US-China trade war is starting to get out of hand

China loses patience. After Trump attacked China, markets have been waiting for China to the response.

Sino inflicted several very strong and unpleasant hits for the United States and Trump personally.

One. China lowered the value of the Yuan below its 7 to 1 peg against the dollar in response to a new series of U.S. tariffs. Thus, China partially solves the problems of its exporters arising from US sanctions. Recall, exporters are going to benefit from the devaluation of the national currency. As a result, with constant sales volumes in dollars, exporters receive more. Which, in fact, artificially inflates the financial results of exporters. Note that Trump for more than a month has been talking about the need to devalue the dollar to support American companies, but so far he cannot find support either from the Ministry of Finance or from the Fed. At that time, China one day solved this problem for itself.

Two . China Halts U.S. Agriculture Purchases. One of Trump's main complaints against China was the decline in US agricultural imports. What caused direct harm to US farmers and the US economy as a whole. So, the Chinese government has asked state-owned enterprises to suspend US agricultural imports. This is a severe hit to the pride of Trump and the US economy.

Three. Bank of America Merrill Lynch warns that China may cross out US administration’s success in restricting Iranian oil exports. US the sanctions and about 2 million barrels per day of crude has been forced out of the oil market, and BofAML believes that China if desired, can return a significant part of them - about 1.5 million b / s. What does this mean for the USA? A powerful diplomatic slap in the face, as well as potential problems for the whole US oil sector. The simultaneous release of 1.5 million b / d of oil to the market will lead to a sharp drop in oil prices. Analysts voiced estimates of decline up to $ 40 per barrel. And this will put the US oil industry on the brink of survival, or even beyond.

Total - everything is bad. Trump may well go to the next level of the conflict escalation. Too painful hits inflicted by China. And this means that commodity assets, including oil, should be sold. A save haven should be bought. We sell the dollar because one of Trump's possible reactions is the dollar devaluation. Currencies from developing countries are also worth selling. The Russian ruble which is under triple (or quadruple) pressure: falling oil, trade war, Russia's Central Bank cut its key interest rate, new sanctions by the United States, dispersal of rallies in Moscow, and this is not counting the main reason for the sale of the ruble - a weak economy of the Russian Federation.