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Illustration: Rebecca Zisser/Axios
When President Trump began threatening China with tariffs, the Chinese initially played the role of obsequious couriers in an effort to avoid a head-on conflict. But since raising tariffs to 25% on their goods, China has reversed course and is making clear its intent to take the conflict with the U.S. to the proverbial mattresses.
Background: Heading into 2018, China's long-held philosophy had been to speak softly and carry a big stick. Its military was working to dominate Southeast Asia by land and sea, it was growing its Belt and Road Initiative globally and making loans to low-income countries to win friends and strategic allies.
But the time for reconciliation looks to have passed and a new, emboldened China is emerging, one that is not afraid to take the fight directly to the U.S.
The bottom line: Tuesday's stock market rebound shows investors haven't quite gotten that message.
A recently released survey of business owners around the world provides an interesting snapshot of expectations and worries for firms in different parts of the globe before Trump escalated the trade war.
What they're saying: European business owners were the least optimistic, while those in Latin America had the most optimism.
When it came to their top concerns, cybersecurity was the most cited answer, chosen by 48% of global respondents, but there was a plurality of responses, ranging from having sufficient insurance to regulations.
Note: African business owners were conspicuously absent from the survey.
The trade war has been a boon for U.S. bonds, which had already seen significant buying for most of 2019.
Driving the news: U.S. Treasury yields fell to a 6-week low on Monday, as investors pushed yields on the benchmark 10-year notes back towards their lows of the year. And data shows investors are snapping up every kind of U.S.-issued bond they can get.
Details: Data from Lipper shows U.S. core bond funds took in $32.6 billion in the first quarter, the second-highest inflows in history. That trend has continued in Q2, as net inflows have totaled $16.9 billion to date.
What's happening: The trade war is exacerbating red-hot demand for the safety of the U.S. bond market that was ignited by the Fed's interest rate reversal in January. When central banks raise interest rates, it reduces the value of already-held bonds.
Despite growing levels of educational attainment, there is still significant dispersion between the groups of people who do and do not have college degrees, new research from the Economic Policy Institute finds.
Conditions in Venezuela are worsening despite U.S. intervention, and the failed, U.S.-backed uprising by opposition leader Juan Guaidó has left President Nicolás Maduro in power. Guaidó is now asking for U.S. military support, putting the U.S. administration in a bind on whether to escalate militarily.
Why it matters: This will create a problem for Trump and the U.S. in Iran, where Trump is reportedly considering sending 120,000 U.S. troops, writes investment manager Ashmore's Global Head of Research Jan Dehn.
"President Nicholas Maduro suddenly looks far more secure in his job after Trump chickened out over military intervention in Venezuela. Trump's sudden wilt undermines his hawkish national security advisor, John Bolton, who favored aggressive measures to effect regime change.
"The real implication of Trump's apprehension with respect to Venezuela is that the credibility of his administration's efforts with respect to Iran must now surely also be called into question."
CNBC's Leslie Picker reported Tuesday that Uber's underwriters, led by Morgan Stanley, were so worried about the company's IPO that they deployed "a nuclear option" ahead of the deal last week to provide extra support for the stock — a so-called naked short.
What it means: Every IPO includes an excess amount of shares that allow underwriters to sell 115% of the available offering and then buy the additional 15% back, Picker explains. That extra 15% can support the stock's price if it falters.
That plan came up short as Uber's stock fell 18% in its first days as a public company before recovering Tuesday with a 7.7% gain.
What to watch: Actual short bets against Uber now total $768 million, with short sellers holding 11.5% of available shares, according to data from Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.