China’s Global Times warns of downtrend in US-China trade – difficult to reverse

The Global Times is forthright with its views, a good window into China sentiment

Latest piece:
  • It has been 18 months since the US began imposing 25 percent tariffs on the first tranche of Chinese goods, and bilateral trade between the world’s two largest economies is still sliding. 
  • Even with a “phase one” trade deal, the downtrend in bilateral trade will be difficult to reverse. 
  • Meanwhile, China’s total trade actually expanded 2.4 percent year-on-year in the first 11 months, indicating that trade with the US is not irreplaceable for China. 
Bolding mine.
More here, but the gist of it:

The UN Security Council will meet this week to discuss North Korea

Reuters (citing diplomats and a request from the United States) report the council will meet on Wednesday

  • it will discuss North Korea’s recent missile launches
Over the weekend NK conducted an unspecified “very important test” at its Dongchang-ri satellite launch site
I wonder if we’ll see a yen response? NK issues have, in the past, prompted yen buying (a flight to liquidity response, the USD also a beneficiary) but this has diminished.
North Korea kim yen

North Korea warns that Kim’s thoughts on Trump can change

North Korea warns Trump on year-end deadline

North Korea US

In case you missed the news from earlier today, North Korea has set a year-end deadline for the US to change its policies or Kim Jong Un may “embark on a new path” as denuclearisation talks between the two countries appear to have broken down.

If you’ve been following our headlines over the past few months, it is clear that the two countries aren’t getting along well with how frequent North Korea has been conducting missile launches and tests during the period.
As things stand, they want the US to lift more sanctions before committing to any more “denuclearisation” projects but the US wants it to be the other way around. Hence, we have reached a bit of an impasse at the moment.
If anything else, keep an eye on this issue here as it could present a wild card risk for markets in 2020 – alongside the host of other issues.

South Korea’s vice fin min says watching markets for impact of North Korea issues

Sounding a warning for volatility related to NK missile tests and other geopolitical issues

This comes after North Korea’s state media KCNA reported on Sunday that the country had conducted a “very important” test at its Sohae rocket-testing ground. NK have previously agreed to close the facility. But, no, they have not.
US President Trump had words on the NK tests over the weekend:
  • “Kim Jong Un is too smart and has far too much to lose, everything actually, if he acts in a hostile way. He signed a strong Denuclearization Agreement with me in Singapore,” 
  • “He does not want to void his special relationship with the President of the United States or interfere with the U.S. Presidential Election in November” 

North Korea has launched more test missiles

Yonhap (South Korean media) with the reports of NK firing off missiles again today

  • ‘super large multiple rocket launcher’
Sheesh …. that doesn’t sound too good.
Yen not doing a real lot on it. In the past missile launches from NK have seen yen gains (a flight to liquidity response) but the market response has transformed into a yawn on these. until that changes again.

Trump: US in final throes of reaching a trade deal with China

Positive comments

Reuters is carrying comments from Trump:
  • Trump says in final throes on reaching trade deal with CHina
  • Trump says US wants to see democracy in Hong Kong
This is a slightly different language. It’s the first time in a few days the President has been so optimistic.
I’m reminded that the previous line was that they were in the ‘short strokes’. The modest market reaction suggests that this kind of talk isn’t enough alone to boost sentiment.

Trump says deal with China ‘potentially very close’

Trump on Fox News

  • Says he told Xi ‘this can’t be an even deal’
  • ‘We have to stand wit Hong Kong but I’m also standing with President Xi’
  • Says he warned Xi not to send soldiers to Hong Kong
  • Deal with China is very close
  • Says he will stick with Pence as running mate in 2020
The comment is boosting stock futures.
Here’s the verbatim:
“We have a deal potentially, very close, he wants to make it much more than I want to make it, I’m not anxious to make it,” he said.