Economic News for the week ending May 17, 2019

Saturday, May 18, 2019

Weekly Commentary: 

True Start to U.S. 

vs. China Trade War

by Doug Noland

full column -- much longer -- is here:
http://creditbubblebulletin.blogspot.com/2019/05/weekly-commentary-true-start-to-us-vs.html

My summary of items 

that interest me, 
is below:

For the week

ending May 17, 2019:

GLOBAL STOCKS:

S&P500 declined 0.8% (up 14.1% y-t-d)

Dow Industrials fell 0.7% (up 10.4%)

Dow Utilities jumped 1.4% (up 11.5%)

Dow Transports declined 1.0% (up 14.4%)

S&P 400 Midcaps dropped 2.3% (up 13.6%)

Small cap Russell 2000 slumped 2.4% (up 13.9%). 

Nasdaq100 declined 1.1% (up 18.5%)

Biotechs lost 1.5% (up 6.3%). 

Though bullion declined $9, 

the HUI gold stock index 
recovered 1.8% 

   (down 6.3%).

U.K.'s FTSE rallied 2.0% (up 9.2% y-t-d).

Japan's Nikkei dipped 0.4% (up 6.2% y-t-d). 

France's CAC40 recovered 2.1% (up 15.0%)

German DAX rose 1.5% (up 15.9%)

Spain's IBEX 35 gained 1.8% (up 8.7%)

Italy's FTSE MIB rallied 1.1% (up 15.2%)

Brazil's Bovespa sank 4.5% (down 1.1%),

Mexico's Bolsa was little changed (up 4.3%)

South Korea's Kospi fell 2.5% (up 0.7%)

India's Sensex gained 1.2% (up 5.2%)

China's Shanghai dropped 1.9% (up 15.6%)

Turkey's Istanbul National 100 fell 2.0% (down 4.9%)

Russia's MICEX jumped 2.5% (up 8.8%).

US  BONDS:

Ten-year Treasury yields 

dropped eight bps to 2.39% (down 29bps). 

Thirty-year Treasury yields 

declined six bps to 2.83% (down 19bps). 

Benchmark Fannie Mae MBS yields 

fell six bps to 3.16% (down 33bps).

US  MORTGAGES:

Freddie Mac 30-year fixed mortgage rates 

declined three bps to 4.07% (down 54bps y-o-y). 

Fifteen-year rates 

fell four bps to 3.53% (down 55bps). 

Five-year hybrid ARM rates 

rose three bps to 3.66% (down 16bps). 

Jumbo mortgage 30-yr fixed rates 

down seven bps to 4.16% (down 57bps).

Federal Reserve Credit

over the past year,

contracted 10.8%. 

M2 (narrow) "money" supply 

rose 4.1%, over the past year. 

Currency Watch:

The U.S. dollar index gained 0.7% to 97.995 (up 1.9% y-t-d). 

Commodities Watch:

Bloomberg Commodities Index increased 1.3% this week (up 3.5% y-t-d). 

Spot Gold declined 0.7% to $1,278 (down 0.4%). 

Silver sank 2.7% to $14.388 (down 7.4%). 

WTI crude jumped $1.10 to $62.76 (up 38%). 

Gasoline rallied 2.9% (up 55%)

Natural Gas gained 0.5% (down 11%). 

Copper declined 1.3% (up 4%). 

Wheat surged 9.5% (down 8%). 

Corn jumped 9.0% (up 2.2%).

Market Instability Watch:

May 14 – Bloomberg (Liz McCormick and Saleha Mohsin): 

“The tensions rippling through global financial markets could still lead Beijing to reduce its stockpile in the $15.9 trillion Treasuries market -- not to retaliate, but to defend its currency if it goes into a free-fall. The offshore yuan has slumped 2.6% this month to about 6.92 per dollar as the trade standoff intensified, reaching the weakest since December. The specter of Treasuries being deployed as a weapon in the trade spat surfaced via a tweet from a Chinese journalist on Monday that said the nation’s scholars are ‘discussing the possibility of dumping” U.S. government debt.’”

May 11 – Wall Street Journal (Lisa Beilfuss and Gunjan Banerji): 

“U.S.-listed options volumes hit a record last year as market volatility roared back… The number of options trades at Charles Schwab Corp., one of the biggest online brokers, climbed 36% in 2018 from the prior year…”

Trump Administration Watch:

May 13 – Financial Times (Pan kwan Yuk): 

“President Donald Trump: ‘I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, and you backed out!’ Mr Trump said in series of tweets. He added it would not be in Beijing’s interest to retaliate because manufacturers would just shift production from China to other countries. ‘There will be nobody left in China to do business with,’ he continued. ‘Very bad for China, very good for USA! . . . Therefore, China should not retaliate — will only get worse!’”

May 14 – New York Times (Ana Swanson):

 “President Trump’s tariffs were initially seen as a cudgel to force other countries to drop their trade barriers. But they increasingly look like a more permanent tool to shelter American industry, block imports and banish an undesirable trade deficit. More than two years into the Trump administration, the United States has emerged as a nation with the highest tariff rate among developed countries, outranking Canada, Germany and France, as well as China, Russia and Turkey. And with further trade confrontations brewing, the rate may only increase from here… On Tuesday, the president continued to praise his trade war with China, saying that the 25% tariffs he imposed on $250 billion worth of Chinese goods would benefit the United States, and that he was looking ‘very strongly’ at imposing additional levies on nearly every Chinese import. ‘I think it’s going to turn out extremely well. We’re in a very strong position,’ Mr. Trump said… ‘Our economy is fantastic; theirs is not so good. We’ve gone up trillions and trillions of dollars since the election; they’ve gone way down since my election.’ He called the trade dispute ‘a little squabble’ and suggested he was in no rush to end his fight, though he held out the possibility an agreement could be reached, saying: ‘They want to make a deal. It could absolutely happen.’”

May 11 – Bloomberg (Shawn Donnan, Yinan Zhao and Miao Han): 

“President Donald Trump said it would be wise for China to ‘act now’ to finish a trade deal with the U.S., warning that ‘far worse’ terms would be on offer for them after what he predicted would be his certain re-election in 2020. ‘I think that China felt they were beaten so badly in the recent negotiation that they may as well wait around for the next election,’ Trump said Saturday in… tweets. ‘The only problem is that they know I am going to win.’ …In a wide-ranging interview with Chinese media…, Vice Premier Liu He said that in order to reach an agreement the U.S. must remove all extra tariffs, set targets for Chinese purchases of goods in line with real demand, and ensure that the text of the deal is ‘balanced’ to ensure the ‘dignity’ of both nations.”

May 15 – Wall Street Journal (Josh Zumbrun, John D. McKinnon and William Mauldin): 

“President Trump signed an executive order that would let the U.S. ban telecommunications gear from ‘foreign adversaries,’ underscoring tensions with China even as the U.S. said it would likely resume trade talks soon in Beijing after reaching an impasse last week… Along with the executive order, the Commerce Department said it would add China’s Huawei Technologies Co. to a list of entities engaged in activities that are contrary to U.S. interests. That could restrict sales or transfers of American technology to Huawei by requiring a government license—a potential body blow to the company, which relies on some U.S. tech companies for chips. The action would also hurt U.S. chipmakers who sell to Huawei.”

May 17 – Bloomberg (Craig Trudell): 

“Toyota issues a statement criticizing the proclamation U.S. President Donald Trump released earlier Friday declaring that imported cars represent a threat to U.S. national security. “Today’s proclamation sends a message to Toyota that our investments are not welcomed, and the contributions from each of our employees across America are not valued,’ the co. says…”

May 15 – CNBC (Matthew J. Belvedere): 

“There is ‘no chance’ President Donald Trump will back down in the U.S. trade war with China, former Trump advisor Steve Bannon told CNBC… ‘China has been running an economic war against the industrial democracies for now 20 years,’ said the hardline ex-White House chief strategist… Bannon said previous presidents — Bill Clinton, George W. Bush and Barack Obama — passed the buck on addressing and fixing the problems of China’s protectionist economy. But Trump is not shying away from the fight, he added. ‘There is no chance that Donald Trump backs down from this. I think he’s looking at the good of people on a global basis,’ Bannon said…”

May 13 – Bloomberg (Shawn Donnan): 

“President Donald Trump loves tariffs so much he once called himself ‘Tariff Man.’ He also has repeatedly portrayed the punitive tariffs he has imposed on China and other countries as tools to create leverage and draw them into new trade deals that benefit the U.S. Increasingly, however, Trump’s tariffs are looking like an end-goal rather than a tool and more tangible than any of the deals the president has promised. And that, economists agree, bodes badly for the U.S. and global economies.”

May 13 – Financial Times (James Politi): 

“Donald Trump’s escalation of trade tensions with China has created a split within his Republican party as some of the president’s closest allies express anxieties about the mounting economic costs of the stand-off. Chuck Grassley… called… for a US-China trade agreement to be reached ‘as soon as possible’ after stock prices fell sharply… ‘There’s no doubt Americans will be harmed, including farmers, businesses and consumers in my home state of Iowa, if the additional tariffs take effect,’ he said. ‘Americans understand the need to hold China accountable, but they also need to know that the administration understands the economic pain they would feel in a prolonged war.’”

May 13 – Wall Street Journal (Summer Said, Nancy A. Youssef and Benoit Faucon): “An initial U.S. assessment indicated Iran likely was behind the attack on two Saudi Arabian oil tankers and two other vessels damaged over the weekend near the Strait of Hormuz, a U.S. official said, a finding that, if confirmed, would further inflame military tensions in the Persian Gulf.”

May 14 – Reuters (Patricia Zengerle): 

“A group of President Donald Trump’s fellow Republicans in Congress introduced legislation on Tuesday intended to prohibit anyone employed or sponsored by the Chinese military from receiving student or research visas to the United States. The bill would require the U.S. government to create a list of scientific and engineering institutions affiliated with the Chinese People’s Liberation Army, and prohibit anyone employed or sponsored by those institutions from receiving the visas.”

U.S. Bubble Watch:

May 12 – CNN (Haley Byrd and Phil Mattingly): 

“As lawmakers trade fire over contempt votes and impeachment, there's been no progress toward reaching a budget agreement or extending the federal government's ability to borrow before September, when the money runs out. That's raising the ugly prospect of more than $100 billion in mandatory cuts as well as an unprecedented default on US debt -- a situation that could trigger a worldwide economic catastrophe. It's a mess everyone knows is coming, and yet no one seems to have a plan -- at least at the moment -- for averting disaster.”

May 17 – Reuters (Lucia Mutikani):

“U.S. consumer sentiment jumped to a 15-year high in early May amid growing confidence over the economy’s outlook. The University of Michigan said its consumer sentiment index increased 5.3% to 102.4, the highest reading since 2004. Economists polled by Reuters had forecast a reading of 97.5.”

May 13 – Wall Street Journal (Ben Eisen): 

“The gatekeepers of the American mortgage market are increasingly backing loans to borrowers who have heavy debt loads, highlighting questions about mortgage risk as policy makers debate ways to change the system. Almost 30% of loans that mortgage giants Fannie Mae and Freddie Mac packaged into bonds last year went to home buyers whose total debt payments amounted to more than 43% of their incomes… The share has nearly doubled since 2015. Data on other government mortgage programs also show an increase. The backing of these loans opens up a debate about the government’s role in the housing market.”

May 16 – Reuters (Nandita Bose and Rod Nickel):

 “Walmart Inc said… that prices for shoppers will go up due to higher tariffs on goods from China as the world’s largest retailer reported its best comparable sales growth for the first quarter in nine years.”

May 14 – Associated Press (Paul Wiseman and Joyce M. Rosenberg):

 “Trump’s administration is preparing to extend 25% tariffs to practically all Chinese imports not already hit with duties, including toys, sneakers, shirts, alarm clocks, toasters and coffeemakers. That’s roughly $300 billion worth of products on top of the $250 billion targeted earlier. ‘The administration’s decision to announce a tax on every product coming from China puts America’s entire economy at risk,’ the Retail Industry Leaders Association said… ‘Americans’ entire shopping cart will get more expensive.’”

May 15 – Associated Press: 

“U.S. retail sales declined last month, as Americans cut back their spending on clothes, appliances, and home and garden supplies. Sales dropped 0.2% in April…, after a big 1.7% jump in March. The March figure was revised upward from the originally reported figure of 1.6%. Car sales dropped 1.1% last month and sales at electronics and appliance stores dropped 1.3%. Economists are having a difficult time gauging the mood of consumers this year. Retail sales have been on a seesaw pattern, rising at a healthy pace in January, then falling in February, followed by the big jump in March and now a drop in April.”

May 16 – Wall Street Journal (Jessica Menton): 

“U.S. companies have been buying back their own shares at a blistering pace for more than a year, and market turbulence isn’t likely to stop them now. The more than 80% of firms in the S&P 500 that have reported results for the first quarter repurchased $180 billion worth of their own stock during that time, according to S&P Dow Jones Indices, on pace to be the second-highest amount on record based on data going back to 1998.”

May 12 – Wall Street Journal (Ruth Simon): 

“Job growth at the smallest businesses has fallen to the lowest levels in nearly eight years as tiny companies struggle to attract and retain workers in the tightest U.S. job market in half a century. The number of people employed by companies with fewer than 20 workers grew by less than 1% in both March and April, compared with the same months a year earlier, according to… Moody’s Analytics… Hiring at the smallest businesses hasn’t been this low since May 2011, when the economy was still recovering from the financial crisis.”

May 11 – Wall Street Journal (Sam Schechner): 

“Governments are in a global race to scrutinize Silicon Valley, creating a broad regulatory wave aimed at curbing the power of a small group of American tech giants. French government officials said Friday they plan to give regulators there sweeping power to audit and fine large social-media companies like Facebook Inc. if they don’t adequately remove hateful content. Competition authorities in India… have launched a probe into whether Alphabet Inc.’s Google uses its mobile operating system to block rivals. The dual efforts are the latest in a series of increasingly aggressive probes and tough new regulations around the world circumscribing tech firms on a number of different fronts. The European Union has enacted broad restrictions on how companies handle data as concerns over privacy grow.”

May 14 – Reuters (Jennifer Ablan):

 “U.S. growth appears to be based ‘exclusively’ on government, corporate and mortgage debt and the economy would have contracted if the United States had not added trillions in debt, Jeffrey Gundlach, chief executive of DoubleLine Capital, said… ‘Nominal GDP growth over the past five years would have been negative if U.S. public debt had not increased,’ said Gundlach. ‘One thing everybody seems to miss when they look at these GDP numbers ... they seem to not understand that the growth in the GDP it looks pretty good on the screen is really based exclusively on debt - government debt, also corporate debt and even now some growth in mortgage debt.’”

China Watch:

May 17 – Bloomberg: 

“China’s state media signaled a lack of interest in resuming trade talks with the U.S. under the current threat to escalate tariffs, while the government said stimulus will be stepped up to buttress the domestic economy. Without new moves that show the U.S. is sincere, it is meaningless for its officials to come to China and have trade talks, according to a commentary by the blog Taoran Notes, which was carried by state-run Xinhua News Agency and the People’s Daily… The Ministry of Commerce spokesman said Thursday he had no information about any U.S. officials coming to Beijing for further talks.”

May 16 – Bloomberg: 

“‘If the U.S. doesn’t make concessions in key issues, there is little point for China to resume talks,’ said Zhou Xiaoming, a former commerce ministry official and diplomat. ‘China’s stance has become more hard-line and it’s in no rush for a deal’ because the U.S. approach is extremely repellent and China has no illusions about U.S. sincerity, he said. According to Zhou, the commerce ministry spokesman on Thursday effectively ruled out talks in the near term. In comments to the media, ministry spokesman Gao Feng said that China’s three major concerns need to be addressed before any deal can be reached, adding that the unilateral escalation of tensions in Washington recently had ‘seriously hurt’ talks.”

May 16 – Wall Street Journal (Lin Zhu): 

“China’s Commerce Ministry denied knowing about U.S. plans to resume trade talks, deflecting remarks by Treasury Secretary Steven Mnuchin that American officials are likely to travel to Beijing soon for negotiations. Mr. Mnuchin told a Senate committee Wednesday that the U.S. team is ‘likely to go to Beijing at some point in the near future.’ The comments offered prospects for a return to talks after both sides spent the better part of a week trading recriminations over perceived backsliding in positions that left the negotiations at an impasse. Asked by reporters about Mr. Mnuchin’s comments, Chinese Commerce Ministry spokesman Gao Feng said… that ‘the Chinese side doesn’t have a grasp on the U.S. side’s plans to come to China for negotiations.’ Mr. Gao then said the U.S.’s escalation of tariffs ‘severely hampered’ consultations.”

May 16 – Reuters (Yawen Chen and Se Young Lee): 

“China on Thursday slammed a decision by the U.S. government to put telecom equipment giant Huawei on a blacklist and said it will take steps to protect its companies, in a further test of ties as the economic heavyweights clash over trade. China is strongly against other countries imposing unilateral sanctions on Chinese entities, a Commerce Ministry spokesman said, stressing that the United States should avoid further damaging Sino-U.S. trade relations… Hopes for a deal to end their trade war have been thrown into doubt after the world’s two biggest economies raised tariffs on each other’s goods in the past week. The U.S. Commerce Department said… it was adding Huawei Technologies Co and 70 affiliates to its so-called ‘Entity List’ in a move that bans the Chinese company from acquiring components and technology from U.S. firms without prior U.S. government approval.”

May 15 – CNBC (Evelyn Cheng): 

“China’s state-run media outlets have come out in force this week after keeping relatively quiet in the wake of U.S. President Donald Trump’s surprise announcement of tariff increases on Chinese goods. Whether it’s the mouthpiece of the Communist Party or the national television broadcaster, the latest commentary exudes confidence about China’s ability to stand up to the U.S… In an environment of tight government control of what messages are allowed to surface, the shift can shed light into what Chinese leaders are thinking about the drawn out trade negotiations. ‘I expect it was ordered by the top leadership to forward the narrative of the U.S. as bully and China as victim,’ said Scott Kennedy, director… at the Center for Strategic and International Studies. ‘Putting the talks in broader normative terms gives (Beijing) leverage — ‘I can’t make big concession because my society will be angry’ — but it also makes it harder for both sides to dispassionately find common ground,’ Kennedy added.”

May 17 – CNBC (Jeff Cox):

 “Escalations in its trade dispute with the U.S. not only could dent China’s economy but also impact its credit standing, according to ratings agencies. China’s credit remains strong despite a weakening economy and a high-stakes tariff battle it is engaged in with the U.S. However, should the impasse linger on, the damages could become greater and start having some deeper impacts. ‘The tariff war is negative for China especially at a time when its policy makers are battling problems of rising debt and increasing leverage in its economy,’ analysts at ratings agency DBRS said… ‘The economic impact on China of rising tariffs would be broader than just via its trade with the U.S.’”

May 14 – Bloomberg (Benjamin Purvis): 

“China may be reluctant to commit to a deal with the U.S. that limits its flexibility on foreign-exchange rates if officials in Beijing draw lessons from previous trade clashes between America and Japan. That’s the view of Deutsche Bank AG strategists Oliver Harvey and Shreyas Gopal, who wrote that U.S. pressure on its biggest economic rival in the early 1990s appears to have at least indirectly contributed to an inadequate policy response from the Japanese authorities. That led to an unwanted appreciation of the yen and protracted deflation, they wrote… ‘China appears to have learnt from Japan’s mistakes,’ the strategists wrote. ‘Benefits for China to mirror the Japan experience and maintain a strong exchange rate may be lower than some argue.’”

May 14 – Bloomberg: 

“Chinese banks’ outstanding bad loans climbed to a record 2.16 trillion yuan ($314bn) as of the end of March… The explosion of soured debt comes in the wake of more private sector firms struggling to refinance debts and an intensifying trade war with the U.S. that’s bearing down on the economy.”

May 14 – Reuters (Kevin Yao and Yawen Chen): 

“China reported surprisingly weaker growth in retail sales and industrial output for April, adding pressure on Beijing to roll out more stimulus as the trade war with the United States escalates. Clothing sales fell for the first time since 2009, suggesting Chinese consumers were growing more worried about the economy… Overall retail sales in April rose 7.2% from a year earlier, the slowest pace since May 2003… That undershot March’s 8.7% and forecasts of 8.6%.”

May 15 – Reuters (Richard Leong): 

“China’s ownership of U.S. Treasuries fell to its lowest in nearly two years in March amid uncertainty about a trade deal between Beijing and Washington… China’s stake in Treasuries declined for the first time in four months to $1.121 trillion in March… It was $1.131 trillion in February…”

Europe Watch:

May 17 – Bloomberg (Arne Delfs): 
“Angela Merkel is feeling pressure from her chosen successor to quit as German chancellor after this month’s elections for the European parliament, according to two people with knowledge of the situation. With Merkel’s Christian Democrats expected to lose ground in the May 26 vote, their leader, Annegret Kramp-Karrenbauer, sent a message to Merkel urging her to resign and called a party conference for June 2 in order to try to force her hand…”

May 14 – Bloomberg (John Follain and Lorenzo Totaro): 
“Deputy Prime Minister Matteo Salvini sent ripples through financial markets on Tuesday, saying Italy could be ready to break European Union fiscal rules, on the same day his coalition partner called on him to stop ‘fanning the flames’ with critical comments about the government. ‘If we need to break some limits, like the 3% or the 130-140%, we’ll go ahead,’ League party chief Salvini told reporters…, while campaigning ahead of this month’s European parliamentary elections. Salvini was referring to the bloc’s limits on budget deficits and government debt as a share of economic output.”

Japan Watch:

May 13 – Financial Times (Robin Harding): 
“Japan’s economy is ‘worsening’ for the first time in more than six years, according to one of the government’s main indicators… The index of economic conditions compiled by Japan’s Cabinet Office fell 0.9% from February to March. That prompted statisticians to cut their assessment of the economy from ‘weakening’ to ‘worsening’ — the lowest of five levels. The last time the Cabinet Office used the bottom grade to describe the economy was in January 2013.”

Emerging  Markets  Watch:

May 14 – Reuters (Marcela Ayres): 

“Brazil’s government will cut its 2019 economic growth forecast to below 2% and seek supplementary funding from state-run BNDES development bank to meet current expenditure and avoid breaking its fiscal rules, Economy Ministry officials said… Economy Minister Paulo Guedes and special secretary Waldery Rodrigues’ testimony to a budget commission made up of deputies and senators underscored the two most serious challenges facing the government: an anemic economy and stretched public finances.”

May 15 – Reuters: 

“Brazilian economic activity fell in March…, adding weight to the view flagged by policymakers earlier this week that the economy contracted in the first quarter. The central bank’s IBC-BR economic activity index, a leading indicator of gross domestic product (GDP), fell 0.28% in March from February, resulting in a decline of 0.68% in the first three months of the year.”

Global Bubble Watch:

May 14 – New York Times (Neil Irwin):

 “The United States raised tariffs to 25% on $200 billion of Chinese imports, for example, and is threatening to tax an additional $300 billion — this worries people who study international economic diplomacy. That’s because both the United States and China seem to be digging into their positions in ways that will be hard to resolve with the mutual face-saving that typically turns high-stakes negotiations into deals. To use a common negotiating metaphor, it is not clear what the offramps might be that would allow a de-escalation and prevent a major trade war that would prove costly to both nations.”

May 11 – New York Times (Ana Swanson and Keith Bradsher): 

“A yearlong trade war between the United States and China is proving to be an initial skirmish in an economic conflict that may persist for decades, as both countries battle for global dominance, stature and wealth. Progress toward a trade agreement nearly collapsed this past week, with both sides hardening their bargaining positions. And even if a trade deal is reached, it may do little to resolve tensions between the world’s two largest economies. The United States is increasingly wary of China’s emerging role in the global economy and the tactics it uses to get ahead, including state-sponsored hacking, acquisitions of high-tech companies in the United States and Europe, subsidies to crucial industries and discrimination against foreign companies.”

Fixed-Income Bubble Watch:

May 14 – Reuters (Eliza Ronalds-Hannon): 

“Credit investors who’ve plowed billions of dollars into private equity-sponsored LBO debt will be hit hard when the credit cycle turns and defaults rise, Moody’s… warns in a new report. The giants of the PE world have used their imposing status to loosen terms on the bonds and loans they sell to yield-hungry investors, says Neal Epstein, a senior credit officer at Moody’s. That gives them more room to preserve their investments in a downturn -- even if it means losses for creditors. ‘The investor demand for this debt is so strong that if the private equity sponsors want to borrow more money for their companies and do it with weaker terms, they can,’ said Epstein.”

Geopolitical Watch:

May 13 – Bloomberg (Derek Wallbank): 
“In the middle of the South China Sea: The ship-to-ship interactions are a regular potential flash point for the world’s two biggest militaries in contested waters. 
In September, a Chinese destroyer sailed within a football field’s distance of the USS Decatur in what the U.S. said was an ‘unsafe and unprofessional’ maneuver. That hasn’t deterred future sailings -- the U.S. sent two guided-missile destroyers within 12 nautical miles of disputed islands earlier this month.”

May 15 – Reuters (Roslan Khasawneh and Muyu Xu):

 “A tanker carrying Iranian fuel oil in violation of U.S. sanctions has unloaded the cargo into storage tanks near the Chinese city of Zhoushan, according to… Refinitiv Eikon. The discharging of the nearly 130,000 tonnes of Iranian fuel oil onboard the tanker, the Marshal Z, confirmed by a representative of the oil storage terminal, marks the end of an odyssey for the cargo that began four months ago.”

May 14 – Reuters (Stephen Kalin and Rania El Gamal): 

“Saudi Arabia said armed drones struck two of its oil pumping stations on Tuesday, two days after the sabotage of oil tankers near the United Arab Emirates, and the U.S. military said it was braced for ‘possibly imminent threats to U.S. forces in Iraq’ from Iran-backed forces. The attacks took place against a backdrop of U.S.-Iranian tension following Washington’s decision this month to try to cut Iran’s oil exports to zero and to beef up its military presence in the Gulf in response to what it said were Iranian threats.”

May 15 – Reuters (John Davison and Mark Hosenball): 
“Helicopters ferried U.S. staff from the American embassy in Baghdad on Wednesday out of apparent concern about perceived threats from Iran, which U.S. sources believe encouraged Sunday’s attacks on four oil tankers in the Gulf. The sabotage of the tankers… and Saudi Arabia’s announcement on Tuesday that armed drones hit two of its oil pumping stations have raised concerns Washington and Tehran may be inching toward conflict. A U.S. government source said American security experts believe Iran gave its ‘blessing’ to tanker attacks…”

May 13 – Reuters (Choonsik Yoo, Hyonhee Shin and Josh Smith): 

“North Korea said on… the seizure of one of its cargo ships by the United States was an illegal act that violated the spirit of a summit between the two countries’ leaders, and demanded the return of the vessel without delay.”

May 15 – Reuters (Chris Sanders and Luc Cohen): 

“The U.S. Department of Transportation… ordered the suspension of all commercial passenger and cargo flights between the United States and Venezuela, citing reports of unrest and violence around airports in the South American country.”