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Market Commentary

Traction and a Catalyst

By Charles Payne, CEO & Principal Analyst
3/5/2019 12:47 PM
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Question of the Week

Do you think the United States should explore some of the tactics used by China or just wait for their economy to implode?

Note: Many experts have been predicting this implosion for a couple of decades.

Post your answer below.

The story of the session is the stock market continues to grapple for traction and a catalyst.   Case in point, the release of the February Non-Manufacturing ISM report blew away Wall Street consensus, and for a brief moment, sparked an upside move.   

The Dow Jones Industrial Average rallied for 100 points, but it stalled just as fast.

Headline number of 59.7 substantially beat consensus of 57.3, as 18 industries reported growth:

Business activity 64.7 +5.0 percentage points

New Orders 65.2 +7.5 percentage points

Employment 55.2 -2.6 percentage points

Non-Manufacturing ISM

United States ISM Non Manufacturing PMI

Coiled spring?

While rallies fade, buyers also continue to materialize on the downside, which has created a tight trading range.

Brick and mortar retailers are rocking today, led by Target (TGT) and Kohl’s (KSS). However, as more than half of the top 25 winners today are China-listed companies, its clear investors are chasing momentum in that market, which was not only hammered last year, but they have been down significantly since 2015.

There is also an urge to reignite key momentum names reflected in the upgrade of Google/Alphabet at Needham this morning.

I love the action and think its classic consolidation and a great time to look for ideas for the next leg higher.

The biggest takeaway this morning is the American consumer is not dead.  On the contrary, they just stopped going to the mall, but they are spending, and their confidence is spreading to the management of retailers.

Why is China’s Command Economy So Awful?

 

I will be discussing this today on my show Making Money with Charles Payne on Fox Business 2PM

Please Tune In

 

China’s central planners have adjusted their economic goals for 2019, and many are calling it a comeuppance for President Xi and a knock against the so-called state capitalism.

The country will lend more to small and private businesses as well as allowing local governments to issue $320 billion in special interest bonds, which as not counted as official debt.

There will be a cut in defense spending, and officials didn’t mention “Made in China 2025.”

Despite this “bad” news, one is left to wonder if there are merits to state capitalist that have advantages over America’s free market system.

Sure, we hear about all that debt and legendary ghost cities that amount to 65 million empty apartments.  In the years after the great recession, there was enormous building as part of a bold stimulus plan that was even greater than in the United States.

The largess resulted in sky high prices for many commodities and helped regional economies, including Australia, pull out of recession, but it came at a major cost.

Still a Juggernaut

But China’s economy has become a juggernaut second only to the United States, growing through government subsides, massive trade tariffs and other interference that would never be considered in our economy.

But since 1990, China’s economy has been gangbusters in China.

 

China is the world’s largest market for cars and luxury items, and you’ll find more Chinese tourist in Rome today than Americans.

Robert Lighthizer has expressed concerns about state capitalism that goes beyond the unfair nature in global trade, and many think America should adopt some of their tactics.


Comments
Today's events shadow exactly events near the end of Andrew Jackson's time in the Whitehouse. Globalists willing to destroy America in order to get world dominance. Andrew Jackson seems to be Trump's "hero" as evidenced by Trump's moving Jackson's portrait into the oval office upon Trump's assent to the Presidency.

cjmcd on 3/5/2019 1:05:41 PM
It will be almost impossible to reverse all of the abuses China has implemented over the last few decades but at least we can work on leveling the playing field. Trump needs more support from the house to get it done; unfortunately he's fighting an uphill battle.

Tom on 3/5/2019 1:13:49 PM
If we complain that China isn't complying with agreed to rules, aren't we a bit hypocritical to start behaving in the same way? Thinking of Ghandi and the observation that an eye for an eye makes the whole world blind, can't that thought be extended to international trade? Let's not precipitate an economic global conflict that may escalate to physical warfare. Just my thoughts.

Richard Green on 3/5/2019 2:56:08 PM
 

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