The markets perked up yesterday on Trump's latest "any day now" proclamation about a China trade deal materializing "in three to four weeks."
Look, I've covered enough of these announcements to recognize when someone's borrowing from the same playbook my four-year-old nephew uses to avoid bedtime. "Just five more minutes" somehow stretches into an hour while the actual bedtime recedes like a mirage.
Time frames in Trump-speak deserve their own special Rosetta Stone. When he says "immediately," what he really means is "someday, if the mood strikes." "Very soon" translates roughly to "probably never, but keep hope alive." And "3-4 weeks"? That's the sweet spot—just close enough to juice the markets but conveniently distant enough that we'll be chasing some new shiny object when the deadline silently expires.
I've started thinking about these recurring trade announcements as what I call the "Diplomatic Options Strategy." It works brilliantly: Markets getting skittish about trade uncertainty? Simply issue a vague but optimistic statement that functions as a free put option on the S&P 500. The premium collected comes in the form of a market bump and friendly headlines. And here's the beautiful part—unlike actual options contracts, there's no firm settlement date that can't be conveniently rolled forward.
We've seen this movie before, haven't we? Remember the "biggest deal ever" promised after the G20? Or that "phase one" agreement that was supposedly "95% complete" last spring? The markets react to each announcement with all the wisdom of Charlie Brown charging toward Lucy's football. Somehow always believing that THIS time the ball will stay put.
(I was actually in the press room when one of these announcements came through last year. The collective eye-rolling from the veteran reporters could've generated enough energy to power a small town.)
This isn't to say we'll never see an agreement. But there are systematic incentives for keeping this process in perpetual "almost there" status. A completed deal eliminates uncertainty—normally good for markets—but also removes the administration's ability to generate future market pops through optimistic pronouncements. It's like those TV shows where they tease the main characters getting together for seven seasons—once it happens, a major plot device vanishes.
The fundamental dynamics remain miles apart. China wants tariff relief without making structural economic changes. The U.S. wants China to fundamentally alter its economic model. Meanwhile, farmers are getting squeezed, manufacturing numbers are softening, and businesses sit paralyzed while this elaborate kabuki theater plays out.
What fascinates me is how the market's response to these announcements has evolved. Early in the trade conflict, markets would swing wildly on each presidential tweet. Now? The reaction is more measured—still positive, but tinged with healthy skepticism. It reminds me of that fable about the boy who cried wolf, except instead of villagers, we've got institutional investors, and instead of a wolf, it's a comprehensive trade agreement.
Maybe I'm just being cynical. Perhaps in three to four weeks, we'll witness a breakthrough that addresses intellectual property protection, forced technology transfers, and state subsidies. And maybe pigs will sprout wings and do aerial acrobatics over the National Mall.
The strangest part? Markets understand this game perfectly well yet continue playing along. Why? Because the alternative—pricing in the actual probability of a comprehensive deal—means acknowledging we might remain in trade limbo for years. And if there's one thing markets hate more than bad news, it's acknowledging uncertainty.
So here we are again, rallying on the possibility of a deal in "three to four weeks," fully aware that a month from now, we'll probably be rallying again on the promise of a deal in "two to three weeks." Time isn't just a flat circle in trade negotiation land—it's a Möbius strip.
The real question—and one I've been mulling over with several economist friends lately—is how many more of these cycles before the market response function drops to zero? That's when things could get... interesting.
