The US congressional delegation’s itinerary includes stops in South Korea and Japan, but no official mention has been made of a visit to Taiwan. However, the Taiwanese official said that Nancy Pelosi is expected to stay in Taiwan overnight. It is unclear when exactly Pelosi will land in Taipei.
China warned against the “egregious political impact” of Pelosi’s planned visit to the self-governing island that China claims as a part of its territory and reiterated that its military “won’t sit by idly” if Beijing feels its “sovereignty and territorial integrity” is being threatened.
Last week, US House of Representative Speaker Nancy Pelosi would like to have a Taiwan visit to show support for Taiwan. China immediately gives a warning against a potential high-stakes trip and vowed to take “resolute and forceful measures” of the trip goes ahead.
However, Chinese government has not specified in public what “forceful measures” it is planning to take. Some Chinese experts say Beijing’s reaction could involve a military component and the situation between China and the US will be very tense.
Pelosi’s potential trip wouldn’t be the first time a sitting US House speaker has visited Taiwan. In 1997, Newt Gingrich met Taiwan first democratically elected President Lee Teng-hui. At that time, China’s response was limited to rhetoric. Twenty-five years on, it is a completely different regime in Beijing with Chinese leader Xi Jinping. China is stronger, more powerful, and confident, and its leader XI, Jinping has made it clear that Beijing will no longer tolerate any perceived slights or challenge to its interests. China is in a position to be more assertive, to impose costs and consequences to countries that don’t take China’s interest into consideration in their policy or actions.
Last Wednesday, US president Joe Biden told reporters the US military thinks a Taiwan visit by Pelosi is “not a good idea right now.”
On this Monday, Gingrich wrote on the social media about his comment on the potential visit and raise out the concern about political timidity.
The potential Taiwan visit by Pelosi would come at a sensitive time for China. The PLA is celebrating its founding anniversary on August 1, while Xi, the country’s most powerful leader in decades, is preparing to seek a third term at the ruling Communist Party this fall.
But with Pelosi’s potential visit is now playing out in public, any decision to delay or cancel, risks being seen as a concession.
European Union and the United States have barred the import of Russian oil to cut off the revenue source for Kremlin and force Vladimir Putin to reconsider the war in Ukraine. However, it seems like this measure hasn’t worked.
When EU and the US looked at the data, they found that Russia is making just as much money from oil export as it was before the invasion of Ukraine. At the same time, global inflation is surging, and it generates Politian pressure on leaders like US president Joe Biden, British Prime Minister Boris Johnson, and French President Emmanuel Macron.
In the recent G7 meeting, these leaders tried very much to reach a consensus on that to do next. However, on oil, only few options are available. several measures were being discussed. For examples, price caps on Russian oil imports and centralized purchasing, insurance bans on ships. Unfortunately, these tools have downsides, and they could push the oil price and inflation rate even higher. These prospective measures may come with significant costs directly to consumers in the US and Europe.
Nevertheless, there is an uptick in exports to Asia. China is currently taking advantages of huge price discounts. Russia is selling barrels of its Urals crude for about USD 35 cheaper than the Brent global benchmark. The Kremlin is still getting a pretty good price for their oil export. The West need to go further to get Russian oil off the market quickly, since any delay will give market participants time to come up with creative ways to skirt the rules.
To make it harder for China, India, and other countries to keep importing Russian oil, EU intends to phase in a ban on insuring ships. Such a move may push China and India to find replacement barrels, the price of oil could easily go rocket high.
Therefore, Treasury Secretary Yellen suggested that using price caps to push down the price of Russian oil and depress Putin’s revenues while allowing more oil supply to reach the global market.
Cryptocurrency is having a terrible week. Still, long-term investors are really care about the steep drops in the value of digital currency and the temporarily halt of withdrawals in the exchanges.
Bitcoin, the world most valuable cryptocurrency, dropped nearly to USD 21,000 in recent days. it is sitting nearly 70% below its historical high of USD 68,000 per coin in November 2021. Ether, the second most valuable digital currency has lost about nearly 75% of its highs.
Due to the extreme market conditions, crypto exchanges like Binance and Celsius Network temporarily halted withdrawals and indicating that it would “take time” to reopen the exchanges.
In the meantime, Coinbase, the largest cryptocurrency exchange in the United States by trading volume announced it would lay off about 18% of its workforce and citing that “could lead to another crypto winter and could last for an extended period.”
However, the leaders in the cryptosphere are not really worried about the volatile market. They believe that the bear market in crypto is not the same as the bear market for stocks: the lows are more extreme, but then so are the highs. Crypto bear markets usually drew down 85 to 90% and then bounced back according to the past performance. Crypto market is naturally more volatile.
The markets in chaos: precious metals prices down, Bitcoin price hits lowest level since December 2020 and stocks plunges. Analysts warn of panic selling as investors are pre-reacting to the Federal Reserve’s interest rate hike on this Wednesday following a high inflation rate of the U.S.
The inflation is now expecting at annual pace of 8.6%. economists believe the Fed will need to get more aggressive to tame the inflation. The U.S. dollar reacted positively to the expected rate hike and goes stronger. In response to rising yields and a strong U.S. dollar, Gold saw a very sharp sell off as it plunged around USD 50 per oz on the day.
The precious metals are struggling as investors are still digesting inflation data and the looming economy downturn in China caused by the latest outbreak in Beijing and Shanghai. The latest lockdowns could lead to a much more extended period of supply chain issues and disruption.
Even though the market expects that the Fed will have an aggressive rate hike, but it is still not enough to get the inflation under control.
in the meantime, gold remains at risk of a more significant selloff. The support at USD 1,800 per ounce might not hold and we will see a retreat towards USD 1,750 per ounce.
The Securities and Exchange Commission (SEC) has been reviewing the ways that brokers trading every day. Investors are worried that the way millions of everyday global investors buy and sell stocks is going to change. And this change will be bad news for so-called free-trading apps like Robinhood as well as other similar business models.
When an investor buy or sell stocks on an app, the trade seems to be instantaneous. But, this buy-sell action is a complex process of Wall Street players exploiting tiny differences in prices to rake in huge amounts of cash.
Here is now it works:
When you place a buy or sell order, your broker for example Robinhood takes your order to a firm known as a wholesaler or market makers – the middlemen who are supposed to get you the best prices and who pay the brokers for the privilege of executing the trades. They typically make pennies off each transaction.
And the process above is called “payment for order flow”. Now this process has come under scrutiny by regulators due to the fallout from the January 2021 run-up stocks like GameStop.
The SEC are likely to roll our new rules as early as this Wednesday. One proposed new rule will be added more competition at the middleman level to ensure retail investors are really getting the best prices. It may also mean trading orders will be routed into auctions where trading firms would have to compete to execute them. In the future, investors may need to pay more trading fees on so-called free-trading apps.
The global economy is on the edge of a precipice, and it may be the biggest crisis since the Second World War.
The invasion of Ukraine has compounded the effects of the Covid-19 pandemic. It brings the cost of the food and fuel to skyrocket which weighing on the economic recovery and fanning inflation.
Rising interest rates are putting more pressure on countries, companies, and households. Climate changes, market turbulence and ongoing supply chain constraints also make the situation become more worse.
To lower economic stress, the IMP is calling for government officials and business leaders meeting in Davos to discuss reducing trade barriers.
However, earlier this month, Indian government decided to ban the export of wheat and it triggered the price of grain soaring. Some countries are heading in the opposite direction of IMF and implementing restrictions on trade in food and agriculture products that could probably exacerbate the shortages and push the prices even higher.
“Fragmentation” – one the many buzzwords heard around Davos this week. “Fragmentation”, it is referring to a breakdown of the kind of free-wheeling, border-crossing trades and investments which have built the global economic order over the past three decades. It also means “deglobalization” – rebuilding fences between nations and nations.
Deglobalization won’t happen overnight but it is not a new issue. Supply-chain disruption, war in Ukraine, growing political divides and trade disputes are renewing concerns about a return of an era of isolation.
Here are the micro-deglobalization playing out in real time:
China’s ride-hailing giant Didi officially delisted its share from NYSE
Starbucks and McDonald’s pulled out of Russian market
Airbnb said it would pull all of it listings in China
Malaysia moved to restrict exports of Chicken to its neighbors
Microsoft slowly scale back their China practice
These supply chains have been built over 30 years, so it’s just really difficult to move them into another country. The US baby formular shortage is a huge public health crisis that indicates the peril of relying too much on domestic production for essential goods. It is far more complicated if governments around the world are doing deglobalization.
Elon Musk tweeted on Friday that his USD 44-billion deal to take the company private was temporarily on hold. And he was waiting for data on the proportion of its fake accounts.
He tweeted on Saturday that Twitter’s legal team accused him of violation a nondisclosure agreement by revealing that the sample size for Twitter’s examination on fake account users was 100.
He said that his team would test “a random sample of 100 followers” on twitter to identify the bots” and “I picked 100 as the sample size number, because that is what Twitter uses to calculate <5% fake/spam/duplicate.”
It caused Twitter legal team told him he violated an NDA and his deal is on hold now.
Global Markets may still underestimate the impact of China’s strict zero-Covid policy. Until now, nearly 400 million people across the mainland China are under full or partial lockdown.
Investors probably do not aware of this zero-Covid policy as much more attention remains focused on the Russian-Ukraine war and the US Federal Reserve rate hikes.
However, more and more analysts are ringing warning bells as Shanghai, a city of 25 million and one of China’s premiere manufacturing is under the indefinite lockdown. The quarantines left the largest port in the world understaffed. Food supplies stuck in shipping containers, incoming cargo is now stuck at Shanghai marine terminals and cargo airlines were cancelled all flight in and out of the city. Sony, Apple supplier plants, Quanta Factory and Tesla factory in and around Shanghai, are idle.
The impact on China is major and the ripple effect on the global economy is also significant.
The ongoing disruption to manufacturing and shipping in China may help accelerate the US president Joe Biden to reduce US dependence on products and supply chains from China. Some US economic leaders believe that decoupling is underway. However, it is extremely difficult. Globalization is not something that is easy to be reversed because it would be incredibly costly.