Oil prices are up today with U.S. benchmark West Texas Intermediate ahead 2.07% to $56.84 a barrel as of 11:30 a.m. in New York. International benchmark Brent crude has gained 2.23% to $66.93 a barrel. Both prices remain below the psychologically important $60 a barrel and $70 a barrel levels, respectively.
Still, you might have expected that even modest good news in an oil market deep in the grasp of a bear would have pushed stocks higher. But not so far this morning. At 11:30 a.m. New York time the Standard & Poor’s 500 was down 0.29% and the Dow Jones Industrial Average was lower by 0.30%. The NASDAQ Composite was off by 0.45% and the Russell 2000 small cap index was down 0.10%. The iShares MSCI Emerging Markets ETF (EEM) was ahead by 0.35%.
The culprit seems to be the news on trade. On the always interesting U.S.-China front in the global trade war, the last two days have revealed a yawning chasm in the White House between White House trade advisor (and ultra China trade hawk) Peter Navarro and White House economic advisor (and the relative voice of reason) Larry Kudlow. The difference is pretty easy to sum up: Ahead of the meeting of Presidents Trump and Xi at the November 30-December 1 G20 conference in Buenos Aires, Navarro ‘s position seems to be “Talks bad.” Kudlow, on the other hand, said yesterday “Talks good.” It’s by no means clear what negotiating position President Donald Trump will present at the meeting. But the China hawks in the administration are sticking to a list of demands that would require a reorganization of China’s economic policy that is never going to be acceptable in Beijing.
And if you want more worrying trade news, Democratic Representative Bill Pascrell, likely to be the head of the Ways and Means Trade subcommittee when the Democrats take over the House of Representatives in January has said that the recently negotiated USMCA replacement for NAFTA needs “not only changes in the legislation but more enforcement” if the Trump administration wants votes from Democrats. The United States, Mexico, and Canada are scheduled to sign the agreement during the Group of 20 summit on November 30-December 1. But the trade deal will require approval from the new Congress in 2019
