AYA Analytica financial health memo July 2018
As of July 2018, this regular podcast is available on our Andy Yeh Alpha fintech network platform.
Trumpism may now become the new populist world order of economic governance.
Trumpism may become the new populist world order of economic governance.
Populist support contributes to Trump's presidential election victory and his subsequent embrace of both trade protectionism and accommodative fiscal stimulus.
Trumpism echoes Carl Schmitt's fundamental critique of modern liberalism.
This critique reflects disdain for the universal aspirations such as absolute individual liberty and economic freedom.
Liberals place individual rights at the core of their political communities.
In principle, these rights extend to every citizen, so absolute American liberty can be a decent idea.
However, this liberal school of thought makes U.S. states vulnerable to the aggressive demand by domestic private interest groups and foreign nations.
This latter retort reflects the key centerpiece of Trump's presidential election campaign.
As dominant market players such as China and Russia refuse to play by the rules of liberal economic governance, the Trump administration has to engage these players in a wider G20 circle.
China's recent economic rise suggests that the old millennium world order of economic governance should be more inclusive.
As Trump himself suggests at the G7 summit, Russia should also be part of this new populist world order.
Another addition can be India that represents a 1.3 billion population-dividend-equivalent to China.
For this reason, Jim O'Neill, former chief economist at Goldman Sachs, advocates the fresh insight that we should broaden the practical scope of the G7 summit.
Instead, a G10 summit or even a G20 summit should encompass all major market economies.
This inclusive approach emphasizes the new populist world order on socioeconomic issues from capital control and monetary contraction to climate change and environmental protection.
Admitting China to the WTO seems ineffective in imparting economic freedom and democracy to the communist regime.
Admitting China to the World Trade Organization (WTO) and other international activities seems ineffective in imparting economic freedom and democracy to the communist regime.
China now marches toward global technological leadership and often challenges America both economically and militarily in what U.S. policy writer Michael Lind terms *Cold War II*.
At one level, China seeks to be master its own technologies such as artificial-intelligence applications, robots, electric cars, biotech innovations, and semiconductor microchips.
Thus, China aspires to achieve not only economic growth but also technological dominance.
With good intentions, the prior Carter and Clinton administrations might have been conducive to normalizing trade relations with China.
These administrations might hold high hopes that China may embrace both economic freedom and democracy after WTO accession.
These high hopes would then continue throughout the subsequent Bush and Obama administrations.
Nevertheless, China fails to fully comply with its WTO membership requirements with respect to trademark-and-patent protection and enforcement.
In fact, China skillfully uses its WTO membership as blanket immunity from prosecution for its R&D-mercantilist policies.
For instance, China sets unfair rules and regulations for U.S. multinational corporations to establish onshore data centers and IT innovation parks.
These policies in turn transfer technologies from these corporations to their Chinese counterparts.
In the new millennium, America can no longer undertake unilateral actions against China without triggering WTO complaints.
For better national economic security, it is legitimate for the Trump administration to impose on China hefty punitive tariffs and even quotas and embargoes in addition to foreign investment restrictions.
This counterrevolutionary strategy better balances U.S. economic interests and so rolls back China's R&D-mercantilist agenda *Made in China 2025*.
President Trump hails and touts America's new high real GDP economic growth in mid-2018.
President Trump hails and touts America's new high real GDP economic growth in 2018Q2.
The U.S. is now a $20+ trillion economy, and America hits this new milestone for the first time in the world.
A major rebound in consumer expenditures from 2018Q1 is the largest contribution to real GDP economic growth.
Personal consumption increases by a hefty margin of 4%, and both business investments and government expenditures also increase quarter-to-quarter.
These great numbers arise in the broader context of Trump economic reforms on trade, infrastructure, fiscal stimulus, monetary contraction, and health care.
This fundamental prediction of healthy real GDP economic growth shatters most fears and doubts that the U.S. may or may not remain tax-neutral when push comes to shove.
Some economists and pundits forecast that American needs at least 3%-3.5% real GDP economic growth in order to better balance its medium-term budget.
Now it seems plausible for the Trump administration to herald supply-side macroeconomic policies.
These policies help fiscal stimulus and government welfare to trickle down to the typical American.
Since Trump's presidential election victory back in November 2016, offshore corporate cash repatriation rakes in $300 billion and partly contributes to the fresh creation of 3.7 million domestic jobs.
Overall, the Trump stock market rally can continue in the foreseeable future.
President Trump now agrees to cease fire in the trade conflict with the European Union.
President Trump now agrees to cease fire in the trade conflict with the European Union.
Both sides can work together towards *zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods*.
Trade barriers in services, chemical products, pharmaceutical medications, and soyabeans are on the chopping block too.
Pundits point out that Trump secures trade talks with the European Union to negotiate a similar deal to the prior Transatlantic Trade and Investment Partnership (TTIP).
Trump agrees to hold off further tariffs, halts punitive measures and sanctions on European cars, and avoids escalation into a tit-for-tat trade dispute.
However, many international trade experts remain skeptical of Trump's mercurial personality and his pet peeve over America's trade deficits with the European partners.
The current trade truce may or may not become permanent during the Trump administration.
In addition to China, Canada, and Mexico, the European Union causes hefty bilateral trade deficits with America.
U.S. farm producers of soy, corn, wheat, cotton, dairy, and pork can receive $12 billion temporary subsidies in light of Trump tariffs, quotas, and even embargoes on Europe.
Whether this trade protectionism proves to be effective in the long run remains open to some healthy debate.
The law of inadvertent consequences counsels caution.
President Trump supports a bipartisan bill or the Foreign Investment Risk Review Modernization Act.
President Trump supports a bipartisan bill or the Foreign Investment Risk Review Modernization Act (FIRRMA), which effectively broadens the jurisdiction of the Committee on Foreign Investments (CFIUS).
This legislation gives CFIUS greater legal power to investigate-and-potentially-block the acquisition of U.S. firms by foreign companies.
The Trump administration advocates the fact that an expansion of CFIUS can be a powerful safety valve for future economic prosperity.
In effect, this safety valve better protects the crown jewels of American technology and intellectual property from unfair trade transfers and acquisitions that may threaten U.S. national economic security.
In March 2018, CFIUS rejected the Singaporean rival Broadcom's potential takeover of Qualcomm (an onshore San Diego chipmaker) over 5G national economic security concerns.
In mid-2018, CFIUS refused to approve a $1.2 billion M&A deal between MoneyGram (a Dallas money transfer company) and Ant Financial Group (a Chinese electronic-payments company).
Also, CFIUS blocked the proposal from Asian buyers to acquire a controlling equity stake in the Californian automobile LED business of the Dutch electronics giant Philips.
The new legislation grants CFIUS greater legal power to review foreign capital investment transactions beyond national economic security to U.S. competitive advantage in new industries such as 5G telecommunication and LTE broadband.
Under this legislation, CFIUS can review major foreign capital investments, M&As, joint ventures, and strategic alliances that might involve the potential transfer of American critical technologies.
In accordance with the congressional mandate, CFIUS helps curb Chinese capital investments in U.S. critical technologies that may hinder American competitive advantage in emerging-industries due to national security concerns.
CFIUS prevents China and several other countries such as Russia, Japan, and Germany from exploiting loopholes in the current safeguards in order to acquire both sensitive and exclusive critical technologies, patents, and trademarks to the detriment of U.S. firms and inventors.
Goldman Sachs chief economist Jan Hatzius proposes designing a new Financial Conditions Index (FCI).
Goldman Sachs chief economist Jan Hatzius proposes designing a new Financial Conditions Index (FCI) to be a weighted-average of risk-free interest rates, exchange rates, stock prices, and credit spreads.
Each weight corresponds to the direct marginal contribution of each macro variate to real GDP economic growth.
Hatzius amends a standard New Keynesian macroeconomic model to embed an FCI in a Taylor monetary policy rule that induces the central bank to ease the FCI when inflation or employment falls below mandate-consistent thresholds.
In effect, this proposal suggests an FCI-driven policy rule for maintaining the neutral interest rate that better contains inflation near full employment.
The Trump administration's economic chief Larry Kudlow engages in a healthy debate with some economists who warn of an economic recession that might arise from the Sino-American trade war with higher U.S. budget deficits and tax cuts.
Specifically, Kudlow advocates the optimistic outlook for the U.S. economy in light of both robust employment and 3.5%-4% real GDP growth in mid-2018.
Kudlow even emphasizes that the current U.S. economic boom may continue until 2022-2024.
In contrast, some other eminent economists such as Mark Zandi (Moody's chief economist) and Ken Griffin (Citadel CEO) are less optimistic about the current U.S. economic boom.
Zandi shares his ingenious insight that the Federal Reserve continues its interest rate hike to dampen inflationary pressure until a recession occurs early in the next decade.
Griffin considers a murkier outlook that the Trump tax cuts may have pulled forward both consumer and business demand.
The current economic boom is the second-longest in U.S. history and thus may or may not sustain in the long run.
Treasury Secretary Steve Mnuchin reiterates America's long-term credible commitment to keeping a strong greenback with minimal risk of a currency war.
In accordance with Mnuchin's recent remarks after the G20 summit of finance ministers, he has to dismiss the arcane idea of U.S. dollar intervention.
On balance, both the U.S. Treasury and Federal Reserve can consider the new FCI in order to make better and wiser economic policy decisions.
Paulson, Geithner, and Bernanke warn that people seem to have forgotten the lessons of the global financial crisis from 2008 to 2009.
Henry Paulson and Timothy Geithner (former Treasury heads) and Ben Bernanke (former Fed chairman) warn that people seem to have forgotten the lessons of the global financial crisis from 2008 to 2009.
As Paulson, Geithner, and Bernanke suggest, the sharp increase in U.S. budget debt and deficit, political dysfunction, and financial deregulation may combine to endanger the economy.
Americans face a more stable financial system today because the defenses are better, whereas, U.S. policymakers now have a weaker set of tools for coping with a severe financial downturn.
These former top-notch economic heads voice their deep concerns about the next U.S. economic recession.
Recent stock market gyrations exhibit much larger volatility in response to Trump tariffs and tax cuts.
Also, bond market analysts express their worries and concerns about potential yield curve inversion that might signal the dawn of the next economic downturn.
As U.S. government bond issuance cannot finance incessant budget deficits, these deficits may reflect the need for greater seigniorage or inflation taxation.
In turn, an increase in money supply growth induces inflationary momentum with higher consumer prices and wages.
As the Federal Reserve continues the current interest rate hike in the foreseeable future, greater greenback strength may dampen U.S. exports.
As a result, this economic policy uncertainty may pose a conceptual challenge to many stock market investors, bond analysts, and currency traders.
In light of these recent economic developments, it would be better for long-term value investors to place their capital in profitable mid-size bluechip cash cows with low asset growth.
Facebook, Google, and Twitter attend a U.S. House testimony on whether these tech titans filter web content for political reasons.
Facebook, Twitter, and Google attend a U.S. House testimony on whether these social media titans currently filter content for political reasons.
These network platforms have undertaken numerous attempts to improve transparency with minimal discrimination.
For instance, Facebook has bent over backwards to placate conservatives in light of the social network giant's recent failure to remove particular pages on conspiracy theories.
Google's video channel YouTube rep emphasizes that giving preference to content of one political ideology over another would fundamentally conflict with universal service provision.
Twitter's senior strategist also suggests that its primary purpose is to serve user interactions with neither value judgments nor personal beliefs.
These platforms then experience sharp stock market gains soon after their congressional clarification.
In recent times, Google receives a $5 billion fine over anti-trust abuses in relation to its Android mobile operating system.
The European Commission deems that Google has abused its dominant position with 80% revenue intake in the smart phone market by forcing manufacturers to pre-install Google Search and Chrome.
As a result, this unfair practice prevents several other tech titans such as Amazon, Alibaba, HuaWei, and Oppo from being able to find alternative manufacturers for Android mobile devices.
Despite this harsh penalty, Google's recent stock market performance remains robust.
Yale economist Stephen Roach warns that America has much to lose from the current trade war with China for a few reasons.
Yale economist Stephen Roach warns that America has much to lose from the current trade war with China for several reasons.
First, America is highly dependent on China as the key source for low-cost products and services.
When America increases its trade bets and tariffs on $200 billion imports from China, most U.S. households and firms would face higher costs due to inflationary concerns.
Second, the Chinese government holds huge dollar amounts of U.S. Treasury bills and notes.
These investments help fund the perennial U.S. budget deficit.
Third, erecting tariffs, quotas, and other trade barriers may isolate America from the OECD free trade bloc.
In turn, U.S. economic output expansion and employment growth may slow down as a result.
For these reasons, America has much to lose from its current trade conflict with China.
In contrast, Mohamed El-Erian, chief economic advisor of Allianz, suggests that America is in a much stronger position to win the trade war against China.
Further, it is important for America to protect its IT-driven intellectual property rights with better patent and trademark enforcement.
Chinese regulatory agencies have been notorious in requiring U.S. corporations to set up data centers and IT science parks in some major cities in China.
This regulation effectively transfers many patents and IT solutions from America to China.
The U.S. Trade Act Section 301 investigation thus concludes that it is opportune for the Trump administration to impose punitive tariffs on Chinese imports.
Global stock market investors may suffer some short-term capital losses due to this relentless Sino-American trade conflict.
CNBC All-America Economic Survey indicates 54% majority approval of the Trump team's supply-side economic reform.
In recent times, the Trump administration sees the sweet state of U.S. economic expansion as of early-July 2018.
As of June 2018, the latest CNBC All-America Economic Survey indicates 54% majority approval of the Trump administration's supply-side economic policies.
At least for 2018Q2, U.S. economic output grows at a hefty rate of 4% year-to-year.
Non-farm payrolls add 213,000 full-time jobs in June 2018.
Also, the U.S. trade deficit shrinks by 6.6% to $43 billion or the lowest level in 19 months (since October 2016).
U.S. average wages growth increases to 2.7%, whereas, CPI inflation remains as low as 2% that the Federal Reserve now targets in order to maintain the current neutral interest rate hike.
Also, unemployment is as low as 4% per annum, so the U.S. economy now operates near full employment.
These top-line statistics accord with the Federal Reserve's dual mandate of both maximum employment and price stability.
In light of this recent evidence, the Federal Reserve seems able to trade off maximum employment with moderate inflationary momentum.
President Trump deserves a lion's share of credit for this sweet state of economic affairs in America.
The mid-term election stirs positive animal spirits and investor sentiments.
The current rollback of Dodd-Frank bank regulation helps boost financial intermediary capital for better profitability, M&A deal momentum, and balance sheet strength.
Trump tax cuts further breed near-term corporate efficiency, capital investment growth, and both dividend payout and share buyback.
These positive economic affairs can trickle down to benefit shareholders, small-to-medium enterprises, and investment firms.
Whether these short-term economic affairs can sustain the current sweet state remains open to healthy debate due to bitter social polarization and rampant economic inequality.
Another concern pertains to whether the Sino-American trade war would escalate with $200 billion extra tariffs on Chinese products and services.
Federal Reserve raises the interest rate again in mid-2018 in response to 2% inflation and wage growth.
The Federal Reserve raises the interest rate again in mid-2018 in response to 2% inflation and wage growth.
The current neutral interest rate hike neither boosts nor constrains inflationary pressure.
FOMC minutes reveal some current voting members' concerns about whether the Trump tariffs would dampen robust macroeconomic momentum and full employment.
When western allies such as Canada, Europe, and Mexico lash back with retaliatory steel and aluminum tariffs, this ripple effect may weaken 2.7%-3% U.S. economic growth and production.
Both capital equipment and risky asset investments may deteriorate in light of international trade frictions.
Also, some FOMC members express their concern about potential yield curve inversion that might signal the dawn of an economic recession.
Whether an economic recession lurks around the corner remains an open controversy.
While both stock market valuation and domestic demand continue to indicate investor optimism, the term spread between short-and-long-term interest rates warns of potential output contraction.
In light of its dual mandate of both price stability and maximum employment, the Federal Reserve may hike the interest rate twice in the second half of 2018.
The current interest rate hike may continue above the neutral threshold sometime in mid-2019.
On balance, the recent Fed Chair transition from Yellen to Powell reflects the fact that the medium-term monetary policy stance has shifted from dovish to hawkish.
A dovish monetary policy stance focuses on attaining full employment, whereas, a hawkish stance emphasizes inflation containment.
This monetary policy transition is a major inflection point that shines fresh light on the inexorable and mysterious New Keynesian trade-off between price stability and employment.
The top Sino-U.S. tech titans now reach the trademark total market capitalization of $4 trillion as of July 2018.
The east-west tech rivalry intensifies between FAANGs (Facebook, Apple, Amazon, Netflix, and Google) and BATs (Baidu, Alibaba, and Tencent).
These Sino-American tech titans now reach the trademark total market capitalization of $4 trillion as of July 2018.
The U.S. tech giants aim to achieve digital supremacy worldwide; however, only Apple and Amazon receive open access to the Chinese market.
The Chinese tech leaders, Baidu, Alibaba, and Tencent dominate in Mandarin online search, e-commerce, mobile payment encryption, social media, and digital communication.
These Sino-American tech titans avoid each other in their home markets, and the recent bilateral trade frictions make it less likely for a major clash to happen in these respective markets.
In light of tariffs, quotas, and other trade barriers, the Trump administration bans China Mobile from gaining access to the U.S. market due to national security concerns.
In response to the recent M&A request of Ant Financial Group (an affiliate of Alibaba), the Trump administration vetoes Ant's potential acquisition of a U.S. payment firm.
Several other investment restrictions prevent Sino-American tech titans from entering the uncharted territory on the other side of the northern hemisphere.
For this reason, these Sino-U.S. tech titans expand their reach and impact in third countries with high population dividends, such as Brazil, India, and Indonesia etc.
FAANGs and BATs are now aggressively seeking both domestic and foreign M&A targets, especially unicorns or tech startups each with at least $1 billion market valuation.
These unicorns specialize in specific R&D innovations in order to package themselves for lucrative deals.
As global income and wealth increasingly concentrate in these Sino-U.S. tech titans, consumer benefits manifest in the form of technological improvements.
Whether this pecuniary concentration would exacerbate global economic inequality remains an open controversy.
U.S. trading partners such as the European Union, Canada, China, Japan, Mexico, and Russia voice their concern at the WTO.
Major U.S. trading partners such as the European Union, Canada, China, Japan, Mexico, and Russia voice their concern at the World Trade Organization (WTO) in light of hefty U.S. tariffs on steel and aluminum.
These tariffs can be particularly detrimental to the automobile industry worldwide.
The unilateral punitive trade measures may disrupt global free trade.
Although Canada, Europe, China, and Mexico seek to impose retaliatory tariffs on U.S. exports, these retaliatory tariffs are smaller in scale in comparison to the Trump tariffs.
The Trump administration vows to substantially reduce the perennial U.S. trade deficits at least for better mid-term election results, whereas, America's major trading partners may lash back quite hard on U.S. car producers.
Overall, 40 countries, of which 28 countries are part of the European Union, uphold the unanimous conviction that the current Trump steel-and-aluminum tariffs violate WTO rules.
In recent times, international stock prices dramatically decline as these trade worries exacerbate the adverse inflationary impact of a near-term increase in oil prices.
Meanwhile, tech titans such as Google, Facebook, and Twitter face sharp share price decreases due to user privacy concerns.
Other tech firms from Netflix, Micron, and Apple to AMD and Nvidia reflect some stock market overvaluation and thus may experience corrective fundamental recalibration.
Traditional industries also experience substantial stock market losses due to steeper U.S. bond yield curves, higher energy costs, and greenback gains that might result from the current Federal Reserve interest rate hike.
From a macro perspective, a bit of fiscal prudence can help ensure better Ricardian equivalence over time.
President Trump's current trade policies appear like the Reagan administration's protectionist trade policies back in the 1980s.
President Trump's current trade policies seem like the Reagan administration's protectionist trade policies back in the 1980s.
In comparison to the previous target of Japan back in the 1980s, the current target is China that causes large perennial U.S. trade deficits nowadays.
In the 1980s, President Reagan and U.S. senators worried about the sharp increases in U.S. trade deficits with Japan as well as the latter's aggressive entry into specific industries where America used to dominate in history.
The Reagan administration focused on automobiles, steel exports, and semiconductors.
The 1980s trade war involved a particular taxonomy of tariffs, quotas, and other import restrictions on Japanese companies in these fields.
Eventually, the 1980s trade policies led to the Reagan administration's inability to tame U.S. trade deficit growth.
In fact, the U.S. trade deficit exacerbated from $36 billion or 1.3% of total GDP in 1980 to $170 billion or 3.7% of total GDP in 1989.
Not only did the Reagan tariffs and quotas fail to deliver robust economic growth in the aftermath of the 1987 stock market crash, these trade measures constrained U.S. economic output expansion from trickling down to benefit the typical American.
Several economic lessons emerge from this historical context.
First, erecting trade barriers may not necessarily shrink the current trade deficit.
These tariffs and quotas may or may not reverse the current Sino-American trade dilemma.
Second, U.S. consumers, households, and companies may end up paying higher prices for intermediate goods and services in the specific areas of steel, aluminum, and other tech-savvy intellectual properties.
Higher inflation induces the Federal Reserve to accelerate the current interest rate hike that in turn adversely affects U.S. financial market developments.
Third, the specific industries such as steel, aluminum, and semiconductor technology may receive little help in light of higher production costs.
When China and the European Union lash back with retaliatory tariffs and quotas, some U.S. companies such as Harley Davidson would have no choice but to move production overseas.
The resultant decrease in total demand for domestic blue-collar workers may mean an inevitable increase in unemployment in these heavy-metal industries.
This adverse impact may further spill over toward American agriculture that relies heavily on its exports to Canada, China, Europe, and Mexico.
As history may repeat itself, the law of inadvertent consequences counsels caution.
China, Russia, France, Germany, and Japan may dethrone the petrodollar.
Are China and Russia etc gonna dethrone the petrodollar?
Over the years, China, Russia, France, Germany, and Japan have made numerous attempts to use their own reserve currencies as the primary basis for futures in oil, silver, steel, aluminum, and other metals.
De-dollarization helps non-U.S. companies anchor their use and consumption of natural resources to more reliable reserve currencies due to zero exposure to foreign exchange risk.
Durable de-dollarization depends on a credible disinflationary monetary policy plan and specific microeconomic measures.
Not only does this strategy contribute to better financial risk mitigation, this strategy helps minimize any abrupt impact of greenback gyrations on domestic demand for oil, steel, and other natural resources.
Often times de-dollarization can be conducive to promoting better exchange rate flexibility, macroeconomic stabilization, inflation moderation, and financial crisis containment.
Should these countries and regions mute their exposure to dollar fluctuations over time, the greenback may become less than the gold standard of hard currency.
Chinese, Russian, and Japanese companies can then better acquire pivotal resources with minimal currency risk, whereas, de-dollarization remains an open challenge for France, Germany, and other European countries in the post-Brexit era.
Amazon acquires an Internet pharmacy PillPack in order to better compete with Walgreens and many other drug distributors.
Amazon acquires an online pharmacy PillPack in order to better compete with Walgreens Boots Alliance, CVS Health, Rite Aid, and many other drug distributors.
CVS Health, Rite Aid, and Walgreens Boots Alliance shares plunge 6%-10% in response to Amazon's expansion into the online retail pharmacy business.
Through this strategic move, Amazon shakes up the online drugstore business with its ambitious $1 billion acquisition of online pharmacy PillPack.
This disruptive innovation changes the competitive landscape for traditional pharmacies.
PillPack organizes, packages, and delivers drugs online.
This online pharmacy sends consumers medical packages and prescription drugs with the specific number of medications that these consumers need to take at particular times.
Amazon CEO Jeff Bezos continues to focus on the long-term persistent trends that are less likely to change in the next few decades.
In one of his earlier letters to Amazon shareholders, Bezos emphasizes the fact that the vast majority of consumers want to enjoy cost-effective online retail solutions to their daily problems with both fast delivery and vast selection.
The recent acquisition of PillPack allows Amazon to tap into the uncharted territory of online pharmacy as the tech titan continues to uphold the Bezos tripartite principle (i.e. low cost, fast delivery, and vast selection).
Apple and Samsung are the archrivals for the title of the world's top smart phone maker.
Apple and Samsung are the archrivals for the title of the world's largest smartphone maker.
The recent patent lawsuit settlement between Apple and Samsung demonstrates that the dollar sums are unlikely to significantly shrink either's bottom line.
Nonetheless, the case has caused a major impact on U.S. patent law.
Both companies continue to impress smartphone consumers with AMOLED curvy touch screens, wireless charging capacities, facial recognition functions, and other high-tech features.
After a loss at trial, Samsung appealed to the U.S. Supreme Court.
In December 2016, the court sided unanimously with Samsung's argument that a patent violator should not have to hand over the entire profit made from stolen design features if these features covered only specific portions of a smart product but not the entire object.
When the case went back to the lower court for trial earlier in 2018, however, the jury sided with Apple's argument that Samsung's profits were wholly attributable to the design elements that directly violated Apple's prior patents.
Because of the recent verdict, the legal settlement called for Samsung to make an extra $140 million payment to Apple in addition to the prior $399 million payment that Samsung previously paid to Apple to compensate for iPhone-driven patent infringement.
The recent verdict marks the end of the 7-year-long patent dispute between Apple and Samsung.
Due to hefty legal fees, neither side turns out to be a clear victor throughout the arduous battle.
Harley Davidson plans to move its major production for European customers out of America due to European Union tariff retaliation.
Harley Davidson plans to move its major production for European customers out of America due to European Union tariff retaliation.
E.U. retaliatory and punitive taxes might cost Harley Davidson up to $100 million per year in total revenue.
White House senior economic advisor Peter Navarro pushes back on investor fears and sentiments that the Trump administration may prepare widespread trade restrictions on foreign companies.
Navarro interprets the recent sharp Dow decline by 500 points as a key market overreactioin to the Trump trade reform that focuses on protecting U.S. interests, investments, and innovations.
The Trump administration's Trade Act Section 301 investigation suggests that U.S. intellectual property protection remains the top priority (especially for the information technology industry).
Meanwhile, several tech companies from Netflix, AMD, and Micron to Twitter and Square experience dramatic dips in share prices and bottomline forecasts in light of the recent Sino-American trade war.
When push comes to shove, smart stock market investors need to carefully gauge corporate valuation and profitability on the core basis of fundamental indicators such as E/P, Div/P, and B/P.
In fact, the Trump administration should focus less on curbing China's tech-savvy progress and more on encouraging scientific breakthroughs and innovations at home.
Capital market liberalization and globalization connect global financial markets to allow an ocean of money to flow through them.
Over the past decades, capital market liberalization and globalization have combined to connect global financial markets to allow an ocean of money to flow through them.
In emerging-economies, the gross foreign financial position can be as large as annual GDP.
In rich economies, the ratio can rise even more.
Given the sheer size of cross-border capital flows, these co-movements can have enormous effects on local economic conditions.
The capital flows across borders is good since financial openness often allows investors in rich countries to seek out large returns in capital-scarce emerging-economies.
Yet, capital flows may not always follow this peculiar pattern.
Money can indeed flow in the other direction.
Less mature emerging-economies often save to safeguard against fickle global financial markets and so amass large quantities of foreign-exchange reserves.
This global savings-glut suggests that a sea of money can swamp individual economies.
The U.S. Federal Reserve determines the turn of the tide.
American monetary policy shapes the global appetite for risk because of the dollar's exorbitant privilege in global finance.
When the Fed changes course, asset prices, returns, and market volatilities all move in its wake, with many sorts of inadvertent consequences for other countries.
Most economies face a fundamental dilemma: these economies can choose open capital markets to attract the foreign investment that emerging markets need to invigorate their economic climate, but only if these economies accept losing domestic control over the global business cycle.
For many economies, this inexorable trade-off seems to be a fair price to pay in global finance.
However, when the Fed eventually raises its interest rate, the trade-off will then tilt toward a major capital exodus from emerging economies back to America.
The law of inadvertent consequences counsels caution.
Federal Reserve's interest rate hike may lead to an economic recession as credit supply growth ebbs and flows through the business cycle.
The Federal Reserve's current interest rate hike may lead to the next economic recession as credit supply growth ebbs and flows through the business cycle.
All of the 35 U.S. large banks such as JPMorgan Chase, Bank of America, and Citigroup pass the annual stress test and so would be able to lend even under the grimmest economic conditions.
During the Trump administration, the U.S. Treasury and Federal Reserve may roll back at least some of the Dodd-Frank rules and regulations.
These extreme economic conditions include 10% unemployment, a sharp decline in general house prices, and a deep recession in Europe and elsewhere.
Even under these dire conditions, the banks hold sufficient capital buffers that would exceed the financial-sector equity claims back in the years just before the Global Financial Crisis.
The Federal Reserve retains the final veto power to limit any dividend hikes or share repurchases that the banks may pursue in order to return cash distributions to their shareholders.
It is important for financial intermediaries to substantially increase their core equity capital buffers in order to safeguard against extreme losses that might arise in rare times of financial stress such as the Global Financial Crisis from 2008 to 2009.
Facebook, Apple, Amazon, Netflix, and Google (FAANG) have been the motor of the S&P 500 stock market index.
Facebook, Apple, Amazon, Netflix, and Google (FAANG) have been the motor of the S&P 500 stock market index.
Several economic media commentators contend that most U.S. stock market returns arise from a small fraction of shares.
This concentration tilts toward platform orchestrators that specialize in mobile communication, ecommerce, music, video, online search, and advertisement etc.
In fact, these platform orchestrators attract many early technology adopters and venture capitalists.
The former pour money into the mass purchases of mobile devices and online software services, and the latter inject capital into these tech titans at an early stage.
Apple and Amazon are the first U.S. heavyweight tech giants that pass the landmark $1 trillion stock market valuation.
Sino-American trade war worries now constrain S&P 500 year-to-date gains to 3.5% as of June 2018.
In contrast, the FAANG group reaps hefty double-digits and thus demonstrate business immunization to the Trump tariffs.
These tech titans make productive uses of their intellectual properties such as patents, trademarks, and copyrights.
This moat protection secures competitive advantages for their platform infrastructure.
As a result, these tech firms can better extract bottom-line rewards from the latest technological advances in mobile communication, ecommerce, video, online search, and advertisement etc.
Andy Yeh Alpha (AYA) AYA Analytica financial health memo (FHM)
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Trumpism may now become the new populist world order of economic governance.
Trumpism may become the new populist world order of economic governance.
Populist support contributes to Trump's presidential election victory and his subsequent embrace of both trade protectionism and accommodative fiscal stimulus.
Trumpism echoes Carl Schmitt's fundamental critique of modern liberalism.
This critique reflects disdain for the universal aspirations such as absolute individual liberty and economic freedom.
Liberals place individual rights at the core of their political communities.
In principle, these rights extend to every citizen, so absolute American liberty can be a decent idea.
However, this liberal school of thought makes U.S. states vulnerable to the aggressive demand by domestic private interest groups and foreign nations.
This latter retort reflects the key centerpiece of Trump's presidential election campaign.
As dominant market players such as China and Russia refuse to play by the rules of liberal economic governance, the Trump administration has to engage these players in a wider G20 circle.
China's recent economic rise suggests that the old millennium world order of economic governance should be more inclusive.
As Trump himself suggests at the G7 summit, Russia should also be part of this new populist world order.
Another addition can be India that represents a 1.3 billion population-dividend-equivalent to China.
For this reason, Jim O'Neill, former chief economist at Goldman Sachs, advocates the fresh insight that we should broaden the practical scope of the G7 summit.
Instead, a G10 summit or even a G20 summit should encompass all major market economies.
This inclusive approach emphasizes the new populist world order on socioeconomic issues from capital control and monetary contraction to climate change and environmental protection.
Admitting China to the WTO seems ineffective in imparting economic freedom and democracy to the communist regime.
Admitting China to the World Trade Organization (WTO) and other international activities seems ineffective in imparting economic freedom and democracy to the communist regime.
China now marches toward global technological leadership and often challenges America both economically and militarily in what U.S. policy writer Michael Lind terms *Cold War II*.
At one level, China seeks to be master its own technologies such as artificial-intelligence applications, robots, electric cars, biotech innovations, and semiconductor microchips.
Thus, China aspires to achieve not only economic growth but also technological dominance.
With good intentions, the prior Carter and Clinton administrations might have been conducive to normalizing trade relations with China.
These administrations might hold high hopes that China may embrace both economic freedom and democracy after WTO accession.
These high hopes would then continue throughout the subsequent Bush and Obama administrations.
Nevertheless, China fails to fully comply with its WTO membership requirements with respect to trademark-and-patent protection and enforcement.
In fact, China skillfully uses its WTO membership as blanket immunity from prosecution for its R&D-mercantilist policies.
For instance, China sets unfair rules and regulations for U.S. multinational corporations to establish onshore data centers and IT innovation parks.
These policies in turn transfer technologies from these corporations to their Chinese counterparts.
In the new millennium, America can no longer undertake unilateral actions against China without triggering WTO complaints.
For better national economic security, it is legitimate for the Trump administration to impose on China hefty punitive tariffs and even quotas and embargoes in addition to foreign investment restrictions.
This counterrevolutionary strategy better balances U.S. economic interests and so rolls back China's R&D-mercantilist agenda *Made in China 2025*.
President Trump hails and touts America's new high real GDP economic growth in mid-2018.
President Trump hails and touts America's new high real GDP economic growth in 2018Q2.
The U.S. is now a $20+ trillion economy, and America hits this new milestone for the first time in the world.
A major rebound in consumer expenditures from 2018Q1 is the largest contribution to real GDP economic growth.
Personal consumption increases by a hefty margin of 4%, and both business investments and government expenditures also increase quarter-to-quarter.
These great numbers arise in the broader context of Trump economic reforms on trade, infrastructure, fiscal stimulus, monetary contraction, and health care.
This fundamental prediction of healthy real GDP economic growth shatters most fears and doubts that the U.S. may or may not remain tax-neutral when push comes to shove.
Some economists and pundits forecast that American needs at least 3%-3.5% real GDP economic growth in order to better balance its medium-term budget.
Now it seems plausible for the Trump administration to herald supply-side macroeconomic policies.
These policies help fiscal stimulus and government welfare to trickle down to the typical American.
Since Trump's presidential election victory back in November 2016, offshore corporate cash repatriation rakes in $300 billion and partly contributes to the fresh creation of 3.7 million domestic jobs.
Overall, the Trump stock market rally can continue in the foreseeable future.
President Trump now agrees to cease fire in the trade conflict with the European Union.
President Trump now agrees to cease fire in the trade conflict with the European Union.
Both sides can work together towards *zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods*.
Trade barriers in services, chemical products, pharmaceutical medications, and soyabeans are on the chopping block too.
Pundits point out that Trump secures trade talks with the European Union to negotiate a similar deal to the prior Transatlantic Trade and Investment Partnership (TTIP).
Trump agrees to hold off further tariffs, halts punitive measures and sanctions on European cars, and avoids escalation into a tit-for-tat trade dispute.
However, many international trade experts remain skeptical of Trump's mercurial personality and his pet peeve over America's trade deficits with the European partners.
The current trade truce may or may not become permanent during the Trump administration.
In addition to China, Canada, and Mexico, the European Union causes hefty bilateral trade deficits with America.
U.S. farm producers of soy, corn, wheat, cotton, dairy, and pork can receive $12 billion temporary subsidies in light of Trump tariffs, quotas, and even embargoes on Europe.
Whether this trade protectionism proves to be effective in the long run remains open to some healthy debate.
The law of inadvertent consequences counsels caution.
President Trump supports a bipartisan bill or the Foreign Investment Risk Review Modernization Act.
President Trump supports a bipartisan bill or the Foreign Investment Risk Review Modernization Act (FIRRMA), which effectively broadens the jurisdiction of the Committee on Foreign Investments (CFIUS).
This legislation gives CFIUS greater legal power to investigate-and-potentially-block the acquisition of U.S. firms by foreign companies.
The Trump administration advocates the fact that an expansion of CFIUS can be a powerful safety valve for future economic prosperity.
In effect, this safety valve better protects the crown jewels of American technology and intellectual property from unfair trade transfers and acquisitions that may threaten U.S. national economic security.
In March 2018, CFIUS rejected the Singaporean rival Broadcom's potential takeover of Qualcomm (an onshore San Diego chipmaker) over 5G national economic security concerns.
In mid-2018, CFIUS refused to approve a $1.2 billion M&A deal between MoneyGram (a Dallas money transfer company) and Ant Financial Group (a Chinese electronic-payments company).
Also, CFIUS blocked the proposal from Asian buyers to acquire a controlling equity stake in the Californian automobile LED business of the Dutch electronics giant Philips.
The new legislation grants CFIUS greater legal power to review foreign capital investment transactions beyond national economic security to U.S. competitive advantage in new industries such as 5G telecommunication and LTE broadband.
Under this legislation, CFIUS can review major foreign capital investments, M&As, joint ventures, and strategic alliances that might involve the potential transfer of American critical technologies.
In accordance with the congressional mandate, CFIUS helps curb Chinese capital investments in U.S. critical technologies that may hinder American competitive advantage in emerging-industries due to national security concerns.
CFIUS prevents China and several other countries such as Russia, Japan, and Germany from exploiting loopholes in the current safeguards in order to acquire both sensitive and exclusive critical technologies, patents, and trademarks to the detriment of U.S. firms and inventors.
Goldman Sachs chief economist Jan Hatzius proposes designing a new Financial Conditions Index (FCI).
Goldman Sachs chief economist Jan Hatzius proposes designing a new Financial Conditions Index (FCI) to be a weighted-average of risk-free interest rates, exchange rates, stock prices, and credit spreads.
Each weight corresponds to the direct marginal contribution of each macro variate to real GDP economic growth.
Hatzius amends a standard New Keynesian macroeconomic model to embed an FCI in a Taylor monetary policy rule that induces the central bank to ease the FCI when inflation or employment falls below mandate-consistent thresholds.
In effect, this proposal suggests an FCI-driven policy rule for maintaining the neutral interest rate that better contains inflation near full employment.
The Trump administration's economic chief Larry Kudlow engages in a healthy debate with some economists who warn of an economic recession that might arise from the Sino-American trade war with higher U.S. budget deficits and tax cuts.
Specifically, Kudlow advocates the optimistic outlook for the U.S. economy in light of both robust employment and 3.5%-4% real GDP growth in mid-2018.
Kudlow even emphasizes that the current U.S. economic boom may continue until 2022-2024.
In contrast, some other eminent economists such as Mark Zandi (Moody's chief economist) and Ken Griffin (Citadel CEO) are less optimistic about the current U.S. economic boom.
Zandi shares his ingenious insight that the Federal Reserve continues its interest rate hike to dampen inflationary pressure until a recession occurs early in the next decade.
Griffin considers a murkier outlook that the Trump tax cuts may have pulled forward both consumer and business demand.
The current economic boom is the second-longest in U.S. history and thus may or may not sustain in the long run.
Treasury Secretary Steve Mnuchin reiterates America's long-term credible commitment to keeping a strong greenback with minimal risk of a currency war.
In accordance with Mnuchin's recent remarks after the G20 summit of finance ministers, he has to dismiss the arcane idea of U.S. dollar intervention.
On balance, both the U.S. Treasury and Federal Reserve can consider the new FCI in order to make better and wiser economic policy decisions.
Paulson, Geithner, and Bernanke warn that people seem to have forgotten the lessons of the global financial crisis from 2008 to 2009.
Henry Paulson and Timothy Geithner (former Treasury heads) and Ben Bernanke (former Fed chairman) warn that people seem to have forgotten the lessons of the global financial crisis from 2008 to 2009.
As Paulson, Geithner, and Bernanke suggest, the sharp increase in U.S. budget debt and deficit, political dysfunction, and financial deregulation may combine to endanger the economy.
Americans face a more stable financial system today because the defenses are better, whereas, U.S. policymakers now have a weaker set of tools for coping with a severe financial downturn.
These former top-notch economic heads voice their deep concerns about the next U.S. economic recession.
Recent stock market gyrations exhibit much larger volatility in response to Trump tariffs and tax cuts.
Also, bond market analysts express their worries and concerns about potential yield curve inversion that might signal the dawn of the next economic downturn.
As U.S. government bond issuance cannot finance incessant budget deficits, these deficits may reflect the need for greater seigniorage or inflation taxation.
In turn, an increase in money supply growth induces inflationary momentum with higher consumer prices and wages.
As the Federal Reserve continues the current interest rate hike in the foreseeable future, greater greenback strength may dampen U.S. exports.
As a result, this economic policy uncertainty may pose a conceptual challenge to many stock market investors, bond analysts, and currency traders.
In light of these recent economic developments, it would be better for long-term value investors to place their capital in profitable mid-size bluechip cash cows with low asset growth.
Facebook, Google, and Twitter attend a U.S. House testimony on whether these tech titans filter web content for political reasons.
Facebook, Twitter, and Google attend a U.S. House testimony on whether these social media titans currently filter content for political reasons.
These network platforms have undertaken numerous attempts to improve transparency with minimal discrimination.
For instance, Facebook has bent over backwards to placate conservatives in light of the social network giant's recent failure to remove particular pages on conspiracy theories.
Google's video channel YouTube rep emphasizes that giving preference to content of one political ideology over another would fundamentally conflict with universal service provision.
Twitter's senior strategist also suggests that its primary purpose is to serve user interactions with neither value judgments nor personal beliefs.
These platforms then experience sharp stock market gains soon after their congressional clarification.
In recent times, Google receives a $5 billion fine over anti-trust abuses in relation to its Android mobile operating system.
The European Commission deems that Google has abused its dominant position with 80% revenue intake in the smart phone market by forcing manufacturers to pre-install Google Search and Chrome.
As a result, this unfair practice prevents several other tech titans such as Amazon, Alibaba, HuaWei, and Oppo from being able to find alternative manufacturers for Android mobile devices.
Despite this harsh penalty, Google's recent stock market performance remains robust.
Yale economist Stephen Roach warns that America has much to lose from the current trade war with China for a few reasons.
Yale economist Stephen Roach warns that America has much to lose from the current trade war with China for several reasons.
First, America is highly dependent on China as the key source for low-cost products and services.
When America increases its trade bets and tariffs on $200 billion imports from China, most U.S. households and firms would face higher costs due to inflationary concerns.
Second, the Chinese government holds huge dollar amounts of U.S. Treasury bills and notes.
These investments help fund the perennial U.S. budget deficit.
Third, erecting tariffs, quotas, and other trade barriers may isolate America from the OECD free trade bloc.
In turn, U.S. economic output expansion and employment growth may slow down as a result.
For these reasons, America has much to lose from its current trade conflict with China.
In contrast, Mohamed El-Erian, chief economic advisor of Allianz, suggests that America is in a much stronger position to win the trade war against China.
Further, it is important for America to protect its IT-driven intellectual property rights with better patent and trademark enforcement.
Chinese regulatory agencies have been notorious in requiring U.S. corporations to set up data centers and IT science parks in some major cities in China.
This regulation effectively transfers many patents and IT solutions from America to China.
The U.S. Trade Act Section 301 investigation thus concludes that it is opportune for the Trump administration to impose punitive tariffs on Chinese imports.
Global stock market investors may suffer some short-term capital losses due to this relentless Sino-American trade conflict.
CNBC All-America Economic Survey indicates 54% majority approval of the Trump team's supply-side economic reform.
In recent times, the Trump administration sees the sweet state of U.S. economic expansion as of early-July 2018.
As of June 2018, the latest CNBC All-America Economic Survey indicates 54% majority approval of the Trump administration's supply-side economic policies.
At least for 2018Q2, U.S. economic output grows at a hefty rate of 4% year-to-year.
Non-farm payrolls add 213,000 full-time jobs in June 2018.
Also, the U.S. trade deficit shrinks by 6.6% to $43 billion or the lowest level in 19 months (since October 2016).
U.S. average wages growth increases to 2.7%, whereas, CPI inflation remains as low as 2% that the Federal Reserve now targets in order to maintain the current neutral interest rate hike.
Also, unemployment is as low as 4% per annum, so the U.S. economy now operates near full employment.
These top-line statistics accord with the Federal Reserve's dual mandate of both maximum employment and price stability.
In light of this recent evidence, the Federal Reserve seems able to trade off maximum employment with moderate inflationary momentum.
President Trump deserves a lion's share of credit for this sweet state of economic affairs in America.
The mid-term election stirs positive animal spirits and investor sentiments.
The current rollback of Dodd-Frank bank regulation helps boost financial intermediary capital for better profitability, M&A deal momentum, and balance sheet strength.
Trump tax cuts further breed near-term corporate efficiency, capital investment growth, and both dividend payout and share buyback.
These positive economic affairs can trickle down to benefit shareholders, small-to-medium enterprises, and investment firms.
Whether these short-term economic affairs can sustain the current sweet state remains open to healthy debate due to bitter social polarization and rampant economic inequality.
Another concern pertains to whether the Sino-American trade war would escalate with $200 billion extra tariffs on Chinese products and services.
Federal Reserve raises the interest rate again in mid-2018 in response to 2% inflation and wage growth.
The Federal Reserve raises the interest rate again in mid-2018 in response to 2% inflation and wage growth.
The current neutral interest rate hike neither boosts nor constrains inflationary pressure.
FOMC minutes reveal some current voting members' concerns about whether the Trump tariffs would dampen robust macroeconomic momentum and full employment.
When western allies such as Canada, Europe, and Mexico lash back with retaliatory steel and aluminum tariffs, this ripple effect may weaken 2.7%-3% U.S. economic growth and production.
Both capital equipment and risky asset investments may deteriorate in light of international trade frictions.
Also, some FOMC members express their concern about potential yield curve inversion that might signal the dawn of an economic recession.
Whether an economic recession lurks around the corner remains an open controversy.
While both stock market valuation and domestic demand continue to indicate investor optimism, the term spread between short-and-long-term interest rates warns of potential output contraction.
In light of its dual mandate of both price stability and maximum employment, the Federal Reserve may hike the interest rate twice in the second half of 2018.
The current interest rate hike may continue above the neutral threshold sometime in mid-2019.
On balance, the recent Fed Chair transition from Yellen to Powell reflects the fact that the medium-term monetary policy stance has shifted from dovish to hawkish.
A dovish monetary policy stance focuses on attaining full employment, whereas, a hawkish stance emphasizes inflation containment.
This monetary policy transition is a major inflection point that shines fresh light on the inexorable and mysterious New Keynesian trade-off between price stability and employment.
The top Sino-U.S. tech titans now reach the trademark total market capitalization of $4 trillion as of July 2018.
The east-west tech rivalry intensifies between FAANGs (Facebook, Apple, Amazon, Netflix, and Google) and BATs (Baidu, Alibaba, and Tencent).
These Sino-American tech titans now reach the trademark total market capitalization of $4 trillion as of July 2018.
The U.S. tech giants aim to achieve digital supremacy worldwide; however, only Apple and Amazon receive open access to the Chinese market.
The Chinese tech leaders, Baidu, Alibaba, and Tencent dominate in Mandarin online search, e-commerce, mobile payment encryption, social media, and digital communication.
These Sino-American tech titans avoid each other in their home markets, and the recent bilateral trade frictions make it less likely for a major clash to happen in these respective markets.
In light of tariffs, quotas, and other trade barriers, the Trump administration bans China Mobile from gaining access to the U.S. market due to national security concerns.
In response to the recent M&A request of Ant Financial Group (an affiliate of Alibaba), the Trump administration vetoes Ant's potential acquisition of a U.S. payment firm.
Several other investment restrictions prevent Sino-American tech titans from entering the uncharted territory on the other side of the northern hemisphere.
For this reason, these Sino-U.S. tech titans expand their reach and impact in third countries with high population dividends, such as Brazil, India, and Indonesia etc.
FAANGs and BATs are now aggressively seeking both domestic and foreign M&A targets, especially unicorns or tech startups each with at least $1 billion market valuation.
These unicorns specialize in specific R&D innovations in order to package themselves for lucrative deals.
As global income and wealth increasingly concentrate in these Sino-U.S. tech titans, consumer benefits manifest in the form of technological improvements.
Whether this pecuniary concentration would exacerbate global economic inequality remains an open controversy.
U.S. trading partners such as the European Union, Canada, China, Japan, Mexico, and Russia voice their concern at the WTO.
Major U.S. trading partners such as the European Union, Canada, China, Japan, Mexico, and Russia voice their concern at the World Trade Organization (WTO) in light of hefty U.S. tariffs on steel and aluminum.
These tariffs can be particularly detrimental to the automobile industry worldwide.
The unilateral punitive trade measures may disrupt global free trade.
Although Canada, Europe, China, and Mexico seek to impose retaliatory tariffs on U.S. exports, these retaliatory tariffs are smaller in scale in comparison to the Trump tariffs.
The Trump administration vows to substantially reduce the perennial U.S. trade deficits at least for better mid-term election results, whereas, America's major trading partners may lash back quite hard on U.S. car producers.
Overall, 40 countries, of which 28 countries are part of the European Union, uphold the unanimous conviction that the current Trump steel-and-aluminum tariffs violate WTO rules.
In recent times, international stock prices dramatically decline as these trade worries exacerbate the adverse inflationary impact of a near-term increase in oil prices.
Meanwhile, tech titans such as Google, Facebook, and Twitter face sharp share price decreases due to user privacy concerns.
Other tech firms from Netflix, Micron, and Apple to AMD and Nvidia reflect some stock market overvaluation and thus may experience corrective fundamental recalibration.
Traditional industries also experience substantial stock market losses due to steeper U.S. bond yield curves, higher energy costs, and greenback gains that might result from the current Federal Reserve interest rate hike.
From a macro perspective, a bit of fiscal prudence can help ensure better Ricardian equivalence over time.
President Trump's current trade policies appear like the Reagan administration's protectionist trade policies back in the 1980s.
President Trump's current trade policies seem like the Reagan administration's protectionist trade policies back in the 1980s.
In comparison to the previous target of Japan back in the 1980s, the current target is China that causes large perennial U.S. trade deficits nowadays.
In the 1980s, President Reagan and U.S. senators worried about the sharp increases in U.S. trade deficits with Japan as well as the latter's aggressive entry into specific industries where America used to dominate in history.
The Reagan administration focused on automobiles, steel exports, and semiconductors.
The 1980s trade war involved a particular taxonomy of tariffs, quotas, and other import restrictions on Japanese companies in these fields.
Eventually, the 1980s trade policies led to the Reagan administration's inability to tame U.S. trade deficit growth.
In fact, the U.S. trade deficit exacerbated from $36 billion or 1.3% of total GDP in 1980 to $170 billion or 3.7% of total GDP in 1989.
Not only did the Reagan tariffs and quotas fail to deliver robust economic growth in the aftermath of the 1987 stock market crash, these trade measures constrained U.S. economic output expansion from trickling down to benefit the typical American.
Several economic lessons emerge from this historical context.
First, erecting trade barriers may not necessarily shrink the current trade deficit.
These tariffs and quotas may or may not reverse the current Sino-American trade dilemma.
Second, U.S. consumers, households, and companies may end up paying higher prices for intermediate goods and services in the specific areas of steel, aluminum, and other tech-savvy intellectual properties.
Higher inflation induces the Federal Reserve to accelerate the current interest rate hike that in turn adversely affects U.S. financial market developments.
Third, the specific industries such as steel, aluminum, and semiconductor technology may receive little help in light of higher production costs.
When China and the European Union lash back with retaliatory tariffs and quotas, some U.S. companies such as Harley Davidson would have no choice but to move production overseas.
The resultant decrease in total demand for domestic blue-collar workers may mean an inevitable increase in unemployment in these heavy-metal industries.
This adverse impact may further spill over toward American agriculture that relies heavily on its exports to Canada, China, Europe, and Mexico.
As history may repeat itself, the law of inadvertent consequences counsels caution.
China, Russia, France, Germany, and Japan may dethrone the petrodollar.
Are China and Russia etc gonna dethrone the petrodollar?
Over the years, China, Russia, France, Germany, and Japan have made numerous attempts to use their own reserve currencies as the primary basis for futures in oil, silver, steel, aluminum, and other metals.
De-dollarization helps non-U.S. companies anchor their use and consumption of natural resources to more reliable reserve currencies due to zero exposure to foreign exchange risk.
Durable de-dollarization depends on a credible disinflationary monetary policy plan and specific microeconomic measures.
Not only does this strategy contribute to better financial risk mitigation, this strategy helps minimize any abrupt impact of greenback gyrations on domestic demand for oil, steel, and other natural resources.
Often times de-dollarization can be conducive to promoting better exchange rate flexibility, macroeconomic stabilization, inflation moderation, and financial crisis containment.
Should these countries and regions mute their exposure to dollar fluctuations over time, the greenback may become less than the gold standard of hard currency.
Chinese, Russian, and Japanese companies can then better acquire pivotal resources with minimal currency risk, whereas, de-dollarization remains an open challenge for France, Germany, and other European countries in the post-Brexit era.
Amazon acquires an Internet pharmacy PillPack in order to better compete with Walgreens and many other drug distributors.
Amazon acquires an online pharmacy PillPack in order to better compete with Walgreens Boots Alliance, CVS Health, Rite Aid, and many other drug distributors.
CVS Health, Rite Aid, and Walgreens Boots Alliance shares plunge 6%-10% in response to Amazon's expansion into the online retail pharmacy business.
Through this strategic move, Amazon shakes up the online drugstore business with its ambitious $1 billion acquisition of online pharmacy PillPack.
This disruptive innovation changes the competitive landscape for traditional pharmacies.
PillPack organizes, packages, and delivers drugs online.
This online pharmacy sends consumers medical packages and prescription drugs with the specific number of medications that these consumers need to take at particular times.
Amazon CEO Jeff Bezos continues to focus on the long-term persistent trends that are less likely to change in the next few decades.
In one of his earlier letters to Amazon shareholders, Bezos emphasizes the fact that the vast majority of consumers want to enjoy cost-effective online retail solutions to their daily problems with both fast delivery and vast selection.
The recent acquisition of PillPack allows Amazon to tap into the uncharted territory of online pharmacy as the tech titan continues to uphold the Bezos tripartite principle (i.e. low cost, fast delivery, and vast selection).
Apple and Samsung are the archrivals for the title of the world's top smart phone maker.
Apple and Samsung are the archrivals for the title of the world's largest smartphone maker.
The recent patent lawsuit settlement between Apple and Samsung demonstrates that the dollar sums are unlikely to significantly shrink either's bottom line.
Nonetheless, the case has caused a major impact on U.S. patent law.
Both companies continue to impress smartphone consumers with AMOLED curvy touch screens, wireless charging capacities, facial recognition functions, and other high-tech features.
After a loss at trial, Samsung appealed to the U.S. Supreme Court.
In December 2016, the court sided unanimously with Samsung's argument that a patent violator should not have to hand over the entire profit made from stolen design features if these features covered only specific portions of a smart product but not the entire object.
When the case went back to the lower court for trial earlier in 2018, however, the jury sided with Apple's argument that Samsung's profits were wholly attributable to the design elements that directly violated Apple's prior patents.
Because of the recent verdict, the legal settlement called for Samsung to make an extra $140 million payment to Apple in addition to the prior $399 million payment that Samsung previously paid to Apple to compensate for iPhone-driven patent infringement.
The recent verdict marks the end of the 7-year-long patent dispute between Apple and Samsung.
Due to hefty legal fees, neither side turns out to be a clear victor throughout the arduous battle.
Harley Davidson plans to move its major production for European customers out of America due to European Union tariff retaliation.
Harley Davidson plans to move its major production for European customers out of America due to European Union tariff retaliation.
E.U. retaliatory and punitive taxes might cost Harley Davidson up to $100 million per year in total revenue.
White House senior economic advisor Peter Navarro pushes back on investor fears and sentiments that the Trump administration may prepare widespread trade restrictions on foreign companies.
Navarro interprets the recent sharp Dow decline by 500 points as a key market overreactioin to the Trump trade reform that focuses on protecting U.S. interests, investments, and innovations.
The Trump administration's Trade Act Section 301 investigation suggests that U.S. intellectual property protection remains the top priority (especially for the information technology industry).
Meanwhile, several tech companies from Netflix, AMD, and Micron to Twitter and Square experience dramatic dips in share prices and bottomline forecasts in light of the recent Sino-American trade war.
When push comes to shove, smart stock market investors need to carefully gauge corporate valuation and profitability on the core basis of fundamental indicators such as E/P, Div/P, and B/P.
In fact, the Trump administration should focus less on curbing China's tech-savvy progress and more on encouraging scientific breakthroughs and innovations at home.
Capital market liberalization and globalization connect global financial markets to allow an ocean of money to flow through them.
Over the past decades, capital market liberalization and globalization have combined to connect global financial markets to allow an ocean of money to flow through them.
In emerging-economies, the gross foreign financial position can be as large as annual GDP.
In rich economies, the ratio can rise even more.
Given the sheer size of cross-border capital flows, these co-movements can have enormous effects on local economic conditions.
The capital flows across borders is good since financial openness often allows investors in rich countries to seek out large returns in capital-scarce emerging-economies.
Yet, capital flows may not always follow this peculiar pattern.
Money can indeed flow in the other direction.
Less mature emerging-economies often save to safeguard against fickle global financial markets and so amass large quantities of foreign-exchange reserves.
This global savings-glut suggests that a sea of money can swamp individual economies.
The U.S. Federal Reserve determines the turn of the tide.
American monetary policy shapes the global appetite for risk because of the dollar's exorbitant privilege in global finance.
When the Fed changes course, asset prices, returns, and market volatilities all move in its wake, with many sorts of inadvertent consequences for other countries.
Most economies face a fundamental dilemma: these economies can choose open capital markets to attract the foreign investment that emerging markets need to invigorate their economic climate, but only if these economies accept losing domestic control over the global business cycle.
For many economies, this inexorable trade-off seems to be a fair price to pay in global finance.
However, when the Fed eventually raises its interest rate, the trade-off will then tilt toward a major capital exodus from emerging economies back to America.
The law of inadvertent consequences counsels caution.
Federal Reserve's interest rate hike may lead to an economic recession as credit supply growth ebbs and flows through the business cycle.
The Federal Reserve's current interest rate hike may lead to the next economic recession as credit supply growth ebbs and flows through the business cycle.
All of the 35 U.S. large banks such as JPMorgan Chase, Bank of America, and Citigroup pass the annual stress test and so would be able to lend even under the grimmest economic conditions.
During the Trump administration, the U.S. Treasury and Federal Reserve may roll back at least some of the Dodd-Frank rules and regulations.
These extreme economic conditions include 10% unemployment, a sharp decline in general house prices, and a deep recession in Europe and elsewhere.
Even under these dire conditions, the banks hold sufficient capital buffers that would exceed the financial-sector equity claims back in the years just before the Global Financial Crisis.
The Federal Reserve retains the final veto power to limit any dividend hikes or share repurchases that the banks may pursue in order to return cash distributions to their shareholders.
It is important for financial intermediaries to substantially increase their core equity capital buffers in order to safeguard against extreme losses that might arise in rare times of financial stress such as the Global Financial Crisis from 2008 to 2009.
Facebook, Apple, Amazon, Netflix, and Google (FAANG) have been the motor of the S&P 500 stock market index.
Facebook, Apple, Amazon, Netflix, and Google (FAANG) have been the motor of the S&P 500 stock market index.
Several economic media commentators contend that most U.S. stock market returns arise from a small fraction of shares.
This concentration tilts toward platform orchestrators that specialize in mobile communication, ecommerce, music, video, online search, and advertisement etc.
In fact, these platform orchestrators attract many early technology adopters and venture capitalists.
The former pour money into the mass purchases of mobile devices and online software services, and the latter inject capital into these tech titans at an early stage.
Apple and Amazon are the first U.S. heavyweight tech giants that pass the landmark $1 trillion stock market valuation.
Sino-American trade war worries now constrain S&P 500 year-to-date gains to 3.5% as of June 2018.
In contrast, the FAANG group reaps hefty double-digits and thus demonstrate business immunization to the Trump tariffs.
These tech titans make productive uses of their intellectual properties such as patents, trademarks, and copyrights.
This moat protection secures competitive advantages for their platform infrastructure.
As a result, these tech firms can better extract bottom-line rewards from the latest technological advances in mobile communication, ecommerce, video, online search, and advertisement etc.
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