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As the government shutdown nears a record-breaking run, retailers like Best Buy and Bed Bath & Beyond could start to feel the bite from lower consumer spending.

With 800,000 federal workers not being paid and a potential delay in tax refunds, the economic effect of the partial government shutdown could be at least $2 billion per week, according to Wells Fargo retail analysts.

The retailers that would be hurt the most include those that sell more discretionary goods such as Best Buy and Bed Bath & Beyond and those operating in regions with high government employment, including Ulta Beauty and Dick’s Sporting Goods, the bank predicted.

Retailers that sell household necessities may have more of a cushion now, but “if the shutdown were to eventually impact benefit programs like SNAP, players like dollar stores, Walmart and Kroger could feel pressure,” Wells Fargo’s Zachary Fadem said in a note to clients Friday. “On the other hand, history illustrates that prior shutdowns had limited impact on retailers with staples-like characteristics, including grocers and auto part retailers.”

Wells Fargo is not alone on Wall Street seeing the damage from the shutdown hitting retailers. Jefferies took a closer look at the areas with the most workers affected by the shutdown — Washington, D.C., Maryland and Virginia. Companies including restaurant chain Chuy’s, and retailers The Container Store and Nordstrom, that have a higher percentage of locations in those areas will likely experience more damage, Jefferies said.

“Impact from the government shutdown could extend well beyond some restaurants in DuPont Circle, “Jefferies’ Laurence Alexander said in a note Tuesday, referencing a section of Washington, D.C.

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China’s Vice Premier Liu He calls for more measures to support economy

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Liu He, China’s vice premier, speaks as U.S. President Donald Trump, right, listens during a meeting in the Oval Office of the White House in Washington, D.C., U.S., on Thursday, April 4, 2019.

Andrew Harrer | Bloomberg | Getty Images

Chinese regulators should step up support for the economy and keep ample liquidity in the financial system, Vice Premier Liu He said on Thursday, suggesting Beijing would soon unveil more policies to bolster growth amid rising U.S. trade pressure.

Beijing has plenty of policy tools and is capable of dealing with various challenges, Liu said at a financial forum in Shanghai.

Despite a slew of support measures and policy easing since last year, China’s cooling economy is still struggling to get back on firm footing, and last month’s sudden escalation in U.S.-Sino tensions has raised fears of a full-blown trade war that could trigger a global recession.

Liu’s comments came after a day after data showed China’s credit growth was weaker than expected in May, reinforcing market expectations that more monetary easing is needed. Factory activity contracted in May and imports fell the most in nearly three years, highlighting soft demand.

“At present, we do have some external pressures, but those external pressures will help us boost our self-reliance in innovation and accelerate the pace of high-speed development,” said Liu, who is also the lead negotiator in the U.S.-China trade talks.

The government will roll out more strong measures to promote reforms and opening up, added Liu.

People’s Bank of China chief Yi Gang said last week that there was “tremendous” room to make policy adjustments if the trade war worsens.

“We have plenty of room in interest rates, we have plenty of room in the required reserve ratio rate, and also for the fiscal, monetary policy toolkit, I think the room for adjustment is tremendous,” Yi said.

Earlier on Thursday, China Daily, citing economists, said China is expected to adjust money and credit supply in coming weeks, including cuts to interest rates or reserve ratio requirements, to counter “downside risks” if trade tensions escalate.

Further cuts in banks’ reserve requirement ratios (RRR) were already expected this year, especially after the trade conflict escalated last month. Both sides hiked tariffs on each other’s goods, and Washington is threatening more.

Last month, the PBOC stepped up efforts to increase loan growth and business activity, announcing a three-phase cut in regional banks’ reserve requirements to reduce financing costs for small and private companies.

It has now cut six RRR times since early 2018.

Unlike previous downturns, however, the central bank has been reluctant to cut benchmark interest rates so far. Analysts believe it is held off on more aggressive measures due to concerns that such a move could risk adding a mountain of debt leftover from past stimulus sprees.

More forceful easing could also trigger capital outflows and add pressure on the Chinese yuan, which has slid nearly 3 percent against the dollar since the trade flare-up last month.

Sources told Reuters in February that the PBOC considered a benchmark rate cut a last resort. But some analysts now think one or more cuts are likely if the trade dispute spirals out of control and the U.S. Federal Reserve starts cutting its rates, giving the PBOC more room to manoeuvre.

Citing experts, China Daily said financial institutions were facing tighter liquidity in June, and said authorities want to spur faster credit growth to meet economic growth targets.

Beijing has set a growth target of around 6 to 6.5 percent for this year, easing from 6.6 percent in 2018, which was the slowest rate of expansion the country has seen in nearly 30 years.

Analysts at Bank of America Merrill Lynch believe China’s GDP growth could fall to 5.8 percent this year and 5.6 percent in 2020 if the trade war intensifies.

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Taiwan president Tsai Ing-wen wins nomination for 2020 election: Media

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Taiwanese President Tsai Ing-wen waves to the crowd on May 20, 2016 in Taipei, Taiwan.

Ashley Pon | Getty Images

Taiwan President Tsai Ing-wen on Thursday won the ruling party’s hotly contested nomination for the 2020 presidential election, domestic media said, in a boost to her administration.

Tsai beat her former premier, William Lai, in a national tally for the independence-leaning Democratic Progressive Party’s primary race, several television broadcasters and newspapers said.

The self-ruled island is set to hold its presidential election in January, amid heightened tension with China, which considers it a wayward province and has never ruled out the use of force to return it to the fold, if necessary.

The election made front-page headlines in April after Foxconn chairman Terry Gou joined the primary for the China-friendly opposition party in Taiwan.

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Chinese consumers buy fewer apples as prices soar

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A woman buys apples at a market in Beijing on April 11, 2019.

Nicolas Asfouri | AFP | Getty Images

The price of apples in China has surged nearly 30%, and consumers are cutting their purchases of the fruit, according to data from grocery delivery platform Dada-JD Daojia.

That’s just one example in several jumps in food prices in the country. The rapid increase is worth watching for any impact on consumer sentiment and spending, especially since Beijing is putting great emphasis on consumption as a way to keep the economy steadily growing.

Government figures released Wednesday showed China’s consumer price index rose in May to 2.7%, its highest in more than a year, boosted by an 18.2% climb in pork prices and a 26.7% increase in fruit prices.

African swine fever has hit millions of pigs, while bad weather has hit the fruit crop.

The cost of half a kilogram of apples jumped to 15.19 yuan at the beginning of June from 11.81 yuan at the end of April, Dada-JD Daojia said. That’s an increase from about $1.55 a pound to nearly $2 per pound.

As a result, between April and early June, sales of apples on the delivery site fell 5.7% from the same period a year ago, the company said. Year-over-year data for overall fruit sales was not available at time of publication, but the firm said sales in the category did increase 15% in May from the prior month, led by lychees, bananas and watermelon.

Dada-JD Daojia says it has more than 30 million monthly active users in more than 90 Chinese cities. The company, backed by Walmart and e-commerce site JD.com, also claims it can deliver orders to customers in less than an hour. The platform is one of a few major players in China’s growing market for fresh produce delivery.

China is the largest producer of apples, followed by the U.S., according to the U.S. Apple Association.

In April and May, frost, heavy rain and hail significantly damaged apple crops in major producing provinces, the U.S. Department of Agriculture’s Foreign Agricultural Service said in its June report.

As a result, China’s production of apples is expected to drop 25% to 31 million tons, its lowest in 9 years, the report said. That will contribute to an 8-year low in worldwide apple production, according to the report.

Apples entering China from the U.S. face a 50% retaliatory tariff from Beijing, the report noted. The projected 12,000-ton increase in Chinese imports of the fruit are expected to come primarily from New Zealand and the EU.

The jump in fruit prices has caught the national government’s attention.

On June 5, the Ministry of Commerce published a statement aimed at providing assurance that the increase in apple, pear and other fruit prices was temporary. During a visit to the apple-producing province of Shandong late last month, Premier Li Keqiang stopped by a fruit seller and emphasized prices would remain reasonable, according to a report from state news agency Xinhua.

“Although inflation data continues to rise, future increases are limited, and the overall pressure is controllable,” said Jianguang Shen, chief economist at JD Digits, which was spun off from Chinese e-commerce company JD.com. He was formerly the chief economist at Mizuho Securities Asia.

One reason for that sanguine assessment is that pork prices have risen less than expected, and he expects fruit prices will likely stabilize as more produce comes to market in the future, according to a CNBC translation of Shen’s Chinese statement. He also said the consumer price index will likely remain within 3% for the year overall, and that the slight inflation may allow for some monetary easing.

Apple futures on the Zhengzhou Commodity Exchange have also garnered significant attention from local traders. Prices surged 19% in May before falling about 6.5% so far this month, and the product ranks among the top 20 commodities futures contracts by open interest, according to financial information database Wind.

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