The other day I waxed on referencing a conversation I had with a colleague about the the Fed and its all-but-spent-money rate cut expected by the “market.” In that discussion there was one small kink that had the potential to make the argument either moot or, at a minimum, far less credible. That point was: the envoy currently meeting with China’s to possibly hammer out any possible trade negotiation or, even small concessions with China.
To refresh, one of the points I used in my hypothetical of how or why the Fed could choose not to cut and then hide behind the reasoning of: it’s not them (the Fed) that caused a market reaction with no rate cut but rather, a failed trade policy.
That “kink” as they say, was the possibility of any resolution, of any type large or small, could affect any potential CYA (cover one’s derriere) argument negatively for the Fed should that be the ultimate strategy. The reasoning was, the trade negotiations were simultaneously on-going and resolution could’ve (in actually should’ve) proceeded to later in the week, if not longer, until a statement was released good or bad. Conversely, the Fed has to make its statement by today 2:00 ET.
Just as a reminder: this was/is all done under the guise on forming a thought experiment, not a conclusion.
So why do I bring this up, and why does it matter? Great question, for I’ll post for you what I just received via that same colleague in said discussion. To wit:
The People’s Daily, mouthpiece of the Communist Party, responded to Trump on Wednesday with a commentary saying that China has no motive to “rip off” the U.S. and has never done so, and China won’t make concessions against its principles on trade.
On Wednesday, China’s foreign ministry spokeswoman Hua Chunying said at a briefing in Beijing that it doesn’t make any sense for the U.S. to exercise a maximum-pressure campaign. “Only when the U.S. shows enough sincerity and good faith can we achieve progress in the trade talks,” she said.Bloomberg News: China Says U.S. Trade Talks To Continue With September Meeting
Translation: No deal or deals, the meeting has ended, and the envoy, as they say in Vegas “Has left the building.” Or, if you like, as was sung by “The Happenings” in 1966 “See You In September” Because when it comes to any more talk for now – it ain’t happening.
So with that new revelation, my Machiavelli inspired hypothetical has just moved what is truly the fulcrum of said argument from use as a lever position, to a more scale or balance one. This means rather than using the argument to do some heavy lifting in a thought exercise – it’s now moved into an odds position, because the heavy portion that was basically stuck in the mud, causing the argument difficulty in building upon further – has just been freed.
One again, just as a reminder: this is all in reference to an original thought exercise. But as you can now clearly see, in real time, that “exercise” has now just moved from solely on the plausible side, to where it now has encroached on the possible. i.e., moved from a lever position – to a scale and balance one. A distinction with a very big difference.
Doesn’t mean any of this is correct or, will come to pass. However, you that have read this now and prior have at least thought about it, where the vast majority of “experts” haven’t even given it a first thought, let alone second.
That’s what being at “the tip of the spear” truly means. For what others would never dream possible, people like yourselves have at least already weighed or calculated the possibilities.
© 2019 Mark St.Cyr