China is showing some signs of trade talks – CNBC

China officials are keeping quiet of the trade talks with the US, but on the other hand they confirm that the countries continue the communication, CNBC writes on Thursday.

According to the news, China did not comment about the possible additional tariffs, which are to start next week the 15h December if there is no deal before that. The countries have been discussing about the trade deal over a year now and it was widely expected that the Phase 1 could be reached by the end of this year.

Earlier this week the US President Donald Trump said that he has no deadline for the trade deal with China and said that it might happen that the deal would be closed after the US elections in November 2020.

The trade talks have been somewhat delayed due to the US Government legislation regarding the democratic movement in Hong Kong and the Uighur minority in Xinjiang. China has made statements that the US is interfering China´s internal affairs and also decided to suspend the US Navy visiting the Hong Kong ports.

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Fed added 70 billion dollars into markets – digital money on agenda (updated)

Updated: The Japanese stimulus package

The US Federal Reserve has added 70 billion dollars to the financial markets on Wednesday, the Wall Street Journal writes. According to the news, the central bank made the intervention using overnight repurchase agreements, repos. The aim is to ensure that the financial system has enough liquidity.

The financial and banking markets have been in turmoil due to the negative rates, global growth concerns and new technology. And during this week, the European Central Bank, said it is now considering to launch its own digital currency if the private sector cannot make cross-border payments faster. According to Bloomberg, the central bank wants the transactions also more cheaper.

This would be somewhat similar what the US Federal Reserve Bank said four months ago. According to Fed, the central bank is developing a new service called FedNov that would allow all banks in the US to offer real-time payment services every day of the week. FedNow was estimated to be available by 2023 or 2024 and it is expected to help the small & midsize companies and households to better balance their transactions.

The digital currency on the other hand would then be rival for example to Facebook´s Libra project which has caused several privacy and legacy issues by authorities globally and the tech giant has said it is postponing the digital currency project in order to meet the regulatory requirements. But there are also other digital bitcoin currencies as well and China has expressed their interest to evaluate the new money in its own financial markets systems for example in the stock markets.

The banking industry play field has also changed in Europe due to the UK departure of the Union. The Brexit has caused some international banks to relocate their services also in the EU area in order to continue to service as full potential.

This in turn has caused that the big US securities companies like Goldman Sachs, JP Morgan and Morgan Stanley are now under the European Central Bank´s supervision of their European operations.

This larger regulation scope will increase also the impact of the ECB and its decisions from now on. ECB is then becoming a new power house in the financial industry. This is also good to remember when the EU-countries are calling ECB to stop the asset purchase programme or the stimulus packages.

What is the role of the ECB in the future, will be in the hands of the new Central Bank President Christine Lagarde. Will ECB defend its independence to ask governments to increase their fiscal spending and thus increase the needed economic stimulus in the Brexit and trade talks aftermath? And how the ECB is balancing the different economic outlooks in the euroarea for unite monetary policy? And what is the euro-strategy after Brexit?

The global trade tensions and trade concerns have caused for example Japan to make a new spending package.  On Thursday the PM Shinzo Abe launched the country’s first stimulus package since 2016 and the total amount of the package was about 121 billion dollars. The aim is to repair typhoon damage, invest in infrastructure and new technologies.

So, the central banks are watching. Will the economies survive?

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Trump: The US China deal might have to wait until US elections

The US President Donald Trump said the China trade deal might have to wait until after the U.S. presidential election in November 2020. He was commenting the trade talks in London on Tuesday.  According to him, he has no deadline.

The markets have been waiting for the Phase 1 deal with China before the trade tariffs deadline next week the 15th December. The trade speculations left the stock markets negative in New York.

The Dow Jones closed down 1,01% to 27502 points, S&P 500 down 0,66 % to 3093 points and Nasdaq down 0,55 % to 8520 points.

 

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US Trump to place tariffs on steel from Brazil and Argentina

The US President Donald Trump has said he will place tariffs on steel and aluminium imports from Brazil and Argentina. He commented the trade situation on Monday  before leaving for the Nato meeting to London. According to him, the weak currencies had made it harder for US food exports to compete.

The trade talks with China are also having delays due to the Hong Kong democracy and human rights bill the President Trump signed last week. According to him, the HK law have complicated the talks with China. China has said that the US Navy cannot enter the Hong Kong ports at the moment.

The city of Hong Kong also revealed some retail sales figures, which show the six months demonstrations have caused the city retails sales massive drops. For example the retail sales dropped 24,3 % in October, while the figures were – 18,2 % and -22,9 %  in September and August.

The trade talks with US China are having deadline next week on the 15th December before the new trade tariffs come into force. The US Administration has said that more tariffs will be placed if no deal is reached with China before the deadline.

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US Senate backing Hong Kong protesters

The US Senate has passed a bill to support the protesters in Hong Kong on Tuesday. The bill is also a signal that the violence in the streets of Hong Kong must be stopped.

The US and China are having trade talks and it is expected that the Hong Kong situation will be integrated to the US  China trade deal. The months long demonstrations in Hong Kong have become more violent during the recent weeks.

 

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US banks start the earnings season next week

The US banks will start the earnings season during next week. For example Citigroup, Wells Fargo, JP Morgan, Goldman Sachs and Bank of America will be in the headlines. One of the big questions is the low interest rates and how the banks are coping with the margins.

It is also a question about the timing. How quickly the banks can swift the low rates to deposits? On the other hand mortgage loans are expected to have shown good trend for banks during the third quarter.

For investment bankers, the recent office-rentals company WeWork´s failed IPO listing might show some write offs in the balance sheet. The market valuation for the WeWork was expected to be around 47 billion dollars before the financial worries started.

The financial markets in general have faced the US China trade talks as an issue for market volatility. Now, when the first phase of the deal between the US and China, has been announced on Friday, the situation is expected to calm down a little when more information of the deal will be revealed.

The market speculation of the low interest rates policy in Europe, US and other Asian countries, is expected to continue while for example the US Central Bank Federal Reserve, Fed is expected to make one rate cut in October, according to Reuters.

The reason for low interest rates policy is the global growth concerns due to geopolitical differences, several trade talks and Brexit. In the UK, the Prime Minister Boris Johnson has said on Sunday that he believes the deal can be reached. On the other hand, the EU´s opinion is that the Brexit Plan is not good enough for the EU leaders Summit on the 17-18th October in Brussels.

 

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Trump to meet Chinese top negotiator Liu on Friday

The US president Donald Trump will meet the top trade negotiator from China  in Washington on Friday.  According to his Twitter, he will meet Mr Liu He in the White House.

According to Bloomberg, last week the US Administration approved licenses for some American companies to sell tech goods to Huawei Technologies. And China agreed to buy more US agricultural products.

The latest US China trade news have lifted the stock markets and Dow Jones index is now trading up 0,62 %, S&P 500 -index up 0,60% and Nasdaq index up 0,64%. In London, the stocks were also up 0,38 %.

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