Bloomberg
“Highlights from the G-20 Summit in Buenos Aires This Weekend.”
Finance ministers and central bankers from the top 20 economies of the world on Sunday ended two days of talks in Buenos Aires. They began against a backdrop of concern with a burgeoning trade war that had risked spilling into currency markets. The meeting kicked off under the shadow of U.S. President Donald Trump’s threats to slap more levies on Chinese imports, accuse the EU and China of manipulating their currencies, and criticizing the Fed of raising interest rates.
Treasury Secretary Steven Mnuchin addressed Trump’s comments on the eve of the summit that a stronger dollar and rising U.S. interest rates were undermining America’s competitive advantage. Speaking to reporters Saturday morning before the start of talks, Mnuchin said Trump fully supports Federal Reserve independence and isn’t trying to interfere in foreign-exchange markets.
“The impact of protectionist measures already implemented has been — that’s lucky– so far very limited. But the risk of escalation is there,” said European Union Economic Affairs Commissioner Pierre Moscovici.
France’s Finance Minister Bruno Le Maire said the U.S. needed to «return to reason» and likened «its unilateral trade actions to «the law of the jungle.» The U.S. must rescind its tariffs on steel and aluminum imports before European countries discuss overhauling aspects of global trade, he said. “We refuse to negotiate with a gun to the head.”
The G-20 statement reiterated cryptos lack many of the attributes of sovereign currencies, but delegates provided limited details on any specific and coordinated steps member nations might take to regulate the assets.
Reuters
“Trump tells Iran ‘never, ever threaten’ U.S. or suffer consequences.”
U.S. President Donald Trump told Iran it risked dire consequences “the like of which few throughout history have suffered before” if the Islamic Republic made more threats against the United States.
His words, spelled out in capital letters in a late night Twitter message, came hours after Iranian President Hassan Rouhani told Trump that hostile policies toward Tehran could lead to “the mother of all wars.”
Despite the heightened rhetoric, both sides have reasons to want to avoid starting a conflict that could easily escalate.
Trump’s comments come in the context of a barrage of speeches and online communications meant to foment unrest and pressure Iran to end its nuclear program and its support of militant groups, according to U.S. officials. Iran has faced increased U.S. pressure and possible sanctions since Trump’s decision in May to withdraw the United States from a 2015 international agreement over Iran’s nuclear program.
Earlier on Sunday, Rouhani had told a gathering of Iranian diplomats: “Mr Trump, don’t play with the lion’s tail, this would only lead to regret.” “America should know that peace with Iran is the mother of all peace, and war with Iran is the mother of all wars,” said Rouhani, quoted by the state news agency IRNA.
Rouhani left open the possibility of peace between the two countries, at odds since the 1979 Islamic Revolution. But Iran’s most powerful authority Supreme Leader Ayatollah Ali Khamenei said on Saturday negotiations with the United States would be an “obvious mistake”.
BBC News
“Chinese Premier Li Keqiang calls for crackdown on vaccine industry.”
Authorities in China have ordered an investigation into a vaccination scandal as panic grows over product safety. Last week vaccine maker Changsheng Biotechnology Co was found to have falsified production data for its rabies vaccine. The firm has been ordered to halt production and recall rabies vaccines. There has been no evidence of harm from the vaccine, but the scandal has sparked a huge outcry in China.
Changsheng, which suspended trading in its shares for part of Monday, saw their value drop by 10% on the day. The shares have slumped 47% since mid-July, when news of the scandal first broke.
On Sunday, Chinese Premier Li Keqiang urged severe punishment for the people involved, saying the incident had «crossed a moral line». «We will resolutely crack down on illegal and criminal acts that endanger the safety of peoples’ lives, resolutely punish lawbreakers according to the law, and resolutely and severely criticise dereliction of duty in supervision,» he said in a statement posted on a government website.
According to the CFDA, there is no evidence that anyone has been harmed by the vaccine. Concern has now shifted to the safety of the DTaP vaccine. The vaccine is subsidised by the government and is given to infants across the country.
It is not known how many children have received the vaccine, but there have not been any reports of children falling ill after receiving the inoculation. The Chinese government has not said what impact the substandard vaccine could have on a person’s health.
Bloomberg
“Volatility’s Coming for Your Summer Break as Headwinds Build.”
A yuan slump, a correction in commodity markets, Trump broadsides against the Fed, a trade war, and fresh Italian risk. For Voya Asset Management in New York, they’re headwinds threatening to disrupt the summer break. “No one is taking a breath,” Barbara Reinhard, head of asset allocation at the $227 billion firm said. “Let’s put it this way, everyone taking a vacation: they can’t be without their devices.”
August is approaching, the most volatile month over the past two decades where thin trading exaggerates price swings.
For many, unpredictable markets could mar dreams of a lazy summer at the beach. Event risk could derail plans as trade tensions engulf the world’s largest economies and China’s sliding currency recalls August 2015’s devaluation, while Italy’s new populist government keeps political risk alive. Oh, lest you forget: President Donald Trump has a Twitter account.
Risk-off sentiment could rapidly snowball alongside the specter of higher borrowing costs. Investors may struggle to offload positions in the second lowest-volume month of the year, from corporate bonds to emerging-market assets. Goldman Sachs Group Inc. has warned that depleted liquidity makes the market prone to crises.
The market is giving the green light to slumber this summer. Thanks to stable monetary expectations, economic expansion and corporate earnings growth, volatility premiums across assets are plumbing post-February lows. At 13.1, the VIX Index still sits below its five-year average. Such expectations of serene trading could be upended in a jiffy.
And August has a way of raising blood pressure for traders who dare not leave their post. In equities, it’s the most volatile month, with the VIX gaining an average two points in the 31 days. Meanwhile, the JPMorgan FX Volatility Index and Merrill Lynch’s MOVE Index of Treasury volatility see their second-biggest monthly uptick on average, in data going back two decades.