PHILADELPHIA—Just Tuesday, and it’s already been a busy week economically, says nationally syndicated host and biblical investing authority Dan Celia.
“We started off the week losing $1.1 trillion worth of market cap,” Celia said. “That’s never good, but at the same time, it is transitory. It is not something that will hold for a prolonged period of time. The rhetoric in China, very aggressive rhetoric, has been ramping up, basically saying, ‘Bring it on.’ The problem is, they seem to forget they need us far more than we need them. As a matter of fact, we don’t need them at all. We can move to Cambodia, Vietnam, Indonesia, South Korea and many other places that are clamoring to get our business. As a matter of fact, three to five years ago, apparel manufacturing already started moving out of China. That is likely to continue in the coming months. Even if a trade deal gets settled, China will likely lose an awful lot of American businesses that will be manufacturing elsewhere for fear that this could happen again.
“I think President Trump is right to stand his ground,” Celia added. “This is good for America. It’s good for the American people. Nothing that is good in the long run comes without a little bit of pain in the short term, and certainly we may have that, even in markets. The big question is—will we be able to maintain a fairly stable economy, and will we start seeing capital expenditures by corporate America begin to slow? That is a concern and would be a problem for the future of GDP growth. Consumers seem to be emboldened by the strength of this president, who seems to be willing to stay in the fight.
In regards to the apparel industry in China, Celia added, three years ago, 50% of all apparel in the U.S. came from China, while today it is only 15%.
“There are some other retail companies, such as Bed Bath & Beyond, Lumber Liquidators and others, that are highly dependent upon China,” he said. “If the goods coming to America face tariffs of 25%, that will certainly hurt some retailers, and we will see zero retail sale earnings for the next year or two. And that is the last thing retailers need. But again, in the long run, it will work out to be stronger for America and better in the long run for retailers.
“Our biggest concern for consumers could very likely be gasoline prices in the not-too-distant future,” Celia continued. “We are headed into the all-important driving season of the summer, and if other geopoliticalevents continue to drive up gasoline prices at the pump, that may take the wind out of consumer confidence along with trade disruptions. The average two-car American family uses 100 gallons of gasoline a month, and increases in gas prices come right out of consumer discretionary income.”
Celia discusses these and other global and economic headlines on his daily, three-hour “Financial Issues” program, heard on about 650 radio stations nationwide, as well as several television networks.
Read more about Celia, FISM and “Financial Issues” or visit the FISM website, its Facebook page, on YouTube at Financial Issues with Dan Celia or on Twitter @financialissues; download the FISM app here.
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