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Showing posts with label Zero Hedge. Show all posts
Showing posts with label Zero Hedge. Show all posts

Ceasefire: US, China Trade Talks "Back On Track" After Trump Folds On Huawei

The "worst case" trade war scenario was avoided in Osaka on Saturday when Trump agreed to restart trade talks with Xi, holding off new tariffs on Chinese exports, and signaling a pause in the trade hostilities between the world’s two largest economies; Trump added that while existing tariffs would remain in place the US president eased restrictions on Huawei as part of what is now the second ceasefire between the two superpowers in two months, removing an immediate threat looming over the global economy even as a lasting peace remains elusive.

"We had a very good meeting with President Xi of China, excellent, I would say excellent, as good as it was going to be," he said. "We discussed a lot of things and we're right back on track and we'll see what happens", Trump told reporters after an 80-minute meeting with Chinese President Xi Jinping on the sidelines of a summit of leaders of the G-20 major economies in Osaka, western Japan.


President Trump meets with China's President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan

Trump said while he would not lift existing import tariffs, he would refrain from slapping new levies on an additional $300 billion worth of Chinese goods - which would have effectively extended tariffs to everything China exports to the America.



 “We’re holding back on tariffs and they’re going to buy farm products,” he said vaguely at a news conference, without giving any details of China’s future agricultural product purchases. “If we make a deal, it will be a very historic event.” He gave no timeline for what he called a complex deal but said he was not in a rush. “I want to get it right.”


Whereas Trump and top admin officials alleged that Beijing had reneged on provisions of a tentative trade deal, it was not immediately clear if Xi agreed to return to previous agreements as part of the new truce.

Trump, however, did relent on one of the major sticking points, saying U.S. firms would be allowed to sell components to Huawei, the world’s biggest telecom network gear maker, where there was no national security problem. The president said the U.S. commerce department would meet in the next few days on whether to take it off a list of firms banned from buying components and technology from U.S. companies without government approval.

"I like our companies selling things to other people, so I allowed that to happen," Trump said. “We’re talking about equipment where there’s no great national security problem with it.” In recent months, the Trump administration has been lobbying allies around the world not to buy Huawei equipment, which the U.S. says could be used for Chinese espionage.

Huawei was delighted by the news on its verified Twitter account: “U-turn? Donald Trump suggests he would allow #Huawei to once again purchase U.S. technology!”




Predictably, China also welcomed the step. “If the U.S. does what it says, then of course, we welcome it,” said Wang Xiaolong, the Chinese foreign ministry’s envoy for G20 affairs.

Trump said he had not yet decided how to allow U.S. companies to continue selling to Huawei or whether to remove the tech giant from the Commerce Department’s entity list. He said he would meet with advisors next week to determine how to proceed.

U.S. microchip makers also applauded the move. “We are encouraged the talks are restarting and additional tariffs are on hold and we look forward to getting more detail on the president’s remarks on Huawei,” John Neuffer, president of the U.S. Semiconductor Association, said in a statement. Recently, Broadcom warned of a broad slowdown in demand as a result of Huawei sanctions and slashed its revenue forecast.

And yet, it was not clear how long the exemption would last. Trump said he had agreed with Xi to wait until the very end of trade talks to resolve broader issues around Huawei, including Washington’s lobbying campaign against allies buying its 5G equipment.

“Huawei is a complicated situation,” Trump said. “We’re leaving Huawei toward the end. We’ll see where we go with a trade agreement.”

The concession will likely draw criticism in Washington where national security hawks have urged Trump not to ease any pressure against Huawei. The company has long been the target of concern at the Pentagon and intelligence agencies in part over what the U.S. claims are its close ties to the Chinese military.




In exchange for his Huawei concession, Trump said Xi Jinping had promised to buy “tremendous” amounts of U.S. agricultural products. “We’re going to give them a list of things we’d like them to buy,” Trump said at a news conference following the Group of 20 summit in Osaka, Japan. However, as Bloomberg notes, the first indications the second fragile truce will collapse soon is that the Chinese official media reports said only that the U.S. president hopes China will import more American goods as part of the truce, without an actual confirmation it will do so.

For now, however, the second truce, after a similar ceasefire was announced on December 1 at the Buenos Aires G-20 summit, has been achieved, offering relief from a nearly year-long trade standoff in which the countries have slapped tariffs on billions of dollars of each other’s imports, disrupting global supply lines, roiling markets and dragging on global economic growth.


In a lengthy statement on the two-way talks, China’s foreign ministry quoted Xi as telling Trump he hoped the United States could treat Chinese companies fairly. On the issues of sovereignty and respect, Xi said that "China must safeguard its core interests."

“China is sincere about continuing negotiations with the United States ... but negotiations should be equal and show mutual respect,” the foreign ministry quoted Xi as saying.

Trump had threatened to extend existing tariffs to almost all Chinese imports into the United States if the meeting brought no progress on wide-ranging U.S. demands for reforms.

The return to the negotiating table ends a six-week stalemate that has unnerved companies and investors, and at least temporarily reduces fears that the world’s two largest economies are headed into a new cold war, which they still are but only after the current stalemate ends allowing the S&P to rise above 3,000 in the the meantime. Because, as Bloomberg notes, it’s unclear how they can overcome differences that led to the collapse of a previous truce reached at the G-20 in November.

* * *

While Trump and Xi were all smiles at their press briefing, the bad blood between the two leaders behind the scenes is clearly still there. Xi spent much of the summit’s first day Friday promising to open up the Chinese economy, and attacking the U.S. (without naming it) for its attack on the global trading system. As Bloomberg reported, Xi took a "not-so-subtle swipe" at Trump’s “America first” trade policy in remarks to African leaders on Friday, warning against “bullying practices” and adding that “any attempt to put one’s own interests first and undermine others’ will not win any popularity.” Xi also called out the U.S. over Huawei and said the G-20 should uphold the “completeness and vitality of global supply chains.”


For now, however, there is optimism.

“Returning to negotiations is good news for the business community and breathes some much needed certainty into a slowly deteriorating relationship,” said Jacob Parker, a vice-president of China operations at the U.S.-China Business Council. But "now comes the hard work of finding consensus on the most difficult issues in the relationship, but with a commitment from the top we’re hopeful this will put the two sides on a sustained path to resolution,” he said.

Others were more skeptical, and warned the pause - just like the first ceasefire - will not last.
“Even if a truce happens this weekend, a subsequent breakdown of talks followed by further escalation still seems likely,” Capital Economics said in a commentary on Friday, quoted by Reuters.
The United States says China has been stealing American intellectual property for years, forces U.S. firms to share trade secrets as a condition for doing business in China, and subsidizes state-owned firms to dominate industries. Meanwhile, China has said the United States is making unreasonable demands and must also make concessions.

The talks collapsed in May after Washington accused Beijing of reneging on reform pledges. Trump raised tariffs to 25% from 10% on $200 billion of Chinese goods, and China retaliated with levies on U.S. imports.

The U.S.-China feud had cast a pall over the two-day G20 gathering, with leaders pointing to the threat to global growth. In their communique, the leaders warned of growing risks to the world economy but stopped short of denouncing protectionism, calling instead for a free, fair trade environment after talks some members described as difficult.

* * *

Finally, global markets will breathe a sigh of relief on news of the resumption in U.S.-China trade talks, even as an official deal remains elusive, and there is no indication of how the two countries will bridge the most difficult aspect of a feud that has emerged beyond simple trade and now affects most aspects of US and Chinese life.

The flip-side is that with trade talks back on, the Fed will feel far less pressure to ease in July, and since in June stocks exploded higher on hopes that the Fed will cut rates as much as 50bps next month, such a reversal in US-China relations could potentially prevent Powell from capitulating, and leave the Fed on hold, an outcome which would lead to a sharp drop in US capital markets. Indeed, in recent weeks, the S&P has returned to record highs, treasury yields have tumbled to their lowest level in years. The Japanese yen, a traditional beneficiary of flight to quality, has gained, while the U.S. dollar has slipped across the board, including against China’s yuan.

Source: https://www.zerohedge.com/news/2019-06-29/ceasefire-us-china-trade-talks-back-track-after-trump-concedes-huawei
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Russia Warns US Intervention In Venezuela Would Have "Catastrophic Consequences"

Russia has dismissed the political crisis engulfing Venezuela as an attempted coup while expressing concern over the role of external states and the potential for foreign military intervention, calling Juan Guaido's move to declare himself president illegal.
Kremlin Spokesman Dmitry Peskov said Thursday, “We are very concerned by statements that don’t rule out some kind of external intervention,” as cited by Bloomberg“We consider such intervention unacceptable,” Peskov added while describing the internal unrest spilling into the streets after the catalyst of Monday's failed military revolt of 27 officers in an opposition neighborhood of Caracas an “attempt to usurp power”.
Prior meeting at the Novo-Ogaryovo state residence outside Moscow on December 5, 2018. Image source: AFP
This follows President Trump's declaration that the US would only recognize the unelected head of the opposition-held National Assembly as "the President of the Venezuelan National Assembly, Juan Guaido, as the Interim President of Venezuela." A senior Trump administration official followed by saying “all options are on the table”.
The Russian Foreign Ministry said further in website statement that Washington's joining a growing list of about a dozen other countries to recognize Guaido “is aimed at deepening the split in Venezuelan society, increasing the conflict on the streets, sharply destabilizing the internal political system and further escalation of the conflict.” And in words eerily similar to the brief international exchange of words over prior US action in places like Libya and Syria the ministry said that external armed intervention would be “fraught with catastrophic consequences.”
The foreign ministry further described that the situation “has reached a dangerous point” and called on the international community to engage in diplomacy and mediation between the Maduro government and opposition. 
And separately, a senior Russian official on Thursday warned the Trump administration against what he called the "catastrophic scenario"of military intervention in the region. "We warn against this," Russia's deputy foreign minister, Sergei Ryabkov, said in an interview with International Affairs magazine, as cited in USA Today. "We believe that this would be a catastrophic scenario that would shake the foundations of the development model we see in the Latin American region."
Wednesday clashes with police, image via Rafael Hernández

In early December of last year President Nicholas Maduro visited Moscow to meet with President Vladimir Putin at a time when tensions with both countries and Washington were soaring. The leaders discussed Russia's offering to throw cash-strapped Venezuela a multi-billion dollar life-line despite Caracas in the past being unable to pay its debts.  During that trip, Maduro had called Russia a “brother country” with which Venezuela had “raised the flag for the creation of a multipolar and multicentric world.”
This meeting was followed by Russia briefly deploying two nuclear-capable "Blackjack" bombers to Venezuela as part of a joint training exercise meant to underscore the two countries' growing military relations. 
Meanwhile Russia is not the only country to express fear of external meddling and an "illegal" coup attempt, but predictably Syria, Turkey, and China have also declared intentions to stick by Maduro while voicing that the Venezuelan people alone should decide their fate.

Source: https://www.zerohedge.com/news/2019-01-24/russia-warns-us-intervention-venezuela-would-have-catastrophic-consequences?fbclid=IwAR2dNVNStmm8fyXijh8wYXYPyIvprspahzfh1ADT3JgTZjxTKuf3wYbROvQ
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US Places 33 Alleged Russian Spies And Military Officials On Sanctions Blacklist

Secretary of State Mike Pompeo has authorized the addition of 33 alleged Russian spies, defense and intelligence officials to the US sanctions list. The blacklisting took place following an executive order from President Trump authorizing Steven Mnuchin, in consultation with Pompeo, to employ all powers granted to the President "by IEEPA and certain CATSAA sections" for implementation of certain sanctions with respect to Russia.



A White House official said the new measures were aimed at "imposing costs on Russia in response to its malign activities."

Washington has also imposed new sanctions on a Chinese military unit over the purchase of Russian jets and missiles.The Chinese sanctions are to come into effect immediately.

Trump has been criticized by Congress for not using his legal powers to target Russia’s defense industry and gas export pipelines, and with the Mueller probe still continuing, Trump has been eager to show an "unfriendly" side to Putin in advance of the probe's release.

Unlike other occasions, which saw the ruble slide on any incremental sanctions or blacklist news, today the ruble - following the lead from the rest of the EM space - is trading stronger on the day, and is the third best performing currency of the week. Earlier in the day, the First Deputy Governor of the Russian Central Bank, Ksenia Yudaeva, said that even if FX drop, the central bank will stick to its recent promise of not engaging in FX purchases by the end of the year which is why the Ruble may have more upside to go, even as Russian stocks hit a new all time high.


Source: https://www.zerohedge.com/news/2018-09-20/us-places-33-alleged-russian-spies-and-military-officials-sanctions-blacklist
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Trump To Make "China Trade Announcement" After Market Close

There will be no more delaying the announcement of the $200BN in China tariffs.

Moments ago, Trump said that the "China Trade Announcement" which likely refers to the $200BN in second round tariffs, will come after the market close, perhaps so that stocks - which arguably can no longer discount the future - won't be impacted?
  • TRUMP SAYS CHINA TRADE ANNOUNCEMENT COMING AFTER MARKET CLOSE
It is unclear if the tariffs will carry a 10% or 25% tax, although according to the latest reports it will be the former, and potentially increase if China still refuses to "fold" to Trump demands.
What happens next? First, visually this is what the trade war with China will look like after today:

As a reminder, the list of the first $50bn in tariffs contained 1,333 tariff lines of products. It was based on "extensive interagency economic analysis", and would "target products that benefit from China’s industrial plans", such as Made in China 2025, while "minimizing the impact on the U.S. economy". The second $200bn list share the same considerations on US economy and consumers, though China's industrial policy was no longer a focus. All finalized lists also took into account public comments received.

So far the US has carefully avoided consumer and China dependent products. As a result, the trade war so far has had little impact on US economy and consumers.
But this will change as the tariff list expands to by another 200bn.

Within the currently proposed 200bn list, about 78bn are consumer products (Figure 7). These include different types furniture (24bn), travel bags(2.2bn), vacuum cleaners (1.8bn), vinyl flooring(1.7bn), window/wall air conditioners (1.3bn), etc. Similarly, reliance on China increases sharply for the 200bn products in tariff pipeline. China import shares are above 20% for most of the products, and for about half of them, China's share are more than 50% (Figure 8).

Furthermore, many of the consumer products subject to tariff also happen to have very high China import share. China's import share is about 93% for air conditioners, 78% for vacuum cleaners, and 60-90% for various types of furniture. Therefore, we believe each dollar of tariff imposed on this 200bn list is a lot more painful for the US than one dollar of tariff imposed on the first 50bn list.
Not surprisingly, US domestic resistance on the latest $200bn list appeared stronger than before. The majority of the  industry representatives were against it during the six-day public hearing. Will the US be able to accommodate their complaints by exempting these products and finding other products to tariff instead?

In other words, while so far US consumers - and capital markets - have been spared from the tit-for-tat escalation, once Trump greenlights the next round of $200BN in tariffs, US purchasers of cheap Chinese imports will find them not so cheap anymore, hitting not only the pocket book of the US consumer, but also downstream corporations who will see their profit margins shrink rapidly, and which also explains the recent panic in various Fed and private sector surveys about the growing threat of ever greater tariffs.

* * *
Trump's action also means that trade talks with China scheduled for later this week will be canceled, and all eyes will be on how China retaliates. Recall that as the WSJ reported last night, Chinese officials involved in advising the leadership are proposing to step up the trade fight a notch by restricting China’s sales of materials, equipment and other parts key to U.S. manufacturers’ supply chain.

While the announcement is not news, as the market had plently of warnings, the Nasdaq has slumped to session lows with both the Dow and the S&P following lower:
Source: https://www.zerohedge.com/news/2018-09-17/trump-make-china-trade-announcement-after-market-close
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US, France, and UK In Direct Talks Over Possible Syria Strikes

“That has to be, in the history of propaganda in the 20th and 21st centuries, one of the most outrageous claims that I can think of,” John Bolton stated in response to Moscow's charge that anti-Assad insurgents in Idlib are preparing a chemical false flag in order to hasten a US attack on Damascus, according to a new Wall Street Journal report.

“Along with the United States and France, we have been clear that we will respond swiftly and appropriately if the Assad regime repeats its appalling use of chemical weapons,” he vowed, echoing statements the national security advisor began making weeks ago during a trip to Jerusalem.
The WSJ has revealed the White House is now in direct talks with the U.K. and France over plans for a possible third round of coordinated strikes on Syria should the Syrian Army use chemical weapons during its Idlib assault.



After a speech in Washington on Monday, Bolton told reporters, “We’ve been in consultation with the British and the French, who joined us in the second strike, and they also agree that another use of chemical weapons will result in a much stronger response.”

The news comes a day after Bolton indicated during a speech that the US and its allies Syria would respond with much "stronger" and harsher action against Damascus. 

Also, early this week there were reports that Germany is mulling over whether to agree to a request by the United States that it join any potential strikes on Syria, though such a move is expected to be too politically divisive for Germany to agree.

Thus far a Russian air attack on Idlib is underway, with international reports saying about 70 strikes have occurred on Idlib in the past days. Syria pro-government forces have amassed around Idlib Province and are said to number as many as 100,000. If true this would be the largest mustering of Syrian forces for any single battle throughout the seven year long conflict.

Meanwhile the United Nations has warned of an impending humanitarian disaster, and a UN Security Council meeting chaired by the US is set to be held on Tuesday morning, according to the WSJ.
On Monday the WSJ reported that unnamed US officials now claim to be in possession of intelligence which they say shows Assad has already given the order to conduct a chlorine gas attack in an absolutely unprecedented level of "pre-crime" telegraphing of events on the battlefield.
The anonymous officials told the WSJ of "new U.S. intelligence" in what appears an eerily familiar repeat of precisely how the 2003 invasion of Iraq was sold to the American public (namely, "anonymous officials" and vague assurances of unseen intelligence)  albeit posturing over Idlib is now unfolding at an intensely more rapid pace:
Fears of a massacre have been fueled by new U.S. intelligence indicating Mr. Assad has cleared the way for the military to use chlorine gas in any offensive, U.S. officials said. It wasn’t clear from the latest intelligence if Mr. Assad also had given the military permission to use sarin gas, the deadly nerve agent used several times in previous regime attacks on rebel-held areas. It is banned under international law.
It appears Washington is now saying an American attack on Syrian government forces and locations is all but inevitable.

However, this time the stakes are much higher as Russia has built up an unprecedented number of warships in the Mediterranean Sea along the Syrian coast in response to prior reports that the U.S., France, and Great Britain could be preparing an attack.

* * *
Meanwhile, does anyone remember this fake news from 15 years ago?...


 

Source:  https://www.zerohedge.com/news/2018-09-11/us-france-and-uk-direct-talks-over-possible-syria-strikes
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