Trump: Think Like China

Trump: Think Like China

So the key to American success is to be… more… like… China?

This morning the president took to his Truth Social platform to express a desire for publicly traded American companies to stop reporting quarterly results.

“Subject to SEC Approval, Companies and Corporations should no longer be forced to ‘Report’ on a quarterly basis… but rather to Report on a ‘Six (6) Month Basis,” he said. “This will save money, and allow managers to focus on properly running their companies.”

Hmmm… Your editor has a long enough memory to recall that while campaigning for president a decade ago, Hillary Clinton hit out against what she called “quarterly capitalism” — and corporate America’s “obsession with share prices and quarterly earnings over real value creation.”

Her solution at the time was to change the definition of short-term capital gains in the tax code. Under her plan, if you wanted to pay the lowest capital-gains tax rate when you sold an investment, you’d have to hold onto that investment for six years instead of just one.

Trump has no such scheme in mind. He just seems to think that if earnings season rolls around only twice a year, CEOs would keep more of an eye on the long-term.

Twice-a-year reporting is already the rule in the European Union and Singapore.

Then he invoked the China example: “Did you ever hear the statement that, ‘China has a 50 to 100 year view on management of a company, whereas we run our companies on a quarterly basis??? Not good!!!”

Considering the challenges facing China’s economy right now — slowing industrial output, slowing retail sales, an aging population, a real estate sector that seems to be in perma-crisis — it seems odd to point to China as an example to emulate.

Then again, you and I might not be the intended audience for his message. Read on…

U.S.-China Trade: The Turning Point?

U.S.-China trade talks might be at a turning point.

A U.S. delegation led by Treasury Secretary Scott Bessent met today with Chinese negotiators led by Vice Premier He Lifeng in Madrid, Spain. They have a little less than two months to reach agreement before steep U.S. tariffs kick in.

But it seems a separate, earlier deadline dominated today’s discussions. Bessent emerged from the talks announcing a “framework” was in place for the Chinese firm ByteDance to sell the TikTok social media platform to U.S buyers.

No details yet — but Bessent says the deal would be finalized when Trump speaks with Chinese president Xi Jinping on Friday.

As you might recall, Congress passed and Joe Biden signed legislation last year banning TikTok unless ByteDance could line up a U.S. buyer.

At that time, a moral panic had swept both sides of the aisle in Washington: Despite a paucity of evidence, the narrative took hold that TikTok was spying on and propagandizing its U.S. customers. (Biden continued to campaign on TikTok even after signing the legislation.)

The ban was due to come into effect on Jan. 19, 2025 — one day before Trump was sworn in for his second term. One of his first official acts was to extend the deadline 90 days — buying time for a deal with a U.S. buyer to materialize.

He extended that deadline again in April… and once more in July. It was becoming a running joke. The current deadline is this Wednesday.

Again, we have nothing in the way of details about this “framework.” But if the shadow of TikTok is no longer hanging over trade talks, the path is cleared for a broad trade agreement — encompassing everything from tariffs to Chinese rare earths to U.S. farm goods — sometime in the next two months.

Said Treasury Secretary Bessent in Madrid: “We preferred to keep the discussions on TikTok. We will be holding trade negotiations in about a month again at a different location."

Maybe that was the point of the president’s praise of the Chinese “50 to 100 year view.” We shall see…

That said, any optimism about Washington and Beijing coming to terms is not reflected in Nvidia’s share price today.

Shortly before the U.S.-Chinese talks got underway in Madrid, the Chinese government accused Nvidia of violating Chinese anti-monopoly laws — without offering any details. An investigation is ongoing.

NVDA shares are down 1.5% as we write.

Careful What You Wish For…

“Markets should be careful what they wish for,” says Paradigm’s macroeconomics maven Jim Rickards.

The Federal Reserve holds one of its periodic policy-setting meetings tomorrow and Wednesday. Jim is in tune with the Wall Street consensus that the Fed will cut short-term interest rates for the first time in nine months.

But he’s out of step with the Wall Street consensus about what a rate cut will mean.

“Lower rates are not stimulative, and they're not associated with inflation. They are associated with recession and depression, not a healthy economy.

“When inflation spiked in the late 1970s (and I was there), interest rates were 14%. During the Great Depression, a sustained period of deflation, interest rates were 1% or 2%.

“So low rates are associated with deflation, disinflation, recession and depression. Those are separate problems. And they are very serious problems, but different from inflation.”

“I expect a coming recession to cause a stock market drawdown,” Jim goes on.

“Another problem for markets may be an AI bubble bursting. It’s difficult to predict when that will happen and I’m not putting a stake in the ground, but investors should be careful.

“Companies developing AI are making strides, but this is very much subject to the law of diminishing marginal returns where you get to a point where you spend enormous amounts of money over and above what you already have for just tiny increases in output and performance.”

Jim will have much more to say about AI in the next monthly issue of Strategic Intelligence — coming at the end of September.

But in the meantime, the stock market has ample fuel to head higher into yearend.

The market had a green month in August and barring some kind of shock is on track for a green September.

According to figures from the financial services firm Piper Sandler, that’s happened only 24 years since 1928. In those years, the average return for October–December was 5.6%.

As we write this morning, the S&P 500 is up a half percent and in record territory — over 6,600 for the first time. The Nasdaq is up about three-quarters of a percent, while the Dow is barely in the green.

Among the big movers: Tesla, up 6.6% on word that Elon Musk has added 1 million shares to his existing stake. As the legendary fund manager Peter Lynch once said, insiders sell their shares for any number of reasons but there’s only one reason they buy — they expect the price will go up.

Precious metals are back on the march — gold up $22 to $3,663 and silver up 28 cents to $42.37. Crypto is languishing, Bitcoin under $115,000 and Ethereum under $4,500.

Crude begins the week up over 1% to $63.38.

New Obamacare Debacle

The pattern is becoming clear: Before the day arrives that the health care cartel implodes, it will first attempt to squeeze blood from a turnip by making everyday Americans pay even more.

As we mentioned last week, employers face an average 9.5% jump in health insurance costs next year — and some of them are responding by taking bigger deductions out of employee paychecks or jacking up out-of-pocket charges such as deductibles.

Now comes word that health care might be at the center of the next “partial government shutdown” at the end of this month.

Congress has to pass either a fiscal 2026 budget or a “continuing resolution” in 15 more days to keep the federal government operating as normal. But Democrats are threatening to hold out over the issue of Obamacare subsidies.

Here’s the background: In 2021, Congress expanded the Obamacare subsidies as part of the American Rescue Plan Act of 2021 — one of the big COVID-era spending bills.

The expanded subsidies are due to expire at year-end.

Over the summer, we cited figures from the Kaiser Family Foundation: Expiration of the subsidies would result in higher costs for people buying insurance on the Obamacare exchanges — by an average $1,296 per year.

About 24.3 million Americans buy their insurance via Obamacare and because the coverage is so ungodly expensive, about 92% of them rely on subsidies. For many small-business owners and the self-employed, Obamacare is their only option for health insurance.

Time was when the first Trump administration promised to “repeal and replace” Obamacare. Now they just want to stick everyday folks with its ever-rising costs.

Could it be? For once, Democrats are latching onto an issue they can actually get regular Americans to rally around?

We’ll see. But the bigger point is that U.S. health care is so ruinously expensive that something’s got to give — in the federal budget, in the budgets of corporate America, in everyday folks’ household budgets or more likely all three.

Mailbag: DST

After a reader lamented the dark mornings setting in this month under daylight saving time, we got a flurry of responses…

One reader pointed out something that I’ve neglected to mention in my periodic DST rants — that it began as a wartime measure during World War I and was actually called War Time.

Another wondered about year-round DST and the matter of kids going to school in the dark: “If schools have such a concern about light issues, why not shorten hours in the winter and then make up the hours lost if need be. Follow the natural cycles.”

“During the Nixon-mandated DST in the ’70s, I owned a small shop in Hanover, New Hampshire,” writes our final correspondent.

“Previously, when we went off DST in October, we noticed that it was already dark at 4 p.m. and if one was in a valley no sun could be seen after about 2:30 p.m. Consequently, everyone rushed home from work and did not shop after work.

“However, in the year of Nixon's year-round DST, our business increased 20% during the winter. Our store kept the same product lines, same marketing. Essentially nothing changed except the advent of year-round DST. Just think of the positive and potentially widespread economic impact of year-round DST, and at no cost!

“Some years after we moved to the Free State of Florida, which has longer evening daylight due to its more southern latitude, we visited Woodstock, Vermont, and went cross country skiing. There was no sun visible from midafternoon on, being blocked by low hills.

“Not only does lack of DST affect businesses' bottom lines in the north, but I know firsthand that it leads to outright depression due to light deprivation.

“School times can be adjusted to accommodate year-round DST, as can other schedules.

“A final note that I have found personally important is that one can work a full day and still travel 150–200 miles after work before darkness falls with less visibility.

“So year-round DST can be an economic boon/boom, as well as a psychological boost, and with safer evening driving conditions.

“I believe that folks detest the adjustments made necessary by twice-a-year time changes, which have psychological and health implications, much more than they dislike DST. Nixon proved to me that year-round DST made me healthier, wealthier and hopefully wiser.”

Dave: Thank you for sharing your adult memories of the previous year-round DST experience.

It comes down to what constitutes a “reasonable” hour for sunrise and sunset. If you define it as 7:00 a.m. or earlier and 6:00 p.m. or later, cartographer Andy Woodruff concluded some years ago that the least-worst solution is year-round standard time. (You can see all of Woodruff’s map goodness at this link.)

Still, you make a compelling case that year-round DST would be a vast improvement over twice-a-year time change — even if for me it meant I’d still need a light on in my home office at 9:00 a.m. in the darkest winter!

Best regards,

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets