40.51 +0.09 (0.22%)
After hours: 5:48PM EST
|Bid||0.00 x 1000|
|Ask||0.00 x 800|
|Day's Range||39.80 - 40.61|
|52 Week Range||37.85 - 54.00|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.34|
|Expense Ratio (net)||0.74%|
In the previous articles, we discussed China’s steel and aluminum exports. While China (FXI) accounts for the bulk of global steel and aluminum capacity, it lacks in copper deposits and is the largest copper importer. China imported 423,000 metric tons of unwrought copper last month, a YoY fall of 3.0%.
On December 8, China (FXI) released its trade data for November. The country’s trade data received even more scrutiny this year amid the US-China trade war. The world’s two largest economies have been involved in a bitter trade war and have imposed tariffs on billions of dollars of each other’s goods.
India (INDA) ranks among the world’s major oil importers. The country runs a big crude oil import bill, which, coupled with its massive trade deficit with China (FXI), has been a consistent drag on its current account.
In March, President Trump slapped tariffs on US steel and aluminum imports. While China doesn’t export much steel to the US (DIA), it does export a significant amount of aluminum. China (FXI) exported 536,000 metric tons of unwrought aluminum in November compared to 480,000 metric tons in October.
According to a report in the Wall Street Journal, President Trump is focused on stock markets and is contemplating the reasons behind the increased volatility lately. The S&P 500 (SPY), the Dow Jones Industrial Average (DIA), and the NASDAQ Composite (QQQ) fell by 4.4%, 4.4%, and 4.7%, respectively, last week.
The United States and China (FXI) have been involved in a bitter spat this year. While US-China trade relations have received all the attention as the two sides have imposed duties on billions of dollars of each other’s goods (TSLA), the tussle has a political as well as diplomatic angle. The most recent flashpoint between the United States and China is over the arrest of Huawei CFO Meng Wanzhou in Canada.
China’s trade surplus with the US (SPY) has been hitting one record after another. In November, China’s (MCHI) trade surplus rose to $35.6 billion, which is a new record. While China’s exports to the US rose 9.8% YoY (year-over-year), the imports fell 25% YoY.
Given the contentious road that the current administration has taken, the recent truce between the U.S. and China came as a surprise to some observers. Since the beginning of this year, the benchmark exchange-traded fund iShares China Large-Cap ETF (NYSEARCA:FXI) has dropped double digits. Individual Chinese stocks have hemorrhaged far deeper losses.
Vale’s (VALE) CEO mentioned during Vale Day that the recent weakness in iron ore prices was expected due to the start of the winter season in China. Also, steel capacity cuts in China are lower this year as compared to last year, while steel mills are following the same approach of producing more in advance. This has led to additional weakness in iron ore.
According to Apple’s (AAPL) regional website in China (FXI), the HomePod will launch in the country in the first six months of 2019. The device will be launched in China and Hong Kong and will be priced at 2,799 yuan, or $408, in China and at 2,799 Hong Kong dollars, or $358, in Hong Kong. The HomePod is currently available in the United States, the United Kingdom, Australia, France, Canada, Germany, Mexico, and Spain.
On Thursday, among the worst performing areas of the market, the SPDR S&P China ETF (GXC) fell 2.3%, the iShares China Large-Cap ETF (FXI) dropped 1.8% and Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) declined 1.8%, with each of the China-related ETFs testing their short-term support at the 50-day simple moving average. The tentative truce between the U.S. and China trade war was being tested Thursday after the U.S. arrested Meng Wanzhou, Huawei’s chief financial officer and the daughter of the founder of the telecommunications giant, who was arrested changing planes in Vancouver on Saturday, the Washington Post reports. Meng was arrested on U.S. extradition warrant as Huawei is suspected of trying to evade American sanctions on Iran.
Canadian authorities at the request of American law officials arrested Huawei's global CFO Wanzhou Meng for allegedly violating Iran sanctions. The timing of Meng's arrest could be seen as a "message to the Chinese as well as to Chinese companies" that the U.S. administration will enforce they "abide by certain standards" and they need to change certain practices the American administration sees as unfair, CNBC's Eunice Yoon reported. Josh Bolten, former Chief of Staff to U.S. President George W. Bush and now president of the Business Roundtable, told CNBC Thursday the "law of the land" prohibits international companies from certain interactions with Iran and the U.S. Justice Department has an obligation to enforce its policies.
An Apple Insider report stated, “The Trump administration’s threat of more China tariffs could significantly raise the price of iPhones for consumers, with the iPhone XS family potentially costing between $60 and $160 more if Apple passes the extra cost on to its customers.”
Yesterday, Qualcomm (QCOM) announced in a press release that it, China Mobile, and Chinese (FXI) smartphone makers are partnering to develop next-generation 5G smartphones based on Qualcomm’s Snapdragon 855 processor. These smartphone makers include Xiaomi, OPPO, Vivo, OnePlus, and ZTE. In addition to supporting 5G technology, the Snapdragon 855 processor offers some more advanced artificial intelligence features.Our take
Optimism after the G20 Trump-Xi truce drove up soybean prices as the Chinese are expected to resume orders for U.S. agricultural products. Master Limited Partnerships are looking forward to the upcoming OPEC+ meeting this week in Vienna. On the technology side, cloud computing enjoyed rejuvenated investor interest following solid earnings from big players. China and various agricultural commodities like sorghum and corn made this week’s list as the U.S.-China truce should propel U.S. exports to 2017 levels and beyond. Check our previous Ttrends edition at Trending: Cold Weather and Low Inventories Push Natural Gas Prices to Four-Year Highs.
On November 20, Jeffrey Gundlach told Reuters that investors haven’t shown an appetite for Treasuries (TLT) even though US stock markets have fallen. He said, “Obviously, it is not a deflationary bear market, otherwise you would have a bond rally.” Gundlach also advised investors to stay out of investment-grade bonds. Gundlach is concerned that the selling pressure in the US stock markets (IVV) (QQQ) wasn’t accompanied by higher volatility (VIX). Investors should note that the drop on December 4 was also accompanied by higher volumes and volatility.
During an interview with Reuters, DoubleLine CEO Jeffrey Gundlach said that the current inversion of the yield curve (TLT) could signal that the US “economy is poised to weaken.” He added that the inversion at the short-end of the Treasury yield curve implies that the bond market doesn’t think the Fed plans to raise interest rates through 2019. As we discussed in Yield Curve Inverts for the First Time since 2007: What to Know, the spread between five and three-year Treasury yields narrowed to -0.01 percentage points on December 5.
Apple (AAPL) got a downgrade, and Cirrus Logic (one of Apple’s suppliers)(CRUS) pre-announced a miss for the December quarter. But most eyes were focused on the two-pronged trade war and rate move. Suddenly, the Dow (DIA) was down 800 points, and the Nasdaq (QQQ) dropped as much as 3%. The 10-yr treasury yield dropped as low as 2.88% today, down from a high of 3.24% a month ago. And the prevailing wisdom is that when 10-yr yield drops like that, it is foreshadowing lower economic growth ahead. Add that to the Fed still seemingly about to raise short term rates on Dec. 19th to 2.25%-2.5%, and we are very close to an inverted yield curve, which supposedly predicts recessions.
Like we have seen previously, the US (SPY) (VTI) and China (FXI) might have different understandings regarding the trade war truce. If China doesn’t resolve the issues, higher tariffs will come into play. While China’s foreign minister pointed out that the two sides will work towards eliminating the tariffs, the White House’s official statement didn’t mention eliminating tariffs.
Has the Trade War Truce Bonhomie Fizzled? As we noted in the previous article, the United States (SPY) and China (FXI) have agreed to a 90-day temporary trade truce, and there won’t be any new tariffs during the period. While there are several differences between the United States and China (BABA), the pace of the reduction in the US-China trade deficit has been a sore point.
After the meeting between US President Donald Trump and Chinese President Xi Jinping, the United States and China decided on a temporary truce. There won’t be any new tariffs for the next 90 days, and the two countries will continue negotiations to sort out their differences.
According to the IDC, global shipments of wearable devices in the third quarter rose 21.7% year-over-year to 32 million units. The wearable market growth was driven by the launch of new products from Garmin (GRMN), Fitbit (FIT), and China’s (FXI) Huawei. The demand from emerging markets in the Asia-Pacific region rose over 21%.
Chinese stocks, in particular, are surging in early trading making them one of the most exciting areas to shop. Rather than playing the often tricky game of picking winners from losers, you could buy China outright via an exchange-traded fund. The iShares China ETF (NYSEARCA:FXI) is the most liquid one available and holds a diversified basket of publicly traded companies with direct exposure to the Chinese economy.