MMA Weekly Column: June 10, 2019

Note: I am abroad for courses the next two weekends. This column will be written on Thursday, one day before normal, while I’m here. This week’s column is written on Thursday, June 6, before the jobs report of Friday, June 7.

Falling bond yields are signaling a growth slowdown and the yield curve is inverted in what nearly always predicts a recession if it continues for three months. Mr. Trump seems to believe the Federal Reserve can make everything great again by cutting interest rates…. U.S. tariffs have a negative impact on growth around the world, which in turn hurts U.S. exports. … Mr. Trump and his Republican fellow-travelers say the doomsayers were wrong about the initial round of China tariffs, (but the) initial tariffs were dwarfed by the growth effects of tax reform and deregulation… (and) the damage from tariffs will rise if they increase in severity and are imposed impulsively. Sooner or later bad policies always exact a high economic and political cost. Wall Street Journal Editors, “Washington’s Anti-Growth Turn,” June 6, 2019.

Two new analyses show that the tariffs Mr. Trump is using to punish China, Mexico, Europe, and other governments would more than wipe out any gains from his $1.5 trillion tax cut for low- and middle-income earners. – Jim Tankersley, “Trump’s Tariffs Could Wipe Out Many Gains From His Tax Cut,” The New York Times International, June 5, 2019.

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MMA Weekly Column: June 3, 2019

Note: I am leaving for China now for courses the next two weekends. This column may not be written and available at its normal times during this period.


J.P. Morgan Chase CEO Jamie Dimon said that the escalating U.S.-China trade dispute is a “real issue” that could damage corporate confidence. “I think trade is a real issue,” Dimon said Tuesday at a conference in New York. “Trade has gone from being a skirmish to being far more important than that. If this goes south in a bad way, and you have other surprises, that could be part of the thing that changes confidence, changes peoples’ willingness to invest.” –Hugh Son, “Jamie Dimon Warns US-China Trade Fight Becoming a ‘Real Issue’ that Could Deter Investment,”, May 28, 2019.


CNBC’s Jim Cramer said Tuesday that investors should balance exposure to the market with storing cash on the sidelines, because there are “some real worries here.” “I think we could be on the verge of a significant slowdown in the U.S. economy if something doesn’t change soon,” the “Mad Money” host said. “Consumer and corporate confidence [is] waning. Things just don’t feel right in this country.” – Tyler Clifford, “Cramer: The U.S. Economy “Could Be On the Verge of a Significant Slowdown,”, May 28, 2019.

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MMA Weekly Column: May 27, 2019

Note: Monday is a holiday – Memorial Day – in the USA. Markets will be closed.


Britain’s Theresa May announced her resignation as prime minister on Friday morning, drawing her turbulent three-year premiership to an abrupt end. She will step down as Conservative Party leader on June 7. – Sam Meredith and David Reid, “Teresa May Resigns as UK Prime Minister Amid Brexit Crisis,”, May 24, 2019.


President Donald Trump signaled Thursday that a trade deal with China could lift tough restrictions on the Chinese telecom giant Huawei. “If we made a deal, I can imagine Huawei being included in some form or some part of a trade deal,” Trump said to White House reporters. He also predicted a swift end to the ongoing trade tensions. – Chloe Taylor and Ryan Browne, “European Stocks Close Higher as Trade Jitters Fade,”, May 24, 2019.

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MMA Weekly Column: May 20, 2019

Imposing tariffs on China and other nations trying to send their goods to the U.S. not only raises the prices of those products for Americans, it also gives targeted nations an incentive to develop markets, and long-term trade ties in other countries, At the same time, those foreign nations can retaliate by cutting purchases of American goods, or by slapping retaliatory tariffs of their own on American products, making them less competitive. – Gerald F. Seib, “U.S. Risks Overusing Its Economic Weapons,” Wall Street Journal, May 14, 2019.


Trump might believe that he can bully Beijing into accepting a one-sided enforcement mechanism under which the United States is allowed to impose retaliatory tariffs in case of a dispute while China is not. That simply isn’t going to happen. Nor will China agree to stop subsidizing industries. Asians have subsidized capital-intensive industries since Japan’s 1868 Meiji Restoration, and that won’t change any time soon… “Forced technology transfers” to China are for the most part mythical. The reality is that America’s largest technology companies from Intel to Boeing are lining up to hand their technology to China in the context of their strategy for China’s domestic market. The emerging consensus is that Trump isn’t fooling anyone. At the end of the day he wants a deal as much as do the Chinese. – David P. Goldman, “Buy Chinese Stocks on the Dip,”, May 6, 2019.

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MMA Weekly Column: May 13, 2019

As the White House prepares to amplify the duties as a route to damage the Chinese economy, opponents are intensifying their efforts to counter what they say is a misguided attempt by the administration to portray the tariffs as anything but a tax on American consumers. “We’re paying that tariff. I want there to be no mistake that the consumer is paying for these tariffs. I wish China was paying them. I certainly would feel better about it that way,” Brent Bible, a soybean farmer in Lafayette, Indiana, said on Thursday on a call arranged by advocacy groups Tariffs Hurt the Heartland and the National Retail Federation. – Joe Williams, “Burdened by Trump’s Tariffs, Small Businesses, Others Mount Last Minute Plea.,” Fox News Network, May 9, 2019.


Don’t underestimate the power of the “Trump put.” Analysts say the stock market has been hanging in after trade talks with China hit a rough spot because investors believe a deal is coming, and they also expect President Donald Trump to take action if the stock market looks like it is heading for a real meltdown. The “put” is the belief that Trump will not let the stock market collapse, since he views it as a measure of his own success. On Friday, stocks cut steep losses and turned positive, after Treasury Secretary Steven Mnuchin said talks with Chinese Vice Premier Liu He were “constructive,” as they ended for the day. – Patti Domm, “The ‘Trump Put’ Saves Stocks as Investors Bet the President Won’t Let the Market Collapse.”, May 10, 2019.

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MMA Weekly Column: May 6, 2019

The U.S. jobs machine kept humming along in April, adding a robust 263,000 new hires while the unemployment rate fell to 3.6%, the lowest in a generation, the Labor Department reported Friday. Nonfarm payroll growth easily beat Wall Street expectations of 190,000 and a 3.8% jobless rate. Average hourly earnings growth held at 3.2% over the past year, a notch below Dow Jones estimates of 3.3%. Unemployment was last this low in December 1969 when it hit 3.5%. At a time when many economists see a tight labor market, big job growth continues as the economic expansion is just a few months away from being the longest in history. – Jeff Cox, “Jobs Surge in April, Unemployment Rate Falls to the Lowest Since 1969,”, May 3, 2019.


President Donald Trump tweeted that he wants the economy to “go up like a rocket,” ratcheting up his efforts to badger the Federal Reserve into slashing interest rates… The Fed, as expected, left its key interest rate unchanged Wednesday after a two-day meeting… Here’s the rub: Trump is cheer leading for an excessively large rate cut for the wrong reasons, economists say. And his proposal, if enacted, carries unpalatable risks for a relatively modest reward, even putting aside the potentially bigger hazard that the Fed would jeopardize the public’s confidence in its independence if it were to follow Trump’s advice. –Paul Davidson, “Trump: Rate Cuts Would Make Economy Soar,” USA Today, May 3, 2019.

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