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Five Things You Need to Know to Start Your Day

Five Things You Need to Know to Start Your Day

Five Things You Need to Know to Start Your Day
U.S. President Donald Trump, left, and Xi Jinping, China’s president, shake hands during a news conference at the Great Hall of the People in Beijing, China. (Photographer: Qilai Shen/Bloomberg)

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Trump tells Xi that America’s trade deficit with China is unsustainable, cryptocurrencies tumble, and U.S. stock benchmarks briefly hit some nice round numbers. Here are some of the things people in markets are talking about.

China, Trump and Trade

U.S. President Donald Trump told Chinese President Xi Jinping that the growing U.S. trade deficit with China isn’t sustainable, the White House said in a statement Tuesday. Trump spoke with Xi on Monday to discuss trade, as well as the talks between Pyongyang and Seoul, according to the statement. Both leaders expressed hope that the negotiations “might prompt a change in North Korea’s destructive behavior,” the White House said. Trump reiterated his stance of exerting “maximum pressure” to compel North Korea to abandon its nuclear program. The president also “expressed disappointment” that the U.S. trade deficit has continued to grow. State-run China Central Television said earlier Tuesday that Xi told Trump that the two sides must work together to find solutions to trade and economic disputes. Xi urged both sides to take a “constructive approach” and work “properly” to settle disputes and open up each other’s markets, CCTV said. 

Crypto Crisis

January’s cryptocurrency selloff got fresh impetus on Tuesday when Bitcoin slumped as much as 25 percent, as the prospect of regulatory crackdowns appeared to spread. As Bitcoin halted its two-day rally, rival cryptocurrencies also tumbled. Ripple sank as much as 40 percent and ethereum dropped 26 percent. Speculators across the globe are struggling to determine when or how market watchdogs may rein in an industry that’s decentralized and derives much of its value from anonymous ownership. Many assertions that digital coins represent a bubble have triggered double-digit selloffs over the past year, only to be followed by rebounds. Bloomberg View’s Joe Nocera thinks digital currencies are still just a dream. But if you’re a believer and looking for the “other Bitcoin,” check out how some of the smaller cryptos are faring.

U.S. Stocks at Records, Briefly

The S&P 500 surpassed 2,800 and the Dow Jones Industrial Average rose above 26,000, both for the first time, before giving up gains as the session went on. Earnings encouragement from several large companies had helped with enthusiasm early in the U.S. day.  Citigroup posted healthy earnings and management discussed possible significant investor payouts from the bank’s windfall stemming from a major tax cut. General Motors surprised the market by predicting steady profits in 2018 and growth in 2019. And UnitedHealth raised its adjusted profit projection due to the recent tax overhaul. Yet the recent climb by equities, spurred in part by synchronized global economic growth, has some investors wondering if there’s too much short-term froth in the market.

Betting on the Yen

A minor tweak in the Bank of Japan’s bond purchases has emboldened investors to bet the central bank is about to wind back monetary stimulus. Going long on the yen is the biggest currency wager for AMP Capital Investors Ltd.’s Nader Naeimi. Singapore-based hedge fund Kit Trading Fund Ltd. started a bet on the yen last week, predicting the currency will appreciate about 10 percent to 100 per dollar. Options traders are the most bullish on the yen among developed-market currencies. Japan’s longest stretch of economic growth in two decades is fueling bets the BOJ will join its global peers and begin normalizing policy as soon as this year. The central bank cut purchases of longer-maturity bonds last week, prompting speculation it will allow 10-year yields to rise above its current target of around zero percent.

A Close Call

A North Korean intercontinental ballistic missile launch in November was witnessed by passengers on a San Francisco-to-Hong Kong commercial flight, highlighting the “recklessness” of Kim Jong Un’s regime, U.S. Secretary of State Rex Tillerson said. “According to the Federal Aviation Administration, the flight was 280 nautical miles from point of impact, and at the time there were nine other flights within that range,” Tillerson said Tuesday in Vancouver, where he’s pressing officials from allied nations to tighten sanctions on Pyongyang. “Over the course of that day, according to the Department of Defense, an estimated 716 flights were due to pass within that same range.” Tillerson didn’t say which airline the passengers were on when they saw “parts of a North Korean ICBM test flying through the sky” on Nov. 28, or whether the plane changed its route as a result.

What we’ve been reading

This is what caught our eye over the last 24 hours.

--With assistance from Joshua Gallu Eric Lam Todd White Camila Russo and Nick Wadhams

To contact the author of this story: Joanna Ossinger in New York at jossinger@bloomberg.net.

To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net.

©2018 Bloomberg L.P.