Asian markets might not anymore rely on funds originated from US and EU and instead will rely on domestic funds where this event might not let the release of higher interest rates for long term to the share holders. This is due to low trust and confidence of the companies with public assets. Every market is based on trust and many investors are those who are interested in foreign investment signals. When a negative signal transmits the risk – the one like trade war – the domestic funds go for less risky funding based sectors in economy of the type money instead of finance.

It’s clear that the trade war is hurting China as a core economy among Asian powers. The collapse of other Asian countries is evident as China itself has based its economy to some great extends on continental benefits. Malaysia, Indonesia, South Korea and even Japan will hurt from a chain of events predictable from the coming new year 2019.

The decisions made by EU and US are also very important. The investors always listen to the warning signals forcing them to direct their money to the money sector such as banks. This is really dangerous for Asian markets. If US, on the other hand, get the trust of some foreign investors such as Saudi Arabia and force it to fund only in US and also to put sanctions on certain countries such as Russia, much of the investment problems in the west block will be solved.

The more divergent policies among Asian countries mean the more benefit for US as the flow of investment will come back to US if it keeps the trust of investors and let them to interact in a stable market. Stability of the US market at the moment rooted in the instability of the Asian markets.

It seems that in near future US will get the trust of two or more Asian countries to make that divergence possible for China. Another fact is that, US might let some banks, under specific certificates, to enter finance sector, something that’s illegal in many countries.

The good part of this strategy is that the money blocked in the banks will circulate in stock markets under the permission of US administration which will benefit companies in the market. This, however, must be done to buy shares of certain highly trusted companies that have already created more jobs. This will reduces the risk of bankruptcy for the banks and also will contribute to the elimination of joblessness.

Directing banking funds to stock markets is just a short term solution at the moment. It seems that US has a high potential for directing such funds into markets.

China has protected its choice to target an extra $50 billion worth of US goods with tariffs and accused US of “blackmail” as the trade war between the world’s two biggest economies shows no signs of decelerating.

Beijing recently exposed more than 5,200 American-made products would be hit with new charges in response to a threat by Donald Trump’s administration to impose supplementary duties on $200 billion of Chinese goods.
China has now proposed tariffs on $110 billion of US goods. Last year, China imported some $130 billion in goods from the United States. Beijing has asserted its actions are “normal” and advised the US its tactics would not work. The latest charges come as the trade war continues to intensify and Mr Trump efforts to force Xi Jining to change its policies.
But commentaries in Chinese state TV asserted Beijing is not willing to give up.
In the meantime, Chinese state TV said: “The White House’s dangerous pressure and intimidation are already clear to the world: “Such methods of dangerous intimidation will not bear fruit against China.”

#China, #US, #TradeWar, #Trump, #XiJining

US manufacturers are influenced by the rise in imported products. Since the start of the year, the price of steel has increased by 33%, that of aluminum by 11% which is a disaster for US. We must not ignore the rule of EU in this war that has recently sided with US not secretly!

California almonds are knockout in turn by China by the commercial war unleashed by US president. Victims of the 50% taxes duties imposed by the Chinese gov. Beijing is conducting a serious war: it has closed a “hole” in its rules that until now allowed imports of almonds via Vietnam via semi-legal privileges and now supplies itself in Australia or Africa. Consequently, Americans who are by far the largest producers in the world suffer a price drop of 10%, unable to sell their production.

According to the Wall Street Journal, California cherries and Florida lemons now hurt delays before being cleared in Chinese ports. As for Ford vehicles, it would be a question of dismantling them to inspect their components in Tianjin, the port of Beijing.

The trade war is hitting American exporters, mainly agriculturalists, who are victims of foreign retaliation. But also producers, affected by the surge in imported crops they need to supply their local market, starting with steel and aluminum. Since the beginning of the year, the prices of these vital materials have risen by one third and 11% separately.

#China #US #TradeWar

The 28 Member States of the European Union approved on Thursday the retaliatory measures against some US products in response to the taxes imposed by Washington on steel and aluminum, told AFP several European sources. “The implementation of these measures has been adopted unanimously” by the Member States and the European Commission will take steps for their entry into force, said these sources.

European countermeasures may legally come into force from June 20, but the EU could wait until July 1 to react with Canada, also sanctioned by Washington, who wants to launch the retaliation that day said a diplomatic source. The European list contains dozens of American products, some of which are very emblematic, such as bourbon, Harley Harley-Davidson motorcycles and jeans. Here is the detail:

● Steel

Dozens of products like some rolled steels, stainless steel bars, seamless tubes, steel wires, doors, windows, etc.

● Agriculture and food

Beans, corn and rice (processed or not), lingonberries, orange juice, peanut butter, bourbon, cigars, cigarettes, pipe tobacco, rolling, chewing or snuffing .

● Textile

T-shirts and undershirts in cotton, wool or synthetic material, denims (ie jeans) or cotton pants, shorts, cotton bedlinen and some leather shoes .

● Vehicles

Motorcycles with a cylinder capacity greater than 500 cm3, sailing, pleasure or sport boats, with or without motor, rowing boats and canoes.

● Various

Eye makeup, nail polish, foundation and playing cards.

The list must be returned by the European Commission – a formality – before its execution.

The measure aims to offset up to 2.8 billion euros the damage caused to his industry by US taxes on steel (25%) and aluminum (10%). This figure is considered “measured” by the Commission, which wants the procedure to fully respect the rules of the World Trade Organization (WTO).

The list was communicated by the EU to the WTO on May 18, in anticipation of Washington’s decision. The affected products are manufactured in the US and not sold by US brands – otherwise they would be likely to be manufactured anywhere in the world. The EU targets several US states, often agricultural, which voted for Donald Trump in 2016. Other US products could in the future also be taxed by the EU, up to 3.6 billion euros, if it won the dispute with the United States in the WTO since its complaint on June 1.

Source and analytics by ICDST economy group.

Since the crisis of 2007-2008, and under the very strong pressure of the regulators and the markets, the banking groups of the planet have on average doubled their maturities of capital: as many dampers intended to absorb possible economic shocks and not not live a new financial trauma. However, according to a recent study by Oxford Economics, this success in regulation is only partial. An example of this is the current rising numbers in US or falling in Italy, which are both sides of coin of the economical shocks.

A more crude indicator
The “solvency ratio”, the usual criterion used to verify that a bank is sufficiently capitalized is ” rather unpredictable ” to anticipate a bank failure. Firstly because this ratio allows banks to modulate the amount of equity depending on the type of asset present on their balance sheet: this gives “play” to banks, say the authors of the study. More in the American tradition, the latter prefer a more crude indicator, but less easy to handle: the leverage ratio (which measures the capital of the bank compared to the total assets of the bank, regardless of their level of risk, Editor’s note ). The image becomes less flattering since some banks only hold 3 or 4 dollars of capital for 100 euros of assets (against 12 to 18 dollars for the solvency ratio). Above all, the study recalls, the strengthening of bank balance sheets is partly illusory because it “coincided in some countries with a rapid rise in bad debts” .

Non-banking finance
In a more traditional way the study underlines that the banking regulation pushed to the development of the shadow banking, a sector of the finance which is not dangerous as such, but that the financial gendarmes seek to understand better and map. In particular “the connections between non-bank finance and banks” may be likely to spread a non-banking crisis towards traditional finance.