Trump predicts ‘fast’ trade deal with China but provides no evidence

U.S. President Donald Trump on Thursday predicted a swift end to the ongoing trade war with China, although no high-level talks have been scheduled between the two countries since the last round of negotiations ended in Washington two weeks ago. Trump also said he will meet with China’s President Xi Jinping when they attend the G-20 meeting next month in Japan. After Trump imposed tariffs on Chinese goods last year, China curbed purchases of U.S. soy, leaving farmers sitting on a stockpile of th


U.S. President Donald Trump on Thursday predicted a swift end to the ongoing trade war with China, although no high-level talks have been scheduled between the two countries since the last round of negotiations ended in Washington two weeks ago. Trump also said he will meet with China’s President Xi Jinping when they attend the G-20 meeting next month in Japan. After Trump imposed tariffs on Chinese goods last year, China curbed purchases of U.S. soy, leaving farmers sitting on a stockpile of th
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Trump predicts 'fast' trade deal with China but provides no evidence

President Donald Trump speaks about the investigations by Special Counsel Robert Mueller and the U.S. Congress into himself and his administration in the Rose Garden at the White House in Washington, U.S., May 22, 2019.

U.S. President Donald Trump on Thursday predicted a swift end to the ongoing trade war with China, although no high-level talks have been scheduled between the two countries since the last round of negotiations ended in Washington two weeks ago.

“It’s happening, it’s happening fast and I think things probably are going to happen with China fast because I cannot imagine that they can be thrilled with thousands of companies leaving their shores for other places,” Trump said during remarks at the White House, providing no evidence of such an exodus.

Trump also said he will meet with China’s President Xi Jinping when they attend the G-20 meeting next month in Japan.

Both countries have blamed each other for the breakdown in talks, which were intended to end trade tensions between the world’s two largest economies marked by tit-for-tat tariffs.

Trump made the remarks during a free-wheeling news conference after touting a plan rolled out by his administration to provide the country’s farmers with an aid package to combat the effects of the trade war, which have hit them particularly hard.

After Trump imposed tariffs on Chinese goods last year, China curbed purchases of U.S. soy, leaving farmers sitting on a stockpile of the commodity. China has also retaliated with tariffs on U.S. corn, pork and other products.

“The $16 billion in funds will help keep our cherished farms thriving and make clear that no country has veto on America’s economic and national security,” Trump said.


Company: cnbc, Activity: cnbc, Date: 2019-05-24
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India’s Modi begins talks for new cabinet after big election win

Prime Minister Narendra Modi addresses his supporters during Sankalp Rally at Gandhi Maidan on March 3, 2019 in Patna, India. Indian Prime Minister Narendra Modi will hold talks on Friday to form a new cabinet to tackle a stuttering economy and other challenges facing his second term after winning a big majority. The BJP would have the first back-to-back majority in the lower house of parliament for a single party since 1984. After a rancorous and a polarizing election campaign, the focus shifts


Prime Minister Narendra Modi addresses his supporters during Sankalp Rally at Gandhi Maidan on March 3, 2019 in Patna, India. Indian Prime Minister Narendra Modi will hold talks on Friday to form a new cabinet to tackle a stuttering economy and other challenges facing his second term after winning a big majority. The BJP would have the first back-to-back majority in the lower house of parliament for a single party since 1984. After a rancorous and a polarizing election campaign, the focus shifts
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India's Modi begins talks for new cabinet after big election win

Prime Minister Narendra Modi addresses his supporters during Sankalp Rally at Gandhi Maidan on March 3, 2019 in Patna, India.

Indian Prime Minister Narendra Modi will hold talks on Friday to form a new cabinet to tackle a stuttering economy and other challenges facing his second term after winning a big majority.

Official data from the Election Commission showed Modi’s Bharatiya Janata Party had won 296 of the 542 seats up for grabs and was ahead in seven more, up from the 282 it won in 2014.

The BJP would have the first back-to-back majority in the lower house of parliament for a single party since 1984. Votes will be fully counted by Friday morning.

After a rancorous and a polarizing election campaign, the focus shifts back to an economy that is slowing, even as the U.S.-China trade war rages and global oil prices tick higher.

“While the macroeconomic picture looks stable and promising, many important segments need support from the government,” BJP General Secretary Ram Madhav wrote in a column in the Indian Express daily.


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China says trade talks can’t continue unless US addresses its ‘wrong actions’

Chinese President Xi Jinping and members of Chinese delegation attend a working dinner with U.S. President Donald Trump after the G20 leaders summit in Buenos Aires, Argentina December 1, 2018. The latest U.S. actions on trade are preventing negotiations with Beijing from proceeding, China’s Commerce Ministry said Thursday. “If the U.S. would like to keep on negotiating it should, with sincerity, adjust its wrong actions. Only then can talks continue,” Ministry of Commerce spokesperson Gao Feng


Chinese President Xi Jinping and members of Chinese delegation attend a working dinner with U.S. President Donald Trump after the G20 leaders summit in Buenos Aires, Argentina December 1, 2018. The latest U.S. actions on trade are preventing negotiations with Beijing from proceeding, China’s Commerce Ministry said Thursday. “If the U.S. would like to keep on negotiating it should, with sincerity, adjust its wrong actions. Only then can talks continue,” Ministry of Commerce spokesperson Gao Feng
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Company: cnbc, Activity: cnbc, Date: 2019-05-23  Authors: evelyn cheng
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China says trade talks can't continue unless US addresses its 'wrong actions'

Chinese President Xi Jinping and members of Chinese delegation attend a working dinner with U.S. President Donald Trump after the G20 leaders summit in Buenos Aires, Argentina December 1, 2018.

The latest U.S. actions on trade are preventing negotiations with Beijing from proceeding, China’s Commerce Ministry said Thursday.

“If the U.S. would like to keep on negotiating it should, with sincerity, adjust its wrong actions. Only then can talks continue,” Ministry of Commerce spokesperson Gao Feng said Thursday in Mandarin, according to a CNBC translation.

He did not mention any U.S. actions specifically, but it’s been a tense couple of weeks between the world’s two-largest economies. President Donald Trump unexpectedly announced earlier this month that tariffs on $200 billion worth of Chinese goods would increase to 25% from 10% on May 10. In the last two weeks, his administration also put Chinese telecom giant Huawei on a blacklist that prevents it from buying from American companies without U.S. government permission.

Google said Sunday it would cut ties with Huawei in order to comply with the order. But after the U.S. temporarily eased some restrictions on trade for the telecom and smartphone company, Google said Tuesday it plans to work with Huawei over the next 90 days.

“The U.S. … crackdown on Chinese companies not only seriously damages the normal commercial cooperation between both countries, but it also forms a great threat to the security of the global industrial and supply chain,” Gao said. “China is firmly opposed to this. We will closely monitor developments and make adequate preparations.”


Company: cnbc, Activity: cnbc, Date: 2019-05-23  Authors: evelyn cheng
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Beijing experts’ latest message as trade talks stall: The US needs China

Now, there have been no announcements about the next round of talks, and markets await some signal about the future of the trade war that’s roiled stocks over the last year. This big economic system will give America more material benefits, including employment, including products, including product exports, including revenues,” Wei said, according to Mandarin-language remarks translated by CNBC. “Originally, we believed that in the U.S.-China economic trade relationship … we could mutually co


Now, there have been no announcements about the next round of talks, and markets await some signal about the future of the trade war that’s roiled stocks over the last year. This big economic system will give America more material benefits, including employment, including products, including product exports, including revenues,” Wei said, according to Mandarin-language remarks translated by CNBC. “Originally, we believed that in the U.S.-China economic trade relationship … we could mutually co
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Beijing experts' latest message as trade talks stall: The US needs China

A Chinese flag is seen in front of containers at the Yangshan Deep-Water Port, an automated cargo wharf, in Shanghai on April 9, 2018. Johannes Eisele | AFP | Getty Images

China’s domestic media is rallying the country’s population with messages of standing firm against American “bullying,” while Chinese government-aligned experts are stressing to an overseas audience that the U.S. will need to negotiate. The world’s two largest economies have been locked in a trade fight for more than a year. Both sides appeared to be making progress until early this month, when President Donald Trump accused China of reneging on a deal and raised tariffs on an additional $200 billion in Chinese products to 25%. Beijing retaliated with raising levies on $60 billion worth of U.S. products. Now, there have been no announcements about the next round of talks, and markets await some signal about the future of the trade war that’s roiled stocks over the last year. Throughout this current lull, China’s state-run newspapers and television channels have taken an increasingly anti-American tone. Still, the country’s expert class is emphasizing what the U.S. has to gain from cooperating with Beijing. “In the next 20 to 30 years, the U.S. shouldn’t miss out on this opportunity and lose the China market,” Wei Jianguo, a former vice minister at China’s Ministry of Commerce, told CNBC in an interview Wednesday. He is now vice chairman and deputy executive officer at Beijing-based think tank China Center for International Economic Exchanges.

Personally, I think, as long as there is negotiation, then there will be results. Wei Jianguo a former vice minister at China’s Ministry of Commerce

“I believe Americans should grasp this opportunity. This big economic system will give America more material benefits, including employment, including products, including product exports, including revenues,” Wei said, according to Mandarin-language remarks translated by CNBC. “Personally, I think, as long as there is negotiation, then there will be results,” he said. On the same day, two speakers addressing foreign reporters at a small press event organized by the government’s main information office echoed some of Wei’s sentiments. “My personal view is that, from the perspective of U.S. businesses, if the trade war continues, it will … have a negative impact on what was a good relationship between U.S. and Chinese businesses,” said Li Yong, deputy director of the expert committee at the China Association of International Trade, which falls under the Commerce Ministry’s direct leadership. “At the end of the day, the image and influence U.S. businesses have developed over the long term will (be affected). It’s a pity.” The other speaker, Zhang Yansheng, head researcher at the China Center for International Economic Exchanges, also emphasized that Beijing would like to keep negotiating with the U.S. It could even be a years-long process that cycles through negotiation and fights, he said. The tone stands in contrast to state-run media, whose Chinese-language reports in the last two weeks have promoted the country’s ability to defy pressure from the U.S. For the last several days, the national broadcaster CCTV has also been airing anti-U.S. movies set during the Korean War. On Wednesday, the prime-time evening report featured Chinese President Xi Jinping’s visit earlier in the week to the province of Jiangxi. The Chinese leader’s remarks during the visit about rare earth elements as an “important strategic resource” and a “new Long March ” signaled to many that Beijing is resolved not to bend to American demands.

Who needs a deal?

At Wednesday’s news conference, Li said China is in a position where it can’t appease American demands. “Originally, we believed that in the U.S.-China economic trade relationship … we could mutually cooperate and rely on each other,” he said in Mandarin. “But now we need to revisit this.” Analysts generally agree that, right now, Beijing still depends heavily on the U.S. as an export market. Last year, China was the largest supplier of goods to the U.S. at $539.5 billion, according to the Office of the U.S. Trade Representative. China is trying to transform its economy into one driven by consumption rather than manufacturing. The country hosted its first import expo last fall in an effort to bill itself and its hundreds of millions of consumers as a buyer of the world’s products. “China needs the U.S. more than the U.S. needs China,” said Jacob Shapiro, director of analysis at online publication Geopolitical Futures.


Company: cnbc, Activity: cnbc, Date: 2019-05-23  Authors: evelyn cheng
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Chinese ambassador on trade talks: The US ‘changes its mind so often’

Chinese Ambassador to the United States Cui Tiankai speaks at a reception celebrating the 90th anniversary of the founding of the Chinese People’s Liberation Army (PLA) at the Chinese embassy in Washington D.C., the United States, on July 27, 2017. Cui Tiankai, the Chinese ambassador to the United States, said on Tuesday that U.S. negotiators have “often” backed out on partial trade deals at the last minute. “If we review the process of trade talks between us over the last year or so, it is quit


Chinese Ambassador to the United States Cui Tiankai speaks at a reception celebrating the 90th anniversary of the founding of the Chinese People’s Liberation Army (PLA) at the Chinese embassy in Washington D.C., the United States, on July 27, 2017. Cui Tiankai, the Chinese ambassador to the United States, said on Tuesday that U.S. negotiators have “often” backed out on partial trade deals at the last minute. “If we review the process of trade talks between us over the last year or so, it is quit
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Chinese ambassador on trade talks: The US 'changes its mind so often'

Chinese Ambassador to the United States Cui Tiankai speaks at a reception celebrating the 90th anniversary of the founding of the Chinese People’s Liberation Army (PLA) at the Chinese embassy in Washington D.C., the United States, on July 27, 2017.

Cui Tiankai, the Chinese ambassador to the United States, said on Tuesday that U.S. negotiators have “often” backed out on partial trade deals at the last minute.

“If we review the process of trade talks between us over the last year or so, it is quite clear it is the U.S. side that, more than once, changed its mind overnight, and broke the tentative deal already reached,” Cui told Fox News.

“It is the U.S. side who changes its mind so often,” Cui added.


Company: cnbc, Activity: cnbc, Date: 2019-05-21  Authors: michael sheetz
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Lions Gate is still interested in selling Starz to CBS — then might have to merge with MGM to stay relevant

It’s the great media paradox: While the amount of content expands, the number of traditional media companies keeps shrinking. CBS is expected to continue talks in the coming weeks with Lions Gate about buying Starz, the premium entertainment network Lions Gate owns, according to people familiar with the matter. Whether or not a Starz deal happens, CBS plans to continue its merger discussions with Viacom, which should heat up in June, according to people familiar with the matter. CBS and Viacom c


It’s the great media paradox: While the amount of content expands, the number of traditional media companies keeps shrinking. CBS is expected to continue talks in the coming weeks with Lions Gate about buying Starz, the premium entertainment network Lions Gate owns, according to people familiar with the matter. Whether or not a Starz deal happens, CBS plans to continue its merger discussions with Viacom, which should heat up in June, according to people familiar with the matter. CBS and Viacom c
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Lions Gate is still interested in selling Starz to CBS — then might have to merge with MGM to stay relevant

It’s the great media paradox: While the amount of content expands, the number of traditional media companies keeps shrinking.

CBS is expected to continue talks in the coming weeks with Lions Gate about buying Starz, the premium entertainment network Lions Gate owns, according to people familiar with the matter.

CBS made a preliminary $5 billion offer for the premium channel, which was rejected, CNBC confirmed last week after The Information first reported the talks. No banks have been hired yet, as talks are still early and a deal is far from assured, said the people, who asked not to be named because the discussions are private.

The consolidation of subscale media assets has been discussed for years as an inevitable survival mechanism against Netflix, Amazon and other technology companies willing to spend billions of dollars on content. BTIG media analyst Rich Greenfield has referred to it as penguins banding together to survive the winter.

Whether or not a Starz deal happens, CBS plans to continue its merger discussions with Viacom, which should heat up in June, according to people familiar with the matter. CBS and Viacom controlling owner Shari Redstone is intent on adding scale to CBS, in part so it can afford to renew NFL broadcast rights against much larger bidders.

Spokespeople at Lions Gate and CBS declined to comment.


Company: cnbc, Activity: cnbc, Date: 2019-05-21  Authors: alex sherman
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Goldman Sachs in talks to buy B&B Hotels from PAI Partners

Trump warns Iran not to fight the US: ‘That will be the official…Trump’s threat, posted on Twitter, comes amid rising international tensions in the Middle East as the U.S. has dispatched a carrier strike group and bomber task force to the… Politicsread more


Trump warns Iran not to fight the US: ‘That will be the official…Trump’s threat, posted on Twitter, comes amid rising international tensions in the Middle East as the U.S. has dispatched a carrier strike group and bomber task force to the… Politicsread more
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Goldman Sachs in talks to buy B&B Hotels from PAI Partners

Trump warns Iran not to fight the US: ‘That will be the official…

Trump’s threat, posted on Twitter, comes amid rising international tensions in the Middle East as the U.S. has dispatched a carrier strike group and bomber task force to the…

Politics

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Dow set to drop 200 points at the open as trade tensions linger

Stock index futures traded lower Friday as trade tensions between the U.S. and China continue to dominate investor sentiment. ET, Dow Jones Industrial Average futures indicated a drop of 200 points at the open. The U.S. hiked tariffs on $200 billion worth of Chinese goods last week while China retaliated Monday with higher levies on $60 billion worth of U.S. products. Jeremy Corbyn, the Labour Party leader, told Prime Minister Theresa May that talks had “gone as far as they can go. ” ET, Federal


Stock index futures traded lower Friday as trade tensions between the U.S. and China continue to dominate investor sentiment. ET, Dow Jones Industrial Average futures indicated a drop of 200 points at the open. The U.S. hiked tariffs on $200 billion worth of Chinese goods last week while China retaliated Monday with higher levies on $60 billion worth of U.S. products. Jeremy Corbyn, the Labour Party leader, told Prime Minister Theresa May that talks had “gone as far as they can go. ” ET, Federal
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Company: cnbc, Activity: cnbc, Date: 2019-05-17  Authors: fred imbert spriha srivastava, fred imbert, spriha srivastava, arjun kharpal
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Dow set to drop 200 points at the open as trade tensions linger

Stock index futures traded lower Friday as trade tensions between the U.S. and China continue to dominate investor sentiment.

At 8:06 a.m. ET, Dow Jones Industrial Average futures indicated a drop of 200 points at the open. Futures for the S&P 500 and Nasdaq 100 also fell.

Chinese Commerce Ministry spokesman Gao Feng said Thursday, according to state-run news agency Xinhua, that the U.S. is exhibiting “bullying behavior” with its latest moves on the trade front, noting it is “regrettable that the U.S. side unilaterally escalated trade disputes, which resulted in severe negotiating setbacks.”

The U.S. hiked tariffs on $200 billion worth of Chinese goods last week while China retaliated Monday with higher levies on $60 billion worth of U.S. products. The moves led to a massive sell-off to start off the week. But the major indexes have clawed back most of their losses through Thursday’s close.

President Donald Trump’s administration then moved to make it harder for U.S. companies to do business with Huawei, a giant telecommunications company in China. Shares of U.S. suppliers like Qualcomm, Qorvo and Micron Technology fell 1.9%, 1.6% and 1.4%, respectively.

Chinese stocks fell sharply overnight. The Shanghai Composite dropped 2.5% and posted its longest weekly losing streak since July 2018.

Investors also fretted over a breakdown in Brexit talks. The U.K.’s two largest political parties failed to strike a deal on the country’s exit from the European Union after six weeks of talks. Jeremy Corbyn, the Labour Party leader, told Prime Minister Theresa May that talks had “gone as far as they can go. ” Sterling fell 0.4% to $1.2751.

Stocks posted solid gains on Thursday, largely driven by strong earnings from Walmart and Cisco Systems, as the major indexes notched their third consecutive gain.

On the data front Friday, consumer sentiment numbers are due at 10 a.m. ET. Meanwhile, Deere is set to report its earnings before the bell.

A number of Fed speeches are also scheduled for Friday. At 10 a.m. ET, Federal Reserve Vice Chair Richard Clarida will be speaking on the Fed’s review of its monetary policy strategy, followed by New York Fed President John Williams’ speech in New York at 11:15 a.m. ET, and Dallas Fed President Robert Kaplan’s speech at 1:10 p.m. ET.


Company: cnbc, Activity: cnbc, Date: 2019-05-17  Authors: fred imbert spriha srivastava, fred imbert, spriha srivastava, arjun kharpal
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Europe stocks trade lower as trade fears linger; Brexit talks collapse; Thomas Cook shares down 29%

European stocks traded lower Friday as trade fears ratcheted up, amid the U.S. administration’s bid to blacklist Chinese telecoms giant Huawei and the ruling Chinese Communist Party’s newspaper striking a defiant tone. The notable contributor to auto losses was BMW, which saw its shares slip 5.7%. In Asia, most major indexes gained in Friday trade following overnight gains on Wall Street, but mainland Chinese shares tumbled amid ongoing tensions between Beijing and Washington. Stateside, investo


European stocks traded lower Friday as trade fears ratcheted up, amid the U.S. administration’s bid to blacklist Chinese telecoms giant Huawei and the ruling Chinese Communist Party’s newspaper striking a defiant tone. The notable contributor to auto losses was BMW, which saw its shares slip 5.7%. In Asia, most major indexes gained in Friday trade following overnight gains on Wall Street, but mainland Chinese shares tumbled amid ongoing tensions between Beijing and Washington. Stateside, investo
Europe stocks trade lower as trade fears linger; Brexit talks collapse; Thomas Cook shares down 29% Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-17  Authors: elliot smith
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Europe stocks trade lower as trade fears linger; Brexit talks collapse; Thomas Cook shares down 29%

European stocks traded lower Friday as trade fears ratcheted up, amid the U.S. administration’s bid to blacklist Chinese telecoms giant Huawei and the ruling Chinese Communist Party’s newspaper striking a defiant tone.

The pan-European STOXX 600 dropped 0.6% after the opening bell, autos leading the losses with a fall of 1.6% in the early minutes of trading, while only travel and leisure and utilities stocks traded in the black mid-morning.

The notable contributor to auto losses was BMW, which saw its shares slip 5.7%.

The morning’s biggest loser was British tour operator Thomas Cook, which saw its shares plummet 30% by mid-morning, hitting their lowest since July 2012 and on track for the biggest one-day drop since November 2011. Citi analysts downgraded the company’s stock to “sell” after its latest profit warning Thursday.

In Asia, most major indexes gained in Friday trade following overnight gains on Wall Street, but mainland Chinese shares tumbled amid ongoing tensions between Beijing and Washington. The Shenzhen component led the losses, dropping 1.77% in the morning session.

Stateside, investors will be monitoring the trade war between the world’s largest economies, as President Donald Trump’s bid to block Huawei from buying American technology ratcheted up tensions. Meanwhile, China’s ruling Communist Party’s newspaper struck a defiant tone Friday, insisting the trade war will only make China stronger.

While major U.S. indexes gained Thursday, shares in American chipmakers fell upon the news.


Company: cnbc, Activity: cnbc, Date: 2019-05-17  Authors: elliot smith
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China’s currency is sending a warning signal about the trade war

China’s currency has been an important barometer for progress in U.S.-Chinese trade talks, and right now it’s signaling that things aren’t going well. “Obviously, the trade shock we’re now discussing is a full blown trade war, so it’s obviously a very serious scenario. CNBC reported Friday that trade talks between the two countries appear to have stalled, and the next round of talks have not yet been scheduled. “They’ll do in a couple of ways, partly through intervention, partly through draining


China’s currency has been an important barometer for progress in U.S.-Chinese trade talks, and right now it’s signaling that things aren’t going well. “Obviously, the trade shock we’re now discussing is a full blown trade war, so it’s obviously a very serious scenario. CNBC reported Friday that trade talks between the two countries appear to have stalled, and the next round of talks have not yet been scheduled. “They’ll do in a couple of ways, partly through intervention, partly through draining
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Company: cnbc, Activity: cnbc, Date: 2019-05-17  Authors: patti domm
Keywords: news, cnbc, companies, chinas, market, currency, yuan, chinese, china, talks, signal, trade, officials, trump, sending, warning, nordvig, war


China's currency is sending a warning signal about the trade war

China’s currency has been an important barometer for progress in U.S.-Chinese trade talks, and right now it’s signaling that things aren’t going well.

The question is whether that signal is intentional, and whether Chinese officials will step in to prevent the yuan from reaching a key psychological low of 7 to the dollar. That level has become a line in the sand for markets around the world, and if broken, it could trigger a negative reaction in risk markets globally, as investors move to price in a bigger economic impact from a longer, more contentious trade war.

The yuan has been fairly stable this year, as the U.S. and China carried on trade talks. But since President Donald Trump tweeted about new tariffs May 5, the onshore yuan or CNY, has lost 2.7% against the U.S. dollar.

“Obviously, the trade shock we’re now discussing is a full blown trade war, so it’s obviously a very serious scenario. Then we have this negotiations period, where it could be averted and that doesn’t seem to be very good at all,” said Jens Nordvig, CEO of Exante Data. “It’s also unclear whether the Chinese officials want to fight hard to keep the currency stable. That’s a question mark that came in today.”

The onshore currency, or CNH, which trades in Hong Kong and is more impacted by international traders, hit a high of 6.945, while the onshore yuan, more controlled by the central bank, was just above 6.91 Friday. Nordvig said unlike other sessions, there was no sign Friday that the People’s Bank of China tried to stem the decline.

Also unclear was whether it was an intentional action, and Chinese officials were responding to trade tensions and the U.S. action this week blocking telecom firm Huawei from buying U.S. components.

CNBC reported Friday that trade talks between the two countries appear to have stalled, and the next round of talks have not yet been scheduled.

A weaker yuan has been a source of friction between China and the U.S. for years. Trump, in the past, had accused China of intentionally weakening its currency, hurting the U.S. as a result. If China does allow its currency to weaken, its exports would become more attractive, but strategists say Beijing would then worry about capital flight and it would probably not want to risk that.

“The market is testing the central bank’s resolve to defend the 7 lever,” said Marc Chandler, global market strategist at Bannockburn Global Forex. “They’ll do in a couple of ways, partly through intervention, partly through draining liquidity, raising the cost of being short the Chinese currency. They can do this in the domestic money market and in the domestic Hong Kong market.”

Nordvig said the message the yuan is sending is not like the positive comments about the trade talks that U.S. officials like Treasury Secretary Steve Mnuchin or White House top economist Larry Kudlow have made.

“It looks like they’re not even being invited to China. If there’s no talks ahead of Trump and [President Xi Jinping] meeting in Osaka, then the meeting becomes binary and very risky,” said Nordvig. Trump and Xi are expected to meet on the sidelines of the G-20 meeting June 28.

“It would be very different if Mnuchin makes some progress on some chapters here in the next couple of weeks. If that doesn’t happen we come close to the cliff,” said Nordvig, adding the question is whether Chinese officials are going to hold the currency up.”

Strategists say the yuan current weakness is due to a strengthening dollar and trade war concerns, which in turn are prodding Chinese authorities to consider more monetary and fiscal policy moves.

“It’s selling off on expectations of easier monetary policy and apparently no trade talks. China says we haven’t invited the U.S. back,” said Chandler, adding he expects the currency to challenge the 7 level soon.

“I think we’ll test it. We’ll test Chinese resolve. It will become more of a concern that it will be an inflection point if the CNY or CNH get to 7. It will have a ripple effect on the markets. It will be another source of instability. Another rubicon has been crossed,” he said.

Adam Cole, head of G-10 foreign exchange strategy at RBC, said reports that unnamed Chinese officials said the PBOC would not let the currency trade through 7 suggests that such a move won’t happen soon. But he said the yuan could breach those levels in the future.

“Longer term, with the dollar generally going up against everything, I think that constraint becomes nonbinding,” Cole said. He said the dollar’s rise has to do with monetary policy positioning, cyclicality and the fact that the U.S. economy looks stronger than the rest of the world.

China has been reducing its holdings of Treasurys, which some say could be a warning to the U.S. But Cole said he does not believe China, the largest holder of Treasurys, would bail out of the market in a big way.

“That’s an ongoing concern. Like most people,we think the risk of China going through a sudden liquidation and allocation out of Treasurys is unlikely. That would be a case of cutting off your nose to spite your face, given how much China has to lose,” he said.


Company: cnbc, Activity: cnbc, Date: 2019-05-17  Authors: patti domm
Keywords: news, cnbc, companies, chinas, market, currency, yuan, chinese, china, talks, signal, trade, officials, trump, sending, warning, nordvig, war


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