One day after yesterday’s at times painfully uncomfortable first official meeting between Angela Merkel and Donald Trump, it will hardly come as a surprise that during today’s G-20 meeting in Baden Baden, Germany- the first for the Trump administration, whose delegation is led by Treasury Secretary Steven Mnuchin – where the dominant topic is trade, and specifically globalization vs protectionism, that a row would break out over how the post-Trump world will deal with trade.
At stake is the language in the official communique to be released later on Saturday and which is expected to serve as the blueprint for future trade relations, which pressured by Trump may be increasingly transformed from multi-lateral to bilateral.
As Bloomberg reports, at the heart of the disagreement are globalist (and mercantilist) powers such as Germany (and China) defending the existing rules-based system, on the other the U.S. is calling for a recognition that trade must be “fair” without however explicitly stating what that means. Chinese
Finance Minister Xiao Jie said in a Saturday statement that the G-20
should be “adamantly against” protectionism. According to reports,
China has been the most insistent on a commitment to the current system
that the World Trade Organization represents, which is understandable: together with such exporting powerhouses as Germany and South Korea, China has the most to lose from a dramatic overhaul of the status quo.
Apple Chief Executive Tim Cook expressed support for globalisation and said China should continue to open its economy to foreign firms, while speaking at a forum in Beijing on Saturday.
“I think it’s important that China continues to open itself and widens the door if you will,” said Cook, speaking at the government-sponsored China Development Forum.
Cook’s comments come amid rising tensions between the U.S. and China, with protectionist rhetoric from U.S. President Donald Trump sparking concern of increased trade friction between the two countries.
“The reality is countries that are closed, that isolate themselves, it’s not good for their people,” said Cook, in a rare public speech.
Apple said on Friday it will set up two new research and development centres in Shanghai and Suzhou in China.
It has pledged to invest more than 3.5 billion yuan ($508 million) in research and development in China.
Apple has been singled out in Chinese media as a potential target for retaliation in the event of a trade war.
The Global Times warned last November if Trump triggered a trade war with China, Beijing would then target firms from Boeing to Apple in a “tit-for-tat” approach.
According to the ministry, the draft report will be presented to ministers during the meeting in Kuwait next week.
“As a result of the second session of the Joint Technical Committee of OPEC and non-OPEC [countries] a draft report on implementation of the oil output cut deal was prepared,” the ministry wrote on its Twitter page.
In November 2016, OPEC agreed to cut oil production by 1.2 million barrels per day to 32.5 million barrels per day for the whole cartel starting January 2017.
In December 2016, OPEC finished a meeting with non-OPEC countries in Vienna, at which 11 non-OPEC producers decided to cut oil output by 558,000 barrels per day from January 2017 with Russia cutting the output by 300,000 barrels per day.
The deal caused the price of crude oil to climb to $55-56 per barrel, boosting optimism in the energy market.
With a rate rise in the books investors get to hear from a handful of Federal Reserve speakers next week. On the geo-political front a hearing on Russia’s interference in the US presidential election and a meeting on combatting Isis take the spotlight.
Here’s what to watch in the coming days.
While the Federal Reserve decided to raise interest rates for the third time since the financial crisis, chair Janet Yellen reiterated that the pace of rate rises would be gradual and the so-called dot plot continued to signal just two additional rate rises this year. The move was interpreted by some as a dovish hike and Fed speakers could get the chance to refute that next week.
“Moreover, we’d also look for clarification on the addition of ‘symmetric’ in the press statement when it came to defining the inflation reaction function,” strategists at RBC Capital Markets said. “Our sense is that this was in an effort to put an end to inflation level targeting—also not a dovish development.”
Ms Yellen will deliver the opening keynote at the Federal Reserve System Community Development Research Conference in Washington on Thursday. Through the week, investors also get to hear from voting members of the monetary policy setting Federal Open Market Committee, including Chicago Fed president Charles Evans, Dallas Fed president Robert Kaplan and Minneapolis Fed president Neel Kashkari — the only voting FOMC member to dissent at the March meeting and who has explained his rationale for the move on Friday.
On the economic data front, the calendar is fairly light but investors will keep an eye on fourth quarter current account deficit figures due Tuesday and durable goods orders slated for Friday.
Moody’s late on Friday cut its outlook on Turkey’s rating to “negative” as risks to the country’s credit profile have “risen materially” in recent months.
The ratings group noted that the “tense political environment” following the coup attempt last July has “persisted for longer than expected” and that actions taken against various forms of opposition to the government have “undermined the country’s administrative capacity and damaged private sector confidence.”
“Partly as a consequence, Turkey has experienced a further slowdown in growth,” Moody’s added.
Indeed, the economy contracted at a year-on year rate of 1.8 per cent in the third quarter of last year, Bloomberg data show. It is forecast to have picked up to 2.6 per cent in the final three months of last year, but remain below the 4.7 per cent and 3.1 per cent notched in the first and second quarter of 2016, respectively.
Moody’s rates Turkey at Baa1. It previously had a “stable” outlook on the sovereign.
Russia and Cyprus get the good news from Standard & Poors
Russia’s outlook raised from positive to stable and the rating affirmed at BB+ by S&P. They see average growth at 1.7% from 2017 to 2019.
USD/RUB is at the low of the day on the headlines.
Cyprus was raised to BB+ from BB and now has a stable outlook. They see 2-3% growth out to 2019.