S&P, Nasdaq again close at record highs, trade choppy
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The S&P 500 edged higher to eke out a record high close for a sixth straight session on Monday, while the Nasdaq also advanced to a closing record in choppy trade as investors gauged the U.S.-EU trade pact and prepared for a week of major market catalysts.U.S. President Donald Trump and European Commission President Ursula von der Leyen unveiled atrade frameworkon Sunday, slashing EU import tariffs to 15% - half the previously threatened rate that was scheduled to take effect on August 1. Still, France denounced the deal as a "submission."The deal is the latest announcement in recent days on U.S. trade agreements with countries such as Japan and Indonesia. Top U.S. and Chinese economic officialsresumed talksin Stockholm to resolve a trade war between the world's two largest economies."It's feel-good in the sense that it doesn't represent Armageddon, if the draconian tariffs went into place," said Scott Welch, chief investment officer at Certuity in Potomac, Maryland."But it's much too soon to pass judgment on the long-term effects on how that will play out. It's better than the alternative for sure, and so I hope they continue."The Dow Jones Industrial Average fell 64.36 points, or 0.14%, to 44,837.56, the S&P 500 gained 1.13 points, or 0.02%, to 6,389.77 and the Nasdaq Composite gained 70.27 points, or 0.33%, to 21,178.58.The benchmark S&P 500 index has now notched six straight daily closing records, en route to its 15th closing record of the year. Stocks have rebounded strongly from a selloff that began in early April when Trump announced a slew of tariffs.Mounting enthusiasm over the potential for AI technology has helped lift stocks, along with the realization of some trade pacts and early indications corporate earnings season may be better than anticipated.Investors now await a policy announcement from the Federal Reserve on Wednesday. The central bank iswidely expectedto keep U.S. rates unchanged even as Trump has ramped up pressure on Fed Chair Jerome Powell to lower borrowing costs.Also on deck this week were a slew of corporate earnings, including results from heavyweights Meta, Microsoft, Amazon and Apple, which could sway broader investor sentiment in either direction.Along with the Fed meeting and earnings, a number of economic indicators are scheduled to be released this week, including the Personal Consumption Expenditure report (PCE) - the Fed's preferred inflation measure - and the government payrolls report to gauge how tariffs may have affected consumer prices and the labor market.Nike climbed 3.89% after J.P. Morgan upgraded the stock to "overweight" from "neutral" and said investors should "just buy it".Energy, up 1.15% was the best performing S&P sector on the session, buoyed by a jump of more than 2% in oil prices while real estate, down 1.75%, and materials , off 1.44%, were the worst performing.Declining issues outnumbered advancers by a 1.81-to-1 ratio on the NYSE, and by a 1.48-to-1 ratio on the Nasdaq.The S&P 500 posted 26 new 52-week highs and five new lows, while the Nasdaq Composite recorded 68 new highs and 54 new lows.Volume on U.S. exchanges was 17.58 billion shares, compared with the 17.84 billion average for the full session over the last 20 trading days.
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The Hindu
7 minutes ago
- The Hindu
Takeaways for India from Trump moment: strategic autonomy is alive, neoliberalism is dead
Donald J. Trump can be brutally forthright and publicly so. It is partly innate and partly a strategy to throw his interlocutors off balance. In a 1989 interview on CNN's Larry King Live, Mr. Trump was asked by the host about his strategies for gaining an edge in negotiations. Mr. Trump responded not with a direct answer, but with a startling personal comment: 'Can I move my chair? Because your breath is very bad. It really is... Has this ever been told to you before?' Years later, Mr. Trump explained that it was a demonstration of his negotiation tactics. Mr. Trump's outspokenness can be unsettling, but it can also be helpful. There are a few valuable lessons that Indian strategy could learn, thanks to the manner in which Mr. Trump conducts U.S. diplomacy. Donald Trump's worldview Key elements of his worldview have largely remained consistent for decades. Even before he made an entry into politics, Mr. Trump was anti-trade, anti-war, cognizant of the economic and social challenges within the American society, and believed that all other countries were taking advantage of the U.S. He is trying to turn all those beliefs into policies with varying levels of success. However, what is remarkable is his ongoing exposition of American policy, which is too candid to be comforting for partners abroad. For his critics at home, it is what he says rather than what he does that is infuriating. All countries are scurrying to reposition themselves. It is a moment of reckoning for India. Editorial | Soured relations: On Trump's 25% tariff, 'penalty' The idea that India's hesitation to go into a complete strategic lock-in with the U.S. and to completely open its market is hindering progress in bilateral ties is commonplace because its proponents are influential. India, whether under Jawaharlal Nehru or Narendra Modi, has been reluctant to do either of these, and strategic autonomy has held the country in good stead. For one, alliances are not insulated from shifts in U.S. priorities over time, Trump or not. To cite one example, when Joe Biden was President, Australia scrapped a $90 billion deal with France to build conventional diesel-electric submarines. Instead, it entered the AUKUS pact with the U.S. and the U.K. to acquire nuclear-powered submarines using the U.S. technology. All within the family, but hanging France out to dry. Mr. Trump, who is often portrayed as hostile to U.S. allies, is saying it all too loud. India's choice Amid Mr. Trump's rhetoric, India could be further incentivised to reinforce the idea of strategic autonomy, which remains the most viable framework for sustaining a robust relationship with the U.S. The Modi government has, in practice, followed the path of strategic autonomy. Both strategic autonomy and strategic subservience carry costs. India appears increasingly prepared to bear the cost of autonomy — rather than of subservience. Turning into a frontline of any U.S. strategy for containment of another country or expansion of its own interest can be fatal — ask Ukraine. Mr. Trump has done India a favour by silencing the call for abandoning strategic autonomy. If there was any doubt about strategic autonomy, the Trump moment has clarified it. Mr. Trump wants to restore manufacturing and jobs in the U.S. and has, in the process, unsettled global trade. Access to its market has been a lever of American power for long, and Mr. Trump is just blunt about it. A trade deal may resolve some immediate issues, but India cannot ignore the reality that in a world where every country has turned protectionist, export-driven growth is a narrow and difficult path. Mr. Trump has made it amply clear that he does not want China being replaced by any country in U.S. supply chains. It will be foolhardy to assume that any future U.S. President will be fine with that either. It is as if no country wants to import anything other than plastic toys and T-shirts. India could pay more attention to leveraging its domestic market to build its economy and manufacturing. Considering the rapid automation and the consequent limits of job growth in manufacturing, 'making for the world' is not sustainable for India, economist Raghuram Rajan has pointed out. Mr. Modi on Sunday exhorted Indians to augment domestic consumption. A domestic market-driven development model needs to be articulated strongly. The priority and the emphasis need to shift. Ties with the U.S. The Trump moment tells India two things — strategic autonomy is alive; and neoliberalism is dead. India has to navigate the path ahead, and the U.S. remains a key partner in that. It is reasonable to assume that the U.S. will remain the most powerful state on the planet for several decades to come. Relations with the U.S. will continue to be a major determinant of India's capacity to realise its ambitions and make progress. Getting this one relationship right will be critical for India. Neither obsequiousness nor confrontation can advance India's relations with the U.S. India should also learn that soft power is supposed to be soft, not loud and screeching. As the yoga teacher would say, pranayama practice should not make any sound.
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Business Standard
7 minutes ago
- Business Standard
Trump tariffs jolt Malaysia, disrupting solar exports, China trade ties
By Alexandra Stevenson and Zunaira Saieed It's become a familiar strategy in Southeast Asia. Companies from China, coveting the American market but blocked by tariffs, do an end run. They pour into a country, opening factories and filling supply chains. They invest billions of dollars and create jobs and business opportunities. The local economy prospers. President Trump wants to stop that trade. On Friday he unveiled a new layer of tariffs — set at a global rate of 40 percent — on all goods that move through a third country before they get to the United States. The tariffs are aimed at stopping transshipment, a practice the administration says has allowed Chinese-made goods to skirt punitive tariffs. The policy landed with a thunderbolt in Southeast Asia, where Chinese investment has helped the economies of poorer neighbors grow more quickly. A crackdown on transshipment will be an economic blow. It also complicates the supply chain in Southeast Asia, which depends heavily on Chinese raw materials and components. From Vietnam to Cambodia to Indonesia, officials and executives are rushing to assess the consequences. The new tariffs raise hard questions for countries that have long used Chinese components to make the final products they ship to the United States. Does the Trump administration, which has yet to detail how it would enforce the new transshipment tariffs, want to tax it all? One country offers a case study others could follow for what to do next: Malaysia. Over the last decade, Malaysia rose to become one of the world's biggest makers of solar panels. Ten companies, most of them Chinese, shoveled $15 billion into factories around the country, creating tens of thousands of jobs. Then, under President Joseph R. Biden Jr., the United States put tariffs on solar equipment coming from Malaysia of as much as 250 percent. Today, just two solar panel makers remain and one of them has ceased much of its production. The upheaval has been a wake-up call for Malaysia, a nation of over 35 million people that is rethinking how to power its future economic growth. 'We're trying to think about ourselves not just as recipients of investment, but actually creators of technology,' said Liew Chin Tong, the deputy minister of investment, trade and industry. 'We want to think of ourselves not as a production site, but also as a consumer site with a sizable middle class.' Officials in Malaysia, who had been trying to work out a trade deal, had said they were ready to work with the Trump administration to stop companies from passing off Chinese-made goods as their own. But they learned on Friday they would be hit with a base tariff of 19 percent. An additional 40 percent would be added for any goods deemed to have originated in China. Those are set to take effect this week. The country finds itself caught squarely between the United States and China. Malaysia believes that Chinese solar companies can play an important role in its attempts to increase renewable power sources. Its goal over the next five years is for half the country's energy consumption to use clean sources like solar power. Warehouses are stuffed with solar equipment that can no longer be exported to the United States, and the government wants companies to sell it to local solar farms. One challenge for Malaysia is that it still needs China's solar industry on its side. More than 75 percent of the solar panels that Malaysia uses locally are imported from China, where prices are much cheaper because of Beijing's industrial policies that encourage exports. Longer term, Malaysia wants the Chinese companies to restart their mothballed factories to make solar panels for the domestic market. More than any other region, Southeast Asia has felt the brunt of the trade war between the United States and China that began in earnest during Mr. Trump's first presidency. Southeast Asian countries profited as Chinese and global multinationals relocated their factories out of China to avoid Mr. Trump's first-term tariffs. For Malaysia, the aim now is to blunt the collateral damage from the battle between the world's two largest economies. 'I don't like to see us just having to choose between US and China,' said Mr. Liew, adding 'I want to see us strengthening ourselves.' Both superpowers have loomed large in Malaysia. The American tech companies Nvidia, Intel and Texas Instruments built huge facilities to make semiconductors, seeing the country as a good location to hedge against the risks of doing business in China. More than 600 American companies invested in Malaysia last year, said Siobhan Das, chief executive of the American Malaysian Chamber of Commerce. Chinese investment, meanwhile, has shaped Malaysia's manufacturing sector, and China has ranked as one of the top investors in the country for the last decade. Malaysia's imports from China have nearly doubled over the past decade, according to Lee Heng Guie, executive director of the Socio-Economic Research Center, a Malaysian think tank. It was also about a decade ago when Chinese solar companies began to invest in factories in Malaysia. The factories made everything for export to the United States and other major markets like Europe. 'We knew we could not compete with the Chinese companies in the long run,' said Lisa Ong, chief executive at Malaysian Solar Resources, a solar company that shut its panel production facilities in 2013. After six years, the company found it was being outperformed on price and production capacity. Today it has switched its focus to building solar farms and importing panels from China. After the Biden administration initiated an investigation into unfair practices by Chinese solar companies in Malaysia, Cambodia, Vietnam and Thailand, Chinese companies began to slow some of their operations. The investigation led to steep tariffs on a handful of Chinese solar companies operating in these countries, and prompted most of them to abandon their factories in Malaysia. The only Chinese company still making some solar panels in Malaysia is Longi, an industry giant. When it opened its third Malaysian factory on the outskirts of Kuala Lumpur in 2023, it heralded the opening as a 'pivotal moment in Longi's global endeavors.' Its executives boasted of creating 900 jobs and promised to increase the openings to 2,000. Instead of expanding, Longi has shut down several production lines at the facility. Today, much of the space at Longi's plant is unused. On one weekday last month, the parking lot was less than half full. Longi declined to comment for this article. Longi has met with Malaysian officials to discuss how to support more of the local supply chain, according to Justin Sim, the president of the Malaysian Photovoltaic and Sustainable Energy Industry Association. He is pressing the government to rebuild a domestic solar panel industry by harnessing the knowledge of Chinese companies like Longi. 'All the Chinese companies came here when there was not really any capacity or interest in building the local market,' Mr. Sim said. 'And then they all went bust or left because they were hit with tariffs from the US and Europe.' Ms. Ong of Malaysian Solar Resources said she would not rule out her company going back to solar panel manufacturing, especially after the Chinese government announced plans to scale back subsidies to companies. Still, she is hesitant, citing the intense competitiveness of Chinese firms. 'I'm worried and a bit concerned about our future,' she said. 'Many Chinese nationals are migrating to Malaysia and they are a lot more industrious than many of us.'
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Business Standard
7 minutes ago
- Business Standard
Trump fired America's economic data collector. History shows the perils.
When President Trump didn't like the weak jobs numbers that were released on Friday, he fired the person responsible for producing them. It was a move with few precedents in the century-long history of economic statistics in the United States. And for good reason: When political leaders meddle in government data, it rarely ends well. There is the case of Greece, where the government faked deficit numbers for years, contributing to a debilitating debt crisis that required multiple rounds of bailouts. The country then criminally prosecuted the head of the statistical agency when he insisted on reporting the true figures, further eroding the country's international standing. There is the case of China, where earlier this century the local authorities manipulated data to hit growth targets mandated by Beijing, forcing analysts and policymakers to turn to alternative measures to gauge the state of the country's economy. Perhaps most famously, there is the case of Argentina, which in the 2000s and 2010s systematically understated inflation figures to such a degree that the international community eventually stopped relying on the government's data. That loss of faith drove up the country's borrowing costs, worsening a debt crisis that ultimately led to it defaulting on its international obligations. It is too soon to know whether the United States is on a similar path. But economists and other experts said that Mr. Trump's decision on Friday to fire Erika McEntarfer, the Senate-confirmed head of the Bureau of labour Statistics, was a troubling step in that direction. Janet L. Yellen, the former Treasury secretary and chair of the Federal Reserve, said the firing was not what is expected from the most advanced economy in the world. 'This is the kind of thing you would only expect to see in a banana republic,' Ms. Yellen said. Essential data The Bureau of labour Statistics is officially part of the labour Department, whose secretary is a member of the president's cabinet. But the agency operates independently, producing detailed, nonpartisan data on employment, prices, wages and other topics. Economists say that reliable, independently produced statistics are critical to good decision making in both the public and private sector. Officials at the Federal Reserve rely on government-collected data on inflation and unemployment to decide how to set interest rates, which affect how much Americans must pay to get a mortgage or a car loan. 'Good data helps not just the Fed, it helps the government, but it also helps the private sector,' Jerome H. Powell, the Fed chair, said at a recent news conference. 'The United States has been a leader in that for 100 years,' he added, 'and we really need to continue that in my view.' Experts on government statistics say data from the Bureau of labour Statistics and other agencies is unlikely to deteriorate dramatically overnight. The acting commissioner named to replace Dr. McEntarfer on a temporary basis, William J. Wiatrowski, is a longtime employee of the agency who is widely respected by experts inside and outside government. The career employees who collect and analyse the data remain in place, using the same methods and procedures they used before Dr. McEntarfer was pushed out. But experts who just days ago were defending the integrity of the statistical agencies now find themselves asking uncomfortable questions about the trajectory of economic data in the United States. 'If the poverty numbers come in and look great, is the director of the Census going to get a raise?' said Amy O'Hara, a former Census Bureau official who is now a professor at Georgetown University. 'If the household income numbers don't look great what happens then? What about G.D.P.? What about C.P.I.?' Andreas Georgiou knows the challenges of standing up to such political pressure. After he took over Greece's statistical agency in 2010, he found that the country has been severely understating its budget deficits. Those findings ran afoul of the Greek authorities, who spent years trying to prosecute him on a variety of charges related to his work, despite independent reviews that supported his conclusions. (He fared better, though, than Olimpiy Kvitkin, the Soviet census official who was arrested and executed when his population count came in lower than Joseph Stalin had announced.) Mr. Georgiou refused to bend. Reliable statistics are important for policymaking, he said. But they are also essential to democracy. 'Official statistics, government statistics are a mirror that society holds up to itself,' he said. If that mirror is distorted, or broken entirely, then the accountability that is central to a democratic system cannot work. 'If society cannot see itself clearly, then it cannot identify its problems,' he said. 'If it cannot identify its problems, then it cannot find the right solutions. It cannot find the right persons to solve these problems.' Data integrity at risk Mr. Trump said he fired Dr. McEntarfer because the numbers produced by her agency were 'rigged' to hurt him politically. Experts on the government statistics, including former commissioners in both Democratic and Republican administrations, have called foul on that accusation. The commissioner, who is the bureau's sole political appointee, does not control the numbers that the agency publishes, or even see them until they have been finalized by a staff of career technocrats whose careers typically span multiple presidential administrations. Erica Groshen, who led the bureau under President Barack Obama, recalled getting resistance from the agency's staff when she tried to liven up the language of the monthly jobs reports. The bureau's staff insisted that the agency's job wasn't to say whether the glass was half-full or half-empty, only to report that, 'It is an eight-ounce container with four ounces of liquid.' Ms. Groshen relented. That is not to say political interference would be impossible. Government statistics rely on hundreds of methodological decisions, many of them judgment calls with no obviously correct answer. A sufficiently sophisticated agency head might, over time, be able to nudge the data in a politically advantageous direction, without any single decision being so egregious that it led to a mass resignation of career employees. 'I could imagine a new commissioner coming in and trying to make changes to those methods and procedures that try to move those numbers one way or the other,' said Katharine G. Abraham, who led the bureau during the Clinton and George W. Bush administrations. 'They would have to know a lot in terms of where to put the finger on the scale.' Private alternatives There are also blunter approaches. In Argentina in 2007, the government of then-President Néstor Kirchner pushed out the mathematician in charge of the country's consumer price data, then released an inflation figure that was dramatically lower than the one the mathematician had calculated. The public wasn't fooled. Nor were international bond investors, who ultimately turned to alternative sources of inflation data, calculated by researchers outside the government. But such alternative sources are inherently limited, said Alberto Cavallo, a Harvard economist who developed one of the most widely used private inflation indexes in Argentina. 'Private alternatives can complement official statistics, but they are not a substitute,' Mr. Cavallo wrote in an email. 'Government agencies have the resources and scale to conduct nationwide surveys — something no private initiative can fully replicate.' Recently, Mr. Cavallo has been publishing data on consumer prices in the United States, which has shown the impact of Mr. Trump's tariffs more quickly than the government's data. But while such real-time sources are valuable, they don't carry the 'institutional credibility' of government data. The trouble is that once that credibility is eroded, it is hard to repair — particularly at a time when partisans on both sides of the political aisle are skeptical of numbers put out by members of the opposing party. Nancy Potok, a former Census official who served as chief statistician of the United States during the first Trump administration, said that in the past there had been strong bipartisan support for the statistical system in Congress and the business community. But partisanship seems to have eroded that support at a moment when a combination of political pressures and longstanding budget challenges are making it most necessary. 'There were some people who really understood the value of the economic data, and now that's not the conversation and those champions aren't there that were there in the past,' she said. 'There's no one leading the charge to make these kind of investments.'
