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All eyes will be on Xi Jinping’s speech in Hainan, especially given the recent back and forth between the U.S. and China about tariffs and trade. Meanwhile, the Bank of Japan has “a lot of work to do,” according to its reappointed head. Here are some of the things people in markets are talking about.
Xi in the Spotlight
President Donald Trump’s barrage of tariff threats have left China’s Xi Jinping needing to show he’s ready to retaliate against U.S. trade threats while demonstrating China’s commitment to freeing up its economy. Xi's first chance to hit back in person comes in a speech Tuesday at the Boao Forum for Asia on the tropical island of Hainan. Also, China is evaluating the potential impact of a gradual yuan depreciation, people familiar with the matter said. Senior Chinese officials are reportedly looking at the effect of using the currency as a tool in trade negotiations with the U.S., as well as what would happen if China devalues the yuan to offset the impact of any trade deal that curbs exports.
Saved by the Bell
Asia stocks looked set for a mixed start after U.S. stocks pared gains in the final hour of trading, with a report that federal agents raided the offices of President Donald Trump’s lawyer adding to the swoon. The S&P 500 Index gave back all but 0.3 percent of an advance that approached 2 percent earlier in the day. The late selling damped what looked to be a stellar rebound from last week, when trade angst rattled global financial markets. Instead, political risk related to Special Counsel Robert Mueller’s investigation of Russian meddling in the U.S. election resurfaced. Tech still outperformed as investors began to shift focus to the earnings season that starts later in the week. Treasuries ended the session little changed, while the dollar was broadly weaker.
BOJ Has Work to Do
The Bank of Japan has a lot of work to do during the next five years, and that includes considering how to normalize monetary policy, according to Governor Haruhiko Kuroda. “We will make the best efforts to meet the price-stability target, and eventually we will also have to consider the process of policy normalization,” the 73-year-old said in Tokyo after being officially reappointed.
Momentum for Belt and Road
China’s massive build program to recreate trade routes stretching from Asia to Africa and Europe is gaining momentum. Since President Xi’s flagship Belt and Road project was announced about five years ago, it gave impetus to billions of dollars of Chinese investment -- some of which were already in the pipeline for several years — to build railways, roads, ports and power plants. The program isn’t without controversy: debt risk is rising, an influx of Chinese workers has fueled tension with locals, and there are worries about China’s dominance in the region. And not all of the projects have succeeded. “It’s been a mixed bag so far,” said Michael Kugelman, a senior associate for South Asia at the Woodrow Wilson Center in Washington. “There have certainly been success stories, and there will be more of them too, but there have also been setbacks.”
New Bitcoin Battle
Bitcoin and Bitcoin Cash’s most fervent supporters are at it again, and Twitter has become a bitter battlefield. @Bitcoin carries the name of the largest cryptocurrency but, just like Bitcoin.com, frequently issued statements supporting Bitcoin Cash, which split from Bitcoin last year over a disagreement on how the technology should scale. These posts don’t sit well with supporters of the original Bitcoin blockchain, known as Bitcoin Core. Meanwhile, Bank of America Corp. says the Bitcoin bubble — the greatest in history — is popping.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- The FBI raids the office of Trump’s lawyer Michael Cohen.
- Russian markets slide on U.S. sanctions that hit Deripaska’s empire hard.
- U.S.-China trade tensions are raising alarm bells in export-reliant Singapore.
- Zuckerberg will tell Congress Facebook's woes are his mistake…
- …as Alibaba's Jack Ma challenges him to "fix" Facebook.
- An international watchdog is investigating the Syria attack.
- Have you seen any oil bears recently? What about a yield-curve inversion?
- These are the world's 20 busiest airports.
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