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Illustration: Lazaro Gamio/Axios
China's growth and size are setting the country up to be not just a power in global financial markets, but The Power in global financial markets.
That means things are going to change.
What's happening: Right now China is adapting its economy and financial system to fit the U.S.-led capitalistic financial model. But given the way China has operated as a rising military and geopolitical power, its ascent likely means that things will change in global financial markets.
Jin joined IMF managing director Christine Lagarde and 3 other economists Wednesday for a discussion of the current state of international monetary cooperation.
Catch up quick: The U.S. dollar is the world's funding currency, dominating global trade and currency reserves, giving the U.S. the ability to use the dollar as a weapon to enforce its interests. China is actively challenging that.
The big picture: Last week Chinese yuan-denominated bonds entered the Bloomberg Barclays aggregate bond index, and global index maker MSCI in February quadrupled its indexes' exposure to China's onshore A share stocks.
Venezuela's oil production fell 500,000 barrels per day in March from the previous month, the country reported yesterday. Despite being home to the world's largest proven oil reserves, Venezuela now pumps around 1/10th of OPEC leader Saudi Arabia's output, and about half of what it produced as recently as 2017.
Context: The incredible production recession is the result of crippling U.S. sanctions, which, as Bloomberg reported in February, have half a billion dollars' worth of Venezuela's oil sitting in ships off its coast, and the rapid debilitation of its state oil company under President Nicolás Maduro.
The ratio of U.S. companies that S&P Global has downgraded to the number it has upgraded this quarter is the highest on an annualized basis since 2016, the ratings agency reported this week.
The big picture: "While 2018 generally showed benign rating activity, 2019 has already seen pronounced downgrades, especially at speculative-grade rating categories, while downgrades among higher-rated issuers remain muted," said Diane Vazza, head of S&P Global Fixed Income Research, in a press release.
There's more: S&P's net downgrade rate (number of total downgrades minus upgrades) is also at the worst level on an annualized basis since 2016, the agency said in a release.
What to watch: S&P also noted that companies in the consumer sector are particularly vulnerable to downgrades, with weak ratings and "high negative bias, which are poised to continue deteriorating this year."
European Union leaders agreed to give Britain until Oct. 31 to reach an agreement to leave, 4 months longer than Prime Minister Theresa May requested.
What they're saying: European Council President Donald Tusk noted at a press conference, “Until the end of this period, the UK will also have the possibility to ... cancel Brexit altogether."
Why it matters to the market: It doesn't. The British pound was almost unchanged yesterday following the decision.
Our thought bubble, from Axios chief financial correspondent Felix Salmon: "A catastrophic no-deal Brexit has been averted, certainly for now and probably forever."
The S&P 500 is 1.4%, or 43 points, away from the all-time high it hit in September thanks in large part to this year's strong first quarter, which was the best 3-month start since 1998, Axios' Courtenay Brown writes.
The index has history on its side. Per LPL Research, when the S&P has stayed above its low point in December during the first quarter, it has ended the year higher 34 out of the last 34 times.
Between the lines: That's a strong track record, but stocks so far have been relying on some optimistic assumptions.
The problem: These are all far from sure bets.
What to watch: The market is not pricing in an escalation of U.S.-E.U. trade tensions, Frederick says.
The Federal Reserve released the minutes of its most recent policy meeting Wednesday.