Markets jittery as trade war and recession worries spook investors - business live

US retail sales stronger than expected, calming nerves

Shops in the Uptown Mall on Main Street, Sedona, Arizona, USA Photograph: Alamy

Just in: US retail sales were stronger than expected last month, calming fears of an imminent recession.

American shoppers spent 0.7% more in July than in June, beating expectations of a 0.3% rise.

As in the UK (see earlier post), internet shopping provided a big boost — again, Amazon Prime Day is a likely reason.

Michael McDonough
(@M_McDonough)

The percent of total retail sales at non-store retailers (meaning mostly web-based stores) is beginning to rise at a much faster clip: pic.twitter.com/NbLq7bhLnO

August 15, 2019

Joseph A. LaVorgna
(@Lavorgnanomics)

Today’s big data batch should quell the recessionistas for a day or two: better retail sales, Philly #Fed & productivity. Estimates of current quarter #GDP should go up a few tenths. However, these figures in general aren’t forward-looking so #Powell & Co should look past this

August 15, 2019

8.27am EDT
08:27

It’s hard to keep track of all the maneuvers in the US trade war.

But helpfully, the Peterson Institute’s Chad Brown has explained America’s latest move – to impose higher tariffs on clothing, shoes and technology products made in China:

Chad P. Bown
(@ChadBown)

1 of 9/

Trump just mapped out his latest plan to impose tariffs on roughly $300 billion of Chinese imports over this fall.

My latest looks in depth at the tariff and trade datahttps://t.co/Oo8nK6Z3Ga

August 14, 2019

Chad P. Bown
(@ChadBown)

2 of 9/

On September 1, Trump will hit China with a 10% tariff on a new set of $112 billion of imports.

These tariffs will target a lot of clothing and shoes. These sectors are mostly untouched by Trump’s tariffs to date… pic.twitter.com/07pWKVllts

August 14, 2019

Chad P. Bown
(@ChadBown)

3 of 9/

On December 15, Trump will hit China with 10% tariffs on ANOTHER new set of $160 billion of imports.

These tariffs will hit a lot of toys and consumer electronics – iPhones, Fitbits, video game consoles. These sectors have also been mostly untouched by Trump’s tariffs. pic.twitter.com/H65y892naS

August 14, 2019

Chad P. Bown
(@ChadBown)

4 of 9/

Note the interesting TIMING, by the two product lists:

(1) The import surge for the December holidays shopping is usually *IN OCTOBER* each year.

By choosing Dec 15 for the first tariffs on smartphones, toys and video games, Trump may avoid THAT consumer backlash… pic.twitter.com/Pc1809ebwf

August 14, 2019

Chad P. Bown
(@ChadBown)

5 of 9/

Note the interesting TIMING, by the two product lists (cont):

(2) A smaller import surge for back-to-school shopping is IN AUGUST each year.

Sept 1 for tariffs on clothes & shoes – remember the June 29, G20 decision to delay tariffs? – avoids THAT consumer backlash… pic.twitter.com/l2v8qGsns4

August 14, 2019

Chad P. Bown
(@ChadBown)

6 of 9/

Interestingly, timing the tariff rollout to avoid the consumer backlash is an implicit recognition that AMERICAN CONSUMERS are likely to bear the tariff burden – through higher paid prices

(it may not be borne by Chinese firms, through lower received prices, after all) pic.twitter.com/mqWHwW0TAD

August 14, 2019

Chad P. Bown
(@ChadBown)

7 of 9/

…overall, Trump has sharply INCREASED US tariffs on China:

• Jan 1, 2018: 3.1%
• Sept 23, 2018: 12.4%
• May 10, 2019: 18.3%
• Sept 1, 2019: 20.0%
• Dec 15, 2019: 21.4% pic.twitter.com/YMwRvvWFR5

August 14, 2019

Chad P. Bown
(@ChadBown)

8 of 9/

Even more important for these next two rounds of tariffs is the MASSIVE increase in scope of PRODUCT COVERAGE.

Share of US imports from China covered by special tariffs:
• Jan 1, 2018: 8.1%
• Sept 23, 2018: 50.6%
• Sept 1, 2019: 68.5%
• Dec 15, 2019: 96.8% pic.twitter.com/1qxJXdfqbZ

August 14, 2019

Chad P. Bown
(@ChadBown)

9 of 9/

The REALLY bad news?

President Trump may be settling in. There are new plans to impose lots more tariffs, and no plans to roll back any of them.

ENDS/https://t.co/Oo8nK6Z3Ga

August 14, 2019

8.19am EDT
08:19

Wall Street isn’t even open yet, but the futures market has been pretty darn lively – hit by recession worries and trade war tensions.

Paul R. La Monica
(@LaMonicaBuzz)

Are investors living on a prayer today? Looks like China comments about hoping US will “meet halfway” on trade talks are lifting futures. pic.twitter.com/w3pklCMSkR

August 15, 2019

8.16am EDT
08:16

China: Hope to meet US half-way

Newsflash: China has now made some more conciliatory comments about the trade war with the US.

The Ministry of Finance has said that it hopes to meet America “half-way” to resolve the dispute, and that presidents Xi and Trump are in touch through phone calls and letters, as well as their recent meeting at the last G7 summit.

This is helping the markets to recover some ground – European stock markets are now a little higher again, and Wall Street is tipped to recover some ground too. What a day!

8.03am EDT
08:03

How might China retaliate against the US’s latest tariffs on $300bn of its exports?

It can’t simply respond in kind. China only bought $120bn of goods from America in 2018, and has already imposed tariffs on them, in response to earlier US sanctions.

Beijing could raise its existing tariffs, I suppose but that would badly hurt Chinese consumers and companies (who would pay the tariff).

Instead, policymakers could use non-tariff measures. It could allow the yuan to fall in value, or cut off purchases from America altogether in favour of other countries (Brazilian soybeans, anyone?).

The nuclear option, as Eleanor Creagh of Saxo Bank points out, would be to stop buying US government debt. That would shake the markets, as China has been such a huge buyer of US Treasuries.

Eleanor Creagh
(@Eleanor_Creagh)

China already stated potential for countermeasures 2 weeks ago … as below 🇨🇳 running out of imports to tariff…non tariff retaliation would be next escalation – RE restrictions, Yuan deval, license restrictions, diverting demand from US goods + nuclear option UST #TradeWar https://t.co/M9zGlsMvOl

August 15, 2019

Ironically, such a move might drive down the prices on US debt, pushing up yields and ending the yield curve inversion…..

7.26am EDT
07:26

Oil is continuing to slide today, hit by fears of a global downturn.

Brent crude has dropped by 2.5% to just over $58 per barrel.

7.15am EDT
07:15

It was already a rough day in the markets, even before China ratcheted up the trade war tensions:

6.50am EDT
06:50

Hold onto your hats, folks. The Dow Jones industrial average is now tipped to lose more than 200 points when trading begins, a drop of 0.8%.

That’s on top of yesterday’s 800-point slide.

6.49am EDT
06:49

August has been a torrid month for the markets, and we’re only halfway through it!

Britain’s FTSE 100, for example, has fallen by over 7% in the last two weeks – from 7,586 points to just 7028 right now (down another 120 points today!).

The Footsie is still up 5% this year, so it’s not disastrous. Plus, August is notoriously volatile (liquidity is lower as investors take their holidays).

6.36am EDT
06:36

Fund manager Brent Carlile thinks China’s threat is a response to Donald Trump’s decision to delay tariffs on Chinese-made consumer goods until December.

That concession is meant to protect US consumers from pre-Christmas price hikes – but could also look like weakness from the White House.

Brent Carlile
(@BrentCarlileFX)

Markets are paying attention to comments this morning from China’s Finance Ministry saying will have to take countermeasures to #US moves which violated Osaka #G20.

Why now? #Trump blinked, emboldening #China. US folded w/ pocket Kings. China had offsuit 7-9. Big error lost face

August 15, 2019

6.21am EDT
06:21

Crumbs. Shares in Europe’s banking sector are down 1.2%, hitting their lowest level since 2012 – when the eurozone debt crisis was raging.

6.18am EDT
06:18

Mining companies are among the top fallers in London, dragging the market deeper into the red.

The FTSE 100 is now down 92 points at 7056, its lowest level since the end of February.

Anglo American are down 5.7% and Glencore has lost 4.5%. Demand for coal, copper and iron ore will all decline if a trade war creates a global downturn.

Financial stocks are also suffering from recession fears, with Royal Bank of Scotland and Standard Life Aberdeen both losing 3.5%.

Markets jittery as trade war and recession worries spook investors – business live – The Guardian

US retail sales stronger than expected, calming nerves

China: Hope to meet US half-way

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