Uncertainty Thrown Back Into US-China Talks

Mild optimism with talks next week in China between top officials and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin was replaced by pessimism on Thursday. The situation started when National Economic Council head Larry Kudlow told Fox Business Network, "There is a pretty sizable difference to go" before getting an agreement with China. Then CNBC reported that an unnamed "senior administration official" said the meeting expected between President Donald Trump and Chinese President Xi Jinping in late February may not take place. The official said things were fluid and that the talks next week could still take place. Kudlow then again took to the airwaves with a follow-up session with Fox Business Network, telling them Trump "does expect to meet with Xi but when is totally up in the air. At some point they will meet, but that is off in the distance at the moment." But markets had already been spooked -- from U.S. commodity futures markets to the U.S. equity markets. Later, President Donald Trump waded into the issue. Asked by reporters at a White House event if he would still meet with Xi yet this month, Trump said, "No," and said the meeting was "unlikely." However he did not rule out a meeting at a later day, but said nothing had been set. The situation cast a pall over markets who have been very volatile when it comes to the U.S.-China situation. They have rallied sharply when positive comments come from the administration or Chinese officials about the trade situation. As was evidenced Thursday, they quickly hit the sell button if comments take on a negative tone. The "long road" description echoes comments from USDA Secretary Sonny Perdue last week at the National Cattlemens' conference. As reported by DTN, Perdue said any agreement ultimately created between the two countries would have to go through normal Congressional approval, and would have to contain regulatory mechanisms to insure China adheres to intellectual property protections that have been one of the key sticking points for the U.S.