Bloomberg
“Stocks Rise, Dollar Gains as Trade Flap Eases: Markets Wrap.”
U.S. stocks rose after futures stormed back from overnight declines when America appeared to retreat from the brink of full-blown trade war with China. Treasuries advanced and oil extended gains.
The S&P 500 headed for a second straight day of advances and the Stoxx Europe 600 Index rallied as senior Trump administration officials said the U.S. will take a less confrontational than expected approach toward the Asian nation. Earlier, equities in Asia dropped, with Chinese equities extending their decline as the yuan slipped. The euro weakened as German chancellor Angela Merkel failed to resolve an inter-party clash over migration. West Texas Intermediate crude traded at a one-month high.
Washington’s less-confrontational stance, which appears to include abandoning plans to use a 1977 emergency law to curb prospective investments, whipsawed markets that were already on edge after a series of mixed signals from the administration. The Federal Reserve Bank of Atlanta President Raphael Bostic yesterday warned that disruption to trade could increase risk to the economy.
Developing-market currencies fell and stocks tumbled, with the MSCI Emerging Markets Index hitting the lowest in 10 months.
Reuters
“Automakers warn U.S. tariffs will cost hundreds of thousands of jobs, hike prices.”
Two major auto trade groups on Wednesday warned the Trump administration that imposing up to 25 percent tariffs on imported vehicles would cost hundreds of thousands of auto jobs, dramatically hike prices on vehicles and threaten industry spending on self-driving cars.
A coalition representing major foreign automakers including Toyota Motor Corp, Volkswagen AG (VOWG_p.DE), BMW AG, and Hyundai Motor Co, said the tariffs would harm automakers and U.S. consumers. The administration in May launched an investigation into whether imported vehicles pose a national security threat and President Donald Trump has repeatedly threatened to quickly impose tariffs.
“The greatest threat to the U.S. automotive industry at this time is the possibility the administration will impose duties on imports in connection with this investigation,” wrote the Association of Global Automakers representing major foreign automakers. “Such duties would raise prices for American consumers, limit their choices, and suppress sales and U.S. production of vehicles.”
The group added: “Rather than creating jobs, these tariffs would result in the loss of hundreds of thousands of American jobs producing and selling cars, SUVs, trucks and auto parts.”
On Friday Trump threatened to impose a 20 percent tariff on all imports of EU-assembled cars. On Tuesday Trump said tariffs are coming soon. “We are finishing our study of Tariffs on cars from the E.U. in that they have long taken advantage of the U.S. in the form of Trade Barriers and Tariffs. In the end it will all even out – and it wont take very long!” Trump tweeted.
BBC News
“Alexandria Ocasio-Cortez: Millennial beats veteran Democrat.”
A millennial candidate has shaken up the US Democratic Party by defeating the incumbent congressman for his seat. Alexandria Ocasio-Cortez, 28, defeated political veteran Joe Crowley, 56, on Tuesday night in their party’s congressional primary in New York City. Mr Crowley, a 10-term Democrat, had been tipped as a future party leader or even Speaker of the House.
Ms Ocasio-Cortez, a former Bernie Sanders volunteer from a Puerto Rican family, won with 57.5% of the vote. Mr Crowley had not faced a challenger from his own party in 14 years in the mostly ethnic minority district, which covers parts of the Bronx and Queens.
Ms Ocasio-Cortez will now face Republican candidate Anthony Pappas in the November mid-terms. If she wins, she will become the youngest ever woman elected to Congress.
The political novice, who describes herself as a socialist Democrat, had huge grassroots support. She raised more small-dollar donations than any other New York City congressional candidate. In fact she found little support from established Democrats.
Senator Kirsten Gillibrand, a top Democrat who has a political action committee designed to support women candidates, endorsed her opponent Mr Crowley. Ms Ocasio-Cortez posted on Twitter after Ms Gillibrand’s endorsement that the New York senator «didn’t even bother to talk to nor consider me before endorsing»
Bloomberg
“Trump Decides Against Harshest Measures on China Investments.”
The White House opted to take a less confrontational approach toward Chinese investments in the U.S. as it pushes Congress to strengthen an existing review process rather than invoke a little-used law reserved for economic emergencies.
President Donald Trump wants Congress to pass legislation to bolster the Committee on Foreign Investment in the U.S., or CFIUS, so it can prevent companies from violating intellectual-property rights of American companies, two administration officials said Wednesday, speaking to reporters on the condition of anonymity.
The administration decided not to employ the International Emergency Economic Powers Act of 1977 that would give the president broad authority to curb Chinese investments in the country.
The decision comes amid White House allegations that China engages in widespread theft of intellectual property. The inter-agency CFIUS panel, if bolstered by Congress, can address those concerns while maintaining an open investment climate, one of the administration officials said.
Trump’s choice shows that he is favoring a more measured strategy that requires coordination with Congress, rather than working solely through the executive branch. It’s also a win for proponents of conciliatory tone in negotiations with China such as Treasury Secretary Steven Mnuchin, who told reporters on Wednesday that moves to strengthen CFIUS aren’t intended to single out Beijing.