The Weekly Recap 3/3/19
I bet you think you’re cooler than a cucumber for dominating last week, don’t you? Come on, don’t be shy. We all know how you went into the week with an open-mind, ready to tackle whatever obstacles you might come across, and then you killed the game. Well, the rest of us had to sit back and watch because we can’t all be a professional like some of you. For many of us, going through the motions of a work week is like taking to the battlefield without any ammunition, nearly impossible. What’s that? You say you have a golden piece of advice for us? You’re saying that the key to a good week is all in the mindset, but that it helps to have some background on prior events from week’s past? Alright, we’ll humor it with this week’s recap.
Game Called On Account Of Trump
President Donald Trump is a many of simple pleasures and interests, he loves a nice piece of fish after a long day at the office, and most notably, the man loves a good tariff. Over the past few months, President Trump has imposed billions of dollars in tariffs on Chinese goods, but per recent reports, it would seem that he’s had a change of heart. On Sunday, Trump announced that the U.S. will delay its previously scheduled tariff imposition from March 1 to an undisclosed time in the future.
“I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. ”
–President Donald Trump
We Got The Wrong Guy?
Everyone who reads or watches the news is well aware of the fact that the United States judicial system is completely and utterly fool-proof. This of course being false, a man named Craig Coley has spent the last thirty-nine years in prison and, on Sunday, it was discovered that he had never been incarcerated in the first place. In 1978, he was convicted of partaking in the murder Rhonda Wicht and her 4-year-old son, Donald.
Over the weekend, Coley was awarded a $21 million settlement as a result of a federal lawsuit which proved that he was innocent.
“Mr. Coley’s 39-years was the longest prison term overturned in California. Following his release, he was awarded the largest payout ever from the Victim’s Compensation Government Claim Board which said it “unequivocally accepts that Coley is actually innocent” of the murders. The City believes reaching this settlement will mitigate the long and costly process of unnecessary litigation. While no amount of money can make up for what happened to Mr. Coley, settling this case is the right thing to do for Mr. Coley and our community. The monetary cost of going to trial would be astronomical and it would be irresponsible for us to move forward in that direction.”
–City Manager Eric Levitt
Netflix & Awards
Since Netflix (NFLX) began releasing original content back in 2013, the streaming-giant-turned-production-company has won thirty-seven Emmy awards, four Golden Globes, and two Academy Awards. While I 100% agree that Netflix (NFLX) content has earned every single award that they’ve won, these victories are an indication that old Hollywood is fading softly into the distance.
Last year, box office films earned nearly $12 billion, representing the highest in history, but, as several analysts have pointed it, that was largely due to the recent increase in ticket prices. In fact, according to TechCrunch, the total number of movie tickets sold in America has dropped over 10% in the last two decades even though domestic population levels continue to rise. The reason behind this must be that moviegoers would rather watch award-winning content for $10/month, from the comfort of their own living room, rather than pay $15 per movie and possibly have to sit among crying babies and loud fans of The Avengers.
“This cash loss exists because Netflix is funding next year’s content against this year’s revenue. Netflix could have chosen to stabilize its 2018 content offering at 2017 levels…The industry and press would do well to focus on Netflix’s cash spend — even when compared to the recognized spend of its traditional peers. Netflix’s amortization figure is a lagging indictor. What’s scary is what’s going out the door: lots and lots of cash.”
–Matthew Ball, former Head of Strategy, Amazon Studios
It’s A Bold Move, Let’s See How It Plays Out
President Donald Trump is headed on a flight to North Korea to meet with everyone’s favorite dictator, Kim Jong Un. According to several sources, Trump will meet with the leader of North Korea in hopes of reopening the discussion surrounding denuclearization. Interestingly enough, this is just one of several events occurring this week featuring President Trump. In addition to Trump’s meeting with Kim, Vice President Mike Pence will meet with South American leaders in Bogota and Colombia.
“Because of U.S. law today, the general counsel of any U.S. company is not going to recommend going into North Korea because of human rights abuses. The Trump administration needs to talk about human rights if they’re going to achieve what they want to achieve.”
–Victor Cha, former Bush administration adviser
India Could Be The Key
Take a trip to India and you’ll see a country with beautiful people, incredible architecture, a cultural paradise. But if you look closer you’ll see remnants of the harmful caste system still very much at play. Thousands of years ago, Hindus were divided into hierarchical groups based on their karma (work) and dharma (religion). For centuries, the caste system dictated every aspect of an individual’s life, with rural communities at the bottom, and the wealthy at the top.
Though they are not proud to admit it, India still has lasting effects of this stratifying system, and we can see that based on the country’s economic present, as well as its future. Analysts believe that India possesses great entrepreneurial potential for several reasons, namely because of its massive tech support industry which has assisted consumers with product-related issued for two decades. In his newest book, James Crabtree, argues that India presently faces a triple threat of “inequality and the new super-rich, crony capitalism, and the travails of the industrial economy.”
“When I lived in in Mumbai, there was a big tech investment wave in the after wave of the Alibaba IPO. There were these great hopes that India would follow the sort of hockey stick growth” seen in China. Yet, the country’s demographics don’t back that up. India has a tiny middle class — 10-20 million using a reasonable definition of the term “middle class.” That group is simply not large enough to support the valuation dreams underpinning some of India’s most-discussed unicorns. Growing users is really easy, but growing revenues is just much more challenging.”
–James Crabtree, Financial Times
Not So Fast, President Trump
As we’ve seen in the media over the past few months, President Donald Trump has pulled out all of the stops to get a wall built along the US-Mexico border. Naturally, members of the Legislative branch of government have expressed stark opposition to President Trump’s decision to declare a national state of emergency along the border.
On Tuesday, the House successfully voted to overturn President Trump’s declaration, with the passing vote being 245-182, in favor.
Juul Operator, Juuuuul Operator
Suffice to say that smoking has lost much of its glitz and glamor, but tobacco addiction remains alive and well, and has recently taken the form of beautifully crafted, USB-looking device called a “Juul.” Juul Labs Inc., a San Francisco-based company, is responsible for the creation of the aptly named “Juul” e-cigarette. For those unfamiliar with the name of the product, I can almost guarantee you’ve seen someone using one of these devices in the club or sneakily taking a puff in line at the DMV. The Juul has become something of a cultural sensation among the younger crowds because users can justify its healthier nature compared to cigarette smokers.
The founders of Juul, James Monsees and Adam Bowen, were two Stanford University students who were fed up with a lack of qualitative alternatives to cigarettes. In their original presentation in 2004, Monsees and Bowen claimed that the issue with cigarettes, aside from the obvious harm to one’s health, was that the act of smoking was offensive to others. Many years later, Juul Labs has done its part to develop products designed to help smokers break their habits, while also investing $30 million in youth prevention, deleting its social media, as well as working to enforce stricter age verification for online sales.
“Underage use is an issue we desperately want to resolve. It doesn’t do us any favors. Any underage consumers using this product are absolutely a negative for our business. We don’t want them. We will never market to them. We never have. And they are stealing life years from adult cigarette consumers at this moment, and that’s a shame.”
–James Monsees, co-Founder, Juul Labs
Oh, So That’s What It Looks Like To Be Thrown Under The Bus
You heard it here second, folks. President Trump’s former lawyer, Michael Cohen, testified in front of the House Oversight Committee, and man, did he spill the alleged beans. Amidst his words, Cohen told the members of the Committee that the President told him to pay hush money to adult film star Stormy Daniels, and that he is a racist, as well as other words I’ll refrain from using because this is a kid’s show.
Israel’s Got Indictment
Israeli Prime Minister Benjamin Netanyahu, or as the kids say “Bibi,” is facing several indictment charges relating to bribery and breach of trust-related offenses following three separate corruption investigations. While I could rant about how politicians are the first on my list to assume foul play is occurring, I’ll avoid that rabbit hole. The announcement of Bibi’s indictment comes months before Israel’s general election, where he is up for reelection after four terms in office.
According to several sources, Netanyahu’s key opponent in the upcoming elections, former military Chief of Staff Benny Gantz, has called for Bibi’s resignation ahead of the April general election.
“Because of the circumstances which have arisen, sitting in a future government with Benjamin Netanyahu is not something which is on the table. Benjamin Netanyahu — I turn to you this evening. Get over yourself and show national responsibility. Resign from your position. If you prove that you are innocent, you can return to the public realm and again lead your movement.”
–Benny Gantz, former military Chief of Staff
One of the first cases being brought against Netanyahu is referred to as Case 1000 which seeks to charge Bibi with breach of trust. According to Israeli Attorney General Avichai Mandelblit, Case 1000 suggest that Netanyahu received illegal gifts from suspicious overseas characters totaling approximately $280,000, “including cigars, champagne, jewelry and more.” Mandelblit says that exchanges occurred between 2007 and 2016, and in exchange for these gifts, Netanyahu told his “friends” he would give them illegal tax breaks.
Diseases A Plenty
According to recent reports from data calculated by UNICEF on 194 countries from the World Health Organization, global measles cases are up 48.4%. The disease is more prevalent in children and can be fatal if left unchecked. As far as the driving forces for the increase in measles, medical experts saying countries with poor health infrastructure, low awareness, civil disorder, and namely a backlash against vaccinations. I am not sure what person said it was okay to stop vaccinating children, given their is no science to back up these claims, but here we are.
“These cases haven’t happened overnight. Just as the serious outbreaks we are seeing today took hold in 2018, lack of action today will have disastrous consequences for children tomorrow.”
-Henrietta H. Fore, UNICEF’s executive director
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.
Chinese Negotiators To Visit US As Tariffs Trigger More Concerns
Vice Premier Liu He, China’s top trade negotiator will be heading to the US to talk trade this week. The two countries have been at odds for months now with China trying to leverage the current US tariff situation. Of course, the US has not helped things either by continuing to increase tariffs on Chinese goods.
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. The markets took a hit on Monday after U.S. President Trump explained that he was not pleased with the speed of discussions and that he planned to raise tariffs by the end of the week. Chinese authorities initially considered delaying talks in light of this.
What’s Next For China & The U.S.?
Both Mnuchin and Lighthizer were concerned after it was evident that talks weren’t making progress. This was during a visit to Beijing just last week. Over the weekend, China sent a new draft of an agreement that outlined a pullback on certain language on several issues. These issues had “the potential to change the deal very dramatically,” according to Mnuchin.
According to reports from the Global Times newspaper, China was prepared for other outcomes to the deal with the U.S. This also included a temporary breakdown. Furthermore, China had also planned to continue talks even if the U.S. decided to raise tariffs. Of course, time will tell but now we must see how the markets will react to these new developments coming from China.
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