Failure of US-China trade talks not an option: Varney
There is one issue that is crucial for America’s economy and stock market, China's economy and stock market and, yes, the global economy, too. The China trade deal. It is a big deal. It’s the single biggest issue, period.
So where are we? What’s the state of play? When Larry Kudlow told us there was a long way to go to reach a deal, and later said there's no Trump-Xi Jinping summit likely in the near future, the stock market took a dive. If there's no meeting and no deal by the March 1 deadline, it looks like failure, and failure on this issue would be bad news for everyone.
That’s why, I’m optimistic. The pressure on both sides is huge. And both sides know it. And both Xi and Trump are negotiators. What's going on here is brinkmanship. In the end, both sides will blink, because they have to.
For the next 20 days, as we head to March 1. You'll be seeing a stream of headlines, leaks and statements. Officials will take public positions that are designed to affect the private discussions. The computers will read the headlines and the market will gyrate. It will get tense. It already is.
Our top trade people fly to Beijing this weekend. Look for any statement or leak from them or the Chinese side as the latest talks get going. That March 1 deadline may be extended. The Trump-Xi summit has already been pushed back.
But what I cannot see happening is either side pushing back from the negotiating table and going home. The pain for everyone would be extreme. Markets would tank everywhere, and economies, worldwide, would head further south.
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Failure would be so dramatic, that it really is not an option.
On the other hand, the rewards of success, are equally dramatic. Stock market rallies. More trade, more growth. It doesn't have to be an agreement on everything. Just a handshake, lots of smiles and loads of promises. That’s what I expect to see because failure would be a disaster. Failure is not an option.