China, United States, Emily discussed on MarketFoolery
I'm Matt Greer and I am joined in studio by Motley Fool. Endless emily flipping emily. It is just you and me how you doing it is things have beyond again all right. We'll always great to have you on. We're GONNA talk some big earnings from big bank. And we're GONNA talk about a potential game changer for cannabis. Docs I'm actually going to find out from you. Is it a game changer. Or is it. You know much ado about nothing or somewhere in between but we begin with big big trade news the US China trade deal now under the phase one agreement that was signed on Wednesday China will purchase an additional two hundred billion dollars of goods goods and services over the next two years and exchange the US will reduce tariffs on one hundred and twenty billion in Chinese products. Now Emily this is an eighty six page agreement. So so there's a lot of moving parts. There's a lot more going on here but I think investors have gotten pretty good over the last couple of years. Just shrugging off all the China the US Trade War News. So what does this deal. What does this phase one agreement mean for investors? It's more of a sign of good faith on the part of China and the US than really doing much for investors and for relieving tariffs for the average American consumer you mentioned the stock. Market's been on fire. They're probably not even aware of the links that the trade war has come to and what this deal means for them so the New York Times I put out an interesting article that kind of broke down the cost of the trade war for the average American households. And well you hear big numbers like two hundred billion dollars ars of consumer goods ultimately that trickles down to is depending on your income level. This trade war over the past year has cost the average American family. Emily between three hundred and forty dollars to nine hundred and seventy dollars so despite the fact that the markets have been on fire the average American is spending a a little bit more for a lot of those basic consumer goods this year than they were last year as a result of the trade deal but foreign investors you know we we mentioned the fact that the market's been great there's still lots of strong impacts on these consumer goods companies as a result of the trade worth that we're still seeing but in large part. The market's been on fire because of tech companies that really don't see the day-to-day impacts of the trade war. I do think that looking forward. This might be a good thing for investors who are looking to get into Chinese companies. It could be a cyclical movement. Back into these Chinese companies have largely been abandoned Vanden over the past two years and emily. You are resident expert in China. You lived in China. You studied in China. You are a student of China when you've seen in this trade story play out over the last couple years. What do you think were missing? I think people miss the motivations behind China we for a large part understand the. US's asses motivation. We don't like counterfeit goods. We don't like intellectual property thefts we feel threatened by China's currency manipulation. What have it during the market today? There are concerns from. US consumers about China. But you have to understand where China's position is when they come in and they negotiate things like trade deals and my opinion the single most important thing to remember about China's that they want to look good on an international stage trade wars do not make China look good also things like the Hong Hong Kong protests or reports of you know weavers being forced into essentially concentration camps in western China. These are all things that China does not WanNa talk talk about does not want them on the front page of the paper and does not want international organizations reprimanding them for so they are motivated to reach a trade deal with the US US enlarge part because not just not just hurting their economy although it is hurting the US like we said but because it makes them look bad so back to what what this might mean for investors. We over the last couple of years as I mentioned and as you mentioned the stock market hitting new highs so investors seemed gotten pretty good at. Just shrugging off all this trade war news news and at the same time as you mentioned we know it has a real impact on consumers we certainly know it has an impact on businesses agriculture. Or if you have a business in your cost of doing business is going up and yet we seem to be able to reconcile or or kind of live in two different cities with the stock market. Going up and this ongoing impact of the trade war and so I guess my question is given that we've shrug it off. How much shrugging should we do with this news or is this truly something different? It does feel a little bit Lackluster for an eighty six page agreement. Not much has been accomplished here does not to say that future agreements future phases won't accomplish something I think. Hopefully they will but it is a long way to go investors. Yeah it's almost like we're accepting trade. The trade wars as the new normal. Because it's not just China right. We're also having trade disagreements with the entire European Union which has forced the price of of wine thus far but likely other other products such as cheese to go up as well and it's not being reflected in the markets right now for for good reason because like I said the stocks that are propping up the market have not really had exposure to these trade war issues. But I do think it's going to start impacting the consumer's pocket which could trickle down and as we wrap up this story. What are you watching going forward? I'M GONNA be watching to see when consumers start getting slightly more upset about the costs that are being pushed onto them. Like I said that three hundred seventy to about nine hundred seventy dollars dollars. It's not something that the average consumer is really aware that they're paying if trae does become the new normal if we're not able to fix these trade. Wars and consumers are paying more and more for products products that they've become accustomed to paying lower prices for. I think it'll be interesting to watch when the American consumer starts to have these issues and what they do and let's move onto investment banks and some big profits from Morgan Stanley. Emily shares up around seven percent of the time of our taping after Morgan Stanley reported better then expected earnings across the board. There are three main businesses investment management wealth management and trading all doing better than expected and that was a great quarter for Morgan Stanley. Their earnings per share was actually thirty percent higher than what was expected for the quarter and expectations for the quarter. Were already pretty high. They saw twenty seven seven percent increase in revenue but like you said all their divisions have been doing relatively well it really came from their investment management division and they associated associated with what they called a large IPO in Asia. They didn't provide much more than that. However if I had to guess I think that'd be Alibaba's secondary listing sting on the Hong Kong Stock Exchange for which Morgan Stanley was an underwriter for so they saw a near seven hundred million dollar pop as associated with this investment management? They did it on behalf of their client so a large earnings increase in part because of this one off event but Otherwise still a good quarter for Morgan. Stanley ah they continue to thrive. Despite the fact that it's a low interest rate environment we see lots of stuff moving the markets in the financial industry. which has been largely supportive of their business? But that's a pretty good payoff. Seven hundred million. I mean it's not quite what it used to be. I mean to me that feels like a lot of it is. It is definitely a lot of money but I will say other divisions in particular their wealth management division division despite still growing. They've been really squeezed because of the low fee environment that we're entering. I think people are becoming increasingly skeptical of paying somebody to manage their assets for them him and the landscape now so much more competitive for the price that you can charge to manage assets so internationally. It's fine but here in the US. We're seeing that kind of get squeezed and and before we get to our final story. I WANNA say thanks to link ten now. The New Year is about growth and change in fact my new year's resolution. Emily is to get in shape. Keep the little full fitness this morning. Feeling good and I'm going to get in shape. Well if you're a business owner looking to grow your business and get your business in shape linked to and can help you find the right hire hires that set you up for a strong here. Lincoln jobs screens candidates with a hard and soft skills. You're looking for so you can hire the right person fast. It's no wonder a person is is hired every eight seconds with Lincoln. That's amazing eight seconds. Oh yeah companies. Also rate linked jobs. The number one hiring platform for delivering quality hires. Now I'm not looking for a job I've been in the Motley fool for twenty one years. Love it here but I was looking around on Lincoln jobs yesterday in..