Markets enter the new week as the US President Donald Trump extended unemployment payments and suspended income tax till the end of the year.
US stimulus talks
Trump’s steps immediately drew fire from the Democrats who failed to reach an agreement with the Republicans and the White House in the past two weeks of negotiations for a new economic stimulus and aid package. In an interview with Fox TV on Sunday, Speaker of the House of Representatives Nancy Pelosi called Trump’s executive order “absurdly unconstitutional” and signaled that she would take the case to court.
Officials from the Congress and the White House, which are about to go to court, still expressed their willingness to resume negotiations.
The coming days will show whether the parties will choose dialogue again or enter into a legal conflict over Trump’s decisions.
Iran arms embargo
As the US pushes for an extension of an arms embargo on Iran at the United Nations Security Council (UNSC), China and Russia are expected to veto its proposal.
The US is expected to officially table its anti-Iran motion on Monday and to a vote on Tuesday, according to information provided by diplomats in the UN to the Foreign Policy magazine. China and Russia have made it clear that they will veto the US decision. However, they may not have to. Washington currently already lacks the minimum nine votes it needs to pass a resolution in the Security Council.
Hong Kong law
The repercussions of the US sanctions on the Chinese Communist Party’s officials in Hong Kong continue.
Hong Kong media magnate Jimmy Lai was arrested on Monday after the Chinese Communist Party passed the new security law to Hong Kong. Lai’s arrest can add the tensions on the Beijing-Washington line. Lai is also a citizen of Taiwan (Republic of China) and Britain. Lai, one of the biggest supporters of freedom of expression, democracy, and autonomy in Hong Kong, refused to leave Hong Kong after the law passed.
The Taiwan visit
Another issue Beijing has reacted to and will protest again is the fact that US Secretary of Health Alex Azar has become the top American official to set foot in Taiwan since the United States changed its China policy in 1979, following the rest of the world.
On Monday, Azar met with Tsai Ing-wen, the head of the democratic Chinese administration on the island of Taiwan which the CCP claims as part of its territory.
TikTok
The Chinese social media platform TikTok, which Trump ordered to be banned in the US in 45 last week, is expected to legally challenge the decision. In the meantime, Microsoft’s negotiations to buy TikTok will be the focus of both the stock market and the China-US tensions over trade and technology.
South China Sea
The US efforts to form an alliance against Communist China on all claims on the South China Sea will continue.
Over the past month, Pompeo made statements against China in favor of the US allies in the region such as Australia, Philippines, Vietnam, Brunei, Malaysia, and Indonesia, and conducted intense telephone diplomacy with counterparts from these countries. The countries in question oppose China’s claims in the South China Sea, one of the most important international trade routes, and the US is on their side.
The most recent statement on the subject came from China’s historical enemy and rival Japan. Japan’s Defense Minister Taro Kono, the strongest US ally in the Pacific, sent the harshest message to China, saying “anyone who tries to change the status quo by force must pay a heavy price.”
RBNZ meeting
There is silence from the major central banks this week. But the New Zealand Reserve Bank (RBNZ) policymakers are meeting on Wednesday. RBNZ is expected to keep interest rates on hold.
Economic Calendar
Monday: Japan — Mountain Day, US JOLTs Job Openings
Tuesday: UK Average Earnings Index +Bonus, UK Claimant Count Change, US EIA Short-Term Energy Outlook, US PPI, US Building Permits
Wednesday: RBNZ Interest Rate Decision, RBNZ Rate Statement, RBNZ Press Conference, UK GDP, UK Manufacturing Production, UK Monthly GDP 3M/3M Change, US Core CPI, US Crude Oil Inventories
Thursday: Australia Employment Change, US Initial Jobless Claims
Friday: China Industrial Production, US Core Retail Sales, US Retail Sales
