The Status of Union, Economy…

7-7 Market Highlights (February 3 – February 9, 2019)

The State of the Union delivered as 76% surveyed said they liked the speech. Highlights echoed the disdain for socialist ideology and punditry of the Democrats pointing to the history and now Venezuela. Most celebrated the rise in women representing the Congress by bi-partisan chants “USA, USA…” Trump boasted the fastest growing economic progress, jobs and wage growth, stock market, tax cut effects on the economy, but still cautious with China-US trade war and North Korean challenges.  Stacy Abrams, a failed Georgia governor’s race, gave Democratic response in usual partisan rhetoric. Status quo...?

There are loud noises around the “Green New Deal" policy and socialist ideal to pay even the people unwilling to work to receive free money… The 100% renewable energy application, decarbonize manufacturing and agricultural industry…, all ideally sound good. But who will, and how programs will be paid? Is this just a grandstanding noise of the young and frivolous junior lawmakers or do they have the reality in making? Once again, communism and socialism have failed everywhere. And even Finland’s universal income has not produced any intended increase in employment… The loud, confusing ideological pontification may be very difficult to disentangle for the uninformed and/or people whose proclivity gravitate to simple keywords like: free money, utopia, vengeance, racist, misogyny against political opposites… More screams and shouting to come…, I am certain.

Market closed early on Friday, 2/08/2019 @:  DOW: 25,106.33;   S&P 500: 2,707.88; NASDAQ: 7,298.20;  Gold: $1,318.20; Oil: $52.71; US 10-Year: 2.634% 

Here are the highlights of the 6th week of 2019:   

1. 1. The State of the Union, Economy... Finally, Trump gave SOTUS and 76% of the people liked his speech. As Trump blasted the socialist policy and emphasizing Liberty and Independence not the government coercion and pointing to death and destruction that are the results of past socialism, further pointing out a current example of so profound disaster unfolding in Venezuela. Other highlights are: He will meet Kim Jung Un of North Korea in Vietnam, Wall will get built, concerns for illegal immigration, highlighted the record number of women in Congress which erupted in a bi-partisan chant “USA, USA…”   Democratic response to SOTUS was delivered by Stacy Abrams… As usual the after SOTUS analysis, pretty much, followed partisan ideological lines.

2. Status of American Economy…     President Donald Trump's State of the Union addressed the U.S. economy a centerpiece of his remarks. While his administration has often been mired in controversy on other issues, the country's economic gains last year give the White House something to crow about.   Here are some key measures of the economy's performance in 2018 to remember. 1) The economy grew at its fastest rate in 13 years. 2) Job creation has been strong by nearly any metric. 3) Wage growth is picking up. 4) The 2018 tax cuts were big, though not the biggest ever. 5) Stocks are up nearly 20%. 6) U.S. trade deficit with China, however, surges. 7) America's total debt keeps climbing.  8) Need Infrastructure spending: Think trillions, not billions, experts say. 9) Prescription drug prices continue rising above the rate of inflation. 

3.     Cut Interest Rate…? According to former FED Chair Janet Yellen: Possible next Fed move is a cut if global growth continues to slow. Former Federal Reserve Chair Janet Yellen said the central bank may have to cut interest rates if a global growth slowdown starts to impact the U.S. Otherwise, she said the U.S. looks solid amid a thriving labor market, strong consumer and contained inflation. Yellen said, weakening economies in China and Europe is posing danger to an otherwise strong U.S. economy. “If global growth really weakens and that spills over to the United States where financial conditions tighten more and we do see a weakening in the U.S. economy, it's certainly possible that the next move is a cut," she said. And, according to Yellen, “So far, the economic data for the United States is solid and strong. We've got as you know about the lowest unemployment rate in about 50 years, continued solid job performance, low inflation."

4.     Free Money for Unwilling to Work.          Ocasio-Cortez's Green New Deal offers 'economic security' for those 'unwilling to work'. The Green New Deal that Democrats proposed Thursday looks to create a more environmentally sound country with economic benefits for everyone, even those who don't want to work. While the resolution patterns itself after President Franklin D. Roosevelt's New Deal, which was aimed at rescuing the country from the Great Depression, the FDR plan did not include a proviso for those willingly idle. The Green New Deal seeks to shift the U.S. to all renewable energy in 10 years. The actual resolution that outlines the Green New Deal does not include the "unwilling to work" part, but the overview document, released by New York Rep. Alexandria Ocasio-Cortez's office, does include the "unwilling" language. The overview entails the "nuts and bolts" of the plan. Ocasio-Cortez identifies as a democratic socialist. Real optimistic? Real aspirational? Realistic? Who’s gonna pay? 

5.     Finland’s Basic Income Experiment.            Result: Test of Finland's basic income: It creates happiness but not jobs.  The universal basic income test fails to boost employment among those participating in the two-year trial, but their general well-being seems to have increased, a report said Friday. The Social Insurance Institution of Finland, or Kela, said "it was not yet possible to draw any firm conclusions" from the first half of the experiment, where about 2,000 randomly selected, unemployed people aged 25-58 got tax-free income of 560 euros ($636) a month with no questions asked. The experiment will end in 2020. Critics say universal basic income reduces incentives for people to look for work. Proponents say it can empower people to start new businesses by encouraging people to try a new job without the fear of losing their unemployment checks or reapplying for benefits. The basic income is below what unemployment benefits pay, which is 32.40 euros a day, or almost 1,000 euros ($1,135) a month — subject to income tax of about 30%. The basic income is tax-free, but barely enough to live on for someone paying rent, so it keeps the pressure on the recipients to join the workforce. The Nordic country's official unemployment rate was 5.4% in 2018.

6.     Estonia, Most Tech-Savvy Society in the World?     Estonia, a tiny country bordering Russia of 1.3 million people became one of the most tech-savvy societies in the world. Estonia has attracted the attention of world leaders, academics and venture capitalists. Taxes are completed online in under 5 minutes, 99% of Estonia's public services are available on the web 24/7 and nearly one-third of citizens vote via the internet. After independence from the Soviet Union in 1991, the country embarked on a series of fast-track reforms to modernize the economy. A key initiative started in education to put computers in every classroom and by 2014 Estonians use the internet from 29% in 2000 to 91% in 2016. E-residency: that allows individuals to start businesses in the country without living there. More than 50,000 people from around the world have applied for e-Residency since it launched in 2014. Digital nomad visa: Estonia is now building on its success with e-Residency to launch a visa for digital nomads; employees who work remotely around the world. Roadblocks? Yes, the journey to becoming a digital society in Estonia hasn't been without roadblocks. In 2007, the country suffered a massive cyber-attack that brought down most of its digital infrastructure. Paradigm change afoot?

7.     Status of China-US Trade War.       Trade war fears mount, and investors rattled after President Trump said there were no plans to meet President Xi Jinping before the US tariffs on Chinese imports kick-in next month. Wall Street opened lower, Europe extended losses. The gloomy mood is prevailing on both sides of the Atlantic, with investors finding very little to cheer. A major factor weighing on sentiment is the lack of progress on trade between the US and China, which is looking increasingly unlikely ahead of the 2 March deadline, at which point 25% tariffs will be imposed on Chinese goods imported into America. As now the mood across global markets becomes distinctly subdued, analysts are considering whether Fed chair Jerome Powell will do them any favors in rate perspective… 

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These are my researches and analysis of the highlights of the week. Perhaps you should take a closer look at them, do additional research and analysis if these are interesting to you. This “7–7 Market Highlights” is presented for general knowledge, the resource for management, and perhaps as a tool for career development, and building wealth. As always, “Think for Yourself”, you decide on your own final analysis and position. 

Mahalo. I welcome your thoughtful comments, “like” notes, and “share” of this publication. 

~ S. Vincent Shin

   www.dhirubhai.net/in/vshin

References and Image credits to Bloomberg News, Getty image, AP Photo, Reuters, CNBC..., and special thanks to Image & Visual Consultant @U.Y.