What Trade Deal Phase 1/N Says About the Four Horsemen of Apocalypse

Phase 1 of N of the “Greatest Trade Deal” that is “easiest to achieve’ by the ‘stablest Genius’ is hitting the newsflows today. Which brings us to two posts worth reading on the subject:

Post 1 via Global Macro Monitor: https://global-macro-monitor.com/2020/01/15/phase-1-of-potemkin-trade-deal-signed-sealed-and-yet-to-deliver/ is as always (from that source) excellent. Key takeaways are:

• “We never believed for one moment that China would cave on any of the big issues, such as restructuring its economy and any deal would be just some token political salad dressing for the 2020 election.”
• “Moreover, much of the deal depends on whether the Chinese will abide by Soviet-style import quotas,” or in more common parlance: limits on imports of goods into the country, which is is ‘command and control’ economics of central planning.
• “We are thankful, however,  the economic hostilities have momentarily ratcheted down but the game is hardly over,” with tariffs and trade restrictions/suppression being the “new paranormal”.
• “Seriously, after more than two years of negotiations, they couldn’t even agree on dog and cat food imports?”

• “The [trade] environment remains very much in flux and a source of concern and challenge for investors”.

My takeaways from Phase 1/N thingy: we are in a VUCA world. The current U.S. Presidential Administration is an automated plant for production of uncertainty and ambiguity, while the world economy is mired in unresolvable (see WTO’s Appellate Body trials & tribulations) complexity. Beyond the White House, political cycle in the U.S. is driving even more uncertainty and more ambiguity into the system. The Four Horse(wo)men of the Apocalypse in charge today are, in order of their power to shift the geopolitical and macroeconomic risk balance, Xi, DNC leadership, Putin and Trump. None of them are, by definition, benign.

The trade deal so far shows that Xi holds momentum over Trump. Putin’s shake up of the Russian Cabinet today shows that he is positioning for some change in internal power balances into 2020, and this is likely to have some serious (unknown to-date) implications geopolitically. Putin’s meeting with Angela Merkel earlier this week is a harbinger of a policy pivot to come for the EU and Russia and Lavrov’s yesterday’s statement about weaponization of the U.S. dollar and the need for de-dollarization of the global economy seems to be in line with the Russo-German New Alignment (both countries are interested in shifting more and more trade and investment outside the net of the U.S. sanctions raised against a number of countries, including Iran and Russia).