Wall Street to Watch Mike Pence ‘Bad Cop’ Speech for China Signs
Wall Street to Watch Mike Pence ‘Bad Cop’ Speech for China Signs
(Bloomberg) -- On Thursday, Vice President Mike Pence is due to deliver a speech on China that is already drawing the attention of policy analysts. Pence could play “bad cop,” with a focus on human rights, which may clear the way for President Donald Trump to play “good cop” with a deal, according to Compass Point.
On Monday, U.S. stocks rose amid positive signals on trade talks, with the S&P 500 gaining as much as 0.7%.
Here’s a sample of some of the latest commentary:
Compass Point, Isaac Boltansky
“Given both the fundamentals and political realities, we expect Vice President Pence to strike a hawkish and defensive tone,” Boltansky wrote in a note. Pence is seen as the “bad cop,” setting the stage for President Trump to play the “deal-maker,” he said.
Boltansky noted Pence’s previous address on China last year set a “hawkish tone”; this is one expected to be similarly framed, he said. And it’s coming as “tensions between China and the United States have expanded beyond the tariff tit-for-tat in recent weeks,” including a tech blacklist decision, visa restrictions, and the administration’s consideration of capital flow limits.
Compass Point expects the U.S.-China Phase One agreement will be signed in mid-November, given its “relatively narrow scope,” but Boltansky said it’s still too early to tell whether negotiators will be able to address the “thorniest and most complicated issues.”
Veda, Henrietta Treyz
“Pence is widely understood to prioritize religious freedom and has had strong words for China in the past on these issues,” Treyz wrote. His speech is likely to attract a lot of attention as it’s coming in the “midst of the high stakes U.S.-China trade negotiations,” she added.
Treyz views the remarks as “unlikely to be intended to escalate tensions with China. Instead, the speech is more likely to offer an “opportunity to let some air out of the balloon” of where U.S. domestic attention is focused.
“One of the best ways to stave off a formal Senate vote on the Hong Kong bill would be for Vice President Pence or Secretary of State Pompeo or some other senior White House official to make a statement acknowledging the concerns of the NBA, the Uighurs, the Hong Kong protesters and the House votes,” she said.
Cowen, Chris Krueger
Pence’s “human rights” speech on China will be a “bookend to his seminal October speech,” Krueger wrote, and may focus on Hong Kong.
“There is growing confidence that President Trump and General Secretary Xi will shake hands on a ‘phase one’ trade deal next month,” Krueger said. At the same time, there’s also “little understanding as to what that deal should or will include.”
Krueger remains skeptical, for several reasons, starting with potential failure at the “last hurdle, as in the past, either because the effort to write down terms reveals irreconcilable differences or because the president rejects his advisers’ proposals.” He added that “even if a super skinny deal is agreed,” the lack of meaningful concessions may provokes a backlash in both countries, and it may prove “impossible to ‘silo’ trade from the broader strategic conflict,” including issues like Hong Kong and Magnitsky sanctions.
To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Dave Liedtka
©2019 Bloomberg L.P.
