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Illustration Lazaro Gamio/Axios
President Trump roiled markets yesterday when he said his administration would likely keep tariffs on Chinese goods until he's certain Beijing is fully cooperating with the terms of a trade deal.
That could mean years of negotiation, acrimony and tariffs, given the nature of the changes being discussed.
The big picture: A trade agreement between Trump and Chinese President Xi Jinping is just one piece of a wide-ranging confrontation between the world's top economies.
Trump has shown that tariffs are his favorite weapon, and he's concurrently pushing a number of international efforts that have thus far been wildly unsuccessful.
Why it matters: Trump's remarks on Wednesday played to investors' worst fears about how much longer the trade war between the 2 countries could continue. Stocks fell from their highs of the day — the S&P 500 dropped from above 2,850, which it had touched for the first time since October — after the news.
Remember, China isn't paying the tariffs. U.S. businesses and consumers are. Tariffs are "a consumption tax ... they hurt the economy," as Trump's former economic adviser Gary Cohn pointed out earlier this month.
The bottom line: While it now looks to be on shakier ground, an agreement between the U.S. and China on trade would be just the first step in a much longer negotiation process. NAFTA began as a proposal by Ronald Reagan in 1979 and was signed by President Bill Clinton.
The U.S. 10-year Treasury note and the 3-month Treasury bill are on the verge of an inversion. The yield spread fell to 5 basis points Wednesday, the lowest level since the financial crisis.
Why it matters: "The yield curve has been a reliable predictor of recessions, and the best summary measure is the spread between the ten-year and three-month yields," the San Francisco Fed's Michael D. Bauer and Thomas M. Mertens wrote in August.
What they're saying: BMO Capital Markets strategist Ian Lyngen notes that Wednesday was the first time the "invert that hurts," the 3-month/10-year spread, has been flatter than the 2-year/10-year spread since January.
What to watch: The yield curve has been inverted for some time out to 5 years, with maturities from 1-month to 3 years holding higher yields than the 5-year note.
A poll Wednesday found that 9 out of 10 Britons say ongoing confusion over when, how and if their country will leave the EU is a "national humiliation."
Driving the news: The public is divided about whom to blame, though few blame the EU. One in three (34%) say the primary fault lies with the British government.
Axios' resident Brit Felix Salmon weighed in on the latest:
Every time you think the Brexit omnishambles can't get worse, it gets worse.
May said in her statement that "we will now not leave on time with a deal on the 29th of March." Increasingly, the risk is that Britain will end up leaving on time without a deal. Enter Operation Yellowhammer.
The bottom line: 9 days before the U.K. is due to leave the EU, the range of possible outcomes is as broad as ever — from a chaotic no-deal Brexit all the way through to a repeal of Article 50 with Britain remaining a full member of the EU. Even Theresa May has no idea which outcome will end up happening.
The financials were Fed day's biggest losers, as bank stocks saw big losses on big trading volumes, Axios' Courtenay Brown reports.
What's happening: Bank of America was the 2nd most actively traded stock in the S&P 500, with 81 million shares changing hands, per FactSet — well above the 3-month average volume of 67 million shares. The stock fell 3.4%.
Meanwhile, Goldman Sachs was the biggest decliner in the Dow yesterday. Shares fell 3.38% after the Fed said it would hold rates steady and signaled the end of rate hikes for the rest of the year.
JPMorgan and Citi also saw slightly higher trading activity than in previous days this week, with 14 million and 17 million shares exchanged, respectively.
The big picture: A low-interest rate environment is seen as negative for bank stocks.
The NYSE may be revising its dress code for today's Levi's IPO.
What's happening: Levi's is slated to open at $17 a share in its return to public markets.
The big picture: The IPO has NYSE excited enough to roll back the long-time ban on jeans, but apparently only if traders wear a matching jean jacket.
"Suit, sport coat or jacket should be worn, but a tie is not required. A dress, collared golf/polo shirt or turtleneck is acceptable. T‐shirts, tank tops or other casual shirts, jeans and shorts are not acceptable."— NYSE dress code, according to WWD
Flashback: It would actually be the second time there's been a pause in the jeans ban by NYSE, which encouraged traders to wear Gap jeans for the company's 2009 IPO.