【Epoch Times, December 18, 2024】Hello everyone, welcome to “Financial Extraordinary Way”. Today, let’s first focus on the news from mainland China.
Today’s highlights: Silicon Valley tycoons show loyalty with million-dollar donations, ABC offers $10 million for settlement! Bleak prospect of deflation, CCP urgently seeks remedy! Retail winter, over 7,000 stores in the US closed! Year-end homecoming rush in the US, travel numbers may set a record!
The overall economic environment in China continues to deteriorate. Faced with overcapacity and weak demand, many factories have had to resort to price cuts. However, instead of helping companies turn the situation around, this has only exacerbated losses, leading to even greater damage to the Chinese economy.
Last week, CCP leaders promised to take more measures to stimulate the economy, including interest rate cuts and increased government borrowing. However, as the pressure on the CCP intensifies, more decisive actions are needed to prevent a vicious cycle of deflation from plunging China into long-term recession.
The ex-factory prices of Chinese factory products have declined year-on-year for 26 consecutive months, with a 2.5% decrease in November, and there are hardly any signs of a short-term rebound. China’s GDP contraction index has been in negative territory for six consecutive quarters, the longest since the late 1990s.
More worrying is that with the upcoming new trade war initiated by US President-elect Trump, the already dire situation facing the CCP is expected to worsen, as the trade war will make it even more difficult for China to export surplus goods to the US, leading to a further backlog of goods domestically.
The question of whether deflation in China has become entrenched is also concerning. As prices fall, eroding business profits, companies may delay investments or lay off employees on a large scale, leading to reduced consumption by the public.
Penelope Prime, founder of the Atlanta-based think tank China Research Center, said: This could become a vicious cycle.
What’s more troublesome is that once the expectation of deflation solidifies, it will be difficult to reverse. In the 1990s, Japan experienced a painful lesson in this regard when the real estate and stock market bubbles burst, and despite interest rates being close to zero, consumers and businesses still tended to pay off debt rather than increase spending and investment. This led to about 30 years of economic downturn and persistent deflation in Japan. Additionally, Japan’s unfavorable demographic structure has further exacerbated its economy. China’s situation today is even more severe than Japan’s at that time.
According to the latest data from research company CoreSight, as of the end of November 2024, 7,100 retail stores in the US have announced closures, a 69% increase from the same period last year. This year, 45 retailers have filed for bankruptcy protection so far, compared to 25 retailers that went bankrupt in the entire year of 2023. However, strangely, at a time when many stores are closing in large numbers, consumer spending in the US seems strong. In other words, while the performance of some retailers has seen a significant increase, more retailers are facing dismal performance.
Last month, the third largest retailer in the US, Target, announced that their earnings and sales for the most recent quarter were lower than expected. Value brands like Family Dollar and CVS Health are also struggling to cope with the downturn in consumer spending, becoming among the companies with the highest number of store closures.
So which retailers are closing stores in large numbers? According to CoreSight data, the retailers closing the most stores include discount chains and drugstores. Family Dollar has closed 677 stores this year, ranking first; CVS has closed 568 stores, ranking second; and Big Lots, ranking third, has closed 580 stores.
Also, major convenience stores like 7-Eleven, Rite Aid, and Walgreens have an astonishing number of store closures.
According to data from the University of Pittsburgh cited by the Associated Press, drugstore closures have been a long-term problem, with over 7,000 drugstores closing since 2019. This has led to a shortage of drugstores in many areas of the US, where residents near residential areas have no drugstores to dispense medications or purchase other health products.
Here is a piece of news from the UK. Last Sunday, December 15, the UK officially became the 12th member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The UK announced last year that it would join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is the UK’s largest trade agreement since Brexit. Joining the agreement means that the UK will be able to apply trade rules to eight of the 11 existing members, and reduce tariffs, including Chile, Japan, Malaysia, New Zealand, Peru, Singapore, and Vietnam.
The UK estimates that the agreement will bring an annual benefit of £2 billion to the UK in the long run, close to 0.1% of the UK GDP. However, the agreement’s greater strategic significance lies in the UK’s ability to influence whether mainland China and Taiwan can join the agreement group.
This free trade agreement originated from the US-supported Trans-Pacific Partnership (TPP), partly aimed at countering China’s growing ambitions. In 2017, during President Trump’s first term, the US withdrew from the agreement.
The Federal Reserve will hold its last monetary policy meeting this week on Tuesday, followed by the announcement of its rate decision on Wednesday. On Monday, The Wall Street Journal reported that investors widely expect the Fed to cut rates for the third time this week. After that, the Fed may slow down or even halt rate cuts.
The article points out that Fed Chairman Powell must balance policy adjustments in the face of internal differences. Since late summer, the frequency and magnitude of rate cuts have raised concerns among some Fed officials, with some hawks fearing that too rapid rate cuts could send incorrect market signals, leading to persistently high inflation, damaging the Fed’s reputation. Moreover, some of the economic policies that President Trump will launch could also lead to higher inflation.
Former Boston Fed Chairman Eric Rosengren said: If I were a voting member on the committee right now, I would vote against.
Furthermore, the performance of speculative assets such as stocks and Bitcoin has also raised concerns among hawks.
Fed Governor Michelle Bowman said in a speech earlier this month: Given recent economic activity, it is difficult to see the current rate level as restrictive.
At the same time, doves are concerned about slowing economic growth and believe that rate cuts are necessary to stimulate the economy. They believe that the Fed raised rates too much in the past two years and now needs to carefully assess the risks of rate cuts.
Chairman Powell believes that it is necessary to prevent excessive inflation and weak economic growth. He emphasized that the Fed needs to find a balance between “going too far” and “not going far enough.”
Currently, the performance of the US labor market is delicate, with low hiring and firing rates. Economic growth is relatively stable, but unemployment has risen. Interest rate-sensitive industries, such as the housing market, have not fully benefited from rate cut policies.
Since rate cuts were initiated in September of this year, a series of economic data in the US has shown that the resilience of the US economy has exceeded expectations. Income growth and personal savings rates are higher than initially estimated, easing concerns about economic recession and indicating that the Fed’s drastic rate cut policy may have been too aggressive.
Overall, the decision-making process of the Fed’s rate cut this time is filled with complexity and uncertainty, with internal disagreements within the committee, continuously changing economic data, and policymakers’ assessments of risks all having significant impacts on the eventual policy direction.
After Thanksgiving in the past two weeks, related consumption data continues to be released. According to the latest report from Adobe Analytics, “buy now, pay later” services set a new record on this year’s “Cyber Monday”.
In the US, more and more people are using “buy now, pay later” services. On Cyber Monday after this year’s Thanksgiving, the single-day online shopping spend using “buy now, pay later” services reached a record $9.912 billion. This indicates that more Americans are turning to the “buy now, pay later” payment method to avoid accumulating large credit card debts, and more retailers are accepting “buy now, pay later.”
In 2023, the total spending through “buy now, pay later” in the US exceeded $75 billion, higher than $65 billion in 2022, and analysts predict that this figure will continue to increase this year. However, experts also warn that while “buy now, pay later” can provide consumers with more flexibility, there is also financial risk if debts are not repaid on time.
Next, let’s focus on some Christmas-related news. Starting this weekend, the US will officially enter the year-end travel season, with the American Automobile Association (AAA) stating that this Christmas, air and road traffic may hit new records.
Whether it’s for family reunions during the Christmas holiday or winter vacations, the skies and roads in the US will be busy during Christmas this year.
AAA spokesperson Aixa Diaz: “Thanksgiving set a record, based on year-end holiday projections, we’re expected to set another record. ”
The American Automobile Association predicts that from Saturday, December 21st to Wednesday, January 1st, a total of 119.3 million Americans will travel at least 50 miles, with 107 million of them traveling by car. The good news for them is that gas prices at the end of this year are lower than last year.
AAA spokesperson Aixa Diaz: “During the holiday season, many people choose remote work and rarely go to the office, reducing the demand for gas. With many people choosing to shop online, there are fewer people driving to stores now too.”
However, according to the latest inflation data, air ticket prices in the US have increased by 4.7% compared to the same period last year. Although domestic flight prices are still within a reasonable range, time is running out for booking tickets.
Melanie Fish, an Expedia travel expert: “If you haven’t planned a trip to visit your grandma across mountain and forest by now, you need to act quickly.”
Although air travelers have not encountered many flight delays or cancellations this year, the upcoming year-end “homecoming rush” means that travelers need to be prepared.
Melanie Fish, Expedia travel expert: “Since it’s holiday time, please make sure you have downloaded all travel apps to get the latest updates. Try to carry your luggage with you as much as possible to save yourself the trouble of looking for lost luggage. Also, stay flexible and make sure to leave enough time for yourself at the airport.”
In the West, although Christmas holidays are a joyful time for family gatherings, it is also a time that requires special attention to safety. Every year at this time, experts come out to remind people: holidays should be not just happy, but also healthy. Cooking delicious dishes, decorating homes, and buying toys all require increased attention to safety.
Here is a heart-wrenching piece of data from the US Consumer Product Safety Commission: during the 2023 Christmas holiday season, approximately 14,900 people in the US had to go to the emergency room for injuries related to holiday decorations.
Dr. Carole Parsons from a clinic in Cleveland: “I have seen people fall off ladders, off roofs, and even if they climb down carefully, they may slip due to wearing the wrong shoes, and end up in the hospital for serious injuries.”
Doctors tirelessly remind people before climbing a ladder to make sure both legs of the ladder are securely fixed.
Dr. Carole Parsons from a clinic in Cleveland: “Once up on the ladder, many people reach out to grab the next set of lights for the sake of convenience. But they should actually climb down from the ladder, move it over, and reposition it.”
When purchasing a Christmas tree, it’s essential to be aware of safety hazards. If using an artificial tree, make sure to purchase one labeled “fire-resistant”. And if buying a real tree, be sure to water it often to prevent the tree trunk from drying out and becoming a fire hazard. Be careful when decorating the Christmas tree.
Dr. Carole Parsons, from a clinic in Cleveland: “Most of the decorations nowadays are plastic, but there are still quite a few ceramic or glass ones. If they fall on the ground and break, it’s easy to step on the shards or cut your fingers. Every year, there are patients who come to the emergency room to be treated for this.”
During the holiday season, apart from paying attention to personal safety, it’s also necessary to be mindful of cyber safety. As the year draws to a close, online shopping will once again drive consumption in the US to record levels, but it also provides significant opportunities for scammers. How to avoid becoming a target for scammers, cyber security experts have provided some tips.
As the Christmas bells ring and people immerse themselves in the atmosphere of joy, little do they know that this is also the most extraordinary time of the year for fraudsters.
CNET cybersecurity and finance editor Danni Santana: “Because at this time we shop more than at any other time of the year.”
Online fraud is everywhere, from emails to text messages, and even browsing social media can make you a target.
Melanie McGovern, Director of Communications at BBB: “Unfortunately, scammers can track us like legitimate marketers. They can track our cookies, see where we’re going, see what we’re searching for, and then you’ll see pop-up ads about what you just searched for an hour ago.”
Online scams leave traces, and many patterns emerge from various types of online fraud. Security experts believe the most concerning scams this year include: unfulfilled parcel warnings; fake charity organizations soliciting donations; gift card exchange or gifting schemes.
If you receive a message that seems like it’s from a parcel delivery company in your email or through a text message, asking you to click a link, it’s a common scam tactic. And if you see highly attractive ads popping up on social media, it’s important to be cautious.
Melanie McGovern, Director of Communications at BBB: “We see many pop-up websites that look very similar to legitimate retailer websites, but one of the letters in the web address could be off.”
Faced with online traps, basic practices to protect personal property and data security include: confirming that the items being produced or sold by the company are from reputable sources; strengthening password settings; not clicking on suspicious links in text messages or emails; and not being enticed by overly cheap offers.
CNET cybersecurity and finance editor Danni Santana: “If the price looks too good to be true, it probably is. If the price is being slashed by three-quarters or half, investigate the company because, as I’ll say again, it’s most likely a scam.”
The theater of life always provides more drama than staged plays, and Trump’s experience is more dramatic than fiction. His resilience and perseverance for justice and truth have finally brought about a turning point, and he is now at the peak of his life. As the newly elected President, he has not only rid himself of many federal level lawsuits, but will become the most powerful figure in the United States and even globally over the next four years.
After being re-elected, Trump has once again been named Time Magazine’s Person of the Year. This marks his second Time cover since 2016. Following this, last Thursday, Trump also came to the New York Stock Exchange to host the bell-ringing ceremony, touring his victory lap for his re-election.
During the bell-ringing ceremony at the NYSE, while Trump was the absolute star of the event, the dozens of business leaders standing behind him were also equally eye-catching. These business leaders, who control the lifeline of the US economy in their respective industries, were lined up like fans, applauding and cheering, just for a chance to get up close with the President-elect of the next four years.
It was reported that Trump’s campaign team received numerous congratulatory and appeasing calls from CEOs after the election. These executives eagerly wish to visit Mar-a-Lago, meet with Trump, and listen to his new policies and plans for the future.
Although Silicon Valley tech giants did not physically show up in New York to congratulate Trump, they have also been expressing their goodwill in various ways. Among these tech tycoons, some who were the most disliked by Trump and publicly threatened with retaliation are now rushing to show their loyalty to the future President. One notable example is Mark Zuckerberg.
Mark Zuckerberg, who is known for his years of jogging exercise routines and was once featured as the runner-up in a charity race in the Silicon Valley, completed a 5-kilometer race in 19 minutes and 34 seconds. This speed is remarkable even among amateur runners. Zuckerberg, the fast runner, is also the fastest runner among those showing loyalty to the future President. The day before Thanksgiving, little Zuck had already secured the opportunity to have dinner with the President-elect at Mar-a-Lago. Evidently, Trump has decided to give him a chance to mend the relationship.
It was a fine detail during Zuckerberg’s and Trump’s dinner that they also listened to the national anthem sung by the “January 6th Chorus.” This group was composed of participants in the January 6th Capitol incident. Trump had promised during his campaign to grant them clemency immediately after being elected.
Clearly, Zuckerberg has successfully mended his relationship with Trump through donations and intermediaries. Although Trump has not openly praised Zuckerberg’s recent efforts, at least he has not publicly threatened him anymore. For little Zuck and Meta, this should be the best outcome.
Another wealthy tech giant who is eager to repair relations with Trump is Amazon’s founder, Jeff Bezos. Bezos will also be coming to Mar-a-Lago next week with his fiancee for dinner with Trump.
Before meeting Trump, Bezos also presented a gift: Amazon announced that they would donate $1 million to Trump’s inauguration committee, and through their platform Prime Video, will be broadcasting Trump’s inauguration ceremony.
It’s well known that Bezos was once one of Trump’s most despised individuals, and their tense relationship can be traced back over a decade. At that time, Trump openly criticized Bezos for acquiring The Washington Post, and The Washington Post had also continuously published negative reports about Trump. Bezos responded by saying: I’m going to send Trump into space!
However, over the past few years, the relationship between Bezos and the Trump family has quietly evolved. In 2023, after stepping down as Amazon’s CEO, Bezos moved to Miami, Florida, where he spent $144 million to purchase two luxury mansions in the Miami area, becoming neighbors with Ivanka Trump and her husband. Over the past year, the two families have interacted frequently, and Ivanka and her husband were invited to Bezos’s 60th birthday party.
Apart from building closer ties with Trump’s family, Bezos also made a significant gesture to Trump before the election. During the most critical period of the general election, The Washington Post and The Los Angeles Times unexpectedly announced that they would not endorse Kamala Harris. Although their official rationale was to maintain neutrality in the election, this abrupt change from decades of endorsing tradition, undoubtedly threw a curveball at Harris at the most crucial moment. Although The Washington Post lost 200,000 subscriptions due to their refusal to endorse Harris, Bezos remained unfazed, fully aware of which side held more sway.
By the way, another wealthy individual who refused to endorse Harris at the same time as Bezos was Chinese-American billionaire Huang Xiangxiang in the biopharmaceutical field, whose fortune exceeds tens of billions of dollars. For both Bezos and Huang Xiangxiang, these two newspapers, along with