Hedge fund manager Kyle Bass says the US has more leverage over China than ever before

Hedge fund manager Kyle Bass believes the United States now has more leverage over China in trade negotiations than ever before and encouraged President Donald Trump to follow his hard-line tactics to force concessions from Beijing. Bass — a known China bear — has previously admonished American corporations for pushing Trump to strike a deal with China too quickly and out of their own self-interest. And it is the corporate American chieftains that have their biggest businesses, let’s say most gr


Hedge fund manager Kyle Bass believes the United States now has more leverage over China in trade negotiations than ever before and encouraged President Donald Trump to follow his hard-line tactics to force concessions from Beijing. Bass — a known China bear — has previously admonished American corporations for pushing Trump to strike a deal with China too quickly and out of their own self-interest. And it is the corporate American chieftains that have their biggest businesses, let’s say most gr
Hedge fund manager Kyle Bass says the US has more leverage over China than ever before Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-21  Authors: thomas franck
Keywords: news, cnbc, companies, better, manager, trump, think, leverage, bass, fund, kyle, china, deal, yesterday, world, trade, hedge, going


Hedge fund manager Kyle Bass says the US has more leverage over China than ever before

Hedge fund manager Kyle Bass believes the United States now has more leverage over China in trade negotiations than ever before and encouraged President Donald Trump to follow his hard-line tactics to force concessions from Beijing.

In an interview with CNBC’s David Faber, Bass said the strength of U.S. business affords Trump the ability to press China’s Xi Jinping for a better deal during their planned meeting at the G-20 summit in Japan next week.

“We have the most leverage that we’ve ever had right now, and I think that our financial system is more solid than it’s been in the last 10 years. And theirs is as weak as it’s ever been,” Bass said Friday morning. “President Trump should hold the line here and get a deal done. If he is going to get a deal done, he should force something that’s both measurable and enforceable.”

Bass, founder and chief investment officer of Hayman Capital Management, is known for profiting and betting against subprime mortgages during the financial crisis in 2008. Bass — a known China bear — has previously admonished American corporations for pushing Trump to strike a deal with China too quickly and out of their own self-interest.

“If you look behind the scenes, it is corporate America pushing Trump to do a deal. And it is the corporate American chieftains that have their biggest businesses, let’s say most growth, coming out of China. And China plays that card. They play it better than anybody else,” Bass told CNBC in April.

The world two largest economies have slapped tariffs on each others’ imports over the past year in an ongoing trade dispute, with the U.S. accusing China of failing to enforce intellectual property protections. Though Wall Street thought the two sides were nearing a deal earlier this year, Trump’s May tweet that the U.S. would introduce more duties dashed those hopes.

“I think the chasm is too far across for us to come to a deal. But what does that mean?” Bass added Friday.

“As Trump tweeted yesterday, the stock market opened at a new high and close at a new high yesterday. I think the fact that talks are ongoing, the U.S. economy is doing better than most of the others in the world,” he said. “I actually think that’s the path that we’re going to see going into the election year.”


Company: cnbc, Activity: cnbc, Date: 2019-06-21  Authors: thomas franck
Keywords: news, cnbc, companies, better, manager, trump, think, leverage, bass, fund, kyle, china, deal, yesterday, world, trade, hedge, going


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Don’t expect the US and China to make any trade progress at G-20, short seller Carson Block says

Investors shouldn’t get their hopes up for the U.S. and China to make any progress on the trade front at the G-20 summit next week, short seller Carson Block said Friday. The Chinese media seems to be digging in and not softening its tone,” Block, founder of Muddy Waters Research, told CNBC’s “Squawk on the Street. ” Block lived in China for six years and gained recognition by shorting several Chinese stocks, including Sino-Forest. China and the U.S. have been engaged in a trade war for more tha


Investors shouldn’t get their hopes up for the U.S. and China to make any progress on the trade front at the G-20 summit next week, short seller Carson Block said Friday. The Chinese media seems to be digging in and not softening its tone,” Block, founder of Muddy Waters Research, told CNBC’s “Squawk on the Street. ” Block lived in China for six years and gained recognition by shorting several Chinese stocks, including Sino-Forest. China and the U.S. have been engaged in a trade war for more tha
Don’t expect the US and China to make any trade progress at G-20, short seller Carson Block says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-21  Authors: fred imbert
Keywords: news, cnbc, companies, huawei, progress, think, block, trade, china, summit, chinese, countries, g20, short, expect, carson, commercial, seller, dont


Don't expect the US and China to make any trade progress at G-20, short seller Carson Block says

Investors shouldn’t get their hopes up for the U.S. and China to make any progress on the trade front at the G-20 summit next week, short seller Carson Block said Friday.

“I don’t think we’re going to have any rapprochement here. The Chinese media seems to be digging in and not softening its tone,” Block, founder of Muddy Waters Research, told CNBC’s “Squawk on the Street. ” “They’re preparing, I think, for a long geopolitical battle with the West.”

Block lived in China for six years and gained recognition by shorting several Chinese stocks, including Sino-Forest. More recently, he compared Chinese after-school operator Tal Education to Enron.

China and the U.S. have been engaged in a trade war for more than a year. In that time, the two countries have slapped tariffs on billions of dollars worth of each other’s goods, tightening trade conditions and dampening the U.S. economic outlook.

President Donald Trump and his Chinese counterpart, Xi Jinping, are scheduled to meet at next week’s G-20 summit in Japan. The two leaders are expected to discuss trade, with the possibility of reaching an accord.

Still, Block does not expect a deal to be reached. He also said China has figured out how to use the open markets and economies of the West against Western countries through its influence on Chinese companies.

“At the end of the day, there can be no business that is based in mainland China that can be assured of acting independently of the government and just for commercial reasons,” Block said. “Huawei and ZTE built themselves because they were strategic priorities of the Chinese government. When Ericsson and Nokia were laying off employees, Huawei was hiring them in Sweden and Norway not because it was a good commercial decision, but because of the long-term vision” of the Chinese government.

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Company: cnbc, Activity: cnbc, Date: 2019-06-21  Authors: fred imbert
Keywords: news, cnbc, companies, huawei, progress, think, block, trade, china, summit, chinese, countries, g20, short, expect, carson, commercial, seller, dont


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Pence puts off China speech ahead of Trump-Xi talks

Trump says ‘we were cocked & loaded’ but ‘in no hurry’ to attack…President Trump says he called off the strike 10 minutes before it was scheduled to happen after a general told him it could result in 150 deaths. Politicsread more


Trump says ‘we were cocked & loaded’ but ‘in no hurry’ to attack…President Trump says he called off the strike 10 minutes before it was scheduled to happen after a general told him it could result in 150 deaths. Politicsread more
Pence puts off China speech ahead of Trump-Xi talks Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-21
Keywords: news, cnbc, companies, result, strike, scheduled, ahead, hurry, speech, trump, minutes, talks, china, general, puts, trumpxi, happen, pence, told, loaded


Pence puts off China speech ahead of Trump-Xi talks

Trump says ‘we were cocked & loaded’ but ‘in no hurry’ to attack…

President Trump says he called off the strike 10 minutes before it was scheduled to happen after a general told him it could result in 150 deaths.

Politics

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China’s Xi Jinping arrives in North Korea on a visit ‘big on symbolism’

Chinese president Xi Jinping holds talks with North Korean leader Kim Jong Un in Dalian on May 7-8 2018. Ju Peng | Xinhua | Getty ImagesChina’s President Xi Jinping arrived in Pyongyang on Thursday morning for a state visit to North Korea — the first by a Chinese state leader in 14 years. The meeting between Xi and North Korean leader Kim Jong Un is more out of “convenience” and “pragmatism” than true comradeship, he said. Xi’s entourage includes high-level diplomats such as Chinese Foreign Mini


Chinese president Xi Jinping holds talks with North Korean leader Kim Jong Un in Dalian on May 7-8 2018. Ju Peng | Xinhua | Getty ImagesChina’s President Xi Jinping arrived in Pyongyang on Thursday morning for a state visit to North Korea — the first by a Chinese state leader in 14 years. The meeting between Xi and North Korean leader Kim Jong Un is more out of “convenience” and “pragmatism” than true comradeship, he said. Xi’s entourage includes high-level diplomats such as Chinese Foreign Mini
China’s Xi Jinping arrives in North Korea on a visit ‘big on symbolism’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: grace shao
Keywords: news, cnbc, companies, pyongyang, arrives, north, president, trade, state, visit, korea, jinping, xi, chinese, china, chinas, symbolism, big


China's Xi Jinping arrives in North Korea on a visit 'big on symbolism'

Chinese president Xi Jinping holds talks with North Korean leader Kim Jong Un in Dalian on May 7-8 2018. Ju Peng | Xinhua | Getty Images

China’s President Xi Jinping arrived in Pyongyang on Thursday morning for a state visit to North Korea — the first by a Chinese state leader in 14 years. Experts say the move is both symbolic and significant. The visit — which comes days before Xi is set to meet with U.S. President Donald Trump at the G-20 summit — will be “big on symbolism and big on substance,” said John Park, director of the Korea Project at Harvard Kennedy School. Washington and Beijing are currently locked in a protracted trade war that started last year and investors are hoping for some progress during the G-20 meeting. Xi’s visit to Pyongyang also comes as nuclear talks between the U.S. and North Korea have reached a stalemate, after the leaders from both countries walked away from the negotiating table during a February summit in Hanoi. Tom Rafferty from the Economist Intelligence Unit told CNBC on a phone interview that the visit shows that both China and North Korea “are engaged in a bit of messaging to the U.S.”

Xi’s trip is partly an effort to remind Trump of the key role that China plays on the North Korean nuclear issue. Michael Hirson Eurasia Group

Nonetheless, it is important to note the significance of having such a high-level Chinese state-visit, Rafferty said, adding that it doesn’t mean there are no problems between the neighboring countries. The meeting between Xi and North Korean leader Kim Jong Un is more out of “convenience” and “pragmatism” than true comradeship, he said. Xi’s entourage includes high-level diplomats such as Chinese Foreign Minister Wang Yi and head of the state economic planner, He Lifeng, according to Chinese state media Xinhua.

North Korea dependency

“The economic dimension is crucial and in many respects — the 1%, the elites in North Korea … (have) already migrated into the Chinese market place,” Park told CNBC on Thursday. He highlighted that the meeting between the two leaders is a “further elevation” and “rebuilding of this party-to-party dynamic.” About 90% of North Korea’s external trade is with China, and that includes the import of food and energy supplies. Although China has been staying within the the guidelines of the United Nations sanctions on North Korea, Park said that an “easing” of sanctions by Beijing toward Pyongyang can be expected. Fundamentally, he said, China is a “lifeline for Pyongyang.”

US-China trade


Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: grace shao
Keywords: news, cnbc, companies, pyongyang, arrives, north, president, trade, state, visit, korea, jinping, xi, chinese, china, chinas, symbolism, big


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Putin says US tariffs are designed to hold back China’s rise

U.S. trade tariffs on China are aimed at holding back the country’s economic rise, Russian President Vladimir Putin said Thursday. He also added that recent restrictions placed on Chinese tech giant Huawei were designed to weaken the world’s second-largest economy. Putin likened tariffs on China to sanctions on Russia, saying both were punitive. But the U.S. slapped tariffs on their goods, you can call it sanctions — tariffs, sanctions, it’s the same way,” he said. The U.S. imposed import tariff


U.S. trade tariffs on China are aimed at holding back the country’s economic rise, Russian President Vladimir Putin said Thursday. He also added that recent restrictions placed on Chinese tech giant Huawei were designed to weaken the world’s second-largest economy. Putin likened tariffs on China to sanctions on Russia, saying both were punitive. But the U.S. slapped tariffs on their goods, you can call it sanctions — tariffs, sanctions, it’s the same way,” he said. The U.S. imposed import tariff
Putin says US tariffs are designed to hold back China’s rise Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: holly ellyatt
Keywords: news, cnbc, companies, china, hold, putin, tariffs, designed, russia, chinas, sanctions, russian, president, ukraine, economy, rise, trade


Putin says US tariffs are designed to hold back China's rise

U.S. trade tariffs on China are aimed at holding back the country’s economic rise, Russian President Vladimir Putin said Thursday.

During his annual phone-in with members of the Russian public, Putin said U.S. tariffs on China, and also sanctions on Russia’s economy for its annexation of Crimea in 2014, were aimed at holding both countries back. He also added that recent restrictions placed on Chinese tech giant Huawei were designed to weaken the world’s second-largest economy.

“What do they want to do? They want to curb the rise of China, the same is happening in the case of Russia and it will continue to happen,” he said during the live TV broadcast, according to a translation.

“So if we are to have a certain place in this world we just need to be strong, particularly in the economy,” he said.

Putin likened tariffs on China to sanctions on Russia, saying both were punitive.

“China has nothing to do with Crimea or the conflict in the southeast of Ukraine — we are accused that we occupied (the) Donbass (region in Ukraine) but that’s complete nonsense, that’s a lie. But what has China got to do with it? But the U.S. slapped tariffs on their goods, you can call it sanctions — tariffs, sanctions, it’s the same way,” he said.

Putin’s comments come as Russia and China appear more united in the face of a common economic rival. The U.S. imposed import tariffs on China at the start of 2018, saying that China’s trade practices were unfair, and the trade conflict has since escalated.

Talks are ongoing to reach some kind of trade deal and a meeting between President Donald Trump and Chinese President Xi Jinping is taking place next week, though hopes for an immediate deal being signed are low. In the meantime, Trump has faced pressure to take a tougher stance on Russia, particularly in light of its alleged meddling in the 2016 U.S. election.

It is Putin’s 17th annual question-and-answer session with Russian citizens and the “Direct Line” covers a variety of topical domestic issues from health care and jobs to housing and waste collection. This year’s event comes amid rumblings over living standards in Russia.

Putin faced public criticism and protests, and his approval ratings were dented late last year, after he approved long-delayed pension reforms, including gradually raising the retirement age by five years (from 55 to 60 for women from 60 to 65 from men). Protests had led Putin to row back on initial plans to raise the retirement age for women to 63 years.

The call-in also comes amid continuing international sanctions on Russia for its annexation of Crimea in 2014 and role in a pro-Russian uprising in eastern Ukraine in the same period. Russia’s economy is expected to grow only 1.2% in 2019, the World Bank predicted earlier in June.

In its Global Economic Prospects report, the bank said “tighter monetary policy, combined with a value-added tax hike at the beginning of 2019, are also contributing to weaker growth momentum in the remainder of 2019.”

Private investment also remains tepid “due to policy uncertainty and prospects for slowing potential growth over the longer term due to worsening demographic pressures.”


Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: holly ellyatt
Keywords: news, cnbc, companies, china, hold, putin, tariffs, designed, russia, chinas, sanctions, russian, president, ukraine, economy, rise, trade


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Apple reportedly considers moving some production out of China to avoid tariffs

Apple is considering moving final assembly for some products out of China to avoid the burden of potential tariffs from the U.S., The Wall Street Journal reported Thursday. Apple has not made any decision about moving production out of China, which could still take months to put in place once set in motion, according to the Journal. But the company has asked suppliers to figure out the feasibility of shifting final assembly for some devices to places such as Southeast Asia, the Journal reported.


Apple is considering moving final assembly for some products out of China to avoid the burden of potential tariffs from the U.S., The Wall Street Journal reported Thursday. Apple has not made any decision about moving production out of China, which could still take months to put in place once set in motion, according to the Journal. But the company has asked suppliers to figure out the feasibility of shifting final assembly for some devices to places such as Southeast Asia, the Journal reported.
Apple reportedly considers moving some production out of China to avoid tariffs Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: lauren feiner
Keywords: news, cnbc, companies, iphone, avoid, iphones, wall, china, production, month, tariffs, reportedly, considers, moving, apple, foxconn, journal, reported


Apple reportedly considers moving some production out of China to avoid tariffs

Apple chief design officer Jony Ive (L) and Apple CEO Tim Cook inspect the new iPhone XR during an Apple special event at the Steve Jobs Theatre on September 12, 2018 in Cupertino, California.

Apple is considering moving final assembly for some products out of China to avoid the burden of potential tariffs from the U.S., The Wall Street Journal reported Thursday.

Apple has not made any decision about moving production out of China, which could still take months to put in place once set in motion, according to the Journal. But the company has asked suppliers to figure out the feasibility of shifting final assembly for some devices to places such as Southeast Asia, the Journal reported. Apple’s stock was up 0.8% Thursday.

Earlier this month, Foxconn, Apple’s main supplier for iPhones and iPads in China, told Bloomberg it has the ability to build enough iPhones outside the country to satisfy demand. Apple is expected to launch its new iPhones in September. President Donald Trump hiked tariffs by 25% on $200 billion worth of Chinese goods last month and warned he could apply the same on another $300 billion.

Apple did not immediately respond to CNBC’s request for comment. Foxconn declined to comment.

The financial burden could force Apple to make its new iPhones even pricier if it can’t find an alternative to production in China as consumers are already less willing to pay for new upgrades. J.P. Morgan analysts said in a note last month the company would likely need to increase iPhone prices around 14% to offset the impact of the tariffs.

Apple has already begun accelerating the production and shipment of some of its products made in China to stockpile ahead of tariff increases, the Journal reported. But Foxconn has already begun to prepare to ramp up production for new iPhone models in China, according to the report.

Read the full report at The Wall Street Journal.

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WATCH: A rare look inside the factory that makes iPhone’s Gorilla Glass


Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: lauren feiner
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Jim O’Neill: China could globalize the yuan in a challenge to the US dollar’s dominance

Former Chairman of Goldman Sachs Asset Management, Jim O’Neill, said China could use its currency to gain an edge over the U.S. — but not by devaluing the yuan. Beijing can consider expanding the role of the yuan globally to challenge the dominance of the U.S. dollar, he told CNBC’s Tanvir Gill in an interview which aired Thursday. While the greenback — the reserve currency of the world — is dominant today, the “only way that can ever change” is if there’s a genuine, “long-term alternative” to t


Former Chairman of Goldman Sachs Asset Management, Jim O’Neill, said China could use its currency to gain an edge over the U.S. — but not by devaluing the yuan. Beijing can consider expanding the role of the yuan globally to challenge the dominance of the U.S. dollar, he told CNBC’s Tanvir Gill in an interview which aired Thursday. While the greenback — the reserve currency of the world — is dominant today, the “only way that can ever change” is if there’s a genuine, “long-term alternative” to t
Jim O’Neill: China could globalize the yuan in a challenge to the US dollar’s dominance Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: weizhen tan
Keywords: news, cnbc, companies, jim, trade, china, challenge, oneill, chinese, dollars, yuan, saidchina, dominance, selling, traded, bonds, currency, globalize


Jim O'Neill: China could globalize the yuan in a challenge to the US dollar's dominance

Former Chairman of Goldman Sachs Asset Management, Jim O’Neill, said China could use its currency to gain an edge over the U.S. — but not by devaluing the yuan.

Beijing can consider expanding the role of the yuan globally to challenge the dominance of the U.S. dollar, he told CNBC’s Tanvir Gill in an interview which aired Thursday.

While the greenback — the reserve currency of the world — is dominant today, the “only way that can ever change” is if there’s a genuine, “long-term alternative” to the U.S. currency, O’Neill said.

China has already made some strides in internationalizing the use of its currency.

Chinese A-shares — those traded in mainland China — were included in index provider MSCI’s global and regional indexes. The A-shares, as well as Chinese bonds in the Bloomberg Barclays index, are traded in yuan.

As Chinese assets are increasingly traded in global markets, more foreigners will need to trade in the yuan, which is the intent of the internationalization drive.

“Some people would say, of course, the ultimate weapon would be for China to start selling very large numbers of U.S. bonds … but it would probably hurt, of course, the value of Chinese investments, ” O’Neill said.

China is currently the largest holder of U.S. government debt, owning roughly $1.12 trillion in U.S. Treasury bonds. Analysts have debated on whether Beijing will consider the so-called “nuclear option” in its trade fight with the U.S. — defined as selling off its holdings of U.S. Treasurys and triggering a rise in interest rates, which could hurt the American economy.


Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: weizhen tan
Keywords: news, cnbc, companies, jim, trade, china, challenge, oneill, chinese, dollars, yuan, saidchina, dominance, selling, traded, bonds, currency, globalize


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Federal Reserve’s quick pivot to easier policy started with a Trump tweet on trade

Federal Reserve Chairman Jerome Powell holds a press conference following a two day Federal Open Market Committee policy meeting in Washington, January 30, 2019. Leah Millis | ReutersThe road to the Fed’s official policy pivot this week to lower interest rates began in early May, with a tweet. Our continued patience stance seemed appropriate and the committee saw no strong case for adjusting our policy rate,” the Fed chair said Wednesday. The S&P 500 on Thursday finally surpassed that record set


Federal Reserve Chairman Jerome Powell holds a press conference following a two day Federal Open Market Committee policy meeting in Washington, January 30, 2019. Leah Millis | ReutersThe road to the Fed’s official policy pivot this week to lower interest rates began in early May, with a tweet. Our continued patience stance seemed appropriate and the committee saw no strong case for adjusting our policy rate,” the Fed chair said Wednesday. The S&P 500 on Thursday finally surpassed that record set
Federal Reserve’s quick pivot to easier policy started with a Trump tweet on trade Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: patti domm
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Federal Reserve's quick pivot to easier policy started with a Trump tweet on trade

Federal Reserve Chairman Jerome Powell holds a press conference following a two day Federal Open Market Committee policy meeting in Washington, January 30, 2019. Leah Millis | Reuters

The road to the Fed’s official policy pivot this week to lower interest rates began in early May, with a tweet. President Donald Trump tweeted May 5 that he could slap China with new tariffs, and that Beijing was attempting to renegotiate. That sudden escalation of the trade war surprised markets and business leaders, who were looking forward to a negotiated deal between the White House and China that would end the trade conflict and roll back tariffs, instead of increasing them The Sunday tweet was just four days after the Fed’s May meeting, where it had kept rates steady while reaffirming that it was still paused in its policy to raise interest rates. In fact, Fed Chairman Jerome Powell said that day that weak inflation was just viewed as transitory by the central bank, basically suggesting it was not reason enough to cut interest rates.

But since then, economic data, particularly in manufacturing, got softer, trade tensions escalated, China’s economy continued to be weak and inflation has remained subpar. Now the Fed has officially signaled it is ready and willing to cut interest rates. “The only thing that’s really changed materially is the shot heard around the world that Sunday afternoon when Trump threatened to raise tariffs from 10% to 25% on that second tranche of Chinese imports. That’s what really started the ball rolling. The market was looking for rate cuts for awhile and it really went into overdrive after the Trump trade war escalated against China,” said Chris Rupkey, chief financial economist at MUFG Union Bank.

‘Speed of a tweet’

Diane Swonk, chief economist at Grant Thornton, said other factors contributing to a change in tone were Trump’s threat to put tariffs on all Mexican goods, which he dropped, and the fact that the global economy was not rebounding as expected. Despite stimulus, China’s economy continued to be weak. “We live in a world where policy can change in the speed of a tweet, and you can get a turn in policy in the speed of a tweet. The ability of the president to unilaterally raise tariffs in so many areas is something Congress is concerned about, but hasn’t done anything on yet. It adds to the risk of a global slowdown,” said Swonk. Fed officials, by the beginning of June, had opened the door to rate cuts by saying they would take action to extend the economic expansion if necessary, and they followed that up Wednesday by signaling after their meeting that an interest rate cut could be coming as soon as July. “Only seven weeks ago, we had a great jobs report, and came out of the last FOMC meeting feeling that the economy and our policy was in a good place. So, we want to see and we want to react to developments and trends that are sustained, that are genuine, and not react just to data points or just to changes in sentiment, which can be volatile,” Powell told reporters after the Fed’s meeting Wednesday. Powell said trade has been an important driver of sentiment. “It’s really that and global growth that are on our minds. So we’re not exclusively focused on one event or piece of data,” he said at the briefing. The Fed on Wednesday left interest rates unchanged, but its statement, forecasts and Powell’s comments signaled that the Fed was ready to cut interest rates if needed to help the economy and fight the effects of trade wars, low inflation and a global slowdown. As many as seven Fed officials forecast a half percentage point interest rate cut this year in their forecast, and Powell, during his comments, emphasized that others were leaning in that direction.

Depends on trade

“In my mind, it really boils down to the direction of trade. I think that’s what Powell told us. You can see how trade has affected the U.S. economy. Fixed investment spending is about a third of what it was before the trade war,” said Ward McCarthy, chief financial economist at Jefferies. McCarthy said in the six quarters ended Q2, 2018, business fixed investment grew at an average 6% a quarter. “Since then, it’s grown over just a little bit over 1%, and it looks like it’s slowing. That is directly related to the trade tensions and that is the primary economic affect the Fed is worried about,” McCarthy said. Many economists expect the Fed will now raise interest rates as much as 50 basis points at its July meeting, and some expect it even if the president can come to some compromise toward a trade deal when he meets with Chinese President Ji Xinping at the G-20 summit next week. Trump has threatened to put tariffs on $300 billion in Chinese goods if that meeting does not go well. “If he can deliberate on a meaningful trade deal with China, the adverse effects we’ve seen on fixed investment spending, the adverse effects we’ve seen on business confidence will reverse and that should obviate the need for the Fed to act,” said McCarthy. “There’s kind of an irony here. Trump has been beating on the Fed to get lower rates, but it would be because he failed on trade.” The Fed, and Powell in particular, have been criticized by the president for not cutting interest rates. Trump has explored demoting Powell, but the Fed chair stressed Wednesday that the law is clear and he intends to serve out the rest of his four-year term. Powell also said when the FOMC ended its meeting May 1, there was tentative evidence that some of the negative crosscurrents in the economy were moderating. “The latest data from China and Europe were encouraging, and there were reports of progress in trade negotiations with China. Our continued patience stance seemed appropriate and the committee saw no strong case for adjusting our policy rate,” the Fed chair said Wednesday. Just before that early May weekend tweet, the S&P 500 had hit an all-time high on the previous Friday, after a report that the economy had added 263,000 jobs in April. That report has since been revised slightly lower, but was followed by May’s dismal nonfarm payrolls of just 75,000, a slowing that many economists blamed on the trade wars. The S&P 500 on Thursday finally surpassed that record set May 3, as the market rallied on expectations for an interest rate cut. Treasury yields also slid since then with the 10-year reaching a low of 1.97% on Thursday, from a high of 2.5% on May 3. “The interesting thing to me is the China trade war accelerated the downward slide in yields. What if there is a settlement with China? The Fed’s really painted themselves into a corner here where they pretty much have to deliver what the market wants,” said Rupkey. “If G-20 goes well, the Fed will call it an insurance rate cut, just in case.”

Recession-like data?


Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: patti domm
Keywords: news, cnbc, companies, pivot, powell, china, policy, started, quick, federal, fed, rate, reserves, rates, trump, easier, meeting, interest, economy, trade


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West Virginia is still waiting on a game-changing $84 billion investment from China that was promised in 2017

Eighteen months after the deal was announced with much fanfare, China Energy Investment Corp. has spent no money in West Virginia’s energy projects, Justice tells CNBC. The wish listDelegations from China Energy Investment Corp. and Shenhua Group, its parent company, embarked on multiple learning tours in West Virginia to figure out where they would invest. In addition to visiting project sites across West Virginia in 2017, executives took courses at West Virginia University’s Energy Institute a


Eighteen months after the deal was announced with much fanfare, China Energy Investment Corp. has spent no money in West Virginia’s energy projects, Justice tells CNBC. The wish listDelegations from China Energy Investment Corp. and Shenhua Group, its parent company, embarked on multiple learning tours in West Virginia to figure out where they would invest. In addition to visiting project sites across West Virginia in 2017, executives took courses at West Virginia University’s Energy Institute a
West Virginia is still waiting on a game-changing $84 billion investment from China that was promised in 2017 Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: kayla tausche
Keywords: news, cnbc, companies, 2017, gamechanging, billion, investment, deal, promised, waiting, virginia, china, 84, state, told, projects, west, energy


West Virginia is still waiting on a game-changing $84 billion investment from China that was promised in 2017

WASHINGTON BOTTOM, W.V. – Beijing billed President Donald Trump’s 2017 trip as a “state visit-plus” — rolling out the red carpet for an unprecedented private dinner in the Forbidden City, marching a military parade through Tiananmen Square, and hosting a signing ceremony in the colossal Great Hall of the People to unveil business deals totaling more than $250 billion. One-third of that value was supposed to flow to West Virginia, an energy-rich but high-poverty state whose manufacturing and energy workers handed Trump his widest margin of victory in 2016. He captured more than more than 67% of the vote. Under the deal, China’s largest state-owned energy giant would spend nearly $84 billion over 20 years to build facilities that extract natural gas and turn it into byproducts that generate power and make consumer goods. In celebrating the announcement, West Virginia officials said projects would be underway within a year. “This time next year, you will see construction activity taking place,” the state’s former Commerce secretary, Woody Thrasher, told reporters on Nov. 13, 2017. A month later, Gov. Jim Justice confirmed that timeline. “It would not surprise me, within my 10-month window of today, to see shovels in the ground,” Justice told a town hall on WSAZ television. But skepticism about the deal surfaced almost immediately. Officials referenced the general areas where China Energy would invest, but didn’t provide a detailed list of projects or an accompanying timeline. The memorandum of understanding outlining the deal was never made public and remains sealed by judicial order. CNBC interviewed dozens of local executives, state officials and federal lawmakers about where the deal stands. What emerges is a picture of a proposal hastily assembled for the deadline of Trump’s trip to China without assessments of national security or geopolitical risks – and a cautionary tale as the U.S. tries to hold China to its promises at the federal level. Eighteen months after the deal was announced with much fanfare, China Energy Investment Corp. has spent no money in West Virginia’s energy projects, Justice tells CNBC. Thrasher – one of three signatories to the deal – points to one reason: “It’s not an enforceable document where we can make them spend their money.”

The wish list

Delegations from China Energy Investment Corp. and Shenhua Group, its parent company, embarked on multiple learning tours in West Virginia to figure out where they would invest. In addition to visiting project sites across West Virginia in 2017, executives took courses at West Virginia University’s Energy Institute and traveled to industry conferences across the Ohio River valley. The trips began to slow as trade tensions heated up between the U.S. and China in early 2018, the governor told CNBC. Local executives and state lawmakers expected China Energy to assist in building new facilities in three areas: Natural gas-burning power plants, steam crackers that turn gas into ethylene, and an underground reservoir that would store the excess energy until it could be processed or traded. The goal, according to those involved: Invest in the infrastructure to extract and process the raw materials and send the materials themselves back to China. But problems arose soon after the deal’s announcement.

CNBC’s Kayla Tausche speaks with West Virginia Governor Jim Justice. CNBC

China’s involvement in the power plants was blocked by U.S. officials, who raised national security concerns about an adversary obtaining operating knowledge of a state’s power grid. The source of the opposition with the federal government was not clear, but Thrasher and Rep. David McKinley, R-W.Va., said the plants included in the original proposal had been removed from consideration. “By law, information filed with CFIUS may not be disclosed by CFIUS to the public. Accordingly, the Department does not comment on information relating to specific CFIUS cases, including whether or not certain parties have filed notices for review,” said a representative for the Treasury Department, which leads the Committee on Foreign Investment in the United States, commonly known as CFIUS. “We didn’t realize that there may be concerns from CFIUS,” Thrasher said in hindsight. “We thought that would be acceptable. Later on, there were questions about it.” Energy Solutions Consortium — the U.S.-based company building the power plants in Brooke and Harrison counties — says permits for the plants are in process, and their construction is not predicated on Chinese investment. A hundred miles away from the power plant sites sits an empty asphalt lot on the banks of the Ohio River that was supposed to host the facility that would “crack” the area’s abundant natural gas into ethylene. A security guard keeps watch 24 hours a day over the area, overgrown with weeds and surrounded by chain-link fencing and barbed wire. When asked where one would find the cracker — or the beginnings of it — the security guard returned a quizzical stare. “There’s not one,” he told CNBC during a recent reporting trip to the area. “That’s here,” he said when he was shown a map highlighting the area the Department of Energy had singled out as the investment site. But nothing had ever materialized, he said. Local executives, who requested anonymity because they are not authorized to discuss the project, say China Energy’s interest was piqued by the waterfront location and neighboring logistics hubs that would allow the company to easily export what it produced back to Beijing. China’s financial backing would have added momentum to the cracker’s long-stalled production. Its construction by Brazil’s petrochemical company Braskem, and Braskem’s parent company, Odebrecht SA, had been on hold for years amid a corruption scandal, financial troubles and ownership questions. Odebrecht’s chief executive in 2016 was sentenced to 19 years in prison for his role in a kickback scheme that lined the pockets of politicians in more than a dozen countries. The same year, Odebrecht and Braskem pleaded guilty and agreed to pay $3.5 billion to U.S. authorities for running afoul of domestic anti-bribery laws. After a deal to sell Braskem to conglomerate to LyondellBasell fell through earlier this month, Odebrecht filed for bankruptcy. The Department of Energy says the cracker would produce a million annual tons of ethylene, a petrochemical product used to make zip-close bags and clothing fibers. But the earliest date it could come online under current ownership is 2022, according to a DOE report. Then there’s the Appalachia Storage and Trading Hub, currently in the fundraising and development phase. Steve Hedrick, CEO of the Mid-Atlantic Technology, Research & Innovation Center (MATRIC) and Appalachia Development Group, says he’ll spend the next two years locking in the $3.3 billion he needs to get the project off the ground. The majority of the funding — $1.9 billion — is expected to come from a Department of Energy loan. The remaining $1.4 billion will come from the private sector, Hedrick says, and so far is not coming from Beijing. “What we have seen thus far is investment out of the continental United States,” Hedrick told CNBC. Hedrick maintains that Beijing never made a firm commitment to fund the construction of the hub, despite his joining West Virginia officials in China to announce the $83.7 billion deal. His participation stoked controversy when ProPublica reported that he conducted private business while taxpayers funded his travel. Hedrick repaid his travel costs and told CNBC he provided “chemical industry acumen” during meetings with Chinese officials, at the request of the state. Lawmakers say the storage hub was always on China Energy’s shortlist. “We’re talking about 10 to 20 million barrels of ethane storage,” said McKinley. “Our conversation with Shenhua and the China Energy group was, ‘Let’s tap into that.'”

A ‘game-changer’ for the Mountain State

The potential value of the China Energy deal is greater than the value of everything the state of West Virginia produces in a year, which according to the St. Louis Federal Reserve was $77.5 billion in 2018. A third of its 1.8 million people don’t have internet, according to the Federal Communications Commission. And 19% of residents live below the poverty line, the most recent Census data show. “It would’ve obviously employed tens of thousands of people,” Thrasher said. “It would’ve been way beyond a game-changer. Way beyond the size of the state.” West Virginia’s current Commerce secretary, Ed Gaunch, told a West Virginia radio show the investment would produce “hundreds of thousands” of jobs in the energy and petrochemical industries. After meeting with China Energy’s chairman and top officials in China in early June, Gaunch told MetroNews Talkline the two parties moved “one step closer” to announcing at least one of the seven projects Gaunch said China has identified. Gaunch declined to elaborate on the commitment – or the projects – and acknowledged the process has been perplexing. “In this case it was backwards,” Gaunch told the Talkline host Hoppy Kercheval. “We announced the intention to do those projects, and now we’re waiting for those projects to materialize.” A spokesperson for Gaunch and the West Virginia Department of Commerce declined repeated requests for comment from CNBC over a three-month period. The proposed size of the investment – and availability of those projects – has lawmakers and longtime West Virginia drillers scratching their head.

CNBC’s Kayla Tausche with Woody Thrasher, former West Virginia Commerce Sec. CNBC

“I think we all knew that was a pretty high figure, particularly in a small state such as ours,” Republican Sen. Shelley Moore Capito told CNBC outside Clarksburg during a recent congressional break. Dennis Xander, president of West Virginia-based Denex Petroleum, said even if China Energy fully paid for every pipeline under construction in the state, it would only be able to spend about $25 billion. “I don’t think the projects are here right now,” Xander said. Asked whether they could emerge over a 20-year investment horizon, he said: “I doubt it.” Denex and MATRIC have not encountered any Chinese bidders participating in existing or future projects where their companies are involved, the two executives said. “If 10% of that were invested in the state of West Virginia, that would be the single-largest investment in the history of the state,” MATRIC’s Hedrick said. “Whether you get to $83.7 billion or you get to $50 [billion] depends on how long we want to sit at the table and work on it,” Hedrick said. Hedrick, who was briefed on the investment as part of the 2017 trip, said the specificity of the figure indicated it was the amount China truly intended to spend. “Someone, somewhere decided that they were going to be precise,” Hedrick said. “Someone did the math and added it up. And it ended up at $83.7.”

Legal challenge

Thrasher, the former state Commerce secretary, says the math was done quickly in late 2017, with the “back of a napkin” figure worked out “in a couple of hours,” so the deal could be rolled out weeks later during Trump and Xi’s big reveal. “The temptation was too great not to sort of announce that deal,” Thrasher said. The White House declined to comment on its role in assembling the deal or President Trump’s discussions about it with Governor Justice. Shortly after CNBC reached out for comment, Justice and the President spoke by phone, tweeting that they discussed West Virginia’s public schools. Gov. Justice said he and Pres. Trump are “bound at the hip,” and that Trump has done “remarkable work that has been tremendously beneficial for WV!” The U.S. Department of Commerce, which arranged the deals and the delegations, says it is still working on the agreement but acknowledged its outcome is unclear. “Work on this particular deal continues to this day. The initial announcement for this trade mission showed that it was a Memorandum of Understanding, which can signify that the agreement is early in the process,” a spokesperson for the department tells CNBC. The deal signed was a “memorandum of understanding” involving China Energy, the state of West Virginia and West Virginia University. It’s not legally binding. And the state’s residents only know as much about the investment as a handful of principals are willing to tell them. China Energy Investment Corp. is no more forthcoming. It declined to provide any executives to discuss the deal or information about its progress, although it did provide the following statement to CNBC: “CEIC’s project in West Virginia is currently progressing as planned. However, because this stage of work involves business secrets, it is not suitable for media interviews.” Appalachian Mountain Advocates, a nonprofit public interest law and policy organization, sued West Virginia University after it declined a November 2017 Freedom of Information Act request to release the deal documents, a list of projects under consideration, and any correspondence related to China.

Proposed steam cracker site in West Virginia. CNBC

A West Virginia circuit court denied the request, saying the document trove could contain “proprietary trade secrets” and is “protected by the economic development privilege.” Judge Russell M. Clawges Jr. found the request to be “unduly burdensome.” Appalachian Mountain Advocates declined to comment for this story, citing the ongoing litigation. The case is currently being appealed. Sen. Joe Manchin, the Democratic former governor and West Virginia’s current senior U.S. senator, has hosted delegations from China Energy but still hasn’t been able to obtain adequate information about the deal. “To say you’re going to make an investment and not tell us what it is going to be about was absolutely wrong,” Manchin told CNBC outside a hearing in Washington. “I never thought it would come to maturity — I really didn’t — and I never did see anything concrete.”

Holding out hope

Not everyone shares Manchin’s skepticism. Capito, his Republican colleague in the Senate, said West Virginia and China Energy are in a “holding pattern” until the U.S. and China resolve their trade issues. Justice, who switched from Democrat to Republican after being elected governor, said a resolution at the national level could give China Energy a “green light” to move forward — and that other nations, including energy-rich Qatar, have expressed interest in the meantime. Thrasher, who is running to unseat Justice as governor, believes, perhaps unsurprisingly, a gubernatorial change could breathe new life into the deal. McKinley says neither the value of the raw materials underneath the state nor China’s need for them has changed. “I’ve met with them in Beijing. I’ve met them in Shanghai. We’ve had meetings in Morgantown,” McKinley says. “They’re still interested.”

CNBC’s Kayla Tausche with Steve Hedrick, MATRIC president and CEO. CNBC


Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: kayla tausche
Keywords: news, cnbc, companies, 2017, gamechanging, billion, investment, deal, promised, waiting, virginia, china, 84, state, told, projects, west, energy


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US Trade Representative Robert Lighthizer says he will meet with Chinese counterpart ahead of Trump-Xi meeting at G-20

U.S. Trade Representative Robert Lighthizer said Wednesday that he will be speaking with a Chinese official before President Donald Trump meets with Chinese President Xi Jinping at the upcoming G-20 summit. But it’s still unclear when the currently stalled trade negotiations between the two economic superpowers will restart, Lighthizer said. Talks between the U.S. and China on a new trade agreement ground to halt in May amid disagreements between negotiators — including Lighthizer’s counterpart,


U.S. Trade Representative Robert Lighthizer said Wednesday that he will be speaking with a Chinese official before President Donald Trump meets with Chinese President Xi Jinping at the upcoming G-20 summit. But it’s still unclear when the currently stalled trade negotiations between the two economic superpowers will restart, Lighthizer said. Talks between the U.S. and China on a new trade agreement ground to halt in May amid disagreements between negotiators — including Lighthizer’s counterpart,
US Trade Representative Robert Lighthizer says he will meet with Chinese counterpart ahead of Trump-Xi meeting at G-20 Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: kevin breuninger
Keywords: news, cnbc, companies, meet, robert, representative, g20, chinese, china, trumpxi, counterpart, trump, meeting, xi, tariffs, summit, president, lighthizer, trade


US Trade Representative Robert Lighthizer says he will meet with Chinese counterpart ahead of Trump-Xi meeting at G-20

U.S. Trade Representative Robert Lighthizer said Wednesday that he will be speaking with a Chinese official before President Donald Trump meets with Chinese President Xi Jinping at the upcoming G-20 summit.

But it’s still unclear when the currently stalled trade negotiations between the two economic superpowers will restart, Lighthizer said.

“I have a conversation set up with my counterpart on the telephone in the next day and a half, and then I expect to meet with him with [Treasury Secretary Steven] Mnuchin in Osaka before the president meets” with Xi, Lighthizer testified before the House Ways and Means Committee.

Trump announced in a tweet Tuesday that he would have an “extended meeting” with Xi at the summit, which is scheduled for June 28-29 in Osaka, Japan. Xi confirmed the plans to Chinese state media soon after.

Talks between the U.S. and China on a new trade agreement ground to halt in May amid disagreements between negotiators — including Lighthizer’s counterpart, Chinese Vice Premier Liu He. The U.S. alleges China reneged on prior commitments made over the course of the discussions.

“When actual negotiations begin again, I can’t say at this point,” Lighthizer told the Democrat-led committee.

“We’re talking, we’re going to meet, and, you know, we have the same objective that you and the other members have. And that is that if we can resolve these issues in a way that improves this relationship, preserves the competitive advantage of the United States, we have an obligation to do that, and hopefully we’ll get to that point,” he said.

Asked by the committee’s ranking member, Rep. Kevin Brady, R-Texas, if the U.S. would be ready to engage with China if they returned to the negotiating table, Lighthizer said, “Absolutely, we are ready to engage.”

The U.S. and China have slapped punitive tariffs on hundreds of billions of dollars of imports of each other’s goods. In May, Trump hiked tariffs on $200 billion in Chinese imports, and threatened to slap duties on another $300 billion after talks stalled out that month.

Trump said last week that he will also meet with Russian President Vladimir Putin at the G-20 summit. Xi met with Putin earlier in June, and heaped praise on the Russian leader.


Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: kevin breuninger
Keywords: news, cnbc, companies, meet, robert, representative, g20, chinese, china, trumpxi, counterpart, trump, meeting, xi, tariffs, summit, president, lighthizer, trade


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