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A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

Morgan Stanley strategist Michael Zezas believes that markets are drastically underestimating the risks of a global trade war,

“US rhetoric did not seek to extract quick concessions, but rather to articulate a deeper disagreement. US officials announced their intention to go forward with tariffs on US$50 billion of goods. China outlined steps in response, and the US countered by proposing tariffs on another US$200 billion of goods. Meanwhile, the US broadened its scope, allowing tariffs on steel and aluminum imports from the EU, Mexico, and Canada to take effect. When these countries responded, the US began to prepare auto tariffs. This pattern of behavior shouldn’t be ignored: the US and its key economic partners now view trade differently. One party’s in-kind response is the other’s escalation. This is what a vicious cycle looks like.’

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“@SBarlow_ROB MS on trade: this is what a vicious cycle looks like” – (research excerpt) Twitter

“Trade war fall-out, charted” – FT Alphaville (free with registration)

“Canada strikes back at Trump, and condo buyers will pay the price” – BNN Bloomberg

““NAFTA, I could sign it tomorrow, but I’m not happy with it. I want to make it more fair, okay?” Trump told Maria Bartiromo of Fox News” – Washington Post

“Canada not helping itself by hitting U.S. with tariffs: White House” – Reuters

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Chinese officials are intervening in markets to stabilize equity values and a rapidly falling currency while corporate bond defaults in the country surge,

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“Prospects of a full-blown trade war and relentless yuan weakening — it has fallen 5 percent in the past two weeks near 11-month lows — reportedly forced China into intervention via state-run banks. A central bank advisor was also quoted as saying authorities did not expect significant yuan depreciation. That helped the yuan reverse earlier losses to move back into positive territory for the day against the dollar”

“World stocks rise from two-and-a-half month low, China soothes currency markets” – Inside the Market

“China seeks to soothe markets as trade angst rattles stocks, yuan” – Reuters

“The resurgence of China pessimism” – Marginal Revolution

“China is zooming to a record year of corporate-bond defaults “ – Bloomberg

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Crude prices are rising this morning, but speculative investors are watching the slowing developing world economies closely,

“Production at Syncrude Canada’s 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta, was hit by a power outage last month and is likely to remain offline through July, helping drain U.S. inventories… Libya’s National Oil Corp declared force majeure on loadings from Zueitina and Hariga ports on Monday, resulting in 850,000 bpd of supplies being disrupted.”

“Oil climbs on Libya force majeure, Canada outage” – Reuters

“COLUMN-Hedge funds continue selling oil, especially fuels: Kemp” – Reuters

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Tweet of the Day:

Diversion: “Her code got humans on the moon—and invented software itself” – Wired

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