Crank up the South Carolina BMW plants and load up the X5s with corn and soybeans when they roll of the assembly lines, because China is lifting tariffs on U.S.-built cars and ramping up purchases of agricultural products in a (probably futile) effort to appease President Senility.
The latest from the trade rumor mill is that Beijing is lifting the 25% retaliatory tariff on autos for three months starting on January 1 and for good measure, there’s a story about alleged corn buying floating around just to spice things up.
The absurdity here cannot be overstated. China isn’t actually “lifting auto tariffs on U.S.-built cars”. China is “lifting retaliatory auto tariffs on U.S.-built cars”, which means we’re just rolling back what was put in place in July. That’s what counts as “progress” under Trump – fixing things he broke previously.
Anyway, nobody apparently cares. Global stocks were in risk-off mode and while things could always turn around during the U.S. session, the bottom line is that growth concerns and an 8 PM (New York time) swoon in futures (which started with Nikkei futs) served to deep-six stocks in the overnight session.
(Bloomberg)
Here’s what things looked like a couple of hours ahead of the U.S. open:
(Bloomberg)
As far as the growth worries go on Friday, you can thank the FAI/IP/retail sales trio out of China. FAI held up ok, but retail sales and IP missed “bigly”, with the former printing the slowest pace since 2003 in November and the latter the most sluggish since 2008.
(Bloomberg)
Obviously, that just underscores concerns about the resiliency of the Chinese economy just a week after the latest trade data showed exports decelerating and imports from the U.S. dropping the most in years.
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China’s November Trade Data Proves Everyone Is Losing In Trump’s Trade War
On the car tariffs, we would (again) remind you that this is going to benefit BMW and Mercedes more than it’s going to benefit U.S. automakers, which, ironically, is probably just fine with Trump (as long as it means U.S. manufacturing jobs) considering he’s locked in a one-sided war of words with Mary Barra, traitor to the MAGA cause.
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China Thinking About Slashing Tariffs On U.S.-Built Cars — Here’s The Irony…
The SXAP is getting a lift from the news, but to say it’s too late to salvage that train wreck in 2018 would be an understatement.
(Bloomberg)
The problem for China is that auto sales are headed for their first annual decline in more than a quarter century and it’s debatable whether domestic consumption is going to hold up and help cushion the blow from decelerating global demand. Friday’s retail sales miss doesn’t do much to boost confidence.
We would again remind you that according to a Bloomberg measure that tracks unsold auto inventory in China, the country is morphing into a giant parking lot as inventory levels are at all-time highs.
(Bloomberg)
But coming full circle, maybe they can boost sales if they offer buyers a trunk full of U.S. corn with every new car purchase.
