MI2 Partners Thoughts From The Divide: Who Blinked First?

Some might think it academic, but we can’t help being curious about who blinked first. There are at least two games of chicken we have been closely watching. Clearly, everyone is watching the game of chicken between Xi and Trump. However, the casual observer might think there was also one involving Powell and Trump. In the case of Xi, its not entirely clear who blinked first.
BY JON WEBB

Some might think it academic, but we can’t help being curious about who blinked first. There are at least two games of chicken we have been closely watching. Clearly, everyone is watching the game of chicken between Xi and Trump. However, the casual observer might think there was also one involving Powell and Trump. In the case of Xi, its not entirely clear who blinked first.

Perhaps we dreamed it, but we had the impression that the Chinese required unilateral tariffs to be cut before they would agree to even discuss a trade deal. “When asked why China now appeared open to trade negotiations—after previously demanding tariff removal as a precondition—Lin said there had been “no change” in China’s position.” Maybe, but the S&P500 clearly thinks there was a change. After all, if there was no change in China’s position, why would Bessent and Greer go to Switzerland, and who would they meet with?

There is scope for disagreement here, but there is no mistaking the sense of optimism from bulls, particularly the Equity Bull in Chief. “You better go out and buy stocks now,” Trump said. “Let me tell you, this country will be like a rocket ship that goes straight up.” Currency traders completely agreed, and the dollar rallied across the board. The only sour note came from the bond markets (typical!), which had a stinker across the curve.

Which brings us to what might appear to be the other game of chicken.

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