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Wall Street surges as Trump hails 'extraordinary' trade talks with China - business live Sports Direct's Mike Ashley warns that high street is dying - business live
(35 minutes later)
High stores have to change, it’s not just about a sea of clothing any more, says Mike Ashley.
He suggests retailers need to be much more innovative -- maybe with different opening hours, more self-service tills.
In another burst of blue-sky thinking, Mike Ashley suggests high street stores could offer services such as free computer gaming to lure customers in.
Retail analyst Neil Saunders isn’t impressed:
Tax the web by 20%, says Mike Ashley. Maybe he forgets people already pay 20% VAT on most non-food. Making people pay 40% sales tax is ludicrous. Idiotic solution to a complex problem.
Here’s some video clips of Mike Ashley in action:
"Everybody knows you went in House of Fraser and it was like nobody was in there. The only people who were in there appeared to be the staff."House of Fraser boss Mike Ashley on combative form answering questions from MPs.@itvtynetees @itvcalendar pic.twitter.com/AD5Nn8wB1Q
'I'm not comparing myself to God... I'm not sitting my office stroking a white cat.'More highlights from Mike Ashley's evidence to MPs on the state of high streets:@itvtynetees @itvcalendar pic.twitter.com/uhF2J4hLCi
Mike Ashley now insists that he doesn’t “sit in an office stroking a white cat”, trying to decide which House of Fraser stores to shut following this year’s takeover.
Of course I’m worried about the state of the high street, he continues.
It’s not my fault the high street’s dying, is it? It’s not House of Fraser’s fault, it’s not Marks & Spencer’s fault, it’s not Debenham’s fault.
It’s very simply why the high street is dying - it’s the internet. The internet is killing the high street.
That’s quite a statement, given Sports Direct has hundreds of stores in the UK, just bought House of Fraser, and also has a stake in Debenhams.
"The internet is killing the high street", you have to address that problem if you want to save the high street says Mike Ashley
But Ashley has a cunning plan -- a new tax on web-only retailers, to encourage them to maintain a high street presence too.
Mike Ashley wants sales tax of online business where online is >20% of sales, which he says will make multichannel retailers invest in high streets in order to maintain <20% online penetration to dodge tax.
Mike Ashley: "You have to tax the internet for the good of the high street....tax the web boys 20 per cent."He's already described the high street as "dead, dead, dead...flat-lining...in the bottom of the swimming pool."
Q: You promised to turn House of Fraser into the Harrods of the high street and keep its 59 stores open, but now people are worried that their local store will close. How will you decide which stores to shut?
Ashley looks like he’s going to burst a blood vessel.
I never said I would keep 59 stores over. Never, never, never...
Everyone knows I set a target of keep 80% of the estate open, the Sports Direct boss insists.
What person could keep 59 stores open - beside God? It’s impossible, it can’t be done.
Even keeping 80% open would be messianic, Ashley indicates, before adding modestly that he’s not comparing himself to God.
Mike Ashley is being grilled by MPs."If I managed to keep 80 per cent [of HoF stores] open that might be a God-like performance...and before anybody says it I'm not comparing myself to God..."
Over in the UK parliament, the boss of retailer Sports Direct is testifying to MPs about the future of the high street.
But Mike Ashley actually finds himself fending off tough questions about his company’s business practices, following the takeover of House of Fraser.
First off, he’s accused of letting customers down - by not refunding orders placed online just before House of Fraser went into administration. Ashley insists that customers received gift cards instead, as SPD got to grips with the company’s problems.
Mike Ashley is in front of the HCLG committee and is upset because a session that's supposed to be about the future of the high street has started off with questioning about House of Fraser gift cards post-administration and rescue
Ashley then asked whether he’ll be putting House of Fraser staff onto zero-hours contracts, something he’s been criticised for using heavily at Sports Direct.
Ashley insists that “the vast majority of staff love them”, but he won’t commit not to roll them out more heavily at HoF.
Getting impassioned, Ashley insists that he needs to keep all options open.
“I can’t, it’s impossible what you’re asking. It doesn’t make sense.
The high street has to change what it offers consumers.
That means stores might need to open later, and close later, Ashley suggests, telling MPs firmly:
Stop trying to showboat... I thought we were here to save the high street.
This is going to be a long hour for Mike Ashley. Wants to talk about the high street...has been asked about House of Fraser administration and now being tackled on zero hour contracts...
"The only people in there appeared to be the staff" Mike Ashley on House of Fraser
Mike Ashley tells MPs to "stop showboating" by asking him questions about House of Fraser. "I thought we were here to talk about the high street."
Mike Ashley already seems quite angry in meeting with MPs. He defends use of zero hours contracts an says vast majority of sports direct staff want to be on them
Mike Ashley tells MPs to "stop showboating" by asking him questions about House of Fraser. "I thought we were here to talk about the high street."
For all Donald Trump’s optimism, many financial analysts are unconvinced that the US and China can settle their trade dispute in just 90 days.For all Donald Trump’s optimism, many financial analysts are unconvinced that the US and China can settle their trade dispute in just 90 days.
Reforming Beijing treatment of intellectual property will take much longer, and there’s only so much US produce which China can really absorb to help mop up the trade gap.Reforming Beijing treatment of intellectual property will take much longer, and there’s only so much US produce which China can really absorb to help mop up the trade gap.
But still, the markets are up.But still, the markets are up.
And that’s because the immediate threat of a deeper trade war has receded.And that’s because the immediate threat of a deeper trade war has receded.
As Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management, puts it:As Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management, puts it:
“To be sure, underlying problems remain unresolved. It is not as though existing tariffs are on the verge of being unwound. But what Xi has managed to extract from Trump is a stay on any escalation for three months. That interlude should see a stronger effort to set a framework for more talks and quid-pro quos.“To be sure, underlying problems remain unresolved. It is not as though existing tariffs are on the verge of being unwound. But what Xi has managed to extract from Trump is a stay on any escalation for three months. That interlude should see a stronger effort to set a framework for more talks and quid-pro quos.
In the long term, though, achieving full trade détente will be tricky:In the long term, though, achieving full trade détente will be tricky:
“The best one can hope for in three months’ time is a trade and geopolitical deal in which we see a road-map for China to materially raise oil and agriculture imports from the U.S. to cut the bilateral surplus by more than one-half in about 1-2 years’ time. That will result in a diversion of Chinese imports from U.S. foes such as Russia and Iran, and possibly Saudi and rest of OPEC. I would imagine the Chinese would also acquiesce to at least some softening of U.S. access to technology and finance in China. Signals to this effect came from Xi suggesting he would not object to the Qualcomm-NXP deal if this were presented again.“The best one can hope for in three months’ time is a trade and geopolitical deal in which we see a road-map for China to materially raise oil and agriculture imports from the U.S. to cut the bilateral surplus by more than one-half in about 1-2 years’ time. That will result in a diversion of Chinese imports from U.S. foes such as Russia and Iran, and possibly Saudi and rest of OPEC. I would imagine the Chinese would also acquiesce to at least some softening of U.S. access to technology and finance in China. Signals to this effect came from Xi suggesting he would not object to the Qualcomm-NXP deal if this were presented again.
“The highest priority for the Chinese authorities at the moment is to stabilize their economy. In this context, a 90-day truce should boost local sentiment, and prove more important from a psychological standpoint than recent policy stimulus which was seen as tepid, if not grudging.“The highest priority for the Chinese authorities at the moment is to stabilize their economy. In this context, a 90-day truce should boost local sentiment, and prove more important from a psychological standpoint than recent policy stimulus which was seen as tepid, if not grudging.
In another boost to the White House, the US manufacturing sector has posted another month of strong growth.In another boost to the White House, the US manufacturing sector has posted another month of strong growth.
The Institute for Supply Management has reported that new orders, employment levels and activity also jumped last month, while the prices paid by manufacturers fell.The Institute for Supply Management has reported that new orders, employment levels and activity also jumped last month, while the prices paid by manufacturers fell.
This drove ISM’s monthly healthcheck on America’s factory sector up to 59.3. from 57.7. That level is consistent with strong growth.This drove ISM’s monthly healthcheck on America’s factory sector up to 59.3. from 57.7. That level is consistent with strong growth.
There are some major names among the big movers on Wall Street today.There are some major names among the big movers on Wall Street today.
Aircraft maker Boeing has gained 6%, construction and machinery business Caterpillar is up 4%, and Apple has gained 2.6%. That suggests investors are optimistic that the trade war time-out will yield results.Aircraft maker Boeing has gained 6%, construction and machinery business Caterpillar is up 4%, and Apple has gained 2.6%. That suggests investors are optimistic that the trade war time-out will yield results.
Chipmakers AMD (+7.8%) and NVIDIA (+6%) are also romping ahead.Chipmakers AMD (+7.8%) and NVIDIA (+6%) are also romping ahead.
Randeep Somel, Director of Global Equities at M&G, explains why markets are upbeat:Randeep Somel, Director of Global Equities at M&G, explains why markets are upbeat:
The rally seen this morning in equity markets show that the escalating trade disputes are a significant concern to the global growth outlook of the world economy. Whilst its very early days and the process of normalising the trading relationship with China is going to be a complex process – today, at the very least is a signal that those negotiations can begin.The rally seen this morning in equity markets show that the escalating trade disputes are a significant concern to the global growth outlook of the world economy. Whilst its very early days and the process of normalising the trading relationship with China is going to be a complex process – today, at the very least is a signal that those negotiations can begin.
Riskier assets such as base metals and oil producers, as well as the US and European car manufacturers and associated supply chains are likely to show the most positive reflection of the news as they have borne the brunt of the negative headlines for most of this year.”Riskier assets such as base metals and oil producers, as well as the US and European car manufacturers and associated supply chains are likely to show the most positive reflection of the news as they have borne the brunt of the negative headlines for most of this year.”
At 2.54pm FTSE 100 up 103 points st 7083 - DJIA up 342 points at 25881At 2.54pm FTSE 100 up 103 points st 7083 - DJIA up 342 points at 25881
After a minute’s silence to honour President George H.W Bush, Wall Street has opened, and shares are rallying hard.
The Dow Jones industrial average has jumped by 412 points, or 1.6%, to 25,950, in early trading, following upbeat comments from Donald Trump and Stephen Mnuchin in the last couple of hours.
The broader S&P 500 index is up 1.5%, while the Nasdaq has gained 2%.
Industrial stocks and technology firms are leading the rally, on relief that the US will not be imposing tougher tariffs on China -- at least not for 90 days.
Nick Payne, head of global emerging market equities, Merian Global Investors, says investors around the globe are feeling much cheerier.
“The 90-day truce in the Sino-US trade war agreed between President Xi and President Trump in Buenos Aires is a welcome development in reducing tension.
The very fact that both sides have reopened dialogue is a good step forward and should help sentiment and asset prices in emerging markets. Of course, hard yards lie ahead in reaching a comprehensive agreement, but for now, both sides can claim a “win”. US consumers can cheer that their manufactured-in-China favourites like iPhones will not be increasing in price for Christmas.
NYSE holds one minute of silence in honor of President George H.W. Bush pic.twitter.com/uqHgwuB28t
Donald Trump is claiming that China’s promise to cut tariffs on US car imports, from 40%, is a win.
However, Beijing only raised the tariff to 40% this summer after the US launched its trade war. A few months earlier, China actually cut the tariff from 25% to 15%.
Brad Setser of the Council of Foreign Relations reckons the tariff won’t be slashed below 15%.
Keep in mind:China’s current tariff on US cars is 40%.China’s current tariff on other foreign cars is 15%.Trump says China is “reducing and removing” tariffs. That might just mean getting US back to 15% level as trade war cools. #trade
Agree with @byHeatherLong.Pretty sure China won't go below 15% just for the U.S.And BMW is making a major investment in China (China let it take control of its JV) which suggests that it will be hard to return to the previous level of US exports to China in a durable way. https://t.co/RMx6Ou2GLd
Mnuchin says the Buenos Aires dinner lasted over three hours, says it included “a very detailed discussion.” Says “I’m taking president Xi on his word and his commitment to President Trump, but they have to deliver on this.” pic.twitter.com/YnNYtkEdke
US treasury secretary Stephen Mnuchin is also cheering the trade war truce.
Speaking on CNBC a few moments ago, Mnuchin says that the 90-day hiatus is a significant step:
This is the first time that we have a commitment from them that this will be a real agreement.
However...Mnuchin added that Beijing to follow through on its commitments, and open its economy more widely, and fairly, to US companies:
“They put on the table an offer of over $1.2 trillion in additional commitments. But the details of that still need to be negotiated.
This isn’t just about buying things. This is about opening markets to U.S. companies and protecting U.S. technology. Those are very important structural issues to the president.”
Treasury Sec. Mnuchin tells CNBC he is 'hopeful' they can turn Trump-Xi discussions into real trade agreement https://t.co/VnZ4mpxWmP
More optimism from the White House:
President Xi and I have a very strong and personal relationship. He and I are the only two people that can bring about massive and very positive change, on trade and far beyond, between our two great Nations. A solution for North Korea is a great thing for China and ALL!
The US president is awake, and in an effusive mood after his negotiations with Xi Jinping on Saturday night.
Donald Trump is tweeting that the trade truce can be a win for both the US and China -- a point analysts have also made today.
My meeting in Argentina with President Xi of China was an extraordinary one. Relations with China have taken a BIG leap forward! Very good things will happen. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed. Level the field!
Farmers will be a a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!
Salman Ahmed, chief investment strategist at Lombard Odier IM, agrees that Trump and Xi made a breakthrough:
“The much anticipated dinner between the two leaders resulted in the first major breakthrough since talks broke down in May. For now, China has agreed to buy more US products, including agricultural goods, and to tackle the trade imbalance concern. President Xi also agreed to designate fentanyl a controlled substance, in a move which was described as a “wonderful humanitarian gesture” in a statement issued by the White House on Saturday.
“On trade, President Trump said the US will not go ahead with the implementation of a 25% tariff rate scheduled for January. The tariffs on $200 billion worth of products will be left at the 10% rate for the next 90 days while both parties attempt to negotiate structural changes.
“Signs of rapprochement between China and the US is certainly good news. This does not reflect a definitive shift in the relationship between the US and China, but the opening up of negotiations is certainly a big step in the right direction.
Stephen Cooper, Head of Industrial Manufacturing at KPMG UK, is concerned by today’s UK factory data (even though anxious stockpiling drove growth up):
“Brexit and supply chain worries have dented November’s UK manufacturing data, with muted growth and optimism at a 27-month low.
“The continued decline in export orders is something manufacturers need to be mindful of, particularly as the Eurozone’s Manufacturing PMI numbers for last month were relatively flat and there are are also wider global demand concerns. With the Eurozone as such an important market for the UK, manufacturers need to prepare carefully for Brexit and ensure they understand every aspect of their supply chains.”
Washington agreed to postpone by 90 days the increase in tariffs from 10% to 25% on $200bn of Chinese goods, due to kick in on 1 January, while China pledged to import more US products, including – according to Washington – farm, energy and industrial products. This should help shrink the US trade deficit with China.
Trump tweeted that China had also agreed to “reduce and remove” tariffs on US car imports from the current 40% level but there was no confirmation from Beijing.
No. This is seen as a temporary respite in the trade spat between Washington and Beijing, which started in June after talks broke down. For instance, the announcement does not affect a separate $50bn worth of tariffs on Chinese goods – including widescreen TVs and pharmaceuticals – imposed by Trump in June. In September, China retaliated with $60bn of tariffs on US imports, including aircraft and coffee.  The US-China truce merely buys both sides more time to negotiate. The White House says there will also be immediate discussions on issues such as intellectual property protection, non-tariff trade barriers (such as customs checks) and cyber theft.
Yes – there was no joint communique and few details have emerged so far. Some analysts say the deal only kicks the can down the road and tensions will resurface in three months.
The Chinese economy is cooling and the Shanghai stock market has fallen almost 30% since the start of the year. A survey showed on Monday that new export orders at China’s factories extended their decline in November as the trade war took its toll.
While Trump’s tough stance is popular with his Republican supporters, the US trade deficit with China has worsened. General Motors, the largest US carmaker, announced last week it would halt production at five North American factories and cut 14,700 jobs, a decision partly prompted by the impact of Trump’s tariffs.
The trade truce came as a positive surprise to markets after Trump’s combative comments in the past fortnight. The rally shows how sensitive global markets are to trade tensions. Julia Kollewe
Here’s a handy chart showing how the trade dispute intensified this year, as the US and China exchanged tit-for-tat tariffs.
pic.twitter.com/HrI8MRx2YW
Tony Fratto, a former White House deputy press secretary, will believe China’s tariff cuts when he sees them....
I know not everyone follows trade very closely, but try the Google machine from time to time. This isn’t the first time Xi has promised to reduce auto tariffs. It’s probably not the last time, either.