Harpal Sandhu, chairman of Mint Exchange, said on Monday that the market flow indicates that investors in China have been unloading yuan to move into Bitcoin and other currencies ahead of a trade war. “This is capital flight coming out of China because of trade,” he said. Chinese investors were wise to move out of the currency, which lost value against both the dollar and the yen early last week. Some analysts expect China to devalue the yuan more aggressively if tensions escalate, making exports relatively cheaper.
Mint Exchange is a cryptocurrency clearinghouse that gives traders access to over-the-counter exchanges around the world. Because order flow is sourced from so many exchanges, Sandhu sees where volumes are heaviest. And in the past couple of weeks, “it’s happening during Asian trading hours.”
Daily crypto volume on Mint Exchange tripled in the past two weeks, to $59 million this past Sunday, he said. The selling was so intense that several major exchanges had temporary outages. “These guys can’t handle the volume,” he said. To Sandhu, this indicates that there are many small trades (as opposed to a few big sellers). “Our read is that this is largely retail driven,” he said.
The price jump has brought new energy to a market that lost its oomph as the price of Bitcoin and other digital coins plunged. Who says you can’t win a trade war?
Stocks: Down, Not Out
Stocks went over a cliff as the week dawned, shoved by trade fears and Persian Gulf tensions. Oil rose, retail took a hit, and the VIX spiked 30%. Stocks then clawed its way almost back on conciliatory noises from the White House, despite few signs the Chinese agreed. For the week, the Dow industrials lost 0.69%, to 25,764; the S&P 500 was off 0.76%, to 2859.53; and the Nasdaq Composite shed 1.27%, to 7816.28.
Readying for a Trade War
After President Trump raised tariffs on $200 billion of Chinese goods, China retaliated with tariffs on $60 billion of U.S. goods. The White House then moved to provide subsidies for tariff-battered farmers, produced an executive order to ban telecom-gear purchases from “foreign adversaries” like Huawei (which also landed on Commerce’s “entity list” as a national-security threat), said it would postpone auto tariff hikes on Europe and Japan, and lifted steel and aluminum tariffs on Mexico and Canada. Treasury Secretary Steven Mnuchin said talks would resume soon, but China denied that a meeting had been set.
Sabers Rattle in the Gulf
Four tankers were attacked near the Strait of Hormuz. Exactly what occurred remains murky, though a U.S. source blamed Iran, which it denied. Iran had said it would resume nuclear enrichment, with U.S. sanctions squeezing its oil exports and a U.S. carrier group heading to the region. Secretary of State Mike Pompeo made an unplanned visit to European diplomats meeting in Brussels to discuss Iran. And the Department of Defense presented a plan to deploy 120,000 U.S. troops if Iran (or its proxies) attacked or Iran accelerated its nuclear program. Trump said he didn’t want a war.
Supremes on the App Store
The Supreme Court said cases brought against Apple arguing that its App Store is a monopoly could be brought to court. Consumers have to buy apps for Apple devices through its App Store; the company has claimed it just provides a marketplace and that app developers set prices. The case began in 2011 and could take years before it’s resolved.
Some 44 states joined in a lawsuit charging that generic-drug maker Teva Pharmaceutical had engaged in widespread price fixing with 19 other generic producers. The case only adds to the woes of the generic companies: Shares have been falling, ironically, because of lower prices.
A Roundup Trifecta
Bayer lost its third trial over the herbicide Roundup, with a jury in California awarding some $2 billion to a couple who claimed the product gave them cancer. Bayer will appeal. The German chemical giant, which picked up Roundup when it bought Monsanto last year, is reeling, with the stock falling and shareholders in revolt.
Goldman’s Wealth Advisor
Goldman Sachs said it would pay $750 million for United Capital Financial Partners, the Newport Beach, Calif.–based roll-up of registered investment advisors. United, led by CEO Joe Duran, now has 90 offices in the U.S., some 220 advisors, and $25 billion in assets.
The U.S. birthrate fell to a 32-year low. Births still outnumber deaths, but the gap is narrowing, particularly with an aging population and reduced immigration. Alabama, meanwhile, passed an abortion ban, gearing up for a court fight.
-- Robert Teitelman and Dan lam