Stocks are reeling from the following headline.
The White House is weighing some curbs on U.S. investments in China, a source familiar with the matter told CNBC. This discussion includes possibly blocking all U.S. financial investments in Chinese companies, the source said.
It’s in the preliminary stages and nothing has been decided, the source said. There’s also no time frame for their implementation, the source added. – CNBC
We don’t think the U.S. is in a strong position to start a war on capital flows given its very weak net international investment position (NIIP), which now exceeds a negative $10 trillion dollars. Capital inflows help keep U.S. asset markets afloat and finance budget deficits.
Net International Investment Poistion
The difference between a country’s external financial assets and liabilities is its net international investment position (NIIP). A country’s external debt includes both its government debt and private debt, and similarly its public and privately held (by its legal residents) external assets are also taken into account when calculating its NIIP. Note that commodities, as well as currencies tend to follow cyclical patterns, whereby they undergo significant valuation changes, of which is reflected in NIIP.
A country’s international investment position (IIP) is a financial statement setting out the value and composition of that country’s external financial assets and liabilities. A positive NIIP value indicates a nation is a creditor nation, while a negative value indicates it is a debtor nation. – Wikipedia
Slouching Toward Socialism
The trade war, the political manipulation of imports and exports, and the threat of managing capital flows are just too much of a slouch toward socialism, in our book.
Do you think the SEC has the same concern of protecting the public from overhyped and overvalued IPOs that owners dump on the public? Think loss-making Uber, which is down 30 percent since its IPO and WeWork, almost. Just askin’.
Running Out Of Free Lunches
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