A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
The White House kicked off a global market sell-off Thursday evening by announcing a set of ill-conceived, Draconian tariffs on Mexican imports, and we’ll get to that in a minute.
For Canadians, the real unwelcome surprise were not-so-veiled threats from China directed our way,
“China hopes Canada understands the consequences of siding with the United States and doing its bidding, China’s foreign ministry said on Friday … Chinese foreign ministry spokesman Geng Shuang implied Canada was to blame for its problems in China. “We hope that the Canadian side will come to understand the full consequences of pulling chestnuts from the fire on behalf of the United States, and not inflict more harm on themselves,” Geng told reporters, without elaborating.”
Canada - for a few hundred economic, political, military, geographic, and Uighur-related reasons – doesn’t really have the option to ally itself with China over the United States no matter how bizarre and arbitrary American leadership becomes. That doesn’t make the Foreign ministry’s statements less ominous for domestic farms and businesses exporting goods to Asia.
“China says hopes Canada understands consequences of siding with U.S.’ – Globe and Mail
“China threatens corporate hit-list on eve of new tariffs on U.S. imports” – Report on Business
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President Trump announced severe tariffs on Mexican goods that will take effect on June 10 and escalate from there,
“The Trump administration rolled out a new policy aimed at coercing Mexico into halting the flow of Central American asylum seekers into the United States — a 5 percent tax on Mexican imports rising steadily to 25 percent unless Mexico cracks down on migration… The White House is not laying out any specific criteria for what would constitute Mexican compliance with these new demands — making sure it has wiggle room to quietly back down sometime this summer if the new coercion policy doesn’t deliver results… the administration clearly believes that the current situation at the border is intolerable. May border crossings were at the highest level in more than 12 years.’
“Trump’s new plan to tax Mexican imports, explained” – Vox
“USMCA, cooked?” – Babad, Report on Business
“ Mexico tariffs may hurt big auto the most” – Reuters (video)
“Premarket: Stocks tumble, bonds surge as Trump threatens tariffs on Mexico” – Report on Business
“@carlquintanilla “What the US imports from Mexico”” – (table) Twitter
“Mexico central bank board member says this is 'game changer' after U.S. tariff threat” – Reuters
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The defensive posture of Chinese diplomats might in part be a reaction to a flagging economy,
“Activity at Chinese factories slowed and a key employment indicator tumbled to a 10-year low in May, according to an official gauge, reviving worries that trade tensions with the US and troubles in the country’s banking sector could weigh down growth in the world’s second-largest economy… challenges were reflected on Friday in China’s official manufacturing purchasing managers’ index for May which fell to 49.4, down from 50.1 in April, according to the National Bureau of Statistics. A reading below 50 indicates that activity is contracting. A Reuters poll of economists had forecast that the gauge would drop to 49.9. The index tracking new export orders for Chinese companies also tumbled to 46.5 from 49.2.”
“Factory slowdown raises pressures on Beijing leadership” – Financial Times (paywall)
“China factory data miss raises expectations of policy support” – Bloomberg
“ @C_Barraud 🇨🇳 #China | The most important point is that the employment component fell deeper into contraction territory to 47.0 (lowest since Feb. 2009), down from 47.2 in April.
*The same patter was observed in the non-manufacturing sector: 48.3 v 48.7 prior (lowest since March 2016)” – (chart) Twitter
“Huawei loses access to vital chip design updates from Synopsys” – Nikkei
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Tweet of the Day:
Diversion: “The decline of trust in science “terrifies” former MIT president Susan Hockfield” – Vox/Recode
Column: “Signs suggest the loonie is poised for an upswing” – Barlow, Inside the Market
Scott Barlow