E Market Briefing For Monday, June 9

Isolation of the USA in 'trade' - is presumed to be a 'non-starter'. Hence, it may well be why pundits are debating 'which' sectors do better in such a 'trade war', rather than contemplating an entire upheaval of major equities, since a majority of big-cap traditional companies rely on global sales, and relationships, for typically half or more of their gross revenues.  


Thus I can only presume (and I lean that way too, as obviously do many of our trading partners given the meek reaction to the kick-off actions Friday), and that's the inherent risk, that the Chinese and Americans will not cut off their noses to save their collective faces, though so far they're doing that.  

At 1 am Friday, as Bloomberg's Hong Kong bureau seemed to be holding their breadth (pun intended) pending Beijing's qui-pro-quo response, I had a fleeting thought that Chairman Xi might be clever enough to 'hold back', on tit-for-tat, and do absolutely nothing. I thought that would be brilliant in the face of Trump's move, even though of course response to China is so overdue (by decades) that it's really dangerous in an interconnected world as we now live in. Hence the risk really is there if they don't ameliorate it.

This is not so much a 'circus' as it is a 'balancing act' of how far to go. Just by by virtue of igniting the conflict, seeing who initiates talks, not who is the first to blink; it becomes useful if nobody is perceived to 'blink'; rather they quietly agree (which I'd like to believe is ongoing) to approach it smartly.  

Again no argument about the need for redressing what China (more so we believe over the years than all others; due to the Intellectual Property theft) has done to us. But, never mentioned that I've noticed in the chatter today; all it takes is a Chinese instruction to the PBOC to increase liquidations of US Treasuries and guess what; they have more 'bazookas' in their pocket than the popular perception of limited ammunition to tariff coming from us. It's hard to say if China is also playing the North Korean 'card' again, with a recently reported upsurge in construction in their nuclear reactor areas.

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