AYA Analytica financial health memo September 2018
As of September 2018, this regular podcast is available on our Andy Yeh Alpha fintech network platform.
Goldman, JPMorgan, Bank of America, Credit Suisse, Morgan Stanley, and UBS face an antitrust lawsuit.
Goldman, JPMorgan, Bank of America, Credit Suisse, Morgan Stanley, and UBS face an antitrust lawsuit.
In this lawsuit, a U.S. judge alleges the illegal conspiracy that they have kept stock loans in the stone age to stifle financial market competition in the $2 trillion stock-lending market.
These large banks boycott the startup platforms AQS, Data Explorers, and SL-x in order to maintain their competitive advantage in stock loans.
In this fashion, these banks maintain monopoly control over stock loans and so charge excessive fees to investors and short-sellers.
A counter argument sheds skeptical light on the court decision that continuing to execute stock loans under the current rules and standards somehow amounts to an illegal conspiracy.
This alternative argument suggests that the current class actions against these banks would result in an unreasonable restraint on trade.
Indeed, this dispute boils down to whether there is sufficient evidence of collusion among the plaintiffs in direct competition with the above startup platforms.
Stock loans are important to short-sellers when the investor borrows stocks in order to immediately sell them.
Institutional investors with large current stock positions profit by lending out these stocks, whereas, borrowers aim to profit by buying the stocks at lower prices later.
The SEC sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a private company.
The Securities and Exchange Commission (S.E.C.) sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a private company.
Federal regulators accuse Musk of misleading stock market investors with false public statements.
This regulatory move can potentially oust Musk out of his current chief executive leadership at the electric carmaker Tesla.
The S.E.C. files a recent lawsuit in federal court in New York to accuse Musk of committing fraud by making false public statements that may inadvertently be detrimental to shareholder value.
This lawsuit seeks to bar Musk, who is both the CEO and executive chairman at Tesla, from serving as an executive director of public corporations such as Tesla.
This punishment is one of the most serious remedies that the S.E.C. can impose against corporate executive incumbents.
From a regulatory perspective, Musk might be reckless in not knowing the fact that his public statements can mislead stock market investors who maintain an active interest in Tesla shares.
Both in truth and in fact, Musk has never confirmed key deal terms such as deal price and stock exchange etc with any relevant source of external finance.
Tesla shares tumble 12% in direct response to this S.E.C. lawsuit.
The S.E.C. eventually settles this lawsuit with Elon Musk who has to relinquish his chairman role but remains the CEO with complete corporate control at Tesla.
As part of this swift legal settlement, Musk and Tesla have to pay hefty fines $20 million each.
Musk and Tesla neither admit nor deny any egregious mistakes that the S.E.C. alleges in recent times.
Elon Musk ultimately has to abort his prior plan to transform Tesla into a private company.
This recent case sets a new precedent for CEOs and executive chairmen who might inadvertently erode shareholder value via their erroneous public statements, tweets, articles, blogs, and posts etc.
S.E.C. regulatory scrutiny and oversight can thus serve as a central safety valve that prevents CEOs and executive chairmen from social engagement that might lead to false public statements.
Michael Kors pays $2.3 billion to acquire the Italian elite fashion brand Versace.
Michael Kors pays $2.35 billion to acquire the Italian elite fashion brand Versace.
In accordance with Michael Kors's 5-year plan, the joint company grows Versace's sales revenue to $2 billion per annum, opens more stores worldwide, and improves the brand's ecommerce services to expand its apparel, footwear, and accessories business franchises.
Donatella Versace remains an Italian fashion label, but the U.S. fashion Group Michael Kors rebrands itself as Capri.
As a major U.S. handbag maker, Michael Kors acquires Gianni Versace plus its debt to enter the exclusive high-end European luxury market.
As part of the deal, Donatella Versace stays as the chief fashion designer to oversee the brand.
In effect, Capri seeks an innovative M&A entry into the global market for personal luxury goods from handbags to clothes and accessories with more than $300 billion revenue as of mid-2018.
This buyout is a significant step toward building a bold and efficient fashion business that would rival the French heavyweight conglomerates LVMH (Louis Vuitton, Fendi, and Givenchy) and Kering (Gucci, Balenciaga and Saint Laurent).
No similar U.S. conglomerate has comparable scale, this buyout can be the key watershed between U.S. and French fashion designers.
In fact, Coach has made moves to implement a similar model with ambitious acquisitions of Kate Spade and Stuart Weitzman, owning the European luxury fashion brand Versace would give considerable clout and star power to the Capri fashion portfolio.
Sirius XM pays $3.5 billion shares to acquire the music app company Pandora.
Sirius XM pays $3.5 billion shares to acquire the music app company Pandora.
This acquisition would form the largest audio entertainment company worldwide.
Building on its current 15% equity stakes in Pandora, Sirius initiates a stock acquisition with an exchange ratio of 1.44 Sirius shares for each share in Pandora.
In response, Sirius experiences a 7% stock price dip while Pandora share price trades at a hefty 13% premium.
This deal generates several synergies between Sirius XM and Pandora.
First, the broader music network includes 100+ million active users.
Sirius now has 35 million subscribers in North America and 23 million users on an annual trial.
Meanwhile, Pandora carries 70 million active users and 6 million premium subscribers.
Massive network effects can result from this merger.
Second, Sirius can tap into Pandora's mobile and web advertisements, and Pandora benefits from Sirius's greater financial capital and in-car presence.
As the joint company cross-sells its music services to build new audio packages, Sirius plans to keep operating both brands for better user experience.
Third, the Pandora-Sirius combination can better hold up against intense competition from Apple, Spotify, and Amazon as these latter platform orchestrators invest aggressively in their music services.
Subject to customary shareholder approval and regulatory scrutiny etc, the deal can close in early-2019.
BAC chief investment strategist Michael Hartnett points out that U.S. corporate debt accumulation can cause the next financial crisis.
Bank of America Merrill Lynch's chief investment strategist Michael Hartnett points out that U.S. corporate debt (not household credit supply or bank capital shortage) can cause the next financial crisis.
U.S. public corporations have gradually accumulated more than $6 trillion debt with low interest rates since the global financial crisis from 2008 to 2009.
This corporate debt binge helps fund the recent recovery in new capital investment and equipment, full employment, and stock buyback in America.
Corporate default rates are minuscule, and U.S. companies now sit on hefty cash stockpiles primarily due to robust U.S. economic output gains and corporate tax cuts under the Trump administration.
At some inflection point, however, both economic growth and corporate income may start to slow down.
U.S. companies then have less firepower to pay back debt, and it is not easy for these companies to roll over their debt in due course.
Debt-laden companies would be vulnerable to higher costs of capital as the Federal Reserve continues the current interest rate hike.
These higher costs of capital can translate into a credit crunch, which adversely affects both employment and capital investment as the U.S. economy slides into an economic recession.
Anne Krueger explains why the Trump administration's current tariff tactics undermine the multilateral global trade system.
Former World Bank and IMF chief economist Anne Krueger explains why the Trump administration's current tariff tactics undermine the multilateral global trade system.
In the post-war decades, America has led the way in establishing the troika of major economic institutions, the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) (formerly known as the General Agreement on Tariffs and Trade (GATT)), that collectively form the primary basis of international economic order in place today.
Due to the healthy expansion of an open multilateral trade system under the WTO, international trade has grown 1.5 times faster than global GDP since World War II.
The WTO 164-member economies commit to supporting an open multilateral trade system with common rules and procedures.
These rules can achieve for international trade what domestic commercial codes can accomplish for contracts and transactions between parties within a given jurisdiction.
Under WTO rules, international trade partners are subject to the same national regulations just as domestic firms have the same rights in regional courts.
Governments cannot discriminate against other WTO members, so trade benefits for one trade partner must apply to all other trade partners under WTO rules.
It is essential to ensure that trade partners receive fair regulatory and judicial treatment from WTO member-state governments, and the principle of non-discrimination has been a core tenet of the global trade system.
Under this WTO framework, the Trump administration now uses national-security concerns to justify tariffs on steel-and-aluminum imports from China, Canada, Europe, Mexico, and Japan etc.
Whether these tariffs would help reduce U.S. trade deficits remains complex and mysterious.
The Trump discriminatory tariffs undermine the WTO economic order and so induce China and other countries to seek reparation through the WTO dispute-settlement mechanism.
These countries may retaliate against Trump tariffs and in turn would exacerbate the current global trade quagmire.
The Trump administration imposes 10% tariffs on $200 billion Chinese imports.
The Trump administration imposes 10% tariffs on $200 billion Chinese imports and expects to raise these tariffs to 25% additional duties toward the end of this year.
These new tariffs arise on top of punitive duties that the Trump administration enacted earlier in mid-2018 on $50 billion Chinese goods and services.
Now U.S. tariffs hit more than half of Chinese imports to America.
China can retaliate against American tariffs in several ways.
First, China may impose tit-for-tat tariffs on $60 billion U.S. imports.
This retaliation, however, stretches limits on the narrow scope of bilateral Sino-U.S. trade negotiations.
Second, China has the option to offload its massive ownership of U.S. Treasury bills and notes.
These foreign investments help finance the perennial U.S. budget deficit.
If the Chinese government decides to engage in large-scale U.S. government bond sales, the likely yield curve inversion can adversely affect American economic output and employment.
Third, China produces numerous low-cost products for the typical American household.
U.S. tariffs may thus inadvertently boost the costs of both household consumption and firm production in America.
In turn, higher inflation induces the Federal Reserve to accelerate its hawkish interest rate hike.
Overall, these concerns shed skeptical light on the Sino-U.S. trade war that the Trump administration uses as a tactical solution to relentless bilateral trade negotiations with China.
Nobel Laureate Robert Shiller's long-term stock market indicator points to a recent peak.
Nobel Laureate Robert Shiller's long-term stock market indicator points to a recent peak.
His cyclically-adjusted P/E ratio (or CAPE) accounts for long-term corporate profitability and market valuation.
CAPE has correctly helped anticipate the Black Monday 1987 stock market crash, the dotcom bubble collapse in the dawn of the new millennium, and the global financial crisis from 2008 to 2009.
As of September 2018, this metric gauges the U.S. stock market value at 33 times the average corporate income over the past decade.
CAPE serves as a useful economic indicator of U.S. stock market (over)valuation at this stage of the business cycle.
In fact, the current U.S. stock market capitalization well exceeds American real GDP economic output.
It is often difficult to beat the market, whereas, it can be quite easy and imperative to save on capital income taxes and transaction costs.
Wharton finance professor Jeremy Siegel, however, disagrees with this CAPE analysis of U.S. stock market valuation.
Even if U.S. stocks appear to be expensive, they remain good bargains in comparison with bonds in light of the small default risk premium.
Relative valuation of stocks-versus-bonds continues to be favorable during the current Trump stock market rally throughout most U.S. history.
Apple releases its September 2018 trifecta of smart phones or iPhone X sequels: iPhone Xs, iPhone Xs Max, and iPhone XR.
Apple releases its September 2018 trifecta of smart phones or iPhone X sequels: iPhone Xs, iPhone Xs Max, and iPhone XR.
Both iPhone Xs and iPhone Xs Max have edge-to-edge OLED touch screens.
The former comes with 5.8-inch display, and the latter has the largest ever 6.5-inch display.
Both offer 512GB digital storage such that each user can save about 200,000 photos on each device.
Both offer Face ID that Apple's artificial intelligence facilitates in a fraction of a second.
Apple's A12 Bionic microchip launches apps 30% faster.
With smart 12-megapixel back cameras, these flagship smart phones now allow for the integration of dual SIM cards for the user to add alternative phone numbers to a single device.
Also, iPhone XR serves as the more affordable version and offers 6.1-inch liquid crystal display (LCD) display (Liquid Retina).
In fact, iPhone XR comes in white, black, blue, coral, yellow, and red, provides Face ID with no home button, and uses haptic touch to navigate apps.
Overall, Apple can afford to charge higher retail prices of the flagship iPhone product lines with higher-pixel camera resolution, longer battery life, and better digital storage.
Bill Gates shares with Mark Zuckerberg his prior personal experiences of testifying before Congress.
Bill Gates shares with Mark Zuckerberg his prior personal experiences of testifying on behalf of Microsoft before U.S. Congress.
Both men drop out of Harvard to pursue their software companies, and both men testify before Congress over their corporate actions and decisions.
Gates warns Zuckerberg to be mindful of Washington (because the Department of Justice both fought and dominated 3-year lawsuits against Microsoft in response to the Gates defiant tone that the computer industry is hyper-competitive with no need for quick fixes).
Zuckerberg now faces a similar legal quagmire.
Facebook has to employ artificial intelligence advances to fix several issues in relation to foreign interference in U.S. elections, post-Cambridge-Analytica user privacy abuse and invasion, and offshore tax avoidance.
As a social media outlet in direct competition with Twitter, Facebook may face similar antitrust regulatory scrutiny from Washington (as Microsoft raised antitrust concerns about its Windows computer system and Office and Internet Explorer software packages).
In the next decade, both U.S. and E.U. authorities either regulate or break up tech titans such as Facebook and Google for better consumer protection and tech market competition.
In fact, the Microsoft antitrust case has deep implications for big tech regulation.
It is indeed anti-competitive for tech titans to orchestrate their platforms to favor their own software products.
For this reason, the European Union slaps a $2.7 billion fine on Google for tilting online search results to stifle competition.
Section 230 of the Communications Decency Act shields tech companies such as Facebook, Twitter, Google, YouTube, and IBM etc from any potential deterioration in the overall quality of online content curation.
Meanwhile, it is still difficult for U.S. and E.U. regulators to hold tech titans responsible for their online content curation and software service provision due to scant legislation.
With respect to the widespread use and adoption of information communication technology (ICT), no reasonable court would attempt to set an intrusive precedent at the risk of shaking up the U.S. ICT industry both in Silicon Valley and elsewhere.
It may be easier for these regulators to impose one-off, ad hoc, or sporadic fines and penalties on tech companies due to both antitrust and tax avoidance concerns.
President Trump tweets that Apple can avoid tariff consequences by shifting its primary supply chain from China to America.
President Trump tweets that Apple can avoid tariff consequences by shifting its primary supply chain from China to America.
The Trump tariffs on another $200 billion Chinese goods can affect iPhone, Apple Watch, and AirPods as well as adapters and chargers for a major host of iOS products.
These tariffs can in turn raise prices for Apple consumers.
An Apple upstream supplier Foxconn moonlights new U.S. plant sites in addition to its recent liquid crystal display (LCD) plant establishment in Wisconsin.
However, Foxconn and other Apple upstream suppliers still need to mull over whether it is sufficiently profitable to open new plants for AMOLED touch screens in America.
In a recent interview with CNBC news anchor Becky Quick, Berkshire Hathaway's Warren Buffett shares his view that many market watchers seem to underprice iPhone X [and its sequels].
In a recent product release, Apple raises the retail prices of iPhone Xs, iPhone Xs Max, and iPhone XR with higher-pixel camera resolution, longer battery life, and better digital storage.
In accordance with Apple CEO Tim Cook's wise and prescient prediction, the Trump steel-and-aluminum tariffs may impact the major iPhone and iPad product lines when the Trump administration activates these punitive tariffs on $200 billion Chinese imports.
Warren Buffett, shares his key insights into life, success, money, and interpersonal communication.
One of the greatest investors on earth, Warren Buffett, shares his top 13 ingenious insights into life, success, money, and interpersonal communication.
Most institutional money managers and retail investors can learn much from the collective wisdom of these wondrous quotes on Business Insider.
One cannot make a good deal with a bad person.
It is better to hang out with people whose behaviors are better than ours.
Good outcomes take time; so one cannot produce a baby in one month by making 9 women pregnant.
It takes 20 years to build our reputation and only 5 minutes to ruin it.
One should learn to sit in his or her office to read all day.
After all, we only find out who is swimming with few clothes when the tide goes out.
It is unnecessary to accomplish extraordinary missions to get extraordinary results.
We should be fearful when others are greedy, and we should be greedy when others are fearful.
We can measure success by how many people love us.
We need to be confident enough that we will achieve fulfillment one day.
When we are in the luckiest 1% of humanity, we owe a great deal to the rest of humanity to think about the other 99%.
Price is what we pay, and value is what we get.
We need not be a rocket scientist to manage well personal finance, and investment is not a game where the smart guy beats the less smart one.
The Economist suggests that the world has learned few lessons of the global financial crisis from 2008 to 2009.
The Economist re-evaluates the realistic scenario that the world has learned few lessons of the global financial crisis over the past decade.
Good times breed complacency.
As the Trump administration rolls back Dodd-Frank rules and regulations, the Federal Reserve has yet to raise countercyclical capital buffers for most large banks.
When prudence prevails, no regulator is a perfect judge of financial risk.
The Economist points out that the news is both good and bad.
The good news suggests that most U.S. large banks fund themselves with proportionately more equity.
The average bank equity capital ratio increases substantially from 3% to double digits in the decade after the Lehman financial meltdown.
However, the bad news suggests that most U.S. households, firms, and financial intermediaries react slowly to the U.S. subprime mortgage crisis from 2008 to 2009.
Former U.S. Treasury Secretary and Harvard President Larry Summers shares the ingenious insight that the U.S. economy suffers secular stagnation, government debt, and inflation in the recent decade after the global financial crisis.
In light of both gradual greenback appreciation and national populism, Harvard chair professor Kenneth Rogoff indicates that the current Trump stock market rally may be the calm before the next financial storm.
Despite Trump tax cuts and infrastructure expenditures, the U.S. economy operates near full employment with high inflation, currency, and interest rate risks.
This trifecta poses a red alert to the Trump administration and its advisory troika (National Economic Council, Federal Reserve, and Treasury).
Both the U.S. Treasury and National Economic Council favor imposing draconian tariffs on at least $200 trillion Chinese imports.
This specific trade tactic aims to help curtail bilateral U.S. trade deficits with China.
Similar trade tactics may involve Canada, Europe, Mexico, and Japan.
Moreover, the Federal Reserve accelerates the current interest rate hike (with at least one rate increase in September 2018 and another in December 2018).
This hawkish interest rate hike is likely to continue until late-2019.
All of these fiscal and monetary measures can help contain the high-risk trifecta of inflation, fiscal debt and deficit, and secular stagnation.
Citron Research short-sellers initiate a class-action lawsuit against Tesla and its executive chairman Elon Musk.
Citron Research short-sellers initiate a class-action lawsuit against Tesla and its executive chairman Elon Musk because he might have deliberately orchestrated taking Tesla private to burn investors.
This lawsuit alleges that Musk might have inadvertently engaged in stock price manipulation via his premature tweet.
Musk may prefer Tesla to go private such that he can steer major business decisions without worrying about near-term share price gyrations.
However, taking Tesla private requires large lump-sums of equity finance from outside venture capitalists.
This lawsuit sheds skeptical light on whether Musk's premature tweet on funding Tesla to go private should be subject to U.S. SEC regulatory scrutiny.
Short-sellers can serve as an effective alternative corporate governance mechanism that helps discipline corporate management in major business decisions.
Not only do short-sellers pose an effective threat to incumbent entrenchment and rent protection, but short-sellers also help improve share price efficiency and information content.
Short-sellers short shares at artificially high prices, wait a while for negative news about the company, and then buy back these shares at lower prices to earn short-term gains.
The Citron lawsuit against Tesla and Elon Musk represents a classic example of potential fraudulent stock price manipulation that proves to be detrimental to short-sellers.
Amazon follows Apple to become the second U.S. public corporation to hit $1 trillion stock market valuation.
Amazon follows Apple to become the second American public corporation to hit $1 trillion stock market valuation.
Amazon's founder and chairman Jeff Bezos is now worth about as much as the total net worth of both Bill Gates and Warren Buffett.
Amazon captures about half of every ecommerce dollar in America.
With more than 550,000 employees and $178 billion in annual revenue, Amazon sells almost everything from cloud-computing space to bread and butter.
Amazon sells a great deal of excitement to investors, customers, and media firms.
For starters, Amazon excites readers with a new way to shop for books online and then a new way to read Kindle Fire e-books.
Amazon excites content creators to curate on Kindle Direct Publisher.
Amazon excites cloud users and hackers with a new way to power the Internet via Amazon Web Services.
Amazon excites its premium members with a new way to experience fast delivery via Amazon Prime.
Amazon excites home owners with a new way to interact with an artificially intelligent outpost Alexa.
Bezos focuses on long-term customer-centrism with one pivotal question: What is not going to change in the next decade?
Amazon continues to offer low-price products and services online with fast delivery and vast selection.
Thomas Piketty empirically shows that the top 1% cohort rakes in 20%+ of U.S. national income.
As the famous French economist who studies global economic inequality in his recent book *Capital in the New Century*, Thomas Piketty co-authors with Berkeley chair professor and John Bates Clark medal winner Emmanuel Saez and others the latest September 2018 World Inequality Report.
This fresh report empirically demonstrates that the rise of both income and wealth for the top 1% U.S. population mirrors the fall of both income and wealth for the bottom 50% U.S. population.
Specifically, the top 1% cohort rakes in more than 20% of U.S. national income in 2017 in comparison to only 11% back in 1980.
At the same time, the bottom 50% cohort receives about 12% of U.S. national income in 2017 in comparison to about 20% back in 1980.
Not only do the rich become richer and the poor become poorer, the income and wealth transfers seem simultaneous, synchronous, and causal in time-series data.
This stark feature shows an empirically robust increase in U.S. economic inequality over the recent decades.
However, this socioeconomic issue cannot reflect talent concentration in specific labor markets.
At least some of this dichotomous wealth inequality arises from the fact that several industries such as biotech, telecom, and social media mold big players with competitive moats into quasi-monopolies.
These big players invest heavily in patents, trademarks, copyrights, and other intellectual properties in order to safeguard their market dominance against external competitive forces.
Nobel Laureate and former chief economist at World Bank Joseph Stiglitz points out that tech titans have become quasi-monopolies with high market concentration.
This concentration serves as a primary explanation for worse income and wealth inequality in America.
When the major network platform orchestrators such as Facebook, Apple, Microsoft, Google, Amazon, Netflix, and Twitter (FAMGANT) reinforce their current market strength and dominance, they may violate antitrust laws and regulations.
Also, several other industries such as big pharmaceutical firms (Johnson & Johnson, Merck, and Pfizer etc) and telecoms (AT&T, Verizon, Sprint, and T-Mobile) are new additions to the list of U.S. quasi-monopolies.
This technological trend aggravates socioeconomic inequality, deepens anti-competitive concerns, and harms consumer benefits in terms of longer-term price and quality improvements.
We share famous inspirational stock market quotes by Warren Buffett, Peter Lynch, Benjamin Graham, and several others.
We share several famous inspirational stock market quotes by Warren Buffett, Peter Lynch, Benjamin Graham, Benjamin Franklin, Phillip Fisher, and Michael Jensen.
Price is what you pay. Value is what you get.
We should be fearful when others are greedy, and we should be greedy when others are fearful.
It is far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.
Great investment opportunities arise when unusual circumstances cause the share-price misappraisal of excellent companies.
Everyone has the brainpower to follow the stock market.
We need to know not only what stocks we own, but also why we want to own them in the first place.
The individual investor should act consistently as an investor and not as a speculator.
An investment in knowledge pays the best interest.
The stock market is full of individuals who know the price of everything, but the value of nothing.
Average investors who try to trade often will only make their brokers rich.
Investors must draw a distinction between a good company and a good stock. After all, one can buy a good stock but may end up paying too much for it.
President Trump criticizes the WTO and proposes indexing capital gains taxes to inflation for U.S. investors.
In an exclusive interview with Bloomberg, President Trump criticizes the World Trade Organization (WTO), proposes indexing capital gains taxes to inflation for U.S. investors, and then expresses no regrets over appointing the new Fed chairman Jerome Powell.
Trump points out that WTO rules have been an unfair trade deal for America because the U.S. often has to respond passively to assuage many WTO complaints and concerns.
When Trump comes into office, America reverses the U.S. long-term disadvantage and starts to win trade lawsuits because the Trump administration threatens to withdraw America from the WTO if the Geneva international organization declines to shape up.
Meanwhile, Trump indicates that Canada may or may not continue to be part of the NAFTA trade deal.
Moreover, Trump rejects the European Union's trade proposal to eliminate tariffs on automobiles.
In the same exclusive interview with Bloomberg, President Trump proposes indexing capital gains taxes to inflation, and this change would slash taxes for investors when they sell assets such as stocks, bonds, and real estate properties.
This index adjusts the original purchase price for inflation and so helps spur job creation and economic growth because investors would face minimal taxes on erroneous phantom income.
These real tax cuts benefit small-to-medium enterprises (SMEs) owners, founders, and entrepreneurs.
National Economic Council top economic adviser Larry Kudlow indicates that the Trump administration hopes to bypass Congress to implement this expansionary tax policy.
Trump opponents contend that this additional fiscal stimulus may exacerbate economic inequality in America.
In accordance with the grand notion of central bank independence, President Trump likes and respects Powell as the Fed chairman who should be free from political influence.
Trump expresses no regrets over appointing Powell to succeed Yellen in the Federal Reserve System's top post.
However, Trump hints to the new Fed Chair that he should help accommodate U.S. economic affairs during the current interest rate hike.
In fact, Trump expects the greenback to stabilize within reasonable bounds as the Fed chairman pencils in some further interest rate hikes in September and December 2018.
This interest rate hike can continue its current cycle until December 2019 as the core CPI inflation rate surges past the neutral 2% target.
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Goldman, JPMorgan, Bank of America, Credit Suisse, Morgan Stanley, and UBS face an antitrust lawsuit.
Goldman, JPMorgan, Bank of America, Credit Suisse, Morgan Stanley, and UBS face an antitrust lawsuit.
In this lawsuit, a U.S. judge alleges the illegal conspiracy that they have kept stock loans in the stone age to stifle financial market competition in the $2 trillion stock-lending market.
These large banks boycott the startup platforms AQS, Data Explorers, and SL-x in order to maintain their competitive advantage in stock loans.
In this fashion, these banks maintain monopoly control over stock loans and so charge excessive fees to investors and short-sellers.
A counter argument sheds skeptical light on the court decision that continuing to execute stock loans under the current rules and standards somehow amounts to an illegal conspiracy.
This alternative argument suggests that the current class actions against these banks would result in an unreasonable restraint on trade.
Indeed, this dispute boils down to whether there is sufficient evidence of collusion among the plaintiffs in direct competition with the above startup platforms.
Stock loans are important to short-sellers when the investor borrows stocks in order to immediately sell them.
Institutional investors with large current stock positions profit by lending out these stocks, whereas, borrowers aim to profit by buying the stocks at lower prices later.
The SEC sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a private company.
The Securities and Exchange Commission (S.E.C.) sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a private company.
Federal regulators accuse Musk of misleading stock market investors with false public statements.
This regulatory move can potentially oust Musk out of his current chief executive leadership at the electric carmaker Tesla.
The S.E.C. files a recent lawsuit in federal court in New York to accuse Musk of committing fraud by making false public statements that may inadvertently be detrimental to shareholder value.
This lawsuit seeks to bar Musk, who is both the CEO and executive chairman at Tesla, from serving as an executive director of public corporations such as Tesla.
This punishment is one of the most serious remedies that the S.E.C. can impose against corporate executive incumbents.
From a regulatory perspective, Musk might be reckless in not knowing the fact that his public statements can mislead stock market investors who maintain an active interest in Tesla shares.
Both in truth and in fact, Musk has never confirmed key deal terms such as deal price and stock exchange etc with any relevant source of external finance.
Tesla shares tumble 12% in direct response to this S.E.C. lawsuit.
The S.E.C. eventually settles this lawsuit with Elon Musk who has to relinquish his chairman role but remains the CEO with complete corporate control at Tesla.
As part of this swift legal settlement, Musk and Tesla have to pay hefty fines $20 million each.
Musk and Tesla neither admit nor deny any egregious mistakes that the S.E.C. alleges in recent times.
Elon Musk ultimately has to abort his prior plan to transform Tesla into a private company.
This recent case sets a new precedent for CEOs and executive chairmen who might inadvertently erode shareholder value via their erroneous public statements, tweets, articles, blogs, and posts etc.
S.E.C. regulatory scrutiny and oversight can thus serve as a central safety valve that prevents CEOs and executive chairmen from social engagement that might lead to false public statements.
Michael Kors pays $2.3 billion to acquire the Italian elite fashion brand Versace.
Michael Kors pays $2.35 billion to acquire the Italian elite fashion brand Versace.
In accordance with Michael Kors's 5-year plan, the joint company grows Versace's sales revenue to $2 billion per annum, opens more stores worldwide, and improves the brand's ecommerce services to expand its apparel, footwear, and accessories business franchises.
Donatella Versace remains an Italian fashion label, but the U.S. fashion Group Michael Kors rebrands itself as Capri.
As a major U.S. handbag maker, Michael Kors acquires Gianni Versace plus its debt to enter the exclusive high-end European luxury market.
As part of the deal, Donatella Versace stays as the chief fashion designer to oversee the brand.
In effect, Capri seeks an innovative M&A entry into the global market for personal luxury goods from handbags to clothes and accessories with more than $300 billion revenue as of mid-2018.
This buyout is a significant step toward building a bold and efficient fashion business that would rival the French heavyweight conglomerates LVMH (Louis Vuitton, Fendi, and Givenchy) and Kering (Gucci, Balenciaga and Saint Laurent).
No similar U.S. conglomerate has comparable scale, this buyout can be the key watershed between U.S. and French fashion designers.
In fact, Coach has made moves to implement a similar model with ambitious acquisitions of Kate Spade and Stuart Weitzman, owning the European luxury fashion brand Versace would give considerable clout and star power to the Capri fashion portfolio.
Sirius XM pays $3.5 billion shares to acquire the music app company Pandora.
Sirius XM pays $3.5 billion shares to acquire the music app company Pandora.
This acquisition would form the largest audio entertainment company worldwide.
Building on its current 15% equity stakes in Pandora, Sirius initiates a stock acquisition with an exchange ratio of 1.44 Sirius shares for each share in Pandora.
In response, Sirius experiences a 7% stock price dip while Pandora share price trades at a hefty 13% premium.
This deal generates several synergies between Sirius XM and Pandora.
First, the broader music network includes 100+ million active users.
Sirius now has 35 million subscribers in North America and 23 million users on an annual trial.
Meanwhile, Pandora carries 70 million active users and 6 million premium subscribers.
Massive network effects can result from this merger.
Second, Sirius can tap into Pandora's mobile and web advertisements, and Pandora benefits from Sirius's greater financial capital and in-car presence.
As the joint company cross-sells its music services to build new audio packages, Sirius plans to keep operating both brands for better user experience.
Third, the Pandora-Sirius combination can better hold up against intense competition from Apple, Spotify, and Amazon as these latter platform orchestrators invest aggressively in their music services.
Subject to customary shareholder approval and regulatory scrutiny etc, the deal can close in early-2019.
BAC chief investment strategist Michael Hartnett points out that U.S. corporate debt accumulation can cause the next financial crisis.
Bank of America Merrill Lynch's chief investment strategist Michael Hartnett points out that U.S. corporate debt (not household credit supply or bank capital shortage) can cause the next financial crisis.
U.S. public corporations have gradually accumulated more than $6 trillion debt with low interest rates since the global financial crisis from 2008 to 2009.
This corporate debt binge helps fund the recent recovery in new capital investment and equipment, full employment, and stock buyback in America.
Corporate default rates are minuscule, and U.S. companies now sit on hefty cash stockpiles primarily due to robust U.S. economic output gains and corporate tax cuts under the Trump administration.
At some inflection point, however, both economic growth and corporate income may start to slow down.
U.S. companies then have less firepower to pay back debt, and it is not easy for these companies to roll over their debt in due course.
Debt-laden companies would be vulnerable to higher costs of capital as the Federal Reserve continues the current interest rate hike.
These higher costs of capital can translate into a credit crunch, which adversely affects both employment and capital investment as the U.S. economy slides into an economic recession.
Anne Krueger explains why the Trump administration's current tariff tactics undermine the multilateral global trade system.
Former World Bank and IMF chief economist Anne Krueger explains why the Trump administration's current tariff tactics undermine the multilateral global trade system.
In the post-war decades, America has led the way in establishing the troika of major economic institutions, the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) (formerly known as the General Agreement on Tariffs and Trade (GATT)), that collectively form the primary basis of international economic order in place today.
Due to the healthy expansion of an open multilateral trade system under the WTO, international trade has grown 1.5 times faster than global GDP since World War II.
The WTO 164-member economies commit to supporting an open multilateral trade system with common rules and procedures.
These rules can achieve for international trade what domestic commercial codes can accomplish for contracts and transactions between parties within a given jurisdiction.
Under WTO rules, international trade partners are subject to the same national regulations just as domestic firms have the same rights in regional courts.
Governments cannot discriminate against other WTO members, so trade benefits for one trade partner must apply to all other trade partners under WTO rules.
It is essential to ensure that trade partners receive fair regulatory and judicial treatment from WTO member-state governments, and the principle of non-discrimination has been a core tenet of the global trade system.
Under this WTO framework, the Trump administration now uses national-security concerns to justify tariffs on steel-and-aluminum imports from China, Canada, Europe, Mexico, and Japan etc.
Whether these tariffs would help reduce U.S. trade deficits remains complex and mysterious.
The Trump discriminatory tariffs undermine the WTO economic order and so induce China and other countries to seek reparation through the WTO dispute-settlement mechanism.
These countries may retaliate against Trump tariffs and in turn would exacerbate the current global trade quagmire.
The Trump administration imposes 10% tariffs on $200 billion Chinese imports.
The Trump administration imposes 10% tariffs on $200 billion Chinese imports and expects to raise these tariffs to 25% additional duties toward the end of this year.
These new tariffs arise on top of punitive duties that the Trump administration enacted earlier in mid-2018 on $50 billion Chinese goods and services.
Now U.S. tariffs hit more than half of Chinese imports to America.
China can retaliate against American tariffs in several ways.
First, China may impose tit-for-tat tariffs on $60 billion U.S. imports.
This retaliation, however, stretches limits on the narrow scope of bilateral Sino-U.S. trade negotiations.
Second, China has the option to offload its massive ownership of U.S. Treasury bills and notes.
These foreign investments help finance the perennial U.S. budget deficit.
If the Chinese government decides to engage in large-scale U.S. government bond sales, the likely yield curve inversion can adversely affect American economic output and employment.
Third, China produces numerous low-cost products for the typical American household.
U.S. tariffs may thus inadvertently boost the costs of both household consumption and firm production in America.
In turn, higher inflation induces the Federal Reserve to accelerate its hawkish interest rate hike.
Overall, these concerns shed skeptical light on the Sino-U.S. trade war that the Trump administration uses as a tactical solution to relentless bilateral trade negotiations with China.
Nobel Laureate Robert Shiller's long-term stock market indicator points to a recent peak.
Nobel Laureate Robert Shiller's long-term stock market indicator points to a recent peak.
His cyclically-adjusted P/E ratio (or CAPE) accounts for long-term corporate profitability and market valuation.
CAPE has correctly helped anticipate the Black Monday 1987 stock market crash, the dotcom bubble collapse in the dawn of the new millennium, and the global financial crisis from 2008 to 2009.
As of September 2018, this metric gauges the U.S. stock market value at 33 times the average corporate income over the past decade.
CAPE serves as a useful economic indicator of U.S. stock market (over)valuation at this stage of the business cycle.
In fact, the current U.S. stock market capitalization well exceeds American real GDP economic output.
It is often difficult to beat the market, whereas, it can be quite easy and imperative to save on capital income taxes and transaction costs.
Wharton finance professor Jeremy Siegel, however, disagrees with this CAPE analysis of U.S. stock market valuation.
Even if U.S. stocks appear to be expensive, they remain good bargains in comparison with bonds in light of the small default risk premium.
Relative valuation of stocks-versus-bonds continues to be favorable during the current Trump stock market rally throughout most U.S. history.
Apple releases its September 2018 trifecta of smart phones or iPhone X sequels: iPhone Xs, iPhone Xs Max, and iPhone XR.
Apple releases its September 2018 trifecta of smart phones or iPhone X sequels: iPhone Xs, iPhone Xs Max, and iPhone XR.
Both iPhone Xs and iPhone Xs Max have edge-to-edge OLED touch screens.
The former comes with 5.8-inch display, and the latter has the largest ever 6.5-inch display.
Both offer 512GB digital storage such that each user can save about 200,000 photos on each device.
Both offer Face ID that Apple's artificial intelligence facilitates in a fraction of a second.
Apple's A12 Bionic microchip launches apps 30% faster.
With smart 12-megapixel back cameras, these flagship smart phones now allow for the integration of dual SIM cards for the user to add alternative phone numbers to a single device.
Also, iPhone XR serves as the more affordable version and offers 6.1-inch liquid crystal display (LCD) display (Liquid Retina).
In fact, iPhone XR comes in white, black, blue, coral, yellow, and red, provides Face ID with no home button, and uses haptic touch to navigate apps.
Overall, Apple can afford to charge higher retail prices of the flagship iPhone product lines with higher-pixel camera resolution, longer battery life, and better digital storage.
Bill Gates shares with Mark Zuckerberg his prior personal experiences of testifying before Congress.
Bill Gates shares with Mark Zuckerberg his prior personal experiences of testifying on behalf of Microsoft before U.S. Congress.
Both men drop out of Harvard to pursue their software companies, and both men testify before Congress over their corporate actions and decisions.
Gates warns Zuckerberg to be mindful of Washington (because the Department of Justice both fought and dominated 3-year lawsuits against Microsoft in response to the Gates defiant tone that the computer industry is hyper-competitive with no need for quick fixes).
Zuckerberg now faces a similar legal quagmire.
Facebook has to employ artificial intelligence advances to fix several issues in relation to foreign interference in U.S. elections, post-Cambridge-Analytica user privacy abuse and invasion, and offshore tax avoidance.
As a social media outlet in direct competition with Twitter, Facebook may face similar antitrust regulatory scrutiny from Washington (as Microsoft raised antitrust concerns about its Windows computer system and Office and Internet Explorer software packages).
In the next decade, both U.S. and E.U. authorities either regulate or break up tech titans such as Facebook and Google for better consumer protection and tech market competition.
In fact, the Microsoft antitrust case has deep implications for big tech regulation.
It is indeed anti-competitive for tech titans to orchestrate their platforms to favor their own software products.
For this reason, the European Union slaps a $2.7 billion fine on Google for tilting online search results to stifle competition.
Section 230 of the Communications Decency Act shields tech companies such as Facebook, Twitter, Google, YouTube, and IBM etc from any potential deterioration in the overall quality of online content curation.
Meanwhile, it is still difficult for U.S. and E.U. regulators to hold tech titans responsible for their online content curation and software service provision due to scant legislation.
With respect to the widespread use and adoption of information communication technology (ICT), no reasonable court would attempt to set an intrusive precedent at the risk of shaking up the U.S. ICT industry both in Silicon Valley and elsewhere.
It may be easier for these regulators to impose one-off, ad hoc, or sporadic fines and penalties on tech companies due to both antitrust and tax avoidance concerns.
President Trump tweets that Apple can avoid tariff consequences by shifting its primary supply chain from China to America.
President Trump tweets that Apple can avoid tariff consequences by shifting its primary supply chain from China to America.
The Trump tariffs on another $200 billion Chinese goods can affect iPhone, Apple Watch, and AirPods as well as adapters and chargers for a major host of iOS products.
These tariffs can in turn raise prices for Apple consumers.
An Apple upstream supplier Foxconn moonlights new U.S. plant sites in addition to its recent liquid crystal display (LCD) plant establishment in Wisconsin.
However, Foxconn and other Apple upstream suppliers still need to mull over whether it is sufficiently profitable to open new plants for AMOLED touch screens in America.
In a recent interview with CNBC news anchor Becky Quick, Berkshire Hathaway's Warren Buffett shares his view that many market watchers seem to underprice iPhone X [and its sequels].
In a recent product release, Apple raises the retail prices of iPhone Xs, iPhone Xs Max, and iPhone XR with higher-pixel camera resolution, longer battery life, and better digital storage.
In accordance with Apple CEO Tim Cook's wise and prescient prediction, the Trump steel-and-aluminum tariffs may impact the major iPhone and iPad product lines when the Trump administration activates these punitive tariffs on $200 billion Chinese imports.
Warren Buffett, shares his key insights into life, success, money, and interpersonal communication.
One of the greatest investors on earth, Warren Buffett, shares his top 13 ingenious insights into life, success, money, and interpersonal communication.
Most institutional money managers and retail investors can learn much from the collective wisdom of these wondrous quotes on Business Insider.
One cannot make a good deal with a bad person.
It is better to hang out with people whose behaviors are better than ours.
Good outcomes take time; so one cannot produce a baby in one month by making 9 women pregnant.
It takes 20 years to build our reputation and only 5 minutes to ruin it.
One should learn to sit in his or her office to read all day.
After all, we only find out who is swimming with few clothes when the tide goes out.
It is unnecessary to accomplish extraordinary missions to get extraordinary results.
We should be fearful when others are greedy, and we should be greedy when others are fearful.
We can measure success by how many people love us.
We need to be confident enough that we will achieve fulfillment one day.
When we are in the luckiest 1% of humanity, we owe a great deal to the rest of humanity to think about the other 99%.
Price is what we pay, and value is what we get.
We need not be a rocket scientist to manage well personal finance, and investment is not a game where the smart guy beats the less smart one.
The Economist suggests that the world has learned few lessons of the global financial crisis from 2008 to 2009.
The Economist re-evaluates the realistic scenario that the world has learned few lessons of the global financial crisis over the past decade.
Good times breed complacency.
As the Trump administration rolls back Dodd-Frank rules and regulations, the Federal Reserve has yet to raise countercyclical capital buffers for most large banks.
When prudence prevails, no regulator is a perfect judge of financial risk.
The Economist points out that the news is both good and bad.
The good news suggests that most U.S. large banks fund themselves with proportionately more equity.
The average bank equity capital ratio increases substantially from 3% to double digits in the decade after the Lehman financial meltdown.
However, the bad news suggests that most U.S. households, firms, and financial intermediaries react slowly to the U.S. subprime mortgage crisis from 2008 to 2009.
Former U.S. Treasury Secretary and Harvard President Larry Summers shares the ingenious insight that the U.S. economy suffers secular stagnation, government debt, and inflation in the recent decade after the global financial crisis.
In light of both gradual greenback appreciation and national populism, Harvard chair professor Kenneth Rogoff indicates that the current Trump stock market rally may be the calm before the next financial storm.
Despite Trump tax cuts and infrastructure expenditures, the U.S. economy operates near full employment with high inflation, currency, and interest rate risks.
This trifecta poses a red alert to the Trump administration and its advisory troika (National Economic Council, Federal Reserve, and Treasury).
Both the U.S. Treasury and National Economic Council favor imposing draconian tariffs on at least $200 trillion Chinese imports.
This specific trade tactic aims to help curtail bilateral U.S. trade deficits with China.
Similar trade tactics may involve Canada, Europe, Mexico, and Japan.
Moreover, the Federal Reserve accelerates the current interest rate hike (with at least one rate increase in September 2018 and another in December 2018).
This hawkish interest rate hike is likely to continue until late-2019.
All of these fiscal and monetary measures can help contain the high-risk trifecta of inflation, fiscal debt and deficit, and secular stagnation.
Citron Research short-sellers initiate a class-action lawsuit against Tesla and its executive chairman Elon Musk.
Citron Research short-sellers initiate a class-action lawsuit against Tesla and its executive chairman Elon Musk because he might have deliberately orchestrated taking Tesla private to burn investors.
This lawsuit alleges that Musk might have inadvertently engaged in stock price manipulation via his premature tweet.
Musk may prefer Tesla to go private such that he can steer major business decisions without worrying about near-term share price gyrations.
However, taking Tesla private requires large lump-sums of equity finance from outside venture capitalists.
This lawsuit sheds skeptical light on whether Musk's premature tweet on funding Tesla to go private should be subject to U.S. SEC regulatory scrutiny.
Short-sellers can serve as an effective alternative corporate governance mechanism that helps discipline corporate management in major business decisions.
Not only do short-sellers pose an effective threat to incumbent entrenchment and rent protection, but short-sellers also help improve share price efficiency and information content.
Short-sellers short shares at artificially high prices, wait a while for negative news about the company, and then buy back these shares at lower prices to earn short-term gains.
The Citron lawsuit against Tesla and Elon Musk represents a classic example of potential fraudulent stock price manipulation that proves to be detrimental to short-sellers.
Amazon follows Apple to become the second U.S. public corporation to hit $1 trillion stock market valuation.
Amazon follows Apple to become the second American public corporation to hit $1 trillion stock market valuation.
Amazon's founder and chairman Jeff Bezos is now worth about as much as the total net worth of both Bill Gates and Warren Buffett.
Amazon captures about half of every ecommerce dollar in America.
With more than 550,000 employees and $178 billion in annual revenue, Amazon sells almost everything from cloud-computing space to bread and butter.
Amazon sells a great deal of excitement to investors, customers, and media firms.
For starters, Amazon excites readers with a new way to shop for books online and then a new way to read Kindle Fire e-books.
Amazon excites content creators to curate on Kindle Direct Publisher.
Amazon excites cloud users and hackers with a new way to power the Internet via Amazon Web Services.
Amazon excites its premium members with a new way to experience fast delivery via Amazon Prime.
Amazon excites home owners with a new way to interact with an artificially intelligent outpost Alexa.
Bezos focuses on long-term customer-centrism with one pivotal question: What is not going to change in the next decade?
Amazon continues to offer low-price products and services online with fast delivery and vast selection.
Thomas Piketty empirically shows that the top 1% cohort rakes in 20%+ of U.S. national income.
As the famous French economist who studies global economic inequality in his recent book *Capital in the New Century*, Thomas Piketty co-authors with Berkeley chair professor and John Bates Clark medal winner Emmanuel Saez and others the latest September 2018 World Inequality Report.
This fresh report empirically demonstrates that the rise of both income and wealth for the top 1% U.S. population mirrors the fall of both income and wealth for the bottom 50% U.S. population.
Specifically, the top 1% cohort rakes in more than 20% of U.S. national income in 2017 in comparison to only 11% back in 1980.
At the same time, the bottom 50% cohort receives about 12% of U.S. national income in 2017 in comparison to about 20% back in 1980.
Not only do the rich become richer and the poor become poorer, the income and wealth transfers seem simultaneous, synchronous, and causal in time-series data.
This stark feature shows an empirically robust increase in U.S. economic inequality over the recent decades.
However, this socioeconomic issue cannot reflect talent concentration in specific labor markets.
At least some of this dichotomous wealth inequality arises from the fact that several industries such as biotech, telecom, and social media mold big players with competitive moats into quasi-monopolies.
These big players invest heavily in patents, trademarks, copyrights, and other intellectual properties in order to safeguard their market dominance against external competitive forces.
Nobel Laureate and former chief economist at World Bank Joseph Stiglitz points out that tech titans have become quasi-monopolies with high market concentration.
This concentration serves as a primary explanation for worse income and wealth inequality in America.
When the major network platform orchestrators such as Facebook, Apple, Microsoft, Google, Amazon, Netflix, and Twitter (FAMGANT) reinforce their current market strength and dominance, they may violate antitrust laws and regulations.
Also, several other industries such as big pharmaceutical firms (Johnson & Johnson, Merck, and Pfizer etc) and telecoms (AT&T, Verizon, Sprint, and T-Mobile) are new additions to the list of U.S. quasi-monopolies.
This technological trend aggravates socioeconomic inequality, deepens anti-competitive concerns, and harms consumer benefits in terms of longer-term price and quality improvements.
We share famous inspirational stock market quotes by Warren Buffett, Peter Lynch, Benjamin Graham, and several others.
We share several famous inspirational stock market quotes by Warren Buffett, Peter Lynch, Benjamin Graham, Benjamin Franklin, Phillip Fisher, and Michael Jensen.
Price is what you pay. Value is what you get.
We should be fearful when others are greedy, and we should be greedy when others are fearful.
It is far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.
Great investment opportunities arise when unusual circumstances cause the share-price misappraisal of excellent companies.
Everyone has the brainpower to follow the stock market.
We need to know not only what stocks we own, but also why we want to own them in the first place.
The individual investor should act consistently as an investor and not as a speculator.
An investment in knowledge pays the best interest.
The stock market is full of individuals who know the price of everything, but the value of nothing.
Average investors who try to trade often will only make their brokers rich.
Investors must draw a distinction between a good company and a good stock. After all, one can buy a good stock but may end up paying too much for it.
President Trump criticizes the WTO and proposes indexing capital gains taxes to inflation for U.S. investors.
In an exclusive interview with Bloomberg, President Trump criticizes the World Trade Organization (WTO), proposes indexing capital gains taxes to inflation for U.S. investors, and then expresses no regrets over appointing the new Fed chairman Jerome Powell.
Trump points out that WTO rules have been an unfair trade deal for America because the U.S. often has to respond passively to assuage many WTO complaints and concerns.
When Trump comes into office, America reverses the U.S. long-term disadvantage and starts to win trade lawsuits because the Trump administration threatens to withdraw America from the WTO if the Geneva international organization declines to shape up.
Meanwhile, Trump indicates that Canada may or may not continue to be part of the NAFTA trade deal.
Moreover, Trump rejects the European Union's trade proposal to eliminate tariffs on automobiles.
In the same exclusive interview with Bloomberg, President Trump proposes indexing capital gains taxes to inflation, and this change would slash taxes for investors when they sell assets such as stocks, bonds, and real estate properties.
This index adjusts the original purchase price for inflation and so helps spur job creation and economic growth because investors would face minimal taxes on erroneous phantom income.
These real tax cuts benefit small-to-medium enterprises (SMEs) owners, founders, and entrepreneurs.
National Economic Council top economic adviser Larry Kudlow indicates that the Trump administration hopes to bypass Congress to implement this expansionary tax policy.
Trump opponents contend that this additional fiscal stimulus may exacerbate economic inequality in America.
In accordance with the grand notion of central bank independence, President Trump likes and respects Powell as the Fed chairman who should be free from political influence.
Trump expresses no regrets over appointing Powell to succeed Yellen in the Federal Reserve System's top post.
However, Trump hints to the new Fed Chair that he should help accommodate U.S. economic affairs during the current interest rate hike.
In fact, Trump expects the greenback to stabilize within reasonable bounds as the Fed chairman pencils in some further interest rate hikes in September and December 2018.
This interest rate hike can continue its current cycle until December 2019 as the core CPI inflation rate surges past the neutral 2% target.
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