There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
J. K. Galbraith.
Like Lazarus,
Goldilocks came back from the dead on Friday. All news is good news again.
Forget bitcoin, buy stocks, especially technology stocks. Forget the Great Global
Trump Trade War. President Trump has already surrendered to Mexico and Canada, how
long before he surrenders to GB, Germany, France and Italy. How long before
capitulation to Japan, India and South Korea?
And talking of Korea,
Kim Jong un is about to surrender to President Trump by May, “denuclearise” and
rebrand himself as the Korean Mother Teresa. Below, hopium lives as the fear of
missing out, FOMO, moves from cryptocurrencies back to stocks again. The
Greater Fool market is back!!!
The S&P 500 Rally Powers On
By Elena Popina and Sarah Ponczek
The bull
market’s resilience was hard to find fault with this week.
A
constellation of risks that loomed on Monday, from trade tensions to the jobs
report that wrecked equities last month, became reasons to buy by Friday
afternoon. The S&P 500 Index ended up 3.5 percent on the week, volatility
is rapidly abating and technology stocks are back at record highs.
Of course,
the newsflow helped. Friday’s report showed bumper hiring without the prior
month’s rapid wage gains. Donald Trump compromised on his tariffs. And a
planned summit between the U.S. President and Kim Jong Un buoyed hopes of a
diplomatic breakthrough on the Korean peninsula. Those developments have gone a
long way to repair sentiment bruised by last month’s savage correction,
restoring some of the composure that’s defined a bull market now heading into
its 10th year.
“There was a
feeling that the market was lost, now it seems that investors have more
certainty,” Ian Winer, director of equities at Wedbush Securities Inc., said by
phone. “The optimism that the economy isn’t at risk of overheating is a very
welcome reprieve after all the volatility we saw last month.”
Investors
began the week reeling from signs that the Federal Reserve may be faster on the
draw when it comes to rate hikes and worry that Trump was spoiling for a trade
war. But as early as Monday, signs emerged that the final policy on trade
wouldn’t be as protectionist as many feared, a sentiment borne out Thursday
when he signed an order full of carve-outs for key allies.
The trade
angst helped domestically-focused small caps outperform, with the Russell 2000
surging more than 4 percent. Still, even multinationals in the Dow Jones
Industrial Average managed to recoup last week’s losses, up 3.3 percent.
Friday’s
jobs report went a long way toward restoring confidence that the Fed isn’t
behind on inflation, as hiring topped 300,000 jobs while wage growth fell short
of expectations. Each of the four main equity indexes rose at least 1.6 percent
on the day. The Cboe Volatility Index fell to the lowest since Feb. 1, the day
before the market selloff began.
More
U.S. Added 313,000 Jobs in February; Wage Gains Cool to 2.6%
By Sho Chandra
Updated on 9 March 2018, 14:45 GMT
The U.S.
economy enjoyed the biggest hiring spree since mid-2016 in February as workers
streamed in from the sidelines of the labor force, but inflation pressures
remained muted amid signs the pay gains that spooked financial markets last
month haven’t taken hold.
Payrolls
rose 313,000 in February, compared with the 205,000 median estimate in a survey
of economists, and the two prior months were revised higher by 54,000, Labor
Department figures showed Friday. The jobless rate held at 4.1 percent, the
fifth straight month at that level. Average hourly earnings increased 2.6
percent from a year earlier following a downwardly revised 2.8 percent gain.
U.S. stock
futures and bond yields rose, as the report signaled the labor market remains
strong and will keep driving economic growth. The wage figures show a cooling
from a pace that spurred financial turbulence last month on concern that the
Federal Reserve could raise interest rates faster.
While the
unemployment rate remains well below Fed estimates of levels sustainable in the
long run, the rise in participation suggests the presence of slack that would
keep policy makers to a gradual pace of hikes.
More
In the bull market’s ninth year, ‘winning’ stocks hide lingering pain
Published: Mar 9, 2018 1:40 p.m. ET
Nine years have passed since U.S. stocks bottomed in March 2009 in the wake
of the financial crisis. The stock market as a whole has gone on to post
stellar numbers, but a deeper dive reveals some lingering ugliness.We will list the companies that suffered the worst stock performance during the financial crisis, and the ones that have performed best and worst since the market bottomed on March 9, 2009.
First, here’s a 15-year chart of the total return of the S&P 500 Index SPX, +1.74% with dividends reinvested, through March 8:
Not bad — a
bull-market gain of 390%.
But if we
look at a chart from the pre-crisis high on July 13, 2007, through the most
recent close, the story changes:
Not terrible — a gain of 122% in less than 11 years. Even if it were 11 full years, the average annual return would be a respectable 11.1%.
The biggest losers of the crisis
S&P Global provided list of the S&P 500 as of June 30, 2007, so that we could identify the stocks that declined the most from the pre-crisis high on July 13, 2007, through the post-crisis bottom on March 9, 2009. Some companies didn’t survive the crisis and are therefore left off the list. Those include investment bank Lehman Brothers, which filed for bankruptcy in September 2008.Here are the 20 S&P 500 stocks that posted the worst performance from the market’s pre-crisis high through its post-crisis bottom:
More
Back in the real
world, I very much doubt that Kim Jong un is about to denuclearise, and turn
himself in to a jail cell in The Hague.
I very much doubt that President Trump thinks he surrendered to Mexico
and Canada. I think he expects more than a pound of flesh back in the NAFTA
renegotiations.
Bashing and thumping
the elitist, socialist, snooty Europeans plays well in “The Donald’s” red
states. I suspect they will take a bashing all the way up to November’s
mid-term US elections. Getting any exemptions for Europe is all too likely to
come with a very high price tag.
And higher prices lie
ahead for Americans too. Higher priced steel and aluminium will roll right
through the US economy in the months and years ahead.
Below, the world
outside of the Wall Street casino.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.
John Kenneth Galbraith
Lawrence Solomon: The real reason for Trump’s steel tariffs? He’s preparing for war
Those who see Trump as threatening a free market in steel should see the world as it really is and welcome, rather than berate Trump’s initiative
March 9, 2018 8:39 AM EST
President
Trump’s decision to apply steep tariffs to steel imports on grounds of national
security met with a loud chorus of protests at home and abroad, by many trying
to divine what could possibly be going through Trump’s mind. Trump is an
economic illiterate, he’s a protectionist, some reasoned; he’s targeting Canada
to get concessions on NAFTA, he’s playing to his base, others pronounced.
These
explanations miss the mark. Though Trump doubtless sees taunting Canada on
NAFTA and playing to his political base as furthering his agenda, these are but
freebies, sideshows to the main event. Trump is acting sincerely, and
legitimately, in the national security interests of the United States. Canada
isn’t his target; China is.
Trump is old
enough to know that during the Korean War, president Harry Truman seized the
U.S. steel industry to maintain production for America’s then-vulnerable
wartime economy. During the Second World War, when the U.S. dominated the
world’s steel production, rationing was nevertheless needed — the public was
even exhorted to donate their automobile bumpers to the war effort as scrap
steel.
Today, the
U.S. has not only lost much of its steel capacity, it’s at risk of losing the
balance, making it dependent on a host of countries: Canada, its largest and
most reliable foreign supplier, meets just five per cent of U.S. needs.
According to the U.S. Commerce Department, the United States is now at risk of
finding itself “in a position where it is unable to be certain it could meet
demands for national defense and critical industries in a national emergency.”
If dependent on a foreign country, the department warns, the U.S. would not
have the legal authority to commandeer supplies as it could within the U.S.
“Our steel
industry is in bad shape,” Trump tweeted. “IF YOU DON’T HAVE STEEL, YOU DON’T
HAVE A COUNTRY!”
Those who
believe war is for the history books, never to inconvenience us in our daily
comforts, naturally view Trump as some kind of madman, senselessly protecting a
few steelworkers in an economically irrelevant industry at a great cost to the
rest of the labour force and economy. But those with a longer time frame and a
sense of history — and especially those who can sense the gathering storm of
war — make different calculations.
Trump, like
president Ronald Reagan before him, believes in peace through strength. He
wants a military so dominant, and an economy so robust, that no adversary would
ever dare challenge it. At the same time, Trump wants to take on today’s Evil
Empire, the country that represents a future existential threat to the U.S. —
China. An uncompromising ally in this project to neuter China — a man Trump
calls a visionary — is Peter Navarro, his chief trade adviser, formerly a
professor of economic and public policy at University of California and the
author of Deathby China, a 2011 book that warns, “China’s perverse form
of capitalism combines illegal mercantilist and protectionist weapons to pick
off American industries, job by job. China’s emboldened military is racing
towards head-on confrontation with the U.S.” Navarro’s other China book, The
Coming China Wars published in 2006, described China as a ruthless emerging
power likely to succeed in its ambitions of dominance.
More
March 8, 2018 / 7:23 PM
Tesla chief Musk says China trade rules uneven, asks Trump for help
WASHINGTON/SHANGHAI
(Reuters) - Tesla Inc (TSLA.O)
Chief Executive Elon Musk took to Twitter on Thursday to call on U.S. President
Donald Trump to challenge China’s auto trade rules, which limit foreign
ownership of Chinese ventures and impose steep tariffs on imported cars.
In a series of tweets aimed at
the president, Musk said he was “against import duties in general, but the
current rules make things very difficult. It’s like competing in an Olympic
race wearing lead shoes.”
Tesla has been pushing hard to
build cars in China, the world’s largest auto market, but has hit roadblocks in
negotiations with local authorities, in part because Musk is keen to keep full
control of any local venture.
“No U.S. auto company is allowed
to own even 50 percent of their own factory in China, but there are five 100
percent China-owned EV (electric vehicle) auto companies in the U.S.,” Musk
wrote in another tweet.
Tesla “raised this with the
prior administration and nothing happened. Just want a fair outcome, ideally
where tariffs/rules are equally moderate. Nothing more. Hope this does not seem
unreasonable,” he said.
Trump
quoted one of Musk’s tweets in his announcement on new tariffs and said
American automakers have not been treated fairly by trade rules around the
world. Trump announced steep tariffs on steel and aluminum imports on Thursday.
Politicians “have known it for
years and never did anything about it. It’s got to change,” Trump said, saying
he plans to impose a “reciprocal tax” on other countries. “We’re changing
things,” Trump added. “We just want fairness.”
Tesla has sought to build a
factory in the Chinese financial capital of Shanghai, and last November Musk
said he hoped the plant would be operating within three years. However, Tesla
and Chinese authorities have yet to announce an agreement.
The Shanghai Municipal
Commission of Commerce did not immediately respond to calls and faxed requests
for comment. Telsa officials in China declined to comment.
China has said it will look to
lower import taxes for cars and carry out a pilot scheme to loosen foreign
ownership rules for new energy vehicles, a term China uses to refer to
fully-electric and plug-in hybrid cars.
More
March 9, 2018 / 11:55 AM / Updated 4 hours ago
U.S. eases way to more tariff exemptions under pressure from allies
WASHINGTON/BRUSSELS/SHANGHAI
(Reuters) - The United States opened the way for more exemptions from its steel
and aluminum tariffs on Friday, after pressure from allies and intense lobbying
from lawmakers, further diluting the measures just a day after they were formally
announced.
President
Donald Trump, who has broad powers to impose the tariffs of 25 percent on steel
imports and 10 percent on aluminum, at the outset granted exemptions to Canada
and Mexico, and said there would be the possibility of industry exemptions,
although he has not been specific.
After Trump
opened the door, Brazil, Japan, South Korea, Australia and Europe clamored for
special treatment, while Chinese producers called on Beijing to retaliate in
kind.
Trump
tweeted on Friday that he spoke with Australian Prime Minister Malcolm Turnbull
about trade and military cooperation. “Working very quickly on a security
agreement so we don’t have to impose steel or aluminum tariffs on our ally, the
great nation of Australia!” Trump said.
Treasury
Secretary Steven Mnuchin earlier said he expects countries in addition to
Mexico and Canada to be exempted in the next couple of weeks.
When
proposed tariffs were initially announced, stock markets went into a tail spin
on concerns they would ignite a global trade war. But since Trump signaled that
exemptions were possible, reaction has been measured, and counter threats have
been carefully calibrated so far.
----Tokyo
and Brussels rejected any suggestion that their exports to the United States
threatened the country’s national security - Trump’s justification for imposing
the tariffs despite warnings at home and abroad that they could provoke a
global trade war.
“We are an
ally, not a threat,” European Commission Vice President Jyrki Katainen said.
More
Finally, as a service
to most of us who have never experienced rationing, the Smithsonian explains
the Great USA Wartime Shoe rationing bonanza. Coming soon in a long running,
escalating trade war, perhaps?
These Photos Captured What Happened When the United States Started to Ration Shoes During WWII
Seventy-five years ago, the Office for Price Administration wanted to limit the use of leather on the homefront
In February 7, 1943, the New York Times devoted four columns to an official U.S. government statement on footwear. Effective February 9, the statement explained, Americans would need a special coupon to buy a pair of shoes. Everyone would receive three of these coupons per year. Shoe rationing had arrived.
Rationing was a fact of life
during World War II. The military effort churned through huge amounts of meat,
dairy, sugar, tires, gasoline, nylon, and other staples. To guarantee consumers
access to essential products at reasonable prices, the U.S. Office of Price
Administration (OPA) distributed coupon books that set careful limits on
everyone’s consumption. No coupon, no sugar — or shoes.
Shoes were rationed because
leather and rubber were in short supply. (Rubber especially, as Japan
controlled Southeast Asia, where the bulk of the world’s rubber was produced.)
Hoping to avoid serious shortages, the OPA set a cap on shoe purchases, and
issued new rules about the kinds of shoes that manufacturers could make. Only
four colors were permitted — “black, white, town brown, and army russet” — and
two-toned shoes were prohibited. Further disappointing the nation’s snazzy
dressers, the OPA banned boots taller than 10 inches, heels taller than
two-and-five-eighths-inches, and “fancy tongues, non-functional trimmings,
extra stitching, leather bows, etc.” The resort set felt the pinch, too: men’s
sandals and golf spikes were deemed inessential, and discontinued.
There were some exceptions. If you lost your shoes in a flood or fire, or if they were stolen, you could, mercifully, apply for a special certificate to buy a new pair. Mail carriers, police officers, and others whose work was hard on their feet were also exempt. Allowances were made for orthopedic and maternity shoes and a few other cases. Otherwise, the three-pair limit stood firm, but the OPA figured it was better than the alternative: compelling manufacturers “to produce shoes that would be so unattractive that people would not buy them unless absolutely needed.”
There were some exceptions. If you lost your shoes in a flood or fire, or if they were stolen, you could, mercifully, apply for a special certificate to buy a new pair. Mail carriers, police officers, and others whose work was hard on their feet were also exempt. Allowances were made for orthopedic and maternity shoes and a few other cases. Otherwise, the three-pair limit stood firm, but the OPA figured it was better than the alternative: compelling manufacturers “to produce shoes that would be so unattractive that people would not buy them unless absolutely needed.”
The
program did not go uncriticized. A New York Times editorial claimed
that, rather than waste their coupons, consumers were buying shoes they didn’t
need. Rationing had given rise to “the greatest shoe-buying orgy in the history
of the nation,” the Times huffed.
Photographic
evidence suggests that the Times’s concerns may have been overblown: in
pictures like the one above, taken at a Washington, D.C., shoe store as the
first coupon-expiration date approached in June 1943, business looks brisk, but
the shoppers manage to keep their clothes on.
In time, people found creative ways — not always legal — to circumvent the ration book. For a price, less-scrupulous store owners might look the other way if a customer didn’t have a coupon, and enterprising brokers bought and sold coupons on the black market.
In time, people found creative ways — not always legal — to circumvent the ration book. For a price, less-scrupulous store owners might look the other way if a customer didn’t have a coupon, and enterprising brokers bought and sold coupons on the black market.
econd-hand
shoe stores got a nice bump, and inventive manufacturers introduced shoes made
from materials that weren’t rationed: mostly plastics, but also “pressed carpet,
felt, old brake lining material and even reclaimed fire hose.” (Below,
women model shoes made from non-rationed materials.)
All
told, shoe rationing lasted more than three years. When it concluded in late
October 1945, more than a month after the war ended, OPA chief Chester Bowles
called it “one of our most
successful programs.” “By
giving everyone a little less,” Bowles said, distilling the sense of shared
sacrifice that defined the effort, the OPA ensured that there was enough “to go
around.”
https://www.smithsonianmag.com/history/shoe-rationing-wwii-america-180968428/?utm_source=smithsoniandaily&utm_medium=email&utm_campaign=20180308-daily-responsive&spMailingID=33398719&spUserID=NjUwNDIzNTUzNDE0S0&spJobID=1241019391&spReportId=MTI0MTAxOTM5MQS2
https://www.smithsonianmag.com/history/shoe-rationing-wwii-america-180968428/?utm_source=smithsoniandaily&utm_medium=email&utm_campaign=20180308-daily-responsive&spMailingID=33398719&spUserID=NjUwNDIzNTUzNDE0S0&spJobID=1241019391&spReportId=MTI0MTAxOTM5MQS2
"When
a President does it, that means that it is not illegal."
President
Richard M. Nixon.
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