It's May 29 and the Coronavirus event seems to have started to blend in with world events of the regular sort, and it's now more our environment than new things coming up, and some world events are coming to the fore in importance. I'm going to leave off the log about talk of a recession and Coronavirus (Part 1, 2, 3, 4) which I started February 25 until now, and write under the broad subject of things emerging in global events, and how those might impact economies and also anywhere they seriously affect human rights.
The biggest story of the days this week are with China. Most of my news is US Economics and Markets news, so naturally everything there is from a US business standpoint. Partly this continues from what I wrote in 2019 about what I thought was the biggest story of the year then, the Hong Kong protests.
China is facing opposition from the US and other countries because it has been a shitty country for so long, and has been growing and becoming an internationally important country that is active in other countries for the past decade or two. It hasn't let up with it's shitty actions like what it's been doing in Tibet, which is currently not among the issues people are talking about, with the Uighurs in Northwestern Muslim China, Hong Kong, Taiwan, it's tech spying and stealing, ongoing attempts to steal islands and sea property by building new islands with military muscle, huge numbers of death sentences, laws against protests and other laws against human rights, treatment of religious groups like Falun Gong. Also, while tons of Chinese have for the past 10 or 20 years of economic success been traveling, this has hurt people's perception of Chinese because they are rude and inconsiderate, famous for doing messy personal care in public, cutting lines, cramming, yelling or talking very loudly, rushing buffets and taking all the food, trying on clothes and messing up stores. They're one of the only types of travelers that I would guess has globally people have a strong negative impression of.
On the other hand China has shown the world that it's population, it's culture, is hardworking and serious. It has become the factory of the world not just because it's people wanted the money. It's hard to find people who are capable of being serious and working, but Chinese are just that. For this reason, they've made good business partners and good, successful companies. On top of that they're very obedient and unobtrusive, so it's easier to deal with them than more individualistic peoples, which is also probably why Canada seems to have like them for selling their cities to. Like the West, China has become rich because it has a population serious about being workers. China is more industrious than the West though, it seems, because more Chinese people think about starting and running businesses, it seems, and becoming wealthy, while in the West most people seem to be workers or employees in their minds. Perhaps this has something to do with the strict and idiotic laws in the West that make starting or running businesses extremely difficult. Canada, for example, is widely considered a bad place to try to do a business because the laws make it very difficult to enter, navigate, and succeed. The US reduced it's corporate tax rate from about 30% to about 20% to be more globally competitive, since many countries have rates in the teens, although right now there is talk of restoring the higher rate for companies that make over $400,000k per year. There's also talk, and has been for years, about somehow making pay taxes the giant companies that are displacing smaller companies, notably Amazon but we might also mention Google, Walmart, Target. Amazon, which is being talked about now, has been portrayed as a sort of hero, delivering goods while stores have not been open, employing large numbers of people with good wages, but as everyone knows it does this by economies of scale and it's scale is one where it eclipses smaller companies which would otherwise be part of the community and economy, and also perhaps the tax situation with 100 small stores would be different from one large one per town.
That was sort of a preamble but it seemed more of a ramble since most of that stuff is well-discussed and understood. I'll draw a line and start with news and developments.
Trump faces a reelection challenge in so-far Joe Biden, who it seems impresses no one in any way. The economy is down but might recover. I'm not sure how much credit Trump can take for the US government's moves to prop up the economy, or how it will appear in retrospect when people are measuring how the emergent US compares with other countries, although right now basically everyone says what they did was the correct thing and the only thing they could have done. I don't know how much of it was layed out by internal policy planning as part of what they learned from the 2008 09 financial crisis.
Some say the only issue Trump really has is being tough on China. Biden is viewed as friendly toward China, and they're trying to put the name Beijing Biden on him, although I suspect Trump will come up with much more creative and potent characterizations in the world wrestling style he's master at.
Issues Trump is focussing on include Beijing's alleged cover-up of early Coronavirus. Trump and some people in probably every country around the world blame China for the virus and for the things the virus is doing in their countries. Most countries are having it very difficult right now, and that probably breeds a lot of resentment at whatever they can target. It doesn't help that there was a bio research plant that does just this kind of work about half a mile from the seafood market where the outbreak is thought to have started, as I mentioned in the talk of recession and Coronavirus log. This is being investigated by the US and UK governments it seems. China for it's part is trying to focus blame and resentment on other nations and nationalities, suggesting the virus originated in US service members, saying new cases come from people flying in from overseas, and that cutting off flights from China was racist, while doing it themselves inside their country, cutting off Wuhan to stem contagion.
China formally approved yesterday a new stricter security law for Hong Kong which criminalizes most types of political protest, using a blanket concept of 'sedition' and 'subversion.' We've seen this in Tibet and Xinjiang for decades.
US politicians are taking the position that Hong Kong is now under the power of China and doesn't have a high degree of autonomy any more. This shift also may change Hong Kong's trade relations. It has enjoyed an absence of the trade tariffs that Trump put on China in the trade war. This change, if it is what's going to happen, as will be announced today by Trump, will have an affect on markets, particularly Hong Kong companies and ones that do business with HK. This would be a bit of a new development in that since the economic issues that started in March, Trump has been signing a ton of things to help the economy and probably doesn't want to sign anything that would hurt it.
People talk about the negative consequences of problems with China. The US doesn't make it's own PPE or medicine, and it might take time to rearrange things, but maybe not. It seems the Trump government can be pretty quick to move and has displayed determination in doing things.
Congress this week approved a bill for the government to make reports identifying Chinese government individuals responsible for the forced detention of 2m Uighurs. The State Department is going to conduct an investigation of the human rights violations in Xinjiang. It seems to me this all might be from a political motivation though, as China has been shitty in Tibet for decades and Xinjiang for years and the governments of the US, Canada, and other countries have been purposefully silent on this, as well as the human rights abuses in the Mainland. They've consistently avoided having the issues brought up in front of them, so they don't have to take a stand when the only stand possible for them would be against the Chinese government. Now there seems to be a lot of action, but I wouldn't say it's likely to contribute to better human rights because the governments involved don't care about human rights. There is also rising anti-China sentiment in the US, although there has been significant anti-China sentiment before. I'm not sure in Canada. From what I've seen, Canada avoids this information becoming public since Canadian politicians probably depend on heavy investments based on Chinese house buying, etc in the cities it has sold to China and India. I wouldn't join the camp that says Well, whatever it's for, it's a good move, a step in the right direction,' because we've seen how Western government involving themselves in this way never create real good outcomes. Sometimes it leads to them doing other harmful things themselves.
India is also going to be an interesting issue. India already hates China, and they have border disputes and things, blocked rivers. India houses Tibet's government in exile by the way. India has been passing really terrible laws over the past years. Right now it's overcrowded and unsanitary population is facing a health challenge. How will it's leader want to appear?
Friday morning, the morning Trump is scheduled to talk about China and Hong Kong, after the announcement of his talk before the close yesterday, which sent markets down, the markets opened all in red. Only a very few on my watchlists were green, and none of the ones I'm holding. Yesterday also they almost all went down, although OLP went up probably because news that house sales were up for single family dwellings, etc. I didn't read or watch much on it but it seems property sales aren't really down that much or are up, just less houses were for sale, and this meant little bidding wars for those available.
Yesterday's market downs followed the Tuesday and Wednesday after Memorial Day and all stocks were green for two days. I got caught up in and increased and invested in a few new stocks.
Late Friday, when people were worried about the US-China trade deal and the value of stocks, which were largely down, the relief of not having Trump say anything brutal about Chinese trade caused a sharp last-hour rise in stocks, maybe most in Alibaba and similar. This may mean that Trump might not be ever going to jeopardize US money when it comes to Chinese companies.
Social Media is an issue this month, as Twitter put little advisory notes on some of Trump's tweets 'fact-checking' them. Zuckerburg actually commented on this, the headlines saying that he said that social networks should not be fact-checking political speech, 'Political speech is one of the most sensitive parts in a democracy, and people should be able to see what politicians say.' Facebook has fact-checkers too, but he said it was to 'really catch the worst of the worst stuff.' 'In terms of political speech, again, I think you want to give broad deference to the political process and political speech' and not 'try to parse words on is something slightly true or false.' The company has decided to continue to allow political campaign ads even when they include misinformation. Zuckerberg said there were 'clear lines' for what content should be allowed, framed in terms of causing violence or harming people's selves, and misinformation that could lead to voter suppression. Facebook, Google and others continue to use the concepts of 'hate speech' and 'racism' and other concepts to censor content. This has been most prevalent over the past year or two on YouTube where many content creators have had videos demonetized, removed, etc., although they contain nothing really of that sort, because the content caused a flag for the algorithms that check content. This week people are talking about YouTube finally facing a challenger in Slack, although Slack doesn't have any better privacy protections that YouTube.
Markets are trading at a 21 stock market multiple. It might be that the Fed has pulled forward years of returns in the last few months, taking it away from future results. In 1999 the multiple in the Nasdaq was in the 40s.
During the trade deal, China showed how it could do lots of unofficial action, like slowing down shipments and gumming up the works.
Headlines included a $850,000 bill for a 2-week intensive care stay in a hospital for Coronavirus. And lots of comments mentioning similar incredible rates for stays for various things, and the US fear of hospitalization.
In April in the US, personal income went up 10% partially due to government stimulus checks, and spending went down 15%. Personal savings jumped a record-high 33%.
Trump said the US would terminate it's relationship with the corrupt WHO.
SpaceX launched two astronauts to the ISS for the first time, all live on YouTube, although they 'had technical difficulties' and lost signal, black screen, when the rocket stage landed again on it's drone platform in the ocean, and just cut the feed back to show an already landed rocket. You can't invest in SpaceX. You can invest in Alphabet which is an investor in SpaceX but that's pretty far removed.
Some businesses that are reopening seem to be raising prices, which may or may not be inflationary. However many businesses aren't raising prices, so maybe dis-inflationary, although on the other side the smaller supply for demand might lead to companies then raising prices.