On the weekend of October 25, top economic officials representing the U.S. and China met in Kuala Lumpur. The meeting is a precursor to President Xi and President Trump meeting in person.
More recently, China reaffirmed its rare earths export restrictions. It would allow exports for consumer-related industries. However, China will not let them be used for military purposes or anything that is security-related. The U.S. aerospace and defense industry is reliant on rare earths.
So far, shares of Boeing (BA), RTX (RTX), Lockheed Martin (LMT), and Northrop Grumman (NOC) trade near their highs for the year. Stock markets signal that China will relax its export ban. Investors should expect Xi to use the ban as a bargaining chip.
The U.S. threatened to impose another 100% tariff on Chinese goods exported. That would start on November 1, ahead of the Supreme Court ruling on the legality of tariffs.
Xi and Trump will meet this Thursday in South Korea at the Asia-Pacific Economic Cooperation summit. Expect Trump to discuss U.S. soybeans. Last month, China bought no soybeans. This hurt American farmers, who now require $10 - $14 billion in bailout.
Conversely, Argentina is getting $20 billion in financial aid. Days later, the bailout increased to $40 billion.
Any dialogue between the two economic powers is welcome news. Stock markets closed at all-time highs in anticipation of progress.
