Xi Jinping says China is embarking on a ‘new Long March,’ signaling no end to trade war soon
Chinese President Xi Jinping ramped up his rhetoric yet again on the trade war…“We are now embarking on a new Long March, and we must start all over again!”…Although he didn’t mention the U.S. or the ongoing trade war, the remarks are interpreted as a clear sign that China is not going to cave in anytime soon…The “Long March” refers to China’s civil war in the 1930s…There has been speculation that China could ban rare earth exports to the U.S. if the trade war escalates, according to the South China Morning Post. The trade negotiations between the world’s two largest countries have hit a roadblock. President Donald Trump followed through with his threat to increase tariffs on $200 billion in Chinese goods from 10% to 25%. China immediately responded by upping the tariffs on $60 billion of U.S. goods to as high as 25%. Trump said recently he has not “made that decision yet” on whether to put tariffs on another $325 billion in Chinese goods. The two leaders are set to meet at the G-20 summit in Japan next month.
What if Green Energy Isn’t the Future?
Source: Wall Street Journal
“There’s a reason Warren Buffett decided to bet $10 billion on the future of oil and natural gas…A week doesn’t pass without a mayor, governor or policy maker joining the headlong rush to pledge or demand a green energy future. Some 100 U.S. cities have made such promises. Hydrocarbons may be the source of 80% of America’s and the world’s energy, but to say they are currently out of favor is a dramatic understatement…The prevailing wisdom has wind and solar, paired with batteries, adding 250% more energy to the world over the next two decades than American shale has added over the past 15 years. Is that realistic?…Even bullish green scenarios still see global demand for oil and gas rising, if more slowly. If the favored alternatives fall short of delivering what growing economies need, will markets tolerate energy starvation? Not likely. Nations everywhere will necessarily turn to hydrocarbons. Green forecasters are likely out over their skis. All the predictions assume that emerging economies – the least wealthy nations – will account for more nearly three-fourths of total new spending on renewables. That won’t happen unless the promised radical cost reductions occur…The reason? Using wind, solar and batteries as the primary sources of a nation’s energy supply remains far too expensive….A common response to all of the above: Make more electric cars. But mere arithmetic reveals that even the optimists’ 100-fold growth in electric vehicles wouldn’t displace more than 5% of global oil demand in two decades.”
Global Markets, Yuan Tumble As China Crushes Trade Hopes
Source: Zero Hedge
“World markets suffered a fresh bout of risk aversion on Friday after China doused hopes for a quick deal when its state media signaled a lack of interest in resuming trade talks with the U.S. under the current threat to escalate tariffs, while the government said stimulus will be stepped up to buttress the domestic economy. Asian stocks erased most gains for the day with the MSCI index of Asia-Pacific shares outside Japan sliding to 15-week lows and down 2.6% for the week at the end of trading…China’s Shanghai Composite Index fell 2.5% after a front page commentary in the Communist Party’s People’s Daily evoked the patriotic spirit of past wars, saying the trade war would never bring China down. ‘The China state media commentaries fueled concerns that the U.S.-China trade disputes will prolong, deterring risk-taking,’ said Koji Fukaya, CEO of Japan’s FPG Securities. ‘This issue will probably be one of the major market drivers for a while as U.S.-China trade war influences global economic conditions.'”
A Recession Indicator No One Is Talking About – and It’s Flashing Red
Source: Mauldin Economics
“The yield curve isn’t the only sign recession is coming. Rising corporate misconduct says the same. Business scandals seem to peak at the end of every growth cycle. I think that’s because CEOs are human, and humans get overconfident when everything is going well. Allegations of negligence and/or misconduct at public companies now seem to be growing again….Why anyone would own shares in such companies, I don’t know. For many, it’s probably because they only care about a rising stock price. And they’ve been getting it. But if the stock is rising not because the business is well-run but because it is borrowing money to buy back its own shares, the gains won’t last….With creative destruction now scarce, as zombie companies refuse to die and monopolies refuse to improve, we also struggle to generate even mild economic growth. I think those facts are connected. And that makes corporate corruption and incompetence a problem for everyone…Such conditions haven’t ended well in the past.”
U.S. Consumer Sentiment Hits Highest Level in 15 Years
Source: Wall Street Journal
“U.S. household sentiment rose starkly at the beginning of May to its highest level in a decade and a half, driven by a brighter economic outlook…The survey’s underlying gauge of future expectations increased to the highest level since 2004, driving most of the month’s overall sentiment rise. ‘That consumers view prospects for the economy both near and long term at the highest levels since 2004 coincides with more economists pushing out forecasts for the start of the next recession from 2020 to 2021,’ said Robert Frick, economist at Navy Federal Credit Union….Richard Curtin, the survey’s chief economist, pointed out that the index growth was recorded largely before the U.S.-China trade negotiations collapsed. He said negative references to tariffs rose in the past week and thinks they ‘are likely to rise further in late May and June.'”
Half of Americans are just one paycheck away from financial disaster
“Missing more than one paycheck is a one-way ticket to financial hardship for nearly half of the country’s workforce. A new study from NORC at the University of Chicago, an independent social research institution, found that 51% of working adults in the United States would need to access savings to cover necessities if they missed more than one paycheck….The findings were based on a survey of more than 1,000 adults. The researchers interviewed a nationally representative panel designed to be indicative of the U.S. population. The survey provides a sobering look at Americans’ precarious finances even as the economy is improving…’Even short disruptions in pay can cause significant hardship, as most Americans appear to be living paycheck-to-paycheck,’ Angela Fontes, director of the Behavioral and Economic Analysis and Decision-Making (BEAD) program at NORC at the University of Chicago, said in the report.”
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