtie up and could still fall apart: 

And the American Enterprise Institute’s Jim Pethokoukis criticized Trump's handling of the matter:

The market, which for months has reacted on a hair trigger to U.S.-China trade developments, processed news of the emerging agreement in real time on Friday. “Even before the president spoke, the Dow Jones industrial average was up roughly 500 points, or close to 2 percent, amid hints that a partial accord was imminent,” David writes. “The president celebrated the outcome … but the lack of specificity in his announcement, and his comment that the partial deal could take weeks to iron out, cooled traders’ optimism. The Dow closed up almost 320 points, or 1.2 percent, to finish at 26,816.59.”

Shawn Donnan concludes in a Bloomberg analysis that “even if it gels in the way that Trump outlined Friday, the agreement is far smaller in scope than what the president himself once envisioned, or what was on the table when talks broke down in May.”

“It also leaves major questions hanging in the wind amid a broader relationship showing plenty of signs of souring,” he writes, “ranging from the Chinese furor over an NBA executive’s backing for the growing protests in Hong Kong to the administration’s invocation for the first time this week of human rights to crack down on Chinese tech companies and visas for officials.”


Futures drop. Bloomberg's Todd White: "Stocks in Europe dropped alongside U.S. equity futures after China appeared to pour cold water on a partial trade deal touted by Donald Trump, saying it wanted to iron out details before signing it. European bonds gained.

"The Stoxx Europe 600 index extended a decline, led by banks and miners, after Bloomberg reported China wants further talks before sealing the “phase one” agreement announced Friday by the U.S. president. S&P 500 futures turned lower, signaling U.S. equities may run out of steam after rising to within 1.8% of a record close Friday. Stocks had climbed earlier from Sydney to Hong Kong, helping sustain a rally in emerging-market assets after after the positive conclusion of the latest round of trade talk."

Bumpy earnings season begins. CNBC's Patti Domm: "The third-quarter earnings season kicks off in the coming week, and it is likely to expose how much the trade war has cost companies’ bottom lines.

"First out of the gate are major banks and financial companies, with J.P. Morgan, Citigroup, Wells Fargo, BlackRock and Goldman Sachs reporting Tuesday. But by the end of the week, a smattering of industrial, tech, transportation and consumer names will have reported, including Alcoa and Honeywell. Netflix and IBM report Wednesday, and consumer giant Coca-Cola reports Friday. United Airlines reports Tuesday, and CSX reports Wednesday...

"Earnings for the S&P 500 are expected to decline by 3.1% for the third quarter, after growing by more than 3% in the second quarter, according to data from Refinitiv."

Brexit talks go down to the wire. Reuters's Guy Faulconbridge and Gabriela Baczynska: "A deal to smooth Britain’s departure from the European Union hung in the balance on Monday after diplomats indicated the bloc wanted more concessions from Prime Minister Boris Johnson and said a full agreement was unlikely this week. As the Brexit maelstrom spins ever faster, Johnson and EU leaders face a tumultuous week of reckoning that could decide whether the divorce is orderly, acrimonious or delayed yet again.

"Johnson says he wants to strike an exit deal at an EU summit on Thursday and Friday to allow an orderly departure on Oct. 31 but if an agreement is not possible he will lead the United Kingdom out of the club it joined in 1973 without a deal - even though parliament has passed a law saying he cannot do so."

"We have to work so hard to compensate for their own hubris and stupidity."



E.U. seeks to halt U.S. tariffs over Airbus fight: “The European Union made a last-ditch appeal to the U.S. to refrain from triggering retaliatory tariffs over illegal subsidies to Airbus SE, warning of economic harm to both sides and repeating a call for a negotiated solution,” Bloomberg News’s Jonathan Stearns reports.

“European Trade Commissioner Cecilia Malmstrom told her U.S. counterpart, Robert Lighthizer, that his plan to hit $7.5 billion of EU goods ranging from planes to whiskey with duties would compel the EU to apply countermeasures in a parallel lawsuit over market-distorting aid to Boeing Co. U.S. levies would make a negotiated settlement harder to reach, she said.”

AMLO urges Pelosi to approve USMCA: Mexican President Andrés Manuel López Obrador “said he wrote House Speaker Nancy Pelosi (D-Calif.) a letter asking her to push forward approval of the trade deal negotiated between the United States, Mexico and Canada, he told reporters at his daily news conference,” the Hill’s Rafael Bernal reports.

“López Obrador has made passage of the USMCA through the U.S. House of Representatives a top diplomatic priority, despite his historical opposition to similar free trade agreements. The Mexican Senate approved the agreement in June; the House of Representatives and Canadian Parliament have yet to ratify it.”

China’s exports to the U.S. shrank by more than one-fifth last month, hit by heavier tariffs, underscoring the urgency for Beijing to resolve trade friction with Washington.
We thought trade would bring Western values to China. Instead, it brought Chinese values to Apple.


— Trump says he would support sanctions on Turkey: "Trump’s administration is set to impose economic sanctions on Ankara, potentially as early as this week, for its incursion into northern Syria, one of the few levers the United States still has over NATO-ally Turkey," Reuters's Idrees Ali and Humeyra Pamuk report.

"After Treasury Secretary Steven Mnuchin said on Friday that Trump had authorized 'very powerful' new sanctions targeting Turkey, the administration appeared ready to start making good on Trump’s threat to obliterate Turkey’s economy. On Sunday, Trump said he was listening to Congress, where Republicans and Democrats are pushing aggressively for sanctions action."


Boeing CEO removed as chairman: “The clock is ticking ever more loudly for Boeing Chief Executive Officer Dennis Muilenburg as the grounding of the 737 Max hits the seven-month mark,” Bloomberg News’s Julie Johnsson reports.

“The board removed him as chairman Oct. 11 after the close of the workweek, saying the change would enable Muilenburg to focus on returning Boeing Co.’s best-selling jet to service … The Friday-evening shakeup weakens Muilenburg, 55, as he tries to get the Max back in the air this quarter and prepares for a crucial appearance before Congress on Oct. 30.”

  • Meanwhile, Boeing and SpaceX make progress on spacecraft: “SpaceX and Boeing are each in the final stages of developing the spacecraft needed for the U.S. to once again fly astronauts, with NASA’s leader estimating launches may happen as early as the first months of 2020,” CNBC’s Michael Sheetz reports. “But, while SpaceX and Boeing may be close to completing work on their respective Crew Dragon and Starliner capsules, [NASA Administrator Jim] Bridenstine emphasized that the current timeline is very fluid given the critical nature of the final tests.”

SoftBank seeks to take control of WeWork: “SoftBank Group Corp. has prepared a financing package that would give it control of WeWork and further sideline its founder Adam Neumann in exchange for relieving the shared-office startup’s looming cash crunch, according to people familiar with the matter,” the Wall Street Journal’s Maureen Farrell, Liz Hoffman and Eliot Brown report.

“WeWork is racing to find a way to shore up its financing after its New York parent company We Co. pulled its plans for an initial public offering and Mr. Neumann resigned as chief executive under pressure … Another possibility: The board has tapped JPMorgan Chase & Co. to look at ways for the company to raise billions in debt, and the bank is in the middle of meetings with investors about participating in a multibillion-dollar debt deal, people familiar with the company’s plans said.”

Michigan pulls $600 million from Ken Fisher: “The State of Michigan Retirement Fund’s pension account, worth more than $70 billion, ended its relationship with the investment firm of Ken Fisher in the latest backlash to offensive remarks the billionaire made this week at a conference,” Bloomberg News’s Janet Lorin reports.

“Fisher has apologized for sexist and off-color remarks he made at the Tiburon CEO summit in San Francisco, but it hasn’t stopped the outrage … Fisher, 68, a longtime market commentator and conference speaker, has come under fire for comparing the process of gaining a client’s trust to ‘trying to get into a girl’s pants’ and talking about genitalia at the financial services conference.”

Purdue Pharma gets pause on civil lawsuits: “A U.S. bankruptcy judge on Friday temporarily halted scores of lawsuits against Purdue Pharma and its owners, the Sackler family,” my colleague Renae Merle reports.

“Extending that relief to the Sacklers, who haven’t filed for bankruptcy protection, is ‘extraordinary’ but appropriate in this case, Judge Robert Drain said from the bench. Drain’s ruling stays action for three weeks in state and federal lawsuits against the Sackler family members, who own the company, as well as Purdue Pharma and related companies. During the three-week reprieve, Purdue Pharma agreed to address one of the key concerns — access to more information about the Sacklers’ finances — raised by state attorneys general who objected to including the family in the temporary injunction.”

UAW boosts strike pay: The United Auto Workers union said that “it will boost strike pay for 48,000 hourly workers at General Motors Co by $25 a week to $275 as a strike against the largest U.S. automaker nears the end of its fourth week,” Reuters’s David Shepardson reports.

“Talks were continuing [over the weekend] to try to resolve the longest nationwide strike at GM since 1970, both sides said. The UAW also said it would allow members striking to take on part-time jobs without reducing their strike pay — as long as they perform picket-line duties. The strike pay hike was previously set to increase on Jan. 1.”

Work on global poverty nets a Nobel prize. Reuters: "Economists Abhijit Banerjee, Esther Duflo and Michael Kremer won the 2019 Nobel Economics Prize for creating an experimental approach to alleviating global poverty, the Royal Swedish Academy of Sciences said on Monday. 'This year’s Laureates have introduced a new approach to obtaining reliable answers about the best ways to fight global poverty,' the academy said in statement."


— Sanders unveils coporate profit-sharing plan: "The day before a debate where Sen. Bernie Sanders will make his first formal appearance since his recent heart attack, he released a plan on 'corporate greed and corruption' that would impose far-reaching rules on the country’s largest corporations, forcing them to share profits and power with their workers," my colleagues Chelsea Janes and Jeff Stein report.

"The plan, which would probably face substantial pushback from Republicans and corporations, is the latest flag planted by Sanders (I-Vt.) at the leftmost boundary of the Democratic field. It comes as Sen. Elizabeth Warren (D-Mass.) has been siphoning support from Sanders among the party’s most liberal voters, a group that belonged solely to Sanders in 2016."

The details:

  • Board seats: "All publicly traded companies, as well as all private companies with more than $100 million in revenue, to give their workers at least 45 percent of the seats on their corporate boards — going further than a similar idea from Warren," who has called for giving workers input on 40 percent of those seats.
  • Stock holdings: "Sanders takes a step beyond Jeremy Corbyn, the leader of Britain’s Labour Party, by calling for corporations to turn over at least 20 percent of their shares to these worker funds, compared to 10 percent for Corbyn."
  • The staggering size: The plan would "give an additional 56 million workers, in more than 22,000 companies, a share of their businesses. The campaign says workers at McDonald’s, for example, would ultimately control 20 percent of its stock and 45 percent of the vote on its management decisions."

— Hunter Biden resigns from Chinese company's board: "Hunter Biden, facing increasing questions about his work for a Chinese investment company, will step down from his position as a board director this month and promised not to do any work for foreign firms if his father, Joe Biden, is elected president, his lawyer said," my colleagues Michael Kranish and Anna Fifield report.

"The lawyer’s statement underscored how Hunter Biden’s foreign work has become a major issue in the presidential campaign, raising questions about whether Joe Biden failed to understand the potential for a conflict of interest with his son’s work and setting in motion a chain of events that have led to an impeachment inquiry about [Trump]."

— Warren pressed over Medicare-for-all pay-for: "Sen. Elizabeth Warren has been dogged from the debate stage to town halls to late-night TV shows by questions about whether she plans to unveil a signature health-care proposal—and how she would pay for expanding government-run insurance," WSJ's  Joshua Jamerson and Tarini Parti report.

"[Warren’s] top aides have called at least one expert on single-payer health-care programs in recent weeks to discuss the costs involved. Her campaign declined to say whether it is crafting its own health-care proposal ... [South Bend Mayor Pete] Buttigieg, who has also called [Warren] 'extremely evasive,' has aired an ad promoting his 'Medicare For All Who Want It' health care plan and stressed in interviews that his plan wouldn’t increase taxes for the middle class. [Sen. Bernie] Sanders has said his Medicare for All proposal would increase taxes but lower premiums. Ms. Warren hasn’t been so specific about how she would pay for expanding government-run health insurance."



  • Citigroup, Wells Fargo, United Airlines, Goldman Sachs, Johnson & Johnson, BlackRock, Charles Schwab and United Health are among the notable companies to report their earnings on Tuesday, per Kiplinger.
  • The House Financial Services Committee holds a hearing on the semi-annual review of the CFPB on Wednesday, director Kathy Kraninger will testify.
  • IBM, Bank of America, PayPal, Netflix and Alcoa are among the notable companies to report their earnings on Wednesday, per Kiplinger.
  • The House Budget Committee holds a hearing on improving economic resiliency on Wednesday.
  • A Financial Services Subcommittee holds a hearing on reauthorizing the terrorism risk insurance program on Wednesday.
  • The Joint Economic Committee holds a hearing on measuring income inequality on Wednesday.
  • The Brookings Institution holds an event on what happens when a big domestic bank fails on Wednesday.
  • Brookings also holds an event with European Central Bank economist Phillip Lane on Wednesday.
  • E*Trade, Morgan Stanley, Phillip Morris, Union Pacific, Skechers USA and BB&T Corp. are among the notable companies to report their earnings on Thursday, per Kiplinger.
  • The Senate Banking Committee holds its hearing on the CFPB’s report on Thursday, Kraninger will testify.
  • A Financial Services subcommittee holds a hearing on the impact of stock buybacks on Thursday.
  • A House Small Business subcommittee holds a hearing on opportunity zones and small businesses on Thursday.
  • The Tax Policy Center holds an event on cryptocurrency and tax administration on Thursday, featuring remarks by IRS chief counsel Michael Desmond.
  • Coca-Cola and American Express the notable companies to report their earnings on Friday, per Kiplinger.


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