There’s no good way to explain to someone that you crashed their car, even though you promised to take good care of it while they were gone. I imagine someone in that scenario would endure the stages of grief, getting stuck in a state of denial. “There’s no way I backed into that light post while I was commenting on a photo someone posted on Instagram.”
However you want to recount the story in your head, the fact of the matter is that you crashed your friend’s car, and you have had to tell them. Studies suggest that honesty is the best policy, but, at the end of the day, how one goes about this is a solitary choice, not one guided by statistics or suggestions. To make it perfectly clear, I am speaking on this from experience of witnessing others endure this, and I hope to never go through such a difficult situation.
Maybe everyone should just take public transportation, here’s what you missed in the news yesterday.
Plate…Date…Grate…Great…State Of The Union
The upcoming State of the Union, delivered by President Trump, was originally set for Jan. 29, but there was a slight snafu related to that clumsy little partial shutdown of the federal government which delayed the speech just a bit. Though the President recently addressed the American public, nearly three weeks ago, and informed viewers of the dire need for a border wall to be built along the U.S.-Mexico border, he’ll get another crack at it on Tuesday, Feb. 5, 2019.
If we utilize President Trump’s current relationship with Congress as a litmus test for how our nation is feeling, overall, the future doesn’t seem all that positive. After a nearly forty-day long government shutdown, the newly instated 116th Congress was made privy to the inconvenient truth that our President will go to any length necessary to get his points across. If it wasn’t a government shutdown, it was public threats to declare an official state of emergency so that, through some bizarre loophole, the U.S. military could be deployed as the President’s personal construction team to build his wall. But President Trump trekked onward, deciding to withdraw all U.S. troops from Afghanistan and Syria without asking permission of Congress, or really any government official for that matter.
It won’t help that as President Trump delivers his speech, he’ll be directly under the vicious glare of House Speaker Nancy Pelosi (D-CA), who has made it quite clear that she is less than pleased with the President
Can You Read This Sentence?
In other President Trump-related news, his former 2016 presidential campaign manager, Paul Manafort, will reportedly be receiving his sentence on March 13, following his submission of a guilty plea on Monday. Manafort was one of the first people named in Robert Mueller’s special counsel investigation into Russia’s alleged interference in the 2016 presidential election.
In addition to his upcoming sentencing, Manafort will be tried later for potentially breaching his plea agreement. Per the official court filing:
“…After signing the plea agreement, Manafort committed federal crimes by lying to the Federal Bureau of Investigation and the Special Counsel’s Office on a variety of subject matters, which constitutes breaches of the agreement. The government will file a detailed sentencing submission to the Probation Department and the Court in advance of sentencing that sets forth the nature of the defendant’s crimes and lies, including those after signing the plea agreement herein…”
–U.S. District Court for the District of Columbia
Fed Announces No Rate Cuts, But Sees A Cut In The Future
For the past couple of years, the United States Federal Reserve has been in the middle of a lot of speculation. The trade war between the United States and China has created a clamor for cuts in interest rates.
But on Wednesday, the Fed held the interest rates as they were. Furthermore, the Fed officially announced that no cuts in interest rates were forthcoming in 2019. It’s interesting to note that the markets are betting heavily on a forthcoming rate cut from the Fed. Some even expect the cuts to be formalized in July.
Rate Cut Ahead?
The Fed has ruled out the possibility of any cuts this year (allegedly). But many market watchers believe that a lot depends on how the market conditions evolve over the coming months. The uncertainty regarding the trade war with China is a major problem.
Yet experts believe that if it turns into a prolonged skirmish, then the Fed might reconsider its position. The United States President Donald Trump has led been campaigning for lower rates from the Fed for some time.
After having delivered his statement on Wednesday, the Chairman of the Federal Reserve Jerome Powell seemed to imply that rate cuts could not be completely out of the question in 2019.
“Many participants now see the case for a somewhat more accommodative policy has strengthened.”
The decision by the Fed was possibly one of the most-watched events in recent times. Long-term ramifications are the main concern.
Market participants had been calling for multiple cuts. But the Fed voted to keep benchmark rates within the 2.25% and 2.5% range. It was the range that had been back in December when the Fed had controversially raised the interest rates. The voted had been passed 9-1 in favor of holding the rate.
Trade Talks Fail, What’s Next For The Market?
The trade war between the United States and China has probably been the biggest economic and diplomatic development since the turn of the year. Although the world’s two biggest economies were locked in talks for months over a new trade deal, it all unraveled quickly.
This happened when US President Donald Trump stated that the Chinese went back on their word. He then imposed tariff hikes on Chinese goods last Friday. The tariffs were raised to an astonishing 25% on goods worth $200 billion. Although Trump might believe this might bully the Chinese into submission, many experts believe that might not be the case.
Difficulty in Completing Deal
The President had imposed these tariff hikes right before the Chinese delegation was supposed to show up at Washington. This was for which many had believed was going to be the last round of talks. However, experts now feel that the escalation of tensions between the two countries following the latest developments will make it difficult to reach a deal that could be considered a win for the US. As soon as the tariffs kicked in, Beijing announced that it was looking at countermeasures as well. However, there were no specifics on the nature of these measures.
Last year, the two nations had been embroiled in a damaging retaliatory tariff war and it could lead to a protracted trade war, if the Chinese decided to resort of the same tactics. The Chinese delegation is going to be in Washington this week to engage in another round of talks but it is believed that a binding trade deal is unlikely to be signed.
Is A Trump Win Likely?
One of the biggest reasons why the deal might not be signed anytime soon is perhaps the fact that the US President needs to be able to claim it as a win for himself. The President has staked his personal weight behind a favorable deal for the US. But with every passing day, it is looking increasingly unlikely that it is going to happen.
If that is to happen, then China’s entire way of doing business will need to change. This is starting at intellectual property theft and expands to technology transfers by force from US companies. If those things are not part of the deal, then it would not be the sort of deal that can be claimed as a win for the US. It doesn’t help that today, China came in with its own tariffs. China will raise tariffs on $60 billion in U.S. goods, the Chinese Finance Ministry said Monday.
And in true Trump fashion, the U.S. may not be done retaliating. The U.S. President has threatened to put 25% tariffs on $325 billion in Chinese goods that remain untaxed. The president has signaled he is content leaving the duties in place, arguing they will damage China more than the U.S. What are your thoughts?
Can 102 Words Really Impact Stock Prices?
In short, the answer is yes. We’ve witnessed, first hand, this week how just a few words can drastically impact the stock market. If you’re just tuning in, at the beginning of the first full week of May, U.S. President Donald Trump Tweeted out a 102-word post that ended up triggering a sell-off costing the global markets around $1.36 TRILLION…with a “T”!
The “Trump Tweet” expressed that he would once again increase tariffs on Chinese goods by the end of this week. What followed has been a shock to the global markets with futures pointing at dramatic declines every day this week. Though some say that the decline are all but a speed bump, it still hasn’t helped the fact that this drop is one of the worst seen all year. People like Kerry Craig of JPMorgan Asset Management think that a trade deal can still be reached. The expectations, however, have been readjusted to reflect a more long-term time horizon.
Eyes Turn Toward The Second Half Of The Week
Other analysts like Oanda Asia Pacific’s Jeffrey Halley feel that investors are prudently “lightening their loads.” Halley said, “My feeling is that investors are lightening their portfolios as a precaution.”
“Liu will be in the U.S. from May 9-10. The invite comes from both the U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.” Regardless of what “will happen,” what has happened thus far has been an emotionally charged & very fragile global market. As this story develops we will continue to follow with more updates.
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