Saturday, May 19, 2018

Headline of the Day: This is good news for the market, however....

The spirit of this headline -- as opposed to the words themselves -- is good news for the equity market.
China to `Significantly' Increase U.S. Buying After Trade Talks
As for the words themselves, any nation's manipulation of its own people (read state-owned firms) to buy specifically from producers in another nation (as the headline suggests China is committing to do) is ultimately not what you're after if you're a freedom/free market-loving individual. Among other things, it risks punishing the world's most productive suppliers of certain goods and services while rewarding the lesser productive (not to remotely suggest that U.S. producers aren't the world's best in certain goods and services -- in many they certainly are!). Worse yet, it inspires other producers to seek political means (empowering politicians in the process) to grow their revenues; distracting them, and their resources, from the goal of producing the best product at the best price for their customers.

As for the spirit of the message; absolutely! Taking "trade war" off the table (if that's indeed the message) is -- for the moment -- unambiguously  good news if you're long stocks...

1 comment:

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