Latest news with #TSLombard
CNBC
29-05-2025
- Business
- CNBC
Why the market could be getting this wrong by rallying on the court blocking Trump's tariffs
Wall Street's excitement after the latest trade development may be short lived. Stock futures rallied overnight after a U.S. federal trade court struck down President Donald Trump's so-called reciprocal tariffs. Safe-haven gold fell to a one-week low on the news, as traders around the world moved into riskier assets. U.S. Treasury prices also rallied, pushing yields lower. But while the court ruling halts levies that would pressure corporate profit margins and drive consumer prices higher, it also adds another layer of complexity at a time when investors are trying to look past trade headwinds. "The court injunction … poses a double-edged sword for [rest of world] negotiators, who may start to adopt Beijing's longstanding philosophy that the U.S. is a 'paper tiger' – with the risk of prolonging trade war uncertainty instead of offering up new concessions," wrote Grace Fan, global policy analyst at TS Lombard. @DJ.1 1D mountain Dow futures intraday Trump also has other paths to push through tariffs, including sectoral levies . Goldman Sachs pointed out the president an implement a tariff of up to 15% under Section 122 of the 1974 Trade Act as well. What's more, the administration is expected to appeal the ruling. "The tariff drama isn't over – Trump has other legal avenues to pursue an aggressive tariff agenda, and investors expect he will utilize them," wrote Adam Crisafulli of Vital Knowledge. The market may already be quickly coming around to Crisafulli's way of thinking. By 8:40 a.m. ET, Dow Jones Industrial Average futures had given back most of their initial gains, trading about 100 points higher. They surged over 500 points overnight. S & P 500 and Nasdaq-100 futures were also off their highs. Bond yields were flat on the session by that time, and gold bounced from its overnight lows. "The only thing this court ruling did was extend the uncertainty of how this ends. All of the 'to be annouced' trade deals likely are now on ice and, if Trump wins on appeal, he'll hit harder and faster in round two," Jamie Cox of LPL Financial told CNBC's Brian Evans in an email. "Given how far along things were and seemingly causing less heartburn than feared, this ruling may be effective in restraining the executive, but not accomplish much otherwise."
Malay Mail
27-05-2025
- Business
- Malay Mail
China cuts rates — but households just save harder
BEIJING, May 28 — After Chinese banks reduced deposit rates last week, Miro Chen launched a social media poll: 'When interest rates fall, do you save or spend?' More than 80 per cent of some 5,000 responses chose saving, underlining the challenge for policymakers seeking to shore up demand and economic growth. 'The result is one-sided, indicating people are very worried,' said the 37-year-old, who works for an internet company in southern China. 'I am not sure how long my company can survive,' he added, explaining why he also saves. China's central bank eased monetary policy last week to limit damage from the trade war with Washington. On Friday, it lowered the ceiling for deposit rates to offset margin pressure on banks and prompt savers to spend or invest more. But successive cuts to deposit rates in recent years have failed to curb explosive growth in Chinese household savings, intensifying concerns over the side-effects that lower returns have on the country's consumers, who tend to build their own safety net. At the end of March, total household deposits surpassed 160 trillion yuan (RM94 trillion), up 10.3 per cent from a year before, and equivalent to 118 per cent of last year's gross domestic product (GDP), official data show. Retail sales, by comparison, rose 4.6 per cent year-on-year in the first quarter. Minxiong Liao, senior economist at GlobalData TSLombard APAC, says lower interest rates 'likely reduce income growth' for China's population. 'People, especially those born in the 1980s, may need to save more rather than spend in the coming decade to secure retirement cashflow, as low interest rates are likely to persist.' Chinese households have been saving more due to worries over job security in a stuttering economy facing deflationary pressures, as well as wealth concerns caused by a prolonged property crisis. Liao and other economists say the best policies to increase consumption in China would be bolstering its pension system and other social benefits to curb households' savings needs. Since losing his marketing job a year ago, 30-year-old Lawrence Pan, now a freelancer, no longer pays his social insurance contributions, although he could if he chose to. He prefers to save money on his own as he doesn't trust the state system, which the Chinese Academy of Sciences sees running out of money by 2035. Pan saves about two-thirds of his income into his current account. He says fixed-term savings offer too little interest for him to bother with deposits. 'I feel my savings and spending habits would be more balanced if deposit rates were higher. A higher interest rate signals that the economy is getting better,' said Pan. 'In such a scenario, I would spend more.' 'Painkillers' China has repeatedly pledged to make household consumption — which is about 20 percentage points of GDP below the global average — a more important driver of economic growth. The world's second-largest economy relied heavily on exports last year to hit its roughly 5 per cent expansion target and analysts say higher US tariffs call for greater urgency on measures that rebalance the economy towards domestic demand. But lower interest rates may work against that aim. Michael Pettis, senior fellow at Carnegie China, says they facilitate a transfer of resources from the net savers in the economy — mainly households in China's case — to the net borrowers, which are the business and government sectors. 'In a financial system like that of China today, and also of Japan in the 1990s, lower real interest rates don't seem to boost consumption,' Pettis said. Also like in Japan, which has grappled with decades of economic stagnation, the side effects on borrowers are growing as well. Elisabeth Werenskiold, senior economist at Fathom Consulting, says monetary policy easing in China makes many businesses dependent on low borrowing costs in the long run, leading to the 'zombification' of entire industries. She says cash flow in sectors such as construction, airlines, travel and computer services covers less than five months of interest expenses, describing anything below five as the 'danger zone'. 'It's a bit like painkillers,' Werenskiold said. 'You can treat the pain, but unless you treat the source you'll have to keep taking the painkillers, increasing the risk of negative side effects.' Thrifty households can also force cost-cutting measures throughout the economy, risking a deflationary spiral. Book editor Erin Yao, 32, moved last year from Beijing to cheaper Wuhan in central China to save more of her income. Her company's strategy shift to lower-cost books makes her worry about the economy, so she plans to put money aside for rainy days even if deposit rates drop to zero. 'My first reaction to the deposit rate cut was: has the economy entered a downturn?' Yao said. 'I won't spend all my money to enjoy life now. I will keep something aside in case my parents or I become ill,' she said. — Reuters
Yahoo
14-05-2025
- Business
- Yahoo
Stock Rally Nobody Is Comfortable With Makes It Hard to Chase
(Bloomberg) -- Equity investors pushed back into the market by a relentless rally are about to find out that the real challenge is just beginning. As Coastline Erodes, One California City Considers 'Retreat Now' What's Behind the Rise in Serious Injuries on New York City's Streets? A New Central Park Amenity, Tailored to Its East Harlem Neighbors How Finland Is Harvesting Waste Heat From Data Centers Lawsuit Challenges Trump Administration Policy on Migrant Children A sharp rebound in risk assets — fueled by progress in trade talks, economic resilience and receding volatility — is turning skepticism into a trade that nobody's really comfortable with, following a month in which the consensus was to brace for the worst. The three-month pause in US-China trade tensions is reassuring investors, yet lurking in the background is the risk that stocks get so extended that they're vulnerable to any fresh surprises. 'Markets are in limbo as world leaders scramble to agree deals within the 90-day tariff pause,' notes the TS Lombard research team including Steven Blitz and Davide Oneglia. 'What matters is the potential for permanent damage during and after the trade war purgatory.' The powerful move off the April lows was almost impossible to predict or to fully participate in. A mix of out-of-the-blue headline risk, blurry data and a flip-flopping narrative created an unprecedented rebound. The speed of the drop and the still-unfolding rebound resembles the Covid market of 2020. Hence, a full recovery for the S&P 500 might be much quicker than other bear markets. Feeling the Squeeze Monday's surge offered a stark example of the squeeze facing underexposed investors. Stocks leveraged to global growth and China-sensitive sectors surged on a wave of fast-money buying. Data compiled by Bloomberg shows that many risky themes, which suffered losses of as much as 60% since the S&P 500 peaked in February, are back in favor. 'Stocks are bid on the back of the cooling trade war temps, but it's the low-quality themes that are pacing stocks,' note the traders at Goldman Sachs Group Inc.'s equity trading desk. They add that client activity levels were up by 71% on Monday. Systematic strategies are adding to fuel to the rally. This cohort of investors uses quantitative models to buy stocks and cares not one bit about headline risk. Those flows push the market higher into areas where risk/reward becomes thin for everyone using classic valuations or a lack of conviction due to economic uncertainty. Even retail investors — often the first to give up and the last to join rallies — were constantly buying during the selloff. Mindful of Risks Professional investors, however, seem far from all in on stocks. Data from the Commodity Futures Trading Commission shows that asset managers remain light on S&P 500 futures. UBS Group AG strategists including Nicolas Le Roux said trend following strategy funds, or CTAs, have been supporting the rebound in risky assets but are in no rush to add significant exposure. 'Given the speed and strength of the rebound, CTAs are not rushing to add,' the UBS team said. 'They prefer smoother trends, and will wait for price confirmation before pressing the buy button hard.' Meanwhile, data from Goldman Sachs' Prime Desk showed global equities had the second-largest notional net buying from hedge funds in five years on Tuesday. That was 'driven by short covers and to a lesser extent long buys,' the desk wrote in a note to clients. That positioning disconnect means the squeeze may not be over. Deutsche Bank AG strategists argue that the US-China trade announcement alone justifies a re-risking shift. 'It exceeds anything the market could have anticipated back in March,' they wrote. 'Stay bullish.' Technical indicators also suggest the rally could run further. Market breadth isn't overextended, and potential turning points such as the 200-day moving average posed little resistance. Also, V-shaped recoveries have a habit of leaving cautious investors behind. Data complied by SentimenTrader shows that performance, while weak in the short-term, is offering good returns for steady hands. 'Based on behavior since the April low, the rally does seem more likely than usual to be sustainable,' SentimenTrader said. 'Of course, nothing is guaranteed, and all we're dealing with are probabilities. The good news is that the probabilities shifted in bulls' favor.' But this chase has its own risks. The stronger the rally, the more asymmetric the setup becomes - higher prices and lower volatility increase the chance of a painful reversal if good news stalls. The risk-reward balance is thus pivoting back toward unappealing levels for many. That's especially true as many of the tailwinds fueling this surge aren't rooted in hard data just yet. Signs that the economy did get hit even from the very short-lived punitive tariffs could cause optimism to fade quickly and stocks to eventually face a buyer's strike. 'It's not all perfect out there,' warned Charlie McElligott, managing director of cross-asset strategy at Nomura Securities International Inc. Things could get turned upside down again when moving closer to the tariff pause deadline in case President Trump 'can't help himself and risks twisting the knife again.' --With assistance from Michael Msika. (Updates with commentary on CTAs from UBS in 9th-10th paragraphs.) Cartoon Network's Last Gasp DeepSeek's 'Tech Madman' Founder Is Threatening US Dominance in AI Race Why Obesity Drugs Are Getting Cheaper — and Also More Expensive Trump Has Already Ruined Christmas The Recession Chatter Is Getting Louder. Watch These Metrics ©2025 Bloomberg L.P.
Yahoo
14-05-2025
- Business
- Yahoo
Investors Chasing Stock Rally Will Find It Gets Harder From Here
(Bloomberg) -- Equity investors pushed back into the market by a relentless rally are about to find out that the real challenge is just beginning. As Coastline Erodes, One California City Considers 'Retreat Now' A New Central Park Amenity, Tailored to Its East Harlem Neighbors What's Behind the Rise in Serious Injuries on New York City's Streets? How Finland Is Harvesting Waste Heat From Data Centers Lawsuit Challenges Trump Administration Policy on Migrant Children A sharp rebound in risk assets — fueled by progress in trade talks, economic resilience and receding volatility — is turning skepticism into a trade that nobody's really comfortable with, following a month in which the consensus was to brace for the worst. The three-month pause in US-China trade tensions is reassuring investors, yet lurking in the background is the risk that stocks get so extended that they're vulnerable to any fresh surprises. 'Markets are in limbo as world leaders scramble to agree deals within the 90-day tariff pause,' notes the TS Lombard research team including Steven Blitz and Davide Oneglia. 'What matters is the potential for permanent damage during and after the trade war purgatory.' The powerful move off the April lows was almost impossible to predict or to fully participate in. A mix of out-of-the-blue headline risk, blurry data and a flip-flopping narrative created an unprecedented rebound. The speed of the drop and the still-unfolding rebound resembles the Covid market of 2020. Hence, a full recovery for the S&P 500 might be much quicker than other bear markets. Feeling the Squeeze Monday's surge offered a stark example of the squeeze facing underexposed investors. Stocks leveraged to global growth and China-sensitive sectors surged on a wave of fast-money buying. Data compiled by Bloomberg shows that many risky themes, which suffered losses of as much as 60% since the S&P 500 peaked in February, are back in favor. 'Stocks are bid on the back of the cooling trade war temps, but it's the low-quality themes that are pacing stocks,' note the traders at Goldman Sachs Group Inc.'s equity trading desk. They add that client activity levels were up by 71% on Monday. Systematic strategies are adding to fuel to the rally. This cohort of investors uses quantitative models to buy stocks and cares not one bit about headline risk. Those flows push the market higher into areas where risk/reward becomes thin for everyone using classic valuations or a lack of conviction due to economic uncertainty. Even retail investors — often the first to give up and the last to join rallies — were constantly buying during the selloff. Mindful of Risks Professional investors, however, seem far from all in on stocks. Data from the Commodity Futures Trading Commission shows that asset managers remain light on S&P 500 futures. Meanwhile, data from Goldman Sachs' Prime Desk showed global equities had the second-largest notional net buying from hedge funds in five years on Tuesday. That was 'driven by short covers and to a lesser extent long buys,' the desk wrote in a note to clients. That positioning disconnect means the squeeze may not be over. Deutsche Bank AG strategists argue that the US-China trade announcement alone justifies a re-risking shift. 'It exceeds anything the market could have anticipated back in March,' they wrote. 'Stay bullish.' Technical indicators also suggest the rally could run further. Market breadth isn't overextended, and potential turning points such as the 200-day moving average posed little resistance. Also, V-shaped recoveries have a habit of leaving cautious investors behind. Data complied by SentimenTrader shows that performance, while weak in the short-term, is offering good returns for steady hands. 'Based on behavior since the April low, the rally does seem more likely than usual to be sustainable,' SentimenTrader said. 'Of course, nothing is guaranteed, and all we're dealing with are probabilities. The good news is that the probabilities shifted in bulls' favor.' But this chase has its own risks. The stronger the rally, the more asymmetric the setup becomes - higher prices and lower volatility increase the chance of a painful reversal if good news stalls. The risk-reward balance is thus pivoting back toward unappealing levels for many. That's especially true as many of the tailwinds fueling this surge aren't rooted in hard data just yet. Signs that the economy did get hit even from the very short-lived punitive tariffs could cause optimism to fade quickly and stocks to eventually face a buyer's strike. 'It's not all perfect out there,' warned Charlie McElligott, managing director of cross-asset strategy at Nomura Securities International Inc. Things could get turned upside down again when moving closer to the tariff pause deadline in case President Trump 'can't help himself and risks twisting the knife again.' Cartoon Network's Last Gasp DeepSeek's 'Tech Madman' Founder Is Threatening US Dominance in AI Race Trump Has Already Ruined Christmas Why Obesity Drugs Are Getting Cheaper — and Also More Expensive The Recession Chatter Is Getting Louder. Watch These Metrics ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
US-China tariffs pause ‘positive' but uncertainty remains
The deal between the US and China to reduce for 90 days the tariffs recently imposed on imports of each other's goods is tentatively positive for global trade, but the situation remains unpredictable, according to an industry analyst. The agreement, announced today (May 12) represents a major de-escalation of the dispute between the two countries – at least temporarily – and has seen global stock prices rise as a result. It will see the US and China cut their tariffs on each other by 115pp, from 145% to 30% for Chinese goods entering the US and from 125% to 10% on some US goods entering China. In a joint statement, the two countries acknowledged 'the importance of their bilateral economic and trade relationship to both countries and the global economy' and 'the importance of a sustainable, long-term, and mutually beneficial economic and trade relationship'. The statement added that, once the pause in tariffs is enacted from May 14, the US and China 'will establish a mechanism to continue discussions about economic and trade relations.' Of this, Steve Blitz, chief US economist and managing director for global/macro at TS Lombard, told Investment Monitor: 'It's obviously positive. Let's take the politics out of it for a second. If you turn it into a microeconomic or a game-theoretic point, there is an optimal tariff price. So, what do you want to achieve with a tariff? 'You don't want to stop trade, so you don't want an infinite tariff, but your objective is to make it more expensive to source from a particular country in order to really do two things: one is to shift production to the US, or make it more competitive for us exporters in the global world. So you are actually putting in a tariff for a positive trade outcome as opposed to a negative trade outcome. 'But you don't want to necessarily negotiate to zero tariffs everywhere, and we'll use the broad word tariffs, so we'll include non-tariff barriers, OK. You don't want to get to zero because you also want to bring cash into the government.' The spiralling tit-for-tat tariffs that the US and China had placed on each other's goods were a result of the sweeping tariffs agenda being pursued by the new administration in the US when Donald Trump returned to office for his second term in January. This has seen 25% fees placed on goods coming from Mexico and Canada, as well as a slate of so-called 'reciprocal tariffs' for most countries around the world. These are purportedly aimed at addressing US trade deficits, which Trump has claimed are 'unfair'. Trump's other stated aims for the tariffs include generating revenue to lower domestic taxes and encouraging the onshoring of industry. The result of introducing such sweeping tariffs on trade partners almost across the board will be an upending of global trade, with ramifications not just for the US and each of its trade partners but for trade flows outside of US trade relationships. In April, Peter Swartz, the chief science officer of supply chain insights company Altana told Investment Monitor that the upheaval being wrought by the proposed tariffs represented 'a very intense moment of deglobalisation'. Swartz noted that this shift towards protectionism has already been going on for over a decade and is 'an inevitable product of the geopolitical stresses on the global system,' with factors like the Covid-19 pandemic and geopolitical disputes at play. He acknowledged, though, that the tariffs agenda of the Trump administration represents an inflection point, adding: 'Where we think it's going is you will see that more multipolar world. You'll see that world in which, fundamentally, the world is fragmenting into blocks. 'I can't tell you which specific blocks – what those blocks will look like. Your readers can read the news as well as I can. But what I can tell you is that it will not look like the previous era of easy global free trade across the entire planet, and what it will instead look like is more complexity, more regulation, and, really, a reordering, and there's the opportunity to thrive in that.' Swartz's outlook aligns closely with assertions in a number of recently published reports from Investment Monitor's parent company GlobalData variously suggesting that 'the era of easy, frictionless supply chains is over', that Trump's tariffs will 'further disrupt global supply chains' but that a silver lining may be 'the potential strengthening of regional and inter-regional trade ties outside the US,' and that China is seeking to 'expand its influence across developing markets … with further fragmentation of global supply chains and even the creation of separate technospheres with competing standards.' Subsequent to today's joint statement, the White House released a separate statement calling the agreement 'a historic trade win for the United States'. It added: 'For too long, unfair trade practices and America's massive trade deficit with China have fuelled the offshoring of American jobs and the decline of our manufacturing sector.' The statement noted that the US' trade deficit with China was the largest with any trading partner in 2024 at $295.4bn, and it stated that the agreement 'works toward addressing these imbalances to deliver real, lasting benefits to American workers, famers, and businesses.' However, the landscape remains unclear for businesses and, indeed, entire sectors in part while there are pauses to the implementation of tariffs for negotiations and in part simply for the involvement of Trump himself. 'You're dealing with somebody who gets bored and moves to the next thing, and then he comes back and he doesn't like the progress so he decides to shake it up a little bit,' Blitz said. 'So, I think we're in a sweet spot right now, let's enjoy it. Let's not be the killjoy, but the thing that you're at the same time in this mode, where [to think that] everything's going to settle down and now iterate through a solution without any further histrionics or changes is probably wrong.'"US-China tariffs pause 'positive' but uncertainty remains – analyst" was originally created and published by Power Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
