S&P at the same level now as it was in November.
Trade War wipes out 6 months of growth
- Thread starter CU_TrialLawyer
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Look, I'm no fan of Trump, but he's right on the fact that we've been getting screwed on the trade stuff for a long time. I can't deny that Trump makes me really nervous b/c he seems to have no real systematic plan (and we need one). BUT, the US has a HUGE trade imbalance with China. Even if the trade war really blows up and all trade stops between us (unlikely, but possible), that hurts China a BUNCH more than it hurts us. Sure we pay a bit more for stuff, but they are closing lots of factories and putting people on the streets....
If people would just stop pulling all their money out at every word the man says it’d surely help.
Based all on speculation as usual. Economy humming and consumer confidence very high.
Maybe if he stopped the impulsive tweets/remarks then people couldn’t pull their $ based on his statements...
In before someone blames Obama
We're about to enter a period of inflation which isn't good due to this horrible trade war.
Cheap consumer goods ( what we have now)vs higher profits for companies(where we're headed).
This will only benefit us citizens if corporations increase wages accordingly. That won't happen. They'll implement share repurchase programs and increase capex and R&D leaving us with more expensive goods and the same ole wages.
Cheap consumer goods ( what we have now)vs higher profits for companies(where we're headed).
This will only benefit us citizens if corporations increase wages accordingly. That won't happen. They'll implement share repurchase programs and increase capex and R&D leaving us with more expensive goods and the same ole wages.
Ha true ...but that’s not going to happen. Part of me thinks he’s doing it while investing his fortunes at every reactionary dip.
Lets pretend that hopefultiger13 is a sovereign country and follow this scenario.
- You need money
- China funds your debt note via buying your treasuries that you put up for sale to create the money
- You then use that very debt note to purchase cheap China goods
- You got your cheap goods and China ran up their production/exports
- This is referred to as a positive sum game, i.e. both parties are happy
It's a game of chicken to lead to negotiations. There's no trade war. China has been taking advantage of us for years and they know it. That's why they're very anxious to negotiate, as they've said many times in the last 24 hours.
Also, if a much-overdue 10% correction spooks an investor, then that investor should consider not being an investor anymore. Put your money in a CD.
This line isn't true. China can withstand higher prices for goods sold better than the US, and will soon be the largest producer and consumer of goods in the world. If US companies are locked out of Chinese markets due to tit for tat trade escalations, those US companies would layoff US workers en masse. There are other, much better ways to try to make China a more fair trade partner. TPP, for instance, was designed with the thought of doing that.
Yep - consumer confidence and CEO confidence at or near all-time highs. Fundamentals of the economy are solid. Use these times to your advantage.
I know this board has been over the point before, but there isn't necessarily anything wrong with having a trade deficit. We need to stop talking about it like it is inherently bad.
Consumer confidence is a lagging indicator. CEOs I talk to Are preparing for a recession the second half of this year.
Agree that China has been raping us on IP but needs to be addressed in a coordinated manner rather than trumps shoot-from-the-hip, reactionary, insecure little man approach.
Trump does not have the attention span or depth to read simple bulletin point one page memo updates on national security. Etc.
He does not like to read.
Does anybody really think he has any depth of understanding of the dynamics and nuances of international trade and relations?
He is playing with Fire. Commercial real estate branding is not a prerequisite for this type of work.
He does not like to read.
Does anybody really think he has any depth of understanding of the dynamics and nuances of international trade and relations?
He is playing with Fire. Commercial real estate branding is not a prerequisite for this type of work.
You and your contacts may be right, but personally, I would be very surprised if we see a recession this year.
Oddly, the major loser in this trade war is the american farmer.
You feed the world and this is the thanks you get!
You feed the world and this is the thanks you get!
When a company spends money on capex and R&D where do you think the money goes? Disappears or into more jobs for those constructing the capital or performing the R&D?
I am not arguing in favor of a trade war, but your position is not completely thought out.
As far a the tariffs go, we have been F'd and mistreated in our prior agreements, and the other side is not just going to agree to balance the playing field. Some times you have to fight to get change. For now, I am trusting this administration (not just Trump) understands who has leverage and is finally using to benefit our citizens. In the past, we have been too quick to lay down in negotiations, and almost seem to feel guilty about our success - thereby agreeing to a bad deal.
Also, cheap consumer goods are in part the result of low wages. I don't care as long as the prices are determined by capitalism, but you seem confused.
Not sure why I felt inspired to respond to this particular post, but I will stop there because I need to go be productive.
As crazy as Trump can be, I do think he knows how to negotiate from a position of strength, which he is in. That is why China has said numerous times that they are willing to negotiate. It's like buying a car...if you're willing to walk away, you have the power. China needs us to buy their crap very badly. I don't care for him as a person, but Trump did not get to where he is in business or elected president by accident. The haters will find every way possible to tear him down and discredit him. Rightfully so in many cases, but not all.
We really haven't, on average we have benefited more than the other countries we have free trade agreements with.
Still, we should consider Ronald Reagan's views on this:
"We can become more like them, or they can become more like us. We can raise taxes, reregulate our economy, and adopt protectionist legislation of the kind now being considered in Congress. That will effectively slow growth in this nation and stifle international trade. We won’t be able to buy their goods and, certainly, no one will want to invest in the United States. The world can all shrink together, and we can all look forward to hearing the experts once again pontificating about convergence and the limits to growth.
The other solution is for them to become more like us: to adopt low-tax, pro-growth policies; to encourage trade, not discourage it—to make it freer and fairer and more plentiful; to join with the other nations in a cooperative, upward cycle of growth in which all participate; to embrace the possibilities of the new world economy."
This protectionist, Tariff driven, rent seeking, isn't the right way to go. When did the Democrats and Republican's flip on this position?
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@99 WYATT
My point is that the incremental increase in topline rev, will be returned to the business and not the employee who now has more expensive goods.
#1. Spending more on depreciable assets should eventually lead to increased revenue. This should happen whether you gross it up to the BS or use net. The FCF is still favorable.
#2. You're partly right R&D , however it's like musical chairs with respect to the economy. There are a finite number of employees in this country / economy. With unemployment so low and underemployment trending lower and lower, without increasing wages, I'm not sure the incremental effect would outpace inflation. Generally, longer hours for fixed cost employees drive R&D. Now, for capex, there would be a mix of fixed and variable wages that come in to play. But, again, the % of of variable employees (employees that would earn overtime) wouldn't outpace inflation imo.
Employees on commission would earn higher wages to be sure, but that's the exception, not the rule. Most of this country has marginal bonus structures if any at all.
The key takeaway here is that we would need to see movements that we haven't seen in decades. 1 being companies that see sustained increases in Revenue returning a proportional amount by way of increased wages for existing staff. And , 2, seeing folks that earn their money from stocks spending a proportional amount.
But the "crap" we're buying from China is stuff made there for American companies because they have workers who'll work for a bowl of rice a day compared to here where workers want a whole lot more.
Did I miss something? I don't think I'm getting screwed. I approve of Trump's plan. If things go well, the trade imbalance becomes less imbalanced. That's a win for the US. If things go completely sideways and all trade stops, we are still 1/2 a trillion/year ahead of the game with China and we buy cheap goods from somewhere else (Taiwan and Indonesia spring to mind). That's a win for the US. I don't see a downside to this except we as consumers MIGHT pay a bit more while whomever we buy from increases capacity.
My thought is ignore short term mouth from everyone and look at fundamentals for the long term
Trump is dead on with the trade thing
So you just assume global supply chains turn on a dime and go from China to Taiwan and Indonesia?
I was just trying to get an explanation from your comment stating, "but he's right on the fact that we've been getting screwed on the trade stuff for a long time", if you didn't mean that, then my bad.
What I was attempting to demonstrate was this. The US currently is the largest debtor nation on the face of planet Earth. The reason why the US is the largest debtor nation is because we wrote the playbook for the currency game, especially since Brenton Woods and for sure since 1974 (petro dollar inception). The trade imbalance will NEVER be balanced with China or any other nation for that matter if "dollars" are used as the form of payment. In other words, there is no conceivable, financial way, for the US to ever "win".
You may have noticed, China is introducing their version of the petro-dollar, called the "petro-yuan". If you go back in time, China has always obliged US debt via US treasuries because they HAD to have dollars to buy oil and hold in their forex for other purchases overseas requiring dollars. These (and other countries, namely Japan) purchases have financed US spending for the last 44 (inception of petro-dollar) years, not taxes, not exportation, etc.. Fast forward to current time, Russia, Iran, etc.. have all agreed to bypass the "petro-dollar" system. What this means, China, the LARGEST oil importer in the world, will no longer require dollars in their forex accounts, i.e. they will halt buying treasuries, i.e. they will no longer finance our massive debt, i.e. our massive trade "imbalances".
The playbook is changing, and the US is not the one making the changes.
Trump doesn't understand much of anything. He told the Canadian PM that we were running a trade deficit with the Canadians - admitting he had no idea if he was right. Of course, he wasn't.
He bad mouths one of the greatest US companies to have ever been created - Amazon - because he doesn't like its CEO owning the Washington Post. Sure, Amazon is putting some retailers out of business. A century ago, Sears did too. Thirty years ago, so did Walmart. That is American capitalism.
Trade imbalances? The real problem is our unbalanced President.
He bad mouths one of the greatest US companies to have ever been created - Amazon - because he doesn't like its CEO owning the Washington Post. Sure, Amazon is putting some retailers out of business. A century ago, Sears did too. Thirty years ago, so did Walmart. That is American capitalism.
Trade imbalances? The real problem is our unbalanced President.
You may want ask amazon employees about what a great company they work for.... you might be surprised ... not defending knuckle head trump
Yes and China would tank just as fast as we would, if anything went wrong. China's economy is built on even more debt than ours and they know this. They own a massive amount of our debt. They have to export to us to maintain their economy.
I laugh at the people pissing their pants right now. This is how Trump has ALWAYS operated. He ALWAYS starts negotiating at a point higher than his goal. The markets will be just fine for smart people who are in it for the long haul. There is no trade war. Just leaders of nations spouting numbers and trying to make the other one flinch.
We are getting screwed by China so trump making it right will increase the cost to the consumer, but we won’t be getting screwed anymore? Just making sure I understand you.
This is unequivocally and factually incorrect. Nearly all our trade deals are structured to slightly favor us. Though the majority are extremely fair to all countries involved. How did you form your opinion?
