Trade

Viewsroom: How to read the recession runes

22 Aug 2019

A U.S. downturn is near, judging by past early warning signals from yield curves to bank valuations. But fallout from the 2008 crisis has sapped them of some predictive power. Plus: what the exit of Cathay Pacific’s CEO says about Beijing’s response to the Hong Kong protests.

Beijing’s Hong Kong hard line threatens everyone

22 Aug 2019

President Xi Jinping has peaceful options to calm protests. Instead state media are talking treason and terrorism; the army is on standby. That China would even consider sacrificing its prize financial centre for nationalism shows economic pragmatism is being overruled by anger.

Wall Street adds $125 bln to recession conundrum

16 Aug 2019

That’s the market value lost by the top five U.S. investment banks in just three weeks, leaving only JPMorgan trading above book value. History suggests it’s an early investor bet on a downturn. But as with the yield curve, the fallout from the last crisis distorts the message.

Russia’s En+ swaps one U.S. headache for another

16 Aug 2019

The Rusal holding company escaped punitive Washington sanctions in the first half. But Donald Trump’s trade war pummelled aluminium prices, leading to a sharp drop in EBITDA. Investors face a long wait to get anywhere near their 2017 IPO price.

U.S. recession signal bears clear fingerprints

14 Aug 2019

A key bond-market metric flashed a downturn warning last seen in 2007, hammering stocks. Business confidence and investment are dropping, China is slowing and Germany’s output just fell. The common thread linking these is Donald Trump’s trade war. At least he’ll win lower rates.

U.S.-China trade war hinges on farmers, not Apple

13 Aug 2019

The Trump administration is delaying import tariffs on some electronics, giving the iPhone maker and the S&P 500 a boost. That’s down to business lobbying and a little pragmatism. But the president wants to boost American agriculture. Until China helps, investors can’t rest easy.

Trump turns U.S. farmers into trade-war fertilizer

9 Aug 2019

The president is using China’s stance on American agricultural products to escalate the conflict. Beijing is willing to egg him on. There are domestic political reasons for the White House to make just $20 bln of goods the crux of the battle. But it increases farmers’ suffering.

Viewsroom: Vicious trade cycle traps U.S., China

8 Aug 2019

The White House’s decision to brand Beijing a currency manipulator is the latest move in a conflict riven by miscommunication, unrealistic expectations and no obvious way out. Plus: Why the LSE is paying $27 bln for Refinitiv, and which of the data firm’s owners comes out on top.

Donald Trump can weaken the dollar, at a price

8 Aug 2019

The U.S. President complains about the effect of a strong greenback but what can he do? Intervening in the currency markets may have little effect, but there are alternatives depending on his tolerance for unpleasant consequences. The most helpful move would be to end trade wars.

China’s trade balance previews a life in hock

7 Aug 2019

Its once-massive current account surplus may soon go into reverse. True, the deficit might be minimal at first, but China could one day need to attract an annual $200 bln of foreign capital. More openness in capital markets and financial services would be a good place to start.

Trump trade tweets are the new Fed and jobs report

2 Aug 2019

The U.S. president on Thursday unexpectedly threatened a 10% levy on $300 bln of imports from China. He rattled markets more than the central bank’s interest-rate cut a day earlier, and put Friday’s steady jobs report in the shade. Economy-watchers must now scan Twitter.

U.S. tariffs risk reviving Chinese zombies

2 Aug 2019

President Trump is threatening new levies on $300 bln of goods after Shanghai talks proved inconclusive. Beijing can cushion with stimulus, benefitting state industries and inflating asset bubbles. Liberalisation offers better yields, but by this point patience may be lacking.

China’s best-case trade deal looks worse and worse

1 Aug 2019

Negotiators have wrapped up another round of talks in Shanghai without result. A ceasefire was brokered in June but Trump no longer seems enthused about a quick compromise that might expose him to criticism. Unfortunately, a lacklustre economy means time is not on Beijing's side.

China can toss Huawei a lifeline with a 5G splurge

30 Jul 2019

The telecom giant blacklisted by Washington in May says first-half revenue rose 23%, despite tensions abroad. Longer term, it is Beijing’s push on next-gen mobile networks that will shape Huawei’s fate. Forcing carriers to step up infrastructure spending can soften the U.S. blow.

India’s richest man closes in on Jeff Bezos

30 Jul 2019

Mukesh Ambani’s Jio has defied expectations. Three years in, the upstart has become the country’s top mobile telco. That puts $111 bln parent Reliance Industries, an oil giant with retail ambitions, on track to conquer consumers with its heady blend of AT&T and Amazon.

Trump’s economy becoming increasingly like Obama’s

26 Jul 2019

Consumers and Uncle Sam drove last quarter’s modest 2.1% GDP growth. But investment slumped, making a Fed rate reduction likely next week. The president wanted tax cuts to energize the economy. Instead he heads into election year with a tepid showing akin to his predecessor’s.

Review: Fighting the second Cold War, lab by lab

26 Jul 2019

U.S. scientific power is a potent diplomatic weapon. Greg Whitesides's new book details how Washington used research largesse to reward friends and punish the Soviet Union. Now a similar conflict is brewing with China, a more formidable rival. This time, there can be no winner.

Japan-Korea spat returns chip price error message

25 Jul 2019

Earnings at semiconductor giant SK Hynix plunged 88%, weighed down by a worldwide glut. Yet shares rose on hopes that Tokyo's export curbs to South Korea will depress supply and lift prices. The risks of weaker demand and supply chain ruptures suggest the rally looks premature.

New UK finance minister is a man for all seasons

24 Jul 2019

Boris Johnson picked Sajid Javid, an ex-Deutsche banker, to run the economy. The former home secretary's ideas chime with his boss’s plans to spend more. And while some Brexiteers may mistrust him, his business-friendly past offers comfort to those fearing a disorderly EU exit.

Fresh attack on China’s zombies can bury some

18 Jul 2019

Beijing officials are on a campaign to kill off moribund companies. Past versions of this familiar horror flick have ended with local authorities keeping state-owned groups staggering along anyway. But a healthier economy and big ambitions make this sequel worth watching.