Forex & Commo Market News

Aug 20 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)

- Oil prices fell as concerns over slowing economic growth dragged on markets. 
- Gold prices inched higher as hopes of easing trade tensions between the United States and China put pressure on the dollar, adding to demand for the yellow metal that improved last week after prices touched 19-month lows.
- London copper climbed as hopes of progress in a trade dispute between the United States and China buoyed risk appetite and undermined safe-haven demand for the dollar.
- Chicago soybean futures climbed more than 1 percent as traders expect China to resume purchases of U.S. cargoes after planned talks between the two nations.
- Oil prices get an end-of-session boost to end up 45c, or 0.7%, at $65.91 as WSJ reports the US and China are plotting a road map to resolve a trade dispute by November. Oil markets have been closely following the US-China tariffs issue, which some investors fear could cause world oil demand to shrink if it were to blow up into a protracted trade war and protectionism by the world's two largest economies. Friday's rise in crude prices was a high-note finale to an otherwise bearish week that saw front-month oil prices fall by 2.5%, fueled largely by an unexpected surge in US oil and fuel inventories.
- Big Pharma stocks such as Pfizer and Eli Lilly are finally feeling the love after being out of favor for much of 2018. JPMorgan says that major drug stocks are up 11% in the past 6 weeks, versus 5% for the S&P 500, helped by strong 2Q earnings reports and a perception that the Trump administration's proposals to cut drug prices won't seriously hurt manufacturers. "For much of the past 12-18 months, investors have been bearish/apathetic towards the Major Pharma names based on industry pricing fears. That appears to be changing as we have seen a clear improvement in sentiment over the past 1-2 months..." firm says.
- There's headline risk and there's actual risk, and Tudor Pickering says a federal judge's decision to order a review of Keystone XL pipeline's approved pathway through Nebraska is mostly the former. "We anticipate the headline risk to be largely overshadowed by the decision to not vacate the Presidential Permit while TRP [TransCanada] committed to slightly delay construction until Q2'19," it says. The 1,184-mile project has seen myriad delays due to environmental protesters and others, but President Trump supports the pipeline, which could help resolve bottlenecks on Canadian crude that have sent local prices tumbling below $40/bbl. Tudor says the project could still be done and ready for service by 3Q21.
- US government bonds rise as investors remain weary of the possibility geopolitical events over the weekend could generate additional risks, investors said. With economic and diplomatic problems in Turkey still evolving and the potential for trade tensions to bubble over in an instant, it's difficult for many investors to feel comfortable selling Treasury debt heading into the weekend, analysts said. Those concerns currently present a greater potential to add volatility to financial markets than any news about the economy, which is widely seen as growing at a strong and steady pace, investors said. The yield on the benchmark 10-year Treasury note fell to 2.857% from 2.871% Thursday.
- Bank of America Merrill Lynch says it likes the euro. "We see some more EUR/USD short-term downside, primarily because of Italy risks, but will be looking for the opportunity to buy the dip ahead of next year," the bank says in a note. It also likes the pound. It says GBP/USD is likely to rise to 1.35 and that the U.K. is likely to agree on a trade deal with the European Union, eventually. This view is shared by most in the market--that a deal, one way or the other, will be achieved. A "no deal" scenario would bring GBP/USD to 1.10. If there was to be "no Brexit"--a view not shared by analysts--then GBP/USD could rise to 1.50, BAML says. GBP/USD rises 0.1% to 1.2733 and EUR/USD is up by 0.3% at 1.1410.
- The U.S. and China have placed tariffs on each other and were threatening to impose even more, but "the tariff war seems to have done little to disrupt trade between the U.S. and China or to address their trade imbalance,"BNP Paribas analysts say in a note. The U.S. says it initiated the tariffs because it said it wanted to fight the trade imbalance with China. The fact that the tariffs have changed little so far may be because of "the low demand elasticity of products subject to the punitive tariff and a strong U.S. economy sustaining strong demand for Chinese products." It could also be because of the fall in the Chinese remnibi versus the U.S. dollar. USD/CNY rose to a 15-month high on Thursday.
- President Donald Trump says in a Tweet that he told the SEC to study extending financial reporting periods for publicly traded companies from quarterly to once every six months. Trump says the move would improve business, add flexibility and cut costs. The idea would likely prove popular with many executives who often complain that investors'focus on quarterly numbers detracts from their ability to plan for the long term. Defenders of the more frequent reporting periods worry that companies would be less likely to alert investors to shifts in business trends on a timely basis if the requirements are eased.
- After rising in previous days and during most of Friday morning, the Turkish lira reversed gains, with USD/TRY reaching a two-day high of 6.3431. The lira has been on the rise most of this week after Turkey's banking regulator limited currency swap transactions, which were considered a form of capital control. The central bank has in a way also offered higher interest rates by deciding not to open its one-week repo auction on Friday. All this is positive for the lira. But analysts have said that fundamentally nothing has changed for the currency. Inflation and debt are still high, the central bank's independence remains in question and the political tensions between the U.S. and Turkey haven't evaporated. USD/TRY is last up 5.6% at 6.1499.
- EUR/USD continues to edge up slightly, last rising 0.2% to 1.1395, but if it were to close below 1.14, it would "confirm the bearish theme" in the euro, ING analysts say. Foreign investors buying eurozone equities have been hedging their exposure to the euro this week, according to ETF flows, the analysts say. "This suggests greater market uncertainty over the euro's broader direction of travel--which makes sense given that the political situations in Italy and Turkey still look precarious." Turkey's high inflation and foreign exchange-denominated debt raise fears that this could cause an economic meltdown, and the new Italian government could spur conflicts in negotiating the new budget.
- The dollar's cyclical macro dynamics "have peaked" in the second quarter, ING analysts say. But the "ample degree of geopolitical noise bubbling in the background" is the reason why the it hasn't started to fall yet, they say. "Leading U.S. activity indicators have been coming off the boil in the past month, while U.S. import and export price data earlier in the week also showed that the economy may be starting to feel the bite of Trump's tariff war." Without the U.S.-China trade dispute in the background, "this may have weighed on the dollar more explicitly." But for now, "troubles elsewhere are keeping the dollar aloft." EUR/USD up 0.1% at 1.1391, having broken recently out of 1.16-1.18 range.
- EUR/USD is up slightly at 1.1392 as it continues the trend seen on Thursday, with dollar weakness arising from the lack of previous safe-haven investment flows on the back of U.S.-China trade tensions. The U.S. and China are this month set for another round of trade negotiations. The dollar had risen this year because of U.S. tax reform, which "leads to capital inflow and to U.S. strength in the medium run," Commerzbank analysts say. "However, in the long run it is likely to put pressure on the greenback though," the analysts say.
- A federal judge strikes down the Trump administration's effort to suspend an Obama-era rule that sought to protect clean drinking water. US District Judge David C. Norton rules Trump EPA's violated the Administrative Procedure Act when it failed to take public comment on what would have been a two-year delay of the Waters of the US, or Wotus, rule. Adopted in 2015 under President Obama, the rule was to expand Washington's power to regulate major rivers and lakes as well as smaller streams and wetlands. The Trump administration wants to revert to the 1980s-era rule that predated Wotus but has been stymied by lawsuits from several environmental groups.

Aug 17 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell, with U.S. crude heading for a seventh weekly decline amid increasing concerns about slowing global economic growth that could hit demand for petroleum products as inventories build.
- Gold prices edged higher as the dollar pulled further away from more than one-year highs, but the metal remained on track to post its biggest weekly decline since mid-2017.
- London copper prices ticked lower, declining for a fifth session in six and set for their biggest weekly decline since early July, as concerns eased about supply disruptions.
- Chicago soybean prices slid, with the market taking a breather after climbing to a one-week high in the last session on support from expectations that China may return to the U.S. market.
- Between tariff threats, trade-policy wrangling and battles for agricultural export markets, you may have overlooked the toll a drought is taking on Europe's potato crop. For spud supplier Lamb Weston, the dry weather is driving prices higher for EU-grown potatoes purchased by its Lamb Weston/Meijer JV, prompting Stifel analysts to lower their 2019 full-year earning projection by $11M to $870M. But, the EU potato travails could be a "catalyst" for the Idaho-based company to speed up its strategy to buy rivals there, Stifel says. LW closed 3.9% lower at $66.59.
- Hog futures have rallied 8% in the past two sessions, partly driven by increased optimism over trade. The US and China are due to resume negotiations over terms of trade, which traders hope could mean an end to Chinese tariffs on American pork. And signals from officials that a deal between the US and Mexico, which also introduced retaliatory duties on US pork, has added to the buying interest. But President Trump on Thursday suggested that a broader agreement over the North American Free Trade Agreement was further away. The WSJ reports that he told advisers that "if we don't have a breakthrough, don't do the deal."
- Canadian Prime Minister Justin Trudeau says the government has no plans to call an early election this fall. The comment follows speculation in the Canadian media about a possible early vote, which one widely-read columnist suggested could reset the Trudeau government's mandate amid heightened trade tensions with the US and conflicts with the recently elected government of Ontario, Canada's largest province. "We have a lot of work that we're going to continue to do," Trudeau said during a media availability Thursday. "There will be no federal election this fall." Canada's next election is scheduled for October 2019.
- Boeing staging something of a relief rally in the wake of plans by China and the US to resume talks over resolving their trade disputes. Shares up 3.4% in heavy trading, eliminating losses over the previous four sessions amid concerns about its exposure as the largest US exporter to China, and broader worries about growth in emerging markets.
- Grain and soybean futures rally as Chinese and US negotiators resume talks after more than two months of deadlock. China's commerce ministry says a vice minister will travel to the US on an unspecified date to discuss trade issues. These are lower-level talks than previous efforts, and the US plans to move ahead with proposed duties on $200B worth of goods in the coming weeks. Nonetheless, any sign that the two countries are trying to resolve a dispute that resulted in 25% Chinese tariffs on US soybeans and other crops is welcome news to traders. China is the largest buyer of US oilseed, and the market has suffered since the dispute escalated earlier this year. CBOT September soybean futures rise 2.8% to $8.81 1/2 a bushel while September corn climbs 1.2% to $3.66 a bushel.
- For EUR/USD to return to 1.18, or even 1.20, emerging markets have to stabilize, budget negotiations in Italy have to have a smooth run, and the U.K. has to agree on a withrawal bill with the European Union, Societe Generale analysts say in a note. A shift in Federal Reserve's policy expectations, which would mean sticking to just three rate rises this year, "would also help but is not conditional," they say. EUR/USD dropped to a 13-month low on Wednesday at 1.1301, according to FactSet, after being stuck in a 1.16-1.17 range for weeks. It last trades at 1.1395.
- President Trump's decision to impose tariffs on imports from other countries could discourage investment in the U.S. and increase inflation, says Gero Jung, chief economist at Mirabaud Asset Management. "Uncertainty certainly doesn't help," he says. If the trend continues then "why would a European or Asian company invest in the U.S.?" he asks. U.S. companies may also be discouraged from investing, he says. Tariffs will also increase inflation, although "for the time being it is marginal," he adds. Mr. Jung notes that the U.S. economy is fairly well insulated from the effects of tariffs as it is "a relatively closed economy," with exports accounting for only around 10% of GDP.
- US tariffs on lumber and steel are driving up construction costs in Canada, a Statistics Canada survey of contractors found. The data agency said construction prices for new Canadian residential buildings rose 1.8% in the second quarter, matching an identical gain in the previous quarter. That increase was largely due to higher softwood lumber prices, which rose 20.5% from January to June. At the same time, non-residential building construction costs rose 1.4% in the second quarter, largely because of higher prices for steel used in industrial buildings. Prices for basic and semi-finished iron and steel products rose 10.8% from January to June. US tariffs on steel, aluminum and softwood lumber have contributed to higher North American prices for those products in recent months.
- The correlation between U.S. government bonds and its currency has broken down as a result of U.S. President Donald Trump's presidency, which has been characterized by unorthodox ways of conducting international politics and an unusual fiscal stimulus boost during a late economic cycle, says Derek Halpenny, European head of global markets research at MUFG. This means that even if U.S.-German government bond spreads continue to rise, the
dollar may not necessarily follow suit. Government bond spreads "are less reliable today because of Trump's influence," he says. Market participants are willing to buy the dollar now, but "dollar sentiment has potential to swing around," he adds. The U.S. and German two-year government bond spread has widened by 180 basis points since Mr. Trump won the elections in favor of U.S. bonds, but the DXY dollar index has lost 1.2% in value.
- The U.S. dollar has strengthened this year on the fact that the U.S. economy is doing better than the rest of the world, as well as because of safe-haven investment flows caused by U.S. protectionism, but MUFG says it's not as strong as it could have been. "The performance of the dollar since President Trump's victory is much less impressive considering what has unfolded over that period," it says. Since U.S. President Donald Trump won the elections about 18 months ago, the dollar has lost 1.5% of its value despite the fact that the Federal Reserve increased the interest rate six times and that the two-year U.S.-eurozone government bond spread widened by 180 basis points, MUFG notes. Moreover, the U.S. implemented the largest tax cutting legislation since the 1980s.
- EUR/USD is up by 0.2% at 1.1368, as the U.S. dollar loses ground against most major currencies, except the Japanese yen. With the dollar gaining from safe-haven investment flows on the back of trade disputes between the U.S. and China, the main driver for its fall on Thursday "is reports that China has accepted a U.S. invitation to trade talks in late-August," say RBC analysts. "The talks are at a relatively low level, but diminish the risk of a further escalation in tension," the analysts say. "News that Qatar has pledged to invest USD15 billion in Turkey is also helping risk sentiment." USD/JPY is up by 0.1% at 110.83.
- Cisco CEO Chuck Robbins says the company is watching the growing trade dispute between the US and China closely, as the US Trade Representative considers levying tariffs switches and routers. Cisco makes some of those products in China and imports them to the US. "We're in deep discussions in Washington with the administration on trying to get to a favorable outcome," Robbins says during a conference call with analysts after the company reported F4Q results. He didn't detail the potential effect the proposed tariffs might have on the company's results. "We like to see that land in a good place," Robbins says.

Aug 16 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices recouped some of the previous day's losses after Beijing said it would send a delegation to Washington to try to resolve trade disputes between the United States and China that have roiled global markets.
- Gold pared heavy early losses that came in the midst of a broad commodity sell-off, bouncing off of a 19-month low on short covering and a softer U.S. dollar following news that Beijing will hold trade talks with Washington this month.
- London base metal prices bounced back from a broad sell-off in the previous session, while the Shanghai complex pared early losses on news of fresh U.S.-China trade talks.
- Chicago soybean futures bounced back, rising more than 2 percent as news on Beijing-Washington holding new round of trade talks boosted hopes of U.S. soybean sales to top importer China.
- Cree finance chief Michael McDevitt told analysts Tuesday that tariffs on various Chinese goods that went into effect last month would reduce the company's F1Q earnings by 2c/share and 3c in subsequent quarters. He added the company hasn't included the effect of additional Trump administration tariffs on Chinese products set to take effect Aug. 23, and that Cree is evaluating ways to further mitigate them and any additional tariffs that may be enacted in the future. Cree reported a loss of $33M, or 33c a share, on revenue of $409M, for F4Q. Shares fall 7.3% to $46.52.
- Rabobank analysts say the Australian dollar has further room to fall and projects AUD/USD to edge towards 0.70 in 12 months. The Australian dollar is one of the currencies which has been the hardest hit by the U.S. and Chinese trade disputes because China is Australia's key trading partner and slower growth can impact demand for Australian goods, whose prices may look also expensive if the Chinese remnibi fall further. Moreover, the Reserve Bank of Australia "is unlikely to stand in the way for further slippage in the value of the Australian dollar," Rabobank says. AUD/USD fell earlier on Wednesday to an 18-month low of 0.7202 and is last down by 0.3% at 0.7216.
- Currency markets continue to be driven by the strong dollar and U.S. trade policy, which means EUR/USD is likely to fall toward 1.12, ING analysts say. EUR/USD is flat at 1.1345, having reached on Tuesday a more-than-one-year low of 1.1317. EUR/USD recently broke out of its range between 1.16 and 1.18. ING analysts say "if Turkey is adding to euro under-performance, then we should look out for some potential key events such as" whether the U.S. pastor is released by Thursday and whether Turkish authorities will offer anything new in an investor call also Thursday.
- Nordic markets are tipped to open slightly higher Wednesday, with IG calling the OMXS30 up 0.3% at around 1613. "U.S. stock markets recovered yesterday after recent days' declines but the positive U.S. session failed to carry over into Asia this morning, with the U.S.-Turkey conflict weighing on risk sentiment," says SEB. "Most stock markets have declined, the dollar has strengthened and Treasury yields are lower." Turkish president Erdogan has said he won't back down and has called for a boycott of American consumer electronics. U.K. inflation and U.S. retail sales are due today. OMXS30 closed at 1608.56, OMXN40 at 1547.24 and OBX at 829.52.

Aug 16 - Best commodity bets? Exposed to China and less open to trade: Russell 

The recent gyrations in the world economy around Turkey's currency and the escalating U.S.-China trade dispute have taken a toll on commodity prices, especially industrial metals. However, while news-driven sentiment can clearly pummel markets, over a longer period of time not all commodities will be equally affected by the changing global economic dynamics. Click here to read full stories

 

Aug 16 - Blockchain benefits still murky for most commodities trading 

Commodity firms and banks have been diving into blockchain pilot schemes over the last two years but the new technology's application for most trading has likely been over-hyped, a report by Boston Consulting Group (BCG) said. Blockchain, originally the platform behind cryptocurrency Bitcoin, is viewed by some as a solution to inefficiencies, improving transparency and reducing to the risk of fraud. But BCG believes its potential has been exaggerated. Click here to read full stories

 

Aug 15 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell pulled down by a report of increased U.S. crude inventories and as a darkening economic outlook stoked expectations of lower fuel demand.
- Gold prices fell to their lowest since January 2017 as the dollar hit an over 13-month peak on demand emerging from concerns about Turkey's financial turmoil.
- London copper fell to a more than one-year low as the dollar strengthened and the union at the world's largest mine in Chile said talks with operator BHP would be extended by another day in hope of averting a planned strike.
- U.S. soybeans fell, dropping for the first time in three sessions, as the market worried the continuing trade war between Washington and Beijing will limit demand at the same time U.S. production may rise to a record.
- Nordic markets are tipped to open slightly higher Wednesday, with IG calling the OMXS30 up 0.3% at around 1613. "U.S. stock markets recovered yesterday after recent days' declines but the positive U.S. session failed to carry over into Asia this morning, with the U.S.-Turkey conflict weighing on risk sentiment," says SEB. "Most stock markets have declined, the dollar has strengthened and Treasury yields are lower." Turkish president Erdogan has said he won't back down and has called for a boycott of American consumer electronics. U.K. inflation and U.S. retail sales are due today. OMXS30 closed at 1608.56, OMXN40 at 1547.24 and OBX at 829.52.
- Home Depot executives downplay the effect of escalating US tariffs on the retailer's business. "The tariff environment is manageable," CEO Craig Menear says on the 2Q conference call. Tariffs on Canadian lumber and Korean washing machines resulted in slight increases to Home Depot's cost of goods. A "mid-teen increase" in laundry-machine prices resulted in lower unit sales, but the CEO expects Korean firms to soon get US factories open. Home Depot reported higher 2Q same-store sales and profits, boosted by strong US economy as well as seasonal sales that fell out of 1Q. Home Depot is trading down 0.3% to $193.50, having given up premarket gains.
- Even if the lira were to strengthen, "it could be too late for Turkey to avoid a significant slowdown in economic activity accompanied by even higher consumer prices," Rabobank analysts say. "The damage has been done already," they say. Interest rates would have to rise significantly and political tensions would have to ease all at once for the Turkish lira to recover. Even before the lira recently extended its substantial year-to-date losses of more than 40% against the dollar and the euro, inflation had accelerated to 15.85% year-on-year in July. High inflation is usually a drag on the economy as it often dampens demand.
- For the Turkish lira to recover, three things have to happen "urgently" and ideally "simultaneously", Rabobank analysts say. The central bank would have to raise interest rates "significantly", diplomatic tension between Turkey and the U.S. would have to ease, and Turkey "would have to swiftly implement prudent fiscal measures and accelerate the pace of structural reforms." The questionable nature of the central bank's independence from the government is the biggest issue for most investors, analysts have previously said. USD/TRY is last down by 5.3% at 6.5434 on Tuesday, paring some of the sharp increases on Friday and Monday when the lira tumbled to new record lows.
- Lower prices for US exports in July could be a reflection of retaliatory tariffs China imposed on a range of goods including soybeans. The Labor Department's export price index fell 0.5% in July from June, the first monthly decline since June 2017, as prices for soybeans plunged 14%. While the data don't include taxes, experts say tariffs can indirectly affect the index by forcing prices for targeted goods lower.
- A trade war remains the tail risk most commonly cited by respondents (57%) in Bank of America Merrill Lynch's August fund manager survey for the third month in a row, it says. Further top risks cited by fund managers are quantitative tightening (15%) and a slowdown in the Chinese economy (14%).
- Political tensions with the U.S. are exacerbating Turkey's problems after the lira's drop fueled concerns about a possible currency and debt crisis given the amount of dollar debt in the country's private sector, says Delphine Arrighi, fund manager at Old Mutual Global Investors. A sizable rate increase followed by drastic measures to reduce the fiscal deficit still appears to be the most viable option to re-anchor the lira and pull the country's economy from the brink, she says. Turkey's markets are pricing in close to nine percentage points of rate increases to stem the lira's depreciation, says Arrighi. But more pressure might be needed to prompt a sufficient response from the central bank and President Recep Tayyip Erdogan, who has been reluctant to acknowledge the severity of Turkey's economic problems, she says.
- Growth in the German economy has picked up somewhat in the second quarter but in a world of increasing risks "the upswing can no longer be taken for granted," says Joerg Zeuner, chief economist of KfW Group. The global trade conflict continues despite the negotiations agreed between President Trump and European Commission President Jean-Claude Juncker, a disorderly Brexit cannot be ruled out, just like Italy seeking confrontation with the European Union, Zeuner says. Germany should therefore play an even greater role in the further development of the euro area and strongly support a world trade system that is as free as possible, he says. Germany's adjusted 2Q GDP rose by 0.5% on quarter, the federal statistical office said.

Aug 14 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices rose after a report from OPEC confirmed that top exporter Saudi Arabia had cut production to avert looming oversupply.
- Gold prices recovered from an 18-month low hit in the previous session as a break below a key psychological level triggered buying, while the U.S. dollar pared gains after scaling a 13-month high.
- London copper fell for a third straight session, pressured by concerns that the collapse of the Turkish lira could infect emerging markets and as data showed the Chinese economy was cooling.
- U.S. wheat futures rose as much as 1.2 percent, rebounding from a three-week low touched in the previous session, as the U.S. Department of Agriculture pegged the condition of the crop below market expectations.
- China should avoid adopting a confrontational approach in the trade fight with the US given a divergence in the countries' economic fundamentals, says Standard Chartered economist Ding Shuang. He contends a better approach for Beijing is to keep opening up the country's economy, strengthen relationships with non-US economies and leaving American firms left behind from those opportunities. That may soften Trump's tough stance, says Ding. "What's more important is to make yourself healthy and strong." He expects China's loosening policies, which likely will stabilize infrastructure investment this quarter, to help prevent slowing economic momentum from getting out of control.
- Canada's finance minister, Bill Morneau, says his country would take "measured and proportionate" steps if the US imposes tariffs on Canadian-made cars and auto parts. Morneau says Canada would likely respond in kind like it did after the US put levies on imported steel. "We do not believe there are any reasonable grounds for any sort of auto tariffs" on exports to the US, he said at a press briefing in Windsor, Ontario after meeting business leaders and touring a Fiat Chrysler plant. President Trump said in a tweet Friday the US "will tax cars if we can't make a deal" on trade with Canada.
- President Trump's renewed hostility Sunday toward Harley-Davidson is adding downward momentum for the motorcycle manufacturer's shares in a lower market Monday. The president tweeted his support for some motorcycle riders' threats to boycott Harley bikes in response to the company's decision in June to move production for motorcycles for Europe out of the US to avoid retaliatory tariffs on US motorcycles from the EU. Trump called the company's decision a "really bad move" in a tweet and described the planned boycott as "great." The president hosted a contingent of motorcycle riders Sunday at his New Jersey golf resort that called themselves "Bikers for Trump." Harley falls 4% to $41.51.
- UBS analysts say softline retail stocks could soon see the end of their recent rally, but not necessarily due to 2Q earnings results. The average stock in softlines has jumped 19% YTD vs. the S&P 500's 5% gain, but ecommerce disruptions and possible tariffs on apparel and footwear could mean the rally is losing steam, analysts say. However, some stocks such as Tiffany, Lululemon Athletica and PVH don't have much if any China import exposure, becoming "safe havens" from the trade tensions. "The bottom line is we don't forecast many companies missing and guiding down," analysts say, adding that department stores are likely the most at-risk softlines stocks.
- J.P. Morgan stays short sterling "due to the rethink of Brexit complacency," it says in a note. The bank also remains short the New Zealand dollar because of the "fading prospects of RBNZ hikes." However, J.P. Morgan says it is switching to being short these two currencies from against the euro to against the dollar, as the U.S. currency rises on safe-haven inflows, whilst the eurozone common currency gets hurt by worsening economic data and concerns of banks' exposure to Turkish assets. J.P. Morgan remains "long JPY vs. USD and AUD, albeit a panic attack in equities may be necessary for these risk hedges to start to perform."
- Demand for the dollar this summer "looks unlikely to abate," ING analysts say. Therefore, after breaking from the 1.16-1.18 range and falling below 1.15 for the first time in a year, EUR/USD could be heading towards 1.13, they say. The 2% yields on three-month U.S. Treasury bills make the dollar the "go-to safe haven right now" whilst tensions escalate in Turkey. And "until the Federal Reserve acknowledges that US.. policy settings are too tight, or we see a significant de-escalation in EM tension," the dollar should stay strong. EUR/USD fell to a more than one-year low of 1.1364 earlier on Monday, but is last trading flat at 1.1410.
- Sterling has fallen versus the dollar to around 1.27 from around 1.30 since the Bank of England increased the interest rate to 0.75% on Aug. 2, mostly due to the fact that investors have switched their attention to Brexit uncertainties and the possibility of a no-deal scenario, says ING. But Brexit worries haven't been the only reason why the pound has fallen, the analysts say. Dollar strength has also played a role. "The broader global market angst has seen GBP/USD slide to the 1.27-1.28 area quicker than we had anticipated." GBP/USD is last flat at 1.2772.
- Given that the dollar has surged on the back of safe-haven inflows, J.P. Morgan advises changing positions from being short USD/CHF to being short EUR/CHF. Regional eurozone data worsened and economic and political events in Turkey have highlighted the risk eurozone banks hold in their portfolios, hurting the euro. EUR/CHF earlier fell to its lowest in a year of 1.1287, according to FactSet. It last trades flat at 1.1350.
- US government bonds fall as investors expect new issues of corporate bonds will be sold this week, leading some investors to sell Treasurys to raise cash for the higher-yielding investments. Bond yields also climbed on unconfirmed rumors that Turkey intends to release US pastor Andrew Brunson. Some investors said they expect that Turkey will need to seek aid from the International Monetary Fund, and that releasing the pastor could ease some of the pressures that have driven down the value of the country's currency. The yield on the benchmark 10-year Treasury note was 2.882%, up from 2.859% Friday.
- The trade tensions caused by U.S. protectionism have become less global, diminishing U.S. dollar strength versus some currencies and increasing appetite for some riskier currencies, Goldman Sachs analysts say. "Trade tensions have focused more narrowly on the U.S.-China relationship since early July, global risk assets have posted modest point-to-point gains, [and] dollar strength, while continuing, has become more differentiated," they write in a note on Friday. Still, "the global risk environment remains fragile," especially within emerging market currencies, led by a massive fall in the Turkish lira. USD/TRY is last up by 7% at 6.8730.
- Of the currencies which are usually exposed to risk aversion, investors should buy those of countries with good economic growth, such as Australia and South Africa, say Goldman Sachs analysts in a Friday note. The South African rand, however, falls sharply on Monday to its lowest in more than two years due to fears that investors will pull out of emerging markets. Goldman's view is that risk aversion will stabilize as trade tensions caused by U.S. protectionism become less global and focus more on U.S. and China. Investors should also buy Canadian dollars and Mexican pesos, because they also offer exposure to further stabilization and "more insulation from a sharp decline in Chinese demand," Goldman says. To fund these long positions, Goldman Sachs recommends borrowing in low-yielding currencies such as the South Korean won.

Aug 13 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices dipped as rising trade tensions dented the outlook for fuel demand growth especially in Asia, although U.S. sanctions against Iran still pointed towards tighter supply.
- Gold prices extended declines into a third session, as the U.S. dollar climbed to a 13-month high against major peers amid financial crisis in Turkey.
- London copper fell after the dollar rose to a 13-month high against the euro as investors shunned risky assets and sought safe havens amid the Turkish lira's drop to a record low.
- U.S. soybean futures fell 1 percent to a three-week low as the market worried a trade dispute between Washington and Beijing would cause U.S. stockpiles, already projected at a record high, to rise even further.
- J.P. Morgan stays short sterling "due to the rethink of Brexit complacency," it says in a note. The bank also remains short the New Zealand dollar because of the "fading prospects of RBNZ hikes." However, J.P. Morgan says it is switching to being short these two currencies from against the euro to against the dollar, as the U.S. currency rises on safe-haven inflows, whilst the eurozone common currency gets hurt by worsening economic data and concerns of banks' exposure to Turkish assets. J.P. Morgan remains "long JPY vs. USD and AUD, albeit a panic attack in equities may be necessary for these risk hedges to start to perform."
- Demand for the dollar this summer "looks unlikely to abate," ING analysts say. Therefore, after breaking from the 1.16-1.18 range and falling below 1.15 for the first time in a year, EUR/USD could be heading towards 1.13, they say. The 2% yields on three-month U.S. Treasury bills make the dollar the "go-to safe haven right now" whilst tensions escalate in Turkey. And "until the Federal Reserve acknowledges that US.. policy settings are too tight, or we see a significant de-escalation in EM tension," the dollar should stay strong. EUR/USD fell to a more than one-year low of 1.1364 earlier on Monday, but is last trading flat at 1.1410.
- Sterling has fallen versus the dollar to around 1.27 from around 1.30 since the Bank of England increased the interest rate to 0.75% on Aug. 2, mostly due to the fact that investors have switched their attention to Brexit uncertainties and the possibility of a no-deal scenario, says ING. But Brexit worries haven't been the only reason why the pound has fallen, the analysts say. Dollar strength has also played a role. "The broader global market angst has seen GBP/USD slide to the 1.27-1.28 area quicker than we had anticipated." GBP/USD is last flat at 1.2772.
- Given that the dollar has surged on the back of safe-haven inflows, J.P. Morgan advises changing positions from being short USD/CHF to being short EUR/CHF. Regional eurozone data worsened and economic and political events in Turkey have highlighted the risk eurozone banks hold in their portfolios, hurting the euro. EUR/CHF earlier fell to its lowest in a year of 1.1287, according to FactSet. It last trades flat at 1.1350.
- US government bonds fall as investors expect new issues of corporate bonds will be sold this week, leading some investors to sell Treasurys to raise cash for the higher-yielding investments. Bond yields also climbed on unconfirmed rumors that Turkey intends to release US pastor Andrew Brunson. Some investors said they expect that Turkey will need to seek aid from the International Monetary Fund, and that releasing the pastor could ease some of the pressures that have driven down the value of the country's currency. The yield on the benchmark 10-year Treasury note was 2.882%, up from 2.859% Friday.
- The trade tensions caused by U.S. protectionism have become less global, diminishing U.S. dollar strength versus some currencies and increasing appetite for some riskier currencies, Goldman Sachs analysts say. "Trade tensions have focused more narrowly on the U.S.-China relationship since early July, global risk assets have posted modest point-to-point gains, [and] dollar strength, while continuing, has become more differentiated," they write in a note on Friday. Still, "the global risk environment remains fragile," especially within emerging market currencies, led by a massive fall in the Turkish lira. USD/TRY is last up by 7% at 6.8730.
- Of the currencies which are usually exposed to risk aversion, investors should buy those of countries with good economic growth, such as Australia and South Africa, say Goldman Sachs analysts in a Friday note. The South African rand, however, falls sharply on Monday to its lowest in more than two years due to fears that investors will pull out of emerging markets. Goldman's view is that risk aversion will stabilize as trade tensions caused by U.S. protectionism become less global and focus more on U.S. and China. Investors should also buy Canadian dollars and Mexican pesos, because they also offer exposure to further stabilization and "more insulation from a sharp decline in Chinese demand," Goldman says. To fund these long positions, Goldman Sachs recommends borrowing in low-yielding currencies such as the South Korean won.

Aug 10 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices edged up on worries that renewed U.S. sanctions against Iran will tighten supplies, although the escalating trade dispute between Washington and Beijing restricted gains.
- Gold prices held broadly steady in Asia after dipping the session before, drawing little support from global political tensions and turbulence in currency markets.
- Copper prices moved higher in Shanghai and London and were set to end the week in positive territory as the prospect of strikes at copper mines in Chile drew nearer.
- Chicago wheat slid for a second session but was set for its fourth consecutive weekly gain on fears that adverse weather in major global exporters could see global supplies tightening further.
- The dollar rose to a 13-month high against a basket of currencies and the yen also made big strides, with investor appetite for risk dropping amid escalating global trade tensions and diplomatic wrangling.
- Shares in London-listed companies with operations in Russia slide on fears about U.S. plans for fresh sanctions on the country that have sent the Russian ruble sliding. Steel company Evraz PLC tops the list of FTSE 100 fallers, losing 7% to 521 pence, as the U.K. blue-chip index loses 0.6%. Shares in precious-metal company Polymetal International, which has gold and silver mines in Russia, Kazakhstan and Armenia, fall 2.5% to 653 pence. The falls come as concerns grow about the impact on Russia's economy of U.S. plans for further sanctions related to the nerve-agent attack on a former Russian spy in the U.K. The Russian ruble slides to a two-year low against the U.S. dollar.
- The FTSE 100 is expected to open 3 points lower at 7738, according to CMC Markets, with markets turning risk averse as the Turkish lira and the Russian ruble plummet and concerns grow about worsening trade relations between the U.S. and various other countries. "The trade dispute between China and the U.S. is still ongoing," David Madden at CMC Markets says. He says U.S. plans for fresh sanctions on Russia could hurt London-listed companies which have exposure to Russia, such as Polymetal and Evraz. The pound's fall to a one-year low against a broadly stronger dollar may temper losses for U.K. stocks, however. U.K. GDP data will be in focus at 0830 GMT.
- Proposed Trump administration changes to Affordable Care Act incentives for hospitals and doctors to more tightly manage Medicare spending would attract fewer providers, but save $2.24 billion in the coming decade, a draft of the proposal said. Under the ACA's Medicare Shared Savings Program, providers that hold spending below a target can keep some of the money they save. After no more than six years, they must also absorb losses when spending exceeds the target. The proposal would shorten that period to two years, which likely would make it less attractive to providers, the rule said. Since its start in 2012, hospitals and doctors with risk of losses were more likely to save money than those without risk, the proposal said. "We think the time has come for the program to evolve," Seema Verma, administrator of the Centers for Medicare and Medicaid Services said on a conference call with reporters.
- Canada Finance Minister Bill Morneau plays down concerns the diplomatic rift with Saudi Arabia threatens to weigh on the economy. He's aware of reports, including from WSJ, that the kingdom's central bank ordered its fund managers to sell off their Canadian holdings. He said he's seen no evidence that's unfolding. Regardless, Morneau said, "whatever may or may not be happening is clearly not having a big impact on our markets." He added Canada is not contemplating any economic retaliation against Saudi Arabia. Canada PM Trudeau said this week his officials are in talks with peers in Saudi Arabia to resolve this row. Morneau described the dispute as "dynamic" and "unusual," adding businesses "will have to respond accordingly."
- Postmaster General Megan Brennan remains mum about potential recommendations for the Trump administration's task force with the potential to overhaul the US Postal Service. The head of the quasigovernmental agency, however, says she welcomes the close scrutiny the Postal Service's model is getting and that she hope it leads to changes. "As we've said repeatedly, business model problems need to be addressed," she says on an earnings call. While the task-force plan is due any day, Brennan says the agency will still continue to push for reforms like postal legislation that could address retiree health benefits and a regulatory review that could allow greater leeway to raise prices.
- Fitch Ratings warns that cash-strapped Venezuela's delays in debt repayment could affect Latin American development bank Corporacion Andina de Fomento, or CAF, which is headquartered in Venezuela and lends around the region. "Fitch expects payment delays to increase over the near term as a result of current sanctions, which complicates the sovereign's ability to liquidate assets and transfer money, and declining oil production," the ratings agency says. Fitch notes that Venezuela has already fallen behind with other multilateral development banks. Venezuela represents 13.6% of CAF's total banking exposure as of year-end 2017, but Fitch notes it expects that to decrease because the bank cannot disburse more funds to Venezuela's government while it's in arrears. For the moment, Fitch says CAF still has "a sufficient buffer to deal with Venezuela's ongoing payment delays."
- The Turkish lira hits new record lows as it weakens as much as 3% against the dollar on Thursday on souring relations with the U.S over detention of an American pastor. "The Turks need to get this resolved ASAP, these markets cannot stand the suspense at this stage," says Tim Ash of Bluebay Asset Management. "Not sure they realise that their negotiating position is weak .... the fragile state of Turkish markets suggests they have to get real and cut a deal ASAP," he says. USD/TRY is last up 2.3% at 5.3994, after it hit a record high of 5.4488 earlier.
- Geopolitical concerns are growing, including retaliatory trade tariffs between the U.S. and China, U.S. planned sanctions on Russia and Turkey, and uncertainties regarding Brexit and Italian politics. ING says in the short term this could see investors "flock to the dollar," although its analysts are questioning "whether any currency is truly safe." This will leave the DXY dollar index anchored around 95, it says, keeping it close to July's one-year peak of 95.652. DXY trades up 0.2% at 95.25. Dollar gains should keep EUR/USD below 1.16, it says. EUR/USD trades down 0.2% at 1.1587.
- The Russian ruble falls to a two-year low against the dollar, taking USD/RUB to a high of 66.7190, following U.S. sanctions in response to a nerve agent attack in the U.K. Danske Bank says USD/RUB could rise to 72.0 if sanctions become law and Russia retaliates. "Any major selloff of Russian local debt, local credit and stocks would amplify outflows from the RUB." EUR/RUB, which reached a near four-month high of 77.33 on Thursday, could rise to 83.50 in this scenario, it says. Danske Bank notes the U.S. bill calls for sanctions on "Russian political figures, oligarchs, certain parastatal entities (including investments in energy projects) and financial institutions."

Aug 09 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices eked out gains on concerns about Iranian crude supplies as the U.S. hit Tehran with renewed sanctions, halting the previous session's declines amid the escalating China-U.S. trade dispute and worries over China's demand.
- Gold prices rose slightly, after gaining for two straight sessions, supported by a slightly weaker dollar versus the yen in Asian trade.
- Shanghai aluminium rose as much 2.8 percent to a near two-month high, tracking a jump in London in the previous session, as a strike affecting Alcoa's alumina refineries in Australia and warnings of shutdowns by Rusal supported prices.
- Chicago soybean futures climbed to a one-week high, rising for a third consecutive session with the market underpinned by forecasts of hot and dry weather in parts of the U.S. Midwest.
- The Russian ruble falls to a two-year low against the dollar, taking USD/RUB to a high of 66.7190, following U.S. sanctions in response to a nerve agent attack in the U.K. Danske Bank says USD/RUB could rise to 72.0 if sanctions become law and Russia retaliates. "Any major selloff of Russian local debt, local credit and stocks would amplify outflows from the RUB." EUR/RUB, which reached a near four-month high of 77.33 on Thursday, could rise to 83.50 in this scenario, it says. Danske Bank notes the U.S. bill calls for sanctions on "Russian political figures, oligarchs, certain parastatal entities (including investments in energy projects) and financial institutions."
- The FTSE 100 index is expected to open 8 points lower at 7,768, with concerns lingering about U.S.-China trade tensions after China announced plans for retaliatory trade tariffs. Any further weakness in the pound due to investor concerns about the risks that the U.K. could leave the European Union without an agreement in place, could lift stocks, however. The pound stabilizes after its sharp falls on Wednesday but remains below 1.29 against the dollar while the euro remains above 0.90 against the pound. Individual stocks in focus following earnings or trading updates include Randgold, TUI, Zurich Insurance, Legal & General, and Coca-Cola HBC.
- The U.S. should keep its strategic petroleum reserve for genuine emergency cases outside its control rather than try to fill the gap for reduction in supplies it is responsible, a top Iran oil official says. The Trump administration has decided to return restrictions on Iran's oil exports in November. It is also considering releasing its SPR to help fill the gap and lower oil prices. "They put sanctions on me, they call it an emergency," Hossein Kazempour, who represents Iran at OPEC, said in an interview. But by reducing the cushion of oil in storage, "in the end, the price will rise," he said.
- Soybean prices are higher even as data shows China imported less in July. China says soybean imports fell 8% in July from a month earlier, according to Commerzbank. The world's largest consumer of oilseeds introduced tariffs on soybeans from the US, one of the world's major exporters, in July. The drop was largely a reflection of that fact that buyers had raced to gobble up supplies before the duties went into effect, analysts say. "High prices for Brazilian beans may also be acting as a disincentive," Capital Economics says. The USDA expects China to buy fewer soybeans in 2018-19, turning to other sources of animal feed instead. CBOT August soybean contracts rise 0.7% to $8.95 3/4 a bushel.
- Oil prices extend their slide and are now down nearly 2%, just off a six-week-low, as a ratcheting up of trade tensions between the US and China sparks dollar-buying and fears it will hurt global economic growth and reduce demand for oil. Beijing, in retaliation to announced US tariffs on Chinese products, says it will impose 25% tariffs on a further $16B on US imports, matching the US tariffs dollar-for-dollar. "Headlines on trade duty implementation specifics from the U.S. and China look to have added to downside," says Baird. WTI falls $1.34 to $67.83.
- A deepening diplomatic stand-off between Turkey and the U.S. over Turkey's detainment of a U.S. pastor has pushed the Turkish lira to new historical lows, and further falls may prompt the central bank to raise interest rates, says Danske Bank. "We expect the Turkish central bank to remain less hawkish than prior to the general election on 24 June, being very cautious with policy rate instruments, while facilitating FX liquidity operations for local banks. However, we believe further deterioration in the TRY over 5.60 [per U.S. dollar] could cause an emergency hike," according to Danske Bank. It notes that Turkey-U.S. diplomatic ties are likely to see improvements over the next week, as the Turkish diplomatic delegation arrives in the U.S. USD/TRY last trades up 1.2% at 5.2946.

Aug 08 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices held steady supported by a report of rising U.S. crude inventories as well as the introduction of sanctions against Iran.
- Gold prices drifted higher in Asian trade extending gains into a second session, as the U.S. dollar softened against China's yuan and the euro.
- London copper ticked higher after the dollar weakened against a basket of major currencies as its recent rally fuelled by U.S.-China trade tensions appeared to fizzle.
- Chicago soybeans edged lower, giving up some of the last session's strong gains, but losses were limited by concerns over U.S. crop condition and expectations of China's return to the market.
- Apple sought to underscore its efforts to preserve user's privacy in a letter to House lawmakers, stating that the company doesn't keep a record of customers' location data or use location information for targeted advertising. The letter, which was dated Tuesday, was in response to questions the House Energy and Commerce Committee posed to Apple and Alphabet's Google in early July. Apple explained that if users turn off location services then location information is stored on their iPhones. The company didn't directly answer a yes-or-no question from the committee regarding whether or not it had suspended or banned apps from its App Store for violating App Store rules. Instead, Apple explained that it reviews all apps for compliance with its rules and rejects about a third of them and investigates apps that violate its rules as needed.
- Australia's LNG producers are unlikely to benefit much from China's proposed 25% tariff on US gas imports. That's because Beijing doesn't buy much LNG from the US, although it could change over time, Capital Economics says. So a key question is how long the tariffs are kept in place, as the long delay between investment in LNG and production means exports aren't very responsive to shifts in demand. Capital Economics estimates that if Australia replaced all US LNG exports to China it would boost the country's total LNG exports by just 2% and add less than 0.1% to GDP. "But the boost to Australia could be bigger over the next 5-10 years as the opportunity of grabbing a larger share of China's growing LNG market may prompt Australian producers to expand capacity and output," Capital Economics says. "That could help mitigate the long-term hit to Australia from a rise in global trade barriers."
- The reported drone attack on Venezuela's president has stoked US national-security concerns about hostile unmanned aircraft that may be launched on a predetermined course and then, relying entirely on satellite-navigation signals, automatically proceed toward a specific target. Jamming systems are being developed to change the trajectory or hack into the communications systems of questionable drones piloted by operators on the ground. More problematic, however, are drones that fly without interim human commands. Protecting against such automated intruders may require local jamming or "spoofing" of signals from ubiquitous Global Position System satellites, with the goal of fooling the software on board to steer the drone to a landing at a safe location.
- Mexico's development banks are in a strong position to increase lending, which is expected under the incoming administration of Andres Manuel Lopez Obrador, and as long as they do so prudently their fundamentals should remain sound, says Moody's. More rapid loan growth, however, could have an impact on asset quality, earnings and capital unless the government decides to support their growth with additional capital. Greater reliance on public lenders is unlikely to increase competition for commercial banks--except maybe in mortgages--as the development banks' business models tend to be complementary, the ratings firm adds.
- Industrial-motor maker Regal Beloit says it's looking to shift production of some China-made components to existing facilities in Mexico and elsewhere in Asia in an effort to avoid current and future US tariffs. The company says around 5% of its US sales are derived from China-made products, and it's already pushing through a price increase--its second of the year--to counter the effect of existing levies.
- Mosaic surges 5.9% after the company beat earnings expectations for 2Q and forecast strong demand in the US and Brazil. Although much of the US agriculture sector is in a tizzy over trade, Mosaic is feeling bullish as global markets for crop nutrients improve following years of oversupply. Despite a sharp drop in crop prices thanks to escalating trade disputes, Mosaic CEO Joc O'Rourke expects US farmers to harvest another large crop earlier than usual this fall, giving them ample time to apply fertilizer to depleted soils. A weaker real has also boosted the profitability of soybeans in Brazil, boding well for fertilizer demand. O'Rourke says Mosaic would watch volatile grain markets closely but that "demand prospects look strong in our two key geographies." Adjusted EPS came in at 40c, higher than analyst estimates, and the company raised its full-year adjusted EPS view.
- Trade disputes between the U.S. and China are "likely to get worse before they get better," says Goldman Sachs. It forecasts further yuan depreciation: USD/CNY at 6.90 and 7.10 in three and six months, respectively. In 12 months it expects USD/CNY to drop back to 6.60, "as an eventual 'deal' still seems to us as a reasonable base case assumption." The Chinese central bank's reimposition of reserve requirements signals "willingness to let the CNY move to reflect changes in the economic outlook, but a desire that any change should be more gradual than the speed of the move so far." USD/CNY last at 6.8250.
- Few investors are confident that an agreement between U.S.' Donald Trump and EU's Jean-Claude Juncker reached at the end of July to start trade talks and prevent the imposition of tariffs will last, according to a poll of credit investors by Bank of America Merrill Lynch. "If tensions again deteriorate, the periphery looks to be the most vulnerable as investors would sell here first," BAML's analyst say, commenting on BAML's credit investor survey results. Only 5% of investors said that they would sit tight and do little if the trade backdrop deteriorated. This contrasts with a 7% of them saying they would sell corporate bonds issued by the auto sector. This is despite sector shorts having jumped since June, BAML's analysts say.

Aug 07 - New commodity funds seek to lure wary investors after giants falter 

New commodity funds springing up to bet on inflation are battling for buy-in from investors still wary of past underperformance and a raft of big-name closures in the sector. At least three commodity-focused hedge funds launched in the first six months of this year, compared with two new funds for the whole of 2017, data from industry tracker Preqin found. Click here to read full stories.

Aug 07 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)

- Oil prices rose as the United States reintroduced sanctions against major crude exporter Iran, tightening global markets.
- Gold prices rose, propped up by buying after a recent price slump, but a strong dollar and expectations of further interest rate hikes in the United States limited interest in the precious metal.
- London copper futures fell for a second session as an escalating trade dispute between Washington and Beijing stoking concerns over demand in China, the world's biggest industrial metals consumer.
- Chicago wheat futures gained further with the market trading close to last week's three-year high on concerns over dryness in key exporting countries cutting world output.
  
- South Korea remains calm in the face of the brewing Sino-U.S. trade war, with some of Seoul's top economic policymakers predicting that any fallout from the dispute will be "limited," according to Yoon Jong-won, chief economic adviser to President Moon Jae-in. South Korea's presidential Blue House recently conducted a study on risks posed by the dispute, but noticed that only about 5% of South Korea's exports to China are involved in Chinese trade with the U.S., Mr. Yoon said in an interview last Friday. His comments appear aimed at addressing investor concerns that the transpacific dispute could serve as another harbinger of slackening growth within Asia's fourth-largest economy, as it struggles to cope with slowing job numbers. The newly appointed presidential adviser said Seoul is prepared to deploy fiscal weapons while the Bank of Korea is prepared to dispose its monetary policies in case its economy runs into turbulence in a worst-case scenario, he added.
- South Korea's top economic presidential adviser reaffirmed in an interview on Friday Seoul's hope to expand its exports to Southeast Asia and India to diversify South Korea's exports destinations, as its top two trading partners steadily escalate trade tension. About a quarter of South Korea's exports go to China, while about 11% go to the U.S., according to data from the Korea International Trade Association. South Korea's Blue House recently finalized plans to create a presidential committee that would oversee South Korea's outreach to Southeast Asia.
- Veteran Iranian oil official Hossein Kazempour says the other signatories in the nuclear deal Washington pulled out of--Germany, France, the UK, Russia and China--should join any discussion between Iran and the US. Kazempour says his view were personal but reflected his experience of Iran's diplomacy and politics. He adds another precondition would be the cancellation of returning sanctions and of the US withdrawal of the nuclear deal. But the official also blames the US president's intransigence on secretary of state Mike Pompeo and national security adviser John Bolton. "It's regrettable that the president's advisers are flaring the fire rather than extinguishing it," says Kazempour, who represents Iran at OPEC.
- Stock futures are slightly higher as investors weigh trade concerns against strong corporate earnings. 80% of S&P 500 companies have beaten expectations so far this reporting season, according to FactSet. Over the weekend, Berkshire Hathaway became the latest company to deliver strong earnings boosted by insurance underwriting and a change to accounting rules. Quarterly results from Hertz and Marriott expected later today. In corporate news, Pepsico's Indra Nooyi will step down as CEO in October and leave the chairman role in early 2019. The soft-drink and snack-food giant names current president Ramon Laguarta as the next CEO. Pepsico shares slightly higher in pre-market trading. Yields on 10-year US Treasurys edge down to 2.950% from 2.952% Friday. Traders look ahead to producer and consumer price data later this week. S&P futures are up 2.25 points.
- The Turkish lira extends its slide against the dollar due to strained relations between the U.S. and Turkey. Turkey's President Recep Tayyip Erdogan over the weekend vowed to retaliate against U.S. sanctions and said he had ordered the freezing of assets owned by two senior U.S. officials. "Markets will welcome any sort of indication of a normalization in the relations," says Oyak Securities. USD/TRY trades up 0.6% at 5.1102 after hitting a new record high of 5.1196, according to Factset.
- Will the back-and-forth between the U.S. and China on trade be decided by the Nov. 6 midterm election ? There's probably little reason economically during the next few months for either side to back down from their plans to slap more tariffs on each other's imports, even though some of last week's China PMI data for July hinted at trade impacts. Significant effects are liable to take longer to develop, though. But politics is likely to be the bigger reason behind the lack of a trade deal by November. While the GOP losing both houses of Congress would weaken the White House's negotiating positioning, Trump would be emboldened to keep the pressure on Beijing if Republicans hold on. He would likely extol that trade is a winning issue for the party.

Aug 06 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices held firm after Saudi crude production registered a surprising dip in July and as American shale drilling appeared to plateau.
- Gold prices inched higher, extending their recovery from a 17-month low, amid lingering worries over the U.S.-China trade conflict, while a stronger U.S. dollar capped the safe haven's gains.
- London copper edged lower as the dollar index ticked higher, making metals more expensive for holders of other currencies, even as China's move to place retaliatory tariffs on $60 billion of U.S. goods heightened trade tensions.
- Chicago wheat futures slid for a second session as the market took a breather from a rally that drove prices to a three-year high last week on concerns over dryness curbing production in key exporting nations.

- The latest escalation in the US-China tariff battle has some farmers worrying that China, among the world's biggest markets for agricultural goods, will get used to buying its food elsewhere. "China is adjusting to a new normal that locks US soybean farmers like me out of their market," said Scott Henry, an Iowa soybean farmer and member of advocacy group Farmers for Free Trade. Instead, Henry worries, China is cozying up to Brazil, Canada and Russia. Agriculture industry executives are divided over whether other soybean-importing countries can replace China in terms of demand for US soybean exports.
- Shares in liquefied natural gas companies Cheniere Energy and Tellurian are falling after China flagged the introduction of 25% tariffs on US gas imports. Cheniere stock fell as much as 1.5% in the wake of the news, while Tellurian was down just under 5% in early afternoon trade. China proposed the introduction of a tariff on LNG from the US as part of a broader $60B package of retaliatory tariffs. LNG had previously been exempt from earlier proposed tariffs, in what was seen as an indicator of the importance of cleaner-burning gas to China as it tries to tackle its pollution issues. According to oil and gas consultancy Wood Mackenzie, some 42 cargoes carrying an estimated 3M tonnes of LNG were exported from Cheniere's Sabine Pass terminal on the US Gulf Coast to China in the year to June. China has become the second-biggest export market for US LNG behind South Korea.
- Trade tensions between the US and China have escalated as the two countries threaten additional tariffs, and some firms are starting to put more focus on trade fears rather than company fundamentals. Wells Fargo's Chris Harvey says China's fiscal and monetary stimulus suggests they're willing to expand the trade time horizon, and the process toward resolution seems to be slow-moving. In the near-term, Harvey says equities investors should let it ride. "If you look at the US earnings season, the underlying fundamentals are quite strong," Harvey says. A near-term resolution between US and China is unlikely, Harvey says, in which case if US stocks trend higher the firm would likely recommend that investors take a more defensive stance.
- Microsoft adds language to its annual SEC filing highlighting the potential financial fallout from international trade disputes. The software maker says "emerging nationalist trends" could alter the international trade status quo. "Changes to trade policy or agreements as a result of populism, protectionism, or economic nationalism may result in higher tariffs, local sourcing initiatives, or other developments that make it more difficult to sell our products in foreign countries," Microsoft says in its 10-K report. "Disruptions of these kinds in developed or emerging markets could negatively impact demand for our products and services or increase operating costs." The company, though, doesn't cite specific financial fallout to its results as a result of new trade policies.
- Soybean futures fall after China says it plans to hit a further $60B worth of US goods with tariffs. Beijing is already levying duties on US soybeans, and the new 5,000-long list includes a number of other agricultural products. The announcement comes after the Trump administration threatened to double its proposed tariffs on on $200B of Chinese goods. All this makes the prospect of a negotiated solution to remove the soybean duties less likely. As China is the largest buyer of US oilseed, traders are concerned that the longer the duties stay in place the more chance there is of surrendering market share. "If we lose our market in China, that could be pretty tough," says Ryan Wagner, who farms soybeans in South Dakota. CBOT August soybean futures fall 0.6% to $8.77 1/4 a bushel.
- General Motors has asked the US government to exempt from tariffs a Buick SUV imported from China. The Envision midsize SUV is the only US-sold vehicle imported from China in significant volumes. In a letter to US trade rep Robert Lighthizer, GM said the Envision is a critical part of the Buick lineup and its modest US sales volumes don't warrant domestic production. Buick sells more than 200K of the SUVs annually in China vs. about 42K in the US. GM says the 25% tariff that took effect last month could force the auto maker to drop the model from US showrooms.
- Canada's strong June trade report should help push 2Q growth to 3% or higher, several economists say. But there is some division on what that will mean for the Bank of Canada. Bank of Nova Scotia's Derek Holt says the trade data "incrementally reinforce" his expectation for a rate increase at the central bank's next policy meeting in September. BMO Capital Markets economist Benjamin Reitzes says that's too soon. While the trade data brings "additional intrigue" to the BoC's outlook, Reitzes says, he's doubtful the central bank would move in September given its narrative about gradual rate increases. The BoC last raised the key rate in July, bringing it to 1.50%. Reitzes anticipates the next rate increase will come in October.
- As trade tensions continue to escalate between the US and China, some companies are reporting that they are already seeing effects during 2Q earnings calls. RBC Capital Markets' Lori Calvasina says, "With trade, I think equities have felt the impact more on the sector and stock level than on the broad market level." For S&P 500 companies that have reported earnings through July 26, RBC found that fewer healthcare and technology companies discussed trade and tariffs during their earnings calls compared to consumer, industrials, financials and materials companies. The highest percentage has come from materials, with 83% of companies that have reported addressing trade tensions on calls with investors.

Aug 03 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices were steady supported by traders placing new hedges in the futures market in anticipation of a decline in U.S. crude inventories, but held back from advancing by the prospect of rising global supplies.
- Gold prices held steady near a one-year low amid a resilient U.S. dollar and were headed for a fourth straight weekly fall.
- London Metal Exchange copper prices fell for a third day as the prospect of an all-out Sino-U.S. trade war outweighed a looming strike at the world's largest copper mine.
- U.S. wheat futures jumped to hold near a three-year high as concerns that global production could fall short of expectations pushed the grain towards a weekly gain of nearly 7 percent.
- President Trump's commitment to the US steel industry is "unprecedented" and he's not likely to cave into pressure to abandon the 25% tariff on imported steel, United States Steel CEO Dave Burritt told analysts. "He's with us. The notion that this guy would blink, is just not going to happen," say Burritt, a major supporter of steel duties. The tariff on imported steel in place since March has helped to drive up domestic prices for flat-rolled steel by more than 30% since the start of the year. Steel company shares though have lagged the broader market this year because of investors' anxiety that steel prices will tumble if Trump bargains away the steel tariff in exchange for broader trade deals with other countries. US Steel off 8% at $32.99.
- Manuel Bartlett, the controversial nomination to head Mexico's state electric utility CFE, says President-elect Andres Manuel Lopez Obrador has tasked him with rescuing the firm's profitability, ability to compete, and its social function, not to undo the 2013 power-sector overhaul. "We'll be respecting the structure that exists under the energy reform and these market rules," the senator and longtime opponent of private investment in energy tells local media. CFE reported a $510M operating loss in 2Q. Lopez Obrador's picks for CFE and oil company Pemex have disquieted business leaders who have called on him to reconsider before his Dec. 1 inauguration.
- China's tariffs on US soybeans mean that the country's animal-feed makers and food processors are likely to lean more heavily on Brazil and Argentina for soybeans -- giving farmers there more incentive to plant them. DowDuPont CEO Ed Breen says that could challenge the company's seed business, where corn seeds make up the bulk of sales: "The shift from corn to soy hurts us a little bit as we go into the Latin American season," he says on 2Q conference call.
- DowDuPont's next phase involves breaking up into three new companies focused on materials, agriculture and "specialty products," but the third one is likely to see more portfolio slicing and dicing after the separations are complete, CEO Ed Breen says. Breen says the division, which makes safety gear, enzymes and other things, is likely to divest 5% to 10% of its current portfolio. That means more moves like the recent sale of a European styrofoam business, which represented 1% of the unit's portfolio but a low-profitability business that Breen said was a drag on margins. The bulk of those divestitures will follow the breakup, which is expected to complete next June, he says.
- DowDuPont CEO Ed Breen says he's no fan of tariffs, but tells investors on the chemical conglomerate's 2Q conference call that the duties imposed on US-made products, as well as those levied by the US on imports from China, Mexico, Canada and other countries, won't have a "material impact" on the company this year. The company has taken some defensive actions, like realigning supply chains, but for the most part executives say DowDuPont makes its petro-chemical products in the countries or regions where they're sold. One concern is whether tariffs result in higher consumer prices that slow demand for DowDuPont's products, but that's yet to materialize.
- Stock futures fall on heightened trade tensions after the Trump administration threatened Wednesday to more than double proposed tariffs on $200B of Chinese goods to 25%, up from an original 10%. Hopes about progress in US/China trade talks had spurred equity gains on Tuesday, but major averages fell again on Wednesday. Tesla climbs 8% premarket as the electric-car maker reassured investors it would achieve a profit later this year. The dollar gains against the euro and slips against the yen, while Treasury prices tick higher as investors seek some safety in the ever-changing trade environment. S&P futures fall 15 points.
- The Turkish lira extends its slide against the dollar after U.S. sanctions on Turkey's interior and justice ministers over the continued detention of an American pastor, which adds to the negative sentiment surrounding the currency. "Seems like [Treasury and Finance Minister Berat] Albayrak is waiting until the MTP [medium-term plan] in Sept before road-showing. I think the state of the market would suggest he needs to be meeting and talking to institutional investors way before that," says Tim Ash of Bluebay Asset Management, referring to Turkey's new finance and treasury minister, who was rumoured to be coming to London last month. USD/TRY last trades up 1.9% at 5.0873, having reached a record high of 5.0934, according to Factset.
- European stocks drop as investors fret about the possibility of fresh U.S. trade tariffs on Chinese exports. The Stoxx Europe 600 falls 0.8%, or 3.23 points to 386.61 while the DAX declines 1.8 and the CAC 40 is off 0.9% after all major Asian indices closed in the red. "European markets have followed their Asian counterparts lower, and with U.S. futures pointing towards a similarly dour open, there's reason to believe we'll see these trade concerns cloud trading for the rest of the week," says IG's Joshua Mahony. Shares in KAZ Minerals fall 21% after the miner said it would buy a Russian copper project in Russia for $900 million.
- Nordic markets are seen opening slightly lower Thursday with IG calling the OMXS30 down 0.3% at around 1608. "U.S. stocks closed mixed yesterday on the back of strong earnings from Apple while Trump/U.S. formalized its threat to raise previously announced tariffs on Chinese imports to 25% instead of 10%," says SEB. Asian equities are trading in the red this morning. "The 10-year U.S. Treasury yield hit 3% for the first time since June and stayed at those levels after the Fed, in line with expectations, decided to leave its key rate unchanged." The Bank of England rate decision and inflation report are among the economic highlights on today's agenda. OMXS30 closed at 1612.54, OMXN40 at 1561.41 and OBX at 825.77.
- The FTSE 100 is set to open lower after trade tensions hit sentiment on Wall Street and in Asia. London's blue-chip index is tipped to fall 33 points to 7619, after the Dow Jones Industrial Average dropped 81 points and all major Asian markets are down. An announcement by the White House that President Trump is considering increasing tariffs to 25% on $200 billion of Chinese imports successfully dampened sentiment, Jasper Lawler at London Capital Group says. "With fears rising that Trump's trade war with China is only just beginning, investors are taking risk off the table once more. Asian markets are a sea of red and European bourses are pointing to a softer open."
- Apple has updated its corporate risk statements to include the potential for disruption from international trade disputes, according to its quarterly SEC filing. In a section focused on the risks of political events, war, terrorism, natural disasters and other business interruptions, Apple has added a paragraph stating that trade disputes "could result in tariffs and other protectionist measures that could adversely affect the Company's business." It says tariffs could increase manufacturing costs and adversely affect gross margins and could also make its products "more expensive for customers, which would make the Company's products less competitive and reduce consumer demand." During a call with analysts yesterday, Tim Cook downplayed the risks of a simmering trade dispute between the US and China, saying Apple hasn't been affected by tariffs to date and is monitoring future planned tariffs closely.

Aug 02 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices rose, steadying after losses over the past two days from a surprise increase in U.S. crude inventories and renewed concerns over trade friction between the U.S. and China.
- Gold prices rose, recovering from the previous session's fall, as the U.S. dollar edged lower against the Japanese yen. 
- Shanghai copper fell as much as 1.9 percent after U.S. officials confirmed that President Donald Trump's administration proposed an increase in tariff rate on $200 billion worth of Chinese goods.
- U.S. wheat futures rose for a fourth session, taking gains this week to nearly 6 percent as fears that hot, dry weather in several major exporters will curb global output pushed prices to a one-year high.
- Nordic markets are seen opening slightly lower Thursday with IG calling the OMXS30 down 0.3% at around 1608. "U.S. stocks closed mixed yesterday on the back of strong earnings from Apple while Trump/U.S. formalized its threat to raise previously announced tariffs on Chinese imports to 25% instead of 10%," says SEB. Asian equities are trading in the red this morning. "The 10-year U.S. Treasury yield hit 3% for the first time since June and stayed at those levels after the Fed, in line with expectations, decided to leave its key rate unchanged." The Bank of England rate decision and inflation report are among the economic highlights on today's agenda. OMXS30 closed at 1612.54, OMXN40 at 1561.41 and OBX at 825.77.
- The FTSE 100 is set to open lower after trade tensions hit sentiment on Wall Street and in Asia. London's blue-chip index is tipped to fall 33 points to 7619, after the Dow Jones Industrial Average dropped 81 points and all major Asian markets are down. An announcement by the White House that President Trump is considering increasing tariffs to 25% on $200 billion of Chinese imports successfully dampened sentiment, Jasper Lawler at London Capital Group says. "With fears rising that Trump's trade war with China is only just beginning, investors are taking risk off the table once more. Asian markets are a sea of red and European bourses are pointing to a softer open."
- Apple has updated its corporate risk statements to include the potential for disruption from international trade disputes, according to its quarterly SEC filing. In a section focused on the risks of political events, war, terrorism, natural disasters and other business interruptions, Apple has added a paragraph stating that trade disputes "could result in tariffs and other protectionist measures that could adversely affect the Company's business." It says tariffs could increase manufacturing costs and adversely affect gross margins and could also make its products "more expensive for customers, which would make the Company's products less competitive and reduce consumer demand." During a call with analysts yesterday, Tim Cook downplayed the risks of a simmering trade dispute between the US and China, saying Apple hasn't been affected by tariffs to date and is monitoring future planned tariffs closely.
- AFL-CIO President Richard Trumka applauds the Trump administration for imposing tariffs on China, and says more could be done. "We're pretty supportive when it comes to China," Trumka says at a Christian Science Monitor event. In answering a question about how trade disputes with China affect US farmers, Trumka says the focus should be on what's in the best interest for the country as whole. "Sometimes what's good for the country may be bad for Joe or Jane in the short term, but in the long term what's good for the country is good for everyone," he says. Trumka says almost 100,000 factories closed due to trade agreements. "What would those farmers say about those 100,000 factories? I'm sure he'd say that's bad for this country," Trumka says.
- AFL-CIO President Richard Trumka says national-security interests are a justifiable reason for the Trump administration to impose tariffs on steel and aluminium and possibly other products. The provision is "is a very legitimate enforcement tool," Trumka says at a Christian Science Monitor event. "Whenever something threatens our national security we ought to be able to do something about it." Trumka says less than half of the products needed for national security are made in the US. Though he cautioned against using the provision in regards to Canada. "I don't think that Canada has violated the rules," Trumka says.
- Labor unions head Richard Trumka praised President Trump's attempts to rewrite US trade policy. The AFL-CIO president said existing trade rules favor corporations over working people. "It's time to rewrite those laws," Trumka said. "He [Trump] understands that that's what should be done." The union leader said he's regularly in contact with US Trade Representative Robert Lighthizer and believes the administration is working to implement many union recommendations into a new Nafta pact. He said the administration shouldn't rush talks. "We should not let the clock dictate the substance of the agreement," Trumka said at a Christian Science Monitor event Wednesday.
- GM has hired a former Trump administration economic adviser as its top lobbyist, as the nation's largest auto maker juggles several big public-policy issues, from tariffs to fuel-economy regulations. Everett Eissenstat had been the president's deputy assistant for international economic affairs and deputy director of the National Economic Council before leaving the White House last month. He will be GM's senior VP of global public policy, reporting to CEO Mary Barra. Eissenstat also was chief international trade counsel for the Senate Finance Committee from 2011 to 2017.
- Soybean futures retreat from multiweek highs as trade tensions between the US and China heat up. Trump administration advisers are debating whether to increase proposed tariffs on $200B worth of Chinese goods to 25%, rather than 10%. That would be in addition to tariffs on $50B that are already in the works. Soybean prices had rallied on Tuesday on reports that suggested the two countries were approaching a detente. Now, traders are doing an about-face. "Bottom line is that today it appears as though the trade relations are breaking down, not building," says Karl Setzer of MaxYield Cooperative. CBOT August soybean futures fall 1.6% to $8.89 1/2 a bushel. Corn futures are also slightly lower.

Aug 01 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell after industry data showed U.S. stockpiles of crude unexpectedly rose, and as economic growth slowed, especially in Asia, amid the escalating trade dispute between the United States and China.
- Gold prices came under pressure as news that the Trump administration has plans to propose higher tariffs on Chinese goods stoked demand for the U.S. dollar.
- London copper edged lower, after losing nearly 5 percent last month, with risk appetite curbed by news that the Trump administration may propose a higher 25 percent tariff on $200 billion of Chinese imports.
- U.S. soybean futures fell 1 percent to retreat from a six-week high touched in the previous session, hit by worries U.S. President Donald Trump could propose additional tariffs on Chinese goods.
- London shares are set to open lower as renewed trade concerns offset an upbeat close on Wall Street after strong earnings from tech giant Apple. The FTSE 100 Index is tipped to fall eight points to 7740 following reports that the U.S. is considering increasing its 10% tariffs on $200 billion of Chinese imports to a 25% tariff. "U.S. and European futures, with the exception of the Nasdaq, are pointing to a weaker start to trading on Wednesday," says Jasper Lawler at London Capital Group. The Dow Jones Industrial Average rose 108 points after Apple posted better-than-expected third quarter earnings.
- Australia's Trade Minister Steven Ciobo has asked his US counterparts to detail the impact of an assistance package for US farmers on Australia's agricultural producers and exports. The recent US announcement of a new $12 billion bailout for US farmers caught in a trade battle "highlights the fact that escalating tariffs is a vicious cycle", says Ciobo. "US taxpayers will be asked to write checks to farmers in lieu of having a trade policy that actually opens and expands more markets." While there's an argument to reform the World Trade Organisation, all members should work within existing dispute frameworks to resolve trade disagreements, he says.
- Apple hasn't been affected by any US tariffs on imports from China to date, but Tim Cook says the company is evaluating the planned $200B in tariffs for potential business effect. Cook said Apple will provide public comment after it's had a chance to evaluate the potential tariffs. "Our view on tariffs is that they show up as a tax on a consumer and wind up resulting in lower economic growth and sometimes can bring about significant risks of unintended consequences," Cook says. But he added that the trade agreements the US has in some markets are in "need of modernizing." Still, Cook says he's optimistic "this will get sorted out because there's an inescapable mutuality between the US and China."
- US stocks rise on reports the US and China will return to trade discussions. The Dow gains 0.4% to 25415, the S&P rises 0.5% to 2816 and the Nasdaq increases 0.5% to 7671. The Dow gains 4.7% in July while the S&P rises 3.6%, their best monthly performances since January. Meanwhile, the Nasdaq adds 2.2% despite the recent selloff. Industrials lead the S&P with a 2.1% gain on the day, as Cummins rises 4.1% after reporting earnings, Deere climbs 4.8% and 3M adds 3.5% on trade hopes. Tech shares gain 0.3%, turning around after an index of the big tech FANG stocks fell into correction territory Monday. Oil prices fall 2% to $68.76 as concerns about Iranian oil ease after President Trump said Monday he would consider meeting with that country's leadership.
- Tyson Foods falls another 3% as investors grow more wary on the meat business following the company's profit warning Monday. Uncertainty arising from US trade disputes with multiple countries, rising meat supplies and slowing domestic demand for chicken prompted Tyson to scale back full-year EPS guidance for 2018 to $5.70-$6--and a 30c range with just 9 weeks to go in Tyson's fiscal year, "should be indicative of the lack of visibility in the [meat] industry," Mizuho analysts say. It's not just Tyson, as chicken rivals Pilgrim's Pride and Sanderson Farms decline 0.9% and 0.8%.
- Soybean futures bounce to the highest point in a month on reports that the US and China are resuming talks over their recent trade dispute. Bloomberg reports that representatives of Treasury Secretary Steven Mnuchin and vice premier Liu He are discussing ways to reopen negotiations. That suggests a potential end to a long-running impasse that has seen Beijing introduce tariffs on American soybeans and other goods in retaliation for billions of dollars worth of US duties. Any sign that China could reopen its markets to US oilseeds is a boon to the futures market, which fell near 10-year lows earlier this month because of concerns over trade. CBOT August soybean futures rise 2.8% to $8.99 1/4 a bushel, on track for the highest close since June 18.
- The US Treasury's report Tuesday on financial technology embraced a series of policy goals sought by that sector. It recommended a "sandbox" giving regulatory financial relief to start-ups, backed a national bank charter for fintech firms, encouraged the federal consumer regulator to rescind its payday lending rule, pushed for a fresh look at rules governing fintech investments by banks, and endorsed an effort by LendingClub and other marketplace lenders to ease the resale of loans.

Jul 31 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Gold prices traded sideways in a narrow range, with investors in a wait-and-see mode ahead of the outcome of central bank monetary policy meetings.
- London Metal Exchange copper held steady as the prospect of imminent strike action at BHP's Escondida mine in Chile, the world's largest, again failed to drive prices higher.
- Oil prices fell with Brent futures set for their biggest monthly loss in two years, on oversupply concerns after a report showed OPEC's output in July rose to its highest for 2018.
- U.S. wheat futures retreated after posting gains of more than 3 percent in the previous session, though concerns that global production will fall short of expectations amid unfavourable weather conditions across major exporters curbed losses.
- The U.S. dollar rose against the yen after the Bank of Japan made small tweaks to policy rather than more drastic changes that some traders in the market had anticipated, before paring those gains.
- US exports of motor gasoline to Mexico have jumped to more than 500k bpd versus as low as 99k bpd in June 2013, allowing US refiners to cash in by running their plants at near-capacity. But left-leaning President-elect Andres Manuel López Obrador may alter this relationship, though it will probably take a while. "AMLO and his energy secretary have said they want Mexico to stop importing gasoline within three years to decrease the country's energy dependence on other nations," says Oil Price Information Service. "This entails the renovation of several existing refineries and the construction of at least one new refinery, widely believed planned for the southern states of Campeche, Tabasco or both. There has been less discussion about how Mexico would pay for a multi-billion-dollar greenfield refinery project."

Jul 30 - China's Shrinking Trade Surplus Unlikely to Impress Trump -- The Outlook
- Gold prices slipped as the dollar stood tall against its peers ahead of key central bank meetings and U.S. inflation and payrolls data this week.
- London copper slipped as investors shrugged off a potential strike at the world's largest copper mine and focused instead on a raft of economic reports that may indicate slowing growth in top metals consumer China.
- Oil prices were mixed with U.S. benchmark WTI nudging higher after four weeks of declines, while Brent began the week lower as the fallout from trade tensions weighed on markets.
- Chicago wheat futures bounced back, reversing a two-day down trend as prices were supported by dry conditions that threaten to reduce global supply.
- For years, China has sold much more to the world than it has bought. Now, that imbalance is shrinking, helping Chinese leadership argue it no longer pursues a mercantilist policy.
    Official data set to be released Aug. 6, economists say, likely will show China's current account, which measures its transactions with the rest of the world, was in deficit for the six months ending in June, essentially meaning it imported more than it exported. Macquarie Capital Ltd.'s economist Larry Hu estimates the deficit was $24 billion, largely occurring in the first quarter. It would be the first half-yearly deficit since the country joined the global trading system in 2001.
    Increased imports of foreign oil, iron ore and other commodities, along with greater spending by Chinese companies on foreign financial and software services, drove the turn.
     For the year overall, economists still expect China to run a current-account surplus, to the tune of $100 billion, as weakening growth leads to reduced Chinese purchases from abroad. But that surplus would represent less than 1% of China's gross economic product, its smallest surplus since 1995.
     By comparison, China's current-account surplus reached nearly 10% of GDP in 2007. The ratio has been declining since then and firms including Morgan Stanley and Standard Chartered estimate that such a surplus will further drop to 0.5% of GDP in 2019.
     "It's a sea change," says Mr. Hu, a Hong Kong-based economist with Macquarie. "China can use the narrowing current-account surplus as evidence that it doesn't have a mercantilist policy of keeping the yuan artificially cheap to gain a leg up on global trade."
     Pressured by its trading partners, China allowed the yuan to appreciate almost 40% against a basket of currencies beginning in 2007, a trend that reversed in mid-2015, when China's central bank devalued the currency by almost 2%. The Chinese currency has weakened more against both the basket of currencies and the dollar in recent weeks.
     Beijing is pointing to the fall in its trade surplus--and the swing into a deficit in the first quarter of the year--as evidence that it is following through on a plan to drive its economy more through consumption, rather than exports and investments.
     "The near-balance in our current account reflects the domestic economy's shift toward high-quality growth," says Wang Chunying, spokeswoman at the State Administration of Foreign Exchange.
     Official data show consumption contributed to 78.5% of China's economic growth in the first half of the year, compared with only 36% in 2005. A sign of growing spending by Chinese consumers: On last year's Singles Day, a one-day sales event championed by China's e-commerce giant Alibaba Group, the company raked in $25 billion of sales within 24 hours, a 40% increase from last year.
     The trend, at least for now, is unlikely to impress President Trump, who focuses on the U.S.'s ever-widening trade deficit with China and is waging a trade battle aimed at narrowing that.
     Some economists and analysts argue China is hardly rebalancing. The country's status as the world's factory floor--meaning it purchases raw materials and components from overseas and then assembles and ships the final products out--remains little changed, they say. Moreover, they argue, the recent shift in China's current account is mainly because of rising commodity prices, which push up China's import costs.
     Excluding the country's imports of commodities such as oil and iron ore, China's current-account surplus this year is near the top of its historical range, calculates Robin Brooks, chief economist at Washington-based Institute of International Finance. "That shows little rebalancing," Mr. Brooks says.
     China runs big deficits with commodity producers such as Russia, Saudi Arabia and Brazil, and with countries like South Korea and Japan, where China purchases electronic components like displays and memory chips to put together smartphones. Its surplus with the U.S., on the other hand, continues to widen, fueled by strong American demand and most recently, Chinese exporters accelerating deliveries to avoid U.S. tariffs.
     China's merchandise surplus with the U.S. almost doubled to $276 billion in 2017 from the height of the global financial crisis in 2009, according to Chinese statistics. The U.S. represents two thirds of China's trade surplus with the entire world. (U.S. data show that its goods deficit with China was $375 billion last year. The discrepancy is because U.S. data include Chinese products shipped via Hong Kong, while the Chinese data don't.)
     Brad Setser, a senior fellow at the Council on Foreign Relations and a former top U.S. Treasury official, says China's shifting current account fails to capture the pressure China continues to place on global manufacturers through subsidies to its own state firms and what he calls the overall "buy China" policy. Such policies, Mr. Setser says, have made it harder for foreign companies to sell products such as aircraft and high-end medical equipment into China.
     "China's surplus in manufactured goods remains large," he says. "That's what is driving U.S. and global concerns."

Jul 27 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices slipped in quiet trading after three days of gains, but took support from Saudi Arabia halting crude transport through a key shipping lane, falling U.S. inventories and easing trade tensions between Washington and Europe.
- Gold prices edged higher as the dollar slipped against major peers ahead of U.S. economic growth data that could shed light on the pace of rate hikes in the world's top economy.
- Copper prices edged higher as markets were buoyed by an easing of trade tensions between the United States and the EU.
- Chicago wheat futures edged higher with the market set for its biggest weekly rise in two months as dry weather in key producing regions across the world reduces supplies.
- Wind-turbine manufacturer Siemens Gamesa joins the chorus of companies bemoaning U.S. tariffs this week, saying it is analyzing their impact on product costs and supply chain decisions. "These measures are having a clear impact not just on the price of steel, the main raw material used to produce wind-turbine components, but also on some components directly, depending on their origin," the company says, following its third-quarter results.
- Despite a White House campaign to end direct US payments for the international space station by 2025, bipartisan opposition to the proposal is growing on both sides of Capitol Hill. GOP Senator Ted Cruz of Texas is leading the drive to continue such financial support through 2030. As a sweetener, his bill also seeks to streamline and ease federal regulation of a broad array of commercial space projects. Bipartisan leaders of the House Transportation Committee have quickly signed up to support the Senate plan. But lurking in the background is a tough bureaucratic battle: whether the Commerce Department of Transportation Department should be the lead agency to promote and oversee the commercial space arena.
- In Peosta, Iowa, President Trump declares he had "opened up Europe" in his discussions a day earlier with the EU's Jean-Claude Juncker. Trump says the US relationship with Europe was "very, very good" and says of farmers: "You're not going to be too angry with Trump, I can tell you this." Later, in Granite City, Ill., he touts what he called a "breakthrough agreement" with Europe that he says will establish a "fair and reciprocal" trade relationship. The president defends his threats and implementation of tariffs. "We are not starting a trade war," he says. "We've been in a trade war for many years, and we lost."
- Hog contracts slide to the lowest close since April as physical prices and wholesale pork continue to march lower. Meatpackers paid over $1 less for hogs on Wednesday, bringing the average price to $65.01 per 100 pounds, and were expected to continue lowering bids for the remainder of the week. CME August lean hog contracts fell to 64.9 cents a pound, the lowest since April 13 and near parity with physical prices on a pound-for-pound basis. But they will need to continue falling in order to keep up with the downward trend in the slaughter-ready pig market. US Trade representative Robert Lighthizer told a Senate Panel he was optimistic that the US could negotiate a deal with Mexico and Canada soon, but that China would take longer. Both Mexico and China have introduced tariffs on US pork.
- American Airlines CEO Doug Parker says he hopes the carrier's tweaks will satisfy the Chinese government's demand to stop recognizing Taiwan as independent. "We had a deadline," Parker said in response to a Wall Street Journal question on a call Thursday. "We complied with the deadline with what we thought was a nice solution for everyone, and hopefully that'll be the case." Asked why Parker wouldn't delve into the airline's decision to comply, despite previously weighing in on the Trump administration's immigrant family-separation policies, Parker said of the Taiwan issue: "It's a matter of international affairs that is I think more important to those countries than to American Airlines and we don't want to intervene in that process."
- Expect analysts to ask about Amazon's delivery plans after the company reports. The company in June announced it was launching a program to sign up entrepreneurs to form companies to deliver its packages. But more pressing are concerns that President Trump has been pushing the Postal Service to increase rates, particularly for Amazon. He tweeted about that topic this week, calling the quasigovernmental agency Amazon's "delivery boy." Higher rates would result in a big uptick in costs.
- Soybean prices are higher, though they've come well off the overnight peak. CBOT August contracts rise 0.3% to $8.63 1/2 a bushel. The EU's plan to import more soybeans as part of a deal to wind down trade tensions with the US boosted the market, but Trump trade chief Robert Lighthizer dampened that optimism by saying that a deal with China was more distant. However many American soybeans the EU imports, analysts say, they won't be able to make up for lost Chinese demand. Low US prices are attracting other buyers though, according to a weekly USDA export sale report. The agency says that exporters sold 538,100 metric tons for 2017-18 and 963,800 for the upcoming 2018-19 crop year.
- Linamar CEO Linda Hasenfratz says Canada would be in a tough position in deciding whether to retaliate if the US imposes auto tariffs. "You can't allow the US to impose, frankly, illegal tariffs on our country, and our businesses without some impact," she tells WSJ. "But on the other hand, when you retaliate it escalates the problem." Hasenfratz says the same concern exists with metals tariffs. Canada imposed retaliatory tariffs on the US in July in response to US tariffs on steel and aluminum.
- The immediate costs of auto tariffs would be borne by auto makers, not the companies that supply them with parts, Linamar chief executive Linda Hasenfratz tells WSJ. "It's not something I'm going to have to, in the short-term, absorb," she says. "However, I'm at risk of losing the business.... If the tariffs don't get rescinded our customers would look to re-source." Hasenfratz says the entire industry would be exposed if auto tariffs are introduced. "I don't feel like this is a Canadian or Mexican problem, I feel like it's a North American problem because the impact on volumes will hit all of us."
- Linamar chief executive Linda Hasenfratz tells WSJ it would take automotive companies at least 12 months to move production into the US in response to automotive tariffs and that shift would cost billions of dollars. In the interim, Hasenfratz says, auto makers would be forced to pay tariffs for parts she says cross the border an average of seven times. "The costs would be enormous," Hasenfratz says, citing research that put end costs to consumers at several thousand dollars per vehicle. The added cost will "absolutely kill the industry. I mean, people just won't buy cars."
- The CEO of Linamar, Canada's second-largest car parts manufacturer, says President Trump would cause a recession if he follows through on his threat to impose tariffs on the auto industry. Linda Hasenfratz tells WSJ the tariffs would have dire consequences for the North American auto industry and the wider US economy. "I think it's really important that we paint this picture, and make it clear to President Trump that if he makes this move, if he imposes these tariffs, he will trigger a recession, him personally," Hasenfratz says. "He will be the instigator of the most significant recession that we've seen since 2009."
- US trade representative Robert Lighthizer distances himself from national-security probes of imports that have already led to tariffs on aluminum and steel imports and could end in duties on vehicles and auto parts." It's not my statute, I'm not responsible for it," he told a Senate panel. Commerce Secretary Wilbur Ross is leading the probes of autos and other imports on national-security grounds under trade legislation known as Section 232. Different members of the administration have different views on whether imports of non-defense items hurt US economic or national security.

Jul 26 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Brent crude led oil prices higher, extending gains into a third day after Saudi Arabia suspended crude shipments through a strategic Red Sea shipping lane and as data showed U.S. inventories fell to a 3-1/2 year low.
- Gold prices held steady as the dollar eased after U.S. President Donald Trump and European Commission President Jean-Claude Juncker agreed to work towards eliminating trade barriers, easing immediate concerns about global trade tensions.
- London base metal prices rose across the board.
- Chicago soybean futures climbed nearly 2 percent, rising for a third consecutive session with prices underpinned by expectations of higher exports to Europe after talks between Washington and the European Union.
- Oil markets will probably have to brace for bigger supply losses than during prior US sanctions regimes against Iran, says RBC commodity strategy chief Helima Croft. That's "because the Trump administration is prepared to be much-more aggressive in using the sanctions." She sees the White House's aim being "to basically take Iran out of the market. That was not the goal of the Obama administration." She estimates that 600,000-700,000 barrels/day of oil won't reach the market by 4Q and likely top 1 million in 1Q. The sanctions will be phased in through November.
- So far US President Trump has been positive for share markets, but this year the focus is increasingly shifting to populist policies with greater risk for investors, says Shane Oliver, chief economist at AMP Capital Markets. Key risks relate to trade conflict and the expanding U.S. budget deficit, although the latter is more a risk for when the U.S. economy turns down next. The best approach for investors in relation to Trump is to turn down the noise given the often contradictory and confusing news flow he generates, Oliver says.
- Canada intends to make its case before Commerce Department that the country's uranium exports don't pose a national-security threat to the US, Foreign Minister Chrystia Freeland tells reporters during a teleconference from Mexico. The Trump administration unveiled plans to probe uranium imports last week to determine whether tariffs on national-security grounds are required. Freeland said "having access to a safe and reliable supplier" of uranium like Canada, which happens to be a NATO and Norad ally, "is very much in the national security interest of the US." Trade watchers view the uranium probe as another way for the Trump administration to exert pressure on Canada to make concessions at the Nafta talks. Canada is the top foreign supplier of uranium to the US.
- Speaking to reporters via teleconference from Mexico, Canadian Foreign Minister Chrystia Freeland applauds efforts by the Trump administration and EU to take a step back from a full-scale trade row. The US and EU agreed to hold off on proposed car tariffs. The two countries also pledged to resolve their dispute over tariffs on steel and aluminum, which the US imposed on Europe and other allies, like Canada, on national-security grounds. "Any act taken by the US administration to pull back from imposing these [national-security] tariffs is a really good thing," she says, without elaborating on what effect that might have on Nafta talks.
- Copper prices bounce after the EU and US indicate they are coming to an agreement to de-escalate their recent trade dispute. President Trump says the two will resolve steel and aluminum tariffs, along with plans to ramp up trade in soybeans, liquefied natural gas and other goods. Copper futures fall to the lowest point in over a year as tensions between the US and trading partners increased, with market participants betting that economic growth and industrial demand would suffer. Comex September copper futures rise 2% to $2.867 a pound in after-hours trading, with platinum and palladium also climbing. Gold, which often finds buyers at times of heightened tension, inches lower.
- The loonie strengthens against the US dollar amid easing trade concerns and rising oil prices. The US dollar was recently down 0.9% at C$1.3042, its lowest since last week. The loonie will likely continue to gain if there is positive sentiment Thursday when Canada and Mexico meet to discuss Nafta, analysts say.
- Canadian government bond prices fall after the EU agreed to make certain tariff concessions to avoid an all-out trade war with the US, WSJ reported. Yields on the benchmark 10-year Treasury note were recently at 2.280% from 2.227% on Tuesday. Yields, which rise as bond prices fall, had risen slowly throughout the day before the afternoon report on trade, when they reached their highest levels in more than a month. "This is definitely constructive news for Canada on the trade front," TD Securities says. But the news must be taken with caution, the firm says, as Nafta talks are still ongoing.
- President Trump says the EU will start buying more US soybeans "almost immediately," WSJ reports, alongside other concessions designed to ease the trade dispute. The EU is the world's second largest buyer of oilseeds after China, which this month introduced tariffs on US soybean imports. But the 15.3M metric tons the USDA expects the EU to bring in 2018-19 is modest compared with China's 95M. That means increased business with EU alone likely won't be enough to offset the lost demand from China, which has shifted purchases to Brazil. South American prices have surged as American prices sagged, giving European importers all the more reason to shop in the US.
- Shares of industrial companies rose after WSJ reported the EU agreed to lower industrial tariffs. WSJ reported that the Trump administration had secured some concessions from the EU to avoid a trade war. Companies that rose on the news include United Technologies, Boeing, Harris, Raytheon, Allegion, Honeywell International, Roper and 3M. The S&P Industrials closed up 1.3%, compared to the 0.9% rise of the S&P 500 as a whole.
- US stocks jump to session highs in the last half hour of trading after an EU official says President Trump has secured concessions to avoid a trade war. As part of the negotiations, the EU is set to agree on lowering industrial tariffs and work on more LNG exports from the US. The Dow is now up 95 points, or 0.4%, to 25342, while the S&P 500 rises 0.7% and the Nasdaq Composite adds 0.9%.
- Cotton futures rise 1.5% to 87.97 cents a pound after the Trump Administration responds to agriculture's trade concerns with a $12B farm aid package to east concerns over trade disputes. The cotton market has worried about demand from China after some buyers there turned to India for supply over retaliatory tariffs on US cotton. US crop conditions are also keeping the market supported, says Price Futures Group, but the ongoing tariffs battle has kept a lid on prices.

Jul 25 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices rose for a second day after industry group data showed U.S. crude inventories fell more than expected last week, easing worries about oversupply that had dragged on markets in recent sessions.
- Gold prices were little changed as the dollar held steady ahead of a meeting between the U.S. and European Commission presidents to discuss trade-related issues.
- Shanghai copper rose as much as 2.2 percent to a three-week high, tracking Tuesday's gain in London Metal Exchange prices amid tense negotiations at Chile's Escondida copper mine, the world's largest.
- Chicago wheat futures rose after two straight sessions of declines on worries about lower production in Europe and other exporting countries. 
- The U.K.'s FTSE 100 index is expected to open 12 points lower at 7697, according to London Capital Group, as trade worries weigh. Markets will focus on today's meeting between the European Commission President Jean-Claude Juncker and U.S. President Donald Trump. The meeting is expected to ease concerns about trade tensions resulting in the U.S. imposing a 20% tariff on all imported European autos, and EU retaliation. "A positive outcome from this meeting could go some way to easing global sentiment. In this scenario we would expect equities to rally, in addition to a strong relief rally in the euro," Jasper Lawler, analyst at LCG, says.
- While many large chipmakers are bracing for a hit from new tariffs on Chinese goods, Texas Instruments isn't worried. CFO Rafael Lizardi told analysts "only about 1% of our revenue would have tariffs applied to it," speaking on the company's earnings call. Still, he cautioned about a wider impact to the economy. "Anything against free trades between the two largest economies in the world--that could actually have a macro effect that could be detrimental." Half an hour into the call, analysts didn't have a single question on Texas Instruments former CEO Brian Crutcher, who resigned over an unspecified code of conduct violation earlier this month.
- The deputy general counsel of the Public Company Accounting Oversight Board has left the audit regulator after 15 years. Michael Stevenson held the position since March 2007, and had joined the PCAOB in 2003, when the board was founded, helping develop many of the board's foundational rules. Stevenson is the latest in a series of longtime senior staff members to leave the PCAOB after the Securities and Exchange Commission, which oversees the board, in December replaced existing leadership with five new board members.
- Livestock futures turned lower, giving back early gains. CME August lean hog contracts fell 1.3% to 65.55 cents a pound. August live cattle slide 0.6% to $1.0805 a pound. Hog producers will be eligible for government payments as part of a $12B farm aid package aimed to offset the impact of tariffs from China and Mexico on US pork. The USDA says it will also buy excess pork, which could bolster prices. But analysts say these programs won't change the longer-term supply-and-demand outlook, particularly if exporters continue to face barriers to entering foreign markets. Mexico is the largest buyer of US pork.
- There's already been griping in farm country about how far the government's planned relief package for crop and livestock producers will stretch, but USDA officials say the $12B program will be felt broadly. While farmers feel immediate effects from tariffs put in place by major agricultural importers like China and Mexico, lower agricultural commodity prices have a broader impact on the rural economy, pressuring suppliers like seed companies and equipment makers. Greg Ibach, USDA undersecretary for marketing and regulatory programs, sees a "ripple effect" from the $12B program, and that farmers will "reinvest those funds back into their communities."
- The USDA's plan to direct $12B in payments to farmers hit by tariffs, along with mass food purchases and programs to promote US farm goods to new markets, is envisioned as a "one-time program," agency officials say. The idea is to give President Trump and other administration officials some time to complete trade negotiations with countries like China, Mexico and the EU, resulting in new trade deals -- and removal of tariffs that already have deeply dented crop and livestock prices for US producers. USDA officials say on a conference call they see the trade disputes resolved over the coming year.
- Soybean futures end higher after the Trump administration proposes a $12B aid package to US farmers, who have been hurt by weaker demand since China introduced tariffs on American oilseed. Analysts say that the measures, details of which are still unclear, could prevent farmers from selling their crop at current low prices. That could mean tighter temporary supplies, though it wouldn't address the longer-term supply-and-demand balance. Traders could also interpret easing pressure on the politically important farm community as a means to force China to the table, says Dave Marshall of First Choice Commodities. "Actual numbers start to make a difference," he says. CBOT August soybeans rise 1.2% to $8.58 a bushel. September corn falls 1.5% while September wheat slides 0.7%.
- Canada is imposing retroactive antidumping duties for two imports of steel rebar from Turkey it says were made at artificially low prices. The Canada Border Services Agency says it will charge a duty worth more than C$1.8M for the imports, which arrived in Canada in 2017. The Canadian government has in recent months given officials greater scope to investigate dumping allegations, in part to show the Trump administration that they take the matter seriously and that Canada won't become a conduit for cheap foreign steel to enter the US. The US imposed tariffs on Canadian steel and aluminum in June after initially granting the country an exemption.
- Soybean prices bounce, resuming their recovery after a dip on Monday. Prices this month traded at the lowest point in nearly a decade before turning higher last week. The Trump administration's plans to shower struggling farmers with $12B in aid has boosted prices, says Brian Hoops of Midwest Market Solutions. "That has encouraged some short covering in the soy complex, although it is not longer-term bullish to prices as it suggests there will not be a quick resolution to the trade war between the United States and China," he says. China, the largest buyer of US soybeans, this month introduced tariffs on American oilseed imports. CBOT August soybean futures rise 1% to $8.56 1/4 a bushel. September corn slides 1% while wheat falls 0.6%.
- Oil extend its gains mid-session in NY as US-Iran tensions simmer. "Iran's foreign minister Bahram Qassemi vowed that the country will respond with equal countermeasures if the U.S. attempts to block its oil exports," say analysts at Baird. "These comments sufficed to bring the geopolitical backdrop back into the limelight after playing second fiddle to supply concerns yesterday." It adds, though, that oil prices haven't rocketed extremely higher, suggesting market is yet to believe an actual Persian Gulf blockade by Iran is in the works. "Second level thinking here is that producers will use the turmoil as cover to sell more oil in the short term." WTI rises 1.5% to $68.92/bbl.
- Shares of agricultural and industrial firms rallied after reports said the White House is set later Tuesday to announce a plan to extend $12B in aid to farmers. The package is meant to help alleviate fallout from trade tariffs, a source told the Wall Street Journal. The Dow Jones Industrial Average was up 193 points, or 0.8%, rising past both the S&P 500 and Nasdaq Composite. Meanwhile, agricultural machinery maker Deere & Co jumped 4.5%, grain trading firm Bunge rose 1.1% and Caterpillar added 2.1%.

Jul 24 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices extended declines into a second session as attention shifted to the risk of oversupply, with market participants shrugging off escalating tensions between the United States and Iran.
- Gold prices edged down on a firmer dollar and a rise in U.S. Treasury yields and as investors' reaction to the dispute between the United States and Iran remained muted.
- London copper prices bounced back, buoyed by concerns over possible disruptions to supply from the world's biggest copper mine.
- Chicago corn futures slid 1 percent as a better-than-expected U.S. crop rating weighed on the market, which has gained for the last six sessions.
- Australian consumer confidence fell last week, per ANZ's reading, surprising to Commsec given the strong June jobs report. The survey was conducted over the weekend, after Trump's comments on the Fed, greenback and potential of putting additional tariffs on all Chinese imports. Commsec adds his salvos on Twitter are beginning to weigh on US consumer confidence as well.
- The peso strengthens against the US dollar and was quoted in Mexico City at 18.8920 versus 19.02 Friday, helped by optimism that progress could be made this week in meetings to discuss Nafta. Mexico's chief trade negotiator, Economy Minister Ildefonso Guajardo, said there's a window of opportunity to advance on certain unsettled issues that "aren't many, but are very complex." The benchmark IPC stock index closed down 0.1% at 48,851 points.
- Lockheed Martin uses White House event, complete with F-35 mock-up and real space capsule to boast about hiring plans. But adding 400 extra staff at its F-35 plant will leave analysts asking about margins at a time when the sale price of the stealthy jet is falling. Shares end down 1.3% ahead of Tuesday's 2Q report, with the broader defense sector also declining -- surprise given latest Iran tensions.
- With senior national security officials demanding that federal agencies get authority to jam, hack or even shoot down suspicious or hostile drones across the US, Congress increasingly is moving in that direction. Leaders of the House Homeland Security Committee are embracing similar legislation pending in the Senate, giving the bills more visibility and a greater chance of passage. Such "countermeasures" also are linked to proposals to develop standard remote tracking standards for unmanned vehicles. The Small UAV Coalition, a leading trade group, recently declared that "without these components in place, the United States continues to risk losing its leadership in commercial (drone) technology as other countries move forward with regulations to allow for expanded operations."
- Canada says it has asked for an independent Nafta panel to review Trump administration tariffs on solar panels. US imposed a 30% tariff from all countries earlier this year, and Canada said Canadian firms were hit even though the Interternational Trade Commission recommended Canada be exempted. Canada is seeking the creation of a Nafta panel to adjudicate the case under the Chapter 20 provision, which deals with disputes regarding the interpretation or application of Nafta. Canada's move comes amid a heightened trade row between Ottawa and Washington, punctuated by US tariffs on Canadian-made steel and aluminum on national-security grounds. Canada retaliated with its own set of tariffs. Nafta talks among US, Mexico and Canada officials are set to recommence this week.
- Mexico's economic activity index rose 0.5% in May from April and was 2.2% higher than a year earlier, led by gains in services which increased 0.6% vs a 0.1% rise in industrial production. While better than expected, the growth in May isn't enough to change Citibanamex's 2.3% GDP forecast for the full year. Lingering uncertainty about Nafta that could hold back private investment, and scant public investment as Mexico prepares for Andres Manuel Lopez Obrador to be sworn in as president on Dec. 1, will likely keep the economy from gathering pace in the remainder of the year, Citi says.
- The country's costs for nuclear power could rise anywhere from $218M to $657M a year under trade protections now under consideration by the Trump administration, says ClearView Energy Partners. The Commerce Department investigates whether uranium imports threaten national security, which could lead to trade protections against foreign producers of the radioactive material. Two major US uranium mining companies-- UR-Energy Inc. and Energy Fuels Inc., both based in Colorado -- petitioned for quotas that would reserve about 25% of the US nuclear market for domestic uranium production. Those could lead to higher prices for uranium, helping US producers in the short term, but that could hurt in the long run by damping demand in a market already shrinking because nuclear power plants have become too costly compared to other power producers. "This increment could further pressure nuclear plants operating in states that have not implemented financial supports," says ClearView predicting nuclear power producers may then lobby states for more help.
- President Trump again hints Amazon could be up for more antitrust scrutiny in a series of tweets, asking if the Washington Post is "used as protection against antitrust claims which many feel should be brought?" Still, legal experts agree that under current US law, Amazon is largely safe from scrutiny. Its business is spread out--for example, it comprises only about 4% of total US retail sales--and generally it lowers prices for consumers. But some expect it could be used as a test case to reexamine current law.
- As Amazon stock takes a slight hit from two of President Trump's tweets, much of that angst is related to a threat he made regarding the US Postal Service. Amazon uses the quasigovernmental agency heavily for last-mile deliveries, and many have said that the business is actually good for USPS. But the president has long tweeted that it's a money loser, and has ordered a review of that business. Any decision to raise prices could cause Amazon's costs to surge.
- President Trump again tweeted about the "Amazon Washington Post," saying that it has lashed out against him due to the Supreme Court's recent ruling on internet sales taxes. After touting that decision as a victory he then threatened that "next up" is the US Postal Service, and also said that many think antitrust claims should be brought against the company. "In my opinion the Washington Post is nothing more than an expensive... lobbyist for Amazon," the added. Amazon CEO Jeff Bezos owns the Washington Post separately from Amazon, and the paper has said he doesn't interfere in editorial decisions. Amazon shares fell on the tweet but recovered slightly to trade down 0.8% at $1,799.68.
- Companies may be forced to quit the U.K. if the country goes ahead with its plan to leave the European Union, says JPMorgan Chase CEO Jamie Dimon. In a CNN interview, Mr. Dimon said that, more than a year after formally announcing its departure from the bloc, Britain still hasn't laid out a clear strategy for leaving. There's no point in pro-Brexit U.K. lawmakers "yelling" at companies for saying they'd have to move factories if Britain crashes out of the EU without a deal, he said. "They won't have a choice...They won't be able to export from a factory in the U.K. into Europe [after a 'hard Brexit'] so if they want to save any jobs or their company, that's what they'll have to do."
- The termination of the North American Free Trade Agreement would have a "small but material" effect on Canada's gross domestic product, the OECD says. A terminated Nafta could result in a loss of around 0.5% of GDP in the short term and 0.2% of GDP in the long term, the OECD estimates. The report on Canada's economic outlook says the country's economy has recovered from the sharp drop in commodity prices in 2014, but barriers to trade pose the greatest threat to future growth. Efforts to renegotiate Nafta stalled earlier this year, and the US imposed steel and aluminum tariffs on Canada in June, prompting retaliatory tariffs by Canada. OECD projects economic growth in Canada of around 2% in 2018 and 2019 amid slower household and government spending and weaker house price growth.

Jul 23 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell because of increasing concerns about fuel demand after finance ministers and central bank governors from the G20 warned that global economic growth risks have increased amid rising trade and geopolitical tensions.
- Gold prices were steady near their highest since July 17 as the dollar eased to its lowest in nearly two weeks after U.S. President Donald Trump criticised the Federal Reserve's interest rate tightening policy.
- London copper eased but held above a one-year low hit last week on mounting concerns that escalating trade tariff spats could dent demand, although a weaker dollar cushioned losses.
- Chicago wheat futures edged lower after rising to a six-week top earlier in the session on prospects of lower production in some of the world's key exporting countries.
- What can Trump, or any US president, actually do to bring about a weaker dollar than lambaste trade partners and his own central bank on Twitter? BNZ says the Fed is unlikely to be swayed from its 2018 tightening plans while many other central banks are constrained from raising interest rates by low inflation in their countries. That helps boost the dollar all else being equal. The investment bank says while it's not convinced Trump's comments alone will change the direction of the currency market, it has nevertheless probably helped establish a short-term top for the greenback. The WSJ Dollar Index on Friday had its biggest percentage decline in 6 months at 0.7%.
- Greg McKenna, strategist at AxiTrader, says Trump is on a mission. McKenna says Trump's recent CNBC interview shows a president who is genuinely going to pursue the agenda he has articulated, who is not going to back down on China or the EU, who is pursuing multiple attacks on many fronts but seems across what he's trying to achieve. McKenna gets a sense his Fed and forex comments aren't going to be one-offs.
- By doubling down on critical comments of the Federal Reserve, President Trump has aided the NZD/USD's pull clear of key support levels. Trump's tweet of "Debt coming due and we are raising rates - Really?" has some speculating that he's setting the Fed up as a scapegoat should White House tax and trade policies fail to deliver, Australia & New Zealand Banking Group says. The NZD/USD is at 0.6805 early on Monday, approaching highs last seen nearly a week ago. "Domestic developments have taken a back seat for now, with the NZD at the whims of global forces, although it is not like that picture is overly clear at present," ANZ says.

Jul 20 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Crude prices rose but were set to drop for the week as concerns about oversupply and lower demand due to a possible economic slowdown caused by the trade conflict between the United States and China, the world's two biggest oil users.
- Gold prices eased for a sixth straight session, hovering near a one-year low hit in the previous session, as the dollar traded close to a one-year high.
- London copper struggled to pull away from the $6,000 a tonne mark, having touched a one-year low in the previous session, as concerns persist that a trade row between China and the United States will weaken demand for metals.
- Chicago corn was headed for its biggest weekly gain since late April with the market rising for a fifth consecutive session on the back of strong demand and dryness in parts of U.S. Midwest.
- The yuan slumped to a more than one year low on Friday while the dollar edged down against major peers after U.S. President Donald Trump expressed concern about the currency's strength.
- The U.S. dollar won't suffer like in January when Treasury Secretary Steven Mnuchin's comments about a weak dollar being good for the U.S. led to its decline, ING says. President Donald Trump's comments Thursday that he is "not thrilled" about the Federal Reserve raising interest rates and the Chinese yuan "dropping like a rock" may curb inflows into dollar assets due to investors' uncertainty over the administration's stance on the greenback, it says. But the dollar remains relatively robust against the euro, yen and yuan, given that the central banks in Europe, Japan and China continue to lean toward easy-money policies, analysts say.
- Market confidence in the U.S. Federal Reserve's policy won't be shaken by U.S. President Donald Trump's criticism of the central bank raising interest rates, and nor will the dollar, says Commerzbank. The dollar weakens in early London trade, but only slightly, with the DXY dollar index down 0.1%, EUR/USD up 0.1% at 1.1656 and USD/JPY down 0.1% at 112.38. Trump suggested he was unhappy with the dollar's strength and weakness in other currencies, but Commerzbank says: "we assume that the dollar will remain strong for now--whether Trump likes it or not." The Fed's gradual rate rises "will support the dollar until attractive alternatives in other currencies emerge."
- The FTSE 100 index is 6 points lower at 7677, according to London Capital Group, as nerves about trade conflicts were reignited after U.S. President Donald Trump criticized the Federal Reserve for raising interest rates and bemoaned the strength of the dollar. Hours later, China weakened the yuan by the most in two years, sparking concerns about so-called "currency wars," says Jasper Lawler, analyst at LCG. "Risk off is prevailing with traders selling out of equities sending Asian markets and European futures sharply lower," he says. Investors will again watch the pound after it fell sharply on Thursday after weak U.K. retail sales data and on Brexit uncertainties. U.K. public sector borrowing data are due at 0830 GMT.
- The possibility of China and the US restarting trade talks still exists, says Huo Jianguo, vice president of the China Institute for WTO Studies and former president of a Ministry of Commerce think tank. He thinks Trump aide Kudlow accusing Xi of holding back talks is a sign "the US is looking for excuses to restart negotiations" as it faces mounting pressure from both its trading partners and domestic forces. Huo believes the US will likely to start to feel the pain from trade frictions in 2-3 months.
- Trump's critical comments about the Fed rate-hike cycle naturally raise concern about political interference, and short-term it's hard to see much impact, says AMP Capital Markets chief economist Shane Oliver. But the Fed answers to Congress and has a mandate to keep inflation down. He thinks that longer term there is a risk Trump and populism will weaken the institution of an independent central bank targeting low inflation. Investors didn't appear to give the Trump comments much heft as the greenback actually finished higher on Thursday.
- NAB says it is still possible to remain confident the Fed will do what it thinks it should do regarding interest rates, regardless of U.S. President Donald Trump's apparent dislike of its hawkish path. NAB adds that more telling from his CNBC interview was Trump's remark that the Chinese yuan was "dropping like a rock." So the President's distaste for a stronger dollar is back on show. There is as yet no reason to think Trump is ready to back off his threats to go ahead with the tariffs on an additional $200 billion of Chinese goods come September, or that he will as yet withdraw the threat of 20% or 25% tariffs on auto imports, NAB adds.
- U.S. President Trump's remark in a CNBC interview that he hopes the Fed will stop raising interest rates has helped to put the brakes on broad-based selling of commodity currencies. The NZD/USD is at 0.6748 early in Asian trading on Friday, having slumped below 0.6720 prior to Trump departing from a convention in which a sitting president has refrained from expressing views specifically on monetary policy. Australia & New Zealand Banking Group says the general vibe around trade tensions and global growth appear to be weighing on the kiwi. "We suspect positioning is going to limit the near-term downside, but price action leaves us cautious," ANZ adds.
- Nucor CEO John Ferriola says tariffs on imported steel aren't the only reason for the steelmakers' strong 2Q results, but they help. "The U.S. steel market is benefiting from a reduction in unfairly traded imports entering our country," he told analysts on conference call. Ferriola, one of the steel industry's most vocal supporters of US tariffs, praised the Trump administration's emphasis on reducing the US trade deficit with other countries. "We agree with the administration's efforts to address this issue. We believe these efforts will lead to a freer, fairer trade that will benefit manufacturers, our customers and American workers." Shares down 1.6% at $64.51
- President Trump's decision to openly criticize the Federal Reserve puts the central bank in a difficult spot, an economist says. "The Fed says they are independent of political influence, but subtly this is going to be in the back of their minds when it comes to making policy, and will make them less likely to move interest rates above normal, neutral levels without hard evidence that the inflation genie is escaping his bottle," says Chris Rupkey, chief financial economist at MUFG, in an email. That could complicate the Fed's efforts to eventually set the fed-funds rate in a range between 3.25% and 3.5% by 2020. It "suddenly looks less and less like it will ever happen," Rupkey says.
- Officials from Canada -- already dealing with US tariffs on domestic metals on national-security grounds -- told Commerce Department hearings on possible auto tariffs that imposing levies on Canadian-made vehicles and auto parts would undermine US security. "US contingency planners have long concluded industrial centers in Canada are an important reserve capacity for the US in the event of attacks on US cities," Kirsten Hillman, Canada's deputy ambassador to US, said in testimony. Her remarks also spelled out the economic repercussions from national-security tariffs on Canadian auto-sector goods, noting Canadian-made cars contain over 50% US materials. Hillman, a former trade negotiator, added Canada would have no choice but to retaliate should US slap tariffs on Canadian auto goods. Canada has retaliated with C$16.6B in tariffs against US goods due to metals tariffs.
- Short-term Treasury yields, which typically move in sync with expectations for Federal Reserve interest-rate policy, fell after President Donald Trump criticized the Fed's recent rate increases in a CNBC interview. Fed funds futures, which investors use to bet on the direction of central bank policy, showed expectations for two more rate increases this year dipped slightly after the comments. The futures showed odds of two boosts to the central bank's target rate slipped to 57% late Thursday from 60% earlier in the day, according to CME Group data. Investors may be trimming bets on rate increases as a "hedge against a very small probability" that Trump may influence the central bank, said Christopher Sullivan, chief investment officer at the United Nations Federal Credit Union. The yield on the two-year Treasury note was recently at 2.591%, down from 2.603% earlier Thursday.
- The US dollar is paring its gains against a number of currencies after President Donald Trump tells CNBC in an interview that he is "not thrilled" about the Federal Reserve's interest-rate increases. "I don't really -- I am not happy about it. But at the same time I'm letting them do what they feel is best," Trump told the news outlet. The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, was recently up 0.2% after rising as much as 0.6% earlier in the trading session. Treasury yields hovered around the day's lows, while the S&P 500 was down 0.3%, roughly unchanged from earlier.

Jul 19 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices were mixed as the market struggled to digest signs of strong gasoline demand in the United States, the world's biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.
- Gold prices eased, nearing a one-year low hit in the previous session, as the U.S. dollar firmed on the potential for further U.S. interest rate hikes.
- Shanghai zinc jumped by the daily limit of 6 percent and hit a one-week top following a report that the Chinese central bank plans to boost liquidity in the banking sector, while falling inventories and a weaker yuan also underpinned the base metal.
- Chicago soybeans edged lower as the market stepped back from last session's near one-week top although demand for U.S. beans kept a floor under the market.
- Not every politician is blasting Amazon these days. Vice President Pence's Twitter account touted Blue Origin rocket launch, saying "American space companies are investing in the future like never before." Founder Jeff Bezos' Twitter account responded: "Appreciate the support, Mr. Vice President." Trump has repeatedly taken to Twitter to blast Amazon and Bezos, something the company has stayed mum on.
- We've heard many times that the Chinese state media has been urged to not make this trade battle personal by naming President Donald Trump. And the Mr. Trump himself has said he and Xi Jinping have a good relationship. In the past couple of days the rhetoric from China's Commerce Department has increased but when Trump advisor Lawrence Kudlow says that "So far as we know, President Xi, at the moment, does not want to make a deal" and then added "I think Xi is holding the game up. I think Liu He and others would like to move but haven't. We are waiting for [Xi]. The ball is in his court," you have to wonder what the Chinese response might be to this direct attack on this President for life, says Greg McKenna, strategist at Axi Trader.
- Alcoa reiterates its opposition to the 10% U.S. tariff on imported aluminum with CEO Roy Harvey saying the tariff "distorts the market by incentivizing the restart of aging, inefficient" smelters. He predicts the duty "will not solve the challenges facing the aluminum industry." Harvey acknowledges U.S. producers are benefiting from higher aluminum prices caused by the tariff. But he told analysts that U.S. smelters remain at risk because they are older and more expensive to operate than smelters in other countries. Harvey says he is "disappointed" that Canada wasn't exempted from the U.S. tariff. Alcoa operates three smelters in Canada that export aluminum to the U.S. where it is subject to the tariff.
- President Donald Trump's advisor Lawrence Kudlow says that trade talks with China have stalled and the ball is in Xi Jinping's court. He said that the threat of an extra $200 billion of tariffs is to keep the pressure up. Meanwhile, companies in the US are becoming more anxious, says ANZ. The Fed's beige book noted that manufacturers in all districts are concerned, with price increases and supply disruptions being experienced as a result of the new trade policies. Rising costs of lumber and imports may have contributed to the fall in housing starts in June. It could just be a blip, but it does highlight how possible trade impacts can be widespread, ANZ adds.
- Farmers are increasingly nervous that the US trade dispute with China, one of the top buyers of US farm products, will lead to lower crop prices and a continued decline in US farm income. But some agree with President Trump that China hasn't been playing fair on trade -- particularly when it comes to China's agricultural subsidies for its own farmers. In 2015, China's minimum support price for corn, rice and wheat was estimated around $100B above the levels China committed to when the country joined the World Trade Organization, according to the American Farm Bureau Federation, while US farmers have had to fight to hang onto smaller government support in the US. Nevertheless, the Farm Bureau calls on the Trump administration to clarify its trade-policy goals and get back to the negotiating table with China.
- The Federal Reserve's report, with anecdotal evidence of economic conditions, shows the Trump administration's recent implementation of tariffs caused lumber and metal prices to rise. A Maryland manufacturer said he couldn't get the quality steel he needed in the US and "anticipated losing business to foreign competitors" who aren't faced with corresponding tariffs, according to the report. In some cases, manufacturers in the Cleveland
district reported a "rush to purchase metals in anticipation of additional price increases," the report says.
- Electrolux CEO Jonas Samuelson says it's tough to calculate the potential impact of the second round of US tariffs on its appliance business here. The Swedish company trimmed its 2018 sales guidance for the North American market to reflect the impact of price increases aimed at mitigating raw material and tariff pressures. Samuelson, on an investor call, says it has time on its side in deciding whether to press ahead with expansion at a Springfield, Tenn. plant, a plan frozen in March as tariffs started to bite. He says the new products aren't planned for two or three years, and the tariff environment could change by that time.
- The EU is looking to China in an effort to remake global free trade in the wake of President Trump's continued attacks on the world's free-trade system. Despite China's mixed record on free trade, the EU is pressuring it to open its economy to outsiders. This after the EU struck a trade deal with Japan--the bloc's largest ever--and as similar deals are negotiated with New Zealand and Australia. "Our logic is very simple: We need to move to WTO 2.0," an EU official said. "And that doesn't only require the US, but also China."
- WW Grainger says it is actively examining its product supplies to ensure that it can mitigate the impact from potential tariffs on Chinese goods. Grainger told investors that a majority of its private-label product purchases come from China, but that the company has found, and is looking for, alternative sources. CEO DG Macpherson told analysts on a call that he hasn't yet seen any downturn and his customers don't expect there to be much short-term impact from potential tariffs. "We can shift if we need to," Macpherson said. Shares are up 11% in midday trading as the company also raised its guidance.
- Powell tells Rep. Bill Huizenga (R., Mich.) the Fed will give "full attention" to complaints by banks about a recent proposal by US regulators to rewrite the Volcker rule trading restrictions. The comments will be welcomed by banks. Huizenga had just said the industry raised concerns with him that the Volcker proposal would actually make the rule "more cumbersome and complex" by relying on accounting definitions to decide what securities holdings are subject to the rule.
- Fed Chairman Jerome Powell sticks to his script on the Trump administration's trade policy during his testimony before the House Financial Services Committee. His message, simply put, is that protectionism has historically resulted in lower productivity and slower growth. "The evidence is clear that countries that remain open to trade have higher productivity, they have higher income," he says, adding "not every group is affected positively by trade." His goal, it seems, is to stick to generalities on the benefits of free trade while avoiding discussing the White House's specific moves.
- Morgan Stanley CFO Jonathan Pruzan said the firm's pipeline of coming deals is "very healthy," adding to banker comments in recent weeks that suggest the M&A and capital-markets boom will continue to roll. Global M&A is up 51% this year by dollar value to $2.5 trillion, according to Dealogic, up across the US, Europe and Asia. Morgan Stanley's advisory fees rose 19% in the quarter, compared to last year, while revenue from underwriting IPOs, stock sales and related derivatives rose 21%. Backlogs point to future revenues, as banks are typically paid only when deals closed.

Jul 18 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices dropped after an industry group reported that U.S. crude inventories rose last week, defying analyst expectations for a significant reduction.
- Gold prices held steady near a one-year low hit in the previous session, as the dollar firmed after Federal Reserve Chairman Jerome Powell's U.S. economic outlook reinforced views the central bank is on track to steadily hike interest rates.
- Shanghai zinc moved away from a one-year low and was on course for its first gain in seven trading days, as it tracked a jump on the London Metal Exchange (LME) in the previous session amid plunging inventories.
- Chicago wheat rose for a second straight session to its highest in more than a week, with prices underpinned by reduced production in Europe and the Black Sea region.
- The American Hospital Association loses an appeal in federal court to halt steep cuts by the Trump administration to Medicare subsidies for certain drugs. Hospitals eligible for the subsidies, known as 340B, can buy certain drugs cheaply. Medicare paid hospitals a bit more than the average sales price for the discount drugs until January, when that amount dropped sharply as cuts took effect. A federal judge in December dismissed a lawsuit to stop the cuts brought by the AHA, Association of American Medical Colleges and America's Essential Hospitals. The groups didn't follow the law by raising their objections elsewhere before turning to the courts, the judge said. On Tuesday, federal appeals court judges agreed. In a statement, the hospital groups say they planned to "refile promptly."
- Federal, state and local governments in the US spent less than a 0.5% of gross domestic product on programs to train those who are or could be in the labor market, a new paper from the White House Council of Economic Advisers says. That is less than most other industrialized nations, including Canada, Australia and Germany. The paper found spending on education and training in the US is focused almost entirely on people younger than 25 years old. Once future workers graduate from college, relatively little is spent by employers or the government, potentially leaving them without the ideal skill set for modern jobs, according to the paper.
- President Donald Trump's economic advisers are becoming more concerned about worker shortages. "There simply aren't enough unemployed workers in the current pool of those looking for work to match the growth in demand for new workers," the White House Council of Economic Advisers said in a paper released this afternoon. Their solution? Better efforts at reskilling workers, with a specific eye towards improving the skills of those outside the workforce in an effort to boost their labor market prospects.
- Federal Reserve Chairman Jerome Powell avoided endorsing a recent report by economists at the San Francisco Fed saying the boost to economic growth from Republican tax cuts could be small or even nil. "One of the nice things about the Fed is that we get a range of views," Powell said in response to a senator's reference to the report. Earlier in the testimony Powell said the tax cuts could help the economy.
- Fed Chair Powell finally gets a question on the yield curve flattening and possible inversion, and we don't get an answer that helps much. Asked by Sen. Pat Toomey if a flattening curve might affect the balance sheet draw down, Powell allows the shape of the curve "is something we've talked about quite a lot." But he doesn't say if the flattening bothers him, or whether an inversion is a meaningful signal about future economic performance.
- The net neutrality see-saw keeps bobbing in Washington, this time in the tech sector's favor: Rep. Mike Coffman (R., Colo.) joins a small GOP contingent siding with congressional Democrats seeking new legislation keep broadband providers from blocking, throttling or otherwise restricting lawful internet traffic. His 21st Century Internet Act would codify many of the rules Obama's FCC wrote before they were rolled back by Republican-led congressional action, a move praised by many telecom companies. The congressman also moves to support a Senate bill that would rescind last year's broad internet service deregulation passed by Trump's FCC. Three GOP senators supported that bill, though it's still unclear whether it can pass the House.
- Major global auto suppliers see the risks of a trade war instigated by the US increasing, a shift from two months ago when they considered the threat negligible, according to Evercore. The firm says it calculates that suppliers are now pricing in a trade-war scenario at up to a 40% likelihood on average, up from just 5% eight weeks ago. A trade war would likely reduce EPS by an average of 14% at top suppliers, including Aptiv, Delphi Technologies, Lear, BorgWarner and Valeo, Evercore says. That's bad, but less than an estimated 31% average drop to these companies' EPS from the onset of a future recession, it says.
- Fed Chairman Powell tangled with Sen. Sherrod Brown on financial regulation during his testimony. In one notable part of the exchange, Powell said he doesn't expect that the Fed will alter how it decides which foreign-owned banks to subject to stricter regulations. Powell said the $50B US asset threshold for applying those stricter rules "will remain the same. We are not looking at that."
- Asked about the Affordable Care Act exchanges during its earnings call, UnitedHealth signals no interest in returning to the health-law marketplaces, from which it has almost totally withdrawn. "Nothing has fundamentally changed since we made our decision" to pull back, says CEO David Wichmann, and the choice "has absolutely turned out to be the right one for us." He says that UnitedHealth's filing for entry into the Massachusetts exchange was tied to a state requirement and "wasn't necessarily a voluntary decision on our part."
- Federal Reserve Chairman Jerome Powell's tendency to avoid going into much detail on risks from the Trump administration's trade policies continued Tuesday. In five pages of prepared remarks on monetary policy at the Senate Banking Committee, Powell limited his comments on trade to this one liner: "It is difficult to predict the ultimate outcome of current discussions over trade policy."
- Home furnishing company At Home Group says it would work to prevent tariffs from materially affecting its 2019 and 2020 bottom line. The company said it would potentially adjust prices and rely on flexible supply chain to offset any Chinese tariffs imposed on imported home furnishings and accent decor items. The shifts are an example of how companies are working to respond to potential increased trade barriers.
- South Korean delegates led by Trade Minister Kim Hyun-chong visiting the US this week will likely insist that their country deserve an exemption from Trump's planned tariffs on auto imports because of concessions it has already made for US carmakers to revise a bilateral free-trade deal, Seoul officials say. The government has agreed to allow the US to extend a tariff on South Korean pickups by 20 years, addressing American concerns about Korea's trade surplus and settling a dispute on new US steel tariffs. Hyundai Motor has joined global carmakers in campaigning against Trump's planned 25% auto tariffs, warning the levy could jeopardize its multibillion-dollar investment plans for the US.

Jul 17 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Brent crude prices rose from a three-month low after more oil workers went on strike in Norway, supporting a market that has been dominated by oversupply issues in recent days.
- Gold prices were steady, as the U.S. dollar remained largely unchanged ahead of U.S. Federal Reserve Chairman Jerome Powell's first congressional testimony.
- London copper prices bounced back, with the market rising more than one percent as low stockpiles and technicals underpinned the market, although lean growth in top consumer China limited gains.
- Chicago soybean and corn futures rose more than 1 percent each, supported by a slight decline in the condition of both crops which have benefited from near-perfect weather across the U.S. Midwest.
- Canada's chief envoy in Washington, David MacNaughton, tells WSJ he's "reasonably confident" Nafta talks will resume shortly now that the Mexican election is out of the way. He adds Canada continues to believe the trade-related issues dividing the three countries, ranging from dispute resolution to rules governing automotive content, are "resolvable," as are differences that have led to an escalated row between Washington and Ottawa. MacNaughton's comments of Nafta negotiations resuming shortly echo what Mexico's economy minister, Ildefonso Guajardo, said last week, hinting at a possible restart in the last week of July.
- International Trade Commission holds a hearing on US tariffs of up to 32% on Canadian-produced newsprint--also known as uncoated groundwood paper--and Canadian officials are confident there's enough evidence to have the levies overturned. David MacNaughton, Canada's ambassador to the US, tells WSJ Canada is confident given groundswell of opposition among members of Congress--some of whom are set to testify Tuesday against the tariff. "The real issue is what this will have on American jobs," MacNaughton said. "Frankly, you don't get 80 members of Congress writing about something that's going to cost Canadian jobs." A final ITC decision is expected in September. ITC surprised observers earlier this year by overturning Commerce Department tariffs on jets made by Canada's Bombardier.
- The pharmaceutical industry's top lobbying group is calling for an end to reimbursement of industry middlemen that is based on a percentage of a drug's list price. Instead, the Pharmaceutical Research and Manufacturers of America says companies such as pharmacy-benefit managers and wholesalers should receive set fees for their services. It is one of many proposals that PhRMA, whose members include Pfizer and Merck, included in a 130-page response to the Trump administration's proposed "blueprint" to reduce drug costs. "We agree that the status quo is not working in the best interest of patients and that our health-care system needs to change," PhRMA CEO Steve Ubl said on a conference call with reporters.
- Washing-machine prices are up an unprecedented 20%, on average, over the past three months--almost the exact amount of the 20% washing-machine tariff that was announced in January as one of the opening salvos of President Trump's trade actions. While consumers who would normally buy expensive washers can switch to a less elaborate model to save some money, data compiled by Thinknum for WSJ show people buying the lowest-cost washers face much higher prices. Whirlpool's least expensive model jumped from an average price of $329 in January to $429 in June, a 30% increase. Samsung's rose 18% to $582 from $494 while LG's rose 12% to $703 from $629. These price increases are larger than any
on record. If you're just looking for a basic washer, there's no way to avoid those higher prices.
- US tariffs on aluminum, steel and Chinese imports have had "relatively small impacts" for United Technologies, CEO Greg Hayes said at an airshow near London. "The bigger threat, as I've said before, is an all-out trade war, which might impact aircraft delivery into China," Hayes said. "Should the US and China escalate this trade war I think you put at least the Boeing production at risk and that is what I think everybody is concerned about. It's not good for the industry. It's not good for the world economy."
- Whirlpool led the charge for tariffs on foreign washing-machine imports. Nearly six months after those tariffs took effect, however, Whirlpool hasn't been a big winner from tariffs designed to protect it. An initial share-price boost from the tariffs has disappeared. Whirlpool is down 15% since Jan. 25, when the company touted the tariffs as "a positive catalyst." But instead the company has been hit by tariffs in another form--steel and aluminum, which have caused Whirlpool's input prices to climb. While imports from competitors have been reduced, the prices of washing machines have risen so much some consumers have been scared away. Whirlpool's struggles this year help explain why many economists have the view that no one wins from trade wars. Shares are down another 1.4% to $153.56 Monday.
- Trade tail risks aren't priced in foreign exchange markets, says J.P. Morgan. "Tail risk outcome is not materially priced into forex markets and further deleveraging cannot be ruled out in the event fundamentals deteriorate further," the bank says. Some analysts have attributed recent dollar gains to the increase in global trade disputes, as the dollar is sometimes seen as a safe-haven investment due to its vast liquidity. But J.P. Morgan says "almost the entire dollar strengthening in the past quarter is explained by changes in the global growth outlook thus far."
- UBS analysts upgrade UPS to buy, citing improved domestic potential amid possible tariff risks as trade tensions between the US and China continue. Analysts say the company's transformation initiative, headed by Walmart's former EVP Global Leverage Scott Price, and its recent early-retirement program could help cut costs and increase efficiency in 2019. However, trade escalation could counteract some of those benefits and it remains a risk for UPS as well as competitors like FedEx, which UBS downgrades to neutral on trade concerns. UPS gains 1.3% and FedEx falls 1.4%.
- USD/JPY has risen strongly in recent days mostly on the back of U.S. dollar strength and a lack of major global political uncertainties, says Rabobank as it upgrades its six-month forecast for USD/JPY to 113, from 111 previously. "Although the softness of the yen can be linked with the Bank of Japan's extremely accommodative policy stance, we would argue that the uptrend...is more linked with a change in perception regarding the dollar rather than the yen," it says. And while "there is undeniably a lot of concern about trade wars currently, the tension between North Korea and the U.S. that last year saw a missile landing in the Sea of Japan has dissipated," says Rabobank. USD/JPY is last down 0.1% at 112.27, having hit a six-month high of 112.79 on Friday, according to Factset.
- US oil prices plunge more than 3% to a nearly three-week low under $69 as investors anticipate rising supplies around the globe. Crude prices climbed to three-year highs in late June on a theme of supply deficits in places like Libya and Venezuela, but fresh headlines Monday point to Libya boosting production rates, while some traders also predict President Trump, after a summit meeting today with Russian President Putin, may signal a willingness on Moscow's part to raise its oil production. Meanwhile, the Saudis also aim to ramp up output, while the US itself may boost available oil supplies by dipping into its strategic petroleum reserves. The Nymex oil contract for August delivery falls 3.3% to $68.70.
- RBC advises a long position in GBP/USD for a 1.35 target, with a stop at 1.3110, on the grounds that the market's pricing of the chances of the Bank of England raising interest rates are likely to rise from current levels around 50%. This week's U.K. labor market and inflation data are unlikely to prevent a rate increase, RBC says. "Political risk premia have narrowed from their peak after last week's cabinet resignations," RBC says. It expects "a further narrowing in risk premia as domestic political noise diminishes." GBP/USD is last up 0.3% to 1.3276. RBC established the long position at 1.3250.
- Oil prices open the US trading week lower as a summit begins in Finland between US President Trump and Russian leader Putin. Investors think Putin may agree to ramp up oil production, which could boost global supply and lower oil prices and thus also lower gasoline prices for US consumers, something Trump's been pining for. With Putin seated next to him at the outset, Trump says US-Russia relations have been strained in recent years, but thinks the world "wants to see us to get along." He adds "now is the time to have a serious conversation about our bilateral relations." The Nymex oil contract for Aug delivery falls 1.7% to $69.81/bbl.

Jul 16 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell as concerns about supply disruptions eased and Libyan ports resumed export activities, while traders eyed potential supply increases by Russia and other oil producers.
- Gold prices recovered from a seven-month low, after sluggish GDP data from China weighed on Asian stocks and as the dollar traded below its recent highs.
- London copper traded above recent one-year lows after China's second-quarter growth slowed as expected, with the focus expected to shift to China's response to the latest U.S. tariffs plan.
- Chicago soybean futures were largely unchanged with the market trading near last session's decade-low on concerns Washington's trade war will curb U.S. exports.
- Major currencies held around recent ranges thanks to a lull in China-U.S. trade skirmishing and as investors await key data from the world's two biggest economies to determine whether global growth is running out of puff.
- The Bank of Canada should put more weight on the possibility that Nafta gets resolved than on the downside risks of possible US auto tariffs, Governor Stephen Poloz says. In an interview with Canadian newspaper The National Post this week, Poloz suggested the Trump administration's auto tariff threat has received disproportionate attention compared with possible upside developments for the Canadian economy. "For example, NAFTA gets restored. Boom. Aluminum and steel tariffs just go away," Poloz said in the interview. "We should put a higher weight on that possibility than on auto tariffs, frankly." The Bank of Canada on Wednesday raised its key interest rate a quarter of a percentage point, to 1.50%, citing a strong labor market and on-target inflation.
- London shares pare some earlier gains as the pound rebounds after President Trump softened his earlier negative rhetoric about the chances of a US-UK trade deal. The FTSE 100 Index closes up 0.14%, or 10.54 points at 7661.87 as sterling gains 0.08% to $1.3217. Support service group DCC is among the biggest risers, up 3.7% after making two substantial acquisitions.
- Chicago-traded soybean futures are down 1.5% at $8.36 a bushel, having plunged 6.5% so far this week, and shed more than 20% over the past three months. That's largely due to the expected disruption caused to U.S. exports from Washington's incipient trade dispute with Beijing. Soybean premiums in Brazil--the world's other major supplier--have soared. While China will be unable to meet all of its demand from South America--it will eventually have to pay U.S. tariffs--frictions have undoubtedly battered sentiment. To make matters worse, the U.S. Department of Agriculture's World Agricultural Supply and Demand Estimates saw an 11% reduction to expected U.S. soy export, while the USDA upped expected U.S. stocks by 5.3 million tons to 15.8 million tons.
- US stocks have been relatively resilient in the face of the trade fight between the US and China. UBS warns that could leave the stock market with a long way to fall if the two countries do end up significantly escalating the conflict. If the US and China launch what UBS considers a trade war--a situation in which there are 30% tariffs on virtually all goods the two countries exchange, as well as global auto tariffs--analysts see the S&P 500 falling as much as 21% to around 2200 and global GDP growth decelerating by 108 basis points. So far, the S&P 500 remains up 4.8% for the year, which UBS says shows investors haven't priced in the risk of a full trade war.
- President Trump's trade efforts are stirring concerns among American households. Consumer sentiment fell 1.1.% over the past month mainly because of concerns about the effects on new tariffs, the University of Michigan says. Sentiment is still high--it's up 4% over the past year. And an index of consumer expectations inched up 0.1%. Also keep in mind that spending remains solid. So while consumers say they're concerned, so far they don't appear to have changed their behavior.
- 10-year Treasury prices have a modest rise Friday morning after President Trump said he looked forward to finalizing a trade agreement with the United Kingdom after Brexit is completed. Yields were little changed overnight but began falling just before data showed US import prices were lower than expected in June. The yield on the benchmark 10-year Treasury note was recently at 2.844%, according to Tradeweb, compared with 2.853% Thursday.
- The dollar has risen this year due to the success of the U.S. economy and interest rate rises by the Federal Reserve, but chasing such gains makes ING nervous as "there are plenty of warning signs to suggest that this love story could come to an abrupt end," the financial services company says. The big risk is the "potential for overexuberant short-term U.S. gross domestic product growth expectations to adjust lower as the investors come to terms with the idea that the U.S. economy is not immune to a global trade war," ING says. The dollar's recent gains also come on the back of expectations from some investors that higher tariffs will bring inflation higher in the U.S., which could lead toward more rate rises. EUR/USD is last down 0.4% to 1.1624.
- London shares rise as the pound falls on concerns that the U.K. would fail to get a trade deal with the U.S. if it presses ahead with its plan to leave the EU. The FTSE 100 Index gains 0.5%, or 39 points to 7690.74. "Donald Trump's declaration that this softer version of Brexit would mean a trade deal with the U.S. was 'probably' off the table was a blow to both host Theresa May and the pound, sending sterling tumbling overnight," Jasper Lawler at London Capital Group says. Support-service group DCC is among the biggest risers, up 3.1% after making two substantial acquisitions.
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The dollar strengthens Friday, pulling EUR/USD down 0.5% to an 11-day low of 1.1613. The fact that the U.S. economy is performing well, likely leaving the Federal Reserve on course to continue raising interest rates, makes the dollar and U.S. assets appealing as other major central banks, including the European Central Bank, are still pursuing very loose monetary policies. U.S. protectionist trade policies, with U.S. President Donald Trump recently threatening further tariffs on Chinese goods, are also viewed as positive for the dollar, at least in the short to medium term. The dollar rises broadly Friday, including against safe haven currencies, on comments suggesting China and the U.S. may be open to negotiations. EUR/USD last at 1.1626.
- The U.S. dollar rises to a six-month high against the safe-haven Japanese yen of 112.79 on Friday, buoyed by improved risk sentiment in the markets and a stronger dollar. U.S. President Donald Trump has signalled willingness to hold trade talks with the Chinese government, leaving investors hopeful that their trade conflict may not escalate further. The U.S. dollar also rises to a two-month high against the Swiss franc of 1.0043. But Commerzbank warns "sentiment on the forex market remains fragile," adding that "for now we do not have hard facts that would justify an improvement."
- GBP/USD falls to a 10-day low of 1.3151 after U.S. President Donald Trump said in a media interview that the U.K's plans for Brexit would "probably kill" any chances of a U.K.-U.S. trade deal. Proponents in the government of the U.K.'s exit from the European Union have argued that one key opportunities of Brexit would be to be able to negotiate trade deals with other countries without the EU. Mr. Trump also said Boris Johnson, former foreign secretary, would made a good prime minister. His comments puts further pressure on Mrs. May's leadership, as her Conservative Party is already divided on what kind of a relationship the U.K. should have with the EU after the divorce. GBP/USD is last down 0.4% at 1.3162. EUR/GBP up 0.2% at 0.8854.
- The FTSE 100 index is expected to open 41 points higher at 7692, according to London Capital Group, as U.S. earnings season begins and with--for now--no further escalation in the trade dispute between the U.S. and China. "The robust U.S. economy, high consumer confidence and low borrowing rates provide a solid backdrop for some impressive figures, and that is before we draw in the benefits of the Trump tax cuts," Jasper Lawler, head of research at LCG, says. U.K. equities may get an additional boost from falls in the pound after U.S. President Donald Trump said in a meeting with U.K. Prime Minister Theresa May that her Brexit plans could "kill" chances of a bilateral trade deal with the U.S. GBP/USD falls 0.3% to a 10-day low of 1.3160.

Jul 13 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices were little changed as markets digested big swings earlier in the week that have left both major benchmarks facing a second weekly loss and largely shrugged off a warning about tightness in spare capacity.
- Gold prices were muted, stuck in a tight trading range as the dollar extended gains from the previous session when strong U.S. inflation data and trade war concerns boosted demand for the greenback.
- London copper edged lower and was set for a fifth consecutive week of decline on concerns of weaker demand amid U.S.-China trade war.
- Chicago soybeans slid almost 1 percent, with the market set to end the week with deep losses after a U.S. government report said the Sino-U.S. trade war would contribute to the biggest ever surplus.
- Livestock futures rise, steadying after a week of mostly lower closes. In a monthly supply-and-demand report, the USDA forecast higher production of red meat and poultry in 2018 and 2019. Concern about oversupply has recently pressured those markets, as traders brace for larger herds. Recent data showed that hog farmers intend to raise more pigs in the months to come, for example. But the agency raised its beef export forecast, a sign of strong demand, and left pork trade unchanged despite new Chinese and Mexican tariffs on US imports. CME July lean hog futures rose 0.2% to 79.95 cents a pound. August live cattle contracts climbed 1.1% to $1.05025 a pound.
- The tax cuts enacted late last year are showing up in the US government's financial statements. Federal revenues dropped 7% in June compared with the same month a year earlier, Treasury says, including a steep 33% decline in gross corporate taxes. Still, the monthly budget deficit of $74.86B was down from June 2017 due to a 9% drop in outlays. More broadly, the federal budget deficit is set to widen this fiscal year and in the coming years as spending outpaces revenues.
- USDA reports that domestic wheat supplies are little changed amid traders' concern regarding competition with other producing countries. The agency says that wheat stockpiles in 2018-19 are due to rise to 985M bushels from its previous estimate of 946M bushels in June, while world stockpile estimates are forecasted to fall to 260.9M metric tons from June's 266.2M metric tons. Analysts say traders are concerned that the US could lose export sales of wheat to cheaper offerings from competitors like Russia. Wheat futures prices are rising after the report, with CBOT wheat contracts for September up 2.2%.
- Tariffs could leave Chinese pigs hungry. The USDA says that China is due to cut soybean imports by 8% to 95 million metric tons, as newly introduced duties on US oilseed makes the key animal-feed source more expensive. That could push pig farmers and others to seek out alternative sources of protein, while sticking global soybean farmers with a larger surplus. The agency increased its world soybean stockpile forecast for 2018-19 by 13% to 98.3 million tons, well above pre-report expectations.
- US farmers are throttling back on selling their soybean crop from last year, according to Cargill, as futures prices tumble due to trade fears. Marcel Smits, Cargill's CEO, says in an interview that while US farmers typically have sold a majority of their prior-year crop to commodity companies like Cargill by this time, their sales volume currently is "down significantly because farmers are holding back their stocks." That could mean more financial hardship for farmers, as they wait for soybean prices to revive before selling crops to raise cash. It also poses a challenge for grain companies like Cargill, Archer Daniels Midland and Bunge, which require a steady stream of crops to
process and trade.
- The USDA forecasts lower domestic corn supplies despite new crop production increases, which analysts say show demand is still strong as concerns of tariff retaliation from Mexico ease for the time being. The agency says that corn stockpiles in 2018-2019 are due to fall to 1.55B bushels from 1.58B in June, which is lower than prereport estimates. While traders have been concerned that corn could be in line for future tariffs, Allendale's Rich Nelson says Mexico's new president "appears to have a less cantankerous approach" to trade tensions with the US. CBOT July corn contracts rise 2.9% after the report.
- European shares gain as dealers brush off lingering trade concerns to focus on news flow from U.S. President Donald Trump's visit to Europe. The Stoxx Europe 600 rises 0.8%, or 2.97 points to 384.37 after the Dow Jones Industrial Average climbs 183 points and the DAX and CAC-40 lift 0.6% and 1% respectively. "Maybe the relief that Trump deemed it 'presently unnecessary' for the U.S. to quit NATO was enough to get the good news-hungry markets off the ground," says Connor Campbell at Spreadex.
- Sales of grain, soybeans and red meat mostly lagged expectations in the most recent week. The USDA says that exporters sold 136,400 metric tons of wheat in the week ended July 5, well below the range of pre-report estimates. The sales were "dismal," says Terry Reilly of Futures International. Corn sales also fell short, while soybeans were at the low end of estimates. China last week introduced tariffs on a range of US agricultural goods, which is expected to weigh on exports -- particularly for soybeans. Meat exports also suffered. Sales of pork, which both China and Mexico targeted with tariffs, fell 43% from the prior four-week average. Beef sales fell 8% from the same period.
- Delta Air Lines CEO Ed Bastian hasn't seen any collateral damage from the United States' escalating trade tensions with China. Bastian, speaking on CNBC early Thursday, said its Chinese business is doing well, though it's hard to predict what could happen long-term. "We haven't seen any effect at all," he said. "Right now all signs are that things are quite healthy." Delta reported 10% year-over-year operating revenue growth in 2Q to $11.8B. Delta shares are up slightly in pre-market trading.
- European auto stocks may regain some strength, "unless tariffs actually reduce sector earnings sharply from here," says Morgan Stanley. Shares of European car makers and suppliers have declined sharply as risks from tariffs, new emissions-testing standards, as well as higher credit costs and slowing growth, are increasing, the banks says. While second-quarter earnings are expected to be "reasonable," share-price movement will depend mostly on perceived new growth opportunities or market acceleration, it says.
- European defense shares trade higher following comments by U.S. President Donald Trump on NATO military spending. During a press conference, Mr. Trump said that after getting NATO member states' spending to the 2% target, "we will go higher." He then reaffirmed his commitment to the defense alliance. Rheinmetall shares trade 2.4% higher, while Thales is up 1.8%. Airbus and Thyssenkrupp gain 1.1% and 1.4%, respectively.
- The most recent exacerbation of the U.S.-China trade dispute hasn't so far damaged the euro but if the U.S. were serious about the threatened tariffs on automobile imports, "the euro should come under pressure at least in the short term," says Raiffeisen's financial analyst Joerg Angele. For now, however, Raiffeisen sees a continued sideways movement around 1.17--in place since late May--for EUR/USD as the most likely scenario. EUR/USD last trades flat on the day at 1.1678.

Jul 12 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Brent crude rose more than $1, recouping some ground after its biggest one-day drop in two years during the previous session after Libya said it would resume oil exports and U.S.-China trade tensions raised demand concerns.
- Gold prices were mostly steady, close to a one-week low hit in the previous session, as the dollar held firm amid an intensifying trade war between the United States and China.
- London copper shrugged off an early dip to trade higher, while nickel jumped by as much as 3.8 percent as base metals staged a fragile recovery from the recent trade war-driven sell-off.
- Chicago soybean futures edged up, recouping some of the last session's deep losses which dragged the market to its weakest in almost 10 years on concerns over demand amid a U.S.-China trade dispute.
- The dollar trades flat against the euro, with EUR/USD at 1.1675, as investors await the release of the U.S. inflation data later on Thursday. The data are expected to show inflation rising. This could lift expectations for Federal Reserve rate increases later in the year, boosting the dollar, although analysts say lingering concerns about escalating trade tensions may temper any moves. According to a WSJ poll, headline annual U.S. CPI is expected to rise to 2.9% in June, from 2.8% in May, with core CPI also rising to 2.3% from 2.2%, and Societe Generale notes that U.S. Treasury yields are higher in anticipation of that. Against the Japanese yen, the dollar rises 0.3% to 112.37, as European equities rise and markets turn less risk averse, though concerns remain about U.S. plans to impose further import tariffs on Chinese goods.
- European equities are expected to open higher on Thursday, recovering only a day after sharp falls in response to U.S. plans to impose further import tariffs on Chinese goods. Mirroring a recent trend, this suggests "a level of optimism" among investors that trade tensions will ease "through negotiations," says Jasper Lawler, analyst at online broker London Capital Group. "The pattern that we've seen over the past 24 hours of losses, consolidation, followed by solid moves higher is the same that was witnessed following previous tariff announcements and one we are likely to see when China retaliates," he says. Germany's DAX is set to open 44 points higher at 12461, according to LCG.
- The escalation of the trade conflict is supportive to safe-haven assets such as German Bunds, says Societe Generale. "Trade war escalation maintains a bid in long maturity swaps and Bunds," say Societe Generale's strategists. They add, however, that the front-end EUR rates seem to have hit their floor. Early Thursday, the 10-year German Bund yield is trading at 0.31%, up 0.2 basis points, according to Tradeweb. In terms of government bond supply in the eurozone, investors will look at Ireland's and Italy's bond auctions.
- Grain and soybean futures fall to new lows for the season after the White House said it was looking to hit a further $200B of Chinese goods with tariffs. Traders are betting that China, which already started levying duties against US soybeans, could retaliate against more crops, or that this will setback the chance of a swift resolution. Soybean futures for July fall 2.3% to $8.33 a bushel, touching the lowest point since 2008. July corn slides 2.1% to $3.32 3/4 a bushel, the lowest point in almost a year. Wheat is also lower. The markets "care about the fact that the trade situation is continuing and not improving," says Rich Nelson of Allendale.
- Canadian PM Justin Trudeau and US President Donald Trump had a conversation about trade and Nafta on the margins of the NATO summit in Brussels. The conversation was described as constructive, an official said, adding part of the talk focused on the recent Mexican election and how president-elect Andrés Manuel López Obrador might change the dynamics at the negotiating table. This was the first face-to-face conversation since the G7 summit in Quebec, in which Trump withdrew US support for a communique due to Trudeau's rhetoric on trade. Bank of Canada raised its benchmark rate Wednesday despite heightened trade uncertainty, and the expectation US tariffs on Canadian steel and aluminum, along with Canada's retaliatory tariffs, will subtract from economic output.
- Investors' reaction to the trade conflict between the U.S. and China isn't as strong as it could have been because of the World Cup, says Bank of America Merrill Lynch. "The market is reacting less than it would normally perhaps because of the focus on the World Cup. When the final game is over, volume is likely to rise and the reaction to the trade war will be more significant," says BAML. During the previous World Cup, overall daily volume of 20 major currencies decreased by 30% on average as compared to historical levels, BAML says, adding that activity rose 15% one week after the final. U.S. announced new tariffs on China, and China said it will retaliate, but the U.S. dollar trades up 0.5% against the safe-haven yen at 111.54 on Wednesday.
- Pfizer's decision to rescind price increases it took on more than 40 medicines, in the face of criticism from President Trump, suggests rough-going for drug companies seeking to boost their toplines by raising prices. After CEO Ian Read had talked with President Trump earlier in the day, Pfizer said Tuesday night it was postponing the price increases that had just gone into effect. The reversal, by one of the industry's biggest companies and a chief executive who supports the administration, signals a tougher climate for firms that had been relying on pricing for sales growth. Many have already curbed their practices. The episode will probably have a chilling effect on drugmakers entertaining price increases, Wells Fargo says. The New York Stock Exchange Arca Pharmaceutical Index drops nearly 1% in morning trading.
- Fastenal CEO Dan Florness says his wife recently asked if US-China tariffs were impacting the business. "Absolutely not," Florness says on 2Q investor call, with no evidence of pre-buying by clients among a product range that goes from construction fasteners to safety gloves. Florness says it's too early to say what effect the latest $200B round of proposed US tariffs might have, and even though around 10% of its costs stem from China-sourced materials. Florness says it could switch to providers in Taiwan or Vietnam to mitigate the impact. Shares up 10% after blowout 2Q, erasing recent sell-off.
- Agricultural commodities are falling sharply as a trade conflict between the US and China escalates, with China attempting to match the Trump administration's planned new tariffs on $200B in goods. China's tariffs in the ongoing dispute have mostly been aimed at US agricultural products. Cotton prices are down 1.3% in the December contract at 85.25 cents a pound and corn, soybeans, orange juice and wheat are also losing steam, dragging down other commodities that aren't grown in the US, including coffee, cocoa, and the global contract for raw sugar.
- The Trump administration's proposed new tariffs on an additional $200B in imports from China largely spare finished medical devices, RBC Capital Markets says in a note today. It does include some supplies like medical gloves and nerve-stimulation machines, but "most of the major finished good product categories," aren't listed. "We view this as a win for the medtech lobbying groups, who have pushed to minimize the impact to the space," RBC says. Still, the industry isn't out of the woods--RBC says China could slap retaliatory tariffs on US-made devices exported to China.
- BMW's profitability will likely take a hit as the trade dispute between the U.S. and China intensifies, says Evercore ISI. The brokerage cuts its operating profit forecast by EUR450 million, citing lower profitability for vehicles imported to China and lower inventory valuations for vehicles imported to China from Europe. BMW's imports into China have fallen significantly this year already, it notes. Evercore lowers its price target for the stock to EUR85 from EUR95. The Bavarian car maker's shares trade 1.8% lower at EUR78.62.
- Given that China imports less from the U.S. than the U.S. imports from China, the Chinese can't retaliate with the same amount of trade tariffs. Which means China will "have to be creative," says Tom Milson, executive director at GWM Investment Management, in a note. China could "retaliate by using its currency to strengthen the value of the U.S. dollar, thereby pushing up borrowing costs in the U.S. and making Chinese goods cheaper," Mr. Milson says. "It could also put in place measures that will make things difficult for U.S. businesses such as increased regulations," he adds.

Jul 11 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell, with Brent dropping by more than $1 at one point, after U.S. President Donald Trump threatened to levy new trade tariffs on China.
- Gold prices fell as the dollar firmed against the yuan after the United States threatened to impose additional tariffs on Chinese goods, escalating trade tensions between the world's two largest economies.
- Copper and zinc prices slumped to their weakest in about a year while other metals also sank in a broad selloff after the United States raised the stakes in a trade war with China with threats of more tariffs.
- Chicago soybean futures slid 1.2 pct as a trade war between Washington and Beijing is curbing demand for U.S. supplies of the oilseed in top importer China.
- After 3 days of broad gains, the US couldn't leave enough alone as a lull in trade tensions allowed global equities to rebound--including a record high Tuesday in Canada. Looming additional tariffs between the US and China set equities skidding in Asia today, with benchmarks in China and Hong Kong off as much as 2% and declines of at least 0.5% in many other locales. Treasurys climbed amid the risk-off mood, though the yen or gold didn't see safe-haven lifts. And oil slid, with Brent back near session lows with a 1.5% decline. But Philippine stocks rose 1.4% as volatility there persisted today. S&P 500 futures remained steady throughout Asian trading, with them currently down 0.9%. Question is will US investors add to or subtract from that.
- The policy mix in Europe is "suboptimal, to say the least," with the emphasis on monetary policy while fiscal policy is restrictive, says Markus Allenspach, head of fixed income research at Julius Baer. He reckons that a push for more spending on defense "would go in the right direction" but such a fiscal initiative would be negative for European government bonds. The reason for that is that it would lead to more supply in government bonds and it would allow the European Central Bank to normalize its monetary policy earlier, he says. Against this backdrop, Julius Baer remains negative for core European government bonds. Making Europe pay for more of its own defense spending is among U.S. President Donald Trump's promises to American taxpayers.
- Need guidance on how the S&P 500 will do on a daily basis? It all depends on the twitterer in chief. On days this year that Trump has tweeted about China or trade, the stock benchmark has fallen a cumulative 6%, says Aberdeen Standard Investments. That compares with a 2% gain on days he didn't tweet and the S&P's year-to-date climb of 4.5%. He hasn't tweeted about the White House plan to put new tariffs on another $200 billion of Chinese imports, but then again we're only nearing Trump's typical prime twittering hours. "As long as US trade measures do not spark an all-out trade war, we remain confident that the global economy will continue to expand at a healthy pace," says Aberdeen.
- The announcement late Tuesday that U.S. President Donald Trump planned tariffs on $200 billion of Chinese imports could end "complacency" among market participants that has allowed stocks to rise in recent days, says Jasper Lawler at London Capital Group. Markets so far have been "relatively tame" in their reaction. Now traders may start to be "much more selective over which markets to buy into, choosing on the basis of which markets are potential winners and losers from this trade war." The Trump administration had until now "carefully selected products to tariff in order to avoid the US consumer being directly impacted." With this new "broad based, untargeted approach," however, it will be "almost impossible" for U.S. households not to be affected, he says.
- The FTSE 100 is expected to open 41 points lower at 7651, says London Capital Group, after the Trump administration announced plans to impose tariffs on $200 billion of Chinese imports. "Overnight, that unnerving trade war silence from the White House, which allowed stocks across the globe to charge higher in recent sessions, was broken," says Jasper Lawler at LCG. Asian stocks fell sharply and European shares are set to follow suit, he says. Sky shares will be in focus after 21st Century Fox raised its offer for the broadcaster, as will those of Micro Focus, which says it swung to a pretax loss in 1H. Barratt Developments will also be watched after releasing results, as well as Burberry after a trading statement.
- China may want to fight fire with fire on tariffs, but Rabobank says the big unknown is how to do that since annual imports of US products don't even total the $200 billion the White House has said new tariffs are set to be put on Chinese goods entering America. Some have said China's "comprehensive measures" against the US may potentially include creating policy hurdles for American companies operating there, the threat of selling US debt or hurting the talks with North Korea. "This is a trade war. Not a spat," adds senior Asia-Pacific strategist Michael Every.
- Copper and zinc futures on the LME have slumped to fresh 1-year lows, while other base metals have also deepened a slide from overnight after news that the U.S. is planning additional tariffs on Chinese goods. Michael McCarthy, chief market strategist at CMC Markets, says a "significant adjustment" is being made to prices of metals like copper amid concerns about global growth. "If we see this continuing, the prospects for global growth gets dimmer and dimmer," adds McCarthy. Base metals are seen as a barometer of industrial growth. Three-month copper and zinc prices are down 2.8% and 4% respectively, while aluminum fell 1%.
- China iron-ore futures are down, while steel rebar are holding steady Wednesday. News that Trump is planning additional tariffs on Chinese goods is weighing on iron-ore. In addition to trade worries, iron-ore supply from Australia's Port Hedland surged to a record high in June, coinciding with a seasonal slowdown in China's construction sector, ANZ says. Meanwhile, FocusEconomics panelists see iron-ore prices moderating further in the short
to medium term in the face of healthy supply and apparent easing of Chinese steel demand. Dalian iron-ore prices are down 1.3%, while Shanghai steel rebar are up 0.3%.
- Chinese tariffs on US imports may have a small positive on beef export prices, says ASB Economist Nathan Penny in a note; "NZ, Australia and Brazil (the key beef suppliers to China) stand to gain modestly as Chinese beef demand is growing fast." China increased tariffs on US beef imports by 25% on 7 July. However, he adds that tariffs already imposed and those potentially on the way pose a broader risk to global growth and this has the potential to dampen global demand for beef.
- Once the U.S. administration implements the additional tariffs on US$200 billion of Chinese imports, the Chinese government will almost surely retaliate, says UBS. On this path, the U.S. government would then almost surely retaliate in response, raising the stakes immediately to US$450 billion of Chinese goods under tariff. At US$450 billion, the list becomes comprehensive and supply-chain damage seems almost inevitable; many of the goods on the longer list are imported largely from China, making substitution essentially impossible. Such an escalation pushes the situation from a trade skirmish to a trade war, it adds.
- Japanese stocks, after 3 days of solid gains, are set to pull back at the open following word that the US will assess new tariffs on a further $200 billion of Chinese imports. Nikkei futures opened down 145 points at 22050 on SGX. That as the yen bounced at the end of New York trading, moving from Y111.25 (just above the level at Tuesday's Tokyo stock-market close) to Y110.86. The Nikkei's winning streak left it some 25 points above its 200-day moving average.
- The Trump administration reportedly looking to put tariffs on a further $200 billion of imports from China has thrown markets for a bit of a loop. S&P 500 futures are down 0.7%, Nikkei futures just started trading with a similar-sized decline and 10-year Treasury yields have ticked down a basis point to 2.86% in early Asian trading. In currencies, the Aussie dollar has been the big mover so far, falling upwards of 0.5% against other major units. But in all this what has been a safe haven looks like it may be again today--New Zealand stocks. The country's main index, which has hit a series of record highs the past month even as US-China trade tensions rose, is off just 0.1% after several days of noted underperformance.

Jul 10 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices rose on escalating concerns over potential supply shortages, with Brent crude leading the way as hundreds of oil workers in Norway were set to strike later in the day.
- Gold prices edged up, after hitting a two-week high in the previous session, amid political uncertainty over Brexit and as the U.S. dollar held steady.
- Copper prices in London and Shanghai extended gains for a second day, with investors lured to buy low after a trade war-fuelled sell-off last week.
- U.S. soybean futures fell as much as 1 percent as the U.S. Department of Agriculture pegged the condition of the U.S. crop above market forecasts, stoking expectations of bumper production.
- The British pound was frail after the departure of two key eurosceptic ministers raised worries about a "hard Brexit" while the yen retreated against the dollar as investors bid up riskier assets.

- Analysts crunch the numbers on what health insurers are due to receive or pay out under the suspended Affordable Care Act risk-adjustment program based on their 2017 ACA business. Those payments had been due to flow this fall, but they are now up in the air. According to Wells Fargo and other analysts, Anthem was set to receive around $522M, UnitedHealth should receive slightly more than $160M, and Aetna is also due for a payment of more than $100M, though analysts differed on the exact tally. Other insurers were due to pay into the program, analysts say: Molina, $853M; Centene, $607M; Cigna, $169M; and Humana, $36M. Height Securities notes that not-for-profit Blue Cross plans are collectively due payments of around $1.7B -- helping to explain the Blue Cross Blue Shield Association's strong criticism of the suspension.
- Fewer branded-drug makers are choosing to take a second yearly price increase, according to Morgan Stanley, a sign of the pressures to hold the line on the increases. Pfizer got a lot of attention last week after raising the prices of more than 40 of its drugs. It was just one of four companies to take a second round of price increases, Morgan Stanley says in a note. The other companies are Acorda Therapeutics, DepoMed and Novo Nordisk. Health Secretary Alex Azar has asked companies to self-regulate.
- Deutsche Bank downgrades AK Steel and Ryerson to hold from buy, citing pricing concerns and growing competition from mini-mills. Analysts say that trade concerns surrounding tariffs between the US, Canada, Mexico and the EU have been weighing on the steel sector, but hide the strength in current supply and demand conditions. However, given the premium to world export prices, some price and margin compression is expected in steel, analysts say. Ryerson shares are down 2.9% to $11.90, while AK Steel slips 2.1% to $4.49.
- After saying it will suspend the risk-adjustment program, the Trump administration release of the amounts insurers were set to pay out or receive this fall. Overall, the program accounts for a smaller share of premiums for the 2017 plan year than the previous year -- 10% in the individual market, versus 11% for 2016. Among those set to get the biggest payouts -- now on hold -- are many Blue Cross plans, including Blue Cross and Blue Shield of Florida, which is due more than $666M on its individual business. Anthem also appears to be in line for some substantial payments, including more than $200M in California and $50M or more for its Georgia, Indiana and New York plans. Centene and Molina were slated to pay out millions. JPMorgan analysts say Centene had accrued $912M, and Molina $677M, toward expected risk-adjustment payments for 2017.
- Economic models show that trade tariffs announced by the U.S. so far may not have much impact on growth but the effect on financial market sentiment will be important, Julien-Pierre Nouen, chief economist at Lazard Freres Gestion, tells Dow Jones Newswires in an interview. Some surveys have shown that companies are starting to worry, which "may lead to some delay in capital expenditures," Mr. Nouen says. Trade tensions have come at a time when global growth is good, so the impact could be like putting sand into the machine: not enough to stop it but possibly causing a little slowdown in growth. "But if things escalate, we could have a bigger impact," Mr. Nouen says.
- A fall towards the June 14 low of 1.1563 in EUR/USD, the day of the last European Central Bank meeting, could happen, says Societe Generale, but it will depend "on whether the return to calm waters for the remnibi and Chinese equity markets can endure." Also, it will depend on "how emerging market currencies respond to whether the U.S. moves ahead with the second tranche of trade tariffs." The remnibi has been falling massively on the past days, dragging down other emerging market currencies and pushing the dollar up. But most of the EM currencies are up against the dollar on Monday. For now, EUR/USD "almost entirely" recovered the losses of June 14, last trading up 0.3% at 1.1778 on Monday.
- European Central Bank governing council member Ewald Nowotny says current tariff increases between the U.S. and Europe shouldn't have an extreme effect on the eurozone economy. Still, he cautioned that a trade war could swell into a currency way, even if unintentional, given the recent strengthening of the dollar and weakening of China's currency. EUR/USD last trades up 0.3% at 1.1784 dollars, having risen to its highest in three and a half weeks at 1.1791.
- The dollar falls broadly on Monday, with BK Asset Management saying this is "a continuation of the short covering rally that started last week, as risk-on flows appear to have improved." Friday's U.S. jobs data "also did not help the greenback," as wage growth was "relatively tepid," it says. EUR/USD and GBP/USD both rise to their highest since mid-June, at 1.1789 and 1.3363, respectively. EUR/USD faces "serious resistance" at the 1.1850 level, but it could make a run at the 1.18 figure, BK AM says. Sterling also rises after U.K. Prime Minister Theresa May secured agreement among her government for her Brexit plans on Friday, and as investors shrug off Brexit Secretary David Davis's resignation.
- European equities are set for a strong start Monday morning after Asian markets rallied overnight, says David Madden, market analyst at CMC Markets UK. "The tense trade standoff between the U.S. and China failed to discourage buying as traders have come to terms with the latest round of tariffs," Mr. Madden says. Brexit secretary David Davis stepped down from his role late last night, raising questions about how long Prime Minister Theresa May will stay in her job, although the pound is holding up "relatively well," says Mr. Madden.
- The Trump administration's decision to suspend the Affordable Care Act's risk-adjustment program could at least temporarily spare some big insurers from major payments that would have taken place this fall. JPMorgan notes Molina had accrued $912 million for expected payments and Centene $677 million. But on the other side, Anthem might not immediately collect a receivable the investment bank estimates $400-500 million. Longer-term, the "effect of suspension would be possibly additional significant disruption/withdrawals/rate hikes in the individual market for 2018-19."

Jul 09 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices rose as investors focused on tight market conditions after data late last week showed U.S. crude inventories fell to their lowest in more than three years.
- Gold prices rose as investors covered their short positions and the dollar slipped to its weakest since mid-June, while lingering U.S.-Sino trade tensions supported the bullion as well.
- London copper rebounded from a near one-year low hit in the session before, as a weak dollar forced short holders to cover positions amid simmering trade war tension.
- U.S. wheat futures fell more than 2 percent as fears of a prolonged trade dispute between the United States and China whipsawed grains markets.

- European equities are set for a strong start Monday morning after Asian markets rallied overnight, says David Madden, market analyst at CMC Markets UK. "The tense trade standoff between the U.S. and China failed to discourage buying as traders have come to terms with the latest round of tariffs," Mr. Madden says. Brexit secretary David Davis stepped down from his role late last night, raising questions about how long Prime Minister Theresa May will stay in her job, although the pound is holding up "relatively well," says Mr. Madden.

- The Trump administration's decision to suspend the Affordable Care Act's risk-adjustment program could at least temporarily spare some big insurers from major payments that would have taken place this fall. JPMorgan notes Molina had accrued $912 million for expected payments and Centene $677 million. But on the other side, Anthem might not immediately collect a receivable the investment bank estimates $400-500 million. Longer-term, the "effect of suspension would be possibly additional significant disruption/withdrawals/rate hikes in the individual market for 2018-19."

Jul 07 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ)

- US stock futures have erased their initial gains following the jobs report. One possible reason why: the jobs report could be playing second fiddle to the looming trade standoff between the US and China, which both slapped levies on billions of dollars of each other's exports early Friday. "The US economy remains strong and the jobs report today confirms that, but I think in the short term you should expect volatility with the tariffs taking effect," said Shawn Cruz, manager of trader strategy at TD Ameritrade. "If the trade tariffs really come into play fully, then that's going to drive up the type of inflation you don't want--and that'll impact global growth." S&P 500 futures down less than 0.1% while DJIA futures lose 0.1%.
- President Trump did not publicly reference the June jobs report the Labor Department released this morning. Trump previously sparked backlash when he tweeted he was "looking forward" to seeing May's jobs report an hour before it was published at the beginning of June. This broke from decades of protocol meant to prevent politicizing the data and spurring market movements in response. Two sources at the Bureau of Labor Statistics said concerns were later discussed with Trump, who promised not to tweet about the June jobs report in advance of its official release, according to Buzzfeed.
- A global trade war "shouldn't be the big euro negative that some people say it will be," says Valentin Marinov, the bank's head of G10 currency research. He expects the eurozone economy to be resilient, even though U.S. President Donald Trump has threatened tariffs on European exports. The region--Germany in particular--stands out as "having benefited from the pick-up in global trade in the last couple of years." Credit Agricole believes the recent eurozone economy has been driven by domestic demand, rather than export demand. "That means the eurozone is in a better position to withstand any cyclical headwinds on the back of growing global trade tensions."
- Emerging-market currencies would be the "primary losers" if brewing global trade tensions lead to a full-on trade war, Valentin Marinov, head of G10 currency research at Credit Agricole, says. He says emerging markets have amassed about $4 trillion in debt in recent years, a level which can't be maintained without access to global trade. "The sustainability of that debt may be questioned" if these countries' U.S. dollar revenues from exports "slow down to a trickle in the wake of a global trade war," he says. "In an escalating trade war I wouldn't be selling euros, I'd be selling emerging-market currencies."
- Nordic markets are seen opening little-changed Friday with IG calling the OMXS30 flat at around 1527. "A decent ADP job report and a rise in the U.S. non-manufacturing ISM to 59.1 in June helped to lift the U.S. mood yesterday and ensured U.S. equities had a good run," says Danske Bank. Separately, FOMC minutes from the June meeting published last night showed that the Fed is now increasingly alert to the adverse impact of the trade conflict between the U.S. and China, Danske adds. OMXS30 closed at 1526.60, OMXN40 at 1498.69 and OBX at 817.98.
- London shares are set to open higher after strong sessions on Wall Street and in Asia. The FTSE 100 Index is expected to open 43 points higher at 7646 after the Dow Jones Industrial Average climbed almost 182 points and major indices in China, Hong Kong and Japan are in positive territory. "With Wall Street experiencing its strongest session in well over a month, higher shares in Asia and Europe pointing to an upbeat Friday is normal enough," says Jasper Lawler at London Capital Group. "But given that trade tariffs are due to kick in today, we would have expected to see more anxiety in the markets."(
- The Bank of Canada should raise its benchmark interest rate by a quarter of a percentage point to 1.50% at its July 11 policy announcement, members of a Toronto-based think tank say. The C.D. Howe Institute's Monetary Policy Council said the BoC should raise the key rate in July because of stronger economic data in 2Q, signs of a tightening labor market and rising inflation, among other factors. Members expressed concern over geopolitical risks and trade uncertainties but the Council said that was not enough to deter the majority from voting in favor of a July rate increase. After raising the rate in July, the central bank should stand pat in September before further increasing the key rate to 2.00% by July 2019, members of the Council said.
- Most Federal Reserve officials at their June meeting said uncertainty surrounding the Trump administration's trade policy had intensified recently, which could have "negative effects" on business sentiment and investment spending, according to minutes of the meeting. The US imposed steel and aluminum tariffs against Europe, Canada and other nations and faced retaliation for the action. Some FOMC participants indicated that recent fiscal policy "is not currently on a sustainable path." Some Fed officials said the economy continuing to operate above potential could cause "heightened inflation pressures," or "financial imbalances that could lead eventually to a significant economic downturn."

Jul 06 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices seesawed in a nervous market as the United States implemented a raft of tariffs on Chinese goods, which should prompt Beijing to retaliate, potentially including a duty on U.S. crude imports.
- Gold prices nudged lower amid a steady dollar, with investors bracing for any impact on global markets from a deepening trade conflict between the United States and China.
- London copper fell for a fifth straight session and hit a fresh 11-month low as U.S. tariffs on Chinese goods kicked in, escalating the trade spat between the world's top two economies.
- U.S. new-crop soybean prices were largely unchanged after dropping to a contract-low earlier in the session as top importer China prepared to impose additional tariffs on U.S. shipments amid a trade war between the two nations.
- Nordic markets are seen opening little-changed Friday with IG calling the OMXS30 flat at around 1527. "A decent ADP job report and a rise in the U.S. non-manufacturing ISM to 59.1 in June helped to lift the U.S. mood yesterday and ensured U.S. equities had a good run," says Danske Bank. Separately, FOMC minutes from the June meeting published last night showed that the Fed is now increasingly alert to the adverse impact of the trade conflict between the U.S. and China, Danske adds. OMXS30 closed at 1526.60, OMXN40 at 1498.69 and OBX at 817.98.
- London shares are set to open higher after strong sessions on Wall Street and in Asia. The FTSE 100 Index is expected to open 43 points higher at 7646 after the Dow Jones Industrial Average climbed almost 182 points and major indices in China, Hong Kong and Japan are in positive territory. "With Wall Street experiencing its strongest session in well over a month, higher shares in Asia and Europe pointing to an upbeat Friday is normal enough," says Jasper Lawler at London Capital Group. "But given that trade tariffs are due to kick in today, we would have expected to see more anxiety in the markets."
- The Bank of Canada should raise its benchmark interest rate by a quarter of a percentage point to 1.50% at its July 11 policy announcement, members of a Toronto-based think tank say. The C.D. Howe Institute's Monetary Policy Council said the BoC should raise the key rate in July because of stronger economic data in 2Q, signs of a tightening labor market and rising inflation, among other factors. Members expressed concern over geopolitical risks and trade uncertainties but the Council said that was not enough to deter the majority from voting in favor of a July rate increase. After raising the rate in July, the central bank should stand pat in September before further increasing the key rate to 2.00% by July 2019, members of the Council said.
- Most Federal Reserve officials at their June meeting said uncertainty surrounding the Trump administration's trade policy had intensified recently, which could have "negative effects" on business sentiment and investment spending, according to minutes of the meeting. The US imposed steel and aluminum tariffs against Europe, Canada and other nations and faced retaliation for the action. Some FOMC participants indicated that recent fiscal policy "is not currently on a sustainable path." Some Fed officials said the economy continuing to operate above potential could cause "heightened inflation pressures," or "financial imbalances that could lead eventually to a significant economic downturn."
- Minutes from the Federal Reserve's June 12-13 meeting reveal that fears of a trade war are starting to ripple through American businesses. Fed officials noted that some of their contacts among firms have reported scaling back or postponing capital-spending plans as a result of the uncertainty over trade policy. In the steel and aluminum industries, targets of the Trump administration's tariffs, firms said they expected to see higher prices but hadn't yet planned investments to increase capacity.
- Interest rate differentials between the U.S. and eurozone are bound to influence EUR/USD more than what the European Central Bank officials say or do in the medium-term, says Rabobank. Some ECB officials reportedly said the central bank may raise rates earlier than markets are expecting--in December, 2019. Though not fully, derivative markets do indicate that a move in September or October next year could happen, Rabobank says. "This, however, does little to alter the view that interest rate differentials are set to favoring the dollar over the next year or so," says Rabobank. EUR/USD rises 0.4% to 1.1704 on Thursday due to the ECB comments, but also because of a weaker dollar, and because the U.S. ambassador to Germany suggested to implement zero tariffs on cars between the U.S. and Europe.
- The Institute for Supply Management says its gauge of nonmanufacturing economic activity rose in June for the second straight month. Some of the details were mixed: Business activity and production were up and so were new orders, but the employment index declined. "Respondents continue to be optimistic about business conditions and the overall economy," says Anthony Nieves, who oversees the ISM survey of purchasing and supply managers. "There is a continuing concern relating to tariffs, capacity constraints and delivery."
- Short-term lean hog futures are falling slightly as Mexico's tariff rate on pork is scheduled to jump from 10% to 20% today. A round of new tariffs between the US and China are also slated to go into effect on Friday, including an additional 25% on US pork. China previously imposed a 25% tariff on US pork in April. "We don't expect or look for anyone to pullback or cancel the so-called trade war," said Dennis Smith of Archer Financial Services. July hog contracts are down 0.5% to 83.325 cents a pound, while contracts for August edges up and October are down 0.3%. Live cattle futures for August are up 0.9%.
- USD/CNH is unlikely to further fall by much, says Societe Generale. USD/CNH, which is the exchange rate for the offshore remnibi, has traded in sync with the USD/CNY, the actual yuan used in China. Both have been rising--which means the remnibi was weakening--since mid-June. "We remain hesitant to chase USD/CNH higher. The dollar is quite overbought and in 2015-16 a consolidation or reversal phase ensued following similar upward moves in USD/CNH," SocGen says. The remnibi is cheap to short, but to position for further disruptions related to trade wars or slower emerging market growth momentum, shorting the South Korean won or the Taiwan dollar has better value," SocGen says. USD/CNH and USD/CNY are both flat. USD/CNH is at 6.6428 and USD/CNY is at 6.6374.
- Reports of European Central Bank's officials saying that markets may be pricing in a first interest rate increase too late is the main factor boosting the euro. However, the fact that the U.S. ambassador to Germany suggested zero tariffs on cars from both the U.S. and EU side is also helping lift the common currency, says BK Asset Management. EUR/USD is up by 0.4% at 1.1699. Meanwhile, the dollar is weaker against most currencies as the fear of a global trade war "still hangs over the market," BK AM says. It adds that both EUR/USD and USD/JPY "could see a bit more follow through when U.S. desks come online." USD/JPY rises 0.1% to 110.62.
- Europe shares rise as trade fears ease and as upbeat European economic news boosts sentiment. The Stoxx Europe 600 gains 0.8% with German factory orders posting their strongest growth since February, boosting the euro by 0.25% against the dollar as well as Germany's DAX. "Dealers are content to pick up European stocks as they feel Chinese markets will bear the brunt of the tit-for-tat U.S.-China tariff spat," says David Madden at CMC Markets. "A report that the U.S. might suspend threats to impose tariffs on EU cars is also driving European optimism." The latter helps lift shares in Osram Licht, which makes car headlights, by 7.5%. Associated British Foods is second in the pan-European fallers, down 4% after a downbeat sugar performance.

Jul 05 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell after U.S. President Donald Trump sent a strident tweet demanding that OPEC cut prices for crude.
- Gold prices traded in a narrow range, after hitting a one-week high in the previous session, amid an easing dollar and as the markets awaited minutes from the U.S. Federal Reserve's June policy meeting later in the day.
- Shanghai base metals fell, with zinc and copper slumping to near one-year lows, as the market braced for further U.S. tariffs on Chinese goods from Friday and a tit-for-tat response from Beijing. 
- Major currencies were on tenterhooks on the eve of Washington's deadline to impose tariffs on Chinese imports while the yuan held steady after the central bank this week sought to stem its recent tumble.
- A trade war between the U.S. and China would ultimately hurt average citizens, says Saxo Bank. "A trade war between the two most economically intertwined superpowers can only work to slow the growth of trade," which eventually "would result in a fall in world gross domestic product," Saxo says. Cost-push inflation would also go up as a result of tariffs, hurting consumers' pockets. "Average citizens of each country are the losers during these altercations as they must shoulder the economic and social costs of increased tariffs," Saxo Bank says.
- In the trade dispute between the U.S. and China, Australia could benefit, says Saxo Bank. On Friday, mutual tariffs are due to come into force. China is expected to impose tariffs on U.S. beef, cotton, wheat, sorghum, rice, wine, nuts and dried fruit. "Chinese tariffs on U.S. agricultural products could provide an opening for Australian exporters to fill for Australia to expand its economic imprint," Saxo Bank says. Australian beef exporters could offer "a far more competitive price" with Australia having the advantage of maritime trade routes through the APAC region. This also applies to other products exported from Australia, such as nuts, dried fruit, wine, vitamin and mineral supplements.
- The Turkish lira continues to fall following data Tuesday showing a strong rise in inflation. Societe Generale says any rebound in the currency would be "temporary unless it is accompanied by policies to get inflation back under control." The lira is "cheap" according to the purchasing power parity or PPP model, says SocGen, but when it falls, it drags the PPP rate with it, because a weaker currency pushes inflation up. USD/TRY rose to a 12-day high of 4.7243 on Wednesday, taking it closer to the record high it reached at the end of May, at just above 4.92, according to Factset.
- The dollar trades lower against the euro and on the DXY Index given thinner market liquidity prompted by the public Independence Day holiday in the U.S. "Far more interest in a weaker renminbi from Chinese authorities has slowed the Dollar/Asia advance and should slow dollar demand across the board," says ING. A media report says the EU is looking at options of cutting tariffs on auto imports, which could potentially grant U.S. President Donald "Trump a victory to take to his voters," ING says. This would lower Trump's protectionist stance and slow the dollar's advance. EUR/USD rises 0.2% to 1.1677 and the DXY falls 0.2% to 94.45. ING says DXY should find support at 94.20.
- The US citing national-security concerns in saying the world's biggest wireless firm by customers, China Mobile, can't offer service in the US and American chip firm Micron losing a patent case in China is "another sign this 'cold' trade war is about to go hot," says Greg McKenna, chief market strategist at AxiTrader. Both developments "highlight that while trade is the headline battle, it is the battle for intellectual property and technological advantage that is where the real battle lays." Still, until tech issues are worked out, "trade will be the frontline. The shooting starts on Friday when the first round of US tariffs goes live."
- Global trade tensions are taking an immediate toll on US farmers, who are watching the value of their crops evaporate ahead of Chinese tariffs on US soybean exports. But the long-term effect of the Trump administration's trade strategy could be worse, says Dave Marshall of First Choice Commodities. Marshall says President Trump's aggressive trade moves could encourage China--the largest buyer of US soybeans--to invest in rival suppliers like Brazil instead, helping improve that country's infrastructure to speed the flow of crops to its ports. "No one wants to call it what it is, which is a trade war," Marshall says. "US farmers aren't so much foot soldiers as much as they are conscripts. They've been drafted in this thing."
- Given that U.S. citizens are "the main intended audience of recent U.S. trade policy actions...if Republicans come out of the mid-terms poorly, there is a chance that they lose the House of Representatives," which would make them "less willing to support the President's protectionist leanings," ING says. This is one way how the trade disputes between the U.S. and the rest of the would could end. But for now, "tariffs are coming, and some have already arrived," ING says. "We sense that the Trump administration feels the global trade environment is unfair, that tariffs can help redress the balance in the U.S.' favour and that it can win a trade war," says ING.
- Asian currencies may fall by 6% to 7% in the medium-term, assuming a temporary 20% decline in global dollar trade values on the back of trade disputes between the U.S., China, Europe, and rest of the world, says ING. Moreover, "a fall in global trade of this magnitude is likely to weigh on commodity prices," ING says. The trade war dispute will hurt China, and "anything which hurts China's purchasing power is also likely to weigh on commodities," since the country imports most of the commodities. "This could be the second leg of a looming global trade shock," the Dutch bank says.

Jul 04 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices edged up following a report of tightening U.S. fuel inventories amid an outage at Syncrude Canada oil sands facility in Alberta, which usually supplies the United States.
- Gold prices rose to a one-week high, rebounding from a seven-month low touched in the previous session, as the dollar softened, stoking some demand for the yellow metal.
- London copper climbed nearly 1 percent to recover from a nine-month low and other metals also pulled away from their weakest level in months after China's central bank assured markets it would keep the yuan stable.
- U.S. wheat futures rebounded on Tuesday from the steepest percentage decline in nearly a year during the previous trading session on worries about weather-reduced crops in several key production areas around the world.
- The US citing national-security concerns in saying the world's biggest wireless firm by customers, China Mobile, can't offer service in the US and American chip firm Micron losing a patent case in China is "another sign this 'cold' trade war is about to go hot," says Greg McKenna, chief market strategist at AxiTrader. Both developments "highlight that while trade is the headline battle, it is the battle for intellectual property and technological advantage that is where the real battle lays." Still, until tech issues are worked out, "trade will be the frontline. The shooting starts on Friday when the first round of US tariffs goes live."
- Global trade tensions are taking an immediate toll on US farmers, who are watching the value of their crops evaporate ahead of Chinese tariffs on US soybean exports. But the long-term effect of the Trump administration's trade strategy could be worse, says Dave Marshall of First Choice Commodities. Marshall says President Trump's aggressive trade moves could encourage China--the largest buyer of US soybeans--to invest in rival suppliers like Brazil instead, helping improve that country's infrastructure to speed the flow of crops to its ports. "No one wants to call it what it is, which is a trade war," Marshall says. "US farmers aren't so much foot soldiers as much as they are conscripts. They've been drafted in this thing."
- Given that U.S. citizens are "the main intended audience of recent U.S. trade policy actions...if Republicans come out of the mid-terms poorly, there is a chance that they lose the House of Representatives," which would make them "less willing to support the President's protectionist leanings," ING says. This is one way how the trade disputes between the U.S. and the rest of the would could end. But for now, "tariffs are coming, and some have already arrived," ING says. "We sense that the Trump administration feels the global trade environment is unfair, that tariffs can help redress the balance in the U.S.' favour and that it can win a trade war," says ING.
- Asian currencies may fall by 6% to 7% in the medium-term, assuming a temporary 20% decline in global dollar trade values on the back of trade disputes between the U.S., China, Europe, and rest of the world, says ING. Moreover, "a fall in global trade of this magnitude is likely to weigh on commodity prices," ING says. The trade war dispute will hurt China, and "anything which hurts China's purchasing power is also likely to weigh on commodities," since the country imports most of the commodities. "This could be the second leg of a looming global trade shock," the Dutch bank says.
- Live cattle futures for August are trading slightly higher after Canada's 10% tariff on US beef was put into effect Sunday. Cattle have been largely untouched by trade tensions so far, analysts say. "While exports are thought to remain robust to even excellent, this is being threatened with the looming trade war," said Dennis Smith of Archer Financial Services. USDA export sales data show that Canada is one of the US's larger beef import customers. August live cattle futures are up 0.3% to 107.225 cents a pound and July lean hog futures are up 0.8%.
- Oil majors are among the biggest risers in early trading in London as crude prices gain ahead of U.S. inventory data later. BP lifts 1.1% and Royal Dutch Shell is up 0.8% after the price of a barrel of Brent crude advances 0.7% to $77.88. Accendo Markets notes that oil is in focus after the OPEC meeting, a big drawdown in U.S. stockpiles and U.S. President Donald Trump calling on OPEC to pump more. "This evening's American Petroleum Institute oil inventories could move prices overnight with a knock-on for FTSE energy and oil majors tomorrow," says Accendo's Mike van Dulken.
- The dollar loses the gains it made on Monday, but ING says for now there is only one way for it to go--up. "There is no sign in the polls or U.S. domestic data that Trump's aggressive trade policies are having any ill-effects," ING says. "And with emerging markets clearly under pressure--including good quality positions in Poland--the dollar will likely win out in the near term," the bank adds. EUR/USD is up slightly at 1.1648, but the DXY dollar index is down by 0.2% at 94.81. ING says as long as DXY remains between 94.50 and 95.50 it will stay bid "ahead of good US jobs data later this week."

Jul 03 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices climbed after Libya declared force majeure on some of its supplies, although an overall rise in OPEC output and an emerging slowdown in demand held back markets.
- Gold prices fell for a second day to the lowest since December as strength in the U.S. dollar put pressure on the yellow metal, offsetting safe-haven demand amid mounting global trade tensions.
- Copper edged higher but was still near a seven-month low reached in the previous session as escalating U.S.-China trade tensions raised concerns about demand.
- Chicago wheat futures rose 1 percent as investors looked for bargains following deep losses in the previous session, although a lack of demand for U.S. shipments is expected to keep a lid on the market.
- Seeking to reduce the number and seemingly limit the scope of a multitude of federally sponsored advisory committees across the government, President Trump's administration has moved to exert more direct control over industry-government advisory panels affecting aviation. Beneath the bureaucratic and legal arguments, according to some industry participants, the crux of the issue is just how independent some advisory groups will remain. Panels assessing commercial drones and air-traffic control enhancements are among those affected. RTCA, which had been the FAA's primary organization for establishing industry-wide technical standards and recommended operational rules for some time, has seen its influence diminish. Some administration insiders also have privately criticized, and talked about reining in, an advisory panel responsible for independent safety reviews of NASA programs. Administration supporters, however, argue industry-based standard setting will continue.
- Federal air-safety regulators continue regulatory maneuvers to cope with Trump Administration mandates to eliminate two existing rules for every new one proposed. The Federal Aviation Administration seeks to issue safety rules based largely on predictive analyses of airline incidents before they turn into accidents, but that's proving a hard sell with the Office of Management and Budget. "We're doing a lot of education of OMB," according to Lirio Liu, the head of FAA rulemaking. Despite the challenges, she told a US-European aviation conference that so far the agency has complied with OMB requirements "while meeting our safety goals."
- Two senators and two congresswomen have asked the Government Accountability Office to undertake a review of gender differences in the hiring, pay and promotion of federal employees. Sens. Patty Murray (D., Wash.) and Tammy Duckworth (D., Ill.) and House members Rosa DeLauro (D., Conn.) and Katherine Clark (D., Mass.) say the government hasn't conducted a study like this since 2009. At that time, the GAO found a 7c pay gap--meaning women made 93c for every dollar a man in a comparable position made--that wasn't explained by experience, education or other relevant factors, resulting in a nearly $5,000 yearly pay differential.
- Bank of America Merrill Lynch says it expects the dollar to rise further, with EUR/USD likely falling to 1.12 by the end of 3Q, though recovering to 1.14 by end of 4Q. Ten-year Treasury yields should stand at 3.25% by the year-end, BAML says. "The U.S. dollar is only marginally higher since late May. We expect another leg higher, driven by cyclical and monetary policy divergence," says BAML, adding that the dollar should rise against all major currencies, except the Japanese yen, given global trade war uncertainties. BAML says the DXY dollar index is around 9% cheap relative to its medium-term fair value.
- Two offsetting factors are likely to keep USD/JPY around 110 for the rest of the year, says Rabobank. Both the dollar and the Japanese yen are considered safe haven currencies, but the yen "has strong safe haven credentials," which means investors should buy more of it as global trade war risks loom. At the same time, interest rate differentials should be supportive for the dollar, given that "the Federal Reserve is by a large margin the most hawkish central bank in the G10." USD/JPY is last at 110.78 on Monday, flat on the day even as the dollar rises against other currencies due to global trade uncertainties.
- Unless worries of a full blown trade war evaporate in the second half of 2018, investors are likely to continue buying safe-haven currencies, including the dollar, Japanese yen and Swiss franc, says Rabobank. Some question the dollar's status as a safe haven, given the U.S. trade and budget deficits, but Rabobank says "the sheer liquidity associated with the dollar means that for some investors the dollar will always be a safe haven."
- Equities in the emerging world are falling as the election of a leftist leader in Mexico and escalating trade-war rhetoric push investors out of stocks that are sensitive to global growth. The MSCI EM index drops 1.1%, MSCI Mexico is down 3.5%, and stocks in China, Argentina and Brazil are down sharply. Recent tariff threats, if realized, would extend tariffs to more than 4% of world imports, says Oxford Economics, a tenfold rise over tariffs that have been imposed so far. "The threat to world growth is significant," the firm says, and could mean a cut to world GDP of 0.4% next year.
- Sterling shows little reaction to the June U.K. manufacturing PMI, which at 54.4, came in higher than the expectations in a WSJ poll for 53.7, and slightly higher than the downwardly revised figure for the previous month of 54.3. GBP/USD is last down 0.3% at 1.3171, up just slightly from around 1.3158 just before the release. EUR/GBP is down 0.1% at 0.8841, little changed from beforehand. "The performance of the U.K. manufacturing sector remained relatively subdued in June, especially when compared to the marked pace of growth seen before the turn of the year," the report says. "Output and new orders rose across the consumer, intermediate and investment goods industries. However, the overall rate of expansion in manufacturing output slowed, as growth of new order inflows improved only mildly."
- EUR/USD falls by 0.6% to 1.1629 due to broad based dollar strength, but also due to political issues in Germany and because of U.S. President Donald Trump's comment that the EU was possibly as bad as China, only smaller, when it comes to trade. German Chancellor Angela Merkel is in the process of discussing the migration deal that was reached at the EU summit with the CDU and CSU leaders, but CSU leader and Interior Minister Horst Seehofer on Saturday said he isn't satisfied with the deal and has offered his resignation. "Until an agreement is reached with the Bavarian sister-party, the CSU, the future of the government in its current form remains uncertain," Commerzbank says.
- Trump's ability to move the oil market works both ways. After an administration official last week said countries risk sanctions after November if they import Iranian oil--sending crude surging--the president's Saturday tweet about asking Saudi Arabia to substantially boost output has oil going the other way in Asian trading this morning. Futures are back near session lows with August WTI off 1.2% at $73.22/barrel and September Brent down 1.3% at $78.18 after the market's big gains of the past week-plus were recent enough for some profit-taking. Iran's OPEC representative told Bloomberg that if the Saudis oblige Trump in boosting output some 2 million barrels/day, "that means he is calling on them to walk out from OPEC."
- The Mexican peso has risen in Asian trading following exit polls showing that leftist presidential candidate Andres Manuel Lopez Obrador--whom surveyed have long showed in the lead--winning the presidency by a clear margin. Opponents quickly conceded. The dollar is at MXN19.77 after finishing Friday at MXN19.91. Esteban Polidura, CIO for Mexico at UBS Global Wealth Management, thinks the local stock and bond markets are liable to show their own strength Monday "because the uncertainty factor is not there any more." He adds if Lopez Obrador's victory speech is market-friendly and conciliatory, "we would see further strength of the peso and some other assets."
- It's a muted start for Asian stocks as markets begin a new month, and for some a brand-new financial year. The Nikkei is lagging early, dropping 0.3% as automakers drop some 1% on Trump's weekend auto-tariff talk. South Korea's Hyundai is down similarly, and the Kospi index is essentially flat in the opening minutes along with Australia's S&P/ASX 200. New Zealand's NZX 50, among the few indexes which didn't log decent gains on Friday, is up 0.3% at midday.

Jul 02 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell by more than 1 percent as supplies from top exporter Saudi Arabia rose and as signs of an economic slowdown in Asia dented the outlook for demand.
- Gold prices edged lower as the dollar firmed after last week's U.S. inflation data supported the Federal Reserve's outlook for future interest rate increases. 
- London copper was steady near its lowest since late March after China's manufacturing growth tempered in June, reflecting a slowdown in the real economy and simmering trade tensions with the United States.
- Chicago wheat futures rose for a second day to trade near last session's one-week high, with prices underpinned by an estimate of lower production in France.
- The euro slipped back in Asian trade after German Chancellor Angela Merkel was dealt a fresh blow when her interior minister offered to quit in an escalating row over migration policy.
- EUR/USD falls by 0.6% to 1.1629 due to broad based dollar strength, but also due to political issues in Germany and because of U.S. President Donald Trump's comment that the EU was possibly as bad as China, only smaller, when it comes to trade. German Chancellor Angela Merkel is in the process of discussing the migration deal that was reached at the EU summit with the CDU and CSU leaders, but CSU leader and Interior Minister Horst Seehofer on Saturday said he isn't satisfied with the deal and has offered his resignation. "Until an agreement is reached with the Bavarian sister-party, the CSU, the future of the government in its current form remains uncertain," Commerzbank says.
- Trump's ability to move the oil market works both ways. After an administration official last week said countries risk sanctions after November if they import Iranian oil--sending crude surging--the president's Saturday tweet about asking Saudi Arabia to substantially boost output has oil going the other way in Asian trading this morning. Futures are back near session lows with August WTI off 1.2% at $73.22/barrel and September Brent down 1.3% at $78.18 after the market's big gains of the past week-plus were recent enough for some profit-taking. Iran's OPEC representative told Bloomberg that if the Saudis oblige Trump in boosting output some 2 million barrels/day, "that means he is calling on them to walk out from OPEC."
- The Mexican peso has risen in Asian trading following exit polls showing that leftist presidential candidate Andres Manuel Lopez Obrador--whom surveyed have long showed in the lead--winning the presidency by a clear margin. Opponents quickly conceded. The dollar is at MXN19.77 after finishing Friday at MXN19.91. Esteban Polidura, CIO for Mexico at UBS Global Wealth Management, thinks the local stock and bond markets are liable to show their own strength Monday "because the uncertainty factor is not there any more." He adds if Lopez Obrador's victory speech is market-friendly and conciliatory, "we would see further strength of the peso and some other assets."
- It's a muted start for Asian stocks as markets begin a new month, and for some a brand-new financial year. The Nikkei is lagging early, dropping 0.3% as automakers drop some 1% on Trump's weekend auto-tariff talk. South Korea's Hyundai is down similarly, and the Kospi index is essentially flat in the opening minutes along with Australia's S&P/ASX 200. New Zealand's NZX 50, among the few indexes which didn't log decent gains on Friday, is up 0.3% at midday.

Jun 29 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices dipped amid escalating trade friction between the United States and other major economies, although crude markets remain tight due to supply disruptions and generally high demand.
- Gold rose after slipping to a more than six-month low in the previous session, as the dollar retreated from recent highs amid a rising euro, but the yellow metal was on track for its worst month since November 2016.
- Zinc shrugged off early losses to trade higher for a third day on the prospect of Chinese smelters cutting output by 10 percent in response to low prices and treatment charges.
- U.S. soybeans edged lower, leaving the oilseed poised to finish the month down 13 percent as concerns about trade tensions between the United States and China roil prices.
- The FTSE 100 index is expected to open 40 points higher at 7655, according to London Capital Group, after a positive close in U.S. stocks and on relief that the EU agreed a migrant deal at a summit. This may be enough to ensure a more upbeat tone heading into the weekend, although concerns about trade wars linger and will leave stocks vulnerable to further selling. "There was a slight increase in optimism across the US session, and whilst risk trends stabilised, they are far from being at encouraging levels," says Jasper Lawler at LCG. Traders will watch out for the final estimate of U.K. 1Q GDP due at 0830 GMT.
- China canceled purchases of 120,000 metric tons of US soybeans for 2017-18 according to USDA's weekly export sales data ahead of the county's potential tariffs next week. The cancellations indicate that China intends to bypass the US in the global market and won't return unless necessary, said Karl Setzer from MaxYield Cooperative. Growing trade concerns coupled with positioning for Friday's USDA acreage and stocks data mean "nobody wants to jump in and buy these futures today," Setzer said. China is due to enact tariffs on US soybeans on July 6. Soybean futures for July fall 0.1% to $8.67 a bushel at the Chicago Board of Trade. July corn contracts fall 0.4% to $3.51 while July wheat is little changed at $4.79 3/4.
- The trigger for a jump in the Canadian dollar could be the next Bank of Canada meeting on July 11, Societe Generale says. Since mid-April, USD/CAD has been rising, but "after feeling the pain on the back of escalating trade wars and deceptive Canadian data, the Canadian dollar is now probably oversold," SocGen says. Which means that with the derivatives market pricing an interest rate increase probability of 50%, "the currency will likely ... bounce sharply if the central bank eventually hikes rates," says SocGen, adding "a hike remains a very possible scenario." The Canadian dollar strengthens, with USD/CAD having hit a six-day low of 1.3245. USD/CAD is last down 0.6% at 1.3263.
- Less than two weeks after proposing creation of a separate "space force," President Trump isn't easing up public pressure to set up a new branch of the US military. During a campaign-style speech in North Dakota, the commander in chief got loud applause when he described military initiatives in space as "the new frontier," and stressed the importance of maintaining American superiority in that warfighting realm. Trump also repeated that when it comes to civilian space efforts, his administration wouldn't be unhappy if high-profile commercial space companies founded and run by billionaires Jeff Bezos and Elon Musk beat the US government in human exploration of the solar system. "Let's help them," the president told the cheering crowd. "Let's make it really good for them."
- Amazon is calling entrepreneurs to form delivery companies to carry its packages. Part of the urgency in that the initiative may stem from President Trump's recent criticism of the US Postal Service's business with Amazon. Amazon uses the USPS for roughly 50% of its more than 1B US package deliveries, according to analyst estimates. And even a $1 increase per package could cost it an extra $1.8B, Deutsche Bank analysts have projected.
- Moody's identifies Argentina and Turkey as "among the most vulnerable to the US dollar appreciation." This is more of a confirmation though for investors, who have been selling the Argentine peso and the Turkish lira for weeks now. USD/ARS rose to a record high earlier this month and hasn't gone much lower than that, last trading up 1.2% at 27.75. USD/TRY isn't much further from its record high either, despite two interest rate increases and more political stability after the elections. USD/TRY is down by 0.8% at 4.58 on Thursday, however. Brazil, China, India, Mexico, and Russia "are among the least vulnerable to currency pressures because of their low reliance on external capital inflows," Moody's says.
- Investors in European steel companies are over-egging fears about the impact of trade rows, says Deutsche Bank. The brokerage notes that concerns about macro and trade friction have led steel equities to correct by 15% in the year so far, with stocks now priced for a 14% cut to consensus pretax earnings. "This appears to be over-priced: U.S. prices are at a multi-year high and Chinese prices provide support," says analyst Bastian Synagowitz. He says a decision by Europe on potential safeguard duties in response to U.S. tariff moves remains uncertain. "But we see a good chance European steel companies evolve as "net winners" from the situation. ArcelorMittal remains our preferred way to have exposure to the theme."
- Energy Secretary Rick Perry says he told top Russian energy officials in a meeting this week in Washington that US exporters of liquefied natural gas sees Europe as an important customer in the coming years, even if that means stepping on the toes of Russian firms that already supply much of that market. "US LNG is now going to be a very very important option for EU countries," he tells CNBC. "'Competition's a good thing' basically was our message and we wish [the Russians] well with their competition and we're now gonna put our shoulders to the task and try to get as much American LNG into the European community as we can."
- Irrigation and infrastructure specialist Lindsay Corp says it may be "more challenging" to pass on any further steel-price increases to customers, after its initial success in transferring higher freight and raw material costs. The warning comes alongside a big 3Q profit miss and more details of its turnaround plan, which includes a plant closure and asset sales.
- The 12% drop in Boeing shares since stepped-up trade rhetoric between the US and China misses the mark since commercial jetliners are unlikely to feature in the tits-for-tat, Sanford Bernstein says. It notes even the small number of Boeing jets initially targeted by Chinese tariffs have now been removed and -- above all -- the country simply needs US and Airbus jets to satisfy traffic growth. Boeing reports 2Q on July 25.
- The price of a barrel of Brent climbs 0.4% to $77.80, with commodity trader Marex Spectron noting that the energy complex is benefiting from anti-Iran sanctions, further supply outages and a large fall in U.S. stockpiles. This stands in contrast to miners, which are down following downbeat Chinese economic news, he says. Brent's rise comes in the wake of the Energy Information Administration saying Wednesday that U.S. crude oil inventories dropped 9.9 million barrels last week to 416.6 million barrels, far exceeding market expectations of a 2.8 million-barrel decline.
- US tax law changes are paying off for Walgreens Boots Alliance shareholders. The company announces a $10B share repurchase program and a 10% dividend increase, moves that come as the company pays far less in US taxes. Walgreens said it's tax rate in the most recent quarter was 7.6%, compared to 12% a year ago due to tax-law changes enacted in December.

Jun 28 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- U.S. oil prices dipped away from three-and-a-half year highs amid high output from Russia, the United States and Saudi Arabia, although unplanned supply disruptions elsewhere and record demand stemmed a bigger decline.
- Gold prices inched up as the latest developments in the U.S.-China trade row led to a slight retreat in the dollar, but was still near a six-month low hit in the previous session.
- Shanghai base metals prices rose, with lead hitting a 19-month high, as they continued to recover from a sell-off triggered by trade war tensions between China and the United States.
- Chicago wheat futures edged lower, falling for four in five sessions as ample global supplies and pressure from harvest of the U.S. winter crop weighed on the market.
- The ongoing US-China trade dispute could push China to accelerate economic reform needed to solve key issues in the agricultural sector and become more self sufficient, says Rabobank in a note. It suggests this will play out with China strengthening its R&D and speeding up of commercialization in new crop seeds, animal breeds, animal nutrition and alternative proteins. It also expects to see China developing innovative rural financial solutions tailored to the needs of Chinese farmers.
- An escalating trade dispute with China could pose a threat to U.S. economic growth, St. Louis Fed President James Bullard says, especially if it results in a meaningful slowdown in the world's second-largest economy. "To the extent that you see China as an economy that could be fragile and is export-based, if the trade war heats up, it could...disrupt Asian growth in a way that we haven't seen in the last 15 years," Mr. Bullard said. Another risk from a general shift in U.S. trade policies, as President Donald Trump has signaled, is that a new wave of tariffs "would scramble the global supply chain and cause a lot of transition costs."
- Fed Vice Chairman for Supervision Randal Quarles doesn't see major economic impacts from trade battles that would change the Fed's monetary policy trajectory. "This is a tariff dispute" rather than a "trade war," Mr. Quarles told the Utah Bankers Association. The tariffs' "macroeconomic consequences are quite small," Quarles said, though he added "future events could evolve from where they are currently and could cause us to come to a different view."
- US Ambassador to the UN Nikki Haley met with Indian Prime Minister Narendra Modi in New Delhi and discussed the importance to the US that India "lessen its dependence" on oil from Iran as part of a wide-ranging meeting about US-India relations, Haley says. After withdrawing from an international deal with Iran restraining its nuclear program, the US has threatened to impose sanctions on companies that do business with it. Earlier this week, Trump administration officials said they would consider imposing sanctions on companies in countries that purchase any Iranian oil after Nov. 1. India is a major buyer of Iranian oil. Haley describes the meeting overall as a positive discussion of ways to expand US-India cooperation in several areas including trade and defense. Indian officials didn't immediately comment on the meeting.
- Chalk up another apparent victory for The Trump administration's tariffs on solar imports, which were meant to help ailing US solar panel makers. LG Electronics says it is planning to open a new solar panel assembly plant in Alabama that is expected to produce more than a million solar panels annually starting early next year. LG is just the latest solar maker to boost operations in the US. China's JinkoSolar is opening a factory in Florida, and FirstSolar is planning another in Ohio. Meanwhile, SunPower has agreed to acquire SolarWorld Americas, one of the embattled panel makers that petitioned for tariffs.
- Marvell Technology shares are up more than 3% after Deutsche Bank analysts upgrade the stock to buy, citing the recent underperformance of its shares due to concerns that the ongoing trade disputes could impact Marvell's acquisition of Cavium. Analysts said they "find it hard not to believe" the deal will get approval from China and go through by the November 19 merger agreement deadline given the deal's size and its existing approvals from US and Poland. The acquisition, valued at about $6B, will be a positive near-term catalyst for the company, they said. Marvel shares are up 3.7% to $20.66 and Cavium gains 2% to $80.77.
- The U.S. dollar "should remain at the same value" as it was before the U.S. started implementing import tariffs if China, or Europe, or any other affected country, retaliates with the same amount of tariffs, says UBS. "In sum, the tit-for-tat tariff exchange should be currency neutral." The Chinese government "has communicated that it is willing and capable to continue matching U.S. measures," UBS says. Europe and Canada have also imposed tariffs on some U.S. products, although some have argued it is not matching the weight of U.S. tariffs.
- The U.S. is likely to achieve a negotiated settlement with its trading partners, but a "resolution could be further away than first thought," says UBS. Which is why the Swiss bank is trimming its "overall direct exposure to the U.S. dollar...for now," it says. The U.S. has so far imposed tariffs on steel and aluminum imports, and $34 billion of further import tariffs targeting China are due to take effect on July 6. The U.S. also threatened to impose tariffs on European cars. Both Europe and China have retaliated with some tariffs and have threaten to impose others.
- S&P places Harley-Davidson on credit watch with negative implications in the wake of the motorcycle maker's disclosure this week that it's facing higher costs as a result of retaliatory tariffs by the EU on Harley's exported motorcycles. "Combined with other significant headwinds, [the tariff] could cause margin deterioration and increase business risks over the next several years," the credit-rating agency says. "We could lower our rating on Harley as a result." Harley says the EU tariff will add about $2,200 to the cost of Harley's US-made motorcycles in Europe. The company estimates total incremental cost from the tariff will be $30M-$45M in 2018 and $90M-$100M on an annual basis. Harley plans to move production of motorcycles for the European market out of the US to avoid the EU tariff. Shares up slightly at $41.38.
- US stock futures erase most of their earlier losses as the Trump administration decides to rely on existing laws to restrict Chinese investment in the US, dropping consideration of alternative approaches that have pressured equities in recent sessions. S&P futures are down 2.25 points an hour before the opening bell after being down more than 12 points prior to the US announcement. Treasury yields are little changed around 2.85%, after an initial spike on the news.
- The U.S. crude price could hit $76 a barrel as the Trump administration presses allies to stop buying Iranian oil by November, says CMC Markets. The spread-betting group says that OPEC's deal to boost production by a million barrels won't alleviate the loss of Iranian exports completely even if Saudi Arabia lifts July output. The U.S. move is also likely to push U.S. prices higher. "The tightness in global and U.S. supplies isn't likely to be helped by production outages in Libya and Canada, as well as the limited ability of other OPEC countries to up their production capacity in such a short space of time, which suggests we could see U.S. crude head towards $76 a barrel in short order," says CMC's Michael Hewson.
- Near-term indicators for the global economy are positive but even if the environment looks supportive for risky assets, risk factors linked to trade and eurozone politics may temper investor sentiment, says NN Investment Partners. Valentijn van Nieuwenhuijzen, chief investment officer at NN IP, says the crucial question for markets is how long the economic consolidation will last. "The key issues over the next six months will revolve around U.S. trade policy and the risk of a trade skirmish evolving into an outright trade war and eurozone politics where the stance of the Italian government on budget and reforms relative to the rest of the region will be crucial," Mr. van Nieuwenhuijzen says.

Jun 27 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices rose following supply disruptions in Libya and Canada and after U.S. officials told oil importers to stop buying Iranian crude from November.
- Gold prices extended fall to a six-and-a-half-month low as the U.S. dollar steadied and investors increasingly turned to other safe-haven assets, amid expectations of more interest rate hikes by the U.S. Federal Reserve.
- London copper prices slid to their weakest since April as worries over U.S. trade policy reduced risk appetite, with other industrial metals also trading near multi-month lows reached in the previous session.
- Chicago wheat futures rose, snapping three sessions of losses on bargain-buying, although the rapid pace of the U.S. winter crop harvest and beneficial rains in Australia capped gains.
- The FTSE 100 is expected to open 32 points higher at 7569, according to London Capital Group, as higher oil prices are set to lift energy stocks, and after a lack of news overnight that may have further intensified trade concerns. "Silence on the trade war radio provided investors with breathing space and the opportunity to reassess the probability of the White House going after Chinese investments," says Jasper Lawler at LCG. "European bourses look set to follow Wall Street higher, despite some softness in Asia overnight," he says. Shares in Whitbread and Bunzl are likely to be in focus after updates on sales and trading.
- European bourses should benefit from ebbing trade concerns and energy stocks' performance, London Capital Group says. "Silence on the trade war radio provided investors with breathing space and the opportunity to reassess the probability of the White House going after Chinese investments. The lack of headlines also enabled traders to switch their attention to other areas of the market, like the rallying price of oil," it says. European markets should open higher despite a weak session in Asia, LCG says.
- Canadian Finance Minister Bill Morneau tells reporters the federal Liberal government "absolutely will stand behind" businesses and workers hurt by US tariffs on steel and aluminum, adding new financial measures could be in the offing in the coming days. His comments come following a day of pointed testimony before lawmakers about how US tariffs are already starting to squeeze firms. After meeting with his provincial treasury counterparts, Morneau says the collective view "is that we need to stand strong. We need to show resolve to demonstrate to the Americans that these tariffs they have put on us are not appropriate."
- Harley-Davidson shares briefly clawed their way back into positive territory late in the session before declining again, though well off earlier lows after President Trump unloaded more displeasure at plans to move more assembly work overseas. Volume twice the 30-day average, implying investors split over the potential fallout from the White House intervention. Shares recently off 0.7% at $41.27, having dropped as low as $40.46.
- USDA Secretary Sonny Perdue's a family man--many of his children and grandchildren crowded into his confirmation hearing last year--and he compares the current US-Canada tensions over trade to a squabble between close relatives. "We're practically familial," he says at a WSJ event in Chicago, citing the world's longest border. That said, "Canada has taken the US for granted," Perdue says, singling out what he calls Canada's dairy-support system that guarantees income for Canadian dairy farmers who contribute to a global oversupply of dairy products that's weighed on prices for producers in the US, New Zealand and elsewhere. "While we're a family, occasionally we have to confront one another," he says, adding he believes an agreement with Canada will come.
- If President Trump thinks oil prices are too high--as he's said in tweets--his administration didn't help the matter today. Late-morning comments regarding Iran from a senior State Department official sent prices surging to a nearly one-month high above $70. The official said Washington's decided not to allow some allies to stop importing Iran oil slowly over many months, and instead wants all Iran oil imports to be "zero" by Nov. 4. "When that news hit the market, crude rallied...and it appears to be driving the market to even higher levels in view of a situation of strong demand and refineries running at 97% capacity," says Alan Levine at Powerhouse in Washington. WTI rises 3.5% to $70.48, a nearly one-month high.
- A Wisconsin business leader is coming to the defense of Harley-Davidson as the Milwaukee motorcycle maker faces attacks and threats from President Trump on Twitter. "Harley-Davidson is doing what a business has to do," says Kurt Bauer, chief executive of the Wisconsin Manufacturers & Commerce, the state's chamber of commerce. "They have to manage their costs. Their costs just went up." Harley itself has said little since it announced Monday it would shift some production to Europe to avoid disruption and lost business from the EU's retaliatory tariffs.
- The US plan to cut Iran's oil exports is not realistic as it was never achieved under the previous administration of Barack Obama, says a former official at the Department of Energy. The US expects all countries to cut oil imports from Iran to "zero" by Nov. 4 or risk sanctions, a senior US State Department official said on Tuesday, expressing a toughening of the Trump administration's Iran policy as Washington tries to politically and economically isolate Tehran. Oil exports are "not a switch you can turn on and off," says Antoine Halff, who is now a senior research scholar at the Center on Global Energy Policy at Columbia University. "It's like saying you can hit the nuclear button but [Iran's oil exports] can't realistically fall to zero."
- Amid heightened trade uncertainty, Canada's factory sector was unequivocal in testimony before country's lawmakers: An imperfect Nafta is far superior to no Nafta and a trade war with the US, Canada's most important customer. The testimony from Matthew Wilson, vice president of the Canadian Manufacturers and Exporters, was meant to get lawmakers to focus on a kickstarting the Nafta talks, which have stalled, Wilson said a renegotiated Nafta would likely bring an end to US tariffs on Canadian steel and aluminum, and remove threat of levies on Canada's car sector. "We need to find a path forward on Nafta talks," Wilson told parliamentary trade committee.
- USDA Secretary Sonny Perdue says the agency aims to have a plan in place by this fall's harvest to financially shield US farmers from low crop prices arising from trade disputes. Perdue acknowledges farmers prefer "trade, not aid" and that they'd rather the US-China trade dispute be resolved before China's tariffs on US soybeans kick in early next month. But he also says that farmers are "patriotic" and understand the Trump administration needs to be tough with China, hence the need for a "compensation plan" that would help cover bills if crop prices dive on reduced exports to China. "We're hoping we can have some type of plan out there to producers by the time they start harvesting this fall."
- A Canadian steel producer with customers in Canada and the northeastern US says its business model will no longer work if 25% tariffs on US steel imports continue. Stephen Young, from Ontario-based Janco Steel, tells lawmakers at a parliamentary committee the firm's US business dropped by 60% in June compared with April and May, after the US tariffs were implemented. Young says the firm has frozen all hiring and may have to lay off workers as a result of the tariffs. Janco is also facing cash-flow problems because it must pay its customs broker within 5-6 business days to cover the cost of tariffs, but doesn't get paid by customers for 50-60 days, he says. Young calls for the Canadian government to provide money received through its retaliatory tariffs to steel companies to help with cash flow and keep them competitive. "If these tariffs remain in effect for much longer, our current business model simply does not work," he says.
- Harley-Davidson isn't the only Wisconsin export that's run into a delicate spot. As the US and China face off over trade, Beijing recently introduced tariffs on American exports of ginseng, whose root is prized in Chinese medicine, bringing duties to 30%. Some 85% of US ginseng is exported, most of which ends up in China. Around Marathon City, Wis.--the US's ginseng capital--the 180 or so producers that make up the bulk of the industry are due to start harvesting this year's crop in the fall. Come September, they're concerned that they'll have fewer places to sell it. Producers are reluctant to try and pass along the costs to consumers, says Bob Kaldunski, president of the Ginseng Board of Wisconsin, lest that shift demand to rival Canadian producers. US farmers will likely plan to swallow the cost themselves. " It's something we're concerned about," he says.

Jun 26 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices edged up on uncertainty over Libyan oil exports, but gains were dampened by an expected increase in supply from producer cartel OPEC and by an intensifying trade conflict between the United States and other major economies.
- Gold prices edged lower, pressured by prospects of rising U.S. interest rates, while an easing dollar and escalating trade tensions between the United States and other major economies supported the metal.
- Copper futures lost more ground with pressure from escalating trade tensions between the United States and top industrial metals consumer China.
- Chicago corn and soybean futures slid for a second day, extending chunky declines from the last session as agricultural markets remained under pressure amid U.S.-China trade tensions.
- The White House may have a glass jaw, says CFD chief market strategist Greg McKenna. "When the Dow drops 500 points on the back of a story that the administration is going impose restrictions on China--one consistent with previous on-the-record comments--we see Treasury Secretary Mnuchin and trade attack dog Navarro walking things back. Everyone has a plan until they get punched in the mouth." McKenna says Mnuchin's effort to calm the market Monday "failed," and he was followed by Navarro saying no investment-restriction plans exist for China. He also called the market's moves an "overreaction," McKenna notes. The Dow finished down 328 points, or 1.3%, while the Nasdaq slid 2.1% to notch its biggest drop since April 6.
- European shares fall 2.1% as tech stocks lose ground in the face of trade-war jitters and cruise operator Carnival encounters choppy waters. The Stoxx Europe 600 drops 7.96 points to 377.05 while Germany's DAX declines 2.5% and France's CAC 40 retreats 1.9%. "Indices across the world have fallen sharply, as trade war fears prompt another reduction in risk appetite," says Chris Beauchamp at IG. "It seems the U.S. is hell-bent on falling out with everyone," he adds. Carnival drops 11% after it cut its full-year outlook. Semiconductor makers fall and Eutelsat drops 6.2% on fears that it will get involved in a bidding war for rival Inmarsat, whose shares rose 4.3%.
- Technology companies fall as investors analyze news that the Trump administration is planning to limit Chinese investment in US technology firms and block additional technology exports to Beijing. The S&P 500 Information Technology sector loses 2%, led by declines in chipmakers and semiconductor companies. The tech-heavy Nasdaq Composite is down 1.9%.
- Expectations for a July Bank of Canada rate increase have fallen sharply in recent weeks amid concern that US auto tariffs could push Canada into a recession, Gluskin Sheff & Associates chief economist David Rosenberg says. Market-based odds of a rate increase at BoC's announcement on July 11 are now below 50%, he says in a note to clients, down from around 80% a couple of weeks ago. Economic data released in recent weeks suggests April GDP will be flat and 2Q GDP could come in around 1.3% annualized, which would be well below BoC's last forecast. If President Trump follows through on a threat to add a 25% tariff on auto imports, Rosenberg says, that "will easily drain a percentage point off of Canadian growth at a time when it is running little better than pace as it is-- making a recession a possible threat."
- Harley-Davidson shares fell in heavy trade Friday, and now the bike maker announces it is shifting some production to counter tariffs imposed by the EU, its one island of growth in a tough market. Europe accounts for more than 15% of sales, but Harley will have to accept a hit to margins to avoid growth slowing. One danger is that ongoing trade talks with India -- where it already makes bikes -- falter and unleash fresh tariffs on imported components. Shares down 1.7% in pre-open trading.
- European shares fall as tech stocks and car makers take a hit from the latest trade spat between the U.S. and China. The Stoxx Europe 600 drops 1%, or 3.91 points, to 381.1 after U.S. President Donald Trump threatened to impose a 20% tariff on EU cars on Friday. The biggest faller among car makers was Ferrari, down 2.5%, followed by Porsche, Volkswagen and Renault. Also facing pressure were tech stocks such as Siltronic, down 4.3%, Micro Focus International declining 4.3% and BE Semiconductor Industries, falling 4%.
- "It comes as no surprise to see European car manufacturers taking a hit in early trade, with Trump threatening to impose a 20% tariff on EU cars on Friday," says brokerage IG, adding that relations between the U.S. and its allies seem to be deteriorating further. "It is clear that this disruption is not going away any time soon," it says, noting that the People's Bank of China has cut capital reserve requirements to free up funding in the face of a trade-war-induced economic slowdown. The Stoxx Europe Autos & Parts trades 1.7% lower.
- Europe's automotive industry is facing substantial risks from escalating trade disputes with the U.S., says Kepler Cheuvreux. "As long as Europe remains reluctant to engage the reassessment of its strategic relationship with America directly, at the highest level, it seems reasonable to assume that U.S. import tariffs on autos will come eventually," it says. The brokerage cuts its sector rating to underweight from neutral. A 20% tariff, as threatened by President Trump, would make exporting cars to the U.S. unprofitable, it says. Worries over potential tariffs have led to a risk premium, but "European autos will probably be a buy once the tariff damage is clear," KC adds. The Stoxx Europe Autos & Parts trades 1.4% lower.

Jun 25 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Brent crude oil prices fell over 1.5 percent as traders factored in an expected output increase that was agreed at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna on Friday.
- Gold prices edged lower pressured by a strong U.S. dollar amid prospects of higher interest rates, while global trade tensions kept the metal buoyed above a six-month low hit last week.
- London copper prices recovered from their lowest in more than three weeks hit in the previous session, after China cut banks' reserve requirements, improving liquidity and supporting prospects for metals demand.
- Chicago wheat futures slid for a second session with pressure from rains in some of the drought-hit areas in Australia and long liquidation by funds.
- CBA thinks Brexit bulls are likely to be left disappointed by Thursday's EU summit, meaning there's little to give the pound fresh impetus versus the dollar in a week that's light on data. The pair remain near 8-month lows, and the bank doesn't see the gathering resulting in much progress regarding Brexit negotiations. "We expect a more-intensive phase of negotiations over the coming months, and progress is more likely to be achieved by the October summit," adds CBA.
- Daimler is facing a "perfect storm of challenges" in 2018, says Barclays, following the German car maker's profit warning earlier this week. The company has to deal with China's tariff on cars imported from the U.S., slowing demand for buses in Latin America, and accreditation bottlenecks from new emissions regulation, which coincides with recalls for diesel vehicles that require additional testing, the bank says. "This comes on top of more temporary 2Q issues involving lower U.S. production levels as a result of a magnesium-part supply interruption and an early price reduction implemented in China following the initial cut to car-import tariffs announced in May," Barclays says. Daimler shares trade 0.4% lower, down 19% year-to-date.
- The White House is proposing to move the Bureau of Labor Statistics, the arm of the Labor Department which produces the monthly jobs report, to the Commerce Department. There it would be combined with the Census Bureau and Bureau of Economic Analysis, which produces reports on gross domestic product. The move, which would require congressional approval, is part of a wider proposal to reorganize the federal government. Housing the three major stats agencies under one roof would improve survey abilities and allow for coordinated technology improvements, the plan says. Other countries, including Canada and the UK, have centralized statistics agencies. The three agencies already work closely together. Census provides much of the raw data BLS and BEA analyze, and reports from all three agencies are released to the media at a briefing room inside the Labor Department. The proposed move would move about 15% of the current the staff at the Labor Department to the Commerce Department.
- US hog producers have been caught in the crossfire of President Trump's recent skirmishes over trade, with both China and Mexico introducing tariffs on American pork. And they're still feeling the fallout from one of Trump's earliest calls on trade: Pulling out of the 12-country Trans-Pacific Partnership. Japan, Canada, Chile and Peru--four of the six largest US pork buyers in the TPP--imported less American pork in the first four months of the year, according to the US Meat Export Federation. Australia bought more, while exports to Vietnam--a smaller market than the others--more than doubled. Many producers and meatpackers are feeling wistful about lost opportunities for export growth to some of the more carnivorous markets on the list.
- The Dow, down 0.7%, could post its longest losing streak since 1978 if it closes lower Thursday and Friday, according to the WSJ Market Data Group. The Dow is track for its eighth straight day of losses and is 2.4% lower this week. The latest round of $200B in proposed tariffs have weighed heavily on companies that could be vulnerable to rising prices, like Boeing and Caterpillar, which have declined 5.5% and 5.8%, this week respectively. If the Dow ends both Thursday and Friday lower, it would mark just the 11th losing streak of nine days or more since 1896, MDG says.
- The highly anticipated OPEC meeting on Friday is viewed as one of the most contentious in recent history, say analysts for Energy Aspects." This is perhaps the most politicized OPEC meeting there has been in years, from Trump's tweets and Saudi Arabia's alleged promise to the U.S. to backfill the market for losses due to Iran sanctions, to Iran, Iraq and Venezuela openly opposing any output increase and Russia talking down the market," say analysts in a recent note. "One week has heard it all."
- Foreign investors are likely to buy fewer U.S. government bonds if there is a full-blown trade war because central banks won't need to invest as much in the U.S., given that their countries won't make as many dollars from international trade, says Bank of America Merrill Lynch. Other analysts say the fall in investment would be a sign of retaliation against U.S. protectionism. China, for instance, as the U.S.'s biggest creditor, has bought U.S. bonds as international trade grew. The dollar is the most common transactional currency, and so the dollars that China accumulated were invested by reserve managers. "Lower global trade volumes should result in a slowdown of global reserve accumulation," which should result in a weaker need to spend dollars on U.S. assets.
- The increase in U.S. dollar is likely to be more than just a temporary blip, as previously expected, says Barclays. The dollar was falling last year as investors were reading into the eurozone economic recovery a sign that the European Central Bank could soon raise interest rates. Then the dollar started rising slightly this year, as those expectations slowly quietened down, while the Federal Reserve was guiding on more interest rate rises. Now, the ECB has made it clear it won't raise rates at least till the end of summer of 2019. There are also political uncertainties in Germany and Italy. The divergence between U.S. and rest of the world monetary policy "will support longer and greater USD strength than we had anticipated," Barclays says.

Jun 22 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices rose by more than 1 percent in early Asian trading, pushed up by uncertainty over whether OPEC would manage to agree a production increase at a meeting in Vienna later in the day.
- Gold prices held steady, after hitting a six-month trough in the previous session, as the U.S. dollar pulled back from a 11-month peak on profit-booking.
- Copper prices were poised to decline for a second week, pressured by fears that trade conflict between Washington and Beijing would hit demand in China, the top consumer of industrial metals.
- U.S. soybean futures were on track for their fourth week of decline, pressured by concerns over demand from top importer China following a trade war between Washington and Beijing.
- The highly anticipated OPEC meeting on Friday is viewed as one of the most contentious in recent history, say analysts for Energy Aspects." This is perhaps the most politicized OPEC meeting there has been in years, from Trump's tweets and Saudi Arabia's alleged promise to the U.S. to backfill the market for losses due to Iran sanctions, to Iran, Iraq and Venezuela openly opposing any output increase and Russia talking down the market," say analysts in a recent note. "One week has heard it all."
- Twitter announces plans to acquire Smyte, a startup that focuses on safety, spam and security. Twitter has set improving the level of discourse and reducing abuse on its platform as a goal. Ahead of the US midterm elections, the company is under pressure to reduce the influence of misinformation on its social network, which it bans for violating its rules against spam. Twitter didn't disclose financial terms of the deal. Twitter falls 3.3% to $44.60.
- Foreign investors are likely to buy fewer U.S. government bonds if there is a full-blown trade war because central banks won't need to invest as much in the U.S., given that their countries won't make as many dollars from international trade, says Bank of America Merrill Lynch. Other analysts say the fall in investment would be a sign of retaliation against U.S. protectionism. China, for instance, as the U.S.'s biggest creditor, has bought U.S. bonds as international trade grew. The dollar is the most common transactional currency, and so the dollars that China accumulated were invested by reserve managers. "Lower global trade volumes should result in a slowdown of global reserve accumulation," which should result in a weaker need to spend dollars on U.S. assets.
- Shares in auto maker Daimler AG fall to their lowest since mid 2016 after the company warned that Chinese import duties on U.S.-built vehicles, as well as new European emissions regulation and diesel recalls, would hurt earnings. The shares last trade down 4.1% at EUR57.96, having dropped as low as EUR57.65, and David Madden at CMC Markets says if the falls continue the stock could target EUR55. "This is evidence that the escalating trade tensions between the US and China has the potential to hurt companies," he says.
- The increase in U.S. dollar is likely to be more than just a temporary blip, as previously expected, says Barclays. The dollar was falling last year as investors were reading into the eurozone economic recovery a sign that the European Central Bank could soon raise interest rates. Then the dollar started rising slightly this year, as those expectations slowly quietened down, while the Federal Reserve was guiding on more interest rate rises. Now, the ECB has made it clear it won't raise rates at least till the end of summer of 2019. There are also political uncertainties in Germany and Italy. The divergence between U.S. and rest of the world monetary policy "will support longer and greater USD strength than we had anticipated," Barclays says.
- Implied volatility in the world's most traded currencies shows markets "remain complacent about the risk of a full-blown trade war," says Societe Generale. USD/JPY volatility has dropped back to the year's lows, and is currently lower than at any time in 2015, 2016 and 2017, SocGen says. "EUR/USD and AUD/USD implied volatility have perked up recently from Italian political risks and U.S.-China trade tensions respectively, but are still trading notably towards the lower end of the range in recent years," SocGen adds. Implied volatility is an indicator of the cost of buying options in the foreign exchange market. If the risk of full-blown trade war would go higher, options would become more expensive, pushing up implied volatility.
- Sen. Mark Warner (D-VA), a prominent political voice on issues related to the gig economy, this week introduces legislation directing the Treasury Dept to conduct a study of tax issues related to independent, non-salaried work. The research would examine how to improve tax filing and compliance for workers such as freelancers, gig workers and others earning non-employee business income. Goals include making sure appropriate taxes are being collected by the IRS for non-traditional income; and making reporting, withholding and filing simpler for independent workers. Warner also asked the Government Accountability Office to study how taxes are reported and collected from people who earn income through online platforms such as Airbnb and Uber. Prior legislation of Warner's, to fund pilot programs offering benefits to gig workers, has gotten little traction.
- The Bank of Canada is likely to raise its benchmark interest rate in July, but Desjardins Group says worries over trade relations and the country's real estate sector mean the pace of future increases is uncertain. Firm's economists say the tone of recent BoC statements has been increasingly positive, with the central bank now "clearly signaling" its plans to raise rates in July. "What comes after that remains unclear for the BoC, but serious ongoing concerns about the real estate sector and trade relations could persuade it to keep its increases at a very gradual pace of just 0.25% every six months," Desjardins says.
- Goldman Sachs is betting buoyant domestic growth and tailwinds from tax cuts will propel further earnings growth over the next three years. The bank's analysts raised their estimate for S&P 500 EPS growth to 19% in 2018, 7% in 2019 and 5% in 2020. While those numbers still trail bottom-up consensus estimates, they are up from Goldman's earlier projections of 12% in 2018, 5% in 2019 and 3% in 2020. "The U.S. economy is growing, corporate profits are rising, and stock prices should continue to climb through 2019. However, the appreciation potential will be constrained by tightening monetary policy, a flattening yield curve, rising trade tensions and the upcoming midterm Congressional elections," Goldman writes.
- EUR/USD is likely to fall below 1.15, Societe Generale says. On Thursday, EUR/USD touched 1.1509, its lowest in three weeks. If it were to go below this level, it would fall to an 11-month low, suggesting 1.1509 is a strong support for EUR/USD. SocGen says "the contrast between negative sentiment in Europe and the continued optimism coming from the U.S. may be a recipe for an overshoot in markets." EUR/USD last trades down 0.2% at 1.1544.
- PG&E plans to take a $2.5B charge in 2Q related to a spate of deadly wildfires in California last October. The charge, PCG said in a filing, stems from the likelihood the company and its utility, Pacific Gas & Electric, will incur losses from 14 of the 16 fires that state fire investigators have so-far determined were sparked by PG&E utility equipment. Investigators are expected to release reports on several more October fires in the coming weeks and days, meaning PCG could face further losses. The charge is a warning of sorts for state officials, who PCG has been pushing to reform a utility liability law that could leave the company on the hook for multibillion dollar losses. PCG's CEO has called the rule "a risk to the financial health" of all California investor owned utilities.
- The euro falls against the dollar, touching a three-week low of 1.1509 given that a U.S.-EU monetary policy divergence, as well as political and trade uncertainties, are putting pressure on the common currency. The Federal Reserve continues to tighten its monetary policy, while the European Central Bank has committed to not raise interest rates at least until the end of summer next year. Political issues in Italy and Germany are raising concerns about eurozone stability. Comments from ECB member Ewald Nowotny on Wednesday confirmed ECB sees the risks for financial stability in Europe currently more political than economic. Mr. Nowotny said this will have an impact on the exchange rate.

Jun 21 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell as Iran signalled it could be won over to a small rise in OPEC crude output, potentially paving the way for the producer cartel to agree a supply increase during a meeting on Friday.
- Gold prices posted a six-month low, pressed down further by a firm dollar and as the U.S. Federal Reserve Chair confirmed an outlook for higher interest rates in the United States.
- London copper rebounded from a three-week low after China said it was eyeing cuts in banks' reserve requirement ratios (RRR) and other measures to spur economic growth, which could support copper demand in the world's top user.
- U.S. wheat futures eased after gaining in the previous session on fears that dry weather could hit production in top exporters Russia and Australia.
- Daimler and BMW shares open weak after the U.S.-China trade war prompted a profit warning at Daimler, which said Chinese import duties on U.S.-built vehicles would hurt earnings for the Mercedes SUVs it makes in Alabama. Daimler cites other factors, such as new emissions regulations, but called Chinese duties the "decisive factor." BMW, which manufactures cars in the U.S. that are exported to China, also slides, with investors nervous that other companies could issue profit warnings in the coming weeks as the effects of tariffs sink in. Daimler trades 2.8% lower after falling more than 3% at the open; BMW trades 2.3% lower.
- During today's presser, Trudeau was asked to reflect on his relationship with Trump, saying Canada's government has sought to develop points of mutual interest and that he's worked to show trade measures taken against his country "will often have negative impacts on workers in the United States." Earlier this month, Trump withdrew US support for a G-7 leaders' statement and called Trudeau "dishonest and weak" after the Canadian leader said the country wouldn't be "pushed around" on trade. Trudeau said today he would next see Trump at the coming NATO summit in Brussels and looked forward to a continued, constructive relationship.
- Canada Foreign Minister Chrystia Freeland tells reporters in Montreal she's encouraged by testimony before Congress from Wilbur Ross in Washington, in which the Commerce Secretary played down any security threat Canadian steel and aluminum pose to the US. "We think that's self evident and we have been saying that from the beginning," Freeland says following remarks before Montreal Council of Foreign Relations. Ross also said in testimony that the US runs a trade surplus with Canada on steel. Freeland, who has repeatedly said the metals tariffs on Canada are "unjust" and "insulting," said it was "good to hear all those comments from" the Commerce Secretary.
- The stock market's stability Wednesday has some analysts scratching their heads. Are investors no longer worried about the threat of a trade war? Perhaps not--for now, Bank of America Merrill Lynch analysts write in a report. Since the Trump administration rolled out tariffs on $50B of Chinese goods Friday, shares of companies with the most positive revisions to their EPS estimates have outperformed those with the most negative revisions. That's even as factors like a company's exposure to foreign revenues and susceptibility to inflation--things that investors fear could become a bigger headwind to corporate profits under a trade war--have appeared to have minimal impact on stock performance. "Scary headlines might be more hype than reality as of now," BAML says.
- Restaurant businesses in Washington, D.C. could be in for big increases to their labor costs. Voters there have cleared the way for the city to increase the minimum wage for tipped workers like bartenders and waiters to $15 an hour by 2025, up from $3.33 an hour now. Restaurant industry employers and some workers had campaigned fiercely against the initiative, warning they might have to cut back on staff hours, shed workers or even close their doors if the wage hike came to pass. Employees said they worried about job security and their tips drying up. It's possible the initiative might not end up going in effect--the city council has the ability to overturn ballot initiatives, and several council members have spoken out against it.
- Central banks which are tightening their monetary policy "may be caught by surprise if the trade situation worsens," says Invesco's Chief Global Market Strategist Kristina Hooper. "I believe is a strong possibility," Ms. Hooper says. She points to last week's International Monetary Fund report, which said that import tariffs could hurt global trade. This would bring "adverse effects for both the U.S. economy and for trading partners." However, risk appetite returns on Wednesday just after two days of risk aversion, with equity markets going up. Risk aversion diminishes in the currency markets as well, with USD/JPY trading slightly higher at 110.16.
- The dollar continues to rise slightly on Wednesday versus the euro, with EUR/USD down 0.1% at 1.1576, even as risk appetite recovers. But Saxo Bank analysts say "the degree to which the U.S. dollar can continue its broader rally if risk appetite stabilizes here is an open question." The U.S. currency, however, will certainty gain against the low-yielding, safe-haven Swiss franc, "even if the greenback heads sideways elsewhere," Saxo Bank says. If USD/CHF were to rise above 1.0050, it would open the door to highs above 1.03. USD/CHF is last up 0.1% at 0.9947.
- Tariffs or no tariffs, many farm-sector followers believe the time will come when China will have to import US-grown soybeans, due to the sheer number of hogs, chickens and other meat animals China raises -- South American producers can't meet China's full demand. But ongoing tension between China and the US could play to Chinese soybean buyers' advantage: So far this month, November-delivery soybean futures prices have dropped more than 10%. "We believe the Chinese government is betting that the trade dispute will be resolved before it becomes desperate for U.S. product and, in the meantime, the dispute will have helped drive soybean prices much lower," Vertical Group analysts write.
- Pressured by the lack of a clear political stance on Brexit and the lack of investors' expectations regarding a tighter monetary policy, sterling has lost nearly 8% against a strengthening dollar since mid-April, and is likely to weaken even further, says Rabobank. GBP/USD is last flat at 1.3182, and Rabobank expects it to fall below 1.30 in coming months and then end the year at 1.28. "Fears about the impact of trade wars and rising U.S. interest rates on risk appetite, and the resultant risk of a retrenchment from EM currencies, has been a contributing factor behind our constructive view on the dollar," Rabobank says. In the U.K., political uncertainty should keep sterling under pressure, the bank says.
- The dollar gains on Wednesday, even as equity markets calm as there are no further developments in the U.S.-China trade altercations. "The danger today, with only existing home sales due for release in the U.S., is that we see market stability drag on U.S. yields up and support the dollar," says Societe Generale. The dollar also rose in recent days, when markets were risk averse and equities fell, due to the U.S. currency's safe haven status. The dollar firms against most currencies Wednesday, with EUR/USD down 0.1% to 1.1580.

Jun 20 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices recovered some day-earlier losses in Asia, supported by a drop in U.S. commercial crude inventories and the loss of storage capacity in oil producer Libya.
- Gold prices were little changed after slipping to a near six-month low in the previous session, amid a steady dollar and firmer equities.
- London copper prices steadied after touching a three-week low earlier in Asian trading, but a deepening trade row between China and the United States capped any recovery in risk appetite.
- Chicago soybean futures edged higher with the market taking a breather after hitting its lowest in almost a decade in the last session on pressure from an escalating U.S.-China trade spat.
- EUR/USD continues to edge lower on Wednesday, last trading down 0.2% at 1.1567. Monetary policy divergence between the U.S. and eurozone, political issues in Germany, and increased worry of a full blown trade war, are keeping EUR/USD under selling pressure. "The margin for a EUR/USD rebound has become less pronounced than in the past," UniCredit says. "Looking at today, both ECB President Mario Draghi and Fed Chair Jerome Powell speaking in Sintra may attract attention, though both of them are largely expected to stick to the tones of their press conferences last week, and thus the ultimate impact on EUR/USD is likely to remain negligible."
- The London market is set to open higher after a broadly positive session in Asia as traders shrugged off jitters about the U.S.-China trade row. The FTSE 100 Index is tipped to rise 35 points to 7638. Jasper Lawler at London Capital Group says selling exhaustion has started to set in as markets become accustomed to U.S. President Donald Trump's "trade game." "Any fresh news of retaliation could see traders snatch risk back off the table quickly," he says.
- European bourses are expected to open in positive territory, London Capital Group says. "The markets have been trading on the same piece of general trade-war news for a while, as a result selling exhaustion has started to set in," it says. Still, the escalating tension between the U.S. and China continues to worry some investors and has them adopting a cautious stance, says Michael Hewson, chief market analyst at CMC Markets UK. "Given the tit-for-tat positions being staked out in the past few days some investors appear to be adopting the position of discretion over valor and locking in some profits, as concerns about a much deeper selloff start to gain traction," Mr. Hewson says.
- Phones are the biggest potential target in the latest round of tariff talk from DC. Some 3/4 were assembled in China in 1Q, according to IDC, including almost all iPhones. It puts Apple and many of its suppliers in a major pickle. If the US slaps tariffs on Chinese smartphone imports and if China retaliates with ones on components made in the US, Apple or its suppliers would either have to eat the cost or pass it on to consumers. Last year, Apple chose to protect its profit margin by passing on increased expenses from memory chips by hiking iPhone 8 and 8 Plus prices $50, notes Mehdi Hosseini at Susquehanna. "Any further escalation would force them to make tough decisions," he adds. Apple suppliers' stocks underperformed Tuesday in Asia and Apple dropped 1.6%.
- Home builders are urging the Trump administration to reconsider tariffs on Canadian lumber. The National Association of Home Builders said its leaders met with Commerce Secretary Wilbur Ross on Tuesday to ask the administration to resume negotiations with Canada over the North American lumber trade. The U.S. last year hit Canadian imports with antidumping tariffs, helping to stoke a rally that pushed lumber prices to records and hurt home builders. Rising lumber prices have added nearly $9,000 to the cost of an average single-family home, the NAHB says. The association's home-builder confidence index fell in June in large part because of the high cost of timber.
- JPMorgan Chase & Co. Chairman and CEO James Dimon called for "comprehensive immigration reform right now" in an internal memo to bank employees Tuesday that was reviewed by The Wall Street Journal. Dimon also chairs business trade group Business Roundtable, which released a statement urging the Trump Administration "to end immediately the policy of separating accompanied minors from their parents," according to Dimon's memo. Dimon, who leads the largest U.S. bank by assets, wrote that reform is necessary, including a legislative solution for DACA recipients that allows them to stay in the U.S. He added: "Fixing these issues will clearly boost the economy and help companies like ours hire great talent, but more importantly, it will reflect our American and core human values of fairness, decency and mutual respect."
- The American Medical Association says it will oppose the merger of CVS and Aetna, arguing the deal would have "anticompetitive effects" on Medicare's Part D drug benefit, pharmacy benefit-management services, health insurance and retail and specialty pharmacies. The doctor group, which previously opposed the now-scuttled combinations between Aetna and Humana and Anthem and Cigna, said the CVS-Aetna deal would "substantially lessen competition in many health care markets." Some analysts saw the CVS-Aetna deal, which is currently undergoing antitrust review, as potentially gaining some ground in the wake of the court ruling against the Justice Department's challenge of AT&T's takeover of Time Warner.
- Canadian officials are preparing for the possibility that the Trump administration imposes tariffs on motor vehicles and auto parts imported from its Nafta partner, Foreign Minister Chrystia Freeland told lawmakers. The government's support for its auto sector "will be equally firm and clear," she said. The Commerce Department has begun a probe on the need for tariffs on imported cars and auto parts on national-security grounds, similar to what was done before with levies on imported aluminum and steel. Freeland said US tariffs on vehicles and car parts from western allies would be "an unprecedented act" by the White House.
- USDA Secretary Sonny Perdue and other Trump Administration officials have mulled ways to shield US farmers from fallout as trade disputes expand with major food importers like China, Mexico and the EU. But some farmers aren't impressed. The National Association of Wheat Growers and US Wheat Associates call on President Trump to rethink a "tactical policy" of tariffs, saying that it makes the already-risky business of farming more volatile, while "the Administration's vague promises of protection for the farmers we represent offers little consolation."
- Canadian Foreign Minister Chrystia Freeland says the Liberal government is mulling financial aid for domestic steel and aluminum producers and their employees to deal with US tariffs on the metals. "[They] need our support," Freeland told lawmakers on a parliamentary trade committee. She added, "I agree we need to work on ways to directly support workers and industry. That work is underway." Canada last year offered a C$867M financial package for domestic lumber producers and their employees after Washington imposed 20% tariffs on Canadian softwood lumber, used mostly in the construction of homes.
- Companies funding political organizations risk angering employees and customers by supporting candidates or initiatives that run counter corporate policies, the Center for Political Accountability warns in a new report. Financial support for party organizations or state and local candidates can backfire if those funds are later traced to controversial policies, says the group, which also rates large public companies on their political-spending disclosures. The report notes more than two dozen well-known companies that favored US participation in global climate accords, but funded state attorney general candidates who sued to block clean-water and clean-air rules.
- US auto companies slump after President Trump directed his administration to consider an additional $200B of tariffs on Chinese exports. Investors worry those stocks could come under further pressure amid escalating trade tensions between Washington and Beijing. Auto stocks were already struggling after China promised to levy tariffs on high-value American exports, including US autos, in response to some $50B in tariffs the Trump administration had imposed last week. Shares of Ford and GM sank 1.9% and 4.1%, respectively, in recent trading. Roughly 5% of GM's total revenue comes from China, compared to Ford's 3.8%, according to estimates from FactSet.

Jun 19 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell on expectations that producer cartel OPEC and key ally Russia will gradually increase output after withholding supplies since 2017.
- Gold prices rose, supported by safe-haven buying, as an escalating trade spat between the United States and China sparked a sell-off in equity markets. 
- London metals gave up early gains, while Shanghai contracts continued their fall following an extended weekend after China said it would firmly respond to any measures by the United States to widen tariffs on Chinese goods, escalating trade tensions between the world's top two economies.
- Chicago soybeans slid 2 percent to their lowest since March 2016, while corn dropped for a fifth consecutive session on concerns over a deepening trade war between Washington and Beijing.
- The dollar fell against the yen and Swiss franc after U.S. President Donald Trump's threats of additional tariffs on China escalated a trade spat between the world's two largest economies in a worrying sign for global growth prospects.
- Beijing may target US businesses in China as bilateral trade tensions build up, says Deutsche Bank. US firms sold $448 billion worth of goods and services to China in 2017, including $168 billion through trade and another $280 billion through subsidaries' operations in China, the bank estimates. China's commerce ministry said today that it is considering a combination of of "qualitative and quantitative" measures in response to Trump's threat of imposing tariffs on $200 billion worth of Chinese products.
- European shares fall on fears that the U.S. trade spat with China could hit other regions. The Stoxx Europe 600 drops 0.8%, or 3.05 points to 382.86 after U.S. President Donald Trump laid out an extra $200 billion worth of Chinese products to be targeted by tariffs. "There's little sign that Trump is about to give up, with Chinese negotiations clearly sending out a message to the EU, setting a precedent to their discussions," says Joshua Mahony at spread-betting firm IG.
- Even if U.S.-China trade tensions escalate to the point where China starts selling some of its substantial holdings of U.S. debt, "oddly enough, it might be good for the dollar," says Marshall Gittler, chief strategist of forex trading analysis firm ACLS Global. If China sells U.S. Treasuries prices would fall sharply as yields rise, and the dollar has had a tendency to rise and fall along with U.S. Treasury yields in recent years, he says. The dollar benefits from elevated risk aversion due to concerns about U.S.-China trade conflict, and is last up against most currencies except the Japanese yen.
- The U.S.-China trade war could spread into the financial world if China starts selling some of its "massive" holding of U.S. debt, says Marshall Gittler, chief strategist of forex trading analysis firm ACLS Global. He says China owns some $1.18 trillion of U.S. Treasurys, or 30% of all foreign official holdings of Treasuries, "not to mention their holdings of agency bonds and others." China may be shooting itself in the foot because bond prices would plunge, but U.S. mortgage rates would also soar, he says. "China might feel the pain was worth it to make middle-class U.S. voters sit up and take notice."
- Sterling falls 0.4% to 1.3201 against the dollar, as the U.S. currency benefits from its safe-haven status on the back of an escalating trade conflict with China. But there are domestic issues facing the pound as well. Brexit talks haven't progressed much since March, while the June 28-29 summit is looming. The Brexit withrawal bill is still being debated in the U.K. parliament, while weaker U.K. economic data has lowered the chance of an interest rate increase this year. According to the derivatives market, there is only an 8% chance of a rate increase this Thursday, when the Bank of England meets. EUR/GBP is flat at 0.8773.
- Safe haven demand lifts the dollar as a trade war escalates between the U.S. and China, pushing EUR/USD down by 0.4% to 1.1577 while the DXY dollar index rises 0.1%. But Commerzbank says the dollar could also benefit on the grounds of macroeconomic fundamentals if the trade war continues. "As the U.S. economy is already at full capacity, import tariffs would likely fuel inflation," which in turn would increase the likelihood of further interest rate increase. The dollar falls, however, against the Japanese yen, the currency which typically gains most in times of risk aversion. USD/JPY is last down 0.8%, having reached a one-week low of 109.55.
- European bourses are expected to open lower as the escalating trade conflict between the U.S. and China looms over the market, Michael Hewson, chief market analyst at CMC Markets UK. "While it is easy to argue that a lot of yesterday's selloff is tariff-related and in particular China's retaliation to last week's U.S. tariffs, the narrative appears to be one of concerns about escalation, and how the U.S. administration will react as well as concerns about a spillover extending to the EU as well as the stalled NAFTA talks with Canada," Mr. Hewson says.
- Oil futures have turned lower after Trump announced he's seeking a list of $200 billion in possible additional tariffs to slap on China if it doesn't back down. It adds to the risk-sentiment seen during Asian trading yesterday, which sent oil futures down as much as 2% in Monday's action there before rebounding 3-4% during the course of European and US trading. With uncertainty continuing about just out big an output-cap increase might be from major producers later this week (predictions of a smaller increase than before helped fuel oil's rebound), expect topsy-turvy trading to continue. July WTI is down 0.45% at $65.55/barrel and August Brent is off 0.4% at $75.07.

Jun 18 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- U.S. oil prices slumped after China threatened duties on American crude imports in an escalating trade dispute with Washington.
- Gold prices inched higher after falling to a 5-1/2-month low in the previous session, as a trade dispute between the world's two largest economies triggered safe-haven buying, but a strong dollar put a cap on the upside.
- London copper slipped and touched a near two-week low hit in the previous session on pressure from a stronger dollar, while a holiday in China drained buying interest from the market.
- Chicago soybean futures ticked higher as the market took a breather following last session's deep losses that dragged the market to a one-year low on escalating U.S.-China trade tensions.
- The recent widening in emerging market, or EM, credit spreads and the weakening of EM local currencies aren't a sign of a deterioration in fundamentals, says Enzo Puntillo of GAM Investments. Instead, he says, the gradual rise in U.S. interest rates and a stronger dollar represent a considerable headwind for the entire EM asset class, and the market is focusing specifically on these factors. Italy-related uncertainty has further increased risk aversion among global investors. GAM considers the correction an opportunity to further increase exposure in various countries and it believes it's a good starting point for investors who aren't yet invested in this asset class.
- It is unclear which direction currencies will take this week due to the escalating global trade war risks, says ING. But one thing is clear: emerging market currencies, especially Asian ones, are likely to get hurt by the fall in the risk appetite on Monday. Except the Japanese yen, which acts as a safe-haven. USD/JPY is last down by 0.1% at 110.53.
- The dollar rises on safe-haven demand as investors become more risk averse due to escalating global trade war fears after the U.S. imposed tariffs on China. China retaliated, pushing U.S. President Donald Trump to say he could respond with even more tariffs. Though the dollar is rising, and China "can neither feed nor water itself and has much less favourable demographics," politically, these developments are affecting the U.S. more than China, RBC says. "Chinese President Xi retains a significant political advantage over Trump and therefore has a greater staying power in a drawn out trade war," RBC says. EUR/USD falls 0.3% to 1.1578, while the DXY dollar index is up 0.2%.
- European markets should open in negative territory as escalating trade tensions unnerve investors, but losses may be limited, says Michael Hewson, chief market analyst at CMC Markets UK. On Friday, concerns about an impending global trade war were stoked by China responding to U.S. tariffs against its products with its own imports levies. "The amount of the tariffs in the wider scheme of things is still quite small in economic terms, in the short term at any rate, which may help explain why we could well see markets in Europe trade only modestly lower on the open this morning," Mr. Hewson says.
- The FTSE 100 Index is expected to make limited gains in early deals after trade tensions led to a broadly negative session in Asia. London's blue-chip index is tipped to start the session about 8 points up at 7641, after China on Friday responded to U.S. President Donald Trump's $50 billion worth of tariffs on Chinese imports by hitting U.S. commodities with import duty pledges, Jasper Lawler at London Capital Group says. "The tit-for-tat response is putting the two powers a step closer to an all-out global trade war," he says.

Jun 15 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Brent oil prices extended declines, as Saudi Arabia and Russia, architects of a producer deal to cut output, indicated ahead of a key OPEC meeting in Vienna next week that production could rise.
- Gold prices steadied below a one-month high hit in the previous session and were on track for a second straight weekly gain amid concerns over U.S.-China trade dispute.
- London copper prices slid for a second session, with the market set for its biggest weekly decline since late April on concerns over demand in top consumer China.
- Chicago soybeans slid to their lowest since June last year as benign weather across the U.S. Midwest raised hopes for a bumper harvest, while concerns over Chinese demand also weighed on the market.
- The euro was headed for its worst weekly loss in 19 months after a cautious European Central Bank signalled it will keep interest rates at record lows well into next year.
- The margin for a rebound in the euro "has now become more constrained" after the European Central Bank monetary policy decision on Thursday, says UniCredit. But "this does not mean that it is necessarily over" and the ECB's negative impact on the euro "will progressively fade," it says. "The intentions of both the Fed and the ECB are now on the table and there is less surprise effect left going forward." Moreover, CFTC data shows investors have returned to being net sellers of the dollar. "One tailwind that has boosted the dollar since mid-April is thus probably gone." EUR/USD continues Thursday's falls, falling to a two-week low of 1.1543, according to Factset. It is last flat at 1.1570.
- On a morning in Asia marked by the latest US economic pressure on China, one of the country's senior financial policymakers said Beijing is acting rationally while decrying "unilateralism" for sending "dark clouds" over the world. Hu Xiaolian, a former central banker who's now chairman of the Export-Import Bank of China, told a forum in Shanghai that "unilateral, anti-global and waving the stick of tariffs is hogging the media headlines. But China's Belt and Road Initiative is about openness and inclusion."
- For all the huffing and puffing, Europe's privacy push won't have much of an impact on big tech, according to one Wall Street analyst. The "General Data Protection Regulation," or GDPR, that went into effect in late May is "more light breeze than stiff headwind" for companies such as Alphabet (GOOGL) and Facebook (FB) wrote Baird analyst Colin Sebastian in a late Thursday research note. "Overall, GOOG and FB appear relatively under-exposed to GDPR headwinds, and we remain confident in Q2 growth estimates, with room for potential revenue upside."
- The Trump administration and a bipartisan group of legislators are jostling, mostly behind the scenes, to determine which agency should be in charge of supervising commercial space ventures such as asteroid mining or deep-space missions run by private entities. The President has made clear he favors the Commerce Department, and has signed a formal directives. But Sen. Ted Cruz, the Texas Republican who chairs a space subcommittee, says "there is a great debate that is raging" on Capitol Hill whether Commerce or the Transportation Department should get "the lead and principal role." In drafting legislation, he sees "good and serious arguments that can be made on both sides."
- It's a brave trader or analyst who sees upside in Chinese tariffs on American crops, particularly soybeans. But that might be just what grain markets need, says Dan Hueber of The Hueber Report. The threat of retaliatory Chinese duties against US agriculture has loomed over prices for several months now, sparking several selloffs that helped push soybean prices in particular to $9.31 a bushel, the lowest point this year. "We have been agonizing about such a move for months now, with spot futures currently $1.40 or 13% down from the March high when all this chatter began," Hueber says. "If it actually comes to fruition, what is left to fret about? It is now fully factored into the price structure."
- The Trump Administration is determined "to have the largest club we can" to pursue future space exploration, including working with other countries and commercial entities to ensure a "greater diversity of options," according to Scott Pace, the top White House space adviser. He has stressed that "does not mean we are going to dominate in every" arena of space "except for military," but the US aims to lead international efforts. Pace and other White House officials, however, have made it clear they don't anticipate additional international treaties affecting commercial space operations.
- The U.S. administration's protectionist platform only works with a weaker dollar, says LMAX Exchange, as it should encourage competitiveness. That's why the dollar hasn't benefited from the fact that the Federal Reserve raised interest rates. In an email, Joel Kruger, its currency strategist, says: "The U.S. administration has imposed its will on currency traders over the past several months through the introduction of a protectionist platform that encourages soft dollar policy." He adds: "This...seriously undermines prospects for any meaningful U.S. dollar appreciation, even in the face of more hawkish-leaning Fed guidance." EUR/USD rises 0.3% to 1.1826.

Jun 14 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices eased, dragged down by rising output and a decline in China's refining activity, although strong fuel consumption in the United States and a drop in its crude inventories provided the market with some support.
- Gold prices eased as the U.S. Federal Reserve forecast a slightly faster pace of interest rate hikes this year, although lingering worries over trade tensions between Washington and Beijing prevented steeper losses.
- London copper edged down, trading near a one-week low, after a slew of Chinese data including industrial output pointed to weaker-than-expected activity last month in the world's No. 2 economy and top copper user.
- Chicago wheat slid more than 1 percent, adding to deep losses in the previous session on selling by funds although expectations of lower production in the Black Sea region are likely to put a floor under the market.
- The dollar slipped back from three-week highs against the yen, quickly erasing gains made after the Federal Reserve took a slightly more hawkish policy tone in signalling two more rate hikes by year-end.
- A noticeable slowdown in the eurozone's economic dynamics and a series of uncertainty-generating factors may prompt the European Central Bank to hold back on any concrete decisions until its July meeting, say HSBC analysts. These factors include the trade conflict with the U.S. and the political situation in Italy, they say. While HSBC doesn't expect a decision on the future of asset purchasing at the upcoming meeting, their base case scenario is a one-time extension of asset purchases until year's end, with the monthly run rate to be reduced to EUR10 billion in October. The ECB buys EUR30 billion of assets a month.
- Even though European Central Bank chief economist Peter Praet recently hinted that there may be a debate over the future of the asset-purchases program at the upcoming meeting, any decision at this stage isn't a done deal. DZ Bank says the recent turmoil in Italy and trade issues with the U.S. may warrant some caution from ECB President Mario Draghi. "The latest political turbulence in Italy and the ongoing trade spat rather suggest that Team Draghi will adopt a wait-and-see stance," DZ Bank says. DZ Bank's analysts say they see a "tangible road map" for the unwinding of QE only being presented at the July meeting.
- Federal Reserve Chairman Jerome Powell says the agency has a "pretty full docket" of regulatory changes in the works, as it prepares to implement a bill signed by President Trump last month that increased the threshold for a stricter regulatory burden on banks to $250B in assets, from $50B. "We've got to think about how we will reach below that $250 billion threshold," said Powell at a press conference. He added that he wants to tailor post-crisis regulatory reforms for smaller banks. "We want to keep all that stuff. We want to make it even more effective and certainly more efficient."
- Ranking Democrat on Senate Commerce Committee queries federal regulators on whether probe has been opened of fires in Kia and Hyundai vehicles. "Spontaneous fires are serious safety hazards and should not be taken lightly," wrote Sen. Bill Nelson of Florida in letter to senior-most official at National Highway Traffic Safety Administration. "We have to find out what is causing these fires and what can be done to prevent them." Center for Auto Safety earlier this week called on agency to investigate Kia Sorento and Optima, and Hyundai Sonata and Santa Fe vehicles spanning model years 2011-2014 for fire hazards. No immediate comment from NHTSA.
- The new 21% corporate tax rate will be a magnet for so-called pass-through businesses to change their status, prompting 17.5% of them to switch to corporate status, according to a new study from the Penn-Wharton Budget Model. The corporate form, disadvantaged for decades, will become attractive to service businesses that can't qualify for the special 20% deduction for pass-throughs. So far, however, such shifts have been relatively slow, because businesses are waiting for regulations and are unsure how stable the new rates and rules will be.
- Democrats have been warning about the consequences of flat or reduced funding for the Internal Revenue Service, and they seem to have some support from the Trump administration. "Tax enforcement activities are a good investment for taxpayers," and produce $5 for every $1 spent, Mick Mulvaney, the budget director, wrote to House lawmakers who will consider an IRS appropriations bill on Wednesday. The House plan keeps the IRS enforcement budget flat instead of endorsing cuts earlier proposed by the administration. Final spending levels for fiscal 2019 won't be set until later this year.
- A federal judge's decision that AT&T can proceed with its purchase of Time Warner may have been a blow for the Justice Department, but it is unlikely to set the tone for the agency's policy on so-called vertical mergers in the future, according to one former member of the Federal Trade Commission. "This is a really case-specific, evidence-specific rejection of DoJ evidence here and, in particular, the economic evidence put forward by their experts," said Joshua Wright, a George Mason University professor who was considered by the Trump administration for the Justice Department's top antitrust job. "I'm not a big believer of the view that these agencies get gun shy when they lose a case," he said. While other large companies may try to merge, Wright is "skeptical" that their lawyers would advise "that a loss in a single case means its open season."
- A gauge of US business prices for steel mill products rose 4.3% in May from the prior month, the Labor Department said. This is the largest monthly gain since the beginning of 2011 when prices for the category rose 5.9%. Steel and aluminum prices have moved higher in the wake of the Trump administration's planned tariffs on those products. It appears the prices are filtering into what businesses pay.
- Germany's economy will grow much less than previously forecast due to the trade dispute with the U.S. and increased uncertainty in the eurozone, the Berlin-based DIW economic institute says. It cut the growth forecast for this year to 1.9% from 2.4% previously and lowered the outlook for 2019 to 1.7% from 1.9%. "Uncertainty stems mainly from growing concern about individual European countries, especially Italy, and the possibility of an escalating trade conflict between the U.S. and the rest of the world," says DIW. "It affects the investment activity of companies world-wide. This in return slows down German export."
- Sterling is "always more likely" to react to good news rather than bad, says Societe Generale, which means the pound isn't likely to fall by much if inflation misses forecasts on Wednesday or if other data comes in lower than expected in the near term. However, the bank recommends shorting sterling against the Norwegian krone, which "may pay off near-term." The U.K. runs a trade deficit, while Norway has a trade surplus. With global trade-war uncertainties in the background, countries that import more than they export are under the radar. GBP/NOK trades 0.3% lower at 10.73. GBP/USD falls 0.2% to 1.3352 and EUR/GBP rises 0.2% to 0.8801.

Jun 13 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices fell, pulled down by rising supplies in the United States and expectations that voluntary output cuts led by producer cartel OPEC could be loosened.
- Gold prices were steady after falling to one-week lows the session before, with investors waiting for the conclusion of the U.S. Federal Reserve's meeting later in the day for clues on the timing of future interest rate hikes.
- Base metals prices fell, led by Shanghai aluminium, which touched a six-week low, as investors fretted over liquidity in China and awaited news from the U.S. Federal Reserve's policy meeting.
- Chicago soybeans slid more than 1 percent to its lowest since mid-September, weighed down crop-friendly weather and a lack of Chinese demand for U.S. supplies.
- The dollar reached a three-week high against the yen and stood tall against the euro ahead of a Federal Reserve policy meeting that could give clues on how many more U.S. rate hikes there will be this year.
- Jake Sullivan, an Obama-era US department of state official, said President Trump's diplomatic approach with Korean leader Kim Jong Un could be effective, in theory. Sullivan said some may dismiss Trump's approach as more concern with pageantry than diplomacy, but with such a wide divide between the estranged nations, working on a personal relationship with Kim before a substantive proposal could be a successful tactic. "I do think there is a rationale with starting with a summit and working your way back," he said.  Sullivan, who was director of policy planning at the state department between 2009 and 2012, said, however, that it remains to be seen if Trump could forge progress beyond the pageantry.
- The Dow less than 2 points to 25320, the S&P adds 0.2% to 2786 and the Nasdaq rises 0.6% to 7703 as market watchers weigh talks between President Trump and Kim Jong Un. Utilities and real-estate companies gained as investors snapped up bond-proxy stocks ahead of the Fed's interest-rate decision Wednesday, although 10-year Treasurys were little changed, yielding 2.960%. Energy stocks are the worst performers even with oil prices closing up 0.4% to $66.36. Twitter jumps 5%, leading the S&P after JPMorgan raised its price target.
- US defense stocks predictably retreat in the wake of the North Korea summit, with Lockheed Martin, Raytheon and Northrop Grumman all losing 1%-3%--but fellow contractor SAIC, which reports fiscal 1Q results after the close, is only flat. The government IT specialist's sideline of upgrading armored vehicles ought to be a loser from any diplomatic moves that reduce the probability of a land battle on the Korean peninsula, but analysts note that any reduction in military exercises in South Korea is likely to be balanced by them being staged elsewhere as the Pentagon continues its focus on improving readiness.
- Risk that President Donald Trump will unilaterally withdraw from Nafta "have clearly risen again," says Capital Economics, citing the rancor after G-7 summit in Canada and the White House's pointed attacks on PM Justin Trudeau. The forecasting firm says markets have shrugged off the escalation of US-Canada rhetoric. CapEcon says warning signs abound over intransigence on Nafta, noting US and Canada can't even agree on the size of the trade imbalance between the countries. Withdrawal notice represents a big risk to Canadian economy, as does potential of tariffs on Canadian vehicles and auto parts. Congress could intervene, firm adds, but "they have shown little appetite for standing up to Trump's destructive impulses."
- The Canadian dollar has softened in the aftermath of the G-7 summit fallout, and President Trump's warning on auto tariffs in a tweet directed at Canada PM Justin Trudeau. Gluskin Sheff chief economist David Rosenberg tells clients in a note there's "little reason to visualize," a catalyst that can reverse C$ softening, given deteriorating US-Canada relations and the impact on trade. Rosenberg said Trump's threat on autos is increasingly worrisome, as cars and auto parts account for one-fifth of Canadian exports. He added that auto tariffs would trim "at least" a half-point from Canada GDP growth, but would also "crush" the US consumer who would see car prices rise on average by up to $7K per car on average.
- Investors cooled on US defense stocks as a historic summit between North Korea and the US wrapped up in Singapore. Shares of Lockheed Martin fell 1.6%, while Raytheon, maker of the Tomahawk missile, lost 2.4% and Northrop Grumman slid 1%. North Korea said in an agreement that it would commit to "work toward complete denuclearization of the Korean Peninsula," while President Donald Trump said separately that he would cease "tremendously expensive" joint military exercises with South Korea as long as talks with North Korea continued to be productive. Defense stocks had jumped over the past year on reports that Trump would pull out of the summit or that North Korea had conducted missile tests, only to reverse course when the two countries appeared to make progress on talks.
- The tax cut passed in December is resulting in stronger capital spending, wage growth and economic growth, in line with expectations, said Kevin Hassett, Chairman of the White House Council of Economic Advisers Tuesday at the WSJ's CFO Network annual meeting. Hassett referenced the 9.2% growth in capital spending clocked in the first quarter as evidence that the tax cut is showing up in business-investment data. The tax cut also resulted in wage growth, as seen by public firm announcements and growth in the employment-cost index, Hassett said.
- The latest analysis of the impact of US tariffs on steel and aluminum suggest among major industrialized economies, "Canada suffers the largest negative impact from the tariffs," according to CD Howe Institute, a Toronto think tank. Canada is the largest supplier of foreign steel and aluminum to the US, and PM Justin Trudeau has been pointed in criticism over the Trump administration's tariffs on national-security grounds. CD Howe said based on economic modeling, the tariffs will lead to 6K job losses in Canada; a $8B decline in GDP; and a drop in productivity by 0.08%. The analysis does not incorporate retaliatory measures, which Canada plans to impose on July 1.
- General Motors has not delayed or altered capital-investment plans amid trade uncertainty, although "continued uncertainty will eventually have an impact," CEO Mary Barra said ahead of the auto maker's annual shareholders meeting. GM makes 1M+ vehicles in Canada and Mexico annually, most of which are imported for sale in the US. The sharpening rhetoric between President Trump and Canadian Prime Minister Justin Trudeau has left strained relations between the trading partners and threatens to harm NAFTA negotiations. Trump last month said he wants to impose a 25% tariff on vehicle imports.
- Kevin Hassett, chairman of the White House Council of Economic Advisers, said Tuesday at a WSJ CFO conference that he doesn't try to advise President Trump on Twitter but that "we need to stay out of a world where there's a tweet before every number." Hassett's comments were in reference to Trump's tweet before the Labor Department's release of the May jobs report, in which he said he was "looking forward" to seeing the figures. "I am the Chairman of the Council of Economic Advisers, not the Chairman of the Council of Twitter Advisers," Hassett says.
- Kevin Hassett, chairman of the White House Council of Economic Advisers, said Lawrence Kudlow, President Donald Trump's top economic adviser, is expected to make a speedy recovery after a heart attack Monday. "It seems like it's minor," said Hassett at the Wall Street Journal's CFO conference Tuesday, noting Kudlow is "a very special person" to the White House.
- Gold prices edge down 0.13% to $1,298.45 a troy ounce, as markets give a subdued reaction to U.S. President Donald Trump's meeting with North Korean leader Kim Jong Un. Equity, foreign exchange, bond and commodities markets are all muted in the wake of the Singapore summit between the U.S. and North Korea. "The summit between Trump and Kim did not spark any particular movement on the precious metals markets," Commerzbank says. Talk of a possible nuclear war between the two countries provided a boost to gold prices almost a year ago, but traders appear to have become less sensitive to those fears. Some of that gentle downward pressure on gold was coming from an uptick in the dollar, according to John Meyer, an analyst at SP Angel.

Jun 12 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices edged up alongside global markets as U.S. President Donald Trump said a summit in Singapore with North Korea's Kim Jong Un had made "a lot of progress," boosting hopes of a deal to end a nuclear standoff on the Korean peninsula.
- Gold prices eased as the dollar strengthened amid encouraging signs from a historic U.S.-North Korea summit and a likely interest rate hike by the U.S. Federal Reserve, limiting demand for the yellow metal.
- Shanghai copper prices slid for the first time in eight days, while London copper continued to lose ground as the dollar strengthened and BHP responded to a proposal from unionised workers at its Escondida copper mine in Chile.
- Chicago wheat slid for a third consecutive session to its lowest in almost one week with improved weather in parts of Australia and Europe easing supply concerns.
- The Trump-Kim joint statement is "brief and vague" and lacks in any new commitments, says Control Risks, adding the duo left all the real questions to be addressed in subsequent talks, probably occurring over months, and implemented over years. "It is certainly underwhelming," the risk-consulting firm adds, "but this was only ever going to be the start of a process--a very precarious one amid a persistent risk of breakdown and re-escalation." But it does admit having a summit was "remarkable" and has probably reinforced the path for diplomacy. For the potential business that opening of North Korea may bring, Control Risks sees "no straight line" from improving security relations to embracing economic reform, predicting North Korea to remain "an extremely complex and risky investment environment for the foreseeable future, even in best-case scenario."
- FTSE 100 miners edge lower after demand for metals wanes overnight, though dealers note some buying in the far East. "Turnover across the metals complex began to subside yesterday and this disinterest is more than likely the market awaiting the outcome of central bank meetings," says Alastair Munro at Marex Spectron. "We also read with interest the view that the soccer World Cup historically results in low volatility. No doubt the Trump/Kim meeting removes geopolitical risk. But in a world expecting a more hawkish environment, we wouldn't be surprised to see markets trade sideways." Anglo American is the sector's top faller and was last down 1.77%.
- No mention of a "verifiable and irreversible denuclearization" of the Korean peninsula in the summit document arguably suggests that Trump and Kim aren't yet on the same page in regards to concretely defining that, says the Economist Intelligence Unit. The research/analysis firm is still of the opinion that behind closed doors North Koreans haven't agreed to dismantle their nukes but instead said yes to slowing the process in exchange for ongoing talks. "This is a huge win for the Democratic People's Republic of Korea," says analyst Anwita Basu, adding that's probably what the North has been working towards for so long: being legitimized as a state despite its isolation.
- Trump and Kim meeting was significant, but what's more important is whether both sides can keep the warm atmosphere going and continue talking, says SEB strategist Melody Jiang. "We think downside risks still exist given Trump and Kim are both quite unpredictable and prone to angry outbursts." That as North Korea has agreed to give up its nuclear aspirations previously, to no avail. "Whether it will be a repeat of history or a new era with peaceful talks between the US and North Korea remains to be seen," says Jiang.
- Vague pledges out of today's summit are unlikely to be very convincing for markets, says Bank of Singapore. "There is doubt, and perhaps rightfully, on whether we can expect anything concrete and expansive today given the tight timeline leading up to the summit and precious few details from both leaders so far," Eli Lee, head of investment strategy, tells WSJ. That said, Trump and Kim meeting as long as they did today was a positive outcome, he added.
- London shares are broadly flat as talks between U.S. President Donald Trump and North Korea's Kim Jong Un seemed to leave markets unimpressed. The FTSE 100 Index falls 0.13%, or 9.93 points, to 7727.50. "The vague wording of the document signed by Trump and Kim Jong Un, with the former's promises of U.S. 'security guarantees' to North Korea and the latter's pledge to 'work toward' the complete denuclearization of the Korean peninsula, resulted in a muted open in Europe," says Connor Campbell at Spreadex. Meanwhile, homebuilders fall after downbeat 1H results from Crest Nicholson.
- The dollar rises against the Japanese yen to a three-week high of 110.48 following the meeting between U.S. President Donald Trump and North Korean leader Kim Jong-un. "Markets have a risk-on tone as the Trump-Kim meeting has so far produced much positive symbolism, but little in the way of substance," says RBC. Risky currencies, such as the Australian and New Zealand dollars, are also up. "Amidst all of the political noise recently, our Risk Aversion Thermometer has been remarkably stable and remains moderately risk-seeking," says RBC. Mr. Trump has a press conference at 1500 GMT. USD/JPY last trades up 0.2% at 110.30.
- London stocks are expected to open slightly higher with market sentiment to be supported by the meeting of U.S. President Donald Trump and North Korean leader Kim Jong Un. "Investors are becoming desensitized to Trump's temper tantrums, and now it is actions that will move markets, and not words," says David Madden, market analyst at CMC Markets. CMC looks for the FTSE 100 to open 10 points higher at 7744. Investors will look at U.K. monthly unemployment and earnings data.
- Recent developments in Italy and the meeting between the U.S. and North Korean leaders should help reduce investors' worries, says CMC Markets UK market analyst David Madden. Italy's FTSE MIB index saw strong performance on Monday after the country's new finance minister, Giovanni Tria, said in a interview over the weekend that the government is committed to the common currency. "This settled investors' nerves greatly as the prospect of one of the largest eurozone economies dropping the euro rocked investor confidence in recent weeks," Mr. Madden says. The talks between the leader of the U.S. and North Korea "should go a long way to put investors' nerves in the region at ease," he adds.
- Trade tensions are "a far, far bigger existential global threat" than geopolitical risks regarding the Korean peninsula, contends Rob Carnell, chief economist and research chief in Asia-Pacific for ING. "Aside from the photo opportunities that today brings, from a financial-market perspective today ranks as a meh." He says that outside of Korea, it is basically business as usual--with it likely returning there as well by tomorrow. Then, "we can revert to things that matter"--like the week's major central-bank meetings and the Brexit bill.
- As Trump looks to overcome history in November's midterm elections by limiting losses by the GOP, he needs a victory regarding North Korea to create and keep momentum regarding his dealmaker image, says Steen Jakobsen, chief economist and CIO at Saxo Bank. That as the idea of peace seems out of reach in the Middle East.
- Tame your summit expectations as today is only the first big step in a long negotiating process for having peace in the Korean peninsula, says political-risk consultancy Eurasia. It expects Trump and Kim to agree to initiate formal negotiations to flesh out plans for eliminating North Korea's nuclear-weapons program, generating some additional optimism in the market. But Eurasia adds such a plan will likely take at least a year and potentially through the end of Trump's 1st term. A lot is at stake politically with chatters about Trump's eying a Nobel Peace Prize, but "even if the summit produces a reasonably robust outcome, Trump's detractors will still likely argue that he underdelivered," Eurasia says.

Jun 11 - Market Talk Roundup: Latest on Trump, U.S. Politics (Dow Jones)
- Oil prices fell, pulled down by rising Russian production and U.S. drilling activity creeping to its highest in more than three years.
- Gold prices edged higher as the dollar softened ahead of key central bank policy meetings and the U.S.-North Korea summit this week, and as a weekend G7 summit fanned trade war fears.
- Base metal prices were mixed as positive sentiment over strong import data in China, the world's biggest metals consumer, was tempered by renewed fears of a global trade war amid a lack of consensus at the G7 summit in Canada. 
- Chicago wheat futures gained almost 1 percent, rising for a fourth session in five, as expectations of lower production in the Black Sea region supported the market.
- The Canadian dollar fell modestly, after U.S. President Donald Trump disrupted the G7's efforts to show a united front and bashed Canada's leader as "very dishonest," though market reaction was relatively muted.
- The European Central Bank's meeting on Thursday "should be euro-positive and partly counterweigh the potentially more hawkish Federal Open Market Committee bias" on Wednesday--when the Fed is due to meet--but "the retention of the open-endness of the quantitative easing program should prevent a material euro rally," says ING. The ECB is likely to reduce its extension of QE by one quarter to end-2018 and cut monthly purchases to EUR10 billion from EUR30 billion, ING says. EUR/USD is up 0.2% at 1.1798.
- The Stoxx Europe 600 rises 0.5% in morning trade as markets shake off geopolitical risks after a turbulent G7 summit and satellite group Inmarsat gains. The pan-European index lifts 1.81 points to 386.93, with the DAX up 0.5% and CAC 40 rising 0.2%. "After a stormy G7 meeting, the U.S. seems to have turned its back on its allies and is prepared to ratchet up trade pressure," says Neil Wilson at Markets.com. "Nevertheless, expectations coming into the event were exceptionally low and so there's been little negative market reaction so far." Inmarsat gains nearly 13% on hopes of a higher takeover bid from rival Echostar.
- If EUR/USD doesn't break the 1.1840 barrier this week it won't go back to 1.20, says Societe Generale, which adds that "a return to 1.16 is not impossible." The European Central Bank "will of course discuss how the quantitative easing exit may look," but it is unlikely the central bank will announce concrete plans for the program, says SocGen. The Federal Reserve also meets on Wednesday with an interest rate increase to 2% from 1.75% expected as "a formality after the latest employment report." Overall, "the two meetings may not cause much of a splash," SocGen says. EUR/USD is up 0.3% at 1.1807.
- The FTSE 100 rises 0.5% as traders shrug off the weekend's inconclusive G7 summit to focus on the U.S. meeting with North Korea. London's blue-chip index gains 37.23 points to 7718.3. Spreadex's Connor Campbell notes the G7 communication breakdown between U.S. President Donald Trump and U.S. allies, but also highlights positive sentiment toward his meeting with Kim Jong Un. "Optimism, misplaced or otherwise, that the two countries could secure some kind of nuclear agreement led to a broadly positive Asian session, and helped the European indices to a strong start on Monday."
- Germans have become more pessimistic about their economic future, mainly due to U.S. President Donald Trump's trade policy, according to a survey by Forsa Institute. Of those polled for broadcasters RTL and n-tv, 43% expect Germany's economic conditions to deteriorate in the coming years, up 17 percentage points compared with January. "Germans' economic expectations are more pessimistic than ever in the past four years," says Forsa head Manfred Guellner. Only 18% of those polled expect the economic situation to improve, while 36% see it unchanged. Mr. Trump has criticized Germany's trade surplus and threatened to launch punitive tariffs on cars, which would hurt Germany and its auto sector.
- EUR/USD is up 0.4% at 1.1818 even though U.S. President Donald Trump refused to endorse the G7's final statement calling for tariff reductions because other data points are more important for the currency pair, says ING. "Although the overhang of global trade wars is still very much alive, the global forex price action this week will be driven by the stream of key event risks" such as Tuesday's U.S.-North Korea summit, the Federal Reserve meeting on Wednesday and the European Central Bank meeting on Thursday. "The first two in particular pose some downside risk to the already fragile risk environment," ING says.
- Even though Trump has termed Tuesday's summit with Kim as a "mission of peace," the meeting is still considered as a major risk event for financial markets given the "very-unpredictable" nature of the duo, says broker ForexTime. Some say the meeting itself is a positive signal, but traders and investors may want to err on side of caution and wait for any results. Gold would be the big loser if there's a positive outcome, says ForexTime, while the yuan and Korean won would get hit if the meeting doesn't go well.
- Chances are Trump used the G-7 summit to look more like an "aggressive alpha male" ahead of his meeting with Kim, says Rabobank senior Asia-Pacific strategist Michael Every. Trump is unlikely to spoil 2 gatherings in a row, adds Every, which suggests a higher probability of "a less-fire-and-brimstone outcome." He goes on to say a positive outcome from Tuesday's meeting will ease some geopolitical-risk overhang, boding well for the markets.
- Currency markets will watch US inflation data and the Fed's response this week more closely than the Trump-Kim summit, says DBS. CPI comes Tuesday and PPI on Wednesday ahead of that day's updated economic forecasts and policy statement from the Fed--widely expected to include another rate hike. DBS sees another increase giving the dollar and Treasury yields a fresh lift. That as the ECB, which also gathers this week, is expected to be more "cautious than hawkish" in its deliberations on when to end QE.

Jun 08 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices were stable, supported by Venezuela's struggles to meet its supply obligations and by ongoing output cuts led by producer cartel OPEC, although surging U.S. crude output was looming over markets.
- Gold prices held steady as investors remained cautious ahead of a G7 meeting starting later in the day and other key events next week such as a United States Federal Reserve policy meeting and a U.S.-North Korea summit.
- London copper retreated after a six-day rally that pushed the metal to its strongest in 4-1/2 years in the previous session, amid worries over potential supply disruptions at the world's biggest copper mine where wage talks are underway.
- Chicago soybean futures were set for their biggest weekly loss in 10 months as benign weather across much of U.S. Midwest boosted hopes of another bumper crop.
- The dollar wallowed near a three-week low against its peers as U.S. Treasury yields fell sharply, while the euro's recovery remained intact amid expectations the European Central Bank will begin unwinding its stimulus programme.
- For markets, Tuesday's Trump-Kim summit won't weigh much on the minds of money managers, predicts KGI Securities. That meeting will be followed later next week by policy meetings at the Fed and ECB. "What comes out from there will be more important for the markets," KGI trading strategist Nicholas Teo tells WSJ. Investors aren't expecting a breakthrough from next week's Singapore gathering, he says, adding that "geopolitical events are unpredictive and generally don't dictate strategic changes in fund flows."
- As negotiations with Canada and Mexico continue over changes to the North American Free Trade Agreement, economists surveyed by WSJ this month on average pegged the probability of President Donald Trump pulling the US out of Nafta at 29%. More broadly, 47% said the risks for GDP growth over the next year were tilted to the downside, versus 43% who saw risks tilted to the upside. More than two dozen economists mentioned tariffs or a trade war as potential risks.
- Voestalpine's insufficient risk-reward ratio, and concerns about its CEO change and auto exposure lead analysts at Kepler Cheuvreux to downgrade its stock to hold from buy, and cut its target price to EUR48 from EUR57. "We see more downside than upside for the stock," Kepler says. The future direction of the Austrian company is a concern following news that CEO Wolfgang Eder will retire next July, says Kepler. Voestalpine's exposure to long-term auto contracts might also become a growing concern since U.S. President Donald Trump's initiation of a Section 232 investigation into car and truck imports into the U.S., Kepler says. Voestalpine shares trade up 3.9% at EUR45.67.
- The dollar is likely to keep rallying into the U.S. midterm elections, which is probably going to hurt more emerging-market currencies, says Bank of America Merrill Lynch. So far, according to BAML's moving average aggregator, the selloff in EM currencies "has been selective and localized," with USD/TRY, USD/ARS, and USD/INR falling the most. Going further, USD/KRW, USD/ZAR and USD/EUR "have the most potential upside if the EM weakness continues," BAML says.

Jun 07 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices rose to shake off some of the previous session's losses, supported by plunging exports by OPEC-member Venezuela.
- Gold prices inched up as the euro rose to 2-week highs against the U.S dollar, with investors waiting for meetings of key central banks and the U.S.-North Korea summit all due next week.
- London copper prices rose up to 0.9 percent to a 2018 high, gaining ground for a sixth session on concerns over disruption at the Escondida mine in Chile.
- Chicago wheat gained 1 percent, rising for a third consecutive session as dry weather in key exporting countries raised concerns over world supplies.
- Hog futures recovered from a tumble after Mexico said it would target US pork with duties. Many traders had pointed to tariffs from the industry's largest export customer as a contender for worst-case scenario, leading to a selloff on Tuesday. But buyers returned to the hog market on Wednesday, with the underlying supply-and-demand outlook painting a less pessimistic picture. Supplies have tightened somewhat, in line with seasonal trends, while prices for physical pigs and wholesale pork have trended higher. But traders will be looking to see whether export sales to Mexico drop off, as they did when China hit the industry with duties of its own. CME June lean hog futures rise 2.2% to 78.175 cents a pound. Cattle prices are also slightly higher, as traders bet that meatpackers will pay steady to higher money for slaughter-ready animals this week.
- Canada PM Justin Trudeau is rejecting musings from President Trump and his top economic advisor, Lawrence Kudlow, that negotiations toward a revamped Nafta be conducted on a bilateral basis, as opposed to the current trilateral talks. "Canada's position is -- and always has been -- that the trilateral approach is better," Trudeau told reporters before attending the Liberal Party's weekly caucus meeting in Ottawa. "Demonstrating the strength of Nafta as a solid community as we take on the world is very much in all of three of our advantages, and we are going to continue to negotiate that way." Trump raised possibility of bilateral talks last Friday, and Kudlow reiterated the point Tuesday on Fox News. Nafta talks have stalled over disagreements on autos.
- Risk sentiment should stay supported and that will likely help EUR/USD go higher, says Morgan Stanley. "A weakening dollar would be supportive of risk sentiment," Morgan Stanley says. Moreover, stronger fundamentals and a greater resilience to external shocks "should keep emerging market currencies supported." News that China would consider increasing its purchases of agricultural goods and commodities from the U.S. to help narrow the trade deficits suggests the risks of escalating protectionism may be falling, "which augurs well for risk." EUR/USD is up by 0.5% at 1.1770.
- About 28,000 US farmers have received a form of government support for 32 consecutive years, according to an analysis by the Environmental Working Group. The group, which has criticized the nation's farm-safety net system, says subsidy and disaster relief payments to the farmers totaled more than $19B between 1985 and 2016, with the average payment for the 32-year period totaling $687K. "It's a staggering number, especially in light of the debate over dependency," said EWG's Scott Faber, who along with conservative and taxpayer watchdog groups opposed the recently defeated GOP-written farm bill due partly to provisions that could benefit wealthy farmers while subjecting food-stamp recipients to new work requirements.
- To those investors who think we are in for a period of calm, Societe Generale recommends shorting the Swiss franc against the Swedish krona and the Norwegian krone. But, if one thinks we are in for noise without any direction in EUR/USD, SocGen advises shorting the dollar against the Swedish krona. "With such a fluid situation in Italy, another vertiginous drop in EUR/USD before the uptrend resumes can't be ruled out," SocGen says.
- Genting Singapore is a noted decliner today amid tight security arrangements around its resort in Sentosa. Though Resorts World Sentosa isn't hosting Tuesday's Trump-Kim summit, neighboring Capella is. Analysts say visitors to Genting's casinos are likely to be cautious and could prompt some to stay away. Shares are down 2.3%, erasing the week's gain, after having dropped 4.6% the prior 2 weeks.
- The euro is benefiting from reports that the next European Central Bank meeting on June 14 may be when an exit from quantitative easing will be discussed, while the dollar continues to struggle slightly. EUR/USD is up by 0.2% at 1.1740. The dollar continues to fall against the Australian and Canadian dollars after strong 1Q Australian gross domestic product and reports that U.S. Treasury Secretary Steven Mnuchin told President Donald Trump to exclude Canada from the aluminum and steel tariffs. AUD/USD is up by 0.5% 0.7656 and USD/CAD is down by 0.3% at 1.2934.
- A connected car technology backed by General Motors and Toyota received lukewarm praise from a senior US DOT official Tuesday. While the government is "pleased" by the two automakers' plans to deploy a wifi-based wireless system strongly pushed by the Obama Administration, NHTSA Deputy Administrator Heidi King said the agency won't favor that technology over others. "We remain technology neutral relative to communication protocols," King said at a conference in Detroit. The Obama White House proposed requiring auto makers to phase in wifi-based dedicated short-range communications, or DSRC, starting in 2021, but some auto and telecom companies that support a rival cellular-based approach have lobbied the Trump Administration, which has yet to formally make a decision, to reconsider that policy.
- In slapping retaliatory import duties on US pork, the Mexican government also opened a 350K-ton tariff-free quota for other countries to secure domestic supply this year. The US is the biggest source of imported pork in Mexico, which also brings the meat from Canada, Chile, Spain, Denmark and Italy. The Agriculture Ministry says France, Germany, Belgium, Australia and New Zealand also have plants that meet Mexican health requirements. Mexican pork imports average 754K tons per year. The country produces 1.45M tons and exports about 105K tons, the ministry adds.
- Banking lawyer Jelena McWilliams was sworn in Tuesday for a five-year term as the 21(st) chairman of the Federal Deposit Insurance Corp, the agency said. She takes over from former FDIC Chairman Martin Gruenberg, who was the last Obama- nominated regulator in charge of a major banking oversight agency. While her specific policy views aren't widely known, McWilliams is expected to be more likely to sign on to deregulatory actions than  Gruenberg was.

Jun 06 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Global oil prices rose during Asian trade after Venezuela raised the prospect of halting some crude exports, according to people familiar with the matter, but gains were capped amid reports the U.S. government had asked Saudi Arabia and some other OPEC producers to increase output.
- Gold prices inched up on a weaker U.S. dollar and lower treasury yields, but expectations of a U.S. rate rise next week kept a lid on gains.
- Shanghai base metals rose, with copper and lead gaining ground on fears of a supply squeeze, while nickel and zinc tracked the ferrous complex higher after a blast at an iron ore mine in China and amid falling inventories.
- Chicago wheat rose for a second session with prices underpinned by concerns over global supplies following dry weather in the United States, Russia and Australia.
- The euro held firm as investors started to focus on the European Central Bank's policy meeting next week, while concerns that the United States could pull out of a trade pact with Canada and Mexico hit the peso and the Canadian dollar.
- In slapping retaliatory import duties on US pork, the Mexican government also opened a 350K-ton tariff-free quota for other countries to secure domestic supply this year. The US is the biggest source of imported pork in Mexico, which also brings the meat from Canada, Chile, Spain, Denmark and Italy. The Agriculture Ministry says France, Germany, Belgium, Australia and New Zealand also have plants that meet Mexican health requirements. Mexican pork imports average 754K tons per year. The country produces 1.45M tons and exports about 105K tons, the ministry adds.
- Banking lawyer Jelena McWilliams was sworn in Tuesday for a five-year term as the 21(st) chairman of the Federal Deposit Insurance Corp, the agency said. She takes over from former FDIC Chairman Martin Gruenberg, who was the last Obama- nominated regulator in charge of a major banking oversight agency. While her specific policy views aren't widely known, McWilliams is expected to be more likely to sign on to deregulatory actions than  Gruenberg was.
- Investor concerns about a possible breakdown in Nafta as Mexico details retaliation measures against US steel tariffs has helped send the peso to a new low for the year, recently trading in Mexico City at 20.3625 to the US dollar versus 20.0765 Monday. The decreasing likelihood of positive news on the trade front, and the approach of July elections in Mexico will likely "either compound any sell-off pressure or cap any rally potential in the MXN coming from shifts in external risk sentiment," says Nomura, which expects the peso to fare poorly in coming weeks.
- Securities and Exchange Commission approved a proposal that scales back compliance requirements for banks subject to the Volcker Rule, which bans taxpayer-insured banks from proprietary trading. The SEC is the last of five agencies that needed to vote to issue the plan for public comment. The SEC passed the measure on a 3-2 vote, with Democratic commissioners vocally resisting the move. "Overall, this proposal cleverly and carefully euthanizes the Volcker Rule," Commissioner Kara Stein said. The plan broadens what qualifies as "hedging" and thus opens the door to more risky trading by banks, she said. SEC Chairman Jay Clayton says the proposal is an attempt to improve the rule and its cumbersome compliance requirements.
- The tax law came at the exact right time, cutting the cost of capital as workers were getting more scarce, said Kevin Hassett, chairman of the White House Council of Economic Advisers. Hassett said the law has helped produce faster capital spending and wage growth. "Everything has kind of surprised on the upside," he said.
- A second farm-state Republican senator harshly criticizes EPA chief Scott Pruitt and questions his future. "...If the president wants to drain the swamp, he needs to look at his own cabinet," Sen. Joni Ernst (R., Iowa) says. While Democrats have hammered Pruitt over a wave of scandals, Ernst joins fellow Iowa Republican Chuck Grassley upset by Pruitt's management of the Renewable Fuel Standard and ethanol consumption mandates. Grassley has already threatened to call for Pruitt's resignation. Ernst declines to do that, but says the combination of his ethanol decisions and "other transgressions," tied to Pruitt's spending and "the way he misuses," his office may make his position untenable. "I do believe Administrator Pruitt is trying to undermine ... the president's promises to our American farmers ...," Ernst tells reporters.
- President Trump is dictating a resolution, not finding compromise in a fight over ethanol and the Renewable Fuel Standard, Sen. Joni Ernst (R., Iowa) tells reporters. She downplays what many had touted as a deal reached during a White House meeting last month. "It don't want to call it an agreement. There was no agreement when we left the White House," she says. "There was a directive that was given by the president. He wants the issue resolved." But parts of the plan--especially allowing credits for exported ethanol--will undermine the law and be bad for corn-growers, Ernst and other allies say. "This will hurt a lot of the very people who supported the president," Ernst says.
- Hog futures fall sharply on reports that Mexico will move ahead with threatened retaliatory tariffs on US pork. CME July lean hog futures fall 3% to 75.6 cents a pound. Reuters reports that Mexico's economy ministry will proceed with tariffs on pork legs and shoulders. Mexico is the largest customer of the American pork industry, which is already dealing with Chinese tariffs. Prices tumble even though duties were widely anticipated. "Not a good situation," says Dennis Smith of Archer Financial Services. Cattle futures are higher as traders bet the market is finding its seasonal low.
- "Technical aspects" are the biggest obstacle for the Trump administration to start a bailout for coal and nuclear power plants, a senior Trump administration energy official says. "We want to make sure whatever we do works, and is upheld by courts," Mark Menezes, under secretary at the Energy Department, tells reporters outside the EIA Energy Conference in Washington. The Trump administration wants to stop the closings of coal and nuclear power plants. A draft memo leaked last week shows the department is proposing to effectively force consumers to buy electricity from certain power plants. A plan would likely face court challenges, and is already opposed by a wide array of groups including the oil and gas industry and environmentalists. It is just one of the options the department is considering, Menezes says.
- Competitive electricity markets aren't capable of ensuring the grid keeps running--or responds quickly--during a catastrophe, a senior Trump administration energy official says. "These are not natural markets," Mark Menezes, under secretary at the Energy Department, tells reporters outside the EIA Energy Conference in Washington. "In fact, electricity is a natural monopoly." The Trump administration wants to stop the closings of coal and nuclear power that are failing to beat out competitors. A draft memo leaked last week shows the department is proposing to effectively force consumers to buy electricity from certain power plants--likely mostly coal and nuclear--to ensure the grid maintains a mix of sources. Menezes tells the conference that diversity is essential for the grid to withstand attacks, and tells reporters later that current regional markets can't effectively ensure that.
- LBBW will watch four events that could move markets in June, the bank's economists say. On June 13, the U.S. Federal Reserve is expected to carry out its second interest-rate increase this year, while the question on June 14 is if the European Central Bank will reveal some information about the future of asset purchases beyond September. LBBW also looks at the June 12 meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un. The Turkish elections on June 24 round off LBBW's list of key events in June.
- The U.S. dollar is slightly higher versus the euro on Tuesday, helped after eurozone retail sales data came in below market expectations, with EUR/USD last down 0.2% at 1.1678. However, the dollar is under the radar as global trade war uncertainties come back on the agenda. With the G7 summit in Canada, the trade issue is even more prominent. "The near term focus for financial markets is very much whether [U.S. President Donald] Trump can be talked down from his protectionist perch by fellow G7 leaders at their weekend meeting in Quebec," ING says. ING thinks the DXY dollar index should stay in a 94-95 range. DXY trades up 0.1% at 94.09.

Jun 05 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Oil prices rebounded after falling in the previous session on expectations that inventories in the United States may decline but increasing U.S. production and concerns that OPEC may raise output continue to weigh on sentiment.
- Gold prices were steady after falling for three days, as investors opted for riskier assets amid increasing prospects of an interest rate hike in the United States following strong U.S. economic data.
- Copper edged lower as the market took a breather after climbing to a near two-week high in the previous session on support from potential supply disruptions amid wage talks at the world's biggest mine.
- Chicago corn ticked higher after dropping to a near seven-week low earlier in the session on pressure from crop-friendly U.S. weather which is boosting expectations of a bumper harvest.
- The euro was supported by signs of stability in Italian politics and the dollar maintained an uptrend against the yen after a strong U.S. jobs report sparked bets of three more U.S. rate hikes by the end of year.
- Political uncertainties in Europe "may force the European Central Bank to delay any significant policy announcements until July or even September," likely intensifying the monetary policy divergence between the U.S. and eurozone, which should push EUR/USD to 1.15, says HSBC. However, HSBC says "we think it may hold for now." EUR/USD rises 0.2% to 1.1689 on Monday.
- Sell the Australian dollar versus the Japanese yen for a target of 80.50 and a stop at 85.10, says HSBC. Global trade war risks are back in the picture after the U.S. imposed aluminum and steel import tariffs and this points to a risk-off environment, which "would favor the Japanese yen and the dollar, and challenge trade-sensitive currencies such as the Australian dollar," HSBC says. AUD/JPY, however, last trades up 1.2% at 83.87 on the back of better-than-expected Australian April retail sales. AUD/USD is also rising by 1% to 0.7646.
- The euro fell last week on the back of Italian politics, but the new government doesn't necessarily point to the country dropping the euro, according to FX Knowledge, which says "the macro case for a weaker EUR is weakening by the day." Eurozone economic data came in below market forecasts recently, but this was due to "excessively high expectations." FX Knowledge says "last week's pick up in eurozone inflation [...] may generate interest at the European Central Bank and amongst market participants." The research firm says this should help the euro, and an EUR/USD level of 1.20 looks "like a feasible target again." EUR/USD is last up 0.2% at 1.1680.
- Energy Secretary Rick Perry stresses cybersecurity as one of the primary reasons the Trump administration is looking to help coal and nuclear power. A draft memo leaked last week shows the department is proposing to effectively force consumers to buy electricity from certain power plants -- likely mostly coal and nuclear -- to ensure the grid maintains a mix of electricity sources. A wider variety of fuel sources ensures the grid can reliably produce power during and recover from attacks and natural disasters, Perry says. Trump has also pledged to help revive coal and has taken millions of dollars in donations from coal-company executives. Perry, speaking at his department's Cyber Conference in Austin, says the country's grid relies on infrastructure vulnerable to cyber-attacks. That "requires us to think differently, to act proactively," he says.
- Relatively high U.S. rates can make the U.S. dollar vulnerable to global shocks "because there is relatively more to be de-priced," says JPMorgan. This is even more true of a late-cycle economy, which is how many view the U.S. "The dollar could struggle relatively more against other safe-haven currencies like the Swiss franc and the Japanese yen" under global risk aversion, says JPMorgan. USD/JPY is flat at 109.50 and USD/CHF is down by 0.2% at 0.9861 on Monday.
- US tariffs on Canadian aluminum exports amount to a "direct attack" on the economy of Quebec, the province's economy minister Dominique Anglade says. Canada's aluminum production is heavily concentrated in Quebec, which exports about C$8 billion worth of aluminum per year, according to Quebec's government. Speaking at a summit on aluminum in Montreal on Monday, Anglade said the industry is an important part of the Quebec economy where it provides roughly 30,000 direct and indirect jobs. "What happened last week was a direct attack on our economy" and will have negative impacts on both sides of the border, Anglade said.
- Emerging market currencies are rebounding on Monday as some risk appetite returns, but Societe Generale says "now is not yet the time to rush back into EM despite the cheaper valuations." There is uncertainty in Turkey, with general elections due June 24, global trade war talk is back on the agenda, while the Federal Reserve continues to tighten monetary policy. Investors have continued to take money out of EM equities, according to data from EPFR and IIF. However, the pace of outflows in EM equity funds has slowed and inflows to bonds returned for a second week, IIF data shows.
- Aluminum extends its gains to 2.7% from a week ago after the White House last week decided not to renew exemptions on steel and aluminum import tariffs for products from Canada, Mexico and the EU. Meantime, U.S. sanctions on Russian individuals were back in the news, with the Financial Times reporting that the U.S. Treasury Department had extended the period allowed for trading in assets of global No. 2 aluminum company United Co. Rusal and its parent firm EN+ Group. Both firms are controlled by sanctioned billionaire Oleg Deripaska. Aluminum is up 1.1% at $2,324/ton so far Monday.
- Ahead of last weekend's round of US-China trade talks, Northern Trust chief economist Carl Tannenbaum told WSJ that neither country "has the upper hand." As a result, negotiations will ultimately bear fruit, he predicted, even if what did--and didn't--happen over the weekend may raise questions for some. That as there is "some urgency for China" as party leaders said last fall they would be willing to sacrifice some near-term economic growth for economic sustainability, Tannenbaum noted. "We've never seen a developing economy grow this fast for this long," substantially cutting poverty in the process. Meanwhile, trade continues to be much-more important for the China, with exports to the US making up 4% of the country's GDP. It's 0.7% for US exports to China.
- The foreign-exchange market's appetite for risk shouldn't wane this week, even as the G7 summit in Canada and "the runup to it should be the main source of headline news," ING says. After the U.S. imposed steel and aluminum tariffs on EU, Canadian and Mexican imports, political tensions and the risk of a global trade war are back in focus, making the summit more important than usual. The "expected solid economy data from both U.S. and eurozone and the stabilization of the situation in Italy" are also likely to encourage appetite for risk, says ING.

Jun 04 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Brent crude oil futures dipped for a second session, with prices coming under pressure from record U.S. output and expectations of higher OPEC supplies.
- Gold prices were little changed as expectations of a U.S. rate hike this month offset support from trade war worries.
- Shanghai copper rallied to the highest in more than six weeks, underpinned by a slightly softer dollar and supply concerns amid wage negotiations at the world's largest copper mine.
- Chicago corn prices slid for a second session to touch their weakest since April 24, pressured by favourable weather across the U.S. Midwest.

- A new analysis highlights the difference in health-care costs between the US and other developed nations. Commonly used treatments for colorectal cancer cost twice as much in Washington state as in neighboring British Columbia, Canada: $12,345 versus $6,195 monthly per patient. But average survival was the same, according to a study released Friday at the annual meeting of the American Society of Clinical Oncology. The most common treatment used in Washington was chemotherapy, while in British Columbia it was chemotherapy plus Roche's  Avastin. Researchers from the Fred Hutchinson Cancer Research Center in Seattle and the BC Cancer Agency--which operates cancer treatment centers there--harvested the numbers from health claims data of private health insurers in the US and the BC agency.
- Canadian government bonds gained on investors concerns that rising trade tensions with the US will curb economic growth, analysts said. The US tariffs would cover steel and aluminum imports from Canada, Mexico and Europe. Prime Minister Justin Trudeau is planning retaliatory trade levies in response. Bonds were also supported by investors seeking to add longer-maturity debt to replace securities maturing on June 1. The date is customarily one when a large number of bonds mature, sending investors into the market to restock their holdings, said Andrew Kelvin, a strategist with TD Securities. Bonds also continued to be in demand after Thursday's disappointing GDP data release. The yield on the 10-year Canadian government note fell to 2.227% from 2.245% Thursday, according to Tradeweb.
- US hog producers fret that trade disputes will sour a high-stakes bet on strong export demand. The US is on track for another year of record pork output in 2018, after meatpackers built new plants and farmers expanded their herds. But Chinese tariffs have dampened demand, and now Mexico has threatened to levy duties on pork chops and other cuts. Dean Meyer, who recently expanded his hog-farming operation near Rapid Rock, Iowa, to sell around 22,000 hogs a year, says his income has taken a hit. His farm is just currently just about breaking even, he said. Lean hog futures have fallen since the Chinese tariffs went into effect in April. "That's what's going to dictate the profitability of our operation and the future for us," he said. "We're at a point in our operation where profits are compromised."
- Fiat Chrysler's chief executive criticized his auto making peers for "wavering" on their request to President Trump for relaxed fuel economy standards. Recent comments from the heads of Ford Motor and General Motors suggesting they favor a toughening of fuel economy regulations contradict what those companies' leaders told President Donald Trump in a meeting early last year, CEO Sergio Marchionne said at a press conference outside Milan. "That kind of wavering with the White House is not helpful," Marchionne said. The Fiat Chrysler CEO said he does not support a "rollback" of current rules, but does want future standards to better reflect American consumers' shifting preferences toward light trucks.
- Spirit AeroSystems CEO Tom Gentile says aluminum tariffs won't have a material impact, though it's yet to quantify any potential hit and the effect may be much greater for some of its smaller suppliers. Spirit secures much of its metal through TMX, the Boeing supply-chain unit run by ThyssenKrupp, and its Airbus equivalent. Much of the rest comes from the US and Canada--which is affected by the tariffs.
- Berkshire Hathaway's NV Energy said it will invest more than $2B in renewable energy and battery energy storage in its home state of Nevada if a proposed state constitutional amendment fails. The proposed amendment would establish a competitive retail electricity market in Nevada and end NV Energy's monopoly. The amendment has already been approved by voters once but needs to pass again in November in order to succeed. If the amendment is approved, NV Energy might not proceed with the investment, the company said. NV Energy's proposed investment "demonstrates that we are navigating the uncertainties in the current market," said NV Energy CEO Paul Caudill in a statement.
- In a tweet, President Donald Trump takes aim at the US-Canada lumber trade. "Highly restrictive on Trade!" he writes. "They report a really high surplus on trade with us. Do Timber & Lumber in U.S.?" One of the Trump administration's early moves to remake trade relations was to hit Canadian lumber producers with duties of around 20% in 2017, alleging that they benefit from government subsidies and dump timber in the US. Around a third of American wood comes from Canada. Previous administrations have negotiated deals with Canada over the long-running issue; those in the lumber industry, however, think tariffs have become the new normal under Trump.
- The direct impact of US steel and aluminum tariffs on Canada could be limited to 0.1%, BMO Capital Markets says. Firm says that while Canadian shipments of steel and aluminum to the US are worth a little over 1% of GDP, producers in Canada likely won't lose a lot of business since the US has limited capacity to boost production at home. BMO says the US could get hit just as hard as Canada, as rising prices for anything that uses steel and aluminum cut into US household purchasing power. Canada also announced retaliatory tariffs against the US on Thursday.
- European stocks climb as the government deal in Italy overshadows the new U.S. tariffs and the vote to oust Spain's Prime Minister Mariano Rajoy, says Joshua Mahony, a market analyst at IG. "News of an Italian coalition has helped drive improved risk attitudes," Mr. Mahony says. Europe's largest bourses gain ground, with Spain's Ibex 35 and Italy's FTSE MIB posting some of the best performances. "Political sentiment in Italy has boosted investor sentiment in Europe," David Madden, Market Analyst at CMC Markets UK, says.
- Some traders appeared to take President Trump's tweet that he was "Looking forward to seeing the employment numbers," as a sign that the report would come in strong. The dollar began rising after Trump's tweet, a move TD Securities' Mark McCormick described as "a little suspicious." The greenback strengthened from around Y109.21 to Y109.47 shortly before the data was released. The dollar is now up 0.8% at Y109.70. The jobs report and other major economic indicators are provided to the White House before public release. Under a long-standing directive from the White House's Office of Management and Budget, the Labor Department provides the employment data to the president via the chairman of the Council of Economic Advisers as soon as it is available. The CEA is tasked with briefing the White House on its details.
- President Donald Trump tweeted Friday that he is "looking forward to seeing the employment numbers at 8:30 this morning." The tweet came just more than an hour before the May jobs report is released to the public. The president and some White House officials have the opportunity to see the report before its public release. Economists surveyed by The Wall Street Journal expect employers added 190,000 jobs last month and that the unemployment rate held steady at 3.9%, matching a 17-year low.
- The U.S. decision to impose tariffs on European steel and aluminum imports lacks any comprehensible justification, says Bernhard Mattes, head of German auto industry association VDA. Mr. Mattes says it was inexplicable that the U.S. would use protectionist instruments against one of its most important partners. "In a globally networked economy, customs barriers do not benefit anyone, including the U.S. itself," he says.

Jun 01 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)
- Crude oil futures lost more ground, with the U.S. market set for a second week of decline on pressure from record U.S. production and expectations of OPEC boosting output.
- Gold prices were steady in early Asian trade amid renewed fears of a global trade war, while a firm dollar and positive U.S. economic data weighed on the market.
- London nickel prices and Chinese nickel futures both rose for a fourth day, supported by strengthening Chinese steel futures and plunging global nickel inventories.
- Chicago wheat is poised for its first weekly decline in three weeks with improved U.S. weather weighing on prices, although losses were limited by concerns over dryness in the Black Sea region and Australia.
- The euro seemed set to post its first weekly gain in seven weeks as worries over Italy's political crisis eased, but the Canadian dollar and Mexican peso were looking frail after Washington went ahead with stiff tariffs on imported steel.
- President Trump's tariffs on European imports of steel and aluminum of 25% and 10%, respectively, "is a moderate negative hit for FCA [Fiat Chrysler] and less relevant for VW, BMW and Daimler," says JP Morgan Cazenove analyst Jose Asumendi. Overall, the indirect negative impact of rising trade tensions, as well as the possibility of car-import tariffs, is much larger than effects from the now imposed steel and aluminum tariffs, he says. If the U.S. closed the car-import duty gap to Europe, BMW's earnings could see a 5% hit in the worst case, while Volkswagen earnings could lose 4% and Daimler 3%, he estimates. Fiat Chrysler, which sources the majority of vehicles from North America, would see a lower impact, he notes.
- Equities rise sharply after Italy's populist parties reached a deal on forming a government, ending concerns about possible new elections. Italy's FTSE MIB jumps 2.7% to 22369.82, reversing much of the steep slide it suffered earlier this week. The U.K.'s FTSE 100 and Germany's DAX are up 0.7%, and even Spain's Ibex 35 rises 1.3% despite expectations that Prime Minister Mariano Rahoy will be ousted after a vote of no confidence. But uncertainties remain and the euro "wasn't quite as enthused," Connor Campbell at Spreadex says, pointing to the U.S. imposing trade tariffs on the EU, "the nature of the Italian government" and the Spanish uncertainty. EUR/USD was last down 0.1% at 1.1686.
- London stocks are expected to open 21 points higher at 7699, according to London Capital Group, with investors likely to be mildly relieved after Italy's populist parties reached a deal on forming a new government. This will ease immediate concerns about the prospects of new elections, though uncertainty remains. Investors are also expected to shrug off fears of a trade war for now after the U.S. imposed tariffs on steel and aluminum from the EU, Canada and Mexico, but again these may soon return to haunt markets. On a relatively quiet day for company news--other than an S&P downgrade of Germany's Deutsche Bank--attention will focus on U.S. jobs data at 1230 GMT and a U.K. purchasing managers' survey on manufacturing at 0830 GMT.
- European bourses should have a positive open despite the U.S.-imposed tariffs on steel and aluminum imports from Canada, Mexico and the European Union, London Capital Group says. "The market is becoming more familiar with this administration's negotiating tactics and as a result, rather than seeing a move straight into risk off trading, we are seeing some investors take a wait and see approach. The traditional safe haven Japanese yen moved lower versus the dollar, as did gold and European bourses are pointing to a stronger start on the open," it says. The immediate economic impact of the tariffs may be limited, says Michael Hewson, chief market analyst at CMC Markets. However, the U.S. move may lead to an escalation.
- Canada has a message for US producers whose goods stand to be affected by C$16.6B in retaliatory Canadian tariffs: call your local lawmaker and members of Congress to get the Trump administration to reconsider levies on imported Canadian steel and aluminum. Foreign Minister Chrystia Freeland issued the advice in a recent interview with the Canadian Broadcasting Corp., adding that its list of targeted items--US-made steel, aluminum and some agricultural products--was ready in the event the Trump administration opted to drop Canada's exemption on steel and aluminum tariffs. She said she spoke with US Trade Representative Robert Lighthizer early Thursday, and told him she was "very disappointed," and believed the tariffs on Canadian metals "was a mistake."
- Facebook investors came armed with fiery questions at the social-media company's annual meeting Thursday. "If privacy is a human right, than we contend that FB's poor stewardship of user data is tantamount to a human rights violation," a representative of Northstar Asset Management said, pointing to the fact that more than 80 million users had their data compromised by Cambridge Analytica, the political firm that bought Facebook user data and aided the Trump campaign. "Scandal is not good for the company's bottom line," another investor said. Executives responded by reiterating that Facebook is taking a broader view of its responsibilities.
- Canada's retaliatory measures against US steel and aluminum tariffs went beyond metals to include a range of specific household and other goods. That's likely because Canada does not import a significant quantity of aluminum from the US, so tariffs on steel and aluminum alone would not have matched the impact of the US move. The Canadian government said Thursday it would impose a 25% tariff on steel imports from the US and a 10% tariff on aluminum and some other specific imports -- including ketchup, small packages of insecticide, sleeping bags and toilet paper. Canada said its full list of tariffs target 16.6 billion Canadian dollars' ($12.871 billion) worth of U.S. imports, matching the total value in 2017 of Canadian exports that will be affected by U.S. steel and aluminum tariffs.
- The US decision to slap tariffs on steel and aluminum imports sends "a fatal signal" for transatlantic trade, says Thilo Brodtmann, the managing director of Germany's VDMA industry group, which represents about 3,200 engineering companies. Trump's actions will ultimately prove to be "an own goal," he says, as they will also hurt US companies that will see their input costs for steel and aluminum rise.
- Former senior Canadian trade negotiator Gordon Ritchie--an instrumental figure in helping reach the original US-Canada free-trade agreement--said the country's economy stands to suffer in the event the Liberal government retaliates against the Trump administration over steel and aluminum tariffs. "Retaliation would be stupid, because it would damage your own consumers and producers," Ritchie tells WSJ. However, he said for tactical reasons, PM Trudeau has no choice but to launch trade measures meant to hurt US industry. "If you don't hit back at the bully, the bully ups the ante." Trudeau is scheduled to speak to reporters in Ottawa at 1:30 PM ET.
- Major European indices close in the red after the U.S. confirmed plans for tariffs on steel and aluminum imports from the EU, Mexico and Canada, while political turmoil also weighed. The levies will kick in at midnight, putting pressure on European equity benchmarks, with the DAX dropping 1.4% and France's CAC-40 falling 0.5%. Milan's FTSE MIB was down just 0.06% as hopes that fresh Italian elections can be avoided boosted sentiment. Still, Spain's IBEX 35 declined more than 1% as Prime Minister Mariano Rajoy faces a vote of no confidence Friday, with early indications suggesting he will lose.
- "These tariffs will harm U.S. farmers and take many American farm operations to the breaking point," warns Brian Kuehl, executive director of Farmers for Free Trade, after the Trump administration applies tariffs to steel and aluminum imported from Canada, Mexico and the EU, threatening retaliation that could hit US agricultural exports. The group, set up to defend Nafta and US agricultural trade generally, promises a hot summer for lawmakers returning home from Washington and reminds President Trump that farmers "overwhelmingly" supported his candidacy in 2016, "but will not be silent in the face of trade wars that harm U.S. agriculture." US net farm income is projected to fall to $62.3B this year, half what it was five years ago, due to low crop prices. Farmers fear trade disruptions will make that worse.
- Aerospace supplier RBC Bearings says it's built in protections against tariff-driven rises in steel prices. CEO Michael Hartnett says on investor call that it has collars to change prices if steel costs rise or fall by more than 5%. The Airbus and Boeing supplier also bought steel ahead of the tariffs, and Hartnett says it has enough forward supplies to "last us through next year." RBC shares narrowly ahead, and aerospace stocks are mixed, though Boeing down more than 1% on trade tension concerns.

Jan 09 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ DJ Reuters)

- U.S. oil prices hit their highest since 2015 again as speculators bet on further price rises amid OPEC-led production cuts and a dip in American drilling activity, though some warned the rally could run out of steam.
- Gold prices inched down amid expectations for more U.S. interest rate hikes this year.
- London copper inched up in early trade as an advancing U.S. dollar lost steam, while Shanghai copper recovered from a drop in the previous session to trade marginally higher.
- Chicago wheat fell for a fourth consecutive session with prices pressured by improved weather conditions in the U.S. southern Plains although a lack of protective snow cover kept a floor under the market.
- The yen jumped after the Bank of Japan trimmed its buying of long-dated Japanese government bonds in market operations, helping to stoke speculation about a future exit from its massive stimulus policy.   
- As a result of tax reform, Visa is improving 401(k) benefits for its U.S.-based employees, according to a company spokeswoman. Visa will increase its 401(k) match beginning in February. Currently Visa contributes $2 for every $1 an employee contributes, up to 3% of base pay. Visa will raise that to 5% of base pay. The company is also "exploring other global employee benefits and investments...which [it] hope[s] to unveil in the near future," says a spokeswoman.
- Former lawmakers urged President Donald Trump to preserve Nafta, citing withdrawal from the trade agreement as the fastest way to undermine any tax benefits or regulatory relief farmers might otherwise see from his administration. As Mr. Trump addressed farmers at an annual meeting in Tennessee, former Senators Max Baucus (D., Mont.) and Richard Lugar (R., Ind.), now co-chairs of a non-profit organization advocating for free trade for farmers, warned that withdrawing from Nafta would be akin to levying a new tax on farmers. They cautioned that U.S. farmers would suffer retaliatory action if the U.S. imposes tariffs on its trading
partners and said American growers already are disadvantaged since Trump pulled the U.S. from a key Pacific trade agreement.
- President Trump used a speech to farmers to highlight benefits of the GOP's tax overhaul, tout his deregulatory agenda and sign executive orders aimed at improving broadband access across rural America. Addressing farmers at an annual convention of the American Farm Bureau Federation, Trump called the recently-passed tax cut "historic relief for farmers," saying family farms would be spared from a "deeply unfair estate tax," and told a welcoming crowd that he was "putting an end to the regulatory assault on your way of life." Signing two orders to expand internet connectivity in rural areas, he said: "You are going to have great, great broadband."
- United Natural Foods CFO Mike Zechmeister says the tax policy changes are impacting how it assesses returns on potential investments. The natural foods distributor saw a four percentage point difference in returns on a recent investment before and after the tax bill, for example. "The tax savings are real," Zechmeister tells investors gathered at the annual ICR Conference. "You could take a project that may be unattractive in the past or one you would have passed on, and it becomes a project you could go forward with."
- US auto industry stands to benefit from the recently passed tax legislation, which will likely boost earnings per share by an average of 5%-6%, Barclays estimates. The tax reforms are expected to cut nominal tax rates for most US auto manufacturers and parts suppliers, even though the reduction in actual taxes paid will be "slightly less impacted" due to widespread use of losses carried forward, Barclays says. Auto parts suppliers domiciled overseas for tax purposes, such as Adient, Aptiv and Delphi Technologies, won't gain much from lower US corporate tax rates, but also may face lower risk from another part of the tax legislation--a hike in levies targeting unremitted foreign earnings, it says.
- United Natural Foods, up more than 5% as its CFO outlines "significant" financial benefits from the tax bill. The Providence-based natural food distributor expects the taxes it pays overall to fall to around 28% in its 2019 fiscal year from 40% currently. CFO Mike Zechmeister tells investors gathered at the annual ICR Conference that the reduced corporate tax will result in around $17M in savings during its current fiscal year, and it will also benefit from a one-time boost on deferred liabilities. The company expects an aggregate rate reduction of as much as 17 percentage points this year, and 13 percentage points in 2019. "That is a meaningful increase to our free cash flow," Zechmeister says.
- Changes to the US tax code could help push Caterpillar's stock price to $200 by the end of the year, JPMorgan analyst Ann Duignan says. The recently passed federal tax law's provision allowing 100% depreciation on new and used equipment will likely prolong the replacement cycle in US construction, she says. That's in addition to a lower corporate tax rate that will boost free cash flow. "As a result of our analysis, we believe that the stock remains undervalued, despite the significant outperformance last year," she said in a note. Caterpillar stock was up about 70% in 2017. Caterpillar shares were up 2.6% to $166.13.
- USDA Secretary Sonny Perdue touted accomplishments of the Trump administration and his own agency ahead of a planned presidential address to farmers at an annual trade convention. Perdue listed what he sees as trade victories, including opening China to American beef and rice, for farmers worried about the fate of Nafta. Speaking at a meeting of the American Farm Bureau Federation, he said USDA has begun rolling back burdensome regulations, targeting 27 rules that will save $56M annually, and urged farmers to flag the "silliest, most onerous rules" they think should be ditched. As for farmers' tax burden, Perdue tells the crowd that thanks to Trump's recent tax overhaul, "Help is not only on the way. It's already here."
- The parent of Alaska Airlines, like Southwest Airlines, American Airline and JetBlue Airways before it, said it plans to award $1,000 bonuses later this month to 23,000 employees, in celebration of the new federal tax bill. The corporate tax-cut windfall will reduce the tax rate to 21% from 35%, effective this year, which should save millions in tax liabilities and allow airlines to invest more in planes, products and their employees, although some of the savings may also go toward share buybacks. Alaska Air shares are down 1% to $72.97.
- Former Navy acquisition chief and acting Navy secretary Sean Stackley joins L3 Technologies, complementing the deal-hungry defense company's M&A team and continuing the run of Obama-era Pentagon officials who've popped up on corporate boards and management teams. Former defense secretary Ash Carter joined the Delta Air Lines' board while his deputy, Bob Work, is now a Raytheon director. Ex-Air Force secretary Deborah Lee James is now on the Textron board while Leidos added former Pentagon acquisition chief Frank Kendall to its director roster, with his deputy Katharina McFarland joining Engility.
- Eli Lilly (LLY) CEO David Ricks said the U.S. tax overhaul will cause American companies to make investments based more on business factors than taxes. "On the next decision you face it really re-balances the calculus on where to build a plant or make hires," he tells the WSJ on sidelines of JP Morgan healthcare conference in San Francisco. He expects Lilly to have "more infrastructure" in the US within the next 7 years as a result of the overhaul. In September the drug maker announced plans to cut 8% of its work force including many jobs in its home state of Indiana. Ricks also sees the mix of Lilly acquisition targets shifting to more US companies than foreign firms. Though Lilly already had a lower tax rate than the former top US corporate rate due to operations abroad, he sees Lilly's total tax bill coming down.
- J.P. Morgan says the introduction of the U.S. tax reform has done very little to lift the market's downbeat view of potential U.S. growth," which is expected to be smaller compared with other countries or areas around the world. This explains why the U.S. dollar hasn't benefited much from either the introduction of the tax reform or from good economic data, it says. "The global economic activity surprise index is at a post-GFC high," J.P. Morgan says, highlighting eurozone, as well as German growth, which for the first time ever "outpaced the U.S. for four consecutive years." J.P. Morgan adds: "This lack of economic exceptionalism ... is turning out to be more of a drag on the currency."