A Chinese Industrial Devolution
Chinese profits are going up in smoke, specifically, in the billows that rise from the country’s industrial sector. The US and China are deadlocked in an arm wrestle over trade, but weak numbers out of China’s National Bureau of Statistics suggest that the second-largest economy in the world might stay as the second-largest economy in the world.
The Red Dragon is the most emerged of all emerging markets out there, long relying on its manufacturers as profit factories, powering economic growth and sending competing economies into spirals of concern. This time last year, those profit factories were 3.1% more lucrative. So, as another dent to the country’s American tariff defenses, investors here, there, and everywhere, are burning with curiosity! Is there an end in sight to this trade war?
Market-watchers have two stations to tune into this week, Fed Chair Jerome Powell’s rate cut FM, and the trade talk show. With timings clashing, connections between both events could make for some live-action on the stock market. Only the bravest contrarian would bet against a rate cut now, and given this industrial news out of China, some are optimistic of war relief if the country concedes to a few more American terms of trade.
This is a Powell pinch. Investors see both a rate cut and trade deal as forces for good. However, if the Fed Chair is caught in-between both, could a trade resolution interrupt his rate cut announcement? Would he press on, sticking to the script so as not to lose face? Or, would his fellow members cut the mic before he cuts rates? At any rate, we’re cutting it close!