Trump triggers NAFTA redo; Brazil crashes amidst political chaos; GM won’t sell cars in India

Profitable Moment

Trump triggers NAFTA negotiations

Amidst all the fuss and furor over markets today, the US gave formal notice it intends to renegotiate NAFTA – the trade treaty that binds together the US, Mexico and Canada. Now begins a 90-day consultation process within the United States. The Mexican economy minister told me last week he expects real live talks to get underway possibly by the end of August.

Donald Trump has repeatedly described NAFTA as a disaster and the worst trade treaty he’s ever seen.  However, getting agreement from the other parties on the extent of any renegotiation will be a battle in itself, even before the talks begin.

Mexico (and Canada) both recognize a need to modernize or update the 23-year old treaty to account for the digital age. Trump wants to use the talks to rebalance the terms of trade and the trade deficit – a non starter for the Mexicans. 

Irony of ironies: Many of the changes Trump wants were actually included in the much wider Trans Pacific Partnership trade treaty…yes, the one he withdrew from on Day One of his presidency. 

What’s new… what’s next

By Patrick Gillespie, Julia Horowitz
and Paul R. La Monica of CNNMoney

1. Political chaos rips through Brazil’s markets

Brazil’s stock market plunged 10% soon after opening on Thursday morning, forcing officials to temporarily halt trading. The real also lost 7% of its value against the dollar, its worst day since 2008. New allegations against President Michel Temer surfaced Wednesday night, claiming he paid off an imprisoned politician to keep quiet and not testify about an ongoing corruption scandal. Temer denied the claims. Brazil’s Supreme Court announced an investigation on Thursday. 

2. OPEC is ‘no longer in control’ of oil prices

For decades, OPEC’s sway on oil prices was unparalleled. But the cartel’s immense influence has been dealt a huge blow by the dramatic boom in U.S. shale. “Saudia Arabia and OPEC are no longer in control,” Douglas Rachlin, managing director at Neuberger Berman’s Rachlin Group, said on Wednesday at the SALT Conference in Las Vegas. And he has a point. In a display of how much the pendulum has swung, OPEC sent a plea to the U.S. earlier this month to stop pumping so much oil.

3. No more lost decade for Japan?

Japan’s economy grew at a 2.2% clip in the first quarter. That’s five straight quarters of growth in a row for The Land of the Rising Sun — the longest winning streak since 2006. It appears that Prime Minister Shinzo Abe’s policies (aka “Abenomics”) are working. Stimulus from the government has boosted consumer spending. But risks remain. Wage growth is stagnant. Inflation is low. And exports could take a hit if the US dollar weakens and yen strengthens.

4. GM is giving up on India

General Motors is retreating from one of the world’s hottest car markets. It announced Thursday it would stop selling cars in India by the end of this year following a “comprehensive review” of plans for the country. It was only two years ago that GM said it would pour $1 billion into its operations in India. That plan got scrapped as part of a bigger rethink of global operations. 

5. Quick Takes:

Theresa May is planning to make it harder for Americans to work in Britain

Watch out Amazon. Walmart is coming for you. E-commerce sales surge

American home builders can’t find enough workers as demand booms
BlackBerry is back! Stock soars after WannaCry attack

Yet another big hack. Data stolen on 17 million users of restaurant app Zomato

This self-driving garbage truck from Volvo spends most of its time in reverse

Tesla is worth more than Ford and GM. Elon Musk says it doesn’t ‘deserve’ that

Facebook stronger than ever 5 years after its rocky stock market debut…

…but Facebook was just fined for misleading EU about WhatsApp deal

6. What’s next:

Colombia issues GDP: On Thursday, Colombian President Juan Manuel Santos visited Trump at The White House. On Friday, we’ll get a look into the country’s economy when it releases first quarter GDP growth.

Oil time! Industry giant Baker Hughes puts out its oil rig count on Friday, providing an autopsy of the industry’s growth in the US. 

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