It seems the machines never sleep.

Before China’s Xi had even uttered a word – in war or peace – Nasdaq futures were ramping up 1% from the cash close and the S&P and Dow following… And once it was clear that Xi was not going to drop another trade war tape bomb, futures extended gains to the highs of the day session.

What futures loved was the series of traditionally hollow promises from Xi including:

  • promise to open up China to the world and expand imports
  • “work hard” to import more products that are needed by China’s people
  • implement major opening up steps,
  • lower auto and auto product import tariff later this year, open sector to higher foreign ownership
  • release a measures to broaden market access
  • expand the opening of China’s economy
  • push forward economic globalization
  • relax market threshold, widen access to market; take major measures in opening and sharply widen market access
  • implement financial and insurance market opening measures
  • strengthen IP protection for foreign firms (to restructure IP bureau
  • Then there were the ideological vows:

  • China reform and opening will definitely succeed, world should push for free trade
  • Cold war mentality is out of place, its a zero sum game, isolationism will hit walls
  • Urges dialog as only way to resolve disputes
  • Says states must refrain from seeking dominance
  • Need to uphold multilateral trading system
  • Incidentally, many if not all of these promises had been made previously, most extensively during last year’s Party Congress. In the meantime, the only real change was Xi upgrading himself from mere president and crowning himself emperor for life.

    Never one to dig too deep between the lines, algos loved the speech and the result has been a vertical lift in risk-assets:

    Now where have we seen that kind of vertical ramp before.. and what happened next?

    Xi’s speech is being interpreted as somewhat globalist in nature as he plays down tensions and calls for ‘free trade’…

    Print Friendly, PDF & Email