Deal Or No Deal?: There Will Be No China “Trade Agreement”- By NEIL SISKIND

If you’re making certain business and investment decisions with the hopes and expectations of a U.S.-China trade agreement, I would urge you to curb our enthusiasm as follows:

1. We have never had a “trade agreement” with China. It’s not like NAFTA, where we have to replace a prior trade agreement. The “agreement” is this: If you stop violating international laws and accepted global trade practices, and you can regain access to our market, without tariffs.

It’s no different than the trade agreement offered for the past year, which China has refused. We won’t be executing any “trade agreement” as you know one- meaning, a preferential or free trade agreement between or among parties in order to reduce (or eliminate) tariffs, quotas, and other trade restrictions on items traded between the signatories; where both, or multiple countries, loosen their trade restrictions to help out businesses so that they can prosper better between the different countries. Under this definition, no bilateral, mutual, trade agreement will happen- at least not anytime soon.

Any trade understanding (or agreement to try to agree someday) between the parties will be a list of terms and requirements of China in order for it get U.S. market access, sans tariffs- which may include immediate removal of tariffs on U.S. goods and purchases of more U.S. products. It will be a unilateral obligation- not a “trade agreement”.

2. The term “trade war” over-simplifies this dispute. This dispute’s inceptions was not one nation’s implementation of tariffs and barriers, or the use of subsidies or dumping, to protect a market or industry, followed by another nation’s similar response. China has been operating in an unacceptable manner in contravention of global practices and acceptable legal and commercial standards for many ways. China’s practices are not just to protect a product or an industry, but the use of a mercantile approach, and illegal activity, and oppressive terms, to gain global power, to which the U.S. has- finally- responded. That’s more than a trade war and tit-for-tat tariffs. Our tariffs on China goods are more like sanctions for practices and behaviors contrary to accepted global trade. Theft, corporate espionage, economy-wide subsidies, forced technology transfers, forced joint ventures- things that go beyond tariffs or trade barriers are at play. There are barriers to operating in the Chinese markets that affect all aspects of commerce, law, trade, and monetary policy. When you look at the situation through this lense, you see why we do not have a typical “trade war” and why we can’t expect a typical, or easy, or immediate, resolution, but, rather a solution that is more multifaceted and multidimensional, and multi-year, in nature.

3. Allies enter into trade agreements to expand and guaranty free trade relationships. Adversaries do not enter into trade agreements as a way to resolve animosities and differences. Trade agreement, like any other agreements, require signatures- but also mutual respect and trust.

4. A temporary deal, or a deal with conditions or contingencies, is not a “trade agreement”. I suspect there will be a tariff deal with China where we will lower our impending 25% rate on China’s goods to 10% or 15% with a time frame for China to alter its practices, while China removes tariffs on our goods- particularly, any retaliatory tariffs- and makes an agreed amount of purchases of U.S. products. The material and substantive differences between a “deal on trade” and a “trade agreement” is the permanence, or lack thereof, of terms. There can be no permanence, and, thus, no certainty for businesses (and for investors) if a deal has numerous qualifications and deadlines. That is not a trade agreement- that is an agreement to maybe agree in finality upon the occurrence of complex contingencies. A resolution of the trade war is not just about sales to China; that would just be a stop-gap measure for China. It’s about “finality”, “certainty”, and clear rules of engagement, such that supply-side business planning and investment that stimulates economic growth is incented and can flourish.

Is it just semantics? No. If the Trump administration announces a “deal” has been reached, the first question is:

Does China have to do anything to keep the tariff rate from rising? If the answer is “yes” (and the list is long), then it’s not a trade agreement- and it’s uncertain.

The core differences between a “trade agreement” (and of any agreement) and a less valuable “working structure” or “agreement with conditions”: “the essence of finality” and “a reasonable certainty of terms over time”.

A trade agreement has tariff rates (or zero rates) that are fixed and final (unless one party violates their tariff rate or manipulates the sale(s) of a category of products or of an industry to benefit its own countries’ companies and/or industries). The tariffs in a “trade agreement” are not contingent on one party making structural political, legal, and economic changes to the satisfaction of the other. Such conditions, complexities, contingencies, cause A lack of definiteness and lack of clarity in the relationship.

You can call it an “agreement” you can call it a “deal”. Whatever it’s called, if it’s not “final”, or “certain”, and if it’s filled with conditions and contingencies- it’s not valuable to a company or to an economy.

From a legal perspective, a promise for a promise creates a binding agreement. But, from a business planning perspective, without “finality” and “certainty”, can it really be said that a useful deal has been made, one upon which accurate business investments, capex, and quantifiable capital risks can occur?

If an announcement comes from the Trump administration that a “deal” has been reached- look beyond the headline print … and read the fine print.

5. If China really wants a trade agreement, and truly plans to change, why show up at the G20 entirely empty-handed?

6. What’s past is prologue. Since the G20, China has done nothing to show good faith or to gain our trust or show any intention to change:

It has not passed a law to stop its people from mailing Fentanyl to Americans, as promised.

It agreed to implement only a “temporary” auto tariff reduction, and only back to the level where it already wrongly was- and hasn’t even done it.

And, oh … yes …  China bought some edamame from us.

Are these the bases for all our hopes?

7. The more U.S. products that China agrees to purchase, the more persuaded I am that they want to avoid other non-tariff related topics or changes. China’s leaders no doubt believe that if they target the Trump administration’s financial sensibilities, they can avoid more significant legal and political changes.

8. I take President Xi Jinping’s recent comment related to nothing interfering with its determined policy on Taiwan, as a strong warning to the U.S. “Foreign interference in China’s Taiwan reunification issue is intolerable”, Xi said. There are more than tariff and economic issues separating the parties, including power and influence over North Korea.

9. President Trump has not exactly been solidifying agreements during his presidency: N. Korea, China auto tariffs and Fentanyl laws, health care reform, USMCA finalization, the govt. shutdown … this president’s track record for finalizing agreements is unimpressive. We are still yet to see if China will agree to any or many of the administrations requirements.

 

Even if China completely capitulates, in many ways, there still will be no trade agreement.  Unless the President completely abandons his concerns and principles on China’s trade practices and economic structure, China will have to pay tariffs for access to our market until new policies and behaviors begin and are verified with benchmarks, standards, and inspections. Changed practices, especially on allowing foreign ownership in all industries, can only be established through a pattern of many transactions, which, by definition, will require time.

Some people think this is now about optics– and any sort of positive announcement on the relationship and the resulting good optics will be enough for the markets and for America. Those people would be wrong. This is about revenues and margins and the economy.  Optics won’t help with business planning and visibility. Stocks can never do well over time without good earnings- which require reasonable levels of visibility into costs, pricing, and supply chain management issues. Sure, stocks might rally on news of “an agreement to maybe one day agree” … but earnings will be the ultimate decider. Anything other than a binary approach to either raise tariffs to a fixed long-term rate (at least until all required changes are made), or to totally forego any tariffs on China in exchange for certain immediate actions, will cause a continued lack of certainty and visibility for businesses.

Keep two thing in mind when your optimism tells you that we may soon have a good trade agreement with China:

First, we still haven’t even been able to finalize a trade agreement with Canada!

Second, the Trump administration can’t even get an agreement on international issues (immigration) with the Democrat Party … but you’re banking on one being reached with the Communist Party?

Anything less than a binary result- either a permanent tariff rate, or permanent removal of tariffs, means that in our relationship with China, uncertainty … is for certain.

 

 

____________________________

endnote

China made an enormous miscalculation with retaliatory tariffs to our retaliatory tariffs. Our initial tariffs were in retaliation to years of unfair and illegal trade practices by China, which we have been complaining about for decades, through several presidential administrations. For China to retaliate to our tariffs for activities and practices that we explained and complained were unfair, and to which we were retaliating, was an act of complete disregard for international relations, international law, international practices, and for the interests or concerns of any other nation except for its own. Rather than address our retaliatory tariffs, China chose to challenge us, attempt to one-up us, antagonize us, and create a riff in relations, with the goal of continuing its practices of IP theft, corporate espionage, and protectionism, and ransacking our technological innovations; and China’s economy is paying a price for its leaders’ arrogance and decision to agitate an enemy, rather than cooperate with the world. Perhaps the Chinese leadership needs to re-read Sun Tzu’s advice in Art of War about understanding their enemy- and themselves. Or perhaps, in the long run, China will prevail in their long-term ambitions. Only time will tell. After all, Sun Tzu’s strategies are long-term ones that are grounded in fortitude … and patience.

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There Will Be No China Trade Deal!- by NEIL SISKIND

First of all, we never had a China trade deal in the past. It’s not like NAFTA, where we need to replace something that we have. We don’t need a “trade deal” with China. The “deal” is: “Stop breaking the law and defying international trade rules and practices, and then we will accept your products without tariffs”. That is the “deal”. We are not signing anything.

Moreover, China has to go first. We will not be providing access to our market without tariffs to help China keep growing until we see changes in important behaviors- which will take months- really, years. We’re not going to allow China to get its footing back and back on its path of world conquest just to find out that it isn’t doing what it promised- again. How about: “No trust and verify”.

There will be no China “trade deal”. If anything, we will be in a military conflict with China in the next few months over the Taiwan issue.

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 8 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

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Trade: China Is Ruining The World- by NEIL SISKIND

The U.S. did nothing wrong to China. China has had years of protectionism, mercantilism, and illegal behaviors, and has refused and declined to abide by international expectations, laws, and activities related to trade, and has failed to allow fair access to its market.

The U.S. responded (finally) to these protectionist and illegal activities, with tariffs.

China should have stopped there, and started negotiating with us.

This would have been difficult enough for China.

But, instead, it chose to retaliate to our retaliation to their protectionist, illegal, and mercantile activities (after many years of patience on our part)- which showed the world what China really is- a bad actor on the global stage that is just looking for power and trouble.

And now they are starting even more trouble by asserting power over Taiwan.

China is a troublemaker nation. It has no respect for national autonomy- except for its own- and has no respect for law, human rights, being a member of a global community- or anything right or just. It deserves its recent decline- and we are right to stand strong.

China should never have retaliated to our initial tariffs. It was arrogant, greedy, short-sighted, and detrimental to its own goals in all respects- and harmful to world peace.

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 8 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

Sponsored Advertisements

Inventors, IP Owners, Manufacturers
Learn How To Bring Products To Market And To Expand Your Distribution Channels
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Prepare Yourself for 2019! The Fed, China, N. Korea, & Trump- By NEIL SISKIND

Here are the major things you should prepare for in the new year:

  1. The Fed is determined to slow the economy. While it may become more dovish and raise rates less than previously expected, this would only be in response to much tighter credit, lower earnings, contracting GDP, and lower asset values. Do not underestimate the Fed’s intent to slow this economy- which does not mean lower inflation- because there isn’t any- but means lower asset values, and whatever that brings with it- including lower profits and higher unemployment. Invest accordingly- now.
  2. As U.S.-China negotiations continue, the relationship will sour further as it becomes clear that little common ground and compromise is possible because our cultures are too divergent, and our respective values too deeply entrenched, causing frustrations to grow. The trade conflict will escalate- no matter how much edamame the Chinese agree to buy from us.
  3. North Korea will rise as a major irritant on the world stage as it seeks to stoke the flames of the U.S.- China dispute and seeks all the benefits it can achieve for itself from the divide. North Korea will present a major threat to global stability starting in the first half of 2019.
  4. The U.S. and China will face a potential military showdown in the South China Sea, which may begin as a potential military conflict between China and Canada, which has been our proxy for actions against China, or over a U.S. military action in North Korea from the air or sea.
  5. We need to now see how this shocking U.S. withdrawal from Syria unfolds in terms of new terror threats- which I believed, and was thrilled, were nearly cured by the President; so, I am not sure what he is thinking. I await more facts. I suspect that a military conflict in Asia is possible (most likely with N. Korea, though possibly also with China over territory issues- not over trade … although all issues with China are connected and inter-related at this point).

2019 is going to be a thrilling and terrifying year of global events from Europe, to Asia, to the Middle East- to the United States. What else would you expect from a real time global version of “The Apprentice”, where everyone is competing to make a profit and to survive and move to the next level before Donald Trump lays down the hammer?

Lights … cameras …

roll ’em!

 

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

Sponsored Advertisements

Inventors, IP Owners, Manufacturers
Learn How To Bring Products To Market And To Expand Your Distribution Channels
The Complete Guide To The Ways To Manufacture & Sell Your Products

 

 

“Synchronized Global Growth” Is Now “Synchronized Global Slowth”

A phrase first coined in 2018 New York City business attorney, Neil Steven Siskind, “synchronized global slowth” (or “synchronous slowth”) is the occurrence or condition of multiple emerging market and developed market economies commencing a downward trajectory of economic and GDP growth, or actually contracting to a point of slow, stagnant, or negative economic and GDP growth, at simultaneous, or nearly simultaneous times, largely, or, at least in part, due to rising interest rates and/or stricter lending regulations (such as rising reserve requirement ratios and stricter bank balance sheet requirements) in the larger, more developed or fully developed economies, such as the United States and China, resulting in diminished liquidity in those economies, and, thus, diminished liquidity and less available dollars in smaller, or emerging economies, in turn. Slowing consumer demand and business spending in the larger more developed economies that result from a constrictive monetary policy, results in less export business for the smaller emerging economies which often depend on the larger economies to buy their goods, and in further economic slowth. Rising interest rates in the larger developed markets force weaker emerging markets to, likewise, consider raising their own interest rates to protect their respective currencies, even as their economies weaken- further expanding the breadth and enhancing the depth of global economic slowth. Currency issues resulting from rising rates or tighter lending rules, play a particularly large role in “synchronized global slowth” as the U.S. dollar strengthens from rising interest rates, making repayment of the dollar-denominated debt of many countries more costly to repay, creating additional global slowth. Political factors, such as trade disputes in large economies leading to trade barriers, including, tariffs, may also play a role in the occurrence of “synchronized global slowth”.

There’s No China Trade Deal Coming- By NEIL SISKIND

The term “trade deal” is being thrown around by the media. There will be no “trade deal” as we know it. At best, if China makes the required changes, we would go back to the prior manner of doing business before the tariffs. We never had a China “trade deal” before, and don’t need one. At most, we’d have a reversion to prior business- with benchmarks and verifications. We have no reason to promise anything to China for their agreement to act as a fair trading partner and provide to us what we’ve been providing to them- law and order, market access, and free and fair markets. There’s no “deal” for us to sign on that. They just have to do it.

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

Sponsored Advertisements

Inventors, IP Owners, Manufacturers
Learn How To Bring Products To Market And To Expand Your Distribution Channels
The Complete Guide To The Ways To Manufacture & Sell Your Products

 

President Trump To President Xi: Mr. Xi, Tear Down This Chinese Wall- By NEIL SISKIND

People who are hoping for, or contemplating, or expecting a U.S. trade deal with China at the upcoming G20 (or anytime soon thereafter) are really not paying attention. They are caught-up in how the NAFTA-USMCA process went, and they are caught up in President Trump’s own language and bravado about his negotiating skills.

The U.S.-China situation is different than any other deal or circumstance.

Donald Trump didn’t become president just so that he could tweak some trade deals, pass some tax cuts, and then head home. Trump- like any other man- perhaps more than many other men- wants to effect change. He wants to have a real and valuable impact on history- like any president does. In Trump’s case, it’s a valuable impact on American history that he desires, more so than on world history (though the former, necessarily, causes the latter).

President Trump will not be content to just return to his apartment on Fifth Avenue in a few years and go back to yelling at CNN through his television screen as he drinks champagne cocktails and imagines the kind of country in which he wished he lived. This is his chance to make America the way he wants it. No man- and certainly not Donald Trump- would squander that opportunity.

The Trump-Bannon doctrine in relation to China is that it’s east vs. west, and us vs. them. This is a battle over who will control the world in the 21st century.

So, what does President Trump want?

President Trump wants a strong economy. But, more than that, he wants a great legacy. He wants to be the man who made America great (again). Going long of Donald Trump’s ego is a trade on which one will never lose money.

President Trump wants power and influence over North Korea and that valuable real estate (for America, not for himself), he wants to limit China’s economic and political colonization of countries in Asia and Africa, he wants fair and honest environmental, labor, and Intellectual Property laws and practices in China, and he wants a China that plays by the same rules as the rest of us. Trump wants China’s mercantilism, with it’s negative effect on U.S. labor, and China’s use of it to grow into a world power at our expense, to end; and he wants U.S. companies and investors to have the same access to China’s markets and assets as Chinese companies and investors have had in the United States.

The Trump administration is looking more and more like the Reagan administration, with many of the same Republican players, a creation of the media at the helm, low taxes, big deficits, a cold war environment with some occasional military chest-thumping, a peace through strength attitude, and a determination to defeat communism and totalitarianism and restore America to its glory as the world’s leader, in all respects. President Trump, with regard to China, is mirroring and attempting to emulate President Reagan in how he successfully pushed the Soviet Union to the brink by forcing it to spend itself into submission, while growing the U.S. economy as large as possible. Reagan wasn’t looking to sell the Soviets more products- he was looking to remove the Soviet Union as a threat to U.S. values, and security, and power. Why would you think that President Trump wants anything less?

There will be no trade deal (though the new tariffs scheduled to take effect in the new year could be temporarily delayed, pending a resolution). Steve Bannon and Jack Ma probably have it right when they suggest that we are at the beginning of a generational conflict without clearly delineated battle or finish lines, or time frames. As tensions rise between the U.S. and China in the South China Sea, over Taiwan, over North Korea, and in the global economy, the trade dispute is but a mere symptom of (and, perhaps, a mere red herring for) a growing U.S.-China power struggle for world dominance- and President Trump isn’t going to settle for anything less than a total win (or, at least, the establishment of a clear path for future victory)- which will require China to change its economic and legal structures, its behaviors, beliefs, strategies, and even its ambitions and time frames.

President Trump’s message to President Xi:

Mr. Xi: Tear-down-this-Chinese-wall!

 

 

________________________

endnotes

  1. China’s most recent PMI report was in-line with expectations. It was, actually, very likely, much lower than forecast, but revised higher by the Chinese government. China is, no doubt, loath to arrive at this G20 and negotiations with President Trump appearing to be in any more of a desperate condition than has already been made known.
  2. China will never cave to one demand of the United States, in particular: That China not provide subsidies to its state-owned enterprises. This practice goes to the essence and to the very core of China’s modus operandi.
  3. Any “framework” or agreement to talk further that comes out of the G20 meeting between the U.S. and China would not be helpful to markets, as such a vague result will not allow companies to properly plan-out their manufacturing businesses or allow non-manufacturers to have complete visibility into their future operations costs. Markets and businesses need some level of certainty, and a mere “framework” for further talks will not provide that.
  4. Update: As I expected, no trade agreement was reached at the G20 meeting between Presidents Trump and Jinping. President Trump’s decision to delay implementation of the new tariffs, with very little quid pro quo from China for his forbearance, is an indication that Trump is very concerned about the potential economic impacts of tariffs as the U.S. economy is slowing. Whether President Trump will see-through his plan for new tariffs remains to be seen- in about 90 days. Regardless, no trade deal with China will ever be made containing anything less than all, or most, of the Trump administration’s demands- a deal that China is highly unlikely to do. Whether the new tariffs are levied or not when it becomes clear that no trade agreement is possible, the relationship between the two nations will deteriorate from there. There are many other legal measures beyond the levying of tariffs that the U.S. can take to interfere with and challenge China’s global activities, and there are many other ways for the U.S. and China to clash in and around the world.

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

Sponsored Advertisements

Inventors, IP Owners, Manufacturers
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The Complete Guide To The Ways To Manufacture & Sell Your Products

 

China & The G20: Some People Are Way-Underestimating Trump’s Ambition- By NEIL SISKIND

People who are hoping for, or contemplating, or expecting a U.S. trade deal with China at the upcoming G20 (or anytime soon thereafter) are really not paying attention. They are caught-up in how the NAFTA-USMCA process went, and they are caught up in President Trump’s own language and bravado about his negotiating skills.

The U.S.-China situation is different than any other deal or circumstance.

Donald Trump didn’t become president just so that he could tweak some trade deals, pass some tax cuts, and then head home. Trump- like any other man- perhaps more than many other men- wants to effect change. He wants to have a real and valuable impact on history- like any president does. In Trump’s case, it’s a valuable impact on American history that he desires, more so than on world history (though the former, necessarily, causes the latter).

President Trump will not be content to just return to his apartment on Fifth Avenue in a few years and go back to yelling at CNN through his television screen as he drinks champagne cocktails and imagines the kind of country in which he wished he lived. This is his chance to make America the way he wants it. No man- and certainly not Donald Trump- would squander that opportunity.

The Trump-Bannon doctrine in relation to China is that it’s east vs. west, and us vs. them. This is a battle over who will control the world in the 21st century.

So, what does President Trump want?

President Trump wants a strong economy. But, more than that, he wants a great legacy. He wants to be the man who made America great (again). Going long of Donald Trump’s ego is a trade on which one will never lose money.

President Trump wants power and influence over North Korea and that valuable real estate (for America, not for himself), he wants to limit China’s economic and political colonization of countries in Asia and Africa, he wants fair and honest environmental, labor, and Intellectual Property laws and practices in China, and he wants a China that plays by the same rules as the rest of us. Trump wants China’s mercantilism, with it’s negative effect on U.S. labor, and China’s use of it to grow into a world power at our expense, to end; and he wants U.S. companies and investors to have the same access to China’s markets and assets as Chinese companies and investors have had in the United States.

The Trump administration is looking more and more like the Reagan administration, with many of the same Republican players, a creation of the media at the helm, low taxes, big deficits, a cold war environment with some occasional military chest-thumping, a peace through strength attitude, and a determination to defeat communism and totalitarianism and restore America to its glory as the world’s leader, in all respects. President Trump, with regard to China, is mirroring and attempting to emulate President Reagan in how he successfully pushed the Soviet Union to the brink by forcing it to spend itself into submission, while growing the U.S. economy as large as possible. Reagan wasn’t looking to sell the Soviets more products- he was looking to remove the Soviet Union as a threat to U.S. values, and security, and power. Why would you think that President Trump wants anything less?

There will be no trade deal (though the new tariffs scheduled to take effect in the new year could be temporarily delayed, pending a resolution). Steve Bannon and Jack Ma probably have it right when they suggest that we are at the beginning of a generational conflict without clearly delineated battle or finish lines, or time frames. As tensions rise between the U.S. and China in the South China Sea, over Taiwan, over North Korea, and in the global economy, the trade dispute is but a mere symptom of (and, perhaps, a mere red herring for) a growing U.S.-China power struggle for world dominance- and President Trump isn’t going to settle for anything less than a total win (or, at least, the establishment of a clear path for future victory)- which will require China to change its economic and legal structures, its behaviors, beliefs, strategies, and even its ambitions and time frames.

President Trump’s message to President Xi:

Mr. Xi: Tear-down-this-Chinese-wall!

 

 

________________________

endnotes

  1. China’s most recent PMI report was in-line with expectations. It was, actually, very likely, much lower than forecast, but revised higher by the Chinese government. China is, no doubt, loath to arrive at this G20 and negotiations with President Trump appearing to be in any more of a desperate condition than has already been made known.
  2. China will never cave to one demand of the United States, in particular: That China not provide subsidies to its state-owned enterprises. This practice goes to the essence and to the very core of China’s modus operandi.
  3. Any “framework” or agreement to talk further that comes out of the G20 meeting between the U.S. and China would not be helpful to markets, as such a vague result will not allow companies to properly plan-out their manufacturing businesses or allow non-manufacturers to have complete visibility into their future operations costs. Markets and businesses need some level of certainty, and a mere “framework” for further talks will not provide that.
  4. Update: As I expected, no trade agreement was reached at the G20 meeting between Presidents Trump and Jinping. President Trump’s decision to delay implementation of the new tariffs, with very little quid pro quo from China for his forbearance, is an indication that Trump is very concerned about the potential economic impacts of tariffs as the U.S. economy is slowing. Whether President Trump will see-through his plan for new tariffs remains to be seen- in about 90 days. Regardless, no trade deal with China will ever be made containing anything less than all, or most, of the Trump administration’s demands- a deal that China is highly unlikely to do. Whether the new tariffs are levied or not when it becomes clear that no trade agreement is possible, the relationship between the two nations will deteriorate from there. There are many other legal measures beyond the levying of tariffs that the U.S. can take to interfere with and challenge China’s global activities, and there are many other ways for the U.S. and China to clash in and around the world.

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

Sponsored Advertisements

Inventors, IP Owners, Manufacturers
Learn How To Bring Products To Market And To Expand Your Distribution Channels
The Complete Guide To The Ways To Manufacture & Sell Your Products

 

 

 

 

As We’re Waiting On Wage Growth, Here’s The Conversation No One Sees Coming- By NEIL SISKIND

As losses on the S&P 500 Index, the Dow Jones Industrial Average, and the Nasdaq mount, investors and the media continue to ask, “Why?”.

So … why are these declines happening?

The declines are due to concerns about slowdowns in the economy and in earnings due to the combination of rising interest rates, elevated oil prices, rising consumer product prices due to tariffs, excessive corporate and government leverage, slowing exports, the approach of the natural end of a long business cycle, and stagnant real wages. So- there is no one reason for the declines[1]. These concerns are leading to investors selling equities and moving capital to more defensive positions, including into cash.

It’s not the lack of animal spirits in the U.S., or a lack of liquidity that are of the causes of concern about the underling economy at this time, or even over the course of the next six months, even as interest rates “normalize” and as the Fed searches for a rate it deems to be “neutral”. It’s the geopolitical policies and constraints that are being laid atop the rising target Fed funds rate (and the related interest rates) that are pressuring markets and investors to face concerns that, otherwise, would, likely, because of the fiscal stimulus, need not be addressed until mid to late 2019. Geopolitical risks are unpredictable and difficult for businesses and consumers to plan around or quantify.

Growing costs from the combination of tariffs, interest rates, and energy prices, are not new costs only for businesses– consumers’ costs have also been rising due to the same factors- and all in the face of, largely, stagnant wages- and it could begin to affect revenue growth results in Q3 and/or Q4 of 2018, and in 2019. Investors are wondering where Q3 earnings and/or Q4 guidance will fall. Investors are concerned about revenues- and about margins.

When it comes to higher costs, investors and analysts have been asking whether businesses that are experiencing higher raw materials costs will take the margin hits, or pass the costs on to consumers. They forget to discuss the third option: businesses can cut other costs, to wit, labor, to avoid either eating the margin losses or raising their prices. Hiding behind the conversation that this nation has been having about wage growth is a completely contrary conversation waiting to reveal itself- one about layoffs.

Because of the growing and new expenses for businesses and consumers with which businesses must contend, revenues and profits are at risk. What can businesses do about lower profit margins[2]?

Can businesses reduce tariffs? Of course not.

Can businesses reduce the prices of oil and gasoline[3]? No.

Can businesses have the Fed reduce its target funds rate- or can businesses make the 10-yr. Treasury yield decline? Not likely.

Here’s what businesses can do. They can cut expenses and reduce overhead- by cutting jobs.

Not only will job openings decline if revenues continue to disappoint while expenses rise- so will existing jobs. (Paradoxically, even following layoffs, the number of job openings still may not decline in a significant way. This could occur if the jobs needed to be filled are those requiring rare and special skills. Such positions can remain open even upon layoffs, and may remain open and unfilled until the skills gap narrows, which could take years.)

Everyone has been wondering for months- actually, for years- where the wage growth is. Perhaps, it’s time to begin to wonder, instead, when the job cuts will come. People have been discussing how higher labor costs would affect businesses if wages start to rise in response to low unemployment, as the Phillips curve suggests; but no one goes on to the other potential conclusion- that companies don’t have to give raises if the unemployment rate declines. The Phillips curve- if it even lives- is a concept, or a “theory” (one that, in the age of globalized work forces, and in a time where larger and larger companies dominate, if not nearly monopolize their industries, takes longer and longer to take hold)- and not a law that demands raises. One common way that wage pressures are managed by businesses- like any other costs- is to cut them- with the remaining employees forced to pick up the slack. In times of slowing-growth, labor forces are strictly scrutinized to eliminate any of the slightest redundancies. Demand destruction takes place in labor markets as in any other markets where costs rise too high to be sustained by those paying them (especially as other costs also rise, or revenues slow). Even if wages rise temporarily due to labor supply pressures, they can also be the first thing to get cut as revenues and/or earnings decline.

I’ve written in the past that there is good inflation and bad inflation- and that the “timing” of the inflation makes it one or the other. Rising wages can be good, if they are accompanied by GDP and earnings growth, but not if they are running counter to such growth patterns- and certainly not if, in addition, other input costs are rising. This latter type of scenario does not lead to raises and bonuses- it leads to layoffs. While everyone has been waiting for wage pressures to materialize, all sorts of other cost pressures have appeared. Companies cannot pass them all through to consumers- or absorb them all.

We are in a jobs bubble, one fueled by monetary and fiscal stimuli; and like a stock, or housing, or any other bubble, it eventually pops when the financial underpinnings are exposed … and usually long before it’s expected or predicted. If businesses foresee growing costs in the pipeline, or the potential for lower revenues, they have to be pro-active, and not re-active, especially in public companies, where officers’ jobs depend on profitability, and even on stock growth. Layoffs should come as no surprise as the GDP declines- as everyone anticipates. As job losses mount and demand side stimulus contracts, the slowdown is exacerbated.

Could anyone really think that if interest rates rise, and stocks fall, and housing markets slow, and trade wars and related costs grow, and GDP declines, and export markets contract, and sanctions cause higher oil and gasoline prices for consumers and companies, and government and corporate debt levels inflate- people won’t lose their jobs? Unemployment is just one more liquidity-fueled bubble, like any other liquidity-fueled bubble, which gets resolved, among other ways, by the withdrawal of liquidity by the Fed. Except in this case- it’s not only the Fed, but also the White House that will help ensure that the bubble deflates- or pops- much sooner than later.

If earnings and/or guidance over the next couple of weeks disappoint, and companies, by and large, point to rising input costs from interest rates, oil, and/or tariffs as the causes- the conversation on your television and in the markets will soon be changing from one about “waiting for wage growth”- to one about “preparing for layoffs”. This would not take place until after the holiday season, including the January “gift return and exchange” season.

If, and as the economy slows, a military standoff or conflict might arise between the U.S. and China. Military conflicts often occur in slow economic times to distract people, to rally the citizenry through patriotism, and even to create jobs. Regardless of the potential for such ulterior motives, tensions with China are on the rise and could escalate in coming months. The trade war would be a secondary cause for any military conflict, with the primary impetus being the United States’ encroachment on Asia, as the U.S. and China continue to compete behind the scenes for the soul of Kim Jong-Un and North Korea, and as U.S.-Taiwan relations expand. Kim Jong-un’s effect on world politics and global instability will rise in 2019. Russia’s location, and, thus, interests in the region will draw it into the conflict. How this will affect the U.S. economy is, of course, an unknown- and something for which investors should prepare as best as possible by watching commodities and currencies as events begin to heat up. All the pieces are in place for tensions with China to escalate in the coming months- as the trade war is taking its toll on the Chinese economy, as Kim Jong-un continues to be used as a political pawn by the U.S. and China- and as he plays both ends against the middle, and as U.S. Navy warships are flaunting their strength in the Taiwan Strait. Does this sound like a blossoming friendship to you? In general, the present administration is determined to repress China’s rise as a (or as the largest) superpower, at any cost- as we have been witnessing on the trade front.

For now, the unemployment rate and jobless claims remain low; and job openings remain high and continue to go unfilled, while the CPI, the PCE, the household savings rate, consumer spending[4], and real wages are all, basically, stagnating. Personal wealth is declining as housing and stock prices are under pressure. Household debt is at an all-time high. Company revenues and margins are under pressure in many sectors. As the U.S.’s, China’s, Japan’s, and other nations’ consumers spend less on U.S. products, how can companies’ earnings grow?

All that can really be said about consumers in terms of purchasing power is that they have jobs. This is pretty much what any and all bullishness on the consumer comes down to at this stage. As company margins get squeezed by rising interest rates, tariffs, commodities prices, and other input costs, and as revenues disappoint because of a weakening or apprehensive consumer … let’s hope that this, at least, lasts.

 

______________________

Fn

1.    Many in the financial industry suggest that, in both the U.S. and China, it has been rising interest rates, financial regulations and crackdowns (in China), and withdrawals of liquidity, that have been the primary culprits for the recent slowdowns in economic and stock market growth, with tariffs being only a small part of each nation’s respective recent problems. While rising borrowing costs clearly affect companies’ earnings and cause multiple-contraction in equities, expectations on the other side of the scale, of revenues and earnings, must decline significantly in order to see the kind of volatility and declines we have been seeing of late on the indices of both nations. As time goes by, it’s becoming increasingly clear that tariffs (on top of rising interest rates and stagnant wages) are going to cause growing economic and financial stresses for businesses and consumers, and investors are responding to these realities.

2.    There are many ways for businesses to handle rising costs, including: Finding new places to source products; re-examining and making changes to product mixes; commodities price hedging; renegotiating vendor and/or customer contracts; limiting discretionary spending; renegotiating or cancelling leases, etc.- but, all of these options can take significant time, have significant costs, and have unknown results and ramifications. Layoffs are a more immediate and predictable cost-cutting measure, and can be, relatively, easily reversed if necessary to resume growth or to repair miscalculations. Moreover, cutting labor overhead may give an employer the exact result it needs- as opposed to other cost-cutting measures.

3.    Oil prices have been heading lower, lately.

4.    Consumer spending, while up 2.3% over last year, has been up and down in recent months. Even in the “up” months, healthcare and energy prices- necessities- as opposed to luxuries and discretionary spending- have been responsible for the higher numbers. Hurricanes have also been the cause of much of the spending, such as on replacement vehicles that were damaged in storms.

________________

endnotes

1.    Remember that the monthly employment rate includes government jobs. Just as I’ve written about how the GDP includes government spending, the employment rate includes government jobs that result from government spending. So, again, the GDP can grow and the unemployment rate can decline, but there are ramifications for the national debt and the budget deficit for these positive economic results when government spending helps to feed GDP and labor force expansions. We pay for this growth.

2.    Millennials will be in for a big surprise when their idealistic views about job and career selection, demands and expectations from employers, and idealism about work environments no longer are addressed by employers, as job options diminish. Millennials’ expectations of work, such as their dreamy ideas of things like the so-called “gig economy” and quitting jobs and dropping-out of the workforce to chase passions, will be realigned in a slowdown or a recession with the reality of how difficult it is to make money, and support a family, and buy a home, and take vacations, and plan for retirement- things with which responsible adults have to deal.

3.    As economic growth slows, and unemployment rises, I’d pay attention to any “modern economy” type of industries. Crowdfunding will be decimated, as the amateur “investors” who “tinker” in highly speculative investments through these services, reign-in their excess or discretionary spending. Contrarily, the cannabis industry will likely see explosive growth, either despite, or perhaps because of a slowdown, as people seek an escape, become cynical about our economic and political systems and their own opportunities, and as states seek to grow their tax revenues.

4.    One might want to consider the implications of significant defaults on student loans should unemployment rise.

5.    In my two most recent articles, I advised- or warned- that the economy and your stocks would decline long before Wall Street says. Just look at the major stock indices, and reported revenues, and earnings guidance since the publications of those articles. Even the 10-yr. Treasury yield is off its highs.

________________________

Neil Siskind is: President of The Siskind Law Firm, focused on product investments, trademark licensing, product distribution, and real estate; Founder & Chairman of The Fatherhood Assignment™, a think tank and advocate for children with absentee fathers; Founder of the global charity marketing initiative, Caring is Free®; Founder of National Fatherhood Day™; Owner & Conservator of The Neil S. Siskind Nature Preserve, over 8 acres of conserved waterfront land along New York’s majestic Hudson River; and author of The Complete Guide To The Ways To Manufacture & Sell Your Products. On December 11, 2017, in his article The Yield Curve Speaketh: Why Stocks Might Crash in Early 2018, Neil Siskind accurately predicted the February, 2018 stock crash, the largest single-day point drop in the Dow Jones Industrial Average’s history. In his September 26, 2018 article, Lots of “Bull” In The Bull Market: Let’s Look At What’s “Really” Growing, Neil Siskind explained how, despite Wall Street’s bullishness, the economic data and stock market underpinnings were in decline, and that the economy and stocks were at imminent risk. By the closing of markets on October 23, 2018, the S&P 500 had fallen approximately 7%, with October being the S&P’s worst month since August 2015, the Nasdaq continues to have its worst month since 2016, and is down approximately 8% from article publication, and the DJIA is having its worst monthly performance since 2008. If you are in need of office space in South Florida, contact Neil Siskind about space availability at The Siskind Executive Office Complex in Boca Raton, FL.

Other Recent Articles by Neil S. Siskind:

China: A Dangerous Sign; A Dangerous Path- By NEIL SISKIND

Seeing a nation lower its banks’ capital reserve requirements simply because its economy is slowing is downright scary. Reserve requirements, are, allegedly, high enough in China. But, the shadow banking leverage problem is not resolved, and allowing banks to lend more- or hoping that they lend more- as businesses’ sales slow, is a bad policy and a bad sign. Bank capital reserves should be lowered when, and only when: (i) They have enough reserves on hand, and (ii) opportunities abound. It should not be just out of fear of slowing.

 

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

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To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

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