Nike has just cancelled a Betsy Ross shoe because Colin Kaepernick (a Nike endorser) claimed he and others found the specific flag design offensive, saying the flag from that period is associated with slavery in America. Is Nike so focused on social justice issues, they are not completing their duties to their shareholders.
It’s said that nothing ever really gets done at the G20, which is currently meeting in Osaka, Japan. Nineteen member countries and the European Union agreed to a new deal to tackle climate change. Guess who was the lone holdout. President Trump was harshly criticized, at home and abroad, for praising Saudi Crown Prince Mohammed Bin Salman, who ordered the killing of Washington Post columnist (who had legal residency in the U.S.) Jamal Khashoggi. There was one cautiously positive development to emerge from the summit, however. Trump and Chinese counterpart, Xi Jinping, agreed to restart talks and temporarily de-escalate the trade war.
If oil demand is down so much due to the China trade war and tariffs, how come the more economically sensitive materials, such as copper, have not felt the same economic downward price effects?
Today China has asked it’s refineries to hold off on placing new orders for crude oil imports in anticipation of lower prices once and if demand stalls further. The Chinese buyers have cut off purchases of U.S. crude oil as the trade dispute between Beijing and Washington continues.
President Donald Trump (R) lifted his tariffs against Mexico and Canada, but is he scaling up on China. So what about cars, steel, aluminium, washing machines, Iran, North Korea, Venezuela, Cuba and Huawei?
Cars: Trump asked for and received a government study on car imports. He was particularly angered last November when General Motors announced that it was closing car assembly plants in Ohio, Michigan and Maryland. Trump has threatened to impose a 25% tariff on imported cars in retaliation for GM’s moves.
Negotiations take days in Washington- but still breakthrough is missing. If nothing happens, US tariffs will apply to all imports from Mexico on Monday. The Mexican government is now making concessions.
To appease US President Donald Trump in the migration dispute, Mexico wants to deploy 6,000 National Guardsmen on its Southern border. Mexican Foreign Minister, Marcelo Ebrard said this on Thursday in talks with US officials in Washington. This is to prevent the entry of Central American migrants on their way to the USA. The Mexican government wants to prevent with a set of concessions that Trump raises from Monday to punitive tariffs on Mexican imports.
President Trump is set to unilaterally levy an escalating 5% tariff on all Mexican goods next week, and just about everybody is working diligently to stop them. The two countries continued talks Thursday, aimed at satisfying Trump’s demands that Mexico do more to stop the flow of migrants from Central America. To that end, Mexico has begun to deploy the National Guard on its southern border with Guatemala. Back in the States, members of the president’s own party have begun to show their own frustrations with Trump’s tariffs. This time, they might be serious.
- Interest Rates: The 10-year Treasury is hitting around 2.08%, down from 3.25% just three months ago.
- Oil is down around $53 per barrel. Down from about $65 in April.
- Industrial Production has hit multi-year lows.
- Gold and the dollar are moving up.
These four indicators have many forecasting both a tougher time ahead and a rotation into safe havens. The central focus of concern is the trade wars with China and the new tariffs with Mexico.
With the China tariff up 25%, we’re constantly being told this will hurt the consumer and that it’s why inflation is rising (up 1.5% in April from 1.4% in March accounting to the Commerce Department). The Consumer Price Index increased 0.3% last month after moving up 0.2% in March. If the trade war with China trade is so bad where is the inflation, where are the price hikes?
Nike and other companies are saying the “consumer will get hurt” with the China and Mexican tariffs, but is this really true? Bear in mind that Nike is not neutral in this fight as it has large investments in China and as a global manufacturer has strong ties to both countries.
If President Trump wants his free trade deal passed, he has a funny way of showing it. On the same day that Vice President Mike Pence met Canadian Prime Minister Justin Trudeau in Ottawa, to push the United States-Mexico-Canada Agreement through Parliament, the President tweeted out an entirely new trade policy. The United States would impose a 5% tax on all imports from Mexico, “until such time as illegal migrants coming through Mexico, and into our Country, STOP.” The unexpected return of Tariff Man sent shockwaves through the continent and financial markets Friday.
On Sunday, President Trump tweeted an escalation to his trade war with China, warning tariffs would more than double, from 10% to 25%. By Tuesday, stocks were sent tumbling, and companies scrambling. The Dow Jones Industrial Average dropped 472 points Tuesday, it’s worst day in four months. Grain futures hit their lowest mark in more than 40 years. Companies weren’t given much in the way of warning, with tariffs due to increase Friday. They’ll have to decide whether to eat the tariffs themselves or pass the costs on to consumers.
Trump’s escalation comes amid a five-month truce between the world’s two biggest economies, and as the U.S. and China appeared close to a deal. However, Administration officials say China has been backtracking from earlier commitments. In a Washington Post op-ed, former chief strategist Steve Bannon urged the president to “follow his instincts and not soften his stance against the greatest existential threat ever faced by the United States.” Trade advisor Peter Navarro, and others, see no deal as preferable to any deal, and some fear the president will cave, again.
- EU: President Trump in an early morning tweet on Tuesday touted his administration’s tariffs on $11 billion of European Union products in the wake of a World Trade Organization (WTO) ruling.”The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products!” he said.
- At least four people were killed, and hundreds more were injured, in a wave of violence across Venezuela this weekend. Opposition activists defied President Nicolas Maduro and attempted to bring emergency food and medical supplies into the country from Colombia.
- Huawei executive arrested on a U.S. extradition warrant in Canada because Huawei is suspected of trying to evade American sanctions on Iran. U.S. prosecutors have been investigating since 2016 whether Huawei violated U.S. export and sanctions laws by shipping U.S.-origin products to Iran.
- China is interested in expanding its strategic and long-term relationship with the Islamic Republic of Iran. The Chinese government and various political and economic institutions, emphasized the need for expansion of the banking and financial relations between the two countries.
- Iran and China have found a way for China to continue buying Iranian crude and pay for it without risking a U.S. sanction breach. China had a special bank dedicated to handling payments for Iranian oil during the international sanctions against Tehran earlier this decade, so finding ways around sanctions is hardly new.
- “I am a Tariff Man,” Trump announced to signal his devotion to import taxes–a remark that served to downplay the likelihood of ending his trade war with China. Fear that an escalation in tariffs would choke off economic growth and possibly send a global slowdown into a recession.
- That massive data breach that hit hotel group: Marriott believes the hackers were working for a Chinese government intelligence gathering operation. Marriott said that a hack that began four years ago had exposed the records of up to 500 million customers in its Starwood hotels reservation system.
- Trump claimed a “BIG leap forward,” But scant details and few public commitments by China on what its commitments would be under the verbal agreement between Trump and Xi erased some market exuberance over what was brokered between the world’s two largest trading partners.
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