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Increase in Stock Market

Global Tech And Health Stock Markets Climbing As Biden Gets Closer To Presidency

As Joe Biden gets closer to becoming the next President of the United States, shares in major technology and health stocks are climbing. Shares in Asia Pacific, for example, have already climbed to their highest point in three years within the past 24 hours. 

Biden currently only needs six electoral college votes to secure the presidency. Investors on the other side of the world have been closely monitoring and betting on Biden getting to 270 votes. Asia Pacific shares climbed by 1.3% which is the highest it has increased since February 2018. Japan technology firm Nikkei rose by 1.1%, the highest it’s been in nearly a year. 

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China’s blue chips stocks gained .8% due to the possibility of Biden taking Trump’s place in the White House and therefore reversing his trade war tariffs as well. Edward Moya is a spokesperson for OANDA who recently spoke with the press about how even the possibility of a Biden presidency is helping boost the global stock market. 

“The contest is not over, and President Trump will not go down without a fight, but financial markets are confident to price in a Biden presidency along with a Republican controlled Senate.”

A Biden win with a Republican controlled Senate would mean there’s less risk for regulation and corporate/personal taxes being raised. The stock market’s reaction to the past 48 hours also is showing “US growth stocks outperforming on prospects of less economic aid,” according to market analysts. 

“Technology and healthcare stocks duly led the charge higher overnight while those leveraged to consumer demand lagged. With tech stocks accounting for such a large share of the indices, the S&P 500 gained 2.20% and the Nasdaq 3.85%.”

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Bond markets in the US are running under the assumption that a divided government would reduce the possibility of debt-funded spending on things like stimulus and infrastructure support for the country. If this were to happen there would also be a reduced bond supply as well. 

10-year US Treasury has dropped down .74% so far after remaining at a .93% peak for five months. Additionally, “the Dow jumped 1.3%, or some 360 points, while the S&P opened up 1.6%. The Nasdaq rallied 1.9%. The S&P 500 and the Nasdaq Composite are on track for their best week since April. For the Dow, it’s shaping up to be the best week since June,” according to media reports

Shares in major tech companies have also continuously risen within the past two days. For example Facebook and Google parent company Alphabet traded more than 2% higher while Amazon, Apple, and Microsoft gained more than 3% each. Because these tech companies work with international governments, mainly China, the prospect of a divided US government has investors on all sides assuming taxes won’t increase. This would also mean the current trade war with China would stabilize. 

As the results continue to be counted throughout the country, and Biden gets closer and closer to a presidency, stocks will likely continue to increase in the tech and healthcare sectors, as those are two areas that will likely see a massive spike in investments should Biden win and enact his policies for Covid-19 and the current economy in the US.

US China Trade War

What Will The New Decade Bring For The US – China Trade War?

One of the key issues of 2019 was the conflict between America and China, which seems likely to continue throughout 2020. While President Trump’s “war” against many of the top Chinese technology firms – including Huawei – has made headlines for most of the year, the stories that China has banned a majority of America’s consumer content-based technologies, or that there has been political pressure placed on many western technology giants could easily have been missed. However the new decade looks like there will be further restrictions placed on technology between countries.

One of the major factors has been the “splinternet” that has seen some governments decide which content its citizens can find online. Countries including China, Iran, Saudi Arabia, and Russia are continuing to filter what is being shown in their countries, however, there are many other countries around the world who appear to be having smaller restrictions on certain areas of content – including specific websites such as news sites, content sharing, communication platforms and the majority of social media.

While content censorship is increasing throughout the world, technology companies have continued their hold over many other countries. For instance, a majority of countries now use a desktop and mobile operating system that is favored by American companies. With travel rates also increasing, this has become a necessity with travelers expecting to step off an airplane in any given country and be able to connect to the internet from their device.

Back in December there was talk that Huawei – frustrated at America’s continuing ban resulting in them being unable to access American technology – is about to start creating their own Android software and services. As the world’s largest manufacturer of telecoms equipment – Huawei already has 42% of the Chinese market as well as over 25% of the Russian market – the likelihood of success seems increased. While other companies have tried to compete against Apple’s iOS or Google’s Android over the last decade, it seems the 20s could be the year of new operating systems.

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Also in December, the Chinese state media confirmed they would be launching an alternative to the United States’ GPS satellite navigation system. ‘Beidou’ has been seen as a major disconnection from the standard US technology with China stating that Beidou’s 35 satellites will be a higher standard than the current global gold standard GPS network.

With 70% of smartphones in China ready to utilize the new network it seems that the market is already there for Beidou – Chinese for “Big Dipper” – with the service working towards promoting 5G services and adoption.

However Beidou will not be restricted to China as there will be a major campaign to convert South East Asian, Eastern European and African markets to the new network. Working along the same vein as their new Belt and Road initiative, the GPS system will also provide higher accuracy levels that are usually kept for military or security specialists.

At the Council on Foreign Relations in November Ajit Pai, the Chairman of the Federal Communications Commission announced that “you don’t have to look hard to find evidence that the Chinese government is willing and able to use its growing influence over global commerce to advance its own interests.”

Pai’s words appear to be centered on the way China is utilizing its influence to reduce the recent criticism of its domestic policies as well as Huawei’s role in the investment of 5g networks worldwide.

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The beginning of 2020 is in stark contrast to the beginning of 2010. A decade ago there were many theoretical divides whereas now they’re becoming a reality. Due to the trade war many countries are finding themselves in a position where they have to decide between Chinese commerce and investment or America’s security and political engagement, with Russia’s President Putin referring to the issue as “the first technological war of the coming digital era,” highlighting the fact that this trade war could lead into something that could be much more powerful in the upcoming years.

So what will be happening in 2020? Canada is currently looking at the request from America to extradite Meng Wanzhou – Huawei’s CFO – while both Germany and the United Kingdom are still looking into whether they will allow Huawei into their networks.

Huawei are also launching their P40 device, which could lead to a competitor to Google’s software as well as their services throughout the worldwide markets.

The US Commerce Department is also due to make a decision on whether they will loosen supplier restrictions on companies based in the United States, which could affect the election during the second half of the year.

If there is a massive change in the way technology is used across the world there could be significant implications to travelers as well as consumers. While China would see an increase on its influence over the rest of the world, America could see a loss on their material market share.

Economy Stock Market

Despite Booming Economy, Experts Worry

Unemployment rates are the lowest they’ve been in 50 years, wages are increasing, and the economy’s expansion is the longest-running on record. So it may come as a surprise that journalists are reporting that the overall mood at last weekend’s annual meeting of economic forecasters was one of concern and pessimism. Instead of praising President Trump’s economic policies for the impact on the economy as the Trump administration would surely prefer, experts at the conference warned that a few economic indicators signal that trouble may come for the economy soon. Though by traditional standards the economy has been healthy and strong for the duration of Trump’s presidency, government budget deficits and the weakness of central banks among other factors concern experts who fear that the when the current expansion ends, as it inevitably will, the negative consequences could be drastic and painful.

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This sentiment is mirrored by the “Global Economic Prospects” report released on Wednesday by economists at the World Bank, who described the global expansion as “fragile” and built upon a shaky foundation. Though this report predicts a continuation of economic growth throughout 2020, it also warns of a potential economic downturn posed by the ever-present risk of trade wars between the Trump administration and other countries as well as changing markets in countries like China and India. While trade-related tensions between the United States and China appear to be lessening for the time being, it’s hard to know whether Trump will sign a trade deal with the foreign country as expected given how unpredictable his behavior has become, particularly in the aftermath of impeachment and a potential war with Iran.

In European nations, technology companies that are largely based in the United States face new taxes, which Trump has responded to by threatening tariffs on French imports, posing a threat to the global economy. And according to research published by the American Economic Association, the economic fight between China and the United States has resulted in lower wages for workers in both countries. While the economy is predicted to continue to grow, the rate of growth is forecasted to slow to 1.8 percent this year and 1.7 percent next year, according to the World Bank. And the combination of the tax cuts passed in 2017 and increased spending have ballooned the national deficit to almost $1 trillion a year, a figure that worries economists around the world. 

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Interest rates in advanced economies have been dropping as a result of trends like the aging of the population, meaning central banks have less power than they would otherwise to grow the economy in the event of a recession. These low rates are expected to continue for the foreseeable future, causing economists grief. Economists like Valerie A. Ramey of the University of California have called on Congress to pass bills increasing spending on infrastructure and research and development in order to stimulate the economy. Though Trump campaigned on plans to improve the nation’s infrastructure, such plans have not materialized, meaning the potential economic gains caused by infrastructure spending have not been realized. Overall, economists say that policymakers will have to act strongly in order to combat the effects of an upcoming recession, the immediacy of which grows more likely by the day.

USA China Trade War 2

Promising Progress Made In US-China Trade War Negotiations

A new easing of trade tariffs between the US and China has sparked fresh hope that an end to the trade war between the countries could now be in sight.

Since Donald Trump was elected President, discussions with China’s Xi Jinping have remained tense. However, new revelations that some tariffs are to be rolled back has led analysts to predict real potential for growth in the coming months.

The stock market has also responded enthusiastically, and there has also been unprecedented steps by the International Monetary Fund (IMF) to increase their global growth forecasts, should a deal to ease trade tensions come to fruition.

Although the details are yet to be finalised, it has been revealed that the deal will reintroduce the movement of US agricultural goods to China alongside a reduction in tariffs on Chinese imports entering the US. There are also suggestions that US poultry imports could also start flowing back into China.

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The first phase of the deal relies on the US rolling back tariffs on over $350bn of Chinese imports. If this is achieved, Xi Jinping will make the historic journey to the US to sign a partial trade deal with Donald Trump. Such progress is unprecedented and there has been excitement from investors, leading to a surge in stock markets and an all-time weekly high for the S&P 500.

Less than six months ago, further tensions were added as China announced new tariffs on $60bn of US imports, after warnings from Donald Trump against adding further fuel to the fire were ignored. Currently, China’s tariffs affect US imports of soybeans, beef, pork seafood, vegetables, liquefied natural gas, whiskey and ethanol. They range between 5% to 25%. The US currently levies a 15% duty on a range of Chinese imports, from meat through to musical instruments. According to Wikipedia, in 2018, over 1,300 categories of Chinese imports were listed for tariffs, including aircraft parts, batteries, flat-panel televisions, medical devices, satellites, and various weapons. In September, it was announced that China has implemented a 5% levy on US crude oil, the first time fuel had been affected by the ongoing trade battle.

Trump has long believed that China has been operating unfair trade practices which have significantly disadvantaged the US economy. He also accused them of intellectual property theft. The objective of the tariffs was to help boost sales to US companies by making imports more expensive. As overseas imports can often be much cheaper to produce, consumers have increasingly shifted towards the cheaper options, even if it takes a little longer for them to arrive. By focusing on making US products and companies more attractive to consumers, he hoped to give the economy a much needed boost.

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Unfortunately, this objective has not been easy to achieve, nor has it been supported by a wide range of industry experts. The reality is that the ongoing trade war is continuing to not only impact politics but wider businesses and consumers too. And whilst the intention may have been to encourage more sales towards American businesses, the tariffs could in fact have the opposite effect and prevent those same businesses from expanding their operations overseas to lucrative international markets.

With Singles Day fast approaching, this is likely to be the next major event impacted by the ongoing trade war. Similar to Black Friday in the US, Singles Day is a huge sale event which takes place on the Alibaba shopping platform. Most popular with young Chinese people, the event takes place on November 11th, chosen because the number 1 is thought to closely resemble a single person alone. Also known as ‘Guanggun Jie’, analysts have suggested that the ongoing trade tensions between the US and China could affect sales of US products on Singles Day, mainly driven by the loyalty of Chinese consumers, who could actively avoid purchasing products from US companies in retaliation for the way China has been treated.

This viewpoint is reflected in the findings of a recent survey by AlixPartners has revealed that 70% of respondents felt the trade war was influencing their purchasing decisions. Interestingly, over 50% stated that their national loyalty was preventing them from purchasing American brands, suggesting that these brands could see sales adversely affected on Singles Day due to the trade war struggles.

Although the future is still somewhat uncertain, the potential olive branches which are being presented by both parties are being taken as a positive sign that we could be entering a new phase of arrangements between China and the US. Any positive steps towards a renewed deal could not only help to reignite the flow of products between the two countries, but help to stabilize the stock market and provide an optimism across the wider global economy too.

Drugs

U.S. and China Joint Investigation Leads To Arrests In Massive Fentanyl Trafficking Ring

China and the United States clearly never see eye to eye. However, this week, the two countries worked together to make a big arrest involving a massive fentanyl smuggling ring between America and China. This Thursday, Chinese authorities sentenced one man to death and imprisoned eight others for trafficking fentanyl into the United States (NBC). Initially, the joint effort was in response to President Donald Trump’s public criticism and call to action directed at China to adopt stricter policies regarding drug trafficking, especially when it comes to fentanyl which is responsible for tens of thousands of deaths in the U.S. every year. 

The case started with an arrest in New Orleans in August 2017 that revealed information about a woman in China, known as ‘Diana’, who sold narcotics online and shipped orders to the U.S. That information was passed on by American officials to drug investigators in China, who spent months uncovering a sprawling network of fentanyl labs, producers and dealers,” according to Janis Frayer for NBC

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Police stand guard outside the Xingtai Intermediate People’s court

When a major wire transfer was made to “Diana” this week, authorities had all the information they needed to make a move. The raids made in response to the wire transfer lead to the nine arrests, and brought in over 26 pounds of fentanyl, along with other opioids and records that helped authorities track areas in the United States that the drugs were being trafficked to. More than 50 U.S. residents names and addresses were seized from the “Diana Organization’s” records which lead to three major arrests in the U.S., and 25 new cases to be opened here in America (NBC). 

Tensions between China and the United States have been especially on the rise within the past few months as we are currently in the midst of a massive trade war with the country. Because of this, this collaborative effort between both countries authoritative forces is being eagerly showcased in the media, and rightfully so. America has often criticized China on their laid back approach to drug trafficking and has labeled them as “complacent” so when these arrests were made China made sure that Americans knew how big of a deal it was. 

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Yu Haibin (C), deputy director of China National Narcotics Control Commission (ONNCC), speaks during a briefing in Xingtai

So much so that during the court proceedings this week, China invited groups of journalists to come and cover the hearings to ensure that the news would spread quickly and efficiently as the charges were made. Journalists were also invited to attend a news conference covering the case both before and after the hearings, China provided police escorts for all the journalists to and from the conference and court to show that they were serious and organized about this accomplishment. The case was being presented at a court in Xingtai, which is about 220 miles from Beijing. 

According to NBC’s coverage of the event, the nine defendants were made up of five men and four women, all of which were seated in the courtroom during the entire proceedings, but none were allowed to speak. There were three presiding judges, one of which was responsible for reading out all the details of the case, the charges that were being made for each individual, and what their sentences would be. The leader of the entire smuggling ring was sentenced to death after he serves a two year sentence, his charge was “leading a conspiracy to defy Chinese laws to manufacture and smuggle the drug of fentanyl to the United States.”

“Their measures are very covert, our investigators lack chemistry expertise … it’s definitely hard to identify and verify this type of substance,” Liu Zhiyong, the deputy chief of Xingtai Public Security Bureau told NBC News.

Due to the success of this collaborative effort, there are now two more ongoing joint fentanyl investigations occurring between the United States and Chinese authorities. This effort could help bring down some of the biggest international drug trafficking rings.

USA China Trade War 2

U.S. and China Discuss Rolling Back Tariffs

President Trump has invoked a trade war between the U.S. and China, resulting in potential economic damage to both countries. After Trump imposed tariffs on goods imported from China, China retaliated in kind, driving up the prices of consumer goods. Now, the two countries have agreed in an initial trade deal to roll back some of the tariffs each country has opposed on the other, pending finalization of their agreement. This development represents a reversal of the Trump administration’s position on tariffs, which they instituted in the first place, forcing China to retaliate. If the deal goes through, the price of consumer goods could decrease, boosting an economy which by traditional measures is already quite healthy.

Though Trump has canceled a planned tariff increase, he has continued to threaten Beijing with additional tariffs if they don’t comply with America’s terms. The battle between Trump and Xi Jinping has lasted for 19 months so far, and has caused pain for businesses, consumers, and investors in both countries. Following this news, stocks soared, as investors anticipate an end to the protracted and arguably unnecessary trade dispute. According to Gao Feng, a spokesman for China’s Commerce Ministry, the two countries have discussed resolving their differences over the past two sides, and have agreed to cancel tariffs by stages. However, a timeline has not yet been publicly established.

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As the reality of a deal between the two countries becomes increasingly likely, markets have reacted with optimism, as the S&P 500 rose to more than 3,090, approaching a record closing high. The companies most positively affected by the news are ones that have close ties to Chinese manufacturers and retailers. Despite the positive reaction in the markets, however, other sectors of the economy continue to struggle. In particular, the trade war with China has negatively impacted farm belt states like Iowa, Kansas, and Nebraska, where economic growth has slowed considerably. Though the Trump administration claims that Americans do not experience the effects of tariffs, businesses and farmers disagree.

This is not the first time that the United States and China seemed close to reaching a deal to end the trade war.

As a result of Trump’s presidency, American tariffs now apply to more than two-thirds of imports from China, whereas Chinese tariffs affect 58 percent of their imported goods from America. Tariffs are paid by consumers in the countries imposing the tariffs, making the trade war destructive on both sides, leading economists to issue warnings about the long-term impacts of ongoing tariffs. The imposition of tariffs on Chinese imports has long been considered a bad idea by experts, who are now vindicated by the Trump administration’s reversal of policy under significant public pressure.

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Issues unrelated to tariffs factor into the negotiations. American officials want China to take more aggressive action on protecting American intellectual property rights, for instance and contend that the ultimate decision is up to Trump. Additionally, the United States wants China to encourage more foreign investment and purchase more goods and services from abroad. This preliminary agreement suggests that China will be willing to make these concessions, but the final details have yet to be ironed out.

This is not the first time that the United States and China seemed close to reaching a deal to end the trade war. In May, the two countries agreed upon a resolution to end the trade war, which included concessions from China to change some of their business and legal practices. President Jinping even gave a speech celebrating the achievement. However, when a draft agreement was sense to the United States, significant changes had been made to the plan, leading Trump to accuse Beijing of reneging on its commitments. The changes to the draft agreement, which included the removal of promises to change domestic laws, were thought to have been personally made by Jinping himself. Only time will tell whether this new agreement suffers the same fate.