Dow Futures Drop Over 500 Points As Trade War Heats Up.
In this report, I cover the early market action from London on Monday, May 6th, 2019. I look briefly at the precious metals, the stock market, the dollar, the bond market and the price of WTI and Brent crude oil.
Today I focus on the overnight headlines coming from the Trump administration and the Chinese government concerning the US/China trade negotiations or lack thereof. President Trump announced yesterday that he will raise existing tariffs from 10% to 25% as of next Friday and that he could impose more tariffs on another $325 billion of Chinese goods.
The major consequence of this announcement has been a big drop in the stock markets overnight as the major indices have dropped over 2% in the futures exchanges. China has also called off negotiations so it looks like a deal is very far away and a trade war much closer.
My conclusion is that the underlying problem with America's major trade and current account imbalances is that with its major reserve currency status and an irredeemable monetary world system other countries are forced to run a surplus with the US in order to accumulate fiat dollars and function in the world economy. Until the world gets back on a sound monetary system like a Gold Standard it will be very hard to find a solution to these imbalances.
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Thanks Mario. Do you think the new round of North Korean tension would bring some life to the metals?
I'm more inclined to say that the tensions with Iran could do that.
I agree with you in that a new monetary system is coming.
We’ve been in a trade war a long time, but we also have been in a currency war.
Nations have been trying to topple the dollar, wars have been started to protect it and keep it going.
A reset is inevitable, a gold standard may come sooner than one thinks.
War is all around us, we just have not been engaged yet. “Yet” is the key word here.
We are focusing on developments in Venezuela, we have humas and Israel already brewing, nothing new but may set of a cycle of events, one such event is again developing, US carrier and group headed towards the region of Iran as a warning.
That should be top news, and we have China and US at trade wars.
I could go on but I’m sure everyone sees, things are developing everywhere for a major event.
Good morning mario, should be an interesting day with this announcement on new chinese tariffs! have good day thanks for the info! :)