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OPINION

When You Find Your Servant Is Your Master

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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Aly Song/Pool Photo via AP

Last week, there was a furious flurry of industry organizations attempting to pressure the White House to avert adding additional tariffs on products imported from China. I get the notion of these organizations ‘talking one’s books.’ What angers me and what more Americans should be cognizant of is the disingenuous nature of those pleas, which also serves the dual purpose of rewriting or ignoring their roles in offshoring American jobs and dreams that left with those jobs.

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I heard the head of one organization talk about China’s role as a leader in environmental issues and the reusable movement. I would not have been surprised if he said China was known for its human rights, although some, including a big businessman running for president, have commended China for improving on human rights, even with one million Muslims in reeducation camps and programs.

As I listened more closely, it became clear these folks obviously were standing up for their workers, as some had already begun layoffs before hearing the fate of the December 15th tariffs. Yes, they want to protect their profits, but the real Eureka moment for me, was when it was clear they were lobbying for China. Much like the tune from ‘The Police,” China was more of a ‘poor servant’ when it entered the World Trade Organization (WTO), but always knew it would take advantage of loopholes and lax enforcement capabilities.

When You Find Your Servant is Your Master

Many faces have turned to alabaster, as it is clear China has become their master. Profits derived in the United States are used to fund unprofitable businesses in China, all in the hopes of one day making money there one day. Meanwhile, these companies and their business organizations continue to present the trade war as a bad thing for America. They have new masters, and it’s not the American consumer or worker.

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Striking the Economy

The financial media continues to push the narrative that keeping CEOs happy should be the number one goal of society. There were numerous articles, including one by Gillian Tett in the Financial Times last Friday. She suggests the strong economy and consumer could be countered by worried and whining CEOs. This bunch is indeed tone-deaf to public opinion, or just so cocky that they believe assuaging their feelings and their worries come at the top of the hierarchy of societal importance.

Consider the fourth quarter CEO survey from the Business Roundtable (BRT).

These CEOs see much higher sales, which stands to reason in an economy with soaring wages, strong job growth, strong household balance sheets, and low-interest rates. That’s not enough for these folks as they laid out in their statement:

Joshua Bolten, President & CEO of Business Roundtable added: “CEOs are justified in their caution about the state of the U.S. economy. While we have achieved a competitive tax environment, uncertainty surrounding trade policy and slowing global growth are creating headwinds for business. Lawmakers should expand, not restrict, trade to help boost U.S. economic potential.”

The Business Roundtable and other major business organizations have made a lot of noise this year about stakeholders, but their unbridled greed and willingness to derail the economy comes shining through. If they are willing to sit on the money and only buy back stock for the next couple of years, it would hurt the economy, but they should know folks are watching. Unlike yesteryear when jobs were shipped overseas in return for cheap TVs and toys and cheap subsidized steel, the BRT should know the public is watching.

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Anticlimactic

I’ve long said the day Phase One becomes official, the market would yawn and even pull back. I must say that was mostly based on the old axiom of selling on the news. Wow, the news really worked overtime, muddying the waters last Friday.

The second-to-second guessing, scuttlebutt, and incorrect interpretations (and that was on the American side, forget China’s press conference, which lurched toward an old Abbott and Costello skit).

Christmas Spirit & Consumerism in the Air

The scenes near the Spanish Steps in Rome were remarkable. There was an electric feel of the holiday spirit in the air. There was also a lot of shopping, a 15-minute wait for Louis Vuitton, and 20 minutes to get inside the Chanel store.

Portfolio Approach

We took a loss in Consumer Discretionary, looking to ride the better names and those that are undervalued.

Today’s Session

The Empire State Manufacturing data was released this morning. The survey showed employment continues to expand, though the average work week was unchanged. Moreover, optimism about the six-month outlook picked up, and capital spending plans were notably stronger. Twenty-eight percent of respondents reported that conditions had improved over the month, while 25 percent reported that conditions had worsened.

The headline general business index increased 3.5 points, below consensus of 4 points.

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  • New Orders +2.6
  • Shipments +11.9
  • Unfilled Orders -13.8
  • Delivery Time -5.8
  • Inventories +2.2
  • Prices Paid +15.2
  • Prices Received +4.3
  • Number of Employees +10.4
  • Average Employee Workweek +0.8

Futures were up this morning. Shares of Boeing (BA) are under pressure after the Wall Street Journal reported the company was nearing a decision on possibly halting or cutting production of the 737 Max.

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