Tag: finance

Images of so-called anti-Trump rioters breaking Starbucks' windows, busting trash cans, and burning bourgeois limousines in the streets of Washington DC really exposed the reality of the alt-left's tolerance and 'stuck it to the man'. The only problem being, in the case of the limo, 'the man' was Muslim immigrant Muhammad Ashraf whose small business now faces $70,000 losses and an injured employee.

As The Washington Examiner reports, the limousine that was set on fire during the anti-Trump anarchist protest in downtown Washington on Inauguration Day is owned by a Muslim immigrant who says the damage could cost his company $70,000.

Muhammad Ashraf, the owner of Nationwide Chauffeur Services, spoke with the Washington Examiner's sister publication, Red Alert Politics, about what happened:

In an exclusive interview with Red Alert Politics, Ashraf said he wasn't a supporter of Donald Trump during his campaign, but Friday's protests were completely counter-productive.

 

"I have a different point of view," Ashraf told Red Alert. "I did not agree with many of the things he said, but that still does not give me the right to go and affect someone's livelihood."

Ashraf noted that the Women's March on Washington and in other cities around the country was a model for how to peacefully protest.

"I really don't think we need to take this [violent] route."

 

Ashraf's employee, Luis Villarroel, 58, was dropping a client off at their destination when things turned ugly.

 

Protesters smashed doors and windows in the vicinity, but then turned their attention to Villarroel and the limo. People began pounding on the car and started throwing stones and bricks in his direction.

 

The driver ended up going to the hospital for cuts on his hands and arms from glass being shattered by thrown projectiles. […]

 

 

"[We've] been in business for over 25 years and this is the first time this has happened," Ashraf said.

A GoFundMe page has been set up to help the company raise the money if insurance won't cover the protest damage. Ashraf said any money raised beyond paying for the car and medical expenses for his employee will go to charity.

Perhaps George Soros should 'fund' that to support Muslim immigrant Americans? Instead of the anarchy on the streets…

via http://ift.tt/2jVngRz Tyler Durden

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

Meanwhile, back in reality, household income for the bottom 95% has declined while the owners of capital and their privileged, protected servants in the Establishment have gorged themselves on private wealth.

As noted yesterday in The Collapse of the Left, the working class has finally awakened to the Left's betrayal and abandonment of labor in favor of the protected privileges of the elitist Establishment. I also described the Left's Great Con:

To mask the collapse of the Left's economic defense of labor, the Left has substituted social justice movements for economic opportunities and security. This has succeeded brilliantly, as tens of millions of self-described "progressives" now parrot the Great Con that "social justice" campaigns on behalf of marginalized social groups are now the defining feature of Progressive Social Democratic movements.

This diversionary sleight-of-hand embrace of economically neutered "social justice" campaigns masked the fact that social democratic parties everywhere have thrown labor into the churning propellers of globalization, open immigration and neoliberal financial policies–all of which benefit mobile capital, which has engorged itself on the abandonment of labor by the Left.

Meanwhile, the fat-cats of the Left have engorged themselves on capital's largesse in exchange for their treachery. Bill and Hillary Clinton's $200 million in "earnings" come to mind, as do countless other examples of personal aggrandizement by self-proclaimed "defenders" of labor.

But it isn't just the Left's fat-cats who have feathered their own nests while denigrating the Working Class with arrogantly contemptuous scorn: the entire protected, privileged "liberal" elitist Establishment has responded with a very illiberal outrage that their protected, privileged skims and scams might be endangered by an uprising of the loathed and ridiculed Working Class that they reckoned would remain safely cowed and conned.

As noted yesterday, the only moment in recent history in which the Wall Street-cartel-state strongholds of privilege, wealth and power (i.e. owners of capital) felt threatened by political insurrection by disenfranchised labor was The Great Depression of the 1930s.

With the first iteration of global debt-based capitalism in near-collapse (systemic bad debt was not written off, lest the big banks' insolvency be recognized), owners of capital and the political class reluctantly swallowed modest social-democratic reforms that gave labor enough of the pie to stave off revolt / revolution (as noted by Arshad A. on my Facebook thread).

Just as Marx had predicted, this crisis of global-debt-cartel-state capitalism was the result of internal contradictions built into all forms capitalism dominated by capital and the state that protects and serves capital.

Now we face another crisis of the current iteration of global-debt-cartel-state capitalism, also the result of internal contradictions–not just financial, but cultural, energy-based and political contradictions.

The privileged, protected elitist Establishment reckoned the social-welfare programs of the 1930s and the Left's Great Cons would keep the disenfranchised Working Class permanently cowed and conned. If welfare (now called "disability," "crazy money", etc.) and the distractions of "social justice" campaigns didn't keep the Working Class fragmented and powerless, then the ceaseless drumbeat of arrogant dismissal and disdain aimed at any Working Class resistance would do the trick.

Any Working Class individual who recognized that globalization, open immigration and neoliberal financial policies were the propellers dismembering the Working Class economically and disenfranchising the Working Class politically was immediately labeled with the worst that "liberal" privileged, protected elites could spew: you're racist, Luddite, backward, etc.–in other words, you're not a rootless Cosmopolitan who loves your servitude to capital and the state like us.

Since the Left has masked its abandonment and betrayal of the Working Class with "social justice" speech acts, the worst insults the Left can dish out are those that suggest opposition to the Left's social justice campaigns.

Self-identified "Progressives" are fine with the destruction and disenfranchisement of the Working Class, as long as the politically correct speech acts praising the Left's Great Con are being uttered.

The self-serving, privileged, protected "liberal" Establishment is enraged that the Working Class is no longer following the script, i.e. remaining cowed, conned and fragmented. Like every other disenfranchised group, the Working Class has essentially zero choice of representational leadership, as the machinery of governance, finance and the mainstream media are all controlled by the privileged, protected elites of the Establishment.

So it boiled down to: choose more disenfranchisement and cowed servitude to "liberal" Elites, or vote for Trump. There was no other choice, so the Working Class voted for Trump as their only option other than surrender and servitude.

This rejection of their "betters" script has enraged their "betters," who now demand the destruction of their proxy voice (Trump) and their rebellion. The Establishment's war on Trump is beneath the surface also a war against a Working Class that has finally had enough of its arrogant, hubris-soaked, self-serving, privileged, elitist "betters" of the Establishment.

If the Establishment had deigned to offer a radical-Left leader who correctly called out the American carnage that is the Working Class experience of the globalized, open-immigration neoliberalism that has so enriched the owners of capital and their "liberal" apparatchiks, then the Working Class may well have voted for the radical-Left truth-teller.

Alas, the Left ground down any opposition to "we 'earned' $200 million" Hillary Clinton and her corrupt coterie of self-serving elites. Having beaten down, stripmined, insulted, denigrated, scorned and exploited the Working Class (whose "proper role" is to provide cannon fodder for the Elites' neocon Permanent War), the privileged, protected Establishment (like every other elite that suddenly finds its entitled dominance challenged) is in a full-blown fury: how dare the Working Class not accept our self-serving rule! We are entitled to rule! How dare they!

Meanwhile, back in reality, household income for the bottom 95% has declined while the owners of capital and their privileged, protected servants in the Establishment have gorged themselves on private wealth.

Here's what's happened as the Left and its armies of privileged fake-Progressives threw the Working Class overboard in favor of serving capital on the First Class deck:

What will it take to shift the balance of power decisively in favor of labor? My guess is the downward mobility of another 10 or 20 million people who currently reckon themselves "middle class" into the unprotected, disenfranchised ranks of the Working Class will do it.

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Via The Daily Bell

 

EU states should guarantee minimum income for citizens … The European Commission wants all EU member states to introduce minimum wages and incomes for their workers and unemployed, the head of the EU executive president said on Monday, in an effort to combat growing social inequality and poverty.  The Commission, which has limited powers in the area of social policy, is preparing an overhaul of the EU’s functions and targets and wants it to include tackling social and economic injustices that have often been successfully exploited by right-wing eurosceptic parties across the 28-nation bloc. – Reuters

The European Union seeks to mandate a basic income. We’d like to see the EU done away with, so from our point of view a basic income is a non-starter. But the EU obviously thinks it is a good idea,

Why? Because it will pretty much end a lot of the agitation against the EU. Or at least that’s the idea. If you are receiving an income from the EU it is harder to argue that you ought to leave it.

More:

“There should be a minimum salary in each country of the European Union,” Jean-Claude Juncker told a conference on social rights in Brussels, adding that those seeking work should also have a guaranteed minimum level of income.

 

Juncker, a former prime minister of Luxembourg, said each state should be free to set its own minimum wage, but added: “There is a level of dignity we have to respect.”

In a sense, the idea is an admission that the current central banking  economy doesn’t work very well. Southern Europe in particular is ravaged by unemployment. At one point, upwards of 50 percent of young people were said to be out of work.

Additionally there is a good deal of social dumping going on. This is a term that describes using migrant workers, especially from the Middle East, to replace higher-wage local workers.

Juncker want to leverage the EU’s 19-country Eurozone that “already shares a single currency and fiscal supervision.” This is not a long-term hypothetical concept. The EU intends to move on the idea within the next few weeks. It will present these ideas in Rome on March 25 during a meeting that celebrates the 60th anniversary of the Treaty of Rome starting today’s European Union.

From what we can tell, this sounds like a true basic income that would be available regardless of a person’s employment status. Juncker is dressing it up in the usual EU verbiage about rights and entitlements. But the idea, ultimately, is to give everyone a regular stipend whether they work or not.

From our point of view, it is nothing more than an attempt to keep the ECB from being exposed to the contempt it so richly deserves. If the central bank is handing out money, it is harder to criticize it,

Additionally, it freezes the current system in place because a basic income puts pressure on people to keep the system as it is. Finally such a system is highly inflationary, so what you are promised is not what you will ultimately receive. You will come under a good deal of additional control for a pittance.

Conclusion: Juncker is buying off his enemies with a program that sounds good but won’t act as promised. People need to make their own way in the world to the degree that it is possible. Otherwise the system itself takes over and there is little hope for improvement.

Other stories:

 

Bank of England’s Andrew Haldane Admits Economic Forecasting Errors

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With spiking mortgage rates, and tumbling mortgage applications, it is hardly surprising that existing home sales tumbled in December but the 2.8% plunge is the biggest since July and is the worst decline for December since 2009.

Larry Yun, NAR chief economist, said that while the housing market had its best year since the Great Recession, it ended on a softer note: "Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market," he said. "However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December." He added that "while a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end."
 

However, worse is yet to come since these closings come from before rates really exploded.

The median existing-home price for all housing types in December was $232,200, up 4.0 percent from December 2015 ($223,200). December's price increase marks the 58th consecutive month of year-over-year gains.   

Lawrence Yun's dour warnings about the future of the housing market in light of surging rates continued when he said that "Housing affordability for both buying and renting remains a pressing concern because of another year of insufficient home construction," said Yun.

"Given current population and economic growth trends, housing starts should be in the range of 1.5 million to 1.6 million completions and not stuck at recessionary levels. More needs to be done to address the regulatory and cost burdens preventing builders from ramping up production."

Yun was also quick to blame the lack of sales on a record low inventory:

Total housing inventory at the end of December dropped 10.8 percent to 1.65 million existing homes available for sale, which is the lowest level since NAR began tracking the supply of all housing types in 1999. Inventory is 6.3 percent lower than a year ago (1.76 million), has fallen year-over-year for 19 straight months and is at a 3.6-month supply at the current sales pace (3.9 months in December 2015).

 

"Constrained inventory in many areas and climbing rents, home prices and mortgage rates means it's not getting any easier to be a first-time buyer," said Yun. "It'll take more entry-level supply, continued job gains and even stronger wage growth for first-timers to make up a greater share of the market."

But ultimately it is a question of deteriorating affordability:

"Housing affordability for both buying and renting remains a pressing concern because of another year of insufficient home construction," said Yun. "Given current population and economic growth trends, housing starts should be in the range of 1.5 million to 1.6 million completions and not stuck at recessionary levels. More needs to be done to address the regulatory and cost burdens preventing builders from ramping up production."

It's even worse for first time home buyers: ""Constrained inventory in many areas and climbing rents, home prices and mortgage rates means it's not getting any easier to be a first-time buyer," said Yun. "It'll take more entry-level supply, continued job gains and even stronger wage growth for first-timers to make up a greater share of the market."

* * *

Needless to say, the NAR was unhappy with Trump's reversal of the FHA mortgage insurance fee. NAR President William E. Brown, said that by cutting annual premiums from 0.85 percent to 0.60 percent, an FHA-insured mortgage becomes a more viable and affordable option for these buyers.

"Without the premium reduction, we estimate that roughly 750,000 to 850,000 homebuyers will face higher costs and between 30,000 and 40,000 would-be buyers will be prevented from entering the market," he said.

Properties typically stayed on the market for 52 days in December, up from 43 days in November but down from a year ago (58 days). Short sales were on the market the longest at a median of 97 days in December, while foreclosures sold in 53 days and non-distressed homes took 50 days. Thirty-seven percent of homes sold in December were on the market for less than a month.

Somre more details:

• All-cash sales were 21 percent of transactions in December, unchanged from November and down from 24 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in December, up from 12 percent in November and unchanged from a year ago. Fifty-nine percent of investors paid in cash in December.
• Distressed sales  — foreclosures and short sales — rose to 7 percent in December, up from 6 percent in November but down from 8 percent a year ago. Five percent of December sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 20 percent below market value in December (17 percent in November), while short sales were discounted 10 percent (16 percent in November).
• Single-family home sales declined 1.8 percent to a seasonally adjusted annual rate of 4.88 million in December from 4.97 million in November, but are still 1.5 percent above the 4.81 million pace a year ago. The median existing single-family home price was $233,500 in December, up 3.8 percent from December 2015.
• Existing condominium and co-op sales dropped 10.3 percent to a seasonally adjusted annual rate of 610,000 units in December, and are now 4.7 percent below a year ago. The median existing condo price was $221,600 in December, which is 5.5 percent above a year ago.

Finally, the regional breadkwon was as follows:

• Sales In the Northeast slid 6.2 percent to an annual rate of 760,000, but are still 2.7 percent above a year ago. The median price in the Northeast was $245,900, which is 3.8 percent below December 2015.
• In the Midwest, existing-home sales decreased 3.8 percent to an annual rate of 1.28 million in December, but are still 2.4 percent above a year ago. The median price in the Midwest was $178,400, up 4.6 percent from a year ago.
• Sales In the South in December were at an annual rate of 2.25 million (unchanged from November), and are 0.4 percent above December 2015. The median price in the South was $207,600, up 6.5 percent from a year ago.
• Sales In the West fell 4.8 percent to an annual rate of 1.20 million in December, and are now 1.6 percent below a year ago. The median price in the West was $341,000, up 6.0 percent from December 2015.
   

via http://ift.tt/2jNspsE Tyler Durden

During his anticipated first meeting of the day with executives from GM, Ford and Chrysler, Trump pledged to cut regulations and taxes in a “very big push” to have more auto plants in the US, noting that environmentalism in the US is out of control, although he said that he is “to large extent” an environmentalist.

Tuesday’s gathering was the first time the CEOs of the big three automakers have met jointly with a U.S. president since a July 2011 session with former Democratic President Barack Obama to tout a deal to nearly double fuel efficiency standards to 54.5 miles per gallon by 2025. Fiat Chrysler is the Italian-American parent of the former Michigan-based Chrysler.

“I want new plants to be built here for cars sold here!” Trump said in a tweet ahead of the meeting with automakers, saying he would discuss U.S. jobs with the chief executives.

During the meeting Trump said that while “it’s not the construction of plants that we’re looking for, although that brings jobs, it’s the long-term jobs that we’re looking for.”

“We’re bringing manufacturing back to the US bigly, we’re reducing taxes very substantially, and we’re reducing unnecessary regulations.”

Trump said that “we want regulations but we want real regulations” although he did not elaborate what those are.

He vowed to make the process “much more simple for the auto companies and everybody else that wants to do business in the United States” and promised to make the US “one of the most friendly countries for manufacturing.”

On regulations he said that “while he is to large extent an environmentalist, it’s out of control. And we’re going to make it a very short process, and we’re going to either give you your permits, or we’re not going to give you your permits but you’re going to know quickly.”

The meeting is the latest sign of Trump’s uncommon degree of intervention for a U.S. president into corporate affairs as he has repeatedly pressured automakers and other manufacturers to “buy American and hire American.”

In short: it sounds like Trump is focused on maximizing efficiency when it comes to relations with the private sector, and in exchange he wants just one thing: a long-term commitment to jobs.

Full clip below:

WATCH: President Trump meets with automakers http://pic.twitter.com/LweDYmdIOT

— Fox News (@FoxNews) January 24, 2017

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Despite lackluster ‘hard’ data (IP only helped by cold-weather-juiced Utility surge), ‘soft’ survey data post-Trump continues to shine as US Manufacturing PMI soared in December to 55.1 – the highest since March 2015 (and notably better than preliminary values and expectations). Despite the steepest increase in new orders in 28 months, export orders were stagnant and employment slipped.

Manufacturing employment continued to increase in January as firms looked to increase their capacity. Though solid overall, the rate of job creation eased slightly from the 18-month high seen in December.

The rate of input price inflation accelerated for the second month in a row in January amid reports of higher raw material costs. Moreover, the latest increase in cost burdens was the sharpest seen in 28 months. As a result, companies raised their selling prices for the fourth successive month, albeit at a moderate pace that was similar to that seen in December.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“US manufacturers are seeing a bumper start to 2017, with production surging higher in January on the back of rising inflows of new orders.

 

“New work is growing at the fastest rate for over two years, thanks mainly to rising demand from customers in the home market. Export growth remains subdued, stymied by the strong dollar.

 

“The survey results suggest that faster manufacturing growth and inventory rebuilding should help boost GDP in the first quarter if current trends persist in coming months. Rising factory employment should also help improve consumer morale and spending.

 

“However, with such strong growth being signalled and price pressures rising, speculation around the next Fed rate hike will intensify.”

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It is just day two of his presidency, and already Trump is taking a sledgehammer to the Obama legacy: in his latest move reported moments ago by Bloomberg, president Trump intends to sign two executive actions today “that would advance construction of the Keystone XL and Dakota Access pipelines“, putting a spoke, so to say, in the train wheels of Warren Buffett’s train-based oil transportation quasi-monopoly.

More details from Bloomberg:

Keystone was rejected under former President Barack Obama. Trump’s move on Energy Transfer Partners LP’s 1,172-mile Dakota Access project aims to end a standoff that has stalled the $3.8 billion project since September, when the Obama administration halted work on land near Lake Oahe in North Dakota.

 

The moves, taken on Trump’s fourth full day in office, mark a major departure from the Obama administration’s handling of the controversial oil pipelines. The steps vividly illustrate Trump’s plan to give the oil industry more freedom to expand infrastructure and ease transportation bottlenecks.

Expect an angry reaction from Buffett, which will promptly flow through to funded environmental protest groups, who will double down in their defense of the two pipelines, of which the Dakota Access was the prominent center of media attention in the waning days of Trump’s presidency.

via http://ift.tt/2jYgw5C Tyler Durden

The F.B.I. director, James B. Comey, told his top agents from around the country that he had been asked by President Trump to stay on the job running the federal government’s top law enforcement agency, The New York Times reports, according to people familiar with the matter.

The political fallout from this decision will make the news cycle buzz today, since Hillary Clinton, the mainstream media, and many Democrats blame Mr. Comey for her defeat, and it is not clear whether she would have kept him on had she won.

but a decision to retain Mr. Comey would spare the president another potentially bruising confirmation battle. As The New York Times adds, it also would keep Mr. Comey at the center of the F.B.I.’s investigation into several Trump associates and their potential ties with the Russian government.

Retaining Mr. Comey could also help calm the bureau’s work force, which has been rattled after a tumultuous few months in which the F.B.I. and the director himself were sharply criticized for moves that many felt influenced the outcome of the presidential election.

 

During the campaign, Mr. Trump harshly criticized the F.B.I. and Justice Department for not bringing criminal charges against Hillary Clinton in connection with her use of a personal email server. After Mr. Trump was elected in November, he said in a nationally televised interview that he had not made up his mind about whether he would ask Mr. Comey to resign.

 

When Mr. Comey and the president-elect met in Trump Tower for the first time earlier this month for an intelligence briefing, Mr. Trump told the F.B.I. director that he hoped he would remain in his position, according to people briefed on the matter. And Mr. Trump’s aides have made it clear to Mr. Comey that the president does not plan to ask him to leave, these people said.

 

…

 

Those who described the plans for the F.B.I. director spoke on the condition of anonymity because they did not want to be identified discussing confidential conversations between Mr. Trump, his aides and Mr. Comey.

We await confirmation – or denial – from The White House. Representatives for the F.B.I. and White House declined to comment.

Mr. Comey will have to manage an increasingly difficult relationship with Mr. Trump and his White House, as the F.B.I. is leading an investigation into ties between Mr. Trump’s associates — including his former campaign manager, Paul Manafort — and the Russian government. As part of that inquiry, agents have examined intercepted communications and financial transactions. Mr. Comey has repeatedly declined to discuss the investigation with members of Congress.

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The latest diplomatic spat between the US and China erupted overnight, when China said on Tuesday it had “irrefutable” sovereignty over disputed islands in the South China Sea after White House spokesman Sean Spicer vowed to defend “international territories” in the strategic waterway. Spicer’s first official comments on Monday signaled a sharp departure from years of cautious U.S. handling of China’s assertive pursuit of territorial claims in Asia.

“The U.S. is going to make sure that we protect our interests there,” Spicer said when asked if Trump agreed with comments by his secretary of state nominee, Rex Tillerson. Two weeks ago, Tillerson said China should not be allowed access to islands it has built in the contested South China Sea.

“It’s a question of if those islands are in fact in international waters and not part of China proper, then yeah, we’re going to make sure that we defend international territories from being taken over by one country,” Spicer said.

This led to the now traditional escalating Chinese response, when, as cited by Reuters, the country’s Foreign Ministry spokeswoman Hua Chunying told a regular news briefing on Tuesday “the United States is not a party to the South China Sea dispute”. 

She added that China’s sovereignty over the Spratly Islands in the South China Sea was “irrefutable” and said that China was also dedicated to protecting freedom of navigation and wants talks with nations directly involved to find a peaceful solution.

“We urge the United States to respect the facts, speak and act cautiously to avoid harming the peace and stability of the South China Sea,” Hua said.

 

“Our actions in the South China Sea are reasonable and fair. No matter what changes happen in other countries, what they say or what they want to do, China’s resolve to protect its sovereignty and maritime rights in the South China Sea will not change,” she added.

The latest verbal escalation follows similar remarks by Rex Tillerson at his Senate confirmation hearing, which prompted Chinese state media to say at the time that the United States would need to “wage war” to bar China’s access to the islands, where it has built military-length air strips and installed weapons systems.

Tillerson was asked at the hearing whether he supported a more aggressive posture toward China and said: “We’re going to have to send China a clear signal that, first, the island-building stops and, second, your access to those islands also is not going to be allowed.” The former Exxon Mobil Corp (XOM.N) chairman and chief executive did not elaborate on what might be done to deny China access to the islands. But analysts said his comments, like those of Spicer, suggested the possibility of U.S. military action, or even a naval blockade. Such action would risk an armed confrontation with China, an increasingly formidable nuclear-armed military power. It is also the world’s second-largest economy and the target of Trump accusations it is stealing American jobs.

Spicer declined to elaborate when asked how the United States could enforce such a move against China, except to say: “I think, as we develop further, we’ll have more information on it.”

Military experts said that while the U.S. Navy has extensive capabilities in Asia to stage blockading operations with ships, submarines and planes, any such move against China’s growing naval fleets would risk a dangerous escalation.

Meanwhile, in what may be even more troubling for the future of US-Sino relations, Trump aides have said the president plans a major naval build-up in East Asia to counter China’s rise. Such a move would lead to even greater anger by China which will have no choice but to retaliate with a proportional military build up and further sabre rattling.

As Reuters adds, citing Washington-based South China Sea expert Mira Rapp-Hooper at the Center for a New American Security, threats to bar China’s access in the South China Sea “incredible” and said it had no basis in international law. “A blockade – which is what would be required to actually bar access – is an act of war,” she added.

“The Trump administration has begun to draw red lines in Asia that they will almost certainly not be able to uphold, but they may nonetheless be very destabilizing to the relationship with China, invite crises, and convince the rest of the world that the United States is an unreliable partner.”

Bonnie Glaser at the Center for Strategic and International Studies think tank called Spicer’s remarks “worrisome” and said the new administration was “sending confusing and conflicting messages.” Dean Cheng, a China expert at the conservative Heritage Foundation, said Spicer’s remarks showed the South China Sea was an important issue for the Trump administration.

He said it was significant that neither Spicer nor Tillerson had been specific as to what actions would be taken and this left open the possibility that economic measures – instead of military steps – could be used against China and firms that carry out island building.

The S&P has yet to decide if a trade war between the US and China is preferable to a conventional one.

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In an unexpected breach from the herd of sellside optimism, this morning Barclays downgraded Apple to Equal Weight from Overweight, putting some pressure on the stock which was down modestly in the premarket. This is what Barclays said to justify its contrarian view on the world’s largest company.

* * *

Downgrade to Equal Weight– No Growth Rebound or Needle Movers

We are downgrading Apple to Equal Weight and lower our price target to $117 from $119. This call is not on the quarter. Despite easier comps approaching, we do not expect meaningful upside potential in the model and thereby consensus estimates for C2017, limiting the stock’s relative outperformance potential – hence, the downgrade. Apple has a sticky ecosystem and large cash balance, though, providing decent downside support for long-term investors.

Growth rebound could be elusive. Our chief concern is that investors increasingly are hoping for a meaningful exit rate (i.e., 10%-plus Y/Y unit growth) led by the iPhone 8 cycle in 2H C2017. Our view is that customers increasingly mixing down (IP6S in favor of IP7) and maturation of the device-centric consumer electronics adoption wave could weigh on both Apple and the smartphone market. We also are concerned about China and India not emerging as growth catalysts in the next 12 months.

Smartphone blues continue. Concurrently, we are lowering our Barclays Global Smartphone market forecast. In our view, the directional movement in the market outlook creates a wider chasm to achieving 10%-plus Y/Y growth exiting C2017 in iPhone units, which could keep Apple’s model and stock range-bound.

Revisions recap. Our revised C2017 global smartphone market revenue and unit growth estimates are for a decline of -0.4% and growth of +5.5%, vs. +4.4% and +7.8% previously. Meanwhile, our revised C2017 total iPhone revenue and unit growth estimates are 4.5% and 3.4%, vs. 7.0% and 5.9% previously. These profiles, if extended to year end, are not likely to expand Apple’s stock valuation multiples, in our view.

The next harvest requires some patience. Long-term growth opportunities related to India, services, the enterprise, artificial intelligence, and maybe even the Cloud still exist; however, we do not expect these potential “what’s next?” opportunities to emerge as major needle movers over the next 12 months for Apple’s model.

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