Tuesday, 10 June 2025

US v China Trade Talks Continue. Global Trade Dying?

Baltic Dry Index. 1691 +58            Brent Crude 67.27

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US Federal Debt. 36.959 trillion  

US GDP 30.062 trillion.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices…. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.

Adam Smith, The Wealth Of Nations, 9 March 1776.

In the stock casinos, no news from the USA v China trade talks in London yesterday, is good news. President Trump said so yesterday.

But, as Mandy Rice-Davis, said at trial in the 1963 Profumo scandal, “well he would say that, wouldn’t he.” Actually, “well he would, wouldn’t he.”

Well maybe. But for the second time the US negotiating team scurried off to a foreign city to meet with a Chinese team already making a scheduled visit.

Who is showing weakness to whom? Who is apparently desperate for a deal, any deal?

At best, at least the London talks will continue this morning. At worst, what if no oily joint PR press release is the outcome if President Xi, following Canada's lead, continues plays hardball?

Already there are signs that global trade is starting to die.

China and U.S. set to continue trade talks as Trump touts ‘good reports’ from London

Published Mon, Jun 9 2025 3:12 AM EDT

U.S.-China trade talks were set to continue in London on Tuesday, as the world’s top two economies strive to sort out differences following a call between the leaders of the two countries.

President Donald Trump’s top trade officials met their Chinese counterparts in London on Monday, with Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer negotiating on behalf of the U.S.

Trump has authorized Bessent’s team to potentially remove U.S. restrictions on the sales of chipmaking software, jet engine parts and ethane, The Wall Street Journal reported, citing sources familiar with the matter.

Trump said that the talks were going well and he was “only getting good reports,” according to Reuters.

China’s Foreign Ministry said Saturday that Vice Premier He Lifeng, Beijing’s lead trade negotiator, will be in the U.K. from June 8 to13. Commerce Minister Wang Wentao and China International Trade Representative and Vice Minister of Commerce Li Chenggang also participated in Monday’s talks, according to state media.

National Economic Council Director Kevin Hassett on Monday told CNBC’s “Squawk Box” that the U.S. was seeking confirmation China would restore the flows of critical minerals.

“The purpose of the meeting today is to make sure that they’re serious, but to literally get handshakes ... and get this thing behind us,” Hassett said.

He added that he expected it “to be a short meeting with a big, strong handshake.”

“Our expectation is that ... immediately after the handshake, any export controls from the U.S. will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters,” Hassett said.

The discussions will continue on Tuesday morning, a source familiar with the situation told CNBC’s Megan Casella.

The talks come after Trump last week said he had held a lengthy phone call with Chinese President Xi Jinping as both look to avert a full-blown trade war.

Diplomatic efforts by both sides have ramped up after weeks of heightened trade tension and uncertainty after Trump announced sweeping import tariffs on China and other trading partners in April.

Beijing retaliated, and a tit-for-tat escalation in duties ensued before both sides agreed in Geneva in May to temporarily slash duties for 90 days and to facilitate talks. At the time, the U.S. tariff on Chinese imports was cut from 145% to 30%, while China’s levies on U.S. imports were lowered from 125% to 10%.

China and the U.S. have since repeatedly accused each other of violating the Geneva agreement, with Washington saying Beijing was slow to approve the export of additional critical minerals to the U.S., while China criticized the U.S. imposing new restrictions on Chinese student visas and additional export restrictions on chips.

U.S. press secretary Karoline Leavitt on Sunday said that the London talks would focus on moving forward with the Geneva agreement, noting the two sides’ strategic interests in each other’s markets.

No quick fix

Analysts said the Monday talks were unlikely to make much progress in resolving disagreements and sector-specific tariffs targeting a range of strategic industries, ranging from technology and critical minerals to manufacturing and agriculture.

Rebecca Harding, chief executive of the Centre for Economic Security, told CNBC on Monday that China and the United States “are locked in an existential battle at the moment.”

More

China and U.S. set to continue trade talks as Trump touts 'good reports'

Asia-Pacific markets climb as investors await details of U.S.-China trade talks

Updated Tue, Jun 10 2025 12:26 AM EDT

Asia-Pacific markets climbed Tuesday as investors awaited further details on the U.S.-China trade talks, which were slated to continue for a second day.

Officials from both countries held trade talks in London on Monday, with U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer meeting with their Chinese counterparts led by Beijing’s Vice Premier He Lifeng.

Christian Floro, market strategist at Principal Asset Management foresees that the “market backdrop will remain uncertain in the period ahead,” in light of the “fluid nature of trade policy.”

Urging investors to prepare for continued market volatility, Floro noted that now is an opportune time to look at “previously overlooked value-oriented stocks and international equities.”

He identified investment opportunities in domestic-oriented sectors such as utilities, real estate and financials which are typically less sensitive to trade-related shocks. Pockets of opportunities can also be found in software and internet companies, Floro added in a Tuesday note.

Japan’s benchmark Nikkei 225 climbed 0.92%, while the broader Topix index increased by 0.43%.

In South Korea, the Kospi index advanced 0.42%, while the small-cap Kosdaq added 0.77%.

Mainland China’s CSI 300 index moved up 0.16% while Hong Kong’s Hang Seng Index rose 0.33%.

Over in Australia, the S&P/ASX 200 benchmark advanced 0.73%.

Meanwhile, India’s benchmark Nifty 50 BSE Sensex started the day flat.

U.S. stock futures rose in Asian hours, after President Donald Trump said that the talks with China were going well and he was “only getting good reports,” according to Reuters.

Overnight stateside, moves on all three key benchmarks on Wall Street were muted. The broad-based S&P 500 inched up 0.09% and notched a second winning session, closing at 6,005.88. The Nasdaq Composite climbed 0.31% to end at 19,591.24. The Dow Jones Industrial Average ticked down 1.11 points and closed at 42,761.76.

Asia stock markets today: live updates for June 10 2025

Europe to follow global markets higher as China-U.S. trade talks continue in London

Updated Tue, Jun 10 2025 12:35 AM EDT

Good morning from London, welcome to CNBC’s live blog covering all the action in European financial markets as well as the latest regional and global business news, data and earnings.

Futures data from IG suggests London’s FTSE will open 11 points higher at 8,838, Germany’s DAX up 62 points at 24,234, France’s CAC 40 up 23 points at 7,807 and Italy’s FTSE MIB 83 points higher at 40,545.

Global markets have been buoyed by trade talks that are taking place between U.S. and Chinese officials in London this week, with hopes rising that both sides can avert large-scale punitive tariffs and a trade war.

Global markets will be keeping an eye on the talks, which are set to continue Tuesday.

The latest U.K. unemployment figures are also due, but there are no other significant earnings or data reports Tuesday.

European markets on Tues June 10: China-US talks, Stoxx 600, DAX, FTSE

US Container Imports Just Dropped 10% From the Last Month

June 9,2025

The latest shipping data just arrived, and it reveals a sharp drop in overall container volumes for May 2025 — they’re now down 9.7% from April.

It’s the first drop after months of growth in these imports, and reflects the impacts of large-scale tariff changes, as well as the removal of the de minimis exemption for China imports.

The same container volumes are also down 7.2% from this time last year, and month-over-month numbers have dropped even further for China imports specifically, falling by 20.8%.

Lowest Monthly Total Since March 2024

By any measure, shipments are down. In fact, total container volumes in May added up to the lowest monthly total since March 2024.

The new stats come from Descartes Systems Group and its Global Shipping Report. The month of May 2025 ended just over a week ago, and its this month that the report focuses on. What’s behind the decrease? Frontloaded cargo and tariff impacts, according to the report.

“The drop followed a wave of frontloading in April and reflects a broader adjustment to shifting trade policies, including the expiration of the de minimis exemption and ongoing tariff volatility. Although the U.S. lowered tariffs on goods imported from China to 30% under a 90-day truce effective May 14, most imports that arrived in May were booked under the earlier, higher rates.” -the Global Shipping Report

Higher Monthly Drop Than the 2020 Pandemic

Historically, shipping volumes jump up between April and May, according to Descartes, which notes that 2025 is the first year out of the last seven years to see a month-over-month decline between these two months, with one exception: The 2020 pandemic.

Even in 2020, though, shipping volumes only dropped by 8.2%, a percentage that was just beaten by the 9.7% decrease the nation experienced last month.

Back in April, we covered a prediction from the ITS Logistics’ Port Rail Ramp Index, which stated that cargo operators should plan for a change in May or June. The index called it a “cliff event similar to the impacts felt during the immediate COVID response.”

Now, we have data on May shipments, and they have indeed fallen farther than the pandemic months of April and May.

What’s in the Future?

This news is certainly not unexpected. Higher tariffs mean that vendors are finding shipments to be costlier, and in many cases are pivoting to a new product or strategy entirely. Others are still taking a wait-and-see approach.

Future shipment volumes remain to be seen, but they seem likely to continue the current trend. We’ll keep seeing the ripple effects of the higher tariffs for months to come.

US Container Imports Just Dropped 10% From the Last Month

In other news, a worrying European drought. Approx. 2.5 minutes.

Half Of Europe Hit By Drought In May | WION Climate Tracker

Half Of Europe Hit By Drought In May | WION Climate Tracker - YouTube

To widen the market and to narrow the competition, is always the interest of the dealers…The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.

Adam Smith, The Wealth Of Nations, 19 March 1776.

Global Inflation/Stagflation/Recession Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.

UK retail sales growth slowed in May, casting doubt on consumer resilience

Shoppers traded down to cheaper items, especially in non-food areas such as clothing

9 June 2025
UK retail spending growth slowed to its weakest pace this year in May, according to new data, casting doubt on the strength of consumer resilience.

The value of retail sales increased at an annual rate of 1 per cent in May, the lowest rate in 2025 and well below the average of 2.5 per cent between January and May, according to figures published by the British Retail Consortium on Tuesday.

The figure also lagged behind the April inflation rate of 3.4 per cent, suggesting a fall in real-terms spending.

Helen Dickinson, chief executive of the British Retail Consortium, said consumers had “put the brakes on spending”, especially on non-food items such as fashion and full price, big-ticket purchases, held back “by lower consumer confidence”.

However, food sales had remained steady, helped by several major football tournaments, while gaming had also performed well because of popular new releases, she added.

Official data showed that in the three months to April, the inflation-adjusted sales rose 1.8 per cent compared with the previous three months, the fastest rate since July 2021. However, the BRC data suggest that the figures for May, published on June 20, could be weaker.

In the first three months of the year, the UK economy grew more than expected at 0.7 per cent, but economists, including at the Bank of England, expect the pace to slow in the second quarter.

Linda Ellett, UK head of consumer, retail and leisure at KPMG, which helps compile the BRC data, said sunny weather had meant some shoppers made seasonal purchases early, contributing to a slowdown in sales growth in May. She added that spending appetite was also damped after households were hit by a rise in essential bills in April.

The BRC figures chime with those from Barclays, which on Tuesday reported consumer credit and debit card spending growing by an annual rate of only 1 per cent, also below the latest pace of inflation.

Card spending on clothing rose just 0.9 per cent in May while transactions in the sector were up 3.8 per cent, which Barclays said indicated shoppers were switching to cheaper items or brands. Spending on electronics and home improvement contracted.

Barclays’ head of retail, Karen Johnson, said shoppers were “becoming more value-conscious”, balancing essential spending with small luxuries such as cinema trips, garden projects or short breaks. And while sunshine in the first half of the month helped sales, “longer-term uncertainty continues to shape how and where people choose to spend”, she added.

UK retail sales growth slowed in May, casting doubt on consumer resilience

Recession Risk After The Jobs Report

Jun 08, 2025, 09:19am EDT

---- Recession Indicators

Accurately forecasting an economic downturn in advance with any accuracy is exceptionally challenging. However, in an environment with tariff threats, monitoring specific high-frequency data can provide an early warning about increased recession risks. These indicators are updated weekly or daily and have shown a strong correlation with economic activity. Indeed, other indicators are crucial, but they are typically only available on a monthly basis, sometimes with a significant time lag. Despite the economic data remaining resilient, consensus estimates of 2025 US GDP growth remain well below the levels seen earlier in the year. Economists generally expect the drag from tariffs to slow economic growth in the second half of the year.

Credit Spreads

Baa corporate bond data has a long history and provides a look at the “typical” credit quality of companies, as Baa credit rating is the lowest level of investment-grade bonds. The spread is the yield that investors demand beyond US Treasury bond rates to compensate for the default risk associated with buying corporate bonds. These spreads expand when investors worry that more bond defaults could be on the horizon, typically driven by deteriorating economic conditions. Spreads on Baa corporate debt are below the highs hit as stocks bottomed in early April. The narrowing of spreads is consistent with a lower risk of economic downturn.

Financial Conditions

The Chicago Fed produces the National Financial Conditions Index (NFCI) on a weekly basis. It looks at 105 measures across three categories, risk, credit, and leverage, to create a measure of financial conditions. According to the Chicago Fed, “Positive values of the NFCI have been historically associated with tighter-than-average financial conditions, while negative values have been historically associated with looser-than-average financial conditions.” The chart indicates that periods of tighter-than-normal financial conditions have frequently been correlated with recessions. Similar to credit spreads, the tightness of financial conditions has eased from the early-April highs.

Cyclical Stock Performance

The more economically sensitive cyclical stocks have recently been outperforming the less economically sensitive defensive stocks. The improved performance of cyclical stocks suggests that the economic growth scare is waning.

Yield Curve

The 10-year Treasury minus 2-year yield is arguably the most well-known predictor of recession. Historically, when the yield on the US 10-year Treasury falls below the 2-year yield, also known as yield curve inversion, a recession is likely to follow. Since the 1970s, a yield curve inversion has occurred before every recession. The only blemishes on its record are the 1998 and mid-2022 inversions, which did not produce subsequent economic recessions. The US economy did see a significant slowdown in the first half of 2022 but rebounded in the second half. Unfortunately, even when the signal is correct, it has widely variable lead and lag times. The yield curve still has a better predictive track record than economists and is used in nearly every Federal Reserve model; therefore, it is worth watching despite its flaws. The curve is not currently inverted and has generally been steepening instead.

Jobs

The labor market is the most crucial part of the economy since consumer spending eventually wanes without wages to fund the purchases. Initial claims for unemployment benefits are reported weekly, but the four-week moving average of claims is used here to reduce volatility. Initial claims are ticking higher, but the level is not exhibiting a strong uptrend or one consistent with economic woes.

The other weekly job data is ongoing claims for unemployment benefits, which are also off its lows and show a slow uptrend. The uptrend suggests that it is taking longer for those losing their jobs to find new ones. Recall that the number of employees in the US has more than doubled since 1970, so even though the current roster of those receiving unemployment benefits is as high as it was during the 1969-1970 recession, the numbers aren’t comparable. The labor market is softening, but it has not yet reached the tipping point.

The closely watched monthly jobs report was released on Friday. Payroll job growth was slightly better than expected at 139,000, but the previous two months were revised lower. The household survey reported job losses of 696,000, but the labor force contracted by a similar amount, leaving the unemployment rate unchanged at 4.2%.

(Emphasis mine.)

Examining the employment of prime working-age people, aged 25 to 54, can provide a good indicator of the labor market’s condition. In addition to being a crucial group, the measure also avoids some of the demographic distortions associated with other methods. Prime-age employment to population ratio fell month-over-month, but using the three-month average to remove volatility, it held steady. The trend appears to be flat to lower, which adds some concern to the outlook.

Overall, job growth is adequate, with the labor market bending lower but not yet breaking. Markets reacted favorably to the monthly jobs report on Friday, indicating less worry about the economic outlook, with US Treasury yields and stocks moving higher.

More

Recession Risk After The Jobs Report

Covid-19 Corner

This section will continue only occasionally when something of interest occurs.

 

Technology Update.

With events happening fast in the development of solar power and graphene, among other things, I’ve added this section. Updates as they get reported.

Billion-dollar battery plant pauses construction amid electric vehicle and tariff uncertainty

7 June 2025

Japanese company has halted construction on a $1.6 billion factory in South Carolina to help make batteries for electric BMWs, citing “policy and market uncertainty.”

While AESC didn't specify what those problems are, South Carolina's Republican governor said the company is dealing with the potential loss of federal tax breaks for electric vehicle buyers and incentives for EV businesses as well as tariff uncertainties from President Donald Trump's administration.

“What we’re doing is urging caution — let things play out because all of the these changes are taking place,” Gov. Henry McMaster said.

AESC announced the suspension in construction of its plant in Florence on Thursday,

“Due to policy and market uncertainty, we are pausing construction at our South Carolina facility at this time," the company's statement said.

AESC promised to restart construction, although it didn't say when, and vowed to meet its commitment to hire 1,600 workers and invest $1.6 billion. The company said it has already invested $1 billion in the Florence plant.

The battery maker based in Japan also has facilities in China, the United Kingdom, France, Spain and Germany. In the U.S., AESC has a plant in Tennessee and is building one in Kentucky. The statement didn't mention any changes with other plants.

The South Carolina plant is supposed to sell battery cells to BMW, which is building its own battery assembly site near its giant auto plant in Greer. BMW said the construction pause by AESC doesn’t change its plans to open its plant in 2026.

AESC has already rolled back its South Carolina plans. They announced a second factory on the Florence site, but then said earlier this year that their first plant should be able to handle BMW's demand. That prompted South Carolina officials to withdraw $111 million in help they planned to provide.

The company is still getting $135 million in grants from the South Carolina Department of Commerce and $121 million in bonds and the agency said a construction pause won't prompt them to claw back that offer.

South Carolina is investing heavily in electric vehicles. Volkswagen-owned Scout Motors plans to invest more than $4 billion and hire 10,000 people for a plant to build its new electric SUVs scheduled to open in 2027.

The state has for decades made big bets on foreign manufacturers like BMW, Michelin and Samsung that have paid off with an economic boom this century, but there is uneasiness that Trump's flirtation with high tariffs might stagger or even ruin those important partnerships.

More

Billion-dollar battery plant pauses construction amid electric vehicle and tariff uncertainty

Next, the world global debt clock. Nations debts to GDP compared.

World Debt Clocks (usdebtclock.org)

There is no art which one government sooner learns of another than that of draining money from the pockets of the people.

Adam Smith, The Wealth Of Nations, 9 March 1776.

 

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