May 22, 2019

Good morning!

The tension between the USA and China appeared ready to explode early last week on Wall Street.  Monday’s drop (5/13/19) pushed the broad stock market decline to nearly 5%, halfway to a 10% correction in less than a 2-week period.  But equity investors instead pivoted away from pessimism for now, concluding that both sides have more to gain from compromise than confrontation.  China’s economy, already fragile from an excessive debt buildup, has little appetite for a blowup with the world’s largest economy.  The Trump White House believes an amicable settlement between the two countries is possible while it still continues to press China to keep its previous commitment to protect the intellectual property rights of US companies (source: BTN Research).                                     

The trade war with China however has set in motion an unintended change that could upend the current global supply chain that largely runs through China.  Many American companies are building goods in the United States that consist of parts imported from China, now at an ever-increasing cost.  Dragging out the trade negotiations between Washington and Beijing will force the hand of US companies to identify suppliers in other countries, e.g., South Korea, Brazil, Taiwan and Germany (source: BTN Research).    

The greatest number of births in US history (4.32 million) occurred in calendar year 2007, equal to 8 babies born per minute for the entire year.  The 3.79 million births that occurred in 2018, the lowest American total since 1986, is equal to 7 babies born per minute, translating into fewer future taxpayers (source: Center for Disease Control).  

Notable Numbers for the Week:

1.     NEW JOBS - 92% of the 820,000 new jobs created in the United States YTD through 4/30/19 are in the private sector, i.e., non-government jobs (source: Department of Labor). 

2.     ON THE EDGE - 31% of 1,010 working adults surveyed in February 2019 say they would not be able to pay for daily necessities without utilizing credit card debt or accessing their retirement savings if they were to miss just a single paycheck.  51% of those surveyed say they would have to use a credit card or dip into savings if they were to miss more than 1 paycheck (source: National Opinion Research Center). 

3.     IMPACTED BY TARIFFS - 41% of the apparel and 72% of the footwear produced worldwide is manufactured in China (source: American Apparel & Footwear Association). 

4.     IT’S WHY THEY ARE EXPENSIVE - 88% of the drugs that enter clinical trials do not receive FDA approval and never come to market for sale to the general public (source: Tufts Center for the Study of Drug Development). 

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