INSUBCONTINENT EXCLUSIVE:
By Mark GongloffToday’s Agenda
· Trade wars and stocks
· Big Government’s comeback
· Grading the ECB Bitcoin bloodbath
· The World
Cup’s costs and benefits
Maybe Trade Wars Are Bad and Easy to LoseAn old Wall Street saw says “Buy on the sound of cannons, sell on the
sound of trumpets,” meaning stock traders see wars as buying opportunities
The story may be different if those cannons are aimed at their wallets, however.
Until recently, President Donald Trump’s waving of the
trade-war stick at China and various allies has generally elicited stock-market yawns
But Trump's new tariffs on Chinese goods today may have been a hot pot of coffee
China fired back with massive tariffs of its own, and Trump has threatened to retaliate for China's retaliation
Suddenly the trade wars seem to matter a bit more to stocks; the SP 500 fell about one percent before recovering at the end of the day
And trade wars matter in some quarters more than others
Qualcomm Inc.’s pending merger with NXP Semiconductors NV is suddenly complicated, notes
Alex Webb
China’s government is telling big U.S
companies doing business in China to "buckle up" should Trump follow through on his anti-trade vows.
Trump’s former economic adviser,
“Globalist” Gary Cohn, has said trade wars could cost the U.S
economy $2 trillion – wiping out the Trump administration’s claimed tax-cut boost
That may overstate the damage, writes
Stephen Gandel – but not by much
Comparing the market valuations of big-company stocks against those of small companies – which you’d expect would feel a trade war less
– Steve suggests trade agita might already have shaved $1 trillion from big-company values:
And the way companies have spent their tax
cuts – on buybacks and mergers rather than investment and hiring – just so happens to be what a company would do if it was worried a
trade war might blow up in its face, notes
David Ader.
Trump seems to pay attention to the stock market, and too much howling there could
make him cool his trade cannons
But maybe it’s better to hide from them now and sound the trumpets later.
Big Government’s Not Dead YetWho said, “The era of big
government is over” Was it:a – Ronald Reagan
b – George H
Bush
c – Bill Clinton
d – Herman Cain
The answer is c, Clinton, which may surprise you; it's something you'd expect a Republican to say
But it reflected the zeitgeist when Clinton said it in 1996, 16 years after Reagan’s small-government revolution
And now, in another surprise, with a different Republican in the White House, big government is coming back.
Again, this may seem
incongruous; Trump has been hacking away at regulations and the social safety net
But he's also using government to intervene in free markets and prop up dying industries.
Meanwhile, socialism is making a comeback in
America’s popular imagination, notes
Noah Smith:
Maybe so many decades have passed since Americans elected Reagan to fight big government
that we forgot why we ever worried about it
Maybe it was the exciting presidential run of the openly socialist Bernie Sanders
Maybe the GOP's relentless attacks on government services make people appreciate them more
And maybe problems like yawning inequality and a dismal health-care system just obviously call out for big-government answers like, say, a
guaranteed job or Medicare for all
It might not be long before another president openly embraces Big Government again.
Easy Does It, ECBThe European Central Bank is taking its
sweet time pulling the props away from Europe’s economy, and that's a good thing, write
Bloomberg’s editors
The economy looks like it could use some help again – although European governments could stand to learn to handle their own
problems.
Bitcoin BloodbathBitcoin prices have plunged by two-thirds over the past six months or so, and there’s no sign of a bottom yet
Lionel Laurent points out that the cryptocurrency’s whole investment thesis has so far been based not on the growing adoption or utility
of bitcoin, but on finding a greater fool to buy your bitcoin
For some reason, those fools have gone missing.
The World Cup: A Cost-Benefit AnalysisToday was the second day of the World Cup in Russia
Morocco wrecked my temporarily Bloomberg LP-leading bracket by forgetting how to score, in its opponent’s goal anyway
The fact that I noticed that during my work day is a reminder that big sporting events like these can be hell on productivity
Maude Lavanchy and
Willem Smit try to figure out just how much economic value these things destroy
But hosting the World Cup in 2026, as the U.S
will do with Canada and Mexico, won’t cost the country much, points out
Conor Sen
In fact, it could be a big moment for the U.S
to rebuild the bonds with its neighbors and the world that Trump has been busy trying to break.
Leonid Bershidsky and Mac Margolis, on the
other hand, wonder how much the World Cup even needs the U.S.
Chart AttackTara Lachapelle and
Elaine He look at all the crazy places Media
Mega Merger Madness could take us, with the Media Merger Wheel™️:
Citigroup is increasingly getting into some risky business, writes
Stephen Gandel.
Speed RoundA Bernie Madoff feeder-fund manager has come out pretty sweet
–
Joe NoceraOPEC’s meeting next week can’t paper over its structural problems
–
Liam DenningNot even Oprah can solve Apple’s entertainment problems
–
Shira OvideWe should change securities laws so everybody can invest like Harvard
–
Nir KaissarThe Justice Department’s inspector general report mainly revealed irony
–
Eli Lake(This column does not necessarily reflect the opinion of economictimes.com, Bloomberg LP and its owners)
