| China calls Trump's bluff, cash bounties offered for Hong Kong protesters, and renewed optimism in Brexit talks. Here are some of the things people in markets are talking about today. China Prepares For the Worst The majority of negotiators in Beijing tasked with navigating trade tensions with the US are less than convinced that a deal will actually materialize ahead of the 2020 U.S. elections, according to Chinese officials familiar with the talks. Trump's on-again, off-again attitude towards China is being seen as a real obstacle, they said, in a signal that they are concurrently girding for a decoupling from the world's biggest economy. They added that it is dangerous for any official to advise President Xi Jinping to sign a deal that Trump may eventually break. Trump's recent assertion that Beijing had over the weekend made a phone call to his administration to discuss trade is yet to be confirmed by China, and is the latest in a series of claims that has added to Chinese skepticism. Mixed Session Ahead Asian stocks looked set for a mixed session Wednesday after U.S. stocks finished a seesaw session lower. Investors are digesting the most recent twists in the tumultuous trade talks between China and America. Futures slipped in Tokyo, were little changed in Seoul and pointed higher in Hong Kong. Treasuries rose, while the dollar was little changed. The S&P 500 fell Tuesday after Chinese officials questioned statements by President Donald Trump about trade discussions between the two countries. Crude jumped on expectations of shrinking U.S. inventories. Hong Kong Protesters Attract Cash Bounties Protesters in Hong Kong have attracted the ire of former leader Leung Chun-ying, who promoted a website offering cash bounties to identify perpetrators of violence and vandalism, including the defacing of Chinese flags and national emblems. Chun-ying, who governed the former British colony between 2012 and 2017, took to his own personal Facebook page to post a link to the website, which offers upwards of HK$1 million ($127,000) for information about the identity of the person who threw China's flag into Hong Kong's harbor, and one million more for the protester who splashed black paint on the national emblem at the Chinese central government's liaison office. In Hong Kong, it is illegal to desecrate the national flag or emblem, with punishment ranging from a stiff fine to three years in jail. Encouraging people to single out protesters is a potentially dangerous development that highlights the hardening divide between Hong Kong's pro-establishment forces -- who prize close ties with the mainland -- and anti-China demonstrators who are pushing for greater democracy. U.K Sees Room for Brexit Maneuver The U.K.'s views on Brexit negotiations have a fresh air of optimism about them, after the new Prime Minister Boris Johnson had meetings last week with German Chancellor Angela Merkel and French President Emmanuel Macron. Europe's two most prominent national figures appeared to relax their language on the Brexit withdrawal agreement and the need to retain the so-called backstop provision for the Irish border, according to a U.K. official said on condition of anonymity. The backstop option, a fallback mechanism that is meant to keep the frontier free of checks after Brexit, seems to be the main sticking point for both parties, with Johnson demanding the EU drop it, but it is despised by Brexiteers who argue it will keep the U.K. tied to the bloc. The Most Profitable Investment Bank in Japan Morgan Stanley kept its position as the most profitable investment bank in Japan last year, as demand for overseas bonds from yield-hungry investors helped offset weakness in the trading business, rising 8% to 21.3 billion yen ($201 million) in the year ended March, the highest among 10 large global banks that filed annual financial reports in Japan. Major Wall Street companies are enduring some of the worst conditions in their trading business in years, as uncertainty over global trade tensions keeps investors on the sidelines. What We've Been Reading This is what's caught our eye over the weekend. - There's a steak war sizzling in Japan's lucrative beef market.
- It's (almost) time to buy equities again, says JPMorgan.
- Hong Kong investors are shunning Singapore for homes in Malaysia and Taiwan.
- Thailand may be the first in Southeast Asia to allow same-sex unions.
- Epstein accusers get their day in court.
- This golf ball could help you cheat by finding the hole every time.
And finally, here's what Tracy's interested in this morning The idea of Donald Trump using tariffs like a monetary policy tool is catching on. In a note titled "Chairman Trump," Neil Dutta at Renaissance Macro Research observed this week that "trade, not the Federal Reserve, is the more relevant macro-driver of market movements." Chairman Trump seems inclined to tighten monetary policy at the moment, tweeting threats to ban American companies from doing business in China, or increase tariffs on Chinese imports. Doing this presumably helps him ratchet up the pressure both on China's trade negotiators and on the Fed, which has to seriously consider offsetting the impact of the trade tensions through rate cuts.  But there's an important consequence of Chairman Trump in tightening mode. It means investors are going to have to rethink the "Trump put" — or the notion that there's a limit to how far the president is willing to push the market down. As Dutta puts it: "An important corollary to last week's events is that the strike price on the fabled Trump put may be lower than commonly believed. After all, it has been widely thought that equity prices act as a constraint on the President's trade agenda." You can follow Bloomberg's Tracy Alloway at @tracyalloway. The best in-depth reporting from Asia Pacific and beyond, delivered to your inbox every Friday. Sign up here for The Reading List, a new weekly email coming soon. Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. Learn more. | 
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