All posts by James Cannon

About James Cannon

James Cannon is an experienced hedge fund analyst. He has served on the advisory boards for various different Fortune 500 companies as well as serving as an adjunct professor of finance. James Cannon has written for a variety of Financial Magazines both on and off line. Contact James at james[at]businessdistrict.com

Bikers Boycott Harley, But Buy Haitian T-shirts

News, Politics, , ,
Harley-Davidson motorcycle.

In a bit of an ironic twist smothered in hypocrisy, it turns out Bikers for Trump leader Chris Cox chose to have pro-Trump T-shirts made in Haiti and not in the United States, to save money, despite Cox’s announcement that he will be boycotting Harley-Davidson for sending production overseas.

Bikers for Trump is a vocal group extending support for President Trump and has met the president on many occasions. The last time they met was this past Sunday, the same day that Trump tweeted his agreement with a boycott of Harley-Davidson, a US-based manufacturer of motorcycles.

Harley-Davidson announced that it was moving some of its production of motorcycles abroad for its European market, to avoid tariffs that would force the company to charge an additional $2,200 for each bike it sold to its European customers. The EU tariffs which the company seeks to avoid are a result of the trade war started by President Trump.

Yes, despite the declaration of a boycott against Harley-Davidson, Cox decided to purchase pro-Trump T-shirts in Haiti to save some money.

“If I get a T-shirt made in the USA, it’s going to cost about $8 more,” Cox told the New York Times.

“I looked far and wide to try to get a shirt made in America, it’s just they get you, they gouge you,” he said while selling the T-shirts from his RV for $20 each.

One Bikers for Trump member, Gary Rathbun, told the Times, “I’m riding my last Harley. It was American made, and that’s why we stood behind them.”

It was unclear whether Rathbun bought a pro-Trump T-shirt made in Haiti. Or if he would even notice a problem with such a purchase.

Despite Threat of Trade War US Economy Strong

Trade, ,
Courtesy of wikideas.

The major indicators did not falter the day after President Trump announced he was raising the threatened tariffs on China from 10% to 25% on $200 billion worth of products. The NASDAQ composite, the Dow Jones Industrial Average and the S&P 500 were all higher by a bit following the announcement.

The consensus among analysts is that US business will survive the latest signs of a coming trade war as well as they have previous similar threats from the president and from reactions from abroad.

In an interview Randy Frederick, vice president of trading and derivatives at Charles Schwab& Co. Inc said,

“The economy generally is so strong that, despite the challenges of the potential trade war, the strength of the economy is more than offsetting that. Corporations have posted record profits this quarter that we haven’t seen in over a decade.”

There have been warnings, however, from companies such as Coca Cola, General Motors, Caterpillar, Ford and Harley Davidson that the tariffs of 25% already imposed on steel and 10% on aluminum; and previous tariffs on $34 billion of Chinese goods, will have negative consequences on 2018 earnings, and further into the future. Retaliatory tariffs have already been imposed by China and US allies like the European Union, Mexico and Canada. There are also many smaller businesses that have suffered from the tariff policy.

Not everyone is suffering. Many companies have seen higher profits during Q2. Apple’s sales in China flew to 19 percent from March to June. Caesars Entertainment Corp showed an 89.3% increase in profits to $282 million. And even though Caterpillar predicted higher prices, the company’s net income rose 112% during Q2 to $1.7 billion.

These data points are not indicative of anything, since the tariffs will not be imposed until September at the earliest, and their effect will not be manifest until months later. US Business is still fearful of what tariffs will do to their bottom lines:

“We said before that this round of tariffs amounted to doubling down on the recklessness of imposing trade policy that will hurt U.S. families and workers more than they will hurt China. Increasing the size of the tariffs is merely increasing the harm that will be done,” National Retail Federation CEO Matthew Shay said in a statement. “Quite simply, there has been no better example of cutting off one’s nose in order to spite the face.”

Trade War Escalates as Trump Proposes 25% Tariffs on Additional Chinese Goods

China, ,

President Donald Trump announced that he will seek 25% tariffs on $200 billion of Chinese goods coming into the United States. The tariff was set to be 10%, but the White House is seeking to increase pressure on China to adhere to fairer trade policies.

On July 10 the administration said it would ask for 10% tariffs on thousands of Chinese products. Those imports include consumer goods such as furniture, dog food and baseball gloves to manufacturing materials like chemicals, steel and aluminum.

Before the tariffs can be imposed the proposal must wind through a period of public comment. The US Trade Commission has set the deadline for such comments to be filed by August 30 with hearings scheduled for August 20-23.

It is expected that a 25% tariff will be greeted with even less enthusiasm than the already beleaguered 10% tariff has been subjected too. It is expected that a 25% tariff will seriously escalate the trade war now already in progress.

Back in July China accused the US of bullying and threatened to hit back with tariffs of its own. Investors are afraid that a full-blown trade war could slow down global growth. Many key US business groups have criticized harshly Trump’s tariff policy.

The First Major Business School in the US Reaches Gender Parity

Education, , ,

This coming fall men and women will make up the student body of the incoming class in close to equal numbers at the University of Southern California’s Marshall Business School. It is the first time such a highly-ranked business school in the US can claim gender parity in its full-time MBA program. The milestone was achieved this year with a 20% jump in the number of women enrolled, from 32% last year to 52% this coming year.

“We know industry is looking for more women for leadership-level positions, so it will give us a chance to satisfy those needs from our employers,” said Dean James G. Ellis. He added that the gender gap in business runs “from boards to senior leadership down to entry level.”

Presently, many of the nation’s primary business schools favor men by about 20%, with women making up 40% while men are represented by 60% enrollment.
Ellis explained the several factors that contributed to USC made the jump to parity in just one year.

“The quality of the pool was strong, and the yield was good. A lot of our students were helping with recruiting,” he said. The school also had “positive reputational stuff” combined with a large climb in MBA rankings, which also helped. US News ranked USC as the 20th top business school in 2018, up from 31st in 2016.

According to global non-profit Catalyst, gender parity at the highest levels of business is few and far between. Women make up about 54% of the labor force among the S&P’s top 500 companies in the financial services sector, but they constitute only 29% of the executive and senior-level manager positions. Women only occupy 2% of the CEO positions. The tech world has similar figures.

Around the world business schools are struggling to improve gender diversity, hoping that these efforts will translate to more women in positions of power and influence when they graduate. Some of the methods used to encourage women to come to MBA programs are scholarships and executive coaching for women, to yearly gender diversity seminars.

GM Say Tariffs are Bad for Business and Bad for People

Automobile Industry, , , , , ,

General Motors explained to the US Commerce Department that broad tariffs such as the

Fábrica de General Motors en Rosario. Photo courtesy Baglieto.

kind the Trump administration is threatening to impose, could “lead to a smaller GM, a reduced presence at home and abroad for this iconic American Company, and risk is less-not more- U.S. jobs.” GM is the country’s largest automaker.

Back in May the Trump administration started an investigation to see if imported vehicles are a threat to U.S. national security. President Trump as many times stated that he would be happy to place a 20 percent import tariff on vehicles.

GM produces some of its cars overseas now for the U.S. market, including in Canada and Mexico. GM warned that tariffs could dampen sales and raise prices. Even if the company decided not to pass on their higher costs to consumers, this “could still lead to less investment, fewer jobs and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies,” GM said.

The company employees about 110,000 people throughout the United States in 47 manufacturing plants. It purchases tens of billions of dollars’ worth of car parts from US suppliers annually. They have invested more than $22 billion in US manufacturing infrastructure since 2009.

The overbroad and steep application of import tariffs on our trading partners risks isolating U.S. businesses like GM from the global market that helps to preserve and grow our strength here at home,” GM said.

Also filing comments in opposition to the Tariffs was Toyota Motor Corp. They said that tariffs would, “threaten U.S. manufacturing, jobs, exports, and economic prosperity.”