Monday, November 21, 2016

Fed Says China Is Ready To Play Hardball On Trade

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*China, according to recent Federal Reserve research, is becoming increasingly self-sufficient.
*China needs the rest of the world less and has more leverage in negotiating.
*President-elect Trump's policies, along with China's new position, could cause both sides to be stubborn.
*That would cause a trade war, inflation, and a slowdown, all of which would hit markets.

Federal Reserve Governor Jerome Powell gave a timely speech last week titled, "The Global Trade Slowdown and Its Implications for Emerging Asia." It was jam-packed with charts and details that hint how we may be a few months from a serious trade war. While that wasn't his main thrust, it was our main take-away.
Americans voted to be tough on trade. China warned the US not pick a fight. According to the Fed China has a strengthening position. A US-China trade war in 2017 could cause inflation and a global slowdown. This is looking very real. This would be a stock market negative.

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