Economy

We’re Down to “Basketball Diplomacy”

By David Stockman  |  October 8, 2019

The Donald’s sudden move to withdraw U.S. troops from northern Syria – and we’re setting aside the “Forever War” aspect of the issue – starts the clock on the “who among Senate Republicans will flip?” watch.

The smart money’s on Mitt Romney…

Meanwhile, equity markets are buckling, again, and the yield on the 10-year U.S. Treasury yield has dipped to 1.51% this morning.

Markets rallied off last December’s lows despite deteriorating economic indicators, declining earnings, and weakening revenue growth. We’ve seen historically high valuations all on hope that the Federal Reserve will cut interest rates and start buying financial assets again…

Whether and how long this can endure is one of the questions I’ll answer in my Keynote Address at the Irrational Economic Summit this Thursday evening… (Click here to join us via livestream…)

It seems impossible to imagine this being the case, but the U.S.-China Trade War has almost been reduced to a secondary issue.

Here’s Chris Scott to remind us why it matters.


Life After No U.S.-China Trade Deal

By Chris Scott

The Trump administration’s China policy can be summed up quite accurately as stages in our nation’s collective grief regarding a failed relationship.

Following a decades-long initial phase of denial with the Donald’s election, our country entered stage two: anger. Tariffs were abruptly heaped upon Chinese goods in hopes that Beijing would change its state-commanded economic model and stop pilfering U.S. technology.

That was never a possibility, but the anger was always a necessity as we attempted to process a new reality.

Anger quickly gave way to the third step in processing a loss: bargaining.

Investors and corporate executives have been the most emblematic of this confusing period, telling us at every turn how we can salvage our unsalvageable relationship with China.

Alas, it was not to be. The stability of the most important economic relationship in the world was always predicated on the idea that China would stay a comparatively weak, developing economy with no designs on exporting its authoritarian ideology overseas.

Before we can come to accept the fact that this breakup is upon us, we must suffer through a period of depression, the symptoms of which are on full display in news headlines this week.

A Reckoning for the NBA

The descent of Hong Kong from shining metropolis into a dystopian hellscape has come swiftly.

China was moving to impose its authoritarian, one-party system on the people of Hong Kong, out of fear that Mainland Chinese would grow jealous under the status quo. But the citizens of the “Special Administrative Region” did not want to become residents of “just another Chinese city.”

If there was ever a doubt that Beijing wanted to export its ideology through coercion, its fixation on a single Tweet from one NBA executive has cleared that up.

Houston Rockets general manager Daryl Morey helped us process our grief over the weekend when he called for people to support Hong Kong protestors. The NBA quickly said it was “regrettable” if Chinese were offended, prompting criticism that it failed to stand up for the values of democracy and freedom.

But, notably, NBA Commissioner Adam Silver has refused to apologize for Morey and has supported his right to expression, even while China has confirmed it will halt broadcasts of NBA games.

The Chinese Foreign Ministry said tersely through a spokesperson that the NBA “knows very well what it should say and do next.

We shall soon see; Silver is traveling to Shanghai as I write this.

Acceptance

It may come as a surprise to know that the (American) basketball is the most popular televised spectator sport in China. Chinese people have very little interest in the Chinese Basketball Association.

The NBA has such a devoted following among the youth of China that banning the games actually presents a “social stability cost” for China, as one Ammerican observer recently noted.

The NBA has leverage and it will be forced to test this. Americans are finally waking up to China’s bullying tactics.

We are moving into the fifth and final phase of coping with our grief, a reality made clear by the blacklisting of Chinese tech firms on Monday.

The Commerce Department said that 28 firms and government bureaus, mostly technology-related, can no longer do business with U.S. companies.

The entities “have been determined by the U.S. Government to be acting contrary to the foreign policy interests of the United States,” and are complicit in “China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs and other members of Muslim minority groups,” the department said.

As American public backlash is beginning to keep Corporate America from fully kowtowing to Beijing, and as Washington turns the screws, we are moving into the final stage of grief.

No negotiating, no matter how skillful, can prevent this acceptance from setting in.

After “Peak Trump”: Charting Uncharted Waters

I’m finishing up preparations for my Keynote Address at the 2019 Irrational Economic Summit, which is happening the evening of October 10 – right outside Imperial Washington.

This is the most politicized market in history, and the Tweeter-in-Chief is still in charge. So, the situation is changing almost by the minute.

The good news is you don’t have to dare the Swamp to join us folks, because you can watch my Address as well as presentations from some of the brightest minds in finance and economics from the comfort of your own home with a Full-Access Livestream Pass.

The stakes are as high as they can be heading into 2020. The U.S. presidential campaign is already well underway. Markets appear to be straining, catching up to an economy that’s been weak and getting weaker for years.

The Donald is tied up in the day-to-day movements of the major stock indexes like no president before him. The increasingly desperate and soon to be impeached incumbent will do anything he must to hold the White House.

That’s why I’ve titled my Keynote Address, “After ‘Peak Trump’: Charting Uncharted Waters”.

Leviathan gets bigger, Wall Street gets richer, and Main Street… well, Main Street gets more and more little every day.

We’re rapidly approaching the end of the oldest, weakest economic “recovery” in American history. At this major tipping point, there’s no telling what the Donald’s great disruptions could do to your wealth.

Click here to learn more about the Full-Access Livestream Pass to the 2019 Irrational Economic Summit.

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR