Category Archives: United States

(NYT) China Offers Trump a Trade Peace Deal. It May Not Be Enough.

(NYT)

A combine harvests soybeans on a farm outside Salina, Kan. China has resumed its purchases of American soybeans, but it is not clear whether Beijing’s recent concessions will lead to a lasting truce on trade with the United States.CreditChristopher Smith for The New York Times

A combine harvests soybeans on a farm outside Salina, Kan. China has resumed its purchases of American soybeans, but it is not clear whether Beijing’s recent concessions will lead to a lasting truce on trade with the United States.CreditCreditChristopher Smith for The New York Times

BEIJING — China is buying American soybeans again and has cut tariffs on American cars. It is offering to keep its hands off valuable corporate secrets, while also allowing foreign investors into more industries than ever before.

Beijing hopes all of that will be enough to let President Trump declare victory and end the trade war between the two largest economies. But the offer combines some real concessions, like lower tariffs, with nebulous promises, and it will be hard to ensure that China sticks to its commitments.

That could make it a tough sell in Washington. The Trump administration’s trade hawks are still pushing for a lot more, while even the doves fret that the new promises need effective enforcement to make sure that China follows through, according to people with a detailed knowledge of American policymaking.

Many American officials and businesses complain that China has long wiggled out of commitments — accusations that China denies. And the more hawkish wing of the administration contends that Beijing’s assurances have been so vague that it is hard to discern any meaningful progress, a position some analysts support.

Beijing’s effort so far adds up “to a modest adjustment of Chinese foreign economic policy,” said Scott Kennedy, a scholar at the Center for Strategic and International Studies in Washington, “but nowhere close to the great leap in liberalization that the U.S. and others are seeking.”

Midlevel trade talks this week in Beijing, which will continue into Wednesday, have been productive. But if negotiators do not come to a deal in the coming weeks, the administration is poised to raiseAmerican tariffs on $200 billion a year in Chinese-made goods on March 2, amping up the trade war at a time when China faces rapidly softening growth and the American economy is facing headwinds.

It is not clear whether the moves will fully satisfy Mr. Trump. The American stock market, one of the president’s favorite barometers, has slumped in part over trade tensions. And further market gyrations could prompt the president to declare victory, even if China does not give up too much.

On Tuesday, Mr. Trump said in a message on Twitter that the talks were “going very well,” a sign that Beijing was at least moving in what he considered the right direction.

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China added a complicated new variable to the trade talks on Tuesday by inviting North Korea’s leader, Kim Jong-un, to Beijing. The invitation could increase pressure on Mr. Trump to reach a deal soon, but it might also antagonize national security hawks in his administration who worry about North Korea’s ballistic missile and nuclear weapons programs.

The White House has said China is an unfair trading partner. Its tariffs are too high, it says. It forces American companies to give up important technology to Chinese partners as a price for doing business there. It offers subsidies and cheap loans to Chinese companies that hope to compete with American companies in strategic areas like jetliners, semiconductors and electric cars.

Chinese officials dispute those claims. They say higher Chinese tariffs and strict investment limits are justified because China is still a developing country and well behind the United States in many economic respects. China’s manufacturing capabilities, they say, need upgrading for the country’s continued growth. They have consistently denied that the government allows forced technology transfers, saying some companies willingly share and make big profits in China doing so.

Still, China has begun to budge. Last month, it dropped retaliatory measures on American-made cars and resumed purchases of American soybeans. It has also reduced tariffs on more than 700 categories of goods from around the world.

Beijing has said it is considering a law that would forbid local Chinese officials to demand foreign companies transfer their technology to Chinese businesses through licensing agreements or joint ventures. It has also promised to open up more fully some sectors of the economy, such as vehicle manufacturing and brokerages, to foreign investors. The efforts, Beijing believes, will help the Chinese economy even as they placate Mr. Trump.

On cars and soybeans, American negotiators can claim some measure of victory. Soybean purchases have yet to reach earlier volumes, however, while Chinese imports of American-made cars are quite small since many are already made in China.

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Catch up and prep for the week ahead with this newsletter of the most important business insights, delivered Sundays.SIGN UPIn addition to buying American soybeans again, China has cut retaliatory tariffs on cars made in the United States and made other efforts. A new round of trade talks begins this week.CreditChristopher Smith for The New York Times

In addition to buying American soybeans again, China has cut retaliatory tariffs on cars made in the United States and made other efforts. A new round of trade talks begins this week.CreditChristopher Smith for The New York Times

But China had imposed measures on soybeans and cars to retaliate against American tariffs last summer on $50 billion of Chinese goods. By dropping them, without requiring the United States to abandon theirs, China is signaling that for now it is willing to accept higher American tariffs on some of its goods, provided they are not applied more broadly.

China’s other peace offerings are more ambiguous.

Chinese lawmakers last month released a draft of a proposed law that would stop local officials from forcing foreign companies to transfer their technology as a cost of doing business. The Trump administration says that Chinese industries like cars and aviation have benefited from American technology.

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The law may not change things meaningfully, said Donald Clarke, a specialist in Chinese law at George Washington University. The draft is vaguely worded, he said, and doesn’t acknowledge that the pressure American companies face to share their know-how often comes from behind-the-scenes maneuvering rather than strict government requirements.

As with many laws in China, it could also be moot if local governments decide not to enforce it or if penalties are not stiff enough.

“These forced tech transfers that people complain about don’t occur because some government department issues an order saying, ‘Transfer this tech,’” Mr. Clarke said in an email.

“It’s done through the government department getting involved behind the scenes in the negotiations, or not granting discretionary permission to do something unless some tech is transferred. It’s very hard to stop through a specific rule.”

Still, Chinese analysts say the pledges are significant. Chinese laws and regulations are often succinct — only a page or two when American laws or regulations would require dozens or even hundreds of pages. The real work lies in carrying out the regulations, and Beijing is now prepared to impose the new rules diligently, Chinese analysts say.

The issue of forced technology transfer “is a longstanding complaint by American businesses in China, and we are addressing it through legal adjustments,” said Tu Xinquan, the executive dean of the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing. “So no matter what, there will be a positive impact to some extent, that is, in reducing America’s dissatisfaction with China.”

Chinese officials are also taking steps to strengthen intellectual property protections against counterfeiters and piracy. Chinese officials last month submitted a draft amendment to the country’s patent law that would raise the level of damages and fines for willfully infringing on patents.

One of the biggest beneficiaries might be companies in China. Big Chinese players have increasingly shed their reputation as copycats and have developed sophisticated technologies, and complain that local businesses can too easily steal their ideas.

“To be honest, in many areas, there is still insufficient motivation for innovation,” said Ma Yu, a research scholar in foreign investment research at the Chinese Academy of International Trade and Economic Cooperation. “So I don’t view these moves to be concessions or compromises, let alone harmful to us.”

The biggest sticking point in China’s package of concessions to the White House may be Made in China 2025, a government plan for developing high-tech industries. The Trump administration has repeatedly criticized the plan, saying it is evidence that China unfairly supports its own companies over foreign competitors in the Chinese market.

China has played down the catchy Made in China 2025 name. But there’s no concrete reason to believe that Chinese companies have halted or reversed their plans, or that officials are any less interested in plowing money into its state-owned enterprises. China’s Ministry of Industry and Information Technology, which played a major role in the program, said last month that it would continue to support development of new manufacturing processes, without mentioning the policy by name.

Jake Parker, vice president for China operations at the U.S.-China Business Council, an American business group, said that “it’s positive that China is taking steps proactively.”

But he also said that China had yet to completely fulfill its promises on issues ranging from opening up its market to credit-rating agencies and American banks to accepting credit card companies’ efforts since 2001 to offer full, nationwide service.

“Are more statements going to be enough to move the needle for President Trump?” Mr. Parker asked. “I think it would have to be a lot more robust than another policy. I don’t think this meets that bar.”

(Axios) A new liberalism rises

(Axios)

Illustration: Rebecca Zisser/Axios

President Trump redefined mainstream conservatism. Now, a cast of rising Democratic stars and 2020 candidates are redefining mainstream liberalism.

What’s happening: You see it in many of the major domestic debates of our times.Show less

  • Support for a big government “Green New Deal” to fight climate change. Watch the 2020 candidates jump on this bandwagon. 
  • Support for Medicare for All, calling for a much bigger government role in health care, beyond the Affordable Care Act.
  • A rush away from tough-on-security as crucial to immigration reform, which until recently was seen by most Democrats as essential to not looking soft on crime or terrorism.

In all three cases, these topics are shaping up as the new litmus tests for liberal activists heading into 2020.

  • Why it matters: These ideas and their champions are coming to the fore at a moment when there are real opportunities to begin to realize them.

You can see this shift in one important number: the number of Democrats proudly calling themselves liberal.

  • Gallup said yesterday that 51% of Democrats self-describe as liberal, a new high “following gradual increases since the 1990s.”
  • In 1992, when Clinton first won, 25% self-identified as liberal, 25% as conservative and the rest as moderate.
  • And across the spectrum, the country’s traditional lean in favor of conservatives has narrowed: 35% of Americans told Gallup they’re conservative, 35% moderate and 26% liberal.

Jon Favreau, the former Obama adviser and now Pod Save America star, said people “want ideas that are commensurate with the size of the challenges we’re facing.”

  • “No more incrementalism. No more warmed-over white paper bullshit. It’s go big or go home.”
  • “When I was working on ”The Wilderness‘ [documentary], I spoke to Obama-Trump voters and Obama voters who didn’t vote in ’16, and both groups were highly favorable toward ideas like Medicare for All, big infrastructure spending, and a $15 minimum wage.”

Matt Bennett of Third Way, who is a leading Democratic centrist thinker, disagrees: “The far left is trying to redefine mainstream liberalism. But so far, there’s plenty of evidence that they aren’t succeeding.”

  • He argues liberals had a bumpy 2018 election, are struggling to get Medicare for All to catch on, and show no signs of lifting far-left candidates like Bernie Sanders beyond single digits in polls.

Be smart: The momentum — online, on cable, among donors, with newly elected Democrats and among the early 2020 crop — is clearly with the new, more unabashed liberals.

Go deeper:

(WSJ) U.S. Targets Huge Currency Scheme in Venezuela Before Maduro Inauguration

(WSJ) Treasury penalizes ex-officials it says perpetrated a huge fraud in Venezuela’s currency markets, days before the leftist leader starts a second term

The U.S. Treasury Department on Tuesday sanctioned a Venezuelan network that allowed the owner of media giant Globovision Tele C.A. and several state-connected businesspeople to illicitly make billions of dollars in profits from the country’s broken currency market.

The U.S. action is part of a comprehensive sanctions campaign Trump administration officials say is meant to pressure President Nicolás Maduro into restoring democratic order and the rule of law.

The latest action targets former Venezuelan Treasury officials, seven Venezuelan businesspeople and nearly two dozen of their companies, including Globovision, the country’s largest media company. It freezes their assets under U.S. jurisdiction, prevents their travel into the U.S. and bars American firms from working with the blacklisted entities. This all complicates their international business dealings.

The administration timed its latest salvo to fall ahead of Mr. Maduro’s Thursday inauguration to a second term following an election Washington says was fraudulent and expands a grip on power kept through violent repression.

Previous U.S. actions have detailed top Maduro regime officials running state-aided narco-trafficking and money-laundering operations and widespread corruption throughout the government. That includes in the food program Caracas says is to aid a starving population but the U.S. alleges is used for political control.

The sanctions follow prosecutions of several of the targeted individuals, including Alejandro Andrade, the former national treasurer, who once served as a bodyguard to Mr. Maduro’s predecessor Hugo Chávez. Mr. Andrade pleaded guilty in a U.S. court to taking more than $1 billion in bribes while in office.

Also targeted is Raúl Gorrín, president of Globovision and life insurance broker Seguros La Vitalicia. U.S. officials say Mr. Gorrín bribed Mr. Andrade and his successor, Claudia Patricia Díaz, to gain privileged rights to exchange currency for the Maduro government. Ms. Díaz, Mr. Chávez’s former nurse and another U.S. Treasury target, is fighting related money-laundering charges levied by Spanish prosecutors.

U.S. officials allege Mr. Gorrín and several of his associates used Venezuela’s widely used black market exchange rates—running at much higher rates—to reap billions of dollars in profits. Mr. Andrade told U.S. prosecutors those profits were transferred into assets overseas, including in the U.S. and Europe.

Calls and emails to Mr. Gorrín, his attorney in Miami, Howard Srebnick, Globovision and Venezuela’s Information Ministry weren’t immediately returned. Mr. Andrade is serving a 10-year U.S. prison sentence that he received late last year. Ms. Díaz, the other former national treasurer, couldn’t immediately be reached for comment, but has rejected the Spanish prosecutor’s allegations against her. In the past, the Maduro administration has routinely dismissed U.S. sanctions as part of an effort to destabilize Venezuela’s leftist government.

The U.S., in prosecuting its broad sanctions campaign against the Maduro government, is trying to disrupt operations and the political alliances that help the president stay in power. It also hopes that exposing the government’s activities will undermine political support in Venezuela and any remaining international backing.

“Venezuelan regime insiders have plundered billions of dollars from Venezuela while the Venezuelan people suffer,” Treasury Secretary Steven Mnuchin said. “The United States remains committed to holding accountable those responsible for Venezuela’s tragic decline, and will continue to use diplomatic and economic tools to support the Venezuelan people’s efforts to restore their democracy.”

Treasury’s actions target the small cadre of officials and Venezuelan elite that U.S. and ex-Venezuelan officials say are profiting from Mr. Maduro’s control of the government. That wealth that stands in contrast to a deepening economic contraction and the plight of most Venezuelans, circumstances that have sparked a mass migration out of the country.

Despite threatening to ban Venezuela’s most important resource, oil, the administration has so far held off from targeting the crude exports that American refiners buy to help keep America’s gasoline tank topped up. U.S. officials say that is in part because of fears it could give Mr. Maduro political ammunition as he blames the U.S. for his nation’s economic woes.

Since 2003, Venezuela has maintained a web of currency controls that restrict access to U.S. dollars, resulting in multiple exchange rates. U.S. officials say that has generated large profits for government officials and their allies who were allowed access to greenbacks and other foreign currencies. The profits were often then moved to offshore accounts and foreign companies, according to U.S. officials.

Caracas has made fewer dollars available in recent years as it struggles with an economic crisis. But the currency scheme the U.S. alleges was exploited by Mr. Gorrín and his network is still active, economists and Western diplomats say, because the government maintains control over dollar flows and many of the same people are still in power.

Despite the sanctions, the U.S. action on Tuesday allows American financial companies to gradually wind down their relationship with Globovision over the next year. Officials say that was meant to persuade Globovision to force out Mr. Gorrín and fellow owner and brother-in-law, Gustavo Adolfo Perdomo, of the company. U.S. Treasury officials say Mr. Perdomo and his wife, who are among the seven it targeted, were primary accomplices in the illicit activities.

Cosme de la Torriente, the Miami-based lawyer listed in Florida corporate records as the registered agent for one of those companies, Magus Holdings USA, Corp., didn’t respond to requests for comment on behalf of the owners.

(Reuters) U.S. sanctions Venezuela officials, Trump slams Maduro

(Reuters)

Venezuela's President Nicolas Maduro walks with his wife Cilia Flores upon their arrival at the airport in Beijing
FILE PHOTO: Venezuela’s President Nicolas Maduro walks with his wife Cilia Flores upon their arrival at the airport in Beijing, China September 13, 2018. Miraflores Palace/Handout via REUTERS

By Lesley Wroughton and Brian Ellsworth

NEW YORK/CARACAS (Reuters) – The United States imposed new sanctions on Venezuelan President Nicolas Maduro’s wife and several of his top allies on Tuesday as U.S. President Donald Trump urged members of the United Nations to support a “restoration of democracy” in the once-booming OPEC nation.

The measure sanctioned six officials in Maduro’s “inner circle,” including Vice President Delcy Rodriguez and Defense Minister Vladimir Padrino, and “blocked” a $20 million private jet identified as belonging to a front-man of a top official.

The move adds pressure to a government already widely criticized for economic collapse and undermining democracy. But it does not materially change Washington’s efforts to pressure Socialist Party stalwarts who have shown no willingness to hand over power or negotiate a transition.

“Today, socialism has bankrupted the oil-rich nation and driven its people into abject poverty,” Trump said in remarks to the United Nations General Assembly.

“We ask the nations gathered here to join us in calling for the restoration of democracy in Venezuela.”

Under Maduro, Venezuela has limited the powers of the opposition-run legislature, jailed opposition politicians and created a parallel congress with unlimited powers.

Inflation is running at 200,000 percent and basic foods and medicines, like rice or antibiotics, are increasingly difficult to obtain. That has fueled an exodus of Venezuelans to nearby Latin American countries, where borders are now overwhelmed by Venezuelan migrants.

Maduro says he is victim of an “economic war” led by U.S.-backed adversaries. He denies limiting political freedoms, insisting opposition leaders have plotted assassination attempts and sought to overthrow him through violent street protests.

On Tuesday, he said Trump’s comments were an apology for America’s history of colonialism in the region and offered words of support for the sanctioned officials who joined him during an event broadcast over state television.

“I’m surrounded by sanctioned (officials),” he said. “Thank you, Donald Trump, for surrounding me with dignity.”

He nonetheless said he hoped to arrange a face-to-face meeting with Trump. The White House last year responded to a similar request by saying such a meeting would happen when the country returned to democracy.

MADURO HANGS ON

The Trump administration has levied several rounds of sanctions against Maduro’s government since 2017.

Sanctions such as those published on Tuesday bar American citizens and companies from any dealings with the individuals in question, which blocks them from holding bank accounts or contracting services from U.S. firms.

“More personal sanctions can maybe deprive top Venezuelan officials from some ill-gotten gains but this will hardly destabilize the regime,” said Raul Gallegos, associate director of consultancy Control Risks.

A broader set of financial sanctions created last year bar American investors from acquiring newly issued debt, effectively locking the country out of credit markets and further fueling the country’s cash-flow problems.

A group of U.S. senators on Tuesday said they had introduced legislation seeking to address the crisis in Venezuela by, among other things, tightening sanctions and providing $40 million in humanitarian aid.

U.S. Vice President Mike Pence separately said on Tuesday the United States would provide an additional $48 million to “partners in the region” to confront the “humanitarian crisis” caused by the growing migration of Venezuelans.

The U.N. migration and refugees organizations said in a joint statement in August that 2.3 million Venezuelans are currently living abroad and more than 1.6 million have left since 2015. Venezuela does not release migration figures.

But Maduro in September said no more than 600,000 Venezuelans had migrated in the past two years, and that 90 percent of them want to return.

Maduro has hung to power in part because of continued support of members of the armed forces such as Padrino, 55, who was appointed defense minister in 2014.

The Treasury said that Padrino helped ensure the military’s loyalty to Maduro. In the past, it has accused high-ranking officers of corruption and undermining human rights.

First lady Cilia Flores, a lawyer and former attorney general who also ran the country’s legislature, frequently appears at public events with Maduro and is seen an important behind-the-scenes power broker.

Treasury also said a Gulfstream 200 private jet located in Florida had been identified as belonging to a front man of Socialist Party Vice President Diosdado Cabello, who the United States accuses of being involved in drug trafficking.

Reuters was unable to immediately obtain comment from Cabello, who denies the accusations.

Separately, several Latin American nations plan to present a complaint against Maduro’s government for alleged human rights abuses with the International Criminal Court (ICC) in The Hague, Peruvian Trade Minister Roger Valencia said in an interview.

The countries, which include Peru, Colombia, Paraguay, Uruguay and Argentina, hope to submit the complaint on Wednesday and were seeking backing from more countries to put pressure on Maduro.

(AP) Venezuela Supreme Court judge flees to US to protest Maduro

(AP)

FILE – In this Dec. 9, 2018 file photo, Venezuela’s President Nicolas Maduro speaks after voting in local elections in Caracas, Venezuela. A Venezuelan Supreme Court justice who has been a longtime government loyalist has fled to the U.S., on Jan. 2019, saying he’s protesting President Nicolas Maduro’s plans for a second term. Christian Zerpa told Miami-based broadcaster EVTV that Venezuela’s high court has become an appendage of Maduro’s inner circle. (AP Photo/Ariana Cubillos, File)
The Associated PressBy SCOTT SMITHPosted: Jan. 7, 2019 8:00 am Updated: Jan. 7, 2019 8:04 pm

CARACAS, Venezuela (AP) — A Venezuelan Supreme Court justice and longtime government loyalist who fled the socialist country for a new life in the United States called Nicolas Maduro an incompetent president leading the once-wealthy country to ruins.

Christian Zerpa’s embarrassing defection came days before Maduro begins his second term amid calls from critics and the international community to relinquish power.

Zerpa on Monday accused Venezuela’s high court of becoming a tool of Maduro’s inner circle, lacking any judicial independence since he and a group of ruling party members were appointed to the bench in 2015.

“Nicolas Maduro doesn’t know the constitution, and he doesn’t know the laws,” Zerpa said in a Florida news conference. “This has no other name than a dictatorship.”

A once wealthy oil nation, Venezuela is in the throes of a historic crisis after two decades of socialist rule. Millions have fled, while runaway inflation leaves those remaining behind struggling to afford scarce food and medicine.

Maduro is expected to take his oath of office on Thursday before the Supreme Court, launching his second, six-year term.

Political opponents and many foreign nations consider it illegitimate, saying his re-election in May was a sham because popular opponents were banned from running and the largest anti-government parties boycotted the race.

Zerpa said that he fled with his family because he didn’t want to play a role legitimizing Maduro’s rule. Relatives staying behind have since been visited by Venezuela’s intelligence police, he said.

“Maduro is incompetent,” Zerpa said. “The country and it public companies are in ruins.”

In far-reaching comments, Zerpa said the military lacks a national conscience for allowing Maduro stay in power, and he accused Supreme Court chief justice Maikel Moreno of having ties with drug traffickers.

Zerpa didn’t provide evidence, holding back sensitive information, but said that he’s ready to cooperate with a sweeping U.S. investigation into corruption and human rights abuses among Venezuela’s well-connected.

Maduro loyalist Moreno said Sunday that Zerpa fled Venezuela to escape allegations of sexual harassment charges lodged by women in his office. Zerpa denied Moreno’s claims.

Zerpa surfaced publicly in Miami on Sunday, describing how he received directions from the influential first lady Cilia Flores on how to rule in politically sensitive cases.

As a newly installed justice, he recounted being summoned to the court and told to sign off on a key ruling without first reviewing its details. It disqualified three elected representatives of Amazonas state from taking their seats in congress following the opposition’s sweep of legislative elections in 2015.

The key ruling cemented Maduro’s power, preventing the opposition from amassing a two-third super majority that would have severely curtailed Maduro’s power.

Zerpa apologized for propping up Maduro’s government as long as he did, saying that he feared being jailed as a dissident where his life would be put at risk.

“I will not be able to return to Venezuela,” Zerpa said. “I am a dead man.”

Zerpa is among the top Venezuelan officials who have been sanctioned by Canada, but he has not been targeted by U.S. authorities, who accuse dozens in Maduro’s administration of using their power for personal gain.

Pressure has been mounting against Maduro internationally and from his political opponents still inside Venezuela.

A dozen Latin American governments and Canada delivered a blistering rebuke Friday, rejecting the legitimacy of Maduro’s second term and urging him to hand over power as the only path to restoring democracy.

The opposition-led congress on Saturday opened its session for the year vowing to battle against Maduro’s socialist administration.

Maduro says he intends to take the oath despite his critics and press ahead with the socialist revolution, promising a turnaround of the failing economy.

“The revolution is stronger today than ever, more experienced than ever, to defend the sovereignty of the country,” he said. “Venezuelans have the opportunity to enjoy 2019 as a year of prosperity and progress.”

Opposition lawmaker Julio Borges, who lives in exile fearing for his safety, sent a letter Monday to the leaders of Latin American nations. He urged Mexico and Spain to join the broad effort to help return Venezuela to democratic rule.

“The inhuman arrogance of this dictatorship led by Nicolas Maduro personally challenges the heads of state of the region,” Borges said. “It’s not fair that a whole country should perish to satisfy one man’s lust for power.”

(Nikkei) Trump and Xi eye next summit as trade war roils markets

(Nikkei) US-China officials meet Monday in Beijing to flesh out compromises

A police officer rolls back a fence in front of the Great Hall of the People in Beijing, China. A U.S. government delegation arrives on Monday for trade talks.   © Reuters

WASHINGTON/BEIJING — U.S. President Donald Trump and Chinese President Xi Jinping are weighing the possibility of another face-to-face meeting in the first half of 2019, sources say, if progress can be made in the trade talks that begin Monday in Beijing.

The talks come after a turbulent first week of the year, which saw stock markets across the world fall sharply in response to weak economic data, but also recover in some markets on hints of positive news. Both Trump and Xi are concerned about the trade war’s impact on their economies and will be looking for a way to break the impasse.

“The China talks are going very well,” Trump told reporters on Sunday at the White House, when asked about the upcoming talks in Beijing. “I really believe they want to make a deal,” he said, noting that the weakness in China’s economy “gives them a great incentive to negotiate.”

Monday’s talks will be the first direct negotiations between the two sides on trade since Trump and Xi met for dinner in Argentina on Dec. 1. The U.S. delegation will include Deputy U.S. Trade Representative Jeffrey Gerrish and David Malpass, undersecretary for international affairs at the Treasury Department.

China offered to import an additional $1.2 trillion worth of American products at the Trump-Xi dinner last month. The agenda for Monday’s meeting will include deciding what products China will import more of.

If progress is made in the talks, China will send Vice Premier Liu He to the U.S. later this month for more in-depth discussion of issues that the two sides have been far apart on, such as intellectual property, according to sources. The two countries have started coordinating another summit in the event that they make some headway, which will involve Xi visiting the U.S. as early as the first half of this year. 

The South China Morning Post reported that Trump may meet with Chinese Vice President Wang Qishan at the annual World Economic Forum in Davos, Switzerland, later this month. The Chinese side is said to be seeking a solution to the bruising trade war through direct talks with Trump, given the U.S. president’s fondness for negotiating deals.

The two leaders called a cease-fire last month, agreeing to hold off on imposing more tariffs for 90 days while they negotiate a deal. The U.S. said that it will raise its 10% tariff on $200 billion worth of Chinese products to 25% if a deal is not reached by March 1. A further escalation of the trade war could put downward pressure on global capital markets, which have recently entered a correction.

Both Trump and Xi have started to become wary of the economic impact of the trade dispute at home. Trump, who faces re-election in the autumn of 2020, is increasingly frustrated over the recent decline in stock prices and has instructed Treasury Secretary Steven Mnuchin and others to address that issue, according to a Treasury Department official. With business confidence among U.S. manufacturers having worsened by the biggest margin in about a decade in December, Mnuchin and other doves in the administration would like to ease concerns over the economy by putting the trade war on hold.

The Xi administration naturally wishes to avoid the additional U.S. tariffs. Business sentiment among Chinese manufacturers has plunged over concern that exports to the U.S. will drop, leading to pressure to lay off workers. The government is working hard to dispel the concerns of companies and investors, with a Commerce Ministry spokesperson noting that negotiators from both sides have been in close contact even over the Christmas holidays.

However, China hard-liners in the Trump administration, including U.S. Trade Representative Robert Lighthizer and trade adviser Peter Navarro, are pressing for a major change in China’s trade and investment rules, including ending industrial subsidies and forced technology transfers. The Chinese government is supporting the cultivation of advanced technologies that could have military applications, such as fifth-generation wireless technologies, artificial intelligence and self-driving automobiles. Many American officials are deeply distrustful of Beijing, arguing that China has stolen U.S. technologies through industrial espionage, cyberattacks and other means.

Beijing has pressed ahead with the “Made in China 2025” initiative to nurture high-tech industries with huge subsidies. Some trade negotiators are optimistic based on the view that China will concede, including by revising that initiative, but hard-liners within the Trump administration are against a simple compromise, arguing that a framework for verifying improvements in China is necessary.

(BBG) Market Swoon Raises Stakes for U.S.-China Trade Talks Next Week

(BBG)

  •  Market confidence ‘hanging by a thread’: China cabinet adviser
  •  Mid-level negotiations set to begin in Beijing on Monday

Falling markets and increased warning signs in the world’s biggest economies are adding pressure on U.S. and Chinese negotiators to make progress on a trade deal during two days of talks in Beijing next week.

Deputy U.S. Trade Representative Jeffrey Gerrish will lead a delegation to meet Chinese counterparts starting Monday, China’s commerce ministry said in a statement. It will be the first time the two sides have met formally since Donald Trump and Xi Jinping agreed to a 90-day truce in Argentina last month.

News of the meeting helped boost Chinese stocks on Friday, as investors bet on easing tensions following a slew of bad news. After the market closed, China’s central bank acted to release money into the economy to support growth, cutting the amount of cash reserves lenders must hold by 1 percentage point.

With the trade war now starting to hit global stock prices and the pace of world economic expansion, both Trump and Xi have an incentive to strike a deal.

The S&P 500 Index dropped 2.5 percent on Thursday, while Apple Inc. shares plunged the most since 2013 after reporting it would miss a quarterly sales forecast because of slowing iPhone sales, especially in China. Chinese data this week also showed a worsening picture, with a manufacturing gauge signaling contraction for the first time since mid-2017. The Shanghai Composite Index hit a four-year low earlier this week.

“Market confidence and growth in 2019 is hanging by a thread and the trade negotiators are shouldering big hopes for a truce,” said Wang Huiyao, an adviser to China’s State Council and also founder for the Center for China and Globalization, a Beijing-based think tank. “Companies, the stock market and the real economy from the two countries are desperate for any signs of confidence.”

The talks next week will involve mid-level officials and be more technical in nature, dealing with non-tariff measures, intellectual property, agriculture and industrial purchases, two people familiar with the matter said. USTR Robert Lighthizer is expected to meet with Chinese Vice Premier Liu He, President Xi’s top economic adviser, later this month, one of the people said.

Robert Lighthizer, left, and Liu He.Photographers: Andrew Harrer/Bloomberg, Qilai Shen/Bloomberg

“Given the market sensitivities, both sides will likely want to convey a sense of progress coming out of this round,” said Michael Hirson, Asia director at Eurasia Group and a former U.S. Treasury Department official. “An important indicator of real progress will be whether they announce a substantive round of negotiations soon at a more senior level.”

The Trump administration has sought to portray recent market declines as a positive. White House economic adviser Kevin Hassett told reporters that lower sales for U.S. companies in China indicates economic pain that will give Trump leverage, saying it “puts a lot of pressure on China to make a deal.”

But other U.S. administration officials quietly concede that falling stock prices may have weakened their hand, even as they grow frustrated that Trump’s trade policy is being blamed for the slump. One person familiar with the White House internal discussions said the market moves were being used by advocates of a deal with China to press their case with the president.

Read More: Trump Trade War Advantage Slips as Apple Cites Slowing China

Where Trump will eventually come down remains unclear, the person added. But hawks in the administration continue to make the case that the long-term threat posed by China to the U.S. economy makes the fight worth having and that any meaningful deal could take years to negotiate.

After meeting Xi on Dec. 1, Trump agreed to put on hold a scheduled increase in tariffs on $200 billion in annual imports from China for 90 days while the negotiations take place. In response, China temporarily lowered tariffs on U.S. car imports for the same period.

Trump reported “big progress” in trade negotiations after a phone call with Xi last week. Beijing also announced a third round of tariff cuts, lowering import taxes on more than 700 goods from Jan. 1 as part of its efforts to open up the economy and lower costs for domestic consumers.

Still, the gap between the two sides remains large. While China has expressed an openness to a deal that involves increased purchases of American goods, Xi’s government has resisted U.S. demands for it to take real action on technology transfer and curtail state support for strategic industries like robotics, electric cars, computer chips and artificial intelligence.

Read More: China Heads Into Trade Talks Bracing for More U.S. Demands

For a truce to last China will have to implement extensive structural reforms, Citigroup Inc.’s London-based strategist Mark Schofield said in a note last month. Even if initially successful, uncertainty will remain and additional U.S. trade and investment restrictions are likely, he said.

“Rather than reflecting purely economic issues, Sino-U.S. trade tensions reflect strategic conflicts,” he said. “This renders such hostilities difficult to resolve and sets this conflict apart from other recent U.S. trade disagreements.”

People familiar with the talks next week said the U.S. delegation in Beijing would include officials such as Gregg Doud, USTR’s chief agricultural negotiator; David Malpass, the Treasury Department’s under secretary for international affairs; and Merry Lin, director for global and Asia economics at the National Security Council.

A realistic deal would include big Chinese purchases of U.S. agricultural and energy products, greater market access in areas like autos and financial services, and Chinese action on intellectual property, according to David Dollar, a former U.S. Treasury attache in Beijing and now a senior fellow at the Brookings Institution in Washington.

“Recent developments like the U.S. stock market correction and Apple’s declining sales hammer home the message that a trade war will be damaging to the U.S. economy,” he said. “And that it is in the administration’s interest to reach a practical compromise.”

(Reuters) Exclusive: White House considers new year executive order to bar Huawei, ZTE purchases

(Reuters) WASHINGTON (Reuters) – President Donald Trump is considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China’s Huawei and ZTE, three sources familiar with the situation told Reuters.

It would be the latest step by the Trump administration to cut Huawei Technologies Cos Ltd [HWT.UL] and ZTE Corp, two of China’s biggest network equipment companies, out of the U.S. market. The United States alleges that the two companies work at the behest of the Chinese government and that their equipment could be used to spy on Americans.

The executive order, which has been under consideration for more than eight months, could be issued as early as January and would direct the Commerce Department to block U.S. companies from buying equipment from foreign telecommunications makers that pose significant national security risks, sources from the telecoms industry and the administration said.

While the order is unlikely to name Huawei or ZTE, a source said it is expected that Commerce officials would interpret it as authorization to limit the spread of equipment made by the two companies. The sources said the text for the order has not been finalized.

The executive order would invoke the International Emergency Economic Powers Act, a law that gives the president the authority to regulate commerce in response to a national emergency that threatens the United States.

The issue has new urgency as U.S. wireless carriers look for partners as they prepare to adopt next generation 5G wireless networks.

The order follows the passage of a defense policy bill in August that barred the U.S. government itself from using Huawei and ZTE equipment.

China’s Foreign Ministry Spokeswoman Hua Chunying said that she did not want to comment on the order as it had not been officially confirmed.FILE PHOTO: A man walks past a sign board of Huawei at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China June 14, 2018. REUTERS/Aly Song

“It’s best to let facts speak for themselves when it comes to security problems,” Hua said.

“Some countries have, without any evidence, and making use of national security, tacitly assumed crimes to politicize, and even obstruct and restrict, normal technology exchange activities,” she added.

“This in reality is undoubtedly shutting oneself off, rather than being the door to openness, progress and fairness.”

Huawei and ZTE did not return requests for comment. Both in the past have denied allegations their products are used to spy. The White House also did not return a request for comment.

The Wall Street Journal first reported in early May that the order was under consideration, but it was never issued.

HIT TO RURAL NETWORKS

Rural operators in the United States are among the biggest customers of Huawei and ZTE, and fear the executive order would also require them to rip out existing Chinese-made equipment without compensation. Industry officials are divided on whether the administration could legally compel operators to do that.

While the big U.S. wireless companies have cut ties with Huawei in particular, small rural carriers have relied on Huawei and ZTE switches and other equipment because they tend to be less expensive.

The company is so central to small carriers that William Levy, vice president for sales of Huawei Tech USA, is on the board of directors of the Rural Wireless Association.

The RWA represents carriers with fewer than 100,000 subscribers. It estimates that 25 percent of its members had Huawei or ZTE equipment in their networks, it said in a filing to the Federal Communications Commission earlier this month.FILE PHOTO – The logo of China’s ZTE Corp is seen on the building of ZTE Beijing research and development center in Beijing, China June 13, 2018. REUTERS/Jason Lee

The RWA is concerned that an executive order could force its members to remove ZTE and Huawei equipment and also bar future purchases, said Caressa Bennet, RWA general counsel.

It would cost $800 million to $1 billion for all RWA members to replace their Huawei and ZTE equipment, Bennet said.

Separately, the FCC in April granted initial approval to a regulation that bars giving federal funding to help pay for telecommunication infrastructure to companies that purchase equipment from firms deemed as a threat to U.S. national security, which analysts have said is aimed at Huawei and ZTE.

The FCC is also considering whether to require carriers to remove and replace equipment from firms deemed a national security risk.

In March, FCC Chairman Ajit Pai said “hidden ‘back doors’ to our networks in routers, switches — and virtually any other type of telecommunications equipment – can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more.”

In the December filing, Pine Belt Communications in Alabama estimated it would cost $7 million to $13 million to replace its Chinese-made equipment, while Sagebrush in Montana said replacement would cost $57 million and take two years.

Sagebrush has noted that Huawei products are significantly cheaper. When looking for bids in 2010 for its network, it found the cost of Ericsson equipment to be nearly four times the cost of Huawei.

(SCMP) Thucydides Trap author Graham Allison says China and US must work together and not end up on path that leads to war

(SCMP)

  • Harvard scholar Graham Allison says China’s rising influence sets it at odds with the US’ notion of itself as a superpower and both need to take a step back

The scholar who warned that China and the US could be heading for war said the two powers needed to redefine their relationship with a “new strategic concept”.CHINA AT A GLANCEGet updates direct to your inboxE-mail *By registering you agree to our T&Cs & Privacy Policy

Graham Allison, who said Beijing and Washington could fall into what he called the Thucydides Trap – where a rising power threatens to eclipse a rival and conflict may result – told the South China Morning Post that the two were “in a dangerous period”.

“We need a new strategic concept for the relationship between US and China, because the old idea from an American perspective is that the strategic partnership has collapsed,” said Allison, who was recently in Beijing to attend a forum that fostered exchanges between Chinese and Western academics and policymakers.

“Unless we can find a new strategic concept that is good enough for each, we will continue rifting in this Thucydides dynamic which will be a very dangerous period,” said Allison, a professor at the John F. Kennedy School of Government at Harvard University. “And I think it is a dangerous period now … and it’s likely to get more dangerous if we don’t become more imaginative.”

Still destined for war? What Xi-Trump trade talks didn’t change

Relations between the two powers have been under increasing strain on trade, political and military fronts. While they agreed to a 90-day trade war truce this month, the risk of conflicts remains.

US Deputy Attorney General Rod Rosenstein will announce a China-related national security law enforcement action on Thursday. It is expected to involve criminal charges against hackers linked to the Chinese government.

US Vice-President Mike Pence has accused China of interfering in US domestic politics and warned Beijing that aggression would not be tolerated in the Indo-Pacific region. Military vessels from both nations have had an increasing number of close calls in the disputed South China Sea.

And Beijing is learning to cope with a growing bipartisan consensus in Washington for a tougher China policy.

“The US no longer sees China as strategic partner, but a strategic adversary,” Allison said. “It’s challenging for China. So people are asking themselves, ‘OK, what to do?’ I think the community is actively thinking, but it has not yet come up with anything specific [to do].”

Since Allison popularised the concept of the Thucydides Trap in an essay in 2015, it has sparked debate among political elites in Beijing and Washington.

Now, scholars and officials across the Pacific are looking for a way towards finding a balance between the competing powers.

Book review: Destined for War should scare you

“It needs to be done jointly,” Allison said. “And actually, interestingly, that is what [Chinese President] Xi Jinping hopes. He does not say, ‘I have a blueprint.’ He says, ‘I have a few pointers.’ You can have a new form of new power relations between rivals.”

In 2015, during a visit to the US for meetings with then president Barack Obama, Xi floated the proposal of building a “new model of major-country relations” that was based on principles of “non-conflict, non-confrontation, mutual respect and win-win cooperation”.

But Xi’s proposal was never embraced by the US leader. After Donald Trump took office in 2016, the relations took a further dip and Washington has officially identified China as a rival in both its national security and defence.

Speaking at the PLA’s National Defence University in Beijing last week, Xu Hui, dean of its defence studies college, expressed a similar viewpoint to Allison’s.

“We have been trying hard to define this relationship. But regrettably, we have not been able to reach a conclusion that is accepted by both the Chinese and American sides,” Xu said.This article appeared in the South China Morning Post print edition as: xi, trump w arned of dangerous days ahead

(AFP) US financial regulator warns on no-deal Brexit: report

(AFP) [LONDON] The head of the US Securities and Exchange Commission wants no disruption to financial markets in the event of a no-deal Brexit, the Financial Times reported Tuesday.

“Some period of adjustment would be good,” Jay Clayton told the business daily in an interview, extracts of which were published online.

“The intricacies of our financial system are significant and it’s difficult to identify all the ways in which a decree that something is no longer valid may impact.”

British ministers met Tuesday to intensify plans for leaving the European Union without a deal – a prospect that is becoming more likely as Prime Minister Theresa May plays for time with just 101 days to go until Brexit.

Speaking of a possible no-deal, Mr Clayton told the FT: “If you asked me that nine months ago, I would have said, boy it would surprise me.

“If you’re asking me today… let me put it this way, I think it’s prudent for me to spend time thinking about what that means.”

The newspaper added that Mr Clayton planned to increase the number of SEC workers focused only on Brexit.

AFP

(CNBC) Google to invest $1 billion in new campus in New York City

(CNBC) Google will invest $1 billion in a new campus in New York City, the company announced on Monday.

  • Google will have capacity to more than double its headcount in New York over the next 10 years, CFO Ruth Porat said in a blog post.
  • Apple announced last week it will build a new $1 billion campus in Austin, Texas while Amazon chose Long Island City last month as the location for one of its new headquarters.
 Google's New York office is shown in lower Manhattan on March 5, 2018 in New York City. Published reports say that the tech giant is close to a reaching a $2.4 billion deal to buy the landmark Chelsea Market building.

Google plans to pour more than $1 billion into new Manhattan headquarters  

Google will invest $1 billion in a new campus in New York City, the company announced on Monday.

The new 1.7 million square foot “Google Hudson Square” campus will include two buildings located at 315 and 345 Hudson Street and an office space situated at nearby 550 Washington Street in Manhattan, Google said in a blog post on Monday.

The move will expand Google’s presence near the Hudson River in New York City. Earlier this year, the search giant announced it had purchased shopping and office complex Chelsea Market for $2.4 billion.

Google said the Hudson Square campus will be the main location for its New York-based global business organization. It said the investments in Chelsea and Hudson Square will create capacity to more than double headcount in New York over the next decade. Google currently houses more than 7,000 employees in New York City in a range of teams including Search, Ads, Maps, YouTube and Cloud.

“Our investment in New York is a huge part of our commitment to grow and invest in U.S. facilities, offices and jobs,” Alphabet CFO Ruth Porat said in the blog post.

Google signed lease agreements for the Hudson Street spaces and plans to move into the two buildings by 2020, the company said. It signed a letter of intent for the 550 Washington Street space, where it will move in 2022 once the building is complete.

The news follows Apple‘s announcement last week that it will invest $1 billion in a new campus in Austin, Texas and build new sites in Seattle, San Diego and Culver City, California. Amazon announced last month it will open one of its new headquarters in the Long Island City neighborhood of Queens in New York.

Shares of Google parent company Alphabet opened slightly lower on Monday and have dropped 2 percent year-to-date.

 

(CNBC) Apple to invest $1 billion in new Texas campus

(CNBC)

  • Apple will invest $1 billion in a new campus in Austin, Texas, the company announced on Thursday.
  • The 133-acre campus will be located in North Austin and will accommodate an initial 5,000 employees, with capacity for 15,000 employees in total.
  • Apple also announced plans to open new sites in Seattle, San Diego and Culver City, California over the next three years.

Apple to invest $1B in new Austin campus

Apple to invest $1B in new Austin campus  

Apple will invest $1 billion in a new campus in Austin, Texas, the company announced on Thursday.

The 133-acre campus will be located in North Austin and will accommodate an initial 5,000 employees, with capacity for 15,000 employees in total. The new campus will be located less than one mile from Apple’s existing Austin facilities and will house a range of jobs in engineering, R&D, operations, finance, sales and customer support.

Apple said the expansion will make it the largest private employer in Austin.

“Apple is proud to bring new investment, jobs and opportunity to cities across the United States and to significantly deepen our quarter-century partnership with the city and people of Austin,” Apple CEO Tim Cook said in a press release.

Texas Governor Greg Abbott said in a statement Apple’s decision to expand in Texas “is a testament to the high-quality workforce and unmatched economic environment that Texas offers.”

On Thursday, Apple also announced plans to open new sites and add over 1,000 employees in Seattle, San Diego and Culver City over the next three years. It said it will also expand its existing operations in Pittsburgh, New York, Boulder, Boston and Portland, Oregon.

Loup Ventures founder Gene Munster says Apple's set to double. Here's why

Loup Ventures founder Gene Munster says Apple’s set to double. Here’s why  

Apple also announced that it has added 6,000 jobs to its U.S workforce in 2018 and is on track to create 20,000 jobs across the country by 2023.

Apple plans to invest $10 billion in U.S. data centers over the next five years, including $4.5 billion this year and next. On Thursday, the company said “preparations are underway” for its newest data center in Waukee, Iowa. It is also expanding its data centers in North Carolina, Arizona and Nevada.

President Donald Trump has attacked Apple for producing many of its devices outside of the United States. In September, he warned Apple it could face more tariffs, ordering the company to “make your products in the United States instead of China.”

Donald J. Trump

@realDonaldTrump

Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting!

55.3K people are talking about this

Apple shares have been under pressure in recent months amid worries about demand for its new iPhones. The tech titan has also been in the crosshairs of the trade war between the U.S. and China. President Trump threatened to place a 10 percent tariff on iPhones and laptops made in China last month. Apple’s stock has tumbled more than 20 percent over the past three months.

(Barron’s) 2019 Outlook: U.S. Stocks Could Rally About 10%

(Barron’s)

2019 Outlook: U.S. Stocks Could Rally About 10%
LETTERING BY ALEX TROCHUT
Text size

Investors will soon bid good riddance to 2018, a stressful year marked by two stock market corrections, rising interest rates, an ugly trade battle, and growing fears that a bear market lies just around the corner.

Yet as U.S. stocks stumble toward what could be their first yearly loss since 2015, next year is looking rather sunny. So say the 10 market strategists Barron’s consulted this month, all of whom have 2019 targets for the S&P 500 index that are higher than the benchmark’s recent price level of 2600. Based on the group’s mean prediction, the S&P 500 will end next year at 2975, indicating a gain of more than 14%.

The strategists, who mostly hail from investment banks and asset-management firms, offered up individual S&P targets ranging from 2750 to 3100. The stock market is down almost 3% this year, as measured by the S&P 500—a disappointing showing in any year, but especially so after last year’s nearly 20% gain.

To some degree, 2017’s rally discounted this year’s robust profit growth, likely to total over 20%. Could 2018’s downdraft signal next year’s earnings moderation? Our prognosticators expect S&P 500 profits to rise just 5% to 6% in 2019, to $172 per share, partly because companies will be losing the boost from this year’s reduction in federal taxes.

Industry analysts, who typically have loftier forecasts than “top-down” strategists, anticipate per share profit growth of 9% next year.

Winners and SinnersTech stocks couldn’t sustain last year’s double-digit gains, and America’s tariff spat withChina hurt industrials and materials. But consolidation helped health-care stocks to thetop of the pack.Source: Bloomberg*Through 12/12
YTD Change*Health CareUtilitiesConsumer DiscretionaryInformation TechnologyReal EstateConsumer StaplesIndustrialsCommunication ServicesFinancialsEnergyMaterials-%15-%10-%5%0%5%10-%20%15

The strategists are guardedly optimistic that the U.S. and China will reach some sort of trade deal early in 2019, ending nearly a year of friction that has weighed on stocks. Corporations and share prices also could benefit from healthy consumer demand and decent capital investment.

The market’s tumult this year has left stocks trading at about 15 times the next 12 months’ expected earnings, in line with the long-term average. That’s well below the S&P 500’s price/earnings ratio of more than 18 on Sept. 20, when the index hit an all-time high of 2930.75.

Rising interest rates get some of the blame for trimming stocks’ valuation; the Federal Reserve has raised the federal-funds rate—the overnight interbank lending rate—three times in 2018, most recently in September, to a range of 2% to 2.25%. The Fed is expected to hike rates again on Wednesday, to 2.25%-2.50%. Concerns about multiple rate increases thereafter have receded, however, since Fed Chairman Jerome Powell signaled recently that rates are “just below” the neutral rate that doesn’t influence economic activity.

More market volatility could ensue next year as the U.S. and China resume arm-wrestling over tariffs. Investors are increasingly anxious about a potential recession and bear market, as well, given that the current U.S. expansion and bull market are already a decade old.

A Gloomy Year for Investors

Stock indexes look set to end the year fairly flat, despite a sharp summer rally. Volatility soared this year–not exactly a plus–and Bitcoin bombed, confirming the skeptics.

*Change in percentage points

Source: Bloomberg

And say goodbye to “TINA”—the view that “there is no alternative” to stocks. Other asset classes, including bonds, commodities, and gold, also have performed poorly this year. For the first time in a while, cash appears to be a viable competitor, as short-term U.S. Treasuries yield about 2.4%, compared with a 2% yield on the S&P 500. Treasury yields are likely to rise further if the Fed continues to hike rates.

This year has been unusual in many ways. “You had a bear market in the P/E multiple, but a bull market in earnings,” says Ed Yardeni, president of Yardeni Research, one of four strategists with an S&P 500 index target of 3100. The U.S. economy also grew nicely, he notes, with gross domestic product climbing 4.2% in the second quarter and 3.5% in the third.

Our market oracles got one important thing right about 2018 when we consulted them a year ago: They predicted that the federal-funds rate would end the year around 2.25%. They also got a few things wrong. For example, they expected the S&P 500 to rise 7% this year. That now seems highly unlikely, although stocks were up nearly 10% for the year at the market’s September high. Nor did the strategists anticipate renewed volatility or any correction in the index, defined as a drop of 10% from the high. Overall, they predicted that financial stocks would do well in 2018 and that utilities would underperform, but the opposite has happened.

America, the Beautiful?

A flat year for U.S. stocks doesn’t look so painful in light of the selloffs in other markets, in particular China, which was stung by the imposition of tariffs on U.S. imports.

*YTD through 12/12 in U.S. dollars

Source: Bloomberg

One big surprise this year has been that Treasury yields have remained relatively low. (Bond yields move inversely to prices.) The 10-year Treasury yielded 2.4% at the end of last year. It yields 2.9% now, although it spiked above 3.2% in November. The decline since then reflects concerns about an economic slowdown and surprisingly soft inflation numbers. Our forecasters expect 10-year Treasuries to yield 3.1% next year.

The strategists look for U.S. GDP growth of 2.5% in 2019. While that’s below recent quarters’ level, it’s above the rate in 2016 and 2017.

Stephen Auth, chief investment officer for equities at Federated Investors, predicts that the economy will expand by an annualized 2.5%. “Think of it as a slowdown on the Garden State Parkway, not a crack-up,” he says.

Auth, who has a 2019 S&P 500 target of 3100, has been bullish on stocks for many years. He believes that a number of headwinds will dissipate in 2019, and that the U.S. trade spat with China will be resolved in the first quarter. He also maintains that oil prices probably have found a floor around $50 a barrel. There should be more certainty about the Fed’s dovish interest-rate path, as well. All of these developments will allow the economy’s underlying strength to emerge in the second half, he adds, and S&P 500 earnings will reach $170, up from an estimated $162.32 this year.

Tobias Levkovich, chief U.S. equity strategist at Citigroup’s Citi Research, cites other reasons for stocks to rebound. Industrial activity will be rising, he says, and consumers are generally flush, given low unemployment and wage increases. Sentiment readings and Treasury yields are also favorable, according to Levkovich, who has a 3100 target for the S&P 500.

Edward Yardeni

Yardeni Research

Mike Wilson

Morgan Stanley

Savita Subramanian

BofA Merrill Lynch

Some strategists, including Rob Sharps, head of investments at T. Rowe Price Group , and Mike Wilson, chief U.S. equity strategist at Morgan Stanley, are less sanguine about the market’s prospects and the economy.

Sharps, whose 2019 target is 2850, describes a “middling environment with meaningful challenges” for stocks, as U.S. growth moderates. Sustainable economic gains above recent levels depend on productivity improvements, he says. Governments around the world have a lot of debt, and demographics in Europe and China could pose difficulties for growth, he adds.

Wilson’s base-case S&P 500 target of 2750 is the strategist group’s lowest. He forecasts just 3% to 4% growth in corporate earnings for 2019, with an “elevated risk of an outright earnings recession”—two quarters of negative comparisons for S&P 500 profits. He notes that more than half of this year’s profit gain owes to tax cuts and stock buybacks, which reduce share count and boost earnings per share.

The economy might undergo a modest cyclical correction in 2019, but “what if companies react and start firing people?” he asks. In other words, investors could be underestimating the potential severity of the economic deceleration.

The Federal Reserve has played a starring role in this year’s stock market drama by pushing up the federal-funds rate, which influences other interest rates. The fed-funds rate bottomed near zero after the financial crisis, as the U.S. central bank flooded the financial system with money. But the Fed has been reversing course gradually since December 2015, and initially was expected to raise rates up to four times next year.

Many of our experts and others, however, now see just one or two increases in 2019—an acknowledgment that economic growth might be slowing, and that inflation isn’t much of a threat. If the fed-funds rate rises further—probably to 3% or so—that would boost short-term Treasury yields and help make cash an even more attractive investment option.

Powell’s comment that interest rates are approaching neutral, which signaled a coming end to increases, sent stock prices sharply higher for several weeks this fall, but the market has since given back most of those gains.

Saira Malik, head of global equities at Nuveen, the investment unit of TIAA, sees tariffs and higher rates restraining the economy. “The Fed could go too far,” she says, and overshoot the neutral rate by tightening monetary policy too much. Malik’s 2019 S&P target is 2840.

Excessive tightening, via higher interest rates, would squeeze corporate profit margins and the economy, she warns. If investors sense a recession is coming, the market’s P/E multiple could shrink to less than 15, Malik adds.

David Kostin, chief U.S. equity strategist at Goldman Sachs, has a base-case forecast for the S&P 500 of 3000 in 2019. His downside estimate, with a 30% probability, is 2500, roughly 4% below the market’s recent level. The downside could materialize, he says, if investors grow increasingly concerned about a recession in 2020. In that case, earnings estimates could be slashed, and the P/E could contract to 14.

Savita Subramanian, head of equity and quantitative strategy at Bank of America Merrill Lynch, has a 2900 target for the S&P. She urges investors not to overlook the potential attraction of cash, which yielded next to nothing for much of the past decade.

Cash yields today are higher than dividend yields for about 60% of the companies in the S&P 500. “You will get close to 3% at some point for cash, with zero volatility,” says Kostin, another fan.

Rob Sharps

T. Rowe Price

John Praveen

PGIM

Saira Malik

Nuveen

What could go wrong for the bull market—and market forecasters? Perhaps the biggest near-term risk is a potential breakdown in trade talks between the U.S. and China. Failure to reach an agreement on trade probably would mean that the Trump administration would move ahead with raising tariffs to 25% from 10% on $200 billion of Chinese goods.

If no deal is reached, “it could be a big challenge and an intractable issue for the market,” says John Praveen, portfolio manager at QMA, a unit of PGIM, the asset-management business of Prudential Financial . Praveen has a 2019 S&P 500 target of 3000.

The bigger issue is China’s theft of intellectual-property rights. “If you are a big U.S. tech company working in China, you might have to give away technology, or it’s stolen,” Praveen says.

The past week saw a “de-escalation” of trade and interest-rate concerns, notes Dubravko Lakos-Bujas, J.P. Morgan’s chief U.S. equity strategist, whose 2019 market target is 3100. Talk of a trade war “was becoming increasingly risky for the Trump administration,” he says, noting the market’s negative response to rising trade friction.

If the economic cycle remains intact, Lakos-Bujas thinks that stocks will be rerated higher. He estimates that S&P 500 companies will earn $178 next year. Applying a multiple of 17.4 gets him to a target price of 3100.

Like many other strategists, J.P. Morgan’s resident seer favors technology stocks. The sector has corrected after a strong first half of the year, and the space no longer is “crowded.” The median forward P/E for tech outfits is about 16.7.

Among technology issues, Federated’s Auth is a fan of semiconductor chip maker Applied Materials (ticker: AMAT), whose price fallen almost 50% from its high. The stock looks as if is already pricing in a recession, he says.

Auth also likes the outlook for Caterpillar (CAT), whose shares have lost about 20% this year. Cat has a strong balance sheet, and orders are still holding up, he notes, even if the market is pricing in a “cliff drop” on trade concerns.

Tobias Levkovich

Citi Research

Dubravko Lakos-Bujas

J.P. Morgan

David Kostin

Goldman Sachs

Steve Auth

Federated Investors

Utility stocks fetch 19 times expected earnings, although the sector offers much less growth than tech. Still, utilities are favored by several strategists, including Sharps of T. Rowe Price, and Wilson of Morgan Stanley. Both likeNextEra (NEE), which has a good rate base in Florida and a rapidly growing national renewable-energy business.

Consumer-discretionary stocks are least liked by our crowd. Consumers could pull back on spending, due to concerns over tariffs and the impact of a slower housing market, Nuveen’s Malik observes. Within the sector, bricks-and-mortar-oriented retailers face an ongoing challenge, and will have to continue spending heavily to compete online.

Malik likes stocks that have “their own levers” for growth and don’t depend heavily on the broader economy. PayPal Holdings (PYPL) is a good example, she says, because it’s a global player entrenched in the payments business, much like Visa (V) and Mastercard (MA). E-commerce is growing 10% a year in the U.S. and 20% in the rest of the world, a structural tailwind for PayPal, she says.

There were many highs and lows in 2018, but short of a miraculous rally in the year’s remaining 10 trading sessions, the stock market’s returns this year could resemble a lump of coal. The clock starts afresh on Jan. 1, however. If just a few things go right, 2019 could be a happier year.

(NR) Feds Discover Largest Oil, Natural-Gas Reserve in History

(NR)

Drill pipe is seen on a drilling site in the Permian Basin oil and natural gas production area near Wink, Texas, August 22, 2018.(Nick Oxford/REUTERS )

The federal government has discovered a massive new reserve of oil and natural gas in Texas and New Mexico that it says has the “largest continuous oil and gas resource potential ever assessed.”

“Christmas came a few weeks early this year,” Secretary of the Interior Ryan Zinke said of the new reserve, which is believed to have enough energy to fuel the U.S. for nearly seven years.

USGS Energy Program

@usgsenergy

Our latest resource assessment-Texas & New Mexico’s Delaware Basin: https://go.usa.gov/xPz5a  We estimate 46.3 billion barrels of & 281 trillion cubic feet of . That’s our largest continuous assessment ever!

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In all, the new reserve is said to contain 281 trillion cubic feet of natural gas, 46.3 billion barrels of oil, and 20 billion barrels of natural-gas liquids, the Interior Department’s U.S. Geological Survey said.

Almost a third of the U.S.’s total crude-oil production comes from the Permian Basin where the reserve was found, making it the biggest shale-oil-producing region in the U.S.

“American strength flows from American energy, and as it turns out, we have a lot of American energy,” said Zinke. “Before this assessment came down, I was bullish on oil and gas production in the United States. Now, I know for a fact that American energy dominance is within our grasp as a nation.”

(ZH) This is What The “Trade” War With China Is Really All About

(ZH) Forget soybeans, auto imports, iPhones, crude oil, and cheap Chinese gadgets. Also forget tariffs, duties, and subsidies. Even forget weapons.

The real reason behind the US-China “trade” war has little to do with actual trade, and everything to do with what China’s president, Xi Jinping, said when he visited a memory chip plant in the city of Wuhan earlier this year. In a white lab coat, he made an unexpectedly sentimental remark, comparing a computer chip to a human heart: “No matter how big a person is, he or she can never be strong without a sound and strong heart”.

What is really at the basis of the ongoing civilizational conflict between the US and China, a feud which many say has gradually devolved into a new cold war if few top politicians are willing to call it for what it is, are China’s ambitions to be a leader in next-generation technology, such as artificial intelligence, which rest on whether or not it can design and manufacture cutting-edge chips, and is why Xi has pledged at least $150 billion to build up the sector.

But, as the FT notes, China’s plan has alarmed the US, and chips, or semiconductorshave become the central battlefield in the trade war between the two countries. And it is a battle in which China has a very visible Achilles heel.

Even with the so-called truce between the two sides signed last weekend, and which promptly unraveled after the Huawei CFO’s arrest was unveiled last week, Washington plans to ramp up export controls next year on so-called foundational technologies — those that can enable development in a broad range of sectors — and the equipment for manufacturing chips is one of the key target areas under discussion.

This is a concern for China as the $412 billion global semiconductor industry rests on the shoulders of just six equipment companies, with three of them based in the US. Together, these companies make nearly all of the crucial hardware and software tools needed to manufacture chips, meaning an American export ban would choke off China’s access to the basic tools needed to make their latest chip designs.

“You cannot build a semiconductor facility without using the big major equipment companies, none of which are Chinese,” said Brett Simpson, the founder of Arete Research, an equity research group. “If you fight a war with no guns you’re going to lose. And they don’t have the guns.”

To observe China’s reliance on foreign products, look no further than the over $300 billion in semiconductor equipment China has imported over just the past 12 months.

Chart: @brad_setser

To be sure, under Beijing’s auspices, Chinese chip companies have made enormous gains in semiconductor design as well as chip testing and packaging, in an attempt to catch up to the US. Several private and state-owned Chinese companies — Intel-backed Tsinghua Unigroup, Cambricon Technologies and Huawei’s HiSilicon among them — have already begun to venture into designing the leading edge chips capable of AI applications.

But, as the FT, notes, the real difficulty is not in designing the chips, but in making them: “From a design perspective, Chinese companies are at least on par with anyone else in the world,” said Risto Puhakka, president of VSLI Research. “Where they have a challenge is if they decide to make a very cutting-edge chip.”

The country’s recent scramble, amid the push for China 2025 strategic plan, to become technologically self-sufficient in chip production is clearly visible in the next chart, showing the big spike in recent imports of equipment for semiconductor manufacturing.

Chart: @brad_setser

Still, as Chinese semiconductor plants try to catch up, they have few choices when outfitting or upgrading their chip foundries. The reason: only a few equipment suppliers remain after a decade of consolidation.

Foremost among them is the Netherland’s ASML, which makes the photolithography machines that print and etch designs on to silicon wafers. It is the only supplier of the extreme ultra violet (EUV) lithography machines needed to make a 7-nanometre processor, the industry’s current gold standard.

Over in the US, Lam Research and Applied Materials as well as Japanese company Tokyo Electron dominate the market for equipment that can deposit billions of transistors and other active components on to a single chip. Another US company, KLA Tencor, sells much of the technology used in testing and monitoring the quality of chip production.

It is China’s reliance on these companies, more than any down swing in the stock market, that has made it vulnerable.

“Firms like Applied Materials, Lam Research and KLA-Tencor made 10 to 20 per cent of their revenues in China in 2017, a share which is expected to rise in 2018,” said Dan Wang, an analyst at Beijing research group Gavekal Dragonomics. “China is a large and growing market for them, and these companies don’t want export controls that are too restrictive.”

What would happen if the trade war escalates to prevent China from catching up with the US technologically?

Under current laws, an export ban on semiconductor equipment would mean both foreign companies, such as Samsung and Intel with foundries located in China, as well as wholly owned Chinese foundries would be unable to buy American equipment, though foreign companies are likely to be able to apply for waivers.

“One of the ideas of export controls is to prevent the release of the tech to certain foreign nationals from China: as an example, that could mean to a Chinese national wherever they are located, or to anyone within the physical geographic region of China,” said Anthony Capobianco, a partner at Hogan Lovells in Washington DC.

A US ban would also impact non-American chip equipment suppliers, because of the integration of what is a highly specialised supply chain: “ASML cannot do without Applied Materials and the other way around. If you take even one out of the value chain, that may hamper Chinese fabs,” said a former ASML executive.

Puhakka of VSLI Research said: “[These equipment suppliers] have the research and development, the trade secrets in metallurgy, the recipes: all of that knowledge base is 40 years old.” said VSLI Research’s Mr Puhakka.

“This is not about money. This about the knowledge base . . . and that knowledge base is not moving” he added, delineating China’s core dilemma.

* * *

Still, slowly China is catching up and some mainland companies are starting to produce their own chip-making equipment. At the head of the pack are Shanghai-based AMEC, which makes both wafer fabrication and packaging equipment for 28nm chips, Shanghai Micro Electronics Equipment, which is creating chip-etching lithography machines, and CETC, the state defence company, which announced a 28nm ion implanting device this August.

But what matters in the global technological arms race is that no Chinese company is close to being able to offer equipment that can produce the current target size of 7nm chips. SMEE’s machines can only match what ASML was able to do about 15 years ago. Today’s most basic smartphones require chips that are between 14nm and 16nm in size, but the smallest chips offered by China’s biggest manufacturer, SMIC, is 28nm.

And if the US cuts them off from purchasing foreign equipment, Chinese plants will also miss out on accumulating operational experience. “Basically, it’s a double whammy,” said Mr Simpson from Arete Research.

“You’ve got two big bottlenecks. You need to get the equipment into your fabs [plants] and secondly, you’ve got to know how it runs and the intellectual property process to make use of that equipment,” he explained.

Of course, being behind doesn’t mean China would give up, and if faced with US export controls, Chinese-owned plants could simply continue producing lower-end semiconductors, such as analogue chips, used in everything from industrial robots to electric vehicles.

However, out of reach in the medium term would be making the most advanced chips able to support AI functions or 5G telecommunication networks. Leading edge chips are also where sales and margins are highest. TSMC expects revenue from sales of advanced chips 28nm and smaller to rise to as much as 70% by this year, up from 42% only four years ago.

The risk is that an overly aggressive posture would backfire, and force China to become entirely self sufficient, because in the long term, analysts said, a US export ban would likely cement Beijing’s resolve to cultivate a wholly home grown semiconductor industry along every step, from design to fabrication to packaging.

“In the short term, US export controls can seriously set back Chinese progress on semiconductors. In the longer term, it’s hard to say if China will be permanently set back,” said Gavekal’s Wang, noting that fear of US export controls helped marshal the resources that shaped Japan’s most dominant semiconductor equipment players.

“The more tightly the US controls these goods, the more important it becomes for China to make these goods itself.”

At the end of the day, however, it is a simple question of money, because if China is willing to throw enough money at the problem, the solution will come. And as we showed back in May, China has every intention of not only matching, but surpassing total US military spending – springing the biggest Thucydides Trap ever witnessed in civilization – and in light of the importance of an autonomous, self-reliant semiconductor industry, one can argue that much of this spending will go toward beating the US where it truly matters…

… in the technological arms race.

Because remember what Bank of America’s Michael Hartnett said half a year ago: for all the talk of the escalating confrontation between the US and China, the “trade war” of 2018 should be recognized for what it really is: “the first stage of a new arms race between the US & China to reach national superiority in technology over the longer-term via Quantum Computing, Artificial  Intelligence, Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security.”

Which is why, at this point delaying Beijing may be the best option for the US which is slowly but surely losing its one insurmountable technological advantage. But while that may win the short-term battle, will it merely lead to an even faster victory for China in the war, first trade and eventually, real.

(JTA) Alexandria Ocasio-Cortez says she is descended from Sephardic Jews

(JTA

(JTA) — Rep.-elect Alexandria Ocasio-Cortez announced at a Hanukkah candle-lighting ceremony that she is descended from Sephardic Jews who fled to Puerto Rico during the Spanish Inquisition.

Ocasio-Cortez, a progressive Democrat, broke the news to a crowd gathered Sunday night at the Jackson Heights Jewish Center in Queens. It was a party organized by the group Jews for Racial and Economic Justice.

“One of the things that we discovered about ourselves is that a very, very long time ago, generations and generations ago, my family consisted of Sephardic Jews,” she said, according to a video of the event posted on Twitter by Taly Krupkin, a Haaretz reporter. “The culture in Puerto Rico was that people would open their closets and there would be a small menorah inside.”

She said that her knowledge of her ancestry came from “doing a lot of family trees in the last couple of years.”

“I think what it goes to show is that so many of our destinies are tied beyond our understanding, beyond even what we know,” she said, according to the Washington Post.

Embedded video

Taly Krupkin@TalyKrupkin

At Hanukkah event with @JFREJNYC in an moving speech, @Ocasio2018 shares that her family were Sephardic Jews who fled to Puerto Rico. “So many of our destinies are tied beyond our understanding”

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In a tweet, the incoming congresswoman also posted a video of her learning to dance the hora at the event, writing: “I can never turn down an opportunity to try a new dance.

Alexandria Ocasio-Cortez

@Ocasio2018

What a beautiful and touching evening we shared tonight for our community Chanukah celebration.

Thank you Rabbi Mia for the opportunity of helping you light the shamash, and thank you @JFREJNYC for assembling the festivities!

May tonight’s light and hope spark many others ✨

View image on Twitter

Alexandria Ocasio-Cortez

@Ocasio2018

Plus I can never turn down an opportunity to try a new dance! 💃🏽 pic.twitter.com/qwTXLXGrDb

Embedded video

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Ocasio-Cortez is affiliated with the Democratic Socialists of America, which supports the Boycott, Divestment and Sanctions (BDS) movement targeting Israel, though she has not taken a stand in favor of an Israel boycott.

She has, however, expressed support for the Palestinian cause and for a two-state solution, and in a tweet called the killing of some 60 Palestinians on May 14 during the 2018 Gaza border protests a “massacre.”

She later said in an interview that her Puerto Rican roots helped her relate to the Palestinian protesters.

(ZH) Futures Tumble After China Summons US Ambassador, Threatens “Further Action” Over Huawei Arrest

(ZH) Update: Amid escalating tensions and stern words from both sides (China warning both Canada and the US over Huawei CFO’s arrest, warning of “retaliation” and “further action”, with the US countering with “hard deadlines” and concerns of “predatory behavior”), US futures have tumbled at the open, back below Thursday’s pre-panic-bid lows.

Of course, it’s not just China-US tensions, as Bloomberg notes: Here’s a non-exhaustive list of potential risk-off drivers hanging over Monday’s open (as succinctly summarized by Bloomberg’s Garfield Reynolds):

  • China summons U.S. Ambassador over the Huawei case
  • Trump Chief of Staff Kelly to leave, amid a welter of fresh Mueller developments
  • China reports weaker trade and inflation data
  • May pushes ahead on Brexit vote despite Cabinet, DUP opposition
  • Soggy U.S. payrolls, though not soggy enough to stop a December Fed hike
  • France protests intensify, raising concern of economic damage

Given all that list Dow -200 is not too bad:

The S&P and Nasdaq are also falling.

As Bloomberg’s Mark Cranfield further notes, ES futures only need to drop another 0.6% and it will goodbye to the October low and could trigger an acceleration of the down move.

The next area of support is likely to be between 2,550 and 2,562, which were the low points in February and April. However bad it gets for E-Minis in Asia, it wouldn’t be surprising for Wall Street to reverse some of the damage when it opens later on Monday. But if there is no climbdown from the U.S. on the Huawei arrest, the bears are still set to be the winners.

Meanwhile, gold and Crude are modestly higher.

easury futures are bid, implying 10Y Yields down around 2bps.

* * *

Earlier:

The trade truce between the US and China was fun while it lasted for about 24 hours.

Following the Dec 1 arrest of Huawei Technologies CFO Meng Wangzhou (which took place right around the time Trump and Xi were having dinner in Buenos Aires, and which the entire top echelon of the Trump administration claims to have been unaware of heading into the dinner), on Saturday China made its growing displeasure and rising anger clear when Chinese Vice Foreign Minister Le Yucheng summoned Canadian ambassador to China John McCallum to urge the immediate release of Meng, threatening Canada with grave consequences and calling her arrest as she changed planes in Canada “unreasonable, unconscionable and vile in nature.”

Artist’s sketch of Meng Wanzhou in a Canadian courtroom

Le told McCallum that the arrest was a severe violation of a Chinese citizens’ legitimate rights and interests. The move ignored the law, and Canada should be held accountable if Meng was not immediately released, Le said in the statement.

Meng’s arrest, based on allegations that she committed fraud to sidestep sanctions against Iran with the help of the one bank which over the past decade was directly and indirectly implicated in virtually every instance of money laundering, HSBC, has become a flash-point in trade tensions between the U.S. and China, roiling markets and judging by the latest news, when futures reopen for trading in a few hours we may see another flash crash, because moments ago China’s Vice Foreign Minister doubled down when Le Yucheng also summoned the U.S. Ambassador to China, Terry Branstad, in a protest over the arrest of the Huawei Chief Financial Officer.

CGTN

@CGTNOfficial

China’s Ministry of Foreign Affairs summons U.S. Ambassador to China Terry Branstad to protest the arrest of CFO Meng Wanzhou by Canadian authorities, which took place at the request of the United States

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The minister said U.S. actions have violated the “legitimate rights and interests of Chinese citizens and are extremely bad in nature,” according to a posting on the ministry website. “China will take further action based on the U.S. actions.”

Curiously, attempts to access the Chinese foreign ministry website from abroad have proven unsuccessful.

Like with Canada, the ministry urged the US to withdraw the Huawei CFO arrest warrant, crushing any speculation that Beijing was allowing the US to arrest her as a sign of “goodwill” in ongoing negotiations.

As a reminder, on Friday, the U.S. began a case against the Chinese telecoms giant in a Vancouver courtroom, alleging that Meng had hidden ties between Huawei and a company called Skycom that did business in Iran, said a lawyer representing Canada during the court hearing.

Meng, 46, daughter of Huawei’s founder, is spending the weekend in jail after a decision on whether to grant bail was not reached amid concerns any bail amount would prove too low and she would promptly flee back to China. The case will continue on Monday.

The second official warning in 24 hours marks a sharp escalation in Beijing’s rhetoric as investors – still weary from Wednesday’s S&P futures flash crash after news of her arrest first hit – worry that the arrest could crush the unstable trade detente between the US and China, resulting in even more aggressive tariffs. As a reminder, a federal US judge had issued a warrant for Meng’s arrest back in August. Though after she was made aware of the warrant, Meng avoided travel to the US. She was arrested in Vancouver last Saturday while traveling to Mexico.

Aside from breaking off trade talks, some are worried that Beijing could seek to retaliate in kind by arresting one or more notable US executives, which in turn prompted Cisco to “erroneously” advise its employees against non-essential travel to China. And while the threats of Chinese bureaucrats might not amount to much in the eyes of US prosecutors, threatening a US executive with long-term detention in a Chinese “reeducation camp” just might.

(LeMonde) Les « gilets jaunes » vus de Moscou : une « révolution de couleur » fomentée par les Etats-Unis

(LeMonde) Selon Dmitri Kisselev, présentateur vedette de la chaîne russe Rossiya 1, il semblerait que, tout comme lors de la « révolution orange » en Ukraine, les Américains sont à la manœuvre en France.

Manifestation des « gilets jaunes », place de l’Etoile, à Paris, le 1er décembre.
Manifestation des « gilets jaunes », place de l’Etoile, à Paris, le 1er décembre. Julien Muguet pour « Le Monde »

Comme partout, la sidération l’emporte en Russie après les violentes émeutes survenues le 1er décembre à Paris lors de la nouvelle manifestation de colère des « gilets jaunes ». Mais Dmitri Kisselev a son interprétation : le jaune est une couleur, les événements mettent en péril le pouvoir, donc, c’est une « révolution de couleur », orchestrée en sous-main, comme toutes les autres avant elles – notamment la « révolution orange » en Ukraine –, par les Etats-Unis.

Lire aussi  « Gilets jaunes » : le point sur les blocages et les concertations en cours

Dimanche 2 décembre au soir, sur la chaîne publique Rossiya 1, le directeur de la chaîne et présentateur vedette de l’émission « Vesti » (nouvelles) – la préférée, dit-on, de Vladimir Poutine – a avancé cet argument imparable à ses yeux pour décrire la situation en France : « Cela ressemble à l’exportation américaine d’une révolution de couleur, et tout cela parce que le président Macron a parlé de la nécessité d’une armée européenne. »

Car sinon, a développé le présentateur devant un fond écran sur lequel s’inscrivaient en grosses lettres les mots « révolte exportée ? », comment expliquer qu’une « microscopique augmentation du prix de l’essence provoque dans la rue des scènes de pillage, la mobilisation d’une armée de policiers, de la fumée, des tirs, du sang, des nuages de gaz lacrymogène, des éclats de verre partout ? » Non, non, « le prétexte est disproportionné », assure Dmitri Kisselev, qui s’est renseigné. Certes, « le prix de l’essence est deux fois plus cher en France qu’en Russie », mais il est encore plus élevé en Grèce ou aux Pays-Bas.

Et puis comment croire cet enchaînement improbable : une coordination de protestation sur les réseaux sociaux avec des vidéos « réalisées soi-disant par de simples Français », et l’apparition de surcroît d’un « nom aussi accrocheur » que celui de « gilets jaunes » ? « Vraiment, enchaîne le présentateur, les Etats-Unis peuvent-ils tolérer une alternative à l’OTAN en Europe ? Pensez ce que vous voulez, mais la première vague des émeutes liées au prix du carburant a balayé la France une semaine seulement après la déclaration de Macron sur la nécessité de créer une armée européenne. » Les images de l’Arc de triomphe et de l’avenue des Champs-Elysées dévastés ont suivi l’exposé.

Connu pour ses outrances

Dmitri Kissilev n’est pas tout à fait un présentateur comme les autres. Connu pour ses outrances, inscrit sur la liste européenne des personnalités russes placées sous sanctions, il est aussi et surtout le patron de Rossia Sevognia, la maison mère de la chaîne de télévision RT et le site Sputnik, les deux médias implantés dans le monde entier pour exporter la voix du Kremlin. Mais dimanche, la leçon s’adressait d’abord aux Russes : révoltez-vous et vous aurez le chaos.

Depuis 2014 et le soulèvement ukrainien sur la place Maïdan, Vladimir Poutine n’a cessé de marteler ce même message : les Etats-Unis sont derrière chaque révolte. « Ils ont commencé à soutenir à toute force les révolutions de couleur, y compris le prétendu printemps arabe et à quoi cela mène-t-il ? Au chaos », répétait encore le chef du Kremlin lors du forum économique de Saint-Pétersbourg en juin 2016.

On notera tout de même aussi cette contradiction parmi les sources influentes en Russie. Dans un tweet envoyé à la veille des rassemblements du 1er décembre en France, Alexandre Douguine, un intellectuel proche des milieux d’extrême droite qui a inspiré le virage eurasien et antioccidental du président russe, écrivait : « Je suis “gilet jaune”. » En français dans le texte.