Tags: China | Trump Administration | trump | china | trade | deal

Trump Aims to Blast China in 2020 Despite Any Deals

Trump Aims to Blast China in 2020 Despite Any Deals

By Thursday, 28 February 2019 08:18 AM Current | Bio | Archive

The summit between President Donald Trump and the North Korean leader Kim Jong-un today in Hanoi, Vietnam, ended with no agreement after the U.S. refused North Korean demands for sanctions relief.

President Donald Trump told reporters: “It was all about the sanctions. They wanted the sanctions lifted in their entirety and we couldn't do that. Sometimes you have to walk and this was one of those times.”

Mr. Trump also said that no plans had been made for a third summit.

Also the “Joint Agreement Signing Ceremony” as well as the planned working lunch for the two leaders, were both cancelled, the BBC reported.

The dollar index DXY eased by about a third of percentage point on the news

U.S. Trade Representative Robert Lighthizer said yesterday that the U.S. was abandoning, for now at least, its threat to raise tariffs to 25 percent on $200 billion of Chinese goods on March 1, which is tomorrow.

This is likely the sort of trade deal that comes through. Enough of a deal or delay to further tariffs to enable equities to stay supported while still allowing enough room for President Donald Trump to criticize China on the campaign trail next year.

In many ways, this indefinite delay and the consequences are reminiscent of the deal that was agreed on July 25, 2018 between President Donald Trump and Jean-Claude Juncker, President of the European Commission.    

Meanwhile, the U.S. trade deficit hit an all-time record high in December. The “advance” number, as calculated by the U.S. Census Bureau came in at $79.5 billion in December, up $9.0 billion from $70.5 billion in November. Exports of goods for December were $135.7 billion, or $4.0 billion less than November exports. Imports of goods for December were $215.2 billion, or $5.0 billion more than November imports.

The record trade deficit would suggest that putting tariffs on trade is not working quite as well as it could in reducing U.S. trade deficits. Yes, the U.S. consumer remains alive and well.

The Bureau of Economic Analysis of the U.S. Department of Commerce (BEA) will release today the Initial Gross Domestic Product for the 4th Quarter and Annual 2018 numbers.

BEA typically makes three estimates of GDP for a given quarter. This cycle will be compressed, because of the government partial shutdown, to two estimates for the 4th quarter and annual estimates of 2018. The other 4th quarter revised estimate will be released on March 28.

Investors could do well keeping in mind that the effects of “annualization” make everything seem so much more dramatic than it actually is.

Today’s it is expected we’ll get a number that is roughly in line with the U.S. trend rate of growth or maybe a little bit above that, somewhere in the range of between 2 and 2.25 percent.

Financial markets may want to look at the consumption and the PCE deflator measures with a bit more attention.  

Finally, China's National Bureau of Statistics (NBS) showed overnight that China's official manufacturing Purchasing Manager's Index (PMI) fell to 49.2 in February, down from 49.5 in January and remained hereby in contraction territory below the 50-line.

Zhao Qinghe, a senior statistician from the NBS commented that from the perspective of industry, high-tech manufacturing industry took the lead with PMI reading 51.4, up 1.8 percent from January. Medicine manufacturing, computer communication, and electronic equipment manufacturing, among others, saw outstanding growth in PMI.

The reduction of factory activities affected by the Spring Festival partly attributed to the manufacturing PMI slowdown.

China’s official non-manufacturing PMI eased to 54.3 in February 2019 from a 4-month high of 54.7 in January.

The official composite PMI, which covers both manufacturing and services activity, edged down 0.8 percentage points to 52.4 in February, CGTN (China Global Television Network) reported.

For investors these data could be helpful for getting a somewhat better overall view on what’s going on in China, which still remains by far the most important emerging market.

Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.

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HansParisis
This is likely the sort of trade deal that comes through. Enough of a deal or delay to further tariffs to enable equities to stay supported while still allowing enough room for President Donald Trump to criticize China on the campaign trail next year.
trump, china, trade, deal
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2019-18-28
Thursday, 28 February 2019 08:18 AM
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