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  • U.S. stocks and government bond yields slumped as fresh data showed that the manufacturing sector contracted in August, adding to worries about the global economy and impact of trade tensions between the U.S. and China.
  • The Institute for Supply Management’s (ISM) gauge of U.S. factory activity contracted for the first time since 2016.
  • The selling in stocks also comes after Beijing said it had lodged a complaint with the World Trade Organization over U.S. tariffs.
  • On Sunday, the U.S. imposed fresh tariffs on Chinese goods including clothing, tools and electronics as retaliatory Chinese tariffs on U.S. soybeans, crude oil and pharmaceuticals also took effect.
  • The Chinese yuan fell to its lowest level in more than a decade in offshore trading, as it neared 7.2 against the U.S. dollar.
  • Japan on Monday said its manufacturers cut spending during the second quarter for the first time in two years, adding to a series of recent data suggesting the U.S.-China trade fight was dampening the world economy.
  • Meanwhile, the British pound hit its lowest level in 34 years against the dollar after Prime Minister Boris Johnson warned lawmakers not to thwart his plans for quitting the European Union with or without a deal on Oct. 31.


China, U.S. kick off new round of tariffs in trade war

  • The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday – including footwear, smart watches and flat-panel televisions – as China began imposing new duties on U.S. crude, the latest escalation in a bruising trade war.
  • A new round of tariffs took effect from 12:01 a.m. EDT, with Beijing’s levy of 5% on U.S. crude marking the first time the fuel had been targeted since the world’s two largest economies started their trade war more than a year ago.
  • A variety of studies suggest the tariffs will cost U.S. households up to $1,000 a year and the latest round will hit a significant number of U.S. consumer goods.
  • Tariffs of 15% on cellphones, laptop computers, toys and clothing are to take effect on Dec. 15.

China’s Yuan Drops to Fresh 11-Year Low

  • China’s yuan weakened further on Tuesday, at one point nearing 7.2 to the dollar, less than a month after Beijing let the currency pass a threshold it had previously defended.
  • The yuan crossed 7 per dollar on Aug. 5, days after President Trump announced tariffs on a wider range of Chinese goods, and has since slid further, as both China and the U.S. have detailed fresh tariff plans.
  • Chinese authorities are seeking to offset the impact of higher charges on exports to the U.S. without sparking a stampede of money abroad, or depleting foreign-exchange reserves, analysts and investors say.
  • To maintain that balance, they have set a stronger anchor rate for daily trading than market prices would imply for most of the past month and, traders say, sometimes intervened to support the currency.

China lodges tariff case at WTO against the U.S.

  • China has lodged a complaint against the United States at the World Trade Organization over U.S. import duties, the Chinese Commerce Ministry said on Monday.
  • China did not release details of its legal case but said the U.S. tariffs affected $300 billion of Chinese exports.
  • The lawsuit is the third Beijing has brought to challenge U.S. President Donald Trump’s China-specific tariffs at the WTO, the international organization that limits the tariffs each country is allowed to charge.

Chinese Steel Slowdown Slams Iron-Ore Prices

  • Iron-ore prices posted their biggest one-month fall in almost eight years as China’s huge steel engine cools and global shipments of the commodity rise.
  • The price fell 27% to $85.85 a metric ton by the end of August, the most since October 2011, according to S&P Global Platts.
  • Both of the forces that drove a surge in iron-ore prices at the start of 2019 have eased. Chinese steel production fell in June and July, albeit from record rates, and supplies of iron ore have picked up, particularly from Brazil.
  • Chinese mills, which buy seven in every 10 tons of iron ore traded world-wide, have been buffeted on a number of fronts. The nation’s trade war with the U.S. has rattled confidence in the outlook for China’s already-slowing economic growth.
  • The mills also face weaker profit margins, a depreciating yuan and environmental restrictions, all of which have exacerbated the conventional summer lull in steel demand.

Google to pay up to $200 million to FTC on YouTube probe: source

  • Google will spend up to $200 million to settle a Federal Trade Commission investigation into YouTube’s alleged violation of a children’s privacy law, a person briefed on the matter told Reuters.
  • The settlement is set to be announced next week and will be the largest ever fine imposed for violating the Children’s Online Privacy Protection Rule by collecting personal information from kids without parental consent.
  • The FTC voted 3-2 to approve the settlement and sent it to the Justice Department as part of the review process, Reuters confirmed, citing a person familiar with the matter.

Murdoch’s Fox launches sports betting with FOX Bet

  • When Rupert Murdoch’s Fox launches the FOX Bet sports betting platform on Monday, it will do what no other major media company has done in North America: become the face of a sports gambling platform.
  • FOX Bet, which launches in New Jersey, is operated through a partnership with gaming provider The Stars Group (TSG).
  • It lent its splashy national name brand recognition, stars, expert commentary and news to attract casual betters.

Catastrophes set to drive 2020 reinsurance rates higher

  • Big insurance losses from hurricanes, wildfires and other natural disasters over the past two years are set to push reinsurance renewal rates higher in January, ratings agencies said.
  • After falling for several years due to competition and fewer natural disasters, renewal rates have started to climb in the past couple of years and for 2020 are set to rise on average by as much as 5%.
  • However, as Hurricane Dorian ravages the Bahamas and bears down on the United States, Fitch, Moody’s and S&P Global said some rates could jump by much more than that.

U.S. LNG grabs 10% market share as January-August exports equal 2018 volumes

  • U.S. exports of liquefied natural gas (LNG), negligible just three years ago, now amount to 10% of the global market and at 22 million tonnes so far this year are equal to the total volumes pumped out in 2018, Refinitiv data showed on Tuesday.
  • The data, comprised of tracked individual journeys made by LNG tankers from supply source to destination, also showed LNG production hit an all-time high last month of 31 million tonnes.
  • As global volumes grow, Qatar, for years the world’s largest LNG supplier, lost market share to Australia, which exported more LNG than any other country in the past two months.

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The US manufacturing sector contracted in August, its first decline in three years

  • A gauge of U.S. manufacturing from the Institute for Supply Management showed the sector contracted in August, its first decline since 2016.
  • The ISM U.S. manufacturing PMI (purchasing managers’ index) declined to 49.1% in August, the lowest reading in more than three years.
  • Any reading below 50% signals a contraction.
  • The August contraction ended a 35-month expansion period where the PMI averaged 56.5%, according to ISM.
  • Data from IHS Markit also released Monday showed the U.S. manufacturing PMI slowed to 50.3 in August, its lowest level since September 2009.

Small Businesses’ Faith in Economy Hits Low on Tariff Uncertainty

  • Higher tariffs on Chinese imports are adding costs and uncertainty for small businesses and dimming their outlook for the U.S. economy.
  • Economic confidence among small firms fell in August to the lowest level since November 2012, according to a monthly survey of more than 670 small companies conducted for The Wall Street Journal.
  • The portion of respondents that expect the economy to worsen over the next 12 months rose to 40%, compared with 29% in July and 23% a year ago.
  • Some small-business owners support the tariffs, even if they are painful in the short run, and a majority say they are optimistic about their finances. Also, tariffs are just one factor contributing to changes in the economic outlook.
  • But business owners on both sides of the tariff issue say the uncertainty—about if and when the duties will be applied, how large they will be and how long they will remain in effect—is making it hard to plan and is hurting their businesses.

Trump warns China against dragging its feet in trade talks

  • U.S. President Donald Trump said on Tuesday that trade talks between the United States and China were going well, though he warned that he would be “tougher” in negotiations if the discussions drag on until his second term.
  • “We are doing very well in our negotiations with China,” Trump wrote in a post on Twitter, arguing that Beijing could ill afford to drag its feet in talks, given the damage U.S. tariffs were inflicting on its economy.
  • Trump said if the United States and China did not resolve their trade dispute and he won re-election, “Deal would get MUCH TOUGHER! In the meantime, China’s Supply Chain will crumble and businesses, jobs and money will be gone!”
  • He did not provide details about the negotiations or how they could become tougher.

U.S. Signs 5G Agreement with Poland Amid Huawei Concerns

  • U.S. Vice President Mike Pence and Polish President Andrzej Duda signed an agreement tightening guidelines on 5G network security, part of a wider push by the Trump administration that has targeted Chinese telecom giant Huawei.
  • The joint declaration didn’t mention Huawei by name but said Poland would carefully review any company interested in building new, faster 5G internet infrastructure to establish “whether the supplier is subject, without independent judicial review, to control by a foreign government.”
  • U.S. officials have long argued that, as a Chinese company, Huawei has no choice but to comply with the demands of the Beijing government and the Communist Party.

Huawei Accuses the U.S. of Cyberattacks and Threats to Its Employees

  • China’s Huawei Technologies accused the U.S. of “using every tool at its disposal” to disrupt its business, including launching cyberattacks on its networks and instructing law enforcement to “menace” its employees.
  • Huawei accused the U.S. of “sending FBI agents to the homes of Huawei employees” to pressure them into spying on the company.
  • The company also said the U.S. has launched “cyberattacks to infiltrate Huawei’s intranet” and has searched, detained and arrested Huawei employees and its business partners.
  • Huawei didn’t provide specific evidence to back up the allegations.

Impasse on Infrastructure Funding Stirs Concern

  • As Congress returns for the fall, President Trump and congressional Democrats remain stalemated over moving forward on a large infrastructure package that advocates and engineers say is urgently needed.
  • Current infrastructure funding doesn’t run out for another year, so the parties have some time.
  • The Senate may take action this fall on the latest attempt to pass an infrastructure measure, but its fate remains unclear as lawmakers struggle to figure out how to pay for it.
  • In 2018, the pace of repair on America’s bridges slowed to the lowest point in five years, according to the American Road and Transportation Builders Association. At that rate, it would take more than 80 years to significantly repair bridges.

Democratic Hopefuls Gear Up for Busy Campaign Calendar

  • Democratic presidential candidates are ramping up for a post-Labor Day push to win the party’s nomination for the White House, with Iowa caucuses now just five months away and the race still wide open.
  • Dozens of Democratic voters interviewed by The Wall Street Journal last month and over the weekend said they hadn’t settled on a candidate and instead listed several favorites.
  • Mr. Biden maintains a polling lead, although Ms. Warren has gained traction in recent weeks.
  • He’s at about 29% in the RealClearPolitics average, with Ms. Warren and Mr. Sanders at about 17%.
  • A polling lead around Labor Day doesn’t always mean much. At this point in 2007, Hillary Clinton led the field in Iowa and nationally. She finished third in the caucuses and lost the nomination to Barack Obama.

Dive Boat Burns in California; Dozens Dead

  • Dozens of people are dead after a fire destroyed a diving boat in Southern California, an event likely to rank among the nation’s worst maritime tragedies in recent years.
  • At least 25 people were confirmed dead and nine others were missing, the Associated Press reported, citing the U.S. Coast Guard.
  • Officials said Monday that they were working to stabilize the sunken vessel and search for the remaining passengers as they investigate what caused the fire and what prevented most of the 39 people on board from escaping.

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ECB package could include rate cut, tiering, new guidance: sources

  • ECB policymakers are leaning toward a stimulus package that includes a rate cut, a beefed-up pledge to keep rates low for longer and compensation for banks over the side-effects of negative rates, five sources familiar with the discussion said.
  • Many also favor restarting asset buys, a significantly more powerful weapon, but opposition from some northern European countries is complicating this issue, the sources, who declined to be named, added.
  • With economic growth slowing as a global trade war threatens to escalate, the ECB has all but promised to announce more stimulus after its Sept 12 meeting, leaving markets only to guess about the composition of the expected package.
  • The sources added that there was no reason to stagger stimulus moves over several meetings, even if Brexit uncertainty was still likely to rise.
  • But they said it was also vital for the ECB to leave some tools unused for Christine Lagarde – due to take over as president from Mario Draghi on Nov 1 – to deploy, if needed.

Factories fettered by trade wars, faltering demand in August

  • The bitter trade war between China and the United States kept global factory activity largely in decline in August, business surveys showed, strengthening the case for policymakers to unleash fresh stimulus to fend off recession risks.
  • An ongoing decline in the euro zone’s export-reliant powerhouse of Germany meant factory activity in the bloc contracted for a seventh month in August, bolstering expectations the European Central Bank will ease monetary policy next week.
  • IHS Markit’s August final manufacturing Purchasing Managers’ Index (PMI) was 47.0, matching an earlier flash reading but well below the 50 level separating growth from contraction.
  • Manufacturing in Britain contracted last month at the fastest rate in seven years.
  • Export-reliant South Korea, Japan and Taiwan saw factory activity shrink, underscoring the growing pain from the tit-for-tat tariff war between the world’s two-largest economies.
  • Data on Friday showed India’s economic growth hit a 6-year low in April-June, raising chances of the central bank cutting interest rates further at its next meeting.
  • But in a surprise development, China’s factory activity expanded as output edged up, a private sector PMI showed, although orders remained weak and business confidence faltered.

China’s factory activity shrinks for fourth month as trade woes deepen

  • Factory activity in China shrank in August for the fourth month in a row as the United States ramped up trade pressure and domestic demand remained sluggish, pointing to a further slowdown in the world’s second-largest economy.
  • The Purchasing Managers’ Index (PMI) fell to 49.5 in August, China’s National Bureau of Statistics said on Saturday, versus 49.7 in July, below the 50-point mark that separates growth from contraction on a monthly basis.
  • Export orders fell for the 15th straight month in August, although at a slower pace, with the sub-index picking up to 47.2 from July’s 46.9.
  • The data showed activity at medium- and small-sized firms contracted, even as large manufacturers, many backed by the government, managed to expand in August.

U.K. Lawmakers Move to Block Boris Johnson From No-Deal Brexit

  • British lawmakers are expected to vote Tuesday on whether to begin steps aimed at preventing Prime Minister Boris Johnson from leaving the European Union on Oct. 31 without an agreement to smooth the way, a process that if successful could lead to a snap election next month.
  • Opposition and rebel lawmakers from Mr. Johnson’s Conservative Party are discussing how to tie the prime minister’s hands and force him to ask the EU for a further extension of Britain’s EU membership to avoid a no-deal exit at the end of next month.
  • Mr. Johnson, who has said his aim is to deliver on the outcome of the 2016 referendum to leave the bloc, said he needs to keep a no-deal exit on the table to persuade the EU to improve the terms of the deal agreed with his predecessor, Theresa May.

China aims to rev up shale gas drive, wean itself off imports amid U.S. trade row

  • China aims to slash its growing dependence on gas imports by boosting domestic projects like shale fields as the security of its energy supply comes under the spotlight amid a festering trade war with the United States.
  • The report, released on Saturday by the oil and gas department at the National Energy Administration (NEA) and a State Council research arm, calls for boosting natural gas production in key resource basins in the southwestern province of Sichuan, the Erdos basin in the north and offshore China.
  • According to the report, China’s gas consumption will rise by about 10% this year to 310 billion cubic meters (bcm), and to continue growing until 2050.
  • Though slowing from last year’s 17.5%, 2019’s growth still represents an annual addition of 28 bcm, faster than the annual average growth of 19 bcm during 2007-2018, the report said.
  • While China imposed tariffs on imports of liquefied natural gas (LNG) from the United States starting last year, it remains the world’s second-largest buyer of the super-chilled fuel.

China’s Xiaomi plans $1.5 billion buyback to arrest stock tumble

  • Chinese smartphone maker Xiaomi announced a HK$12 billion ($1.53 billion) share buyback plan on Tuesday, in a reversal of its cash-management strategy that is aimed at boosting its floundering stock.
  • Just last week the company scrapped an already delayed plan to offer equity in China, a move aimed at attracting mainland investors hungry to buy into global companies.
  • The company said then it had enough money and would focus on business development.

Beijing Asserts Power to Declare Emergency to Quell Hong Kong Unrest

  • China’s top office for Hong Kong affairs said it had legal power to unilaterally declare a state of emergency in the city if unrest continues unabated, while laying out specific measures for the city’s leader to address protests.
  • The comments came amid hints of tensions and disagreements between Hong Kong’s chief executive, Carrie Lam, and her bosses in Beijing over what should be done to try to allay widespread public sentiment against the government in the former British colony.
  • Beijing made the comments—in which officials referred to the protest movement becoming more like the “color revolutions” that unseated governments in the Middle East and Eastern Europe—after a weekend of clashes that disrupted the city’s airport.
  • A workers’ strike and a class boycott by thousands of students have extended demonstrations into the workweek.

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  • The Treaty of Paris officially ended the Revolutionary War between the United States and Great Britain. (1783)
  • Great Britain and France declared war on Germany during World War II. (1939)

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