Per Reuters – More foreign firms halted U.S. deals amid Trump administration scrutiny: report

Last week, Alexandra Alper of Reuters Financial News shared findings within a concerning report. The “report released by the Committee on Foreign Investment in the United States (CFIUS), shows that foreign companies abandoned roughly 14 percent of U.S. investments that were investigated by CFIUS in 2017 ‘in light of CFIUS-related national security concerns.’ The percentage in 2018 was 11 percent.

Those figures were sharply up from the period immediately before Trump took office. About 4 or 5 percent of such transactions probed by the committee were dropped annually from 2014 to 2016, the report showed. The Committee, led by the Treasury Department, reviews foreign investment in the United States for national security issues.”

I have raised this issue previously – when any entity makes it more burdensome to deal with, other entities will explore other options. The tariff wars are causing suppliers and customers to find other avenues. John Deere sales are down in the US, but up in South America as more agricultural products are being bought there.

On foreign investment, if we have companies jump through too many hoops, they will take their money elsewhere. These are headwinds to our economy and our growth has been softening.

Coupled with overall global softening, it should give us concern.

Plain talk

The news is never dull when the world has too many leaders that do not embrace facts to address problems. This is not unique to the US, but is indicative when other fact-challenged leaders are called the British Trump, the Philippino Trump, the South American Trump.

A threat to other countries’ national security is being identified in a country on the other side of the world and other hemisphere. The Amazon rain forest produces 30% of the planet’s oxygen, absorbs huge amounts of carbon and creates countless medicines. Yet, it is burning out of control and more is being harvested when it is not. Brazilian President Jair Bolsonaro, like Trump, says climate change is a hoax and is slow to act on the fires and wants to develop more of the rain forest. This is a major concern. The planet needs more trees, not fewer.

The UK is headed for a trainwreck which makes me incredibly sad. They are unfortunately being led by a man who promises to make Great Britain great again. Financial analysts have said from the outset that Brexit will be dilutive to the British economy. Companies are moving and will move EU headquarters and distribution centers to EU cities like Dublin, Frankfurt, Amsterdam, etc. because of Brexit. And, what would be even worse, in spite of assurances to the contrary by PM Boris Johnson, is a no deal Brexit. Picture semi-trucks lined up on both sides of the borders trying to get through. Picture the Scottish and Northern Irish parliaments taking serious votes for referndums to leave the UK and rejoin the EU.

Italy will be having a new vote after the PM resigned over conflicts with his popular populist number two had created a stir. Snap elections are not conducive to stability. Just ask Theresa May, who made a horrible unforced error, losing a lot of support when she overstated her appeal.

Let me close with the most fact-challenged person in a position of lesdership outside of Putin, Erdogan, Kim and other autocrats, the regal-minded Donald Trump. His former ally and short-lived Communications Director Anthony Scaramucci, has started a group to assure Trump is not reelected saying Trump is “off the rails.” Sadly, I agree with The Mooch.

As Trump’s tariff and trade wars push the global and US ecomomy closer to recession right when the ten plus year old growth market is feeling its age, he is blaming everyone else. Yet, what he is up against is financial and non-financial news shows consistently referring to the dampening impact of the Trump tariffs and trade wars as a cause and concern.

These increasing temper tantrums (let’s call them what they are) fail to recognize the role he has played in this with poor decision-making and lying to support such. It was reported by two insiders yesterday that Trump was surprised by China’s response that morning. Really? So, the person in the White House is barking orders and calling the Fed Chair a greater enemy than Xi.

Harry Truman’s words “the buck stops here,” are words that we are unlikely to hear from this president. And, if you ever wonder what a narcissist is worried about, a key trait is to blame others with their own faults.

Perception matters more than reality to the US president

Our friend Jill has written an excellent post on “Trumponomics 101” (a link is provided below). What I opined in a comment is Trump is more about perception than reality. Here are a few examples:

– he beats his chest on his trade and tariff decisions, but they have dampened the global economy, of which we are a key part, as well as certain US industries.

– he left the Trans Pacific Partnership which was designed to compete better with China on trade (note the other ten countries proceeded without us).

– he claims being tough on immigration and terror, but his travel ban and reduction in legal immigration are dilutive to our economy (note legal immigration has fallen as well).

– he touts his tax law, but it borrowed from our future to make a pretty good economy a little better for eighteen months or so.

Focusing on another tax cut to lessen the impact of the slowing growth is malfeasance, as was the first tax cut in December, 2017. And, lowering interest rates won’t push a lot of investment as businesses are concerned by the chaos caused by Trump.

So, Trump is worried about the market and economy retrenching from its growth not recognizing the headwinds he created. Note, for brevity I did not speak to other headwinds – not investing more in renewables, infrastructure, healthcare, etc.

Yet, the biggest perception he painted to his followers before the election was the US economy was in trouble citing the unemployment rate at 30%, then 40% then 42%. The reality is the unemployment rate was beneath 5% and we were in an economic growth period of 90 consecutive months (7 1/2 years) which continues to this day. He convinced his followers that he alone helped turn the economy around, which was doing pretty good.

Reality does matter. And, you won’t get a lot of that from Trump, who had a faux reality TV show.

Trumponomics 101

Tuesday’s gone with the wind -redux

Please hum one of my favorite Lynyrd Skynyrd songs, “Tuesday’s Gone,” as you read a few miscellaneous thoughts this Tuesday. In no particular order:

– Most news agencies are purposefully not mentioning rhe killer’s name in Virginia Beach. I did hear the killer was a pleasant fellow by all accounts. This rebuts the comment about the good guy with a gun stoppng the bad guy – how do you know?

– Why must every issue or small thing be contentious? This president wears me out and has increased stress levels around the country. Please Mr. Trump stop commenting on so many topics. Please stop picking fights when they are not needed.

– And, the press needs to focus less on the many pedestrian faux pas of the president and more on the bigger issues like tariffs and trade, retrenching from our global position, climate change, environmental degradation, ignoring debt, and ongoing obstruction of justice and diminishing our democratic institutions. Coverage of the small stuff dilutes the impact of the large stuff.

– The middle part of our country is hurting with the flooding from these frequent behemoth storms that slowly move across the country. Plus, it is impacting farmers at the very time they must decide what to plant, which is influenced by the tariff issues.

– Finally, speaking of tariffs, political comedian Bill Maher noted on his show on Friday that Democrats should start calling tariffs what they are – a tax. He said they should be referred to as a “Trump Tax,”

That is all I have for this Tuesday. “Tuesday’s gone with the the wind. My baby’s gone with the wind.”

Governing is hard enough when we use facts

Governing is hard enough when our elected leaders use facts. What frustrates me is when decisions are supported by purposeful misinformation. As noted in a recent The Charlotte Observer article on the Trade War, the US President consistently repeats that China is paying the tariffs we establish.

Each time, his claim is refuted by economists who note US importers are paying the tariffs and pass most of the added cost to consumers. In the article it is noted by economists for the Federal Reserve the typical US household will pay $831 more each year with the next round of tariffs.

Tariffs are an unwieldy tool to deploy, but continually lying about their impact is poor stewardship. We deserve the truth from our leaders, regardless of what party they claim. Sadly, the US President feels that being loose with the facts or outright lying is a suitable modus operandi. It further frustrates when his staff facilitate these untruthful statements.

**************

Note: A variation of the above was sent into the Letters to the Editor for The Charlotte Observer.

Trade war and sagging prices push U.S. family farmers to leave the field

Recently, I wrote of the significant increase in farmer bankruptcies in several states. Already in a fragile state, the trade wars have pushed an increasing number of family farmers into bankruptcy.

In a Reuters article entitled “Trade war and sagging prices push U.S. family farmers to leave the field,” bankruptcy is not the only path forward for these farmers.

The article begins “Shuffing across his frozen fields, farmer Jim Taphorn hunched his shoulders against the wind and squinted at the auctioneer standing next to his tractors. After a fifth harvest with low grain prices, made worse last fall by the U.S.-China trade war, the 68-year-old and his family were calling it quits. Farming also was taking a physical toll on him, he said; he’d suffered a heart attack 15 months before.

Across the Midwest, growing numbers of grain farmers are choosing to shed their machinery and find renters for their land, all to stem the financial strain on their families, a dozen leading farm-equipment auction houses told Reuters. As these older grain farmers are retiring, fewer younger people are lining up to replace them.”

This a key reason tariffs and trade wars need to be well thought out and avoided whenever possible. Tariffs usually cast a wider net on the lives of people and business, harming far more than those intended for them to help. These farmers are one audience that is harmed.

The additional troubling aspect is the slow and lengthy impact tariffs and trade wars have on sales and supply chains. These chains are built on relationships. I often quote a CFO who echoes what I observed in 30 plus years of business that CFOs like predictable costs maybe even more than lower costs. Tariffs and trade wars upset that paradigm.

We must help our farmers, especially the family farmers. We also must make more thoughtful decisions with input from people in the know. Why? People are impacted, so we need to make sure we understand the scatter-fire of pulling the trigger on a change.

A little bird and a big crow

While at a stop light, I saw a flying metaphor. A little bird (about three inches in height) chased off a big crow who is closer to a foot in height. The little bird chased the bigger one for well over 100 feet, most likely a mother defending her nest from an egg stealer.

I feel the big crow is analgous to the America First mindset, where we are devaluing our relationships and bullying people into action. Now, some might say we have always thrown our weight around. Yet, our allies are reacting to being treated worse with tariffs and talk of more, our pulling out of multilateral or global agreements, our denigrating respected multinational groups, and telling countries who they can and cannot do business with.

The little bird represents individual countries, businesses and farmers who are doing what they must to perpetuate commerce. When certain avenues are closed or made difficult or costly to use, they have to find new suppliers or customers. They are chasing away the impact of the crow. It is a simple equation – the more difficult an entity becomes to deal with, others will seek other options. Plus, the more difficult we make it for all transactions, then fewer transactions will be made and global trade will suffer.

It is reported the President reached out to former President Jimmy Carter. The reason is Trump’s having concern over an ascendant China. This was happening any way, facilitated by actual long term planning by China. Yet, what Trump fails to realize is his role in greasing the skids. By retrenching from our position of strength, pulling out of a Trans-Pacific trade deal meant to even the playing field with China, he has allowed China to fill the void. By telling countries they will face tariffs if they deal with Cuba and Iran, we are greasing the skids for China to fill the void.

These little birds have to eat. They will look out for their best interests. If they must acquiesesce to the big crow, those actions will be remembered, if they are needed in the future by the crow. It should be noted,  a foreign diplomat said two years ago, the strength of the US is its allied relationships – failing to nurture them comes at a cost.

And, that Chinese bird is getting even bigger and faster than this old crow.