Connect with us


Trump’s New Trade Advisor An Outspoken China Critic

Trump appointing Navarro as head of the new NTC sends a not-so-subtle message to China. But how much power will Navarro really have?




On Wednesday, President-Elect Donald Trump announced the creation of a new advisory board; The White House National Trade Council. Trump also announced his pick for head of the new council; Peter Navarro, economist author of “Death by China”. Tapping Navarro as head of the new NTC sends a not-so-subtle message to China. But how much power will Navarro really have?

Peter Navarro Is Trump’s New Advisor And He Has A Few Words For China

By now, the entire U.S. is familiar with Donald Trump’s stance on China. The President-Elect believes the U.S. needs to renegotiate all deals with the Chinese Government. In fact, according to Trump, the U.S. needs to renegotiate all deals with every country. As such, the incoming president has formed a new White House National Trade Council that has one goal: to stop the “exodus of jobs” to foreign countries. Considering the U.S. has lost 5 million manufacturing jobs since 2000, the NTC may be a needed addition to Trump’s administration.

Trump campaigned as a businessman who is good at making deals. And it worked. Americans rallied behind his “Make America Great Again” promise, understanding the general principle of the campaign. But the specifics are a little scarier. Trump didn’t just choose China as a target. Granted, providing a foreign “enemy” (well, several) drew people to his cause, but China really does seem to be the winner in its trade relationship with the United States. For every one dollar in goods the U.S. exports to China, we import $4 in Chinese made goods. And while the U.S. trades with countries all over the globe, 20 percent of all imports come solely from China. There’s definitely in an imbalance in the trade relationship between the two countries. So it shouldn’t really surprise anyone that Trump chose an outspoken China critic in Peter Navarro to head the NTC.

But how much power will Navarro actually have?

The truth is, we’ll just have to wait and see. While he can’t draft proposals for new laws, Navarro can directly influence policy creation, and is being brought on by Trump to help shape the economy with those policies. Navarro has argued that Trump can boost the economy and balance the budget by 10%, allowing more drilling and coal burning to expand U.S. energy production, and renegotiating deals to reduce or eliminate the U.S. trade deficit – ideas which Trump championed during his campaign.


You can check out CNBC’s coverage on why Navarro is a good appointment:

Navarro may be an extreme selection, but tempered by congress, Trump and Navarro may just be able to balance out the Chinese trade relationship.

What happened to Alibaba? Get yesterday’s business news right here. 

Follow us on Facebook and Twitter for more news updates!

The statements, views, and opinions of any article, contribution, editorial, or advertisement in this publication are not necessarily those of The Capitalist or its editorial staff, and are not considered an endorsement, sponsorship, or recommendation of any referenced product, service, issuer, or groups of issuers.

This publication provides general information about certain subjects, and should not be construed or taken as advice (legal, financial, investment, tax, or otherwise). Do not construe or take any information in this publication as a solicitation, offer, opinion, or recommendation to buy or sell any securities, bonds, or other financial instruments or to provide any legal, financial, investment, tax, or other advice or service about the suitability or profitability of any financial instruments or investments.

The Capitalist disclaims any liability for the accuracy of or your reliance on any statements, views, opinions, or information in this publication.


Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


Fed Bank Predicts 53 Million Americans Out of Work, 32% Unemployment Rate




Fed Bank Predicts 53 Million Americans Out of Work, 32% Unemployment Rate

As we covered here on The Capitalist last week, during an interview with Bloomberg News, Federal Reserve Bank of St. Louis President James Bullard said that he is forecasting the U.S. unemployment rate will hit 30% in the coming months as the coronavirus pandemic continues.

The comments understandably raised a few eyebrows at the thought of such a staggering unemployment rate, which would be nearly triple what we experienced during the Great Recession.

Bullard tried to soften the blow in a later interview with CNBC, stating that although the unemployment number will be “unparalleled” we shouldn’t get discouraged.

“…if we play our cards right and keep everything intact, then everyone will go back to work and everything will be fine.”

Now, one of Bullard’s colleagues at the St. Louis Fed has an even more dour prediction about what America will face in the coming months.

In a research paper published last week, Miguel Faria-e-Castro, an economist at the St. Louis Fed, titled his article “Back-of-the-Envelope Estimates of Next Quarter’s Unemployment Rate” and estimated (remember, this is one man’s estimates) that nearly 53 million Americans could find themselves unemployed due to the coronavirus.

That works out to an unemployment rate of 32.1%. At the peak of the Great Depression nearly 100 years ago the unemployment rate topped out at 24.9%.

Faria-e-Castro acknowledges that it’s a massive number, and states “These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years.”

He points to previous research that identifies 66.8 million workers who are in “occupations with high risk of layoff” that include sales, production, food preparation and services. He then looks at additional research that found 27.3 million workers in “high contact-intensive” jobs at risk such as barbers, stylists, airline attendants and food and beverage services.

Faria-e-Castro then averages those two numbers and adds in the existing number of unemployed Americans to arrive at his estimate.

While we are nowhere near reaching that unimaginable number, we are at the very beginning of a massive wave of initial jobless claims filings.

Just last week initial jobless claims hit a record of 3.3 million and another 2.65 million are expected to join them this week, according to economists surveyed by Dow Jones.

Some are even more pessimistic.

Thomas Costerg at Pictet Wealth Management has the highest estimate at 6.5 million, while Goldman Sachs estimates 5.25 million and Citigroup is at 4 million.

Moody’s Analytics predicts that initial unemployment claims from last week, which will be announced Thursday, could reach 4.5 million.

“COVID-19 has caused unemployment to surge and we look for U.S. initial claims for unemployment insurance benefits this week to total 4.5 million, compared with the 3.283 million in the week ended March 21,” Moody’s Chief Economist Mark Zandi said in a statement.

Continue Reading


Stocks Continue to Rally on Mixed News, Hopes For A Coronavirus Vaccine




Stocks Continue to Rally on Mixed News, Hopes For A Coronavirus Vaccine

The stock market continued its week-long rally yesterday, with the Dow Jones Industrial Average climbing 690 points to finish almost 3.2% higher on a day that saw both good and bad news for the market.

The S&P 500 closed 3.35% higher and the Nasdaq gained 3.62% as the pending home sales index hit a three-year high in February, but oil prices continued to crater and the Dallas Federal Reserve reported that its manufacturing index fell well below expectations.

Oil prices hit an 18-year low yesterday, as the price of WTI crude fell to $20.09 per barrel, the lowest price since February 2002. Demand continues to disappear as nearly all travel is frozen amid the coronavirus outbreak just as the supply is about to explode as Saudi Arabia and Russia increase production when the current OPEC deal ends on March 31.

The Dallas Federal Reserve’s manufacturing activity index absolutely collapsed in March, measuring -70.0 compared to expectations of -10.0. New orders, capacity utilization and shipments all fell to their lowest readings since the Great Recession.

A handful of stocks climbed higher on positive news of clinical trials for a COVID-19 vaccine and the ability to rapidly test for the virus as well, but at least one analyst is skeptical the gains will last.

Johnson & Johnson (NYSE: JNJ) rose 8% after announcing it would begin human testing of a coronavirus vaccine by September and says it expects the first batches of a COVID-19 vaccine could be available for emergency use authorization in early 2021. The company also reported that it plans to produce as much as one billion doses of the vaccine.

Alex Gorsky, Johnson & Johnson’s Chairman and CEO said, “The world is facing an urgent public health crisis and we are committed to doing our part to make a COVID-19 vaccine available and affordable globally as quickly as possible.”

Abbott Labs (NYSE:ABT) climbed 6.4% after it received an emergency use authorization (EUA) from the FDA for its 5-minute COVID-19 testing kit, which it says it hopes to produce 5,000 per day starting on Wednesday.

“Abbott’s ID Now Covid-19 test will help battle the pandemic in real-time by bringing vital information in minutes to front-line clinicians who are working to stop the spread of the virus,” said John Frels, Abbott’s vice president of research and development.

Nigam Arora, investor and founder of the Arora Report says the revenues that Abbott Labs will see from sales of the 5-minute COVID test will be dwarfed by the losses it will see elsewhere as a result of the coronavirus.

And Arora says that Johnson & Johnson will be selling the vaccine at cost, resulting in no additional revenue for the company. Thus, the run-up in stock price is unwarranted in his opinion.

While investors and Wall Street analysts can debate whether or not the rising stock prices are warranted, the rest of us can at least benefit from these companies bringing forward new tests and treatments in the fight against COVID-19.

Continue Reading


The Fed is Propping Up Bond Prices, Are Stocks Next?




The Fed is Propping Up Bond Prices, Are Stocks Next?

Last Monday the Federal Reserve announced that it would spend nearly $700 billion to buy up Treasurys and mortgage-backed securities as part of its “aggressive action” to soften the impact the coronavirus is having on our economy.

As part of the stimulus package, the Fed also said it would start buying exchange-traded funds (ETFs) that track the corporate bond market. For now, it appears the purchases will be limited to investment grade or highly-rated corporate bonds and won’t include more risky high-yield (or junk) bonds.

It’s the first time that the Fed has directly bought securities in an attempt to add liquidity and jump start a frozen market.

“This will provide much-needed liquidity to the bond market and to ETFs,” said Todd Rosenbluth, head of ETF and mutual fund research at CFRA.

Steve Blitz, chief U.S. economist for TS Lombard, says the Fed’s move is helping investors enter and exit a position if needed. “All of this is to make sure that people who want to sell have a buyer. The Fed is taking both sides of the market so people who need to raise cash can do so.”

It’s clear why the Fed prefers to buy corporate bonds through an ETF as opposed to buying bonds in individual companies. With one purchase order, it can impact the bond prices of hundreds of companies at once, as opposed to the time consuming task of identifying, pricing and then buying bonds of individual companies.

By moving into the ETF space and buying up bonds, the Fed may also be trying to calm a part of the market that has seen record outflows over the last few weeks. Just two weeks ago, the iShares iBoxx $ High Yield Corporate Bond ETF saw a $1.2 billion outflow, or roughly 8% of it’s total value.

The question becomes, if the market continues to slide as the coronavirus outbreak batters the economy, would the Fed extend its reach and start buying stocks via index ETFs?

It’s an unprecedented move, but then again so was buying bond ETF a little over a week ago.

It would allow the Fed simultaneously impact the stock price of hundreds of companies at once. With the SPDR S&P 500 ETF, the Fed could move the stock price of all S&P 500 companies with a single purchase.

The same would apply for all broad index ETFs like the Dow Jones Industrial Average (DIA) and Nasdaq (QQQ).

Vincent Reinhart, chief economist and macro strategist at BNY Mellon Asset Management, says it could be in the Fed’s playbook.

“Other central banks have done it. It’s the ETF route that the Bank of Japan has taken. I would not rule out them doing equities.”

Lindsey Bell, chief investment strategist at Ally Invest added “We’ve seen the Fed show that they’re willing and able to do whatever it takes to make sure the markets are opening in an efficient manner. They’re taking whatever steps they can. That would be new territory for the Fed, not that they’re scared of new territory.”

Continue Reading


Copyright © 2019 The Capitalist. his copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only. MATERIAL CONNECTION DISCLOSURE: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to from this page and may receive commissions from purchases you make on subsequent web sites. You should not rely solely on information contained in this email to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.