The Dow’s mid-week sell-off took an even steeper turn on Thursday after White House economic adviser Larry Kudlow broke from the Trump administration talking point that the United States and China are close to reaching an agreement to end the trade war before new tariffs kick in at the beginning of March.
Kudlow: US & China ‘Miles’ Apart on Trade Deal
Speaking with Fox Business, Kudlow — who has served as US President Donald Trump’s Director of the National Economic Council since 2018 — said that that world’s two largest economies had a “pretty sizable distance” to cover before they could put an end to the trade war that has had global stock markets on edge for months.
“We’ve got a pretty sizable distance to go here,” Kudlow told Stuart Varney. “To quote a colleague of mine – ‘we have miles to go before we sleep.’”
Those comments seemingly contradicted remarks that US Treasury Secretary Steven Mnuchin had made just one day prior. Stating that the US-China trade talks had so far been “very productive,” Mnuchin revealed that he would personally lead a delegation to China to work out remaining sticking points ahead of the March 2 deadline.
“We are committed to continue these talks,” Mnuchin told CNBC. “We’re putting in an enormous amount of effort to hit this deadline and get a deal. That’s our objective.”
Dow Crashes More than 350 Points
The US stock market had already been in decline on Thursday morning, with the Dow plunging by triple digits at the opening bell and the Nasdaq creeping further into the red after almost bursting out of its bear market on Tuesday.
The already battered Dow did not take Kudlow’s comments well, and mounting losses quickly thrust the index more than 250 points into the red.
Trump Won’t Meet with Xi, is the Trade Deal Falling Through?
Thursday wasn’t the first time that Kudlow has thrown cold water on trade deal optimism from other White House advisers — and even President Trump himself. Given Kudlow’s seeming inability to hold the party line, one begins to wonder (if only facetiously): Is he shorting the Dow?
In this case, though, it appears Kudlow’s gloomy trade war comments may be vindicated. Shortly after his comments sent traders into button-mashing mode, his former employer — CNBC — reported that a meeting between Donald Trump and Chinese President Xi Jinping is “highly unlikely” to take place before the trade deal deadline. Considering that Trump previously said he will not sign a trade deal before he has a sit-down with Xi, this report put the odds of the US and China finally putting an end to the trade war even further in doubt.
That, unsurprisingly, threw the stock market even further into panic mode. As of the time of writing, the Dow Jones Industrial Average was down 355.63 points or 1.4 percent, the S&P 500 was down 1.48 percent, and the Nasdaq had plunged by 1.69 percent.
Featured Image from REUTERS / Kevin Lamarque
Josiah is an assistant editor at CCN. In a past life, he taught Herodotus and Boethius to high school students. He holds long-term investment positions in bitcoin and other large-cap cryptocurrencies. Follow him on Twitter @Y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.