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The U.S. proposes a new round of trade talks with China. More Wall Street heavy hitters sound warnings on the outlook for the American economy. And Apple unveils its latest iPhone and watch. Here are some of the things people in markets are talking about.
U.S. Floats New Round of China Trade Talks
The U.S. government has proposed another round of trade talks with Beijing to avoid further escalation in President Donald Trump’s trade war with China, according to three people familiar with the matter. U.S. equities briefly rose on expectations the development could ease growing tensions. Senior officials led by Treasury Secretary Steven Mnuchin recently extended the invitation to counterparts in China, the people said, speaking on condition of anonymity. One of the people said the talks, if agreed to by the Chinese, are likely to take place in Washington. The proposal may reduce bilateral tensions just days after Trump threatened to slap tariffs on nearly all goods the U.S. buys from China.
Tech Drop Offsets Trade Hopes
Stocks in the U.S. initially cheered the news of potential trade talks, but a drop in tech left the S&P 500 little changed by the end of the session. Chipmakers declined after Goldman Sachs and Stifel downgraded several U.S. companies amid mounting industry concerns. Oil surged, sending Brent above $80 a barrel for the first time since May, as Hurricane Florence took aim at the U.S. East Coast and amid signs global supplies are shrinking. The dollar sank the most in two weeks amid disappointing U.S. producer inflation numbers and optimism over Nafta negotiations, which boosted the Canadian dollar. Treasuries retreated from their highs but held gains.
Goldman, Dalio Sound Alarm
Billionaire hedge fund manager Ray Dalio predicted the U.S. economy is about two years from a downturn, which will see the dollar plunge as the government prints money to fund a swelling deficit. The combination of rising interest rates and mounting costs from pension and healthcare obligations will put pressure on the budget, the founder of Bridgewater Associates told Bloomberg Television. "We have to sell a lot of Treasury bonds, and we as Americans will not be able to buy all those treasury bonds," he said. "The Federal Reserve will have to print more money to make up for the deficit, will have to monetize more, and that’ll cause a depreciation in the value of the dollar." Meanwhile, the warnings from Wall Street are only getting louder. Goldman Sachs and JPMorgan Chase are the latest to weigh in, highlighting the potential danger to corporate America if a full-blown trade war erupts. Goldman chief strategist David Kostin went as as far as calling for a bear market under a scenario where the U.S. imposed 10 percent tariffs on all imports.
Apple Unveils Biggest-Ever iPhone
Apple took the wraps off a renewed iPhone strategy on Wednesday, debuting a trio of phones that aim to spread the company’s latest technology to a broader audience. The iPhone Xs, starting at $999, succeeds last year’s flagship model with a faster A12 processor and updated cameras. The iPhone Xs Max is a higher-end version with a 6.5-inch OLED screen, making it one of the biggest on the market -- and one of the most-expensive at $1,099 and up. There are 512 GB storage options for the first time. The third model, called the Xr, is Apple’s biggest hardware bet of 2018. It retains the key advances of the first iPhone X -- facial recognition and an edge-to-edge display -- but is cheaper while being noticeably larger at 6.1 inches. Apple aslo unveiled the most-significant upgrades to the Apple Watch since it first went on sale in 2015, turning the product into more of a health monitoring device.
It’s a light data day in Asia, with Japanese PPI and Aussie jobs the highlights. But the major action will be elsewhere. The European afternoon brings policy decisions from the European Central Bank and the Bank of England. Both are expected to hold rates steady, but the ECB is poised to tweak forecasts lower as global trade tensions damp external demand, people familiar said. In Britain, optimism over a potential Brexit deal could lead to a more hawkish-sounding BOE driving the currency higher. In the U.S., traders will be anxiously awaiting the CPI report. A Federal Reserve survey Wednesday said tariffs were contributing to rising input costs, especially for manufacturers.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Jamie Dimon bragged he could beat Trump in an election – then quickly walked it back.
- Super typhoon Mangkhut is gaining even more strength.
- China’s Tesla wannabe got off to a bumpy start in its U.S. trading debut.
- Goldman Sachs shares are on their longest losing streak ever.
- Crypto’s 80% plunge is now worse than the dot-com crash.
- The richest Asians are feeling the pain in their pocket books.
©2018 Bloomberg L.P.