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Trump ramps up the pressure on China with threat of more tariffs and market sentiment takes a hit, while Warren Buffett discusses buybacks and critiques private equity. Here’s what’s moving markets.
President Donald Trump intensified pressure on China to strike a trade deal in Washington this week by threatening to more than double tariffs on $200 billion of the Asian nation’s sales to the world’s largest economy. In an abrupt shift from the White House after both sides had indicated negotiations were going well, Trump tweeted on Sunday he’s not satisfied with the pace of progress and that the duties would increase Friday. He had twice delayed increasing tariffs to 25 percent from 10 percent after agreeing to a Dec. 1 truce with President Xi Jinping to give negotiators time to work out a comprehensive agreement. Trump also raised the possibility of imposing a 25 percent tariff on another $325 billion in imports from China not currently covered.
The yuan plunged the most since August and U.S. index futures tumbled after Trump’s tariff tweets. His comments came after the S&P 500 Index rose the most in a month Friday as data showed the labor market can support growth without sparking inflation. China markets reopen after a holiday though Japan remains closed. Futures in Hong Kong and Australia pointed higher. The yen was stronger in early Monday trading, while the Aussie and kiwi both traded lower.
Bond traders will have one word on their minds as they gear up for the latest readings on inflation: “transitory.” That’s how Federal Reserve Chairman Jerome Powell characterized the factors behind muted price pressures after last week’s policy meeting, where officials kept interest rates unchanged. Markets whipsawed on his comments, with benchmark 10-year Treasury yields bouncing off their lowest levels in a month.
Warren Buffett’s Berkshire Hathaway Inc., sitting on a cash pile of more than $114 billion, spent the first quarter snapping up more of its own stock. The Omaha, Nebraska-based conglomerate repurchased $1.7 billion of shares as the stock dipped in the first quarter. That was more than the $1.3 billion that Berkshire, which historically has preferred using its cash on equities or acquisitions, spent all of last year after relaxing its policy on buybacks. Buffett, who has long slammed the hedge fund industry for charging high fees, also escalated his criticism of private-equity firms that have been raising record sums of money in recent years.
Kim Jong Un oversaw a live-fire military exercise Saturday that potentially included North Korea’s first ballistic missile launch since 2017, challenging President Trump’s bottom line in nuclear talks. Kim watched as “large-caliber, long-range multiple-rocket launchers and tactical guided weapons” were fired off North Korea’s eastern coast Saturday, according to the official Korean Central News Agency. The state media’s report on Sunday was accompanied by a photo of what non-proliferation analysts said appeared to be the launch of a short-range ballistic missile.
What We’ve Been Reading:
This is what’s caught our eye over the weekend.
- Fugitive Malaysian financier Low Taek Jho plans to sell a $39 million mansion
- Indonesia sinks 13 Vietnamese fishing boats
- The magic of relisting your shares in China
- A $300 billion blow-up has traders bracing for war in Washington
- U.K.’s May to draft new customs law for Brexit with Corbyn
- Trump says best horse was denied victory in Kentucky Derby
- Darth Vader costume may fetch $2 million at auction
©2019 Bloomberg L.P.