Trade war? Ouch, stock markets don’t like it. Trump has used his big trade stick to enact $50 bln of sanctions on China imports. The rhetoric in China went straight up to 11! Fury in the papers and from the official organs of state. BUT! The Chinese responded with a mere $3 bln of tariffs against US imports. Its’ a measured response – acknowledging there is power in Trump’s charges and ability to damage China.
Its’ what the Chinese haven’t done that’s interesting. When they cancel Boeing orders, and put the pressure on US Soya Exports – that’s when yesterday’s 3% stock market wobble becomes some more centrifugal… Stocks gapped down through long-term moving averages y’day – in thin holiday markets, ahead of quarter-end, I suspect next week is going to be torrid!
It’s elsewhere things get really silly. Like more debunkings from Trump’s Casablanca as he sacked his National Security Advisor – a general he disagreed with, for a civilian who shares his enthusiasm for big-stick diplomacy. Elsewhere, we’re wondering if Facebook looks terminally punctured.
And, then there is UK financial Aviva making a complete *rs* of itself.
Why? Aviva has been a major story in sterling markets the past few weeks. Aviva decided to redeem its outstanding Preference Shares (a traditional form of non-voting debt-like equity) at par on the basis they will no longer count as capital from 2026. Problem was the Prefs were trading around 175! Meaning investors were going to be absolutely gutted – and Aviva justified it as good for shareholders!
There is nothing in the documentation to say such a redemption was ever envisaged or permitted – investors had no reason to expect the bonds would be redeemed at par against their interest. Yet, an obscure precedent involving Lloyds redeeming bonds early gave a fug of dubious legality to the process.