Five Things You Need to Know to Start Your Day
U.S. stocks edge lower, German spies are fighting to keep Huawei at bay, and Washington and Tokyo may be on course for a clash over the yen. Here are some of the things people in markets are talking about.
Yen Clash Coming?
The U.S. says it wants a currency clause in any trade agreement with Japan. As the two sides prepare to sit down, Japanese officials say there is no need to talk about currencies. Masatsugu Asakawa, the nation’s currency chief, has indicated opposition to a currency clause, saying recently that the link between the yen’s exchange rate and Japanese exports has been "severed." With President Donald Trump often focused on exchange rates, the U.S. got a currency clause in its revamped trade deal with Canada and Mexico and is said to be seeking one from China now. From the U.S. point of view, Japan is next. How the U.S-Japan talks play out on currencies could determine how much freedom the Bank of Japan has during the next economic downturn. A currency clause could tie the BOJ’s hands, preventing it from taking action that might weaken the yen, even indirectly.
U.S. Stocks Drift
U.S. stocks edged lower Tuesday as investors struggled to find inspiration after a torrid start to the year. The dollar rallied for a fifth day. The S&P 500 Index fell 0.1 percent. Equities opened lower amid a lack of progress on the U.S.-China trade deal before briefly erasing losses on home-sales and service-industries data that beat estimates. General Electric Co.tumbled after its chief executive officer forecast negative industrial free cash flow this year. Target Corp. and Kohl’s Corp. buoyed consumer shares on the back of solid earnings. Investors are hungry for concrete details about progress on a U.S.-China trade deal before they push a global equities rally further, leaving the S&P 500 Index seemingly stuck below the key 2,800 level. Trade and slowing growth are on the agenda as China’s most powerful officials gather in Beijing for the National People’s Congress, while investors will get the latest read on the U.S. economy with the monthly jobs report Friday.
German Spies Fight Huawei
Germany’s cyber-security hawks are concerned that Huawei could help China steal secrets from German companies or even the state, and are pushing for strict criteria on equipment suppliers before the government begins the process of issuing 5G licenses in two weeks’ time, according to three people familiar with talks in Berlin. While the cabinet has decided that an outright ban on the Chinese equipment maker would be legally impossible, officials across the administration, including at the interior ministry, the foreign ministry and German intelligence, are demanding tools that would allow them to block Huawei equipment from being used all the same, the people said.
A Shot Across New Delhi’s Bow
Trump’s attempt to pressure India on trade may be intended as a symbolic shot across New Delhi’s bow, but its inopportune timing threatens broader political consequences. The Trump administration notified Congress on Monday that it wants to scrap trade concessions for India, the largest beneficiary of the so-called generalized system of preferences that impacts $5.7 billion worth of goods. The move affects just a fraction of India’s trade flows, yet it comes weeks before India’s national elections, and just as Prime Minister Narendra Modi’s government is trumpeting its foreign policy prowess and military strength following a stand-off with Pakistan. Both Trump and Modi likely hope to isolate thorny trade issues from their geopolitical ties as both countries position themselves in Asia against an increasingly assertive China.
Brexit Vote Looks Tight
One of Theresa May’s top officials told the Cabinet he wasn’t confident the prime minister will get her Brexit deal through Parliament next week. Chief Whip Julian Smith told ministers on Tuesday that the vote, likely to be on March 12, will be tight, according to three people who spoke on condition of anonymity. With Britain due to leave the European Union in 24 days, May is pursuing a three-pronged strategy to try to get members of Parliament to back her deal. But none are going well. If May’s deal is defeated on March 12, it’s likely Parliament will reject a no-deal Brexit the following day and then order May to seek a delay to Brexit on March 14 -- though the EU would have to agree to do so.
What we’ve been reading:
This is what caught our eye over the last 24 hours.
- Kylie Jenner becomes the world’s youngest self-made billionaire.
- Goldman allows bankers to trade bespoke suits for khakis.
- Renault-Nissan cozy up without Ghosn.
- Michael Bloomberg isn’t running for president.
- Tesla sell-off worsens after surprise store closings.
- Russia tosses Venezuela an oil lifeline.
- Ceratanium? Carbonium? They’re not metals from the Marvel Universe... they’re in watches.
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