Ministry of Commerce spokesman Gao Feng’s comments about holding off on further retaliation towards US tariffs excited markets this morning. I am not sure Gao’s comments signal any softening, and maybe the recent RMB drop has mitigated the short-term need for another response from Beijing, but when things look so dark any slight glimmer of hope gets magnified, especially in the days before a major US holiday (Labor Day) when most traders are on vacation and market volume is usually light.

There is still talk that Liu He and Zhong Shan will come to DC in September. Nothing is confirmed but I am hearing the week of September 16 is the likely window for a visit. It is positive if he comes though as we saw with the Lighthizer and Mnuchin’s visit to Beijing in August just showing up does not mean there will be progress. The Chinese have been very clear they see this as a process of fighting and talking, and are comfortable doing both simultaneously.

As for President Trump’s claim of phone c…