Posts belonging to Category Prices



New NAFTA agreement possible

Canada and U.S. Express Optimism

The United States and Canada are aiming to reach a deal by the end of the week that keeps the three-country North American Free Trade Agreement intact, as President Trump and Prime Minister Justin Trudeau of Canada expressed optimism that the two countries could resolve their differences.

“I think Canada very much wants to make a deal,” Mr. Trump said from the Oval Office on Wednesday, sounding far more optimistic than just days before, when he announced a deal with Mexico and threatened to leave Canada behind.

http://www.nytimes.com

Separate U.S.-Mexico trade agreement

Canada may join later

The Trump administration said Monday it had reached a new, 16-year trade deal with Mexico, setting in motion a rapid chain of events that could redraw the world’s largest trade agreement.

The ultimate scope of the deal could hinge on whether Canadian prime minister Justin Trudeau decides to join the agreement after months of feuding with President Trump.

White House officials said the agreement, centered largely on manufacturing, would help American workers by making it harder for countries like China to ship cheap products through Mexico and then into the United States. Harmonizing labor and environmental rules would also protect U.S. jobs and salaries, the officials said, by making it less attractive for U.S. companies to move operations to Mexico.

http://www.washingtonpost.com

Tesla stock could be worth $4,000

CEO of  ARK Invest: Tesla share could be valued 10 times in 5 years

Elon Musk thinks he could take Tesla private at $420 a share. But one Tesla investor thinks that’s a bad idea — because the stock could be worth nearly ten times that amount in the most optimistic of scenarios. Cathie Wood, CEO of money management firm ARK Invest, wrote an open letter to Musk earlier this week saying that Tesla could be valued somewhere between $700 and $4,000 per share in five years.

Wood tweeted out a link for the letter to Elon Musk Wednesday night. Musk responded in less than an hour, telling Wood “thank you for the thoughtful letter.” In an interview with CNNMoney Thursday, Wood said that Tesla’s investor relations responded quickly to her letter as well and passed it on to the board, but the board has not gotten back to her as of yet.

Tesla (TSLA) shares surged after Musk’s now infamous“funding secured” tweet earlier this month, hitting a peak of $387.46 in the process.
https://www.cnn.com

Amazon earnings skyrocket

Unlike Facebook

Amazon.com Inc (AMZN.O) forecast strong fall sales and posted a profit that was double Wall Street targets on Thursday thanks to the retailer’s younger, higher-earning businesses, including cloud computing and advertising.

Shares rose more than 3 percent in after-hours trade. The report was a relief to investors in the U.S. technology sector, still reeling from a profit warning by Facebook Inc (FB.O) Wednesday that plunged its stock 19 percent.

Amazon’s report shows how the world’s largest online retailer has increasingly learned to compensate for the high costs of fast package delivery and video streaming by controlling expenses and building up higher-profit businesses. It was the first mover in the business of selling data storage and computing power in the cloud, a bet that continues to reap rewards and give it the leeway to invest in grand projects.

For instance, the company is working to ship food from Whole Foods Market stores across the United States, in an ambitious attempt to bring groceries into the age of online retail.

http://www.reuters.com

Trump, EU agree to work on lowering tariffs

Averting a potential trade war

President Donald Trump on Wednesday said the United States and the European Union had launched a “new phase” in their relationship, saying that the two major economies would start negotiations immediately on a number of areas that include working toward “zero tariffs” on industrial goods, and further cooperation on energy issues.
“We agreed today, first of all, to work together towards zero tariffs, zero non-tariff barriers and zero subsidies for the non-auto industrial goods,” Trump said at a joint press conference in the White House Rose Garden with European Commission President Jean-Claude Juncker.

Trump did not address whether the two leaders had reached an agreement on car tariffs, though Juncker said that no new tariffs would be assessed as negotiations proceed. Economists have said that, among the major issues under discussion, tariffs on cars could be the biggest threat to the U.S. economy.

http://www.cnbc.com

Venezuela’s inflation rate may hit 1,000,000 percent

Hyperinflation in Venezuela

 When the International Monetary Fund predicted this year that hyperinflation in Venezuela could top 13,000 percent, it seemed as if the South American country’s economic outlook could not get any worse.

It just did. With the situation in the country deteriorating faster than expected, the IMF has unveiled a far more severe prognosis, saying that Venezuela’s hyperinflation is poised to reach an annualized rate of 1 million percent by year’s end. That inflation rate is set to catapult socialist Venezuela into a rogue’s gallery of nations that have suffered the worst inflation rates in history.

Venezuela’s “is one of the most severe hyperinflation situations that we’ve known about since the beginning of the 20th century,” said Robert Rennhack, deputy director of the IMF’s Western Hemisphere Department.

http://www.washingtonpost.com

All-out trade war would lower earnings for US companies by 15%

60% probability that the U.S. imposes tariffs on $200 billion of imports from China

The acceleration of U.S. trade actions poses a risk to S&P 500 earnings through falling export revenues and rising input costs for American companies, according to Goldman Sachs. A 10 percent tariff on all imports from China would lower Goldman’s 2019 S&P 500 earnings per share estimate by 3 percent, Goldman Sachs chief U.S. equity strategist David Kostin wrote. If “tensions spread” and a 10 percent tariff were imposed on all U.S. imports, Goldman said, it would lower its 2019 EPS estimate by 15 percent to $145 a share.

“Tariffs benefit some domestic industries, but pose a risk to S&P 500 earnings through reduced revenues (lower exports) and weaker margins (higher input costs),” Kostin wrote. “Our economists now assign a 60 percent probability that the U.S. imposes tariffs on the recently targeted $200 billion of imports from China.” President Donald Trump and his administration have defended an initiative of “fair and reciprocal” trade in recent months, demanding that some of the nation’s economic allies offer the U.S. a better deal in an effort to curb Washington’s trade deficit and promote American exports.

http://www.cnbc.com

Trump Says May’s Brexit Plan Likely to Kill Off U.S. Trade Deal

U.S. president backs Boris Johnson as future prime minister

President Donald Trump dealt a double blow to U.K. Prime Minister Theresa May, saying her plans for a soft Brexit would likely end hopes of a trade deal with the U.S. and that Boris Johnson, who quit her cabinet this week, would be a “great” leader.  “If they do a deal like that, we would be dealing with the European Union instead of dealing with the U.K., so it will probably kill the deal,” Trump said in an interview in the Sun newspaper to be published Friday.

His comments in the Sun, controlled by Rupert Murdoch, a political ally of the president, appeared after May had hosted Trump at a black-tie dinner at Blenheim Palace, the birthplace of Winston Churchill.

Weak debut fot Xiaomi shares

Unprofitable territory?

Millions of shares in Xiaomi Corp. could be in unprofitable territory right from the start. According to the smartphone maker’s prospectus, a total 48,787,104 Series F-1 preferred shares were issued to investors between December 2014 and August 2017. Early backers came into the startup through preferred stock that converts to ordinary shares upon Xiaomi’s IPO. Accounting for splits and adjustments, the preferred stock converts to Class B shares at a cost that’s 18.82 percent below the expected offer price, Xiaomi’s prospectus states, implying a price of HK$15.83 per share.

Brexit secretary David Davis resigns

Government into crisis

David Davis has resigned as Brexit secretary, shattering the hard-won consensus around Theresa May’s Chequers deal and plunging her government into crisis.

His resignation was swiftly followed by that of fellow Department for Exiting the EU ministers Steve Baker and Suella Braverman. It forces May to reshuffle her government, at the same time as trying to convince backbenchers to support her plan.

Davis sent a bluntly worded resignation letter to Theresa May, saying he would not be a “reluctant conscript” to the plan agreed at Chequers, which he said was “certainly not returning control of our laws in any real sense”.

https://www.the guardian.com/

Trump Is Fracturing OPEC

Trump tweets

Trump’s tweet over the weekend that Saudi Arabia agreed to add 2 million barrels per day (mb/d) of supply confused the oil markets, pushing prices down a bit on Monday. Most analysts dismissed the statement, concluding that Trump was confused when the Saudis told him they have 2 mb/d of spare capacity, and not that they had planned to bring that capacity online.

A few days on from that episode, however, it actually doesn’t look that black and white.

Indeed, Trump’s tweet suggests that he very much believes that 2 mb/d of Saudi supply is coming online, and despite the attempt by the Saudis to clarify, by stating that they have surplus capacity waiting to be used in the event of a pinch, the statement was interpreted in different ways by the oil market.

https://www.oilprice.com/

Morgan Stanley hikes oil price forecast to $85

Trump targets Iranian barrels

Oil prices will rise more than previously expected in the second half of 2018, as the Trump administration aims to wipe out Iranian crude exports by November, Morgan Stanley forecasts.

The tougher-than-anticipated U.S. policy means Iran’s production could fall by 1.1 million barrels per day (bpd) at a time of high oil demand. The bank also sees output declining more than it previously forecast in Libya and Angola, leaving the oil market undersupplied by about 600,000 bpd in the second half.

As a result, Morgan Stanley said it now believes international benchmark Brent crude will average $85 a barrel over the next six months. That’s $7.50 higher than its previous estimate.

https://www.cnbc.com/

EU warns Trump’s car tariffs threaten $300 billion of US exports

20% of US exports at risk

Nearly $300 billion of US exports could be hit by retaliatory tariffs if the Trump administration decides to penalize automobile imports from around the world, the European Union says.

The Commission said global retaliation against US tariffs on auto imports would have a much bigger impact on the American economy than the backlash provoked by the Trump administration’s steel and aluminum tariffs this year. It estimated that $294 billion, or around 19% of total US exports last year, could be affected.

President Donald Trump has threatened to place a 20% tariff on all European cars coming to the United States if the European Union doesn’t remove its own trade barriers. In May, the US government launched an investigationinto imports of automobiles, including SUVs, light trucks and auto parts.

The type of investigation, known as Section 232, is meant to determine whether the imports are hurting US national security. It’s the same approach the Trump administration used before it slapped tariffs on steel and aluminum imports earlier this year.

https://www.cnn.com/

Does Trump plan to quit the World Trade Organization?

Better WTO Treatment

President Donald Trump said he doesn’t plan to withdraw from the World Trade Organization (WTO), but wants the U.S. needs to be treated more fairly by the global body.The U.S. won’t exit the Geneva-based organization “at this point,” Trump said Friday. His top White House trade adviser hedged on the question on Saturday, saying any decision was up to the president, and pushed back at critics of U.S. trade moves from companies including auto-maker General Motors Co.

Axios news agency reported earlier in the day that Trump had repeatedly told top White House officials he wants to exit the WTO, citing people familiar with Trump’s thinking. The Stoxx Europe 600 Index and U.S. futures wobbled on the story before recovering. Earlier Friday, White House officials sought to ease concerns over the report, with Treasury Secretary Steven Mnuchin calling it an “exaggeration.”

https://www.bloomberg.com/

The shipping industry is back

Indicator of the health of the global economy

90 percent of today’s global trade is carried by ship. The importance of shipping is why it’s one of the most useful indicators of the health of the global economy… And, more recently, the state of China’s economy – the largest consumer of a range of commodities, including iron ore, coal, copper, and zinc, and the largest importer of oil.

The Baltic Dry Index (BDI) tracks the price of shipping raw materials such as metals, grains and fossil fuels by sea. It takes into account the day-to-day changes in shipping rates for the three major carrier sizes: Capesize, Panamax and Supramax.

Shipping companies committed a classic boom/bust cycle mistake back in 2011. At the height of the commodity boom, they ordered a huge number of cargo ships. Global shipping capacity continued to expand by approximately a net 2.5 percent rate each and every year. Meanwhile, according to the World Bank, global trade of goods and services has declined by 7 percent from 2011 to 2016, as commodity prices collapsed.

https://www.businessinsider.com/

Tariffs on $50 billion in Chinese goods

Trump to unveil tariff list targeting Chinese goods on Friday

U.S. President Trump has made up his mind to impose “pretty significant” tariffs on Chinese goods, an administration official said on Thursday, as Beijing warned that it was ready to respond if Washington chose to ratchet up trade tensions. Trump is due to unveil revisions to his initial tariff list targeting $50 billion of Chinese goods on Friday. The list will contain 800 product categories, down from 1,300 previously, according to another administration official and an industry source familiar with the list.

Trump no longer believes that Beijing’s influence over North Korea is a compelling reason to ease up on trade talks now that his administration has opened up a direct line of communication with the nuclear-armed country, the first administration official said. U.S. Treasury Secretary Steven Mnuchin argued against imposing the tariffs at a White House meeting on Thursday but he was not expected to prevail, the official said.

The Chinese government’s top diplomat, State Councillor Wang Yi, said his country was prepared to respond if Trump went ahead with the tariffs.