Displaying items by tag: US

Friday, 28 June 2019 09:43

What Will Happen if Trade Talks Collapse

(Washington)

Trump and Xi are meeting this weekend alongside the G20, and the encounter seems likely to pivotal in the trade war between the US and China. No one is expecting a whole lot, but there is some hope of a potentially positive new path. The more likely outcome, however, appears to be an escalation of the conflict. If that happens, with both sides raising tariffs and escalating rhetoric, a mild global recession over the next six quarters seems probably, says UBS. This would likely prompt global rate cutting by central banks.


FINSUM: This seems like a decent forecast. The irony is that because of their ability to stimulate, the US and Chinese markets will probably be hurt the least by this, as it will more likely be emerging markets that take a hit.

Published in Eq: Total Market
Wednesday, 26 June 2019 07:27

Treasury Says China Trade Deal is 90% Done

(Washington)

In what comes as a potentially very good sign, the Treasury Department announced yesterday that a trade deal with China was close to becoming a reality. Steve Mnuchin, head of the Treasury, said that a deal with China was “90% of the way there”. On a slightly less positive note, he continued “The message we want to hear is that they want to come back to the table and continue because I think there is a good outcome for their economy and the U.S. economy to get balanced trade and to continue to build on this relationship”. Trump will meet Xi at the G20 gathering this weekend.


FINSUM: Mnuchin is not particularly given to exaggeration, so we take this 90% number as pretty meaningful. The downside is that the Chinese aren’t at the negotiating table right now.

Published in Politics
Monday, 24 June 2019 08:34

Trade Truce is Becoming Less Likely

(New York)

The trade war between the US and China has been pretty intense for some months, but many are wondering if it is headed for a cool down as the countries come to an agreement. The odds of such a development look bleak, according to Bloomberg, because each side’s alternative is looking better. Trump and Xi will meet at the G-20 summit this week to talk over their country’s trade issues, but given that both countries have realized they have good options outside of one another, it seems unlikely a deal will materialize.


FINSUM: We think a symbolic deal could still happen, but it is hard to envision an impactful and comprehensive deal being agreed any time soon.

Published in Politics
Wednesday, 12 June 2019 09:26

Hong Kong’s Impact on the US-China Trade War

(Hong Kong)

Hong Kong has erupted into full scale riots with over 1m people taking to the streets. Protesters are angry over a new measure that would allow mainland China to extradite accused criminals from Hong Kong to their courts, a measure which many in Hong Kong say is a clear violation of China’s agreement to leave Hong Kong’s freedoms in place for 50 years. The US has condemned the measure in serious terms, but the reality is that Hong Kong’s fate, and the US’ protection of the city-state, may become a pawn in the trade war, with the US government using it as an element to help it get a better deal.


FINSUM: This seems like one more way for Beijing to exert control on Hong Kong, and we dislike it as much as the protesters on the street. There has been a furious international backlash to the proposal, but it remains to be seen how it may impact the trade war. One more thing we think is important to note: there are 85,000 Americans living in Hong Kong.

Published in Politics
Friday, 31 May 2019 10:34

Apple Headed for Big Trouble in Trade War

(San Francisco)

We ran a piece yesterday highlighting the risk of China using rare earth elements as a bargaining chip in the trade war. The US currently gets 80% of its rare earths from China, and the elements are used in everything from smartphones, glass, electric vehicles, and jet engines. The biggest loser if China blocks access could be Apple. The company is currently planning a ramp up in production for its new fall products, so according to Goldman Sachs “even a short term action affecting production could have longer term consequences for the company.”


FINSUM: It is hard to calculate the financial impact at this point, but we expect it could be significant given that these elements are key to smartphone production.

Published in Eq: Tech
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