Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) -- Want to receive this post in your inbox every morning? Sign up here
Markets take umbrage to President Trump’s plans to slap tariffs on steel and aluminum, while the new Federal Reserve Chairman sees no evidence that the U.S. economy is overheating. Here are some of the things people in markets are talking about.
Trump’s Tariffs
President Trump said the U.S. will slap tariffs on steel and aluminum imports to protect national security, a major escalation of his hawkish trade agenda that could hit producers from Europe to Asia and spur global retaliation. After on-again, off-again signals of an impending announcement that sent producers’ stock prices seesawing, Trump said he will impose tariffs of 25 percent on imported steel and 10 percent on aluminum for “a long period of time,” and he expects to sign a formal order next week. The president didn’t elaborate on the details of the planned action, including whether any products or countries will be exempted.
Markets Unimpressed
U.S. stocks plunged and Treasuries climbed on the news as investors grew fearful that a damaging trade war could be on the horizon. The duties drew rebukes from a manufacturing industry group and the European Commission, while Canada said any trade restrictions would be “absolutely unacceptable.” The S&P 500 Index briefly fell below its 100-day moving average while the Dow Jones Industrial Average dropped more than 400 points. Yet the market reaction was uneven. While industrial companies in the S&P 500 tumbled, U.S. Steel Corp. advanced 5.7 percent and steel-products company Nucor Corp. gained 3.5 percent. Automakers led decliners as Ford Motor Co. and General Motors Co. added to losses already sparked by weak sales numbers.
Powell Keeps It Cool
New Federal Reserve Chairman Jerome Powell said he sees no signs the U.S. economy is overheating, and reiterated the central bank will continue to raise rates gradually to keep unemployment and inflation in balance. “By continuing to gradually raise interest rates over time, we’re trying to balance those two things and achieve inflation moving up to target but also make sure the economy doesn’t overheat,” Powell told the Senate Banking Committee on Thursday in his second appearance before lawmakers this week. Powell and New York Fed’s William Dudley both praised the benefits of a global economy without trade restrictions.
China’s Tycoon Trouble
President Xi Jinping’s government has fired another warning shot at global dealmakers doing business with Chinese billionaires: Not even the most well-connected tycoons are safe. Ye Jianming, a globe-trotting Chinese tycoon who runs the conglomerate CEFC China Energy Co., has been investigated by authorities, according to people with knowledge of the situation. The news, first reported by local media outlet Caixin, comes shortly after Xi’s government seized Anbang Insurance Group Co., a global empire whose once-influential founder, Wu Xiaohui, is detained while facing fraud charges.
Coming Up….
South Korean industrial output data and CPI reports for Japan and Thailand are on tap Friday. Europe features U.K. Prime Minister Theresa May delivering a speech on Britain’s relationship with the European Union after Brexit, along with BOE head Mark Carney's address to the inaugural Scottish Economics Conference in Edinburgh. German retail sales, Danish unemployment and GDP figures for the Czech Republic and Italy are due. The American sessions highlights include Canadian GDP and U.S. sentiment figures from the U. Michigan survey. Political events this weekend include national legislative meetings in China, a coalition accord vote in Germany and national elections in Italy.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Warren Buffett has lost $3.7 billion this week.
- Exxon’s Papua New Guinea LNG project may be shut for six weeks post-earthquake.
- Softbank leads $535 million investment in DoorDash delivery app.
- The best days may be over for emerging-market stocks.
- Singapore freezes ministerial salaries.
- Tycoons’ Manila airport bid is challenged by a $3 billion offer.
- Boeing is preparing to sell flying taxis.
--With assistance from Garfield Clinton Reynolds
To contact the author of this story: Joanna Ossinger in New York at jossinger@bloomberg.net.
To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net.
©2018 Bloomberg L.P.