Trump tries to convince the world his approach to North Korea is the right one, Bitcoin’s slide continues and here comes the Fed’s interest-rate decision. These are some of the things people in markets are talking about.
Trump Tries to Sell North Korea Pact to World
U.S. President Donald Trump tried to sell his nuclear agreement with North Korea on Tuesday as different from, and better than, any that has come before. Measured against previous deals, though, the two-page document had similar language and was distinctive mainly for being vague. The statement Trump signed with North Korean leader Kim Jong Un committed them both to the “complete denuclearization’’ of the Korean Peninsula, as well as to a new relationship, a peace regime and security guarantees, none of which were defined. The omission of the words “verifiable’’ and “irreversible’’ from the phrasing on denuclearization suggested North Korean resistance to Trump’s requests.
Nuclear Summit’s Big Winner: China
The biggest winner from Trump’s summit with North Korean leader Kim Jong Un, other than Kim, is the Chinese president, Xi Jinping. In talks with Kim on Tuesday in Singapore, Trump committed to an open-ended negotiating process and said the U.S. would suspend military exercises with South Korea. Given that North Korea has halted missile and nuclear tests, for now, that amounted to the very dialogue and “suspension for suspension” model that China has advocated for years. Japan, the chief U.S. ally in the region, got none of what it wanted. Kim made no promise to address the issue of Japanese citizens abducted by North Korea and offered no limits on his ballistic missile programs.
Bitcoin’s Collapse Accelerates
Bitcoin tumbled to its lowest level since February as the meltdown in the world’s largest digital currency accelerates, renewing concern about the long-term viability of the alternative to traditional currencies. The price of the digital coin fell below $6,500, bringing the slide for the year to more than 50 percent. It’s down from a record high of $19,511 in December, the culmination of the year’s more than 1,400 percent surge as Bitcoin burst onto the mainstream. Cryptocurrencies have been beset by a string of bad news, most recently the hack of the South Korean cryptocurrency exchange Coinrail over the weekend, which appeared to result in a loss of an unknown quantity of digital currency.
Two Words: The Fed
The Federal Reserve won’t steepen the path of interest-rate increases this year in the face of accelerating U.S. growth, according to economists surveyed by Bloomberg. In a poll conducted June 5-7, the proportion of respondents who expect at least three additional rate hikes in 2018 dropped slightly from the March polling. The median estimate now is two more increases this year, which matches the Fed’s own projections back in March. Although all 37 respondents predicted a quarter-percentage-point rate hike when policy makers conclude their two-day meeting in Washington on Wednesday, bond traders, for whom the stakes are huge, will be on the edge of their seats.
China Tries to Lure Tech IPOs Back Home
In China’s volatile equity market, at least one thing’s been certain: Initial public offerings price low and then rally like crazy. An unwritten valuation cap imposed by regulators has listings all launching at about 23 times earnings or less. Entrepreneurs have had no choice but to pocket an artificially low amount and then watch their shares soar by the daily limit, over and over again. But this defining, and distorting, characteristic of the $7.3 trillion market may be about to change, at least for some companies. Analysts say firms selling the first Chinese depositary receipts won’t be subject to the valuation restriction. Xiaomi Corp. is planning to raise $5 billion, or half of its total offering, from the new type of security, a high-profile attempt by Chinese officials to lure big tech companies back home.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- The man who coined “the BRICs” says the G-7 is irrelevant without India and China.
- U.K. Prime Minister Theresa May averts another Brexit revolt.
- Apple is cracking down on apps sharing information on users’ friends.
- One of China’s top fund managers says Tencent has room to rise.
- U.S. stock indexes finished higher in listless trading Tuesday
- Tesla is cutting about 9% of its workforce.
©2018 Bloomberg L.P.