“I don’t think these responses show that a bottom has been reached,” Loewengart said of E-Trade’s latest survey. “We would see it in the asset allocation question and we not seeing it,” he said, pointing to findings in the survey that show the majority of investors with $1 million or more in their accounts are planning no changes over the next six months.
Loewengart said the market rebound since Fed chairman Jerome Powell became more dovish in his comments — that is, less likely to raise rates soon — shows how important that change in the Fed’s outlook has become to many investors. “The markets really calmed down after we saw Powell’s change in posture.”
Another swing factor is U.S.-China trade. It was cited by 71 percent of millionaire investors in the E-Trade survey as the biggest risk to investment portfolios — gridlock in Washington was a distant second at 40 percent. This suggests that if the headlines about the U.S. and China resolving trade their differences are real, investor sentiment could swiftly reverse.
For now, “they want to protect and don’t want to make changes, but no one is heading for the hills,” Loewengart said.
The E-Trade survey was conducted from Jan. 2 to Jan.10 among an online U.S. sample of 910 self-directed active investors who manage at least $10,000 in an online brokerage account. The segment of investors with $1 million or more in an online brokerage account is provided exclusively to CNBC and included 124 respondents in the January survey. The respondents are broken into thirds of active (trade more than once a week), swing (trade less than once a week but more than once a month), and passive (trade less than once a month).
“In Shanghai, you also need a licence to run a business and many of the small vendors have been kicked out because they don’t have a licence,” she says.
The couple are the face of the millions of small business owners the Chinese government says it wants to help with tax cuts and other incentives to get the world’s second-largest economy firing on all cylinders again. While official 2018 GDP data to be released on Monday will show the world’s second-largest economy grew at more than 6.5 per cent, many small business owners say they are not seeing the benefits of the country’s economic miracle.
They are a world apart from the billionaire property and tech entrepreneurs China has become famous for. For many life is better than for previous generations in the country but the promise of easy money that lured them to big cities like Shanghai a decade ago has dried up.
“The Golden Era of Shanghai is over,” declares Steve Venturini, who is leaving China after running a popular Italian bistro and gelateria in Shanghai’s former French Concession for 10 years. Entrepreneurs like Italian-born Venturini, whose father is from Australia, says business became untenable due to soaring costs, taxes and tighter regulation. This came at a time when the prices for luxury goods, such as the pasta and ice cream his customers would queue up for, were falling.
“It’s always been tough but the government doesn’t care if you are making a profit or not. Prices dropped but rents and utility fees and taxes keep going up,” says Venturini who is moving to Japan where his wife was offered a job.
While Beijing is promising to cut taxes for small business, many small business owners say this defeats the point as many never paid tax in the first place.
While China’s unemployment rate and economic growth is better than in many Western countries, including Australia, growth in the world’s second-largest economy is slowing to its lowest rate in a decade. Official GDP data due out Monday is expected to show growth slowed to 6.4 per cent with full-year growth coming in around 6.6 per cent. But the official figures will mask the challenges facing many of China’s small businesses, which are struggling to compete with large state-owned companies and the boom in online shopping and services.
Despite this, Beijing’s economic policymakers made it clear last week that it wants to help the millions of small business owners who make up the backbone of the world’s second-largest economy.
“I feel business is getting more difficult. It is getting harder to run a business in China now,” says Shen Lihua, who opened his souvenir store in Shanghai’s tourist hot spot Yuyuan Garden 14 years ago. He is busy when The Australian Financial Review arrives, as locals pile in to buy Chinese New Year decorations, but he says business is generally slow. His main concern is rising rents, labour costs and tougher regulation, which was making it harder to make a profit. Many small business owners seem unaware of the tax cuts outlined by the government last week.
Shen says tax cuts are nothing new. He says his taxes were cut several years ago from 1200 yuan a month to 200 yuan a month. But during the same period, the rent for a 160-square-metre storage warehouse rose from 40,000 yuan a year to 160,000 yuan.
“Business is not good. There are less pedestrians and less crowds than before,” says another stall owner, Che Mingli, who is also selling Chinese New Year decorations. New regulations mean the trestle tables laden with goods cannot be extended out onto the street like they were previously and he says this has reduced sales.
He blames a sluggish stockmarket for keeping people away because they are concerned about their investments and have less monty to spend. “People are less comfortable spending,” he says. Che opened the business 10 years ago and said business was good up until 2017 when he started to feel a slowdown. His rent has almost doubled in the past two years.
While’s China’s growth still overshadows many Western economies including Australia, the economic slowdown is causing problems for President Xi Jinping as he comes under pressure from the United States to give up some of the generous trade benefits that contributed to its boom. The latest slew of economic data, including falling car sales, slowing retail sales and the country’s debt pile is making investors globally anxious. If China runs into trouble, the world economy will feel the effects.
China’s inflation-adjusted GDP slowed to 6.5 per cent in the third quarter and economists expect this to slow to 6.4 per cent in the fourth quarter, according to consensus estimates published by Bloomberg and Reuters. China’s leaders will officially release 2019 GDP forecasts in March. Comments by top economists in China and government officials suggest the government is preparing to lower targets for the current year to as low as 6 per cent.
Economists in Australia and globally are divided over how to accurately measure the health of the Chinese economy. Many believe the official data in a country where the ruling Communist Party does not tolerate provincial governments missing targets, is unreliable. But others point to a long history of China bears being proved wrong and believe growth remains robust compared to almost everywhere else in the world.
There is little doubt growth is slowing though and the big question is how far will China’s leaders go to stimulate growth and resolve its trade dispute with Washington.
Retail sales in November grew at their weakest rate in 15 years, the Purchasing Managers Index (PMI) was flat in November for the first time in two years and power consumption slipped 9 percentage points in 2018. China’ car sales fell for the first time in almost three decades in 2018 after the government cut subsidies. There are already signs in the local media that Beijing will lower last year’s 6.5 per cent target to as low as 6 per cent. Property sales are falling amid reports developers are offering steep discounts to attract buyers.
But Huw McKay, BHP Billiton’s vice-president for market analysis and economics, says China’s nominal GDP data, which was tracking around 9 per cent last year, shows the economy remains strong.
“It is an economy which is absolutely slowing but it is not an economy which is showing major signs of weakness,” he says. “We are not facing this with incredible trepidation, this is a slowdown and we really hope they get their act together on trade negotiations so we can stabilise that uncertainty.”
McKay says housing starts are up and the government is likely to bolster infrastructure and the automotive industry. He also points to strong steel production, power generation, excavator output and sales of airconditioners as signs that the economy remains robust. Supply-side reform meant demand for Australia’s high quality iron ore and coal also remained steady as China shut down inefficient steel mills using low quality commodities. Demand for gas was also a bright spot in the economy.
Dion Hershan, head of Australian Equities at Yarra Capital Management in Melbourne and a regular visitor to China, is cautious on the outlook for China’s growth but agrees that demand for Australian commodities is stable for now.
“Over time we expect the volume and value of coal and iron ore exports to decline, in part because more local scrap steel will become available,” he says.
“Within the commodity complex, LNG is a rare bright spot and will continue to benefit as coal is de-emphasised with a view to reducing pollution. Australia’s other major exports to China – such as education, travel and consumer goods – are growing but remain small by comparison. In simple terms, Australia probably exports 60 times more iron ore than wine to China and 75 times more coal than infant formula.”
Economists in China note unemployment is rising as companies lay off workers and private sector confidence is weak. It is unclear how effective government policies will be in addressing the slowdown.
“It is a very important and urgent task for Chinese government to boost entrepreneurs’ confidence. Chinese government is taking measures to boost entrepreneurs’ confidence, but these measures are not enough.” Xiang Songzuo, a senior economist at Renmin University, says.
“I would say Michael Cohen would have a much better recollection of it than the president,” Giuliani added. “It was much more important to him. That was his sole mission. The president was running for president of the United States. So you have to expect there’s not going to be a great deal of concentration on a project that never went anywhere.”
Also appearing on “Meet the Press,” Virginia Democratic Senator Mark Warner said that the idea that negotiations could have continued into November was “big news.”
“That is news to me, and that is big news. Why, two years after the fact, are we just learning this fact now when there’s been this much inquiry?” Warner, the top Democrat on the Senate Intelligence Committee, asked.
“I would think most voters — Democrat, Republican, independent, you name it — that knowing that the Republican nominee was actively trying to do business in Moscow, that the Republican nominee at least at one point had offered, if he built this building, Vladimir Putin, a free-penthouse apartment, and if those negotiations were ongoing up until the election, I think that’s a relevant fact for voters to know. And I think it’s remarkable we are two years after the fact and just discovering it today.”
The Moscow tower project is part of investigations by the special counsel and lawmakers into links between Trump’s campaign and Russia’s interference in the 2016 election.
Cohen has said he lied about the length of his involvement in the process in order to be consistent with Trump’s own public pronouncements that he wasn’t involved in business dealings with Russia.
President Donald Trump went on a Twitter tear against Nancy Pelosi Sunday morning, which ended with him saying he was “still thinking” about House Speaker Nancy Pelosi’s request to postpone his State of the Union speech or submit it in writing.
“Nancy, I am still thinking about the State of the Union speech, there are so many options – including doing it as per your written offer (made during the Shutdown, security is no problem), and my written acceptance,” Trump wrote in a tweet. “While a contract is a contract, I’ll get back to you soon!”
“Sadly, given the security concerns and unless government re-opens this week, I suggest that we work together to determine another suitable date after government has re-opened for this address or for you to consider delivering your State of the Union address in writing to the Congress on January 29th,” Pelosi wrote in a letter to Trump last week.
After the request, Trump seemingly retaliated by canceling Pelosi’s military flight Belgium and Afghanistan.
The State Of The Union address would give Trump another chance for a public appeal on behalf of constructing his long-touted border wall, over which congressional lawmakers fell into gridlock and triggered a shutdown on December 22.
Since the shutdown began, Trump has clashed with Pelosi several times, claiming without evidence she is controlled by “the radical left” and storming out of a meeting with her and Senate Minority Leader Chuck Schumer after they said they would not consider a deal that included funding for the wall.
Less than an hour before he tweeted he was still considering Pelosi’s request, Trump tweeted to claim that Pelosi had become a “Radical Democrat,” and is petrified of “lefties” within the party.
Trump also took aim at Democrats’ rejection of a “compromise” he announced Saturday in a much-teased announcement where he offered Democrats a deal combining temporary protection for so-called “Dreamers” and other immigration proposals in exchange for funding for his border wall.
The proposal immediately prompted sharp backlash from Democratic lawmakers, who rejected the offer before Trump even announced it.
Pelosi rejected the plan Saturday, saying: “Unfortunately, initial reports make clear that his proposal is a compilation of several previously rejected initiatives, each of which is unacceptable and in total, do not represent a good faith effort to restore certainty to people’s lives.”
As the shutdown reaches its 30th day, lawmakers and the Trump administration remain in a tense standoff as Trump continues his demands for a $5.7 billion border wall and his public hits at Pelosi.
Saints quarterback Drew Brees is looking to lead his team to its second Super Bowl championship in franchise history. The team will get that much closer this Sunday when the Saints play the Rams in the NFC Championship at 3:05 pm ET.
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New Orleans’ first Super Bowl title came in 2010, when the Saints, with Brees at the helm, beat the Indianapolis Colts.
But the 40-year-old quarterback and his team haven’t always been on top: When Brees first joined the Saints in 2006, the team was coming off a dismal 3-13 season.
It was during that low point when Brees cemented his leadership, his former teammate Steve Gleason tells ESPN. “We were meeting as a team,” Gleason recalls of the start to the 2006 season. “And as Coach [Sean] Payton was wrapping up, unplanned and unannounced, Drew said, ‘Hey, Coach, can I talk to the team for a bit without the coaches?’ … He was willing to stand in front of uncertain teammates and set lofty, even outrageous goals, for a team that had gone 3-13 the year before.”
“I remember being nervous for him,” Gleason continues. “Drew listed the characteristics that he saw as vital to achieve the goal he set for us: courage, resilience, poise, discipline, unity, etc. Not only that, as he listed each characteristic, he talked about players in the room who embodied those characteristics. The team was captivated. We had our leader.”
That year, the Saints not only improved their record, they went 10-6 and won their division.