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Saturday, August 24, 2019

Responding to the earlier comments by the European Council President Donald Tusk, the UK Prime Minister Boris Johnson warned, “I would say to our frie

Responding to the earlier comments by the European Council President Donald Tusk, the UK Prime Minister Boris Johnson warned, “I would say to our friends in the EU if they don’t want a no-deal Brexit then we’ve got to get rid of the backstop from the treaty. If Donald Tusk doesn’t want to go down as Mr. No Deal then I hope that point will be borne in mind by him too.”  Tusk said that he would not cooperate with the UK in preparing for on a no-deal Brexit when he arrived at the G7 Summit earlier on Saturday. EU’s Tusk at G7: Open to cooperation on Brexit, but not on no-deal

In an interview with the German weekly Frankfurter Allgemeine Sonntagszeitung (FAS) on Saturday, the European Central Bank (ECB) Governing Council mem

In an interview with the German weekly Frankfurter Allgemeine Sonntagszeitung (FAS) on Saturday, the European Central Bank (ECB) Governing Council member Jens Weidmann shot down heightened expectations of an economic stimulus. Key Quotes (via Reuters): Currently sees no need for a major economic stimulus programme. Remains cautious on government bonds because they risk blurring the line between monetary and fiscal policy. It is still not right to fundamentally question the criteria for bond purchases. Friday’s rally in the shared currency is likely to gain extra impetus on Weidmann’s comments on Monday. EUR/USD rallied hard above the 1.11 handle after the US dollar slumped broadly amid US-China trade war and yield curve inversion, courtesy the US President Trump’s social media barrage.

China’s Commerce Ministry issued a statement on the renewed trade dispute with the US on Saturday, warning the US to stop wrong trade actions or face

China’s Commerce Ministry issued a statement on the renewed trade dispute with the US on Saturday, warning the US to stop wrong trade actions or face consequences.Key Comments:China strongly opposes the US decision to raise tariffs on $550 bln worth of Chinese imports. Strongly urges the US not to misjudge the situation, immediately stop its wrong actions. The US should not underestimate the determination of the Chinese people. All consequences would be borne by the US if it does not stop its wrong actions on trade. US unilateralism and bullying trade protectionism, maximum pressure violate consensus reached by the head of both nations. Breaking: Trump retaliates to Chinese tariffs by announcing fresh tariffs on Chinese products Trump is welcome to relocate GM, Ford and other automakers back to the US – Global Times

Responding to the US President Trump’s tweet that US companies must look for ‘alternative to China’, Hu Xijin, editor-in-chief of Chinese and English

Responding to the US President Trump’s tweet that US companies must look for ‘alternative to China’, Hu Xijin, editor-in-chief of Chinese and English editions of the Global Times, tweeted on Saturday, “President Trump is welcome to relocate GM, Ford and other automakers back to the US. As far as I know, China is their No.1 market, they can give up their market to BMW, VW and Toyota. Go back to the US, let each American family have 20 cars.” In one his Twitter rant on Friday, Trump said: “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States.” Markets eagerly await the reaction to Trump’s retaliation on the Chinese tariffs on Monday. The US President tactfully timed the announcement of the fresh retaliatory tariffs on Chinese products after the Wall Street close. Breaking: Trump retaliates to Chinese tariffs by announcing fresh tariffs on Chinese products Special report on Wall Street close: US stocks end in a trade war bloodbath, plotting long-term Fibo downside targets

On his arrival at the G7 Summit earlier today, the European Council President Donald Tusk said that he is open to cooperation on Brexit. However, he a

On his arrival at the G7 Summit earlier today, the European Council President Donald Tusk said that he is open to cooperation on Brexit. However, he added: “One thing I will not cooperate on is No Deal. And I still like to think Boris Johnson will not want to go down in history as Mr. No Deal." Tusk spoke ahead of his much-awaited meeting with the UK Prime Minister (PM) Boris Johnson to discuss the Brexit plan on Sunday. The Cable enjoyed a relief rally and tested the 1.23 handle on Friday after the US dollar was thrown under the bus broadly by the US President Trump’s Twitter barrage following China’s unexpected retaliatory tariffs on the US imports. Trump’s rant led to the US yield curve inversion, as it fueled concerns that the trade war will trip the US economy into a recession. On Monday Asia open, the outcome of the PM Johnson and Tusk’s meeting will influence the GBP trades. However, the reaction to Trump’s retaliation to the Chinese tariffs will emerge the main market driver. Breaking: Trump retaliates to Chinese tariffs by announcing fresh tariffs on Chinese products

Wall Street traders were all set for a positive day on the premise that the Federal Reserve's Powell would advocate for precautionary measures to offs

Shocking trade war escalation sinks US stocks, sending risk appetite packing. The Dow Jones Industrial Average closed down 623.34 points.Wall Street traders were all set for a positive day on the premise that the Federal Reserve's Powell would advocate for precautionary measures to offset the 'potentially' adverse implications for an otherwise growing US economy. However, China came along with a surprisingly timed retaliation in the trade war saga and dispute between Beijing and the US. Consequently, the Dow Jones Industrial Average closed down 623.34 points, or 2.4%, at 25628.90. The S&P 500 dropped 2.6% and the Nasdaq Composite fell 3% and here's why: News came that China will impose 5% to 10% tariffs on $75 billion of goods (including frozen pork and nuts) along with resuming the 25% duty on US automobiles and auto parts from 15th December, although some tariffs will come into effect as soon as 1 September. It wasn't so much that China had retaliated in the way that they did which caused the panic attack in the markets on Friday, it was the fact that traders were caught completely off guard. Markets were simply not prepared for the Chinse announcements out of the blue like this given that China did not immediately react to the 10% US tariffs on $ 300 billion goods and President Trump's unexpected tariff delays to 15 December. Indeed, there had been plenty of canaries in the mine for markets to take heed of throughout the various official Chinses news outlets that had been warning of such scenarios, warnings that had prevented a full return of risk appetite, weighing on US yields and stock markets. The US yield curve had been big news in recent sessions which gave oxygen to the US recession pundits, of which many economists have warned that such sentiment circulating in the media could end up being self-fulling. Prior to Friday's session, markets were already on edge with bond prices sending fresh warnings about the US economy after a report showed that manufacturing activity slowed for the month of August to the lowest in almost 10 years forcing the yield on the 10-year note to fall below the 2-year's briefly.  Trump fires back at China after the close Following the Chinese retaliation, it was circulating that Trump would react, and, of course, he did! Tacitly timed after the Wall Street close, no doubt, Trump came out with the following statement over Twitter: For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30% Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter! So, we can expect further declines in stock markets for sessions ahead and despite Powell's best efforts of talking up the US economy in his delivery at the Jackson Hole earlier in the day.  Powell's careful delivery combined with trade war escalation opens to door for two more rate cuts Chair Powell managed to pull off an impressive tightrope act by not deviating from the "mid-cycle policy adjustment" mantra, but at the same time, he acknowledged that developments since the July meeting have been "eventful" - If only he knew what was to come later in the day! "He cited a number of risks to the outlook (new China tariffs, further evidence of slowing in Germany and China, geopolitical events including Brexit, Hong Kong, Italy, and financial market volatility and post-crisis lows in yields). Based on these risks, Powell reiterated that the Fed "will act as appropriate to sustain the expansion", suggesting a rate cut is likely in September," analysts at TD Securities acknowledged. However, markets will now be quick to price in subsequent from the Fed, perhaps even as early as October.  What does this all mean for US stocks? When comparing the U.S. stock market to the 49 countries and competitor markets, investors have obviously been content in its performance to date - much to the delight of 'talk(twitter)-it-up-Trump' and current administration as we head into an election year. However, this trade war escalation is sending can only end badly for US stocks if the US consumer gets the brunt of it. Moreover, the majority of the best performing components of the benchmarks to date are those corporates that have foreign sales which account for no less than 43% of total revenues for the S&P 500 listed companies - Trade war escalation can only be bad news for these companies and when you see a retraction in consumer confidence and job growth ... Well, it doesn't take more than common sense to see what the ramifications are going to be for US stocks. DJIA levels Pulling up the charts on the bellwether DJIA index, we can see that volatility is at play and when we see this we should be getting prepared for one of two things - either an upside breakout or a downside breakout which would usually extend into either a continuation or a reversal. The fundamentals are stacked against an extension of the prevailing trend so we focus our attention on the downside levels for now.   Scrolling out all the way back to 1915, (yes, why not), then we can apply a Fibonacci (Fibo') retracement tool and mark the 23.6% at 21000 - below the Dec 2018 lows of 21712. On the way there, first up, the 21-monthly moving average is located at the May and Jun lows in the 24700s which seems like a reasonable target to aim for in coming sessions considering they are double-bottom lows - Thereafter, the 23.6% Fibo' of the March 2009 swing lows to all-time highs is located in the 22,200s.    

Trump announces 5% additional tariffs on Chinese products: For many years China (and many other countries) has been taking advantage of the United Sta

Trump announces 5% additional tariffs on Chinese products:For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30% Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter! More to come...

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