Why the stock market has a ‘great distance to rise’ in the coming years - MarketWatch

There’s a lot to be glum about in the stock market — and the world, really — at the moment, but in our call of the day Michael Kramer, founder of Mott Capital Management, is confident there’s some serious upside potential in the coming years.

It all starts with valuations.

Kramer points out that the earnings multiple of the S&P 500 index SPX, -0.39% on a trailing 12-month basis sits around 19.7, the lowest level since June 2016 — a time when “the world literally felt as if it was on the verge of a meltdown”. (That multiple is a key method of measuring the value of a stock relative to earnings.)

But, in the reality that perhaps matters most to markets, we were in the midst of an earnings recession that would soon come to an end.

The bull market had life and, three years later, it still does, he says.

Read: How big will this year-end rally turn out to be?

For some context, Kramer used earnings data going back to 1988 and projections through to 2020, then overlaid that with a chart of the S&P for what he says is a self-explanatory reflection of where we stand.

And, more importantly, where we’re headed.

Kramer explained that the numbers show attractive equity valuations and, if corporate earnings continue to increase as expected, the market “has a great distance to rise” in the coming years.

Stocks are rising this morning, though not by “a great distance” yet.

The market

Futures on the Dow YM00, +0.13%, S&P ES00, +0.27% and Nasdaq NQ00, +0.33% are all in the green ahead of the opening bell. The pound GBPUSD, +0.1773%  is fairly volatile as investors wait for more Brexit updates after Prime Minister Boris Johnson’s deal vote was a non-starter on Saturday. Europe SXXP, +0.45%  stocks are up.

The chart

Yes, it’s a bit hairy out there.

This one is really stunning: A separate index that only focuses on uncertainty in global trade policy has surged to around 100 this year. From 1996 through 2018, its average level was about 2. “I think political uncertainty is clearly far higher than it has been for a long time.” pic.twitter.com/hgdAAT4Vvi

— Steven Russolillo (@srussolillo) October 20, 2019

The buzz

We’ve got a big week of earnings coming up, with bellwethers like Microsoft MSFT, -1.63%, Amazon AMZN, -1.68%, Procter & Gamble PG, +0.72% and Boeing BA, -6.79% among notables on the docket.

Voters won’t have to wait much longer to hear how Democratic presidential candidate Elizabeth Warren plans to pay for the “Medicare for All” future she envisions. The Massachusetts senator, who says she’ll give the details of her plan soon, came under heavy fire from her opponents during last week’s debate for refusing to say whether her plan would raise taxes on the middle class.

The strike at General Motors GM, -0.06% is spilling over into a second month, and the impact is intensifying across the Midwest in the U.S.he United Auto Workers union banged out a tentative labour deal with GM last week, but union leaders opted to continue picketing until workers approve the agreement.

The quote

“Market stability should not be the subject of a tweet here or a tweet there. It requires consideration, thinking, quiet and measured and rational decisions.” — Christine Lagarde, soon-to-be president of the European Central Bank, in an interview that aired on Sunday night on CBS’s “60 Minutes”.

The economy

New and existing home sales figures for September are probably the economic highlight of the week, but we won’t get a look at those until Thursday and Tuesday, respectively. There’s nothing of note on the docket today. University of Michigan rounds out the week on Friday morning with the consumer sentiment index.

Read: Latest data does nothing for investors ‘animal spirits’

The tweet

Hillary & her gang of rich, powerful elite are going after me to send a msg to YOU: “Shut up, toe the line, or be destroyed.” But we, the people, will NOT be silenced. Join me in taking our Democratic Party back & leading a govt of, by & for the people! https://t.co/TOcAOPrxye pic.twitter.com/TahfE2XOek

— Tulsi Gabbard (@TulsiGabbard) October 20, 2019

Random reads

Influencers can buy 1,000 fake followers on Facebook FB, -2.38% for $34. Advertisers pay billions for them to pitch products to real people.

There’s a bear market in religion.

This sure looks like Republican senator Mitt Romney’s secret Twitter TWTR, -1.57% account.

A man stabbed his brother to death; now he earns six figures in Silicon Valley.

The grim reality of what climate change could do to three major US cities.

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https://www.marketwatch.com/story/why-the-stock-market-has-a-great-distance-to-rise-in-the-coming-years-2019-10-21

2019-10-21 11:11:00Z
CAIiELA61TY5cOE1OflXUHTaligqGAgEKg8IACoHCAowjujJATDXzBUwiJS0AQ

Facebook says Libra could use a series of cryptocurrencies pegged to different currencies - CNBC

A "Zuck Buck" is displayed on a monitor as David Marcus, the executive leading Facebook's blockchain initiative, is questioned by U.S. lawmakers in Washington, D.C., on July 17, 2019.

Andrew Harrer | Bloomberg | Getty Images

Facebook has suggested its Libra project could use multiple cryptocurrencies backed by different existing currencies like the dollar, rather than having one single digital token tied to a basket of currencies.

The tech giant had initially proposed one synthetic unit of value that would be tied to a basket of currencies and government debt. But according to Reuters, David Marcus, the executive leading Facebook's blockchain initiative, told a banking seminar that he was open to looking at alternative approaches.

"We could do it differently," he said, according to the news agency. "Instead of having a synthetic unit … we could have a series of stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound stablecoin, etc."

Stablecoins are cryptocurrencies that are usually pegged to government-backed currencies like the dollar. Tether is the world's best-known stablecoin, backed by the dollar, though it has garnered some controversy over whether it has a sufficient amount of dollars in reserve, as well as the suggestion that it could have been used for market manipulation.

Such currencies aim to reduce the volatility seen in virtual currencies like bitcoin and ether. In libra's case, the objective is to create a more efficient cross-border payments system.

But the Switzerland-based Libra Association, which oversees the proposed cryptocurrency, has faced numerous setbacks since the start of the month, with various original member companies including payments giants Mastercard and Visa backing out.

And as payments companies withdraw from Libra, there are no immediate signs that banks could be willing to join. J.P. Morgan CEO Jamie Dimon on Friday called the group's currency "a neat idea that'll never happen."

Libra has also been met with fierce regulatory pushback, with authorities around the world worried the currency could heavily disrupt the financial system and potentially be used for money laundering or terrorist financing.

Last week, the Group of Seven (G-7) said in a report that no stablecoin project — Libra included — should be allowed to go ahead until the attached legal risks are addressed.

Meanwhile the Financial Action Task Force, a global watchdog on illicit financing, said that such digital currencies could inhibit efforts to clamp down on money laundering and terrorist financing.

Facebook could find some solace in the fact that the chief of Germany's financial regulator doesn't think libra will go away anytime soon. BaFin President Felix Hufeld told CNBC over the weekend that he doesn't think the social media firm's digital token is "dead in the water." Meanwhile, fellow tech giant IBM has said it's open to working with Libra.

WATCH: Don't think Facebook's libra is dead in the water, BaFin president says

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2019-10-21 07:04:28Z
52780413829659

Facebook says Libra could use a series of cryptocurrencies pegged to different currencies - CNBC

A "Zuck Buck" is displayed on a monitor as David Marcus, the executive leading Facebook's blockchain initiative, is questioned by U.S. lawmakers in Washington, D.C., on July 17, 2019.

Andrew Harrer | Bloomberg | Getty Images

Facebook has suggested its Libra project could use multiple cryptocurrencies backed by different existing currencies like the dollar, rather than having one single digital token tied to a basket of currencies.

The tech giant had initially proposed one synthetic unit of value that would be tied to a basket of currencies and government debt. But according to Reuters, David Marcus, the executive leading Facebook's blockchain initiative, told a banking seminar that he was open to looking at alternative approaches.

"We could do it differently," he said, according to the news agency. "Instead of having a synthetic unit … we could have a series of stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound stablecoin, etc."

Stablecoins are cryptocurrencies that are usually pegged to government-backed currencies like the dollar. Tether is the world's best-known stablecoin, backed by the dollar, though it has garnered some controversy over whether it has a sufficient amount of dollars in reserve, as well as the suggestion that it could have been used for market manipulation.

Such currencies aim to reduce the volatility seen in virtual currencies like bitcoin and ether. In libra's case, the objective is to create a more efficient cross-border payments system.

But the Switzerland-based Libra Association, which oversees the proposed cryptocurrency, has faced numerous setbacks since the start of the month, with various original member companies including payments giants Mastercard and Visa backing out.

And as payments companies withdraw from Libra, there are no immediate signs that banks could be willing to join. J.P. Morgan CEO Jamie Dimon on Friday called the group's currency "a neat idea that'll never happen."

Libra has also been met with fierce regulatory pushback, with authorities around the world worried the currency could heavily disrupt the financial system and potentially be used for money laundering or terrorist financing.

Last week, the Group of Seven (G-7) said in a report that no stablecoin project — Libra included — should be allowed to go ahead until the attached legal risks are addressed.

Meanwhile the Financial Action Task Force, a global watchdog on illicit financing, said that such digital currencies could inhibit efforts to clamp down on money laundering and terrorist financing.

Facebook could find some solace in the fact that the chief of Germany's financial regulator doesn't think libra will go away anytime soon. BaFin President Felix Hufeld told CNBC over the weekend that he doesn't think the social media firm's digital token is "dead in the water." Meanwhile, fellow tech giant IBM has said it's open to working with Libra.

WATCH: Don't think Facebook's libra is dead in the water, BaFin president says

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2019-10-21 06:34:21Z
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Illegal vapes traced to California woman who was CBD pioneer - Yahoo Lifestyle

FILE - In this May 8, 2019, file photo, a Yolo! brand CBD oil vape cartridge sits alongside a vape pen on a biohazard bag on a table at a park in Ninety Six, S.C. More than 50 people around Salt Lake City had been poisoned by the time the outbreak ended early last year, most by a vape called Yolo!, the acronym for "you only live once." (AP Photo/Allen G. Breed, File)

CARLSBAD, Calif. (AP) — Some of the people rushing to emergency rooms thought the CBD vape they inhaled would help like a gentle medicine. Others puffed it for fun.

What the vapors delivered instead was a jolt of synthetic marijuana, and with it an intense high of hallucinations and even seizures.

More than 50 people around Salt Lake City had been poisoned by the time the outbreak ended early last year, most by a vape called Yolo! — the acronym for "you only live once."

In recent months, hundreds of vape users have developed mysterious lung illnesses, and more than 30 have died. Yolo was different. Users knew immediately something was wrong.

Who was responsible for Yolo? Public health officials and criminal investigators couldn't figure that out. Just as it seemed to appear from nowhere, Yolo faded away with little trace.

As part of an investigation into the illegal spiking of CBD vapes that are not supposed to have any psychoactive effect at all, The Associated Press sought to understand the story behind Yolo.

The trail led to a Southern California beach town and an entrepreneur whose vaping habit prompted a career change that took her from Hollywood parties to federal court in Manhattan.

When Janell Thompson moved from Utah to the San Diego area in 2010, the roommate she found online also vaped. Thompson had a background in financial services and the two decided to turn their shared interest into a business, founding an e-cigarette company called Hookahzz.

There were early successes. Thompson and her partner handed out Hookahzz products at an Emmy Awards pre-party, and their CBD vapes were included in Oscar nominee gift bags in 2014. In a video shot at a trade show, an industry insider described the two women as "the divas of CBD."

Indeed, Hookahzz was among the first companies to sell vapes that delivered CBD, as the cannabis extract cannabidiol is known. Now a popular ingredient in products from skin creams to gummy bears, cannabidiol was at that time little known and illegal in some states.

The partners started other brands that offered CBD capsules and edibles, as well as products for pets. Part of Thompson's pitch was that CBD helped treat her dog's tumors.

By autumn 2017, Thompson and her partner formed another company, Mathco Health Corporation. Within a few months, Yolo spiked with synthetic marijuana — commonly known as K2 or spice — began appearing on store shelves around Salt Lake City.

Synthetic marijuana is manmade and can be manufactured for a fraction of the price of CBD, which is typically extracted from industrial hemp that must be farmed.

Samples tested at Utah labs showed Yolo contained a synthetic marijuana blamed for at least 11 deaths in Europe — and no CBD at all.

Authorities believed that some people sought out Yolo because they wanted to get high, while others unwittingly ingested a dangerous drug. What authorities didn't understand was its source.

Investigators with Utah's State Bureau of Investigation visited vape stores that sold Yolo, but nobody would talk. The packaging provided no contact information.

By May 2018, the case was cold. But it was not dead.

That summer, a former Mathco bookkeeper who was preparing to file a workplace retaliation complaint began collecting evidence of what she viewed as bad business practices.

During her research, Tatianna Gustafson saw online pictures showing that Yolo was the main culprit in the Utah poisonings, according to the complaint she filed against Mathco with California's Department of Industrial Relations.

Gustafson wrote that while at Mathco she was concerned about how Yolo was produced, that it was excluded from Mathco's promotional material and that the "labels had no ingredients or contact listing."

Justin Davis, another former Mathco employee, told AP that "the profit margins were larger" for Yolo than other products.

Gustafson's complaint asserted that Mathco or JK Wholesale, another of the companies that Thompson and her partner incorporated, mixed and distributed Yolo. Financial records in the complaint show Thompson's initials as the main salesperson for Yolo transactions, including with a company in Utah. The records also show Yolo was sold in at least six other states, including to an address in South Carolina where a college student said he vaped a cartridge that sent him into a coma.

The former bookkeeper also tipped the Utah Poison Control Center about who she believed was behind Yolo, according to her complaint.

Barbara Crouch, the poison center's executive director, recalled getting a tip in late 2018 and passing it along to the State Bureau of Investigation. SBI agent Christopher Elsholz talked to the tipster, who told him she believed the company she had worked for distributed Yolo. Elsholz said the company was in California and therefore out of his jurisdiction, so he passed the tip to the U.S. Drug Enforcement Agency.

The DEA offered to help but took no law enforcement action, spokeswoman Mary Brandenberger said. Spiked CBD is a low priority for an agency dealing with bigger problems such as the opioid epidemic, which has killed tens of thousands of people.

In the end, it wasn't the synthetic marijuana compound in Yolo from Utah that caught up with Thompson. It was another kind of synthetic added to different brands.

By the time of the Utah poisonings, vapes labeled as Black Magic and Black Diamond had sickened more than 40 people in North Carolina, including high school students and military service members. Investigators were able to connect Thompson to that outbreak in part based on a guilty plea from the distributor of the spiked vapes, who said a woman that authorities identified as Thompson supplied the liquid that went into them.

Prosecutors also linked her to dealers charged in New York, where she pleaded guilty last month to conspiracy to distribute synthetic marijuana and a money laundering charge. The only brand federal prosecutors cited was Yolo.

U.S. Attorney Geoffrey Berman called Thompson a "drug trafficker" who used JK Wholesale to distribute "massive quantities" of synthetic marijuana as far back as 2014. She faces up to 40 years in prison.

Reached by phone the week before she pleaded guilty, Thompson declined to discuss Yolo and then hung up. In a subsequent text message, Thompson said not to call her and referred questions to her lawyer, who did not respond to requests for comment.

While Yolo was Thompson's project and she was the exclusive salesperson, her business partner and former roommate was involved in its production, according to the workplace retaliation complaint.

Thompson's business partner and former roommate, Katarina Maloney, distanced herself from Thompson and Yolo during an August interview at Mathco's headquarters in Carlsbad, California. Maloney has not been charged in the federal investigation.

"To tell you the truth, that was my business partner," Maloney said of Yolo. She said Thompson was no longer her partner and she didn't want to discuss it.

In a follow-up email, Maloney asserted the Yolo in Utah "was not purchased from us," without elaborating.

"Mathco Health Corporation or any of its subsidiary companies do not engage in the manufacture or sale of illegal products," she wrote. "When products leave our facility, they are 100% compliant with all laws."

Maloney also said all products are lab tested. She did not respond to requests for Yolo lab results.

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2019-10-21 05:44:34Z
CBMiVGh0dHBzOi8vd3d3LnlhaG9vLmNvbS9saWZlc3R5bGUvaWxsZWdhbC12YXBlcy10cmFjZWQtY2FsaWZvcm5pYS13b21hbi0wNTAyMjc4NzYuaHRtbNIBXGh0dHBzOi8vd3d3LnlhaG9vLmNvbS9hbXBodG1sL2xpZmVzdHlsZS9pbGxlZ2FsLXZhcGVzLXRyYWNlZC1jYWxpZm9ybmlhLXdvbWFuLTA1MDIyNzg3Ni5odG1s

Qantas Completes Historic Test Of Longest Nonstop Passenger Flight - HuffPost

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2019-10-20 12:56:00Z
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GM Strike Continues, Deepening Pain Felt by Midwest Workers, Firms - The Wall Street Journal

A worker outside a GM plant in Flint, Mich., on Thursday. UAW workers continue to picket until a labor pact is ratified, putting further pressure on local economies. Photo: Jake May/Associated Press

By

Ben Foldy

Ben Foldy
The Wall Street Journal
• Biography
• @
• ben.foldy@wsj.com

Oct. 20, 2019 8:00 am ET

With the strike at General Motors Co. stretching into a second month, the impact is intensifying across the Midwest economy, hitting more businesses and auto-parts suppliers reliant on GM’s U.S. factories for work.

The United Auto Workers struck a tentative labor agreement with GM last week, but union leaders decided Thursday to continue picketing until workers approve the deal.

The move likely extends the nationwide walkout, already the company’s longest in decades, through Friday as UAW leaders turn their attention to educating workers on the proposed contract terms and as voting gets under way on whether to ratify the agreement.

SHARE YOUR THOUGHTS

As the consequences of the strike ripple through the Midwest, to what extent will communities support GM workers? Join the conversation below.

Meanwhile, the financial toll is mounting for both the company and states—like Michigan and Indiana—where GM has a concentration of unionized workers. Economists say the cascading effect of lost wages, production and employment will likely linger even if the strike ends, weighing on regional economies already straining from the tariff dispute with China.

U.S. factory activity overall hit a 10-year low in September after contracting for a second straight month, according to the manufacturing index published by the Institute for Supply Management.

“The trade war has already done a lot of damage, and this is just adding insult to injury,” said Mark Zandi, principal economist at Moody’s Analytics. “This is a double whammy to areas of the country that are already getting hammered.”

The strike has idled more than 30 GM factories across the U.S., suspended work at another two dozen company-owned parts warehouses and distribution centers and led to temporary layoffs of nearly 10,000 GM factory workers not represented by the UAW in the U.S., Canada and Mexico but still affected by the walkout.

GM already has lost the production of more than 300,000 vehicles because of the idled factories, according to research firm IHS Markit, and analysts say the Detroit auto maker will struggle to make it up before the year’s end, likely putting a more than $2 billion dent in second-half earnings.

The Federal Reserve said Thursday that the strike contributed to a drop in factory output overall last month, accounting for a 0.7% decline in production of durable, or long-lasting, goods. That included a steep 4.2% decline in the production of autos.

Related

• UAW Leaders Face Tough Task Selling New Labor Deal (Oct. 18)
• Heard: UAW Deal Turns Headlights on GM’s Planning (Oct. 18)
• UAW Reaches Tentative Labor Deal With GM (Oct. 16)

“The GM strike is likely to weigh on production again in October, but with a tentative deal in place, auto production should rebound in November and December as GM looks to make up for lost output,” said Gus Faucher, chief economist at PNC Financial Services Group.

Striking GM workers also are pulling back on spending, having now lost a month’s worth of company paychecks. Many are trying to get by on $275 a week, the strike pay offered by the UAW to provide some financial assistance. That figure is a fraction of their regular pay, which ranges from $630 to $1,200 for a 40-hour week.

For veteran workers earning the top wage, the strike has resulted in more than $4,000 in lost pay, analysts at Bank of America estimate. If GM workers ratify the proposed contract, they would get a hefty signing bonus payout—$11,000 for full-time workers and $4,500 for temporary employees—which would help offset lost wages. But there is no guarantee members will back the deal.

Jason Kirkpatrick, who works at a GM factory in Flint, Mich., but is currently on strike, said his family has held off on big purchases, as well as more minor spending, such as splurging on his daughter’s 14th birthday.

“We can’t make any big decisions right now,” said 46-year-old Mr. Kirkpatrick. “Normally, we would have had a party and brought some kids over, but we just don’t have that extra money right now.” Other workers say missed wages have led to canceled vacations, missed bill payments and delayed purchases.

Auto-parts suppliers reliant on GM for business are also taking a big hit. With no cars coming off assembly lines, many suppliers producing parts and materials for GM vehicles had little recourse but to stop production themselves.

As a result, 120 of GM’s direct suppliers furloughed some 17,000 workers in the U.S. during the strike, according to the Original Equipment Suppliers Association, a trade organization. That count doesn’t include layoffs further down in the supply chain, the association said, and some analysts have estimated that up to 60,000 more jobs have been affected.

The financial repercussions are starting to show up in third-quarter earnings for major parts suppliers. On Thursday, Faurecia SA, a French maker of automotive seats and other components, reported the strike had dented third-quarter earnings by about $25.6 million.

In Michigan, where GM has around 18,000 UAW-represented workers, the economic pain is most acute.

Todd Collins, president of UAW Local 724, which represents workers at auto-parts suppliers near GM’s two assembly plants in Lansing, Mich., said 1,600 of his 1,800 members have been temporarily laid off during the strike.

“They’re just equally as affected as GM workers, if not more so,” Mr. Collins said, adding that they generally made less than their counterparts.

A spokeswoman for the Michigan Department of Labor and Economic Opportunity said the agency has received 7,900 new unemployment claims from workers at auto-parts suppliers through Oct. 12 that it attributes to the strike.

Sam Kassab, 65, owns the Chene Trombly market where he sells food and liquor close to GM’s Detroit assembly plant. The strike is costing him between 10% to 15% of his usual business, Mr. Kassab said, with most of that caused by layoffs at the supplier factories nearby.

“Everybody is taking a hit,” Mr. Kassab said.

With thousands of workers missing out on paychecks for more than a month, economists and retailers in Michigan expect to feel the loss of their disposable income through the year’s end.

“Holiday season in Michigan is going to be different this year,” said Patrick Anderson, principal at Anderson Economic Group.

—Sarah Chaney contributed to this article.

Write to Ben Foldy at Ben.Foldy@wsj.com

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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2019-10-20 12:00:00Z
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Wall Street keeps embarrassing itself every time Trump talks about China - Business Insider

It's quite possible that this is Trump's "Got you again, Wall Street" face. Who can really say?AP Photo

• Every time President Donald Trump says he has a trade deal with China the stock market rallies.
• And then it turns out the deal is vapor.
• Meanwhile, US-China relations continue to deteriorate in the background, making anyone bullish on a deal look even more absurd.
• Stop it, Wall Street — you're embarrassing yourself. And we hate to see it.

People, people, people. Why does this keep happening?

On Thursday, President Donald Trump announced that he had a trade deal with China, and stocks soared. All was well in the universe of Wall Street. The administration gave itself a pat on the back.

A few hours later, though, everyone figured out that this "phase-one deal" sounded a lot like the trade war detente the US and China came to last December. In this latest "mini-deal," just like the agreement from nine months ago, both parties agreed that China would buy some agricultural goods here and there, and in exchange the US tariffs would not increase for the time being.

(There are more details, we have to assume, but they are difficult to grasp since the agreement wasn't written down or anything this time.)

Of course, this deal leaves untouched the deep structural disagreements between the US and China — issues that include major changes to China's business practices and law enforcement — unresolved. These are the issues at the core of the Trump administration's justification to launch the trade war.

And lo, in the days that followed the announcement of this "phase-one deal," the cracks started to show:

The S&P 500, to its credit, is flat for the month — phase-one deal or no. But it seems every time the president makes one of these pronouncements, the market gets excited, only to be let down again.

Let me tell you a story about the president. From 1986 to 1988, Trump reportedly made millions by betting in the stock market. His strategy was to leak to Wall Street that he was going to take over a company, like a real corporate raider. Then he'd quietly sell his shares before everyone figured out that he was bluffing.

It all ended because after two years Wall Street figured out that Trump's bark was much worse than his bite.

How long is it going to take this time?

President Pump-and-Dump

Meanwhile, as Trump pumps his trade deal and Wall Street foolishly gets their hopes up, the rest of US-Chinese diplomatic relations are in meltdown mode.

So while Trump may say the trade war with China is on the road to resolution, in the rest of the relationship chaos reigns.

And according to Sam Bresnick and Paul Haenle at Foreign Policy, there are some in China who like it that way.

To them, a Donald Trump who is willing to allow democracy to waver in Hong Kong (and the rest of Asia), who is not trusting of his allies, who is easily fooled, is a president who could create the kind of opening that would allow China to gain ground on a swiftly tilting planet. One Chinese thinker called it the "greatest strategic opportunity since the end of the Cold War."

From their piece, which is very much worth reading:

During numerous off-the-record discussions with Chinese government officials and scholars, we are finding that an increasing number are hoping for Trump's reelection next year. At a time when China's political influence and military capabilities are growing, they argue that in spite of his anti-China bluster, Trump has afforded Beijing the space to expand its influence across Asia and, more importantly, comprehensively weakened Washington's global leadership. From a zero-sum standpoint, many Chinese have concluded that Trump's policies are strategically very good for China in the long run.

On top of all these complications is the simple matter of trust. Last month, Beijing hosted a China Development Forum Special Session attended by politicians and technocrats the world over. The message out of that, according to Susan Thornton, a former assistant secretary of state for East Asian and Pacific Affairs, was that the Chinese don't think Trump is acting in good faith.

"They think Trump wants to have the China fight going into November elections," she said during a phone call with Business Insider. "They think he doesn't want to make a deal."

Thornton told us that the US and Chinese sides are having trouble understanding each other. Chinese diplomats tend to be subtle in their dealings; the US president is not a subtle man.

"Trump is presiding over the bleeding of US credibility," Thornton said. "There's no way the Chinese believe in the US ... and after seeing Trump's antics on the world stage how anyone is going to do a deal with us ever again?"

If we're stuck in phase one

Now, you may be thinking to yourself: At least the trade war isn't getting worse. If we're stuck in phase one, we're stuck in phase one.

Problem is, phase one is already causing chaos in the global economy. Up until September, the US consumer was the undisputed champion holding things together in a world of negative interest rates, slumping trade and manufacturing data, and declining business investment.

But last month, US retail sales started to sag. And now the Federal Reserve's Beige Book — a quarterly survey of businesses around the US released last week — is replete with complaints about how the trade war is constraining sales and raising input prices.

Then there's what's going on in China, the world's second-largest economy. Last quarter, GDP growth slowed to its lowest rate in three decades, 6%. Trade, manufacturing, industrial production — all declining. The one bright spot is infrastructure investment, which is supported by the government and widely considered a playground for dangerous shadow banking.

The world needs a real US-China trade deal if economic growth is going to return to the planet, not the fake deals the Trump administration keeps serving up. Wall Street — the so-called masters of the universe and the underlings who serve them — should be smart enough to know a real deal when they see one. But no. So far they've bought just about every pump the president has sold them. We hate to see it.

Let's block ads! (Why?)

https://www.businessinsider.com/trump-trade-war-tariffs-china-fools-wall-street-stock-market-2019-10

2019-10-20 12:06:17Z
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