Very muted response from the futures bourse at this stage. Might change overnight, but surprising so far.
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Very muted response from the futures bourse at this stage. Might change overnight, but surprising so far.
Look what happened after hours,
“Earlier today, at the direction of the President, the United States increased the level of tariffs from 10 percent to 25 percent on approximately $200 billion worth of Chinese imports. The President also ordered us to begin the process of ... " (emphasis added)
https://ustr.gov/about-us/policy-off...representative
I won't pretend to be well informed but with preparations for grand celebrations looming in October to commemorate the 70th anniversary of Mao founding the Peoples Republic of China, can imagine President Xi Jinping feeling some urgency to get the distraction of these negotiations resolved well beforehand, 1) to save face & 2)' to prevent social & economic risks evolving into political risks ' - Chen Yixin, Secretary Gen of parties Law & Order committee.
With US elections just over the horizon, Trump also needs to be seen to 'close the deal' for his base.
I think the markets now expect they will reach a watered down agreement in the next month or two which enables both sides to claim success & move forward again.
China Names Its Trade-Deal Price as Trump Sets New Deadline
https://www.bloomberg.com/news/artic...d=premium-asia
looks like they are both digging in for the long game now , how i read it.? trump has bi partisan support now for the long game and china being an autocrat do as they please in the parties interest.
stocks rose on friday , surprise to lots of people a. Im no tariff expert but dont tariffs hurt the consumer in the US but in the long run US companies will make more money from this shifting of supply chains. China companies will shift business to other countries as well but china people will lose there jobs. trade deficit between china and US will decline key point in trump electioneering but trade deficits with other less competitive countries goes up. some manufacturing may even go to US who knows? im no expert on these matters
Is anyone else concerned that China will retaliate eye 4 an eye, damaging the two largest economies, sending the world into recession?
Things will still get bought, they will get made, they will get sold....just the locations may ‘adjust’....I don’t see a recession in the near term....just stay hedged, or if you aren’t hedged, be really convinced. Or keep most money in NZ - seems to be a bit immune!
Thanks bb, i can't help feeling that as China trade drops off, Americans and others will bring their money back to the usd, causing the nzx to drop due to lack of investment. I expect the next event (of poor nz company performance due to China demanding less from nz as they're poorer and business is less) could cause people to sell underperforming shares at a loss, meaning less money in nz, having a knock on effect in house prices and the economy.
... i suppose that's about the worst case scenario, so maybe im being overly pessimistic, but it doesn't seem like too much of a stretch at the moment.
I guess i should wait to see what China do. Sitting on about 80% cash in my portfolio at the moment and hoping im doing the wrong thing.