🥶 Is US-China Tension Thawing Out?

Good morning. US stock futures rose in Friday morning trading as Wall Street braced for a key inflation report.

🤝 US, China meet on economic relations

📝 Our report: Jake Sullivan, U.S. national security advisor, said he voiced concerns over economic security during his talks with Chinese President Xi Jinping and other officials in a rare visit to Beijing held recently. “We had a vigorous give and take on the issue, obviously didn’t come to agreement,” Sullivan told reporters during a press conference at the end of the trip. Just as the U.S. has cited national security concerns for its own restrictions on Chinese tech imports, China has increasingly emphasized the need to protect its economic security.

 🔑 Key points:

• Foreign businesses in China have complained of vague data rules and preferential treatment for local players, as well as subsidies that allow Chinese businesses to sell at far lower prices.

• The Chinese leader said that he hopes the U.S. would view China’s economic growth “in a positive” light and “work with China to find a right way for two major countries to get along with each others,” according to Beijing.

• Tensions between the world’s two largest economies have escalated in recent years, spilling over from trade into finance and technology.

💡 So what: U.S.-China economic relations are vital to the global economy, given that they are the two largest economies with deeply intertwined trade and investment ties. These relations significantly influence global supply chains, markets, and economic stability, affecting industries like technology, manufacturing, and finance. However, the relationship is complex, marked by both cooperation and competition, and disruptions can have widespread impacts, influencing everything from consumer prices to geopolitical stability.

Friday - Consumer Sentiment (final)

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💰 Ratings agency reaffirms US credit rating

WHAT: Ratings agency Fitch affirmed the U.S. credit rating at "AA+" and quipped that the nation's fiscal profile will likely stay the same, no matter who takes the White House. They cited strong income and financial flexibility as key reasons for the rating. “Fitch believes the underlying fiscal position will remain largely unchanged despite the differing economic objectives, tax policies, and spending priorities of Vice President Kamala Harris and former President Donald Trump" the agency said in a statement.

WHY: Fitch cut the U.S. government's top credit rating by one notch last year, drawing an angry response from the White House. The downgrade came after Democratic President Joe Biden and the Republican-controlled House of Representatives reached a debt ceiling agreement that lifted the government's $31.4 trillion borrowing limit, ending months of political brinkmanship.

🏗️ Japanese steel giant boosts commitment to US plants

WHAT: Nippon Steel bumped up its investment in U.S. Steel by over $1 billion, despite facing political and labor pushback against its $15 billion bid for the American steel giant. The company’s $1.3 billion commitment to upgrade facilities in Pennsylvania and Indiana is on top of an earlier commitment to spend $1.4 billion.

WHY: In its statement, Nippon Steel said it will spend at least $1 billion to upgrade the hot strip mill at the Pittsburgh-area Irvin Plant, along with other facilities in Pennsylvania's Mon Valley Works, and about $300 million to improve one of the blast furnaces at Gary Works in Gary, Indiana.

🤖 Apple considers joining OpenAI investing round

WHAT: Apple is reportedly eyeing an investment in OpenAI, valuing the ChatGPT maker at over $100 billion, according to a report from the Wall Street Journal. The news comes a day after the Journal reported that venture-capital firm Thrive Capital would invest around $1 billion in OpenAI, leading the funding round.

WHY: OpenAI-backer Microsoft is also expected to invest in the firm, the report said. Details on how much Apple or Microsoft will invest is yet to be learned according to the report.

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