I know Pres. Trump wants a rate cut, says Jim Cramer

Key Concepts:

• Non-Farm Payroll Report: A monthly report detailing the number of jobs added or lost in the US economy, excluding farm workers.
• Federal Reserve (The Fed): The central banking system of the United States.
• Rate Cut: A reduction in the federal funds rate, the target rate that the Federal Reserve wants banks to charge one another for the overnight lending of reserves.
• Trade Deal: An agreement between countries to reduce barriers to international trade.
• Rare Earth Materials: A set of seventeen metallic elements that are essential for many high-tech devices and industries.
• Semiconductors: Materials that have electrical conductivity between conductors and insulators, used in electronic devices.

Market Reaction to Economic Data and Political Factors

The market experienced a significant surge, with the Dow Jones Industrial Average gaining 443 points (1.3%) and the Nasdaq jumping 1.20%. This positive reaction was attributed to two primary factors:

1. "Just Right" Labor Report: The non-farm payroll report indicated accelerated job growth but included downward revisions for the previous two months. This created a "soft read," providing the Federal Reserve with greater flexibility to consider a rate cut.
2. Presidential Restraint: The market was also positively influenced by the President's decision not to escalate tensions with trading partners.

Upcoming Week's Game Plan: US-China Trade Negotiations

The focal point of the upcoming week is a meeting with Chinese officials to attempt to revive trade negotiations. The current state of the two sides is uncertain.

Strategic Assets and Potential Leverage

The discussion highlights the strategic assets each country possesses:

• China: Controls rare earth materials, which are crucial for the US auto industry. A disruption in the supply of these materials could force US auto factories to shut down.
• United States: Possesses advanced semiconductors, particularly those produced by Nvidia, which are highly sought after by China.

Potential for a Deal and Key Personnel

The possibility of a trade deal hinges on whether an "even trade" can be negotiated. The discussion specifically mentions the potential for a deal involving rare earth materials from China in exchange for Nvidia's semiconductors from the US. Secretary Best is expected to participate in the talks.

Conclusion

The market's positive response was driven by a labor report that allows the Federal Reserve flexibility and a lack of escalation in trade tensions. The upcoming week's focus is on US-China trade negotiations, where each country holds strategic assets that could be used as leverage. The potential for a deal depends on finding a mutually beneficial exchange, such as rare earth materials for semiconductors.