Okay, it’s not quite a trade war, but the Chinese have threatened to slap a tariff on imports of chicken feet from the US, in retaliation for our putting a steep tariff on tire imports from them. Interestingly, and this shouldn’t surprise most of you, there isn’t much demand for chicken feet here, but there is in China, so it’s a nice little bonus market for chicken producers.
Madeleine and I talk about that, as well as Eli Lilly’s job cuts and President Obama’s financial-reform speech in today’s edition of Tomorrow’s News Today.
US stocks finish modestly higher, after dropping in the morning amid anxiety over trade tensions between the US and China.
DJIA adds 21 (0.2%) to 9627, S&P 500 gains 7 (0.6%) to 1049, Nasdaq Comp rises 11 (0.5%) to 2092. The Dow’s up six of the past seven sessions, and is now up 9.7% on the year, as well as up 47% from the March 9 low of 6547. Doesn’t that seem like a lifetime ago?
Stocks dropped at the open, as the trade recriminations between the US and China heated up over the weekend, and, we’d bet, Smoot-Hawley became a top Google search. But with two meetings between the nations coming up, and with the knowledge that both sides need each other, most people don’t think this tiff will escalate into something deeply destructive.
It’s hard to believe this is the one-year anniversary of Lehman’s collapse and the financial crisis that ensued — especially since not much has changed to prevent another crisis from happening again.
The government’s decision to let Lehman fail has widely been regarded as a huge mistake that triggered the crisis, but NYT’s Joe Nocera argues Lehman wasn’t the cause of the crash, but merely “the spark that turned a serious subprime crisis into a financial meltdown.”
Increasing risk, leverage and reliance on easy profits were the real causes of the crisis.”If Lehman hadn’t brought the whole thing down, something else would have,” Nocera says. “It was pure dumb luck that Lehman went bust.”
There’s no denying how bad the outcome was at Lehman, but saving it meant some other event would’ve ultimately served as the spark for the crisis. “And the likelihood is that that spark would have been far more dangerous,” Nocera says.
The Dow dropped more than 500 points after that fateful weekend when Lehman filed for bankruptcy and Bank of America (BAC) scooped up a teetering Merrill Lynch. But only a few days later stocks recovered a bit on hopes that the government would step in and backstop the financial system.
Of course that’s exactly what ended up happening, with the $700 billion TARP plan. But not before the real panic ensued when the Dow dropped 777 points on Sept. 29 after the House initially rejected the TARP plan.
The initial reaction to the Obama administration’s China tariff hasn’t been too cheery, to say the least, so comparisons to the Smoot-Hawley Tariff Act certainly aren’t helping matters.
In a nut shell, that act passed in 1930 taxed foreign imports and had a devastating impact on the economy, playing a major role in the Great Depression. But instead of giving you a longer textbook definition of the act, we’ll draw your attention to Ben Stein’s classic scene in “Ferris Bueller’s Day Off.”
We don't see trade tensions in this recovery's recipe.
Bloggers aren’t fans of the new China tariff.
The Obama administration’s decision to impose a 35% tariff on Chinese tire imports is getting bashed in the blogosphere as observers question the timing of the move, not to mention the fact that China is one of the biggest holders of US debt.
But Obama’s decision is seen as a signal to labor unions that he wants to strictly enforce trade laws. United Steelworkers, which represents American tire workers, is seen as a major winner.
It didn’t take long for China to retaliate. It said yesterday it’s considering imposing tariffs on American exports of cars and chicken, prompting thoughts of a trade war occurring sooner rather than later.
Posted by Paul Vignaon September 14, 2009 Autos, Markets, Media /
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So I caught GM’s new ad over the weekend, the one with freshly minted CEO Ed Whitacre walking through what looks like a set that’s supposed to look like a real engineering lab and touting GM’s cars.
Let’s be charitable and say that in his first try out of the box, he’s a little stiff. While the braintrust at GM probably hoped he’d be a latter-day Lee Iaccoca, he’s doesn’t quite manage the swagger of the old Chrysler chieftain.
Back in the ’80s, when Chrysler had, as Iaccoca put it, “one foot in the grave,” he became the face of the company, and in some ways, the face of America, an America struggling to keep up with the competition, which was handing us our lunch.
Iaccoca was a natural pitchman. Whitacre, meanwhile, well, he’s just not a natural pitchman. It’s not that the messages are that far off, actually. But there is one key difference.
“A lot of people think America can’t cut the mustard anymore,” Iaccoca starts off, dismissively. He’s loose, he’s charismatic, he’s bold. He brags about his cars with such an easygoing manner, you don’t realize the outrageous claims he’s making. He says, we’ll build cars as good as BMW and Mercedes. He says, we’re going to beat Japan at its own game.
Some early weakness for US stocks suggested by premarket equity futures, as stocks and commodities prices retreat around the globe.
Increasing trade tensions, strong yen being blamed for the softer tone, though the sheer fact that stocks have gone as far as they have in the past six months leaves them vulnerable now on any given day.
Three Fed officials scheduled to speak today, and President Obama also set to offer comments on the financial crisis. No economic data due, but week’s busy beginning tomorrow, with August PPI and retail sales. CPI, industrial production, housing starts and regional manufacturing gauges also due this week.
S&P futures down 7.40; DJ futures down 60. Ten-year a tad lower, yield at 3.36%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
The bridge that collapsed on Interstate 5 bridge over the Skagit River in Washington was listed as “functionally obsolete” and “fracture critical,” which means the whole sha-bang could come tumbling down if one major part fails. Click here to read the details from USAToday. This sort of thing shouldn’t be happening in a modern, developed nation. Barry LePatn […]
