Displaying items by tag: China

(Beijing)

One of the scary facts of yesterday’s selloff was that there wasn’t a single identifiable catalyst for it. That said, one of those that had a certain effect was growing doubt about the strength of the Trump-Xi trade truce. Well that concern got a bit of support today as China publicly reaffirmed its commitment to the trade détente. Beijing said it was working toward a trade agreement with the US by March 1st, a sign that it intends to follow through on the promises made by Trump and Xi over the weekend.

FINSUM: We think it is a good sign China made this kind of statement. It seems an obvious reaction to the big stock market drop yesterday, but the fact that they care to help out is a good indication of where things are heading.

(New York)

Markets are having a very rough day. Both the S&P500 and the Dow are down almost 3%. Financials have been leading losses. The selloff appears to be centered on fears over the fragility of the US-China trade “truce”. Treasury bonds have been rallying, leading to selloffs in tech and banks. The Treasury curve started to invert yesterday, which also seems to have spooked investors.

FINSUM: What a difference a day makes! Just yesterday it seemed like stocks might be lined up for a nice end of year run. A day later, the trade trace has created more tension than before and the yield curve is starting to invert.

(New York)

Markets and the global economy got some very welcome news this weekend. On the sidelines of the G-20 conference, President Trump and Chinese leader Xi came to a “truce” in their trade war spat this weekend after what they both called a “high successful meeting”. Accordingly, several industry-specific stocks should react well to the news. These stocks are: Stanley Black & Decker, Caterpillar, Emerson Electric, AGCO Corporation, and 3M.

FINSUM: Many of these stocks already have big tariff-driven headwinds in their 2019 outlooks, so the possibility for big reversals seems likely. A lot of gloom had already set in, which means there is significant upside.

(Washington)

The market has been worried about trade for almost half a year now, ever since the rhetoric surrounding it began heating up in June. It has been a major factor in several volatility events in stocks, including in October’s big selloffs. However, a meeting this weekend has the potential to put those worries to rest. Alongside the G20 summit this weekend, Trump and Xi will meet for dinner to discuss the trade tensions between their countries.

FINSUM: Trump and Xi seem like two men that get along well personally, but have an immense amount of competing interests that they need to represent. That said, we have faith that good personal relationships can help bridge such differences. (e.g. see the Cold War)

(San Francisco)

In what comes as an almost apocalyptic announcement for Apple investors, President Trump indicated yesterday that he may impose a tariff directly on iPhones. When asked about whether he would do so, Trump said “Maybe. Maybe. Depends on what the rate is … I mean, I can make it 10%, and people could stand that very easily”. One analyst summarized the development this way, saying “The Street will not be taking this news lightly as with the litany of bad news Apple (and its investors) have seen over the last month … this tariff threat on iPhones out of left field from Trump and Beltway will surely add to this white-knuckle period for Apple”.

FINSUM: We don’t think this will happen. If Trump tried to raise iPhone prices 10% he would likely have a popular revolt (from both sides of the aisle) on his hands. He certainly doesn’t want that.