Wall Street Dialogues | Economy, Wall Street, China

P .: Everyone shivers.

g.g .: There is no harm that for good does not come. The worst thing would be to ignore the seriousness of the question.

Q: Do you think Trump can be tempered by the financial consequences of his initiatives?

g.g .: Less willpower if it does not notice any impact.

Q: The trade truce that he forged at the top of Osaka was broken. Why force the presence of Xi Jinping and agree on an ornamental peace if it now detonates all that has been agreed?

g.g .: The Washington Post writes that the president no longer pays attention to the advice of his advisers and is guided by his instincts.

Q: What is the calculation? What do you win in the escalation of the confrontation?

g.g .: The Fed lowered its interest rates for the first time in eleven years. This is not trivial. And what was the use?

P: You're welcome. It's as if it has not happened, but we've already lost a ball. What is the calculation that inspires Trump? Or is it pure moment?

g.g .: It makes sense to become "crazy" in a negotiation. China wet Trump 's ear in May, when he shot the draft of an agreement. He erased his commitments and put him to the test. Are you invited to an agreement? Do you need a photo like the one you had with Kim Jong Um, the North Korean leader, even though there is no tangible advance behind?

P: It seems no.

g.g .: We have clearer with this new twist.

Q: China is not in a hurry either.

g.g .: And showed that it can hurt.

Q: The People's Bank of China has denied its shares during the fall of the yuan and the breaking of the symbolic threshold of 7 yuan to the dollar. He claims that they were market forces.

g.g .: That's true. And so it is that the central bank was a necessary participant.

P: I lost myself. Did he have to do it or not?

g.g .: Market pressures to depreciate the yuan, and it is the central bank that intervenes for this not to happen. He is mainly responsible for the fact that the 7 yuan marker was not overflowed before.

P: And this Monday it worked. He let the markets return the quote. Did I understand well

g.g .: Yes, and he gave them the signal when he moved the fix, which is the currency benchmark that the central bank sets in the opening, day after day.

Q .: The US Treasury He accused China of manipulating its currency.

G.G .: It is ironic that you act precisely the day you stopped to intervene to maintain your value.

Q: China with its retaliation has touched a delicate nerve. How is the film? Would you like to offset the effect of customs duties by letting your currency slip?

g.g .: No, it was a discreet movement. On Tuesday, the signal was one of a return to "normalcy". China warned that she could use this resource, but did not change her policy. And the reason is very simple. The depreciation of the yuan in 2015 was a haemorrhage whose control is expensive. Do not forget that the foreign exchange reserves then reached 4 billion dollars and that half a billion was lost. The figure has never recovered (they are today at 3.1 billion).

Q: At the heart of this fight, what can the Fed really do? Trump sent him an express tweet as if Powell had to act because of the yuan's avatars. Are we going to a parts war?

g.g .: If you want, you have to call Mnuchin, the secretary of the treasury. The Fed looks from the box. Markets do not need to open their mouths. They are already expecting a lower rate in September. Almost as if it was a certainty.