China, United States, Derek Wall discussed on Biz 1190 Overnight featuring Bloomberg Radio

Automatic TRANSCRIPT

The jet lost communications when it was hit by lightning soon after takeoff, and there are signs of attention improvement in cash house relations with its neighbours shake tiny received a red Telephone cO from the prime minister Bahrain during which the two exchange traditional gratings for the holy month of remedy is the first contact of its kind since Gulf states lead by Saudi Arabia and Egypt cut diplomatic ties with cash out almost two years ago. Global news twenty four hours a day on it. And it took on Twitter. More than twenty seven hundred journalists and analysts in more than one hundred twenty countries. I'm outta Motorola's. This is Bloomberg. He said. Thank you very much for that. Let's get back to our top story. Tiny stocks are pulling higher after Monday's four hundred and eighty seven billion dollars setup. That's after the Trade Representative Robert lighthizer said the US is not breaking off trade talks. Doesn't tend to go ahead with a tariff on Chinese goods on Friday. Dallas fed president. Robert Kaplan told Bloomberg trade tensions are being felt while the former ambassador to China Max Baucus that patients is the key to deal. It's not having a substantial material impact on US GDP growth at this point. But I can tell you cross number of industries. It's having some chilling effect on their ability to manage their their costs and the way they do business. President Trump Mnuchin in Robert lighthizer really do not have a lot of experience in ago, she had with the Chinese. They're they're kind of green about all this frankly, and my experiences with China. There's a lot of talk sometimes backtrack. Sometimes not just wait. Is you stick with it? You got be patient patient patient positive resistant, stick with it. And after a while, I kind of get a deal. Let's get more with senior editor Derek wall. Banquet joins us from Singapore studio. Derek give me a sense of where this story is at the moment because we have a Chinese response now, but it doesn't really add color or detail to the status quo. This. It's a serious setback. No doubt across the entire range of the trade war between the US and China certainly inflame from where we were last week. Remember at the end of last week. We started hearing some grumblings about about trouble in paradise. But there wasn't really any precipitating factor there. Now there is and the issue of the pullback, particularly the idea that there had been some things that the Chinese side headed greed to deal with that would have required changing some laws in the US side thought that this was pretty well baked in. But then our our reporting suggests that that the US saw a Chinese pullback in some fashion and got really really upset about this. Bob lighthizer as you say went to the president was upset about this Trump fired off the tweets that we all saw and then comes the threat to actually put on some more of these terrorists. This puts us back to kind of where we were in February. Remember when they're supposed to be some some tariff action in March and that got put off as a bit of a stall. So now, we're back on with that sort of thing I actually found some real interesting nuggets in that global times editorial out of China. And they said, look they still intensify that the US the US bias toward a deal. In fact, they're suggesting that the US has some urgency to get a deal and said that even if the trade talks have some problems, even if the terrorists come in that doesn't necessarily close the door off to to trade talks in the future. So it's a bit of a measured response in that global times editorial will see what China has to say on that going forward. Derek? I I think that's an interesting context that measured response from China. But we are seeing perhaps tail risks that just wasn't had in these markets in terms the currency. When do we begin to consider competent fly down on the you wan when does that spin become a real concern? Far for me to give trading advice. But you're right. They the the risk wasn't priced in as much and you saw that. I think across Asia. I mean, look all Asian markets are pretty are pretty exposed to the idea of U S China trade tensions. I mean, it's hard to think of something that's not for good or for L. So there is a certain amount of this. And and I think there's some there's something John Mickel Twitter editor in chief couple years ago wrote this great editorial the basically suggested that people tend to round off risk. You know, like something has a twenty thirty percent chance of happening. All of a sudden it's zero or something as sixty seventy percent chance of happening. All of a sudden it's honor percent. Well, life doesn't work in black and white right in trade talks shades of gray. And that's what we're looking at here. You know, there's clear indications from that Chinese response. You know, let's say let's see what the Chinese side actually, officially say. But if that's the way that it holds, then we're talking about a measured response into. Something the talking about the US still looking for a deal that doesn't say it's over, you know, we're in the early stages of this. But but yeah, shades of gray not black and white, and you got a price shades of gray in right? Careful those great there. Thank you very much running us through her senior editor Derek wall Bank. Let's get somewhat writer Michael Price. He's the portfolio strategist that Taurus wealth advisors in Singapore. You listen to what we just heard in terms of the updated the developments you look at the valuations Chinese equities, stay overweight, China at this point. So Goldman Sachs is arguing they're saying the policy reaction function and mid the trade tensions is reactive and is able to adapt is that something that you could strike too. Yeah. Good question. I mean, look, I mean, I think with with with all after classes when they had two major run. Sometimes there's a great opportunity to to preserve gains and look looking gains. And I think that's from a financial markets point of view. That's potentially the right thing to do. I mean Chinese Rick equities were the best performing asked the club this year. And then lost few days that have major pullback, and you was also close seventy percent. Maybe this time to lock in some games in reduce risk. Because again, this whole Togo tree talks with China. I think is somewhat misleading ultimately much more than just straight is about the rising power taking on an incumbent power. And that is easy solution for that. So I think the Trump comments. Quite the antiquated in the sense that yes, now's the time to be decisive with China, and again hints this this Pasha frustration with the slowness of these negotiations. What's interesting? It's I may weaken Asia. Of course, Michael good morning to you. The Brandi thought seems to be that these are going to be protracted trade discussions over a period of time. Do you want has reacted quite aggressively volatility rising by five percent? And yesterday. I this is where the Chinese perhaps need to worry the most. It's a runaway train off a flight of competent from the on. Would you agree with that? Yeah. I mean, look the currencies the most sort of the if you think the currency go, the potentially the easiest Lucien to very complicated problem. But that of course, we'll have a spillover effect on Asia. Asian currencies. Asian economies enhance is that that card that the US would like to sort of stay back. But I think this case, yes, the market is clearly potentially testing the seven you unlivable again because if you really introduce these terrorists than the currency most probably has to readjust to to to offset that and I think that's a very high possibility. So again, we had a major sort of low volatility environment for the last couple of months and weeks. Now, I think the psychology market has changed that realization that. It's actually not that easy to solve. Looking at this with a binary outcome in mind that either they strike a deal or they don't strike deal, and which side of the trade or of the bet are you on? Eggen? I would be held over. I wouldn't take it back on this because ultimately political decision but through an outcome of these discussions. I mean, even if you have a trade agreements to speak. My view is that it could be a cosmetic because the underlying issues, including the issue, so strategic and soul important that is no easy solution to this. And this is why also China increasingly spends effort on this one road one bale strategy and initiative in order to offset that the reliance on the United States. So again, the recent summit in Beijing has to be seen from that perspective. Again, hitching China's risk. Lego some bold means there, we're gonna continue this conversation. Mike price stays with us. In fact, let's get you a bit of a step. What's ahead? We'll.

Coming up next