Trump delivered a speech before heading to Scotland, becoming today's headline news.
First, nearly 200 tariff letters will be sent out, with some letters indicating tariff rates of 10% and 15% — this is significantly lower than the threats made in the past, so it hasn't scared the market.
Second, relations with China are going very well, and an agreement with China is being finalized. There is confidence that progress will be made in the trade talks in Stockholm, with the U.S. and China having a 'boundary for the agreement.'
Last night (Wall Street Journal) quoted sources familiar with the White House's thoughts, stating that Trump seeks to reach an economic agreement with China.
Even before talks have started, Trump has already indirectly signaled concessions, which is quite startling, contrasting sharply with his tough stance towards other countries. Trump is paving the way for a 'acceptable agreement' with China. The so-called 'boundary for the agreement' means he will not require the Chinese side to meet all terms; Trump needs a 'face-saving agreement' (the content of the agreement will not be too deep).
Third, the possibility of reaching a trade agreement with the EU is 50%.
European Commission President Ursula von der Leyen will meet Trump in Scotland on Sunday. A senior EU official said, 'We are close to reaching an agreement, and it could happen over the weekend.'
Market optimism regarding a trade agreement between the U.S. and EU is heating up, driving the S&P 500 to new highs. However, this is an expectation trade, and the market has fully digested it. If the agreement is not reached, the level of disappointment will be greater than the potential for an increase.
Fourth, there is no need to dismiss Powell; the Federal Reserve will take the right actions, and Powell is a 'very good guy' — Trump has extended an olive branch to the Federal Reserve, but if the Fed does not signal a rate cut next week, it will anger Trump.
Next week is the 'super gathering' of risks: China-U.S. trade talks, tariff deadlines, the Federal Reserve's decision announcement, U.S. non-farm payroll data release, and tech giants' earnings reports — Trump is also nervous because he only has insight into the first two events.
The 'most likely volatile week of the year' is here.