Blain’s Morning Porridge Oct 30th 2025 – What did the Korea Summit really mean for markets?

“Come not between the dragon and his wrath”

This morning’s meeting in Busan, Korea was short and sweet. Goal achieved – the global meltdown that would have followed a rare-earth embargo by China has been avoided. What is more interesting is how it could change the current power set-up in Washington as Scott Bessent and Marco Rubio increasingly take centre stage.

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Two events and One Big Question for Global Markets to consider this morning:

• What really happened in Busan, South Korea this morning?
• What did the Fed tell us about the path of US interest rates?
• What do they tell us about global power and influence?

The noise from the Trump/Xi meeting in Korea was exactly as expected: There was de-escalation of Trade War rhetoric including port charges levied on shipping. A 1-year trade deal (cease fire) is in the offing. Tariffs were cut to 10%. Agreement was (apparently) reached that China will hold back on rare-earth export controls while the USA scales back export bans on advanced chips. China will buy American Soya Beans – sparing US famers from bankruptcy. A full summit in Beijing next year, followed by a visit to DC. Thus spake Trump. (I would love to know what Xi thought.)

The apparent agreement was all pretty much as already negotiated by Trump’s adult-in-the-room Treasury Secretary Scott Bessent. As such, it’s all positive for a less destabilised global trading system, although still plenty of things to be ironed out, like Russian oil and Ukraine. Markets should like it.

However, the optics of the summit looked less than convincing. Trump stood there waiting to greet a great chum with charm, flattery and lashings of shmooze. He piled on the compliments. Xi barely acknowledged any of it – his comments about frictions and relationships emphasised this was a meeting of equals. But his body language looked like a man who was there in “necessary but distasteful toleration” mode of Trump.

That doesn’t actually matter much. The die are already cast.

It was a brief 90 minute meeting, and no communique. Trump went straight back to Air Force One to fly back to Washington, while Xi went to meet the other Asian leaders at the conference – which tells us a lot about the future. Xi’s ambition for China’s is to lead the global economy as (at a minimum) regional economic and military hegemon in South East Asia (the new nexus of global wealth). Where will that leave MAGA America? Focused primarily on the American Hemisphere.

What’s the upside?

It was the USA that needed this morning’s summit. Bessent’s objective was to minimise the market damage any disruption a de-facto rare-earth embargo would do to markets, confidence and the economy. That mean persuading Trump to completely roll back the trade war/tariff threats and be accommodating. Bessent and other thinkers in the cabinet are acutely aware of just how vulnerable US AI build out and rearmament plans are. The rush to do deals with allies on new rare-earth projects, like Australia last week highlight how US Politics might just be getting back on track.

The most positive signal from the meeting is it confirms how the White House is evolving. The Trump factor is diminishing. (His power to shock, destabilise and unsettle is diminishing, because that’s what we expect of him – he no longer surprises.) Treasury Head Bessent, together with Secretary of State Marco Rubio, are emerging as the real power and leadership in the evolving Trump administration. I suspect Trump is pivoting to focus on legacy issues – he seems to know succession is inevitable given his recent comments about the very capable Rubio and his VP, JD Vance standing together in 2028.

(I will aware extra points to anyone who spots the significance of this morning’s top of the Porridge quote on this…)

Quite how that will play with Vance’s sponsors, the Theil, Ackerman, Andreesen Billionaire set, will be interesting. Clearly, they’d like Vance in the White House – after it all, it cost millions to Trump to put him in the VP seat. Rubio might be too independently-minded for their liking.

Of course, any succession will set the dogs running in DC. Trump’s ongoing support for Bessent and Rubio will always be vulnerable to the “who-spoke-to-him-last” factor. His solid support for the two of them will be critical during the transition – the MAGA hardliners and Trump loyalists will fight tooth and nail against practical men like Bessent and Rubio. For instance, it’s interesting Trade Secretary Howard Lutnick has pretty much vanished from the scene and was not seriously engaged.

(While I try not to listen to the utter BS on X/Twitter, this may all happen sooner than we think. More than a few US chums (admittedly Democrats) are pressing on Trump’s increasingly bizarre interventions and rambling speeches. I am told the thing to do will be to watch his gait for signs that conspiracy rumours about his health are not just idle speculation.)

All of which leads to yesterday’s 25 bp rate cut by the Fed. As we all know, Jay Powell is under the cosh to ease and ease faster, and the whole independence of the Fed is under threat. That may become much less an issue if Trump is seen to be mellowing, and handing much of the day-to-day running of the administration to Bessent and Rubio – not particularly loyal, but competent lieutenants!

Although there has been much talk of how lower rates will boost the market, and Powel’s comments about a slower pace until he sees more data caused a minor sell-off, the reality is US rates are now already in the Sweet Spot for the economy. The QE era demonstrated pitching rates too low simply triggered investment away from the economy into financial assets – because money was too cheap. Rates around 3.5-4% should drive ongoing real economy investment..

So, the conclusion is it’s not to bad a picture this morning after the China summit, but still plenty of things that could derail markets..

Out of time and back to the day job

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital