The Endless Ping-Pong of U.S.-China Trade Talks
- Investors, according to many accounts, are newly chuffed by Donald Trump’s declaration—the second in a week—that he’s willing to suspend his March 1 deadline for slapping higher tariffs on $200 billion in U.S. imports from China if trade negotiators from the two countries move closer to a deal.
- China’s state-controlled Peoples’ Daily chortled that a U.S. trade delegation, led by Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer, has “made important progress” during their two days of meetings with Chinese counterparts in Beijing this week—and that, as Chinese negotiators head to Washington next week for a round of follow-up discussions, the two sides are making a “final sprint” towards the finish line.
- Even so, White House officials already are discussing a mid-March meeting between Trump and Chinese president Xi Jinping at Trump’s Mar-a-Lago resort where the two leaders would announce a final deal.
Suspicion of China's government is growing across the globe
- At the same time, multiple countries have threatened to cut relations with private Chinese technology giant Huawei over concerns its 5G network will provide Beijing with a backdoor to a global spy network.
- The Chinese technology juggernaut is a symbol of China's economic rise, growing over just 30 years to become one of the world's leading 5G network providers, in the process signing major contracts in countries on every continent.
- It was the fierce denunciation by the Turkish Foreign Ministry of Beijing's Xinjiang policies on February 9 which signaled a new shift against the Chinese government.
- Questions have been raised behind closed doors in the Chinese government over the aggressive tone of Chinese foreign policy under Xi. Some Chinese officials believe his "over-the-top" remarks on issues such as trade and the South China Sea have caused the Washington backlash.
CREDIT SUISSE: Here's why investors shouldn't assume China's economy is already recovering
- Credit Suisse analyst Andrew Garthwaite says signs of Chinese economic growth could be a fake-out.
- While he's seen big rallies in areas like emerging-market indexes and mining companies, he argues that the Chinese government hasn't yet added enough stimulus to the economy to loosen credit conditions.
- Garthwaite isn't going so far as to bet against a recovery, but he says stocks that are tightly linked to China's economy have climbed too quickly, which means the rally might be premature.
- At the same time, China was forced to tighten credit conditions as the government made big changes to the financial system and tried to handle its debts.
- Then, as last year's slowdown got more severe, the government in Beijing relaxed lending standards to boost growth again.
‘Enormous economic harm’: Auto tariffs would add to pain of other trade measures, report says
- U.S. tariffs on auto imports would compound the pain of other recent trade measures, with the impact spilling across borders, even if Canada, Mexico and South Korea are exempted from the levies, says a leading analyst at the Center for Automotive Research.
- A new study by the centre found light-duty vehicle prices would climb by an average US$2,750 for American consumers if auto tariffs were added onto existing U.S. trade measures including tariffs on steel, aluminum and various Chinese goods.
- The Center for Automotive Research report looks at 10 scenarios for how the tariffs might be imposed, applying different combinations of policies and trade deals including the implementation of the revised NAFTA, Section 232 tariffs on steel and aluminum and Chinese imports.
The Fed could move markets this week when it tells us what it was thinking at the January meeting
- The Fed calmed the markets in late January when it said it could stop raising interest rates, but investors are watching the release of its meeting minutes for any sign the Fed could veer off its easy path.
- In what felt like an about face from its December meeting, Powell also emphasized that the Fed would be flexible with its balance sheet.
- Stocks were higher in the past week, even with Thursday's sell off on stunningly weak December retail sales data.
- So the coming week's data will also be important, including weekly jobless claims Thursday, which were higher for a third week this past week.
- Pande said the market broke out in the past week from a sideways trade it fell into earlier in the month.
- Pande said there's a risk that investors will read the Fed's minutes in the coming week a little more hawkish than it intends.
As Trump ponders auto tariffs, free-trade Republicans push back
- But as President Trump deliberates his next moves – by law, he has 90 days to decide –he will face an uphill battle from companies, foreign allies and Republican lawmakers if he decides to impose duties.
- The report was crafted under section 232 of a 1962 trade law, a provision that allows tariffs on items that threaten national security that was scantly used before the Trump Administration.
- In March 2018, the president used the provision to slap duties on foreign steel and aluminum, and called for an investigation into automobiles several months later, tweeting before the research was conducted that he'd be interested in a 25 percent rate.
- Sen. Pat Toomey (R-PA) introduced a bill last month that would give Congress sixty days to approve any proposed tariffs under section 232.
- Sen. Portman said his measure is timely because of the widespread opposition among Republicans to placing tariffs on auto imports, most of which come from allied countries.
Investors may have already missed out on the bulk of the market's gains this year
- Investors expecting the stock market to build on the robust start it's seen in 2019 don't have history on their side.
- But someone looking to jump into the market now and expect to make money by the time the calendar rolls over 2020 will need the following stars to align: positive U.S.-China trade talks, continued reluctance by the Federal Reserve to raise interest rates, and the economy and corporate profits to stay out of recession, just to name three.
- Lindsey Bell, investment strategist at CFRA, thinks the markets and earnings picture will need a boost from geopolitics, namely a positive resolution to the U.S.-China trade talks.
- But Paulsen said reductions in imports have traditionally come with a weakening economy and a down stock market.
- That highlights just one of the obstacles for investors late to the market rally.
The Pelicans' GM is suddenly out and it could be a good sign that the Lakers are still alive in the Anthony Davis sweepstakes
- The decision comes just days after the NBA trade deadline, which saw the Los Angeles Lakers offering a bounty of picks and young players for Anthony Davis.
- But the latest front office shuffle in New Orleans might be the best evidence Lakers fan have gotten yet that their team could still bring Davis to Los Angeles.
- The Pelicans decision to fire Demps gives a reason for Lakers fans to hope, as it implies that New Orleans' ownership has been unhappy with how Davis' looming trade has been dealt with, and possibly that the Pelicans front office would have preferred for the deadline deal to go through.
- According to Dan Woike at the Los Angeles Times, Demps future being up in the air was also a factor in the team's decision to wait until the summer to move Davis.
'Ann Coulter — I don't know her': Here are the most combative moments from Trump's sprawling press conference
- At the event in the Rose Garden, the president was expected to give a speech that touched on his recent decision to declare a national emergency in order to redirect funds toward the construction of a border wall.
- An NBC News reporter asked Trump whether he would admit that the current deal crafted by bipartisan lawmakers provided less wall money than what he could have gotten prior to the 35-day government shutdown, which was sustained over disagreements about border funding.
- CNN's Jim Acosta asked Trump about data from government agencies showing border crossing at historic lows, and of reports claiming illegal immigrants having lower crime rates than native-born Americans.
- But he claimed not to know Ann Coulter, an immigration hard-liner who has been one of Trump's biggest supporters, but has offered scathing criticism of the president amid the border wall fight.
Trump, Xi Hail Progress in Trade Talks as Tariff Deadline Nears
- President Donald Trump hailed progress made in trade talks with China this week, saying he may extend a tariff truce and take steps to sell a potential deal with opposition lawmakers.
- President Xi Jinping also sounded upbeat, saying the week-long round of meetings “achieved important progress in another step,” according to China’s Xinhua News Agency.
- While Trump doesn’t need the backing of lawmakers to impose or revoke tariffs, the president on Friday said he would consider bringing Democrats to the negotiating table.
- Earlier this week, Trump repeated on Friday that he’s open to extending that deadline for higher tariffs if the two sides are close to striking a deal.
- The two sides remained far apart this week on structural reforms to China’s economy that the U.S. has requested, according to three U.S. and Chinese officials who asked not to be identified because the talks were private.