USA

Trade dispute slows China’s economic growth

The Chinese economy lost further momentum over the summer months. Economic growth in the third quarter was again lower than in the previous quarter, falling to a new 27-year low of 6.0 percent (y/y). Market estimates were thus slightly missed, but our own somewhat more sceptical expectations came true. The downward trend that began at the beginning of last year with the outbreak of US-Chinese trade disputes has continued. The largest growth losses occurred in industry, which recorded its lowest increase since 1990 in the past quarter at 5.0 percent. This figure would have been even weaker if industrial production had not picked up visibly in September, the month that ended the quarter. We remain cautious, however, as to whether this will signal a reversal of the industrial downturn. On the contrary, as in the course of the year to date, this could conceal government measures that have been brought…

Rare earths: Beijing’s pledge of fist

Rare earths: Beijing’s pledge of fist China exported so few rare earths in September as it has not done for more than two years. Australia, on the other hand, intends to significantly expand its exports of rare earths in the near future, with sales in the United States in particular set to increase. The USA is currently working on a cooperation agreement with Australia to promote the production of rare earths. This is intended to make the worldwide, but above all the US demand for the important metals more independent of the Chinese supply supremacy. For there is great concern that Beijing could impose an embargo on the export of raw materials against the USA, thus using its dominant position as a „weapon“ in the trade dispute – even if the two sides have recently come a little closer to settling the conflict. Rare earths are indispensable for today’s technologies,…

Much ado about nothing? Trump announces partial agreement in trade dispute with China

China and the United States seem to be heading for a partial solution to the trade dispute. The talks between the two countries, which resumed last week, have at least brought a first success. However, in the past two years, in which the conflict gradually escalated, an agreement had often come within reach. But it failed time and again because of unacceptable or hardly realizable demands on both sides and ultimately also because of the volatility of Donald Trump. This cannot be ruled out this time either. According to the US President, the core of the partial agreement is the willingness of the Chinese to purchase American agricultural products worth between USD 40 billion and USD 50 billion per year. The solution will also include higher imports of Boeing aircraft with a volume of up to 20 billion US dollars. In addition, there is said to have been an initial…

US economy loses momentum

The US economy is not fully immune to the ongoing political pressures. In particular, the never-ending trade dispute with China appears to be becoming an increasing burden for industry. Direct effects are less likely to play a role here than the expectation of higher prices (due to customs duties) and thus declining profit margins. The mood in industry has recently fallen significantly. According to surveys conducted by the ISM Institute, the climate has deteriorated significantly in recent months. In September, the indicator fell below the growth threshold of 50 points. By contrast, the US labor market still appears to be developing robustly, albeit not without flaws. The number of industrial employees has hardly grown since the beginning of the year. The visible slowdown in employment growth compared with the previous year is partly due to the shortage of qualified workers. However, concerns about the robustness of the labor market and…

New customs dispute between USA and EU: this could become expensive in the end

The US government has announced the introduction of new punitive tariffs against the EU. This time it is about „retaliatory tariffs“, which have even been explicitly approved by the World Trade Organisation (WTO) because of the banned EU subsidies for the aircraft manufacturer Airbus. Customs duties on goods worth 7.5 billion euros are due to come into force in mid-October. The volume corresponds to the WTO decision, but the list of products subject to tariffs published by the US Department of Commerce came as a surprise. It is clear that the countries with Airbus production sites that are responsible for the subsidies in question will also be affected by the US tariffs. These are essentially France, Germany, the UK and Spain. Although passenger aircraft are on the list as expected, they are only subject to a tariff rate of 10%. Aircraft parts or helicopters, on the other hand, are exempt…

There is no way around the US dollar

The Bank for International Settlements has published its triennial statistics on foreign exchange turnover, considered the ultimate in global foreign exchange trading. The most important finding for us is the predominance of the US dollar. Despite doubts about the reliability of US policy and the frequently assumed global desire for an alternative means of payment, the US currency can even slightly expand its leading position in the foreign exchange market. Other key statistical findings are as follows: „Overall sales are on the rise again: Daily foreign exchange turnover in April 2019 was 6.6 trillion. US dollar (2016: 5.1 trillion). The trend of declining volumes observed between 2013 and 2016 has thus been broken. „US dollar remains the most liquid currency: 88.3% of all foreign exchange transactions are denominated in US dollars (2016: 87.6%). The euro can also maintain its second place with 32.3% (31.4% in 2016); however, it cannot be…

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