Despite Trump Gesture, the Trade War Will Worsen, BofA Warns

Before the latest inverted yield curve news roiled the market, stocks had been whipsawed by the ongoing US-China trade war. On Tuesday, investors took heart as the White House postponed half the new tariffs it wanted to impose, until after the year-end holidays. The S&P 500 advanced 1.48%.

Alas, intones the BofA Merrill Lynch Global research report, “the trade war will last indefinitely.” Why so downbeat?

The Bank of America analysts warned that the Trump administration has crossed two “red lines.” Namely, its slapping new duties on consumer goods from China (albeit some of them are given a temporary stay of execution—toys, laptops, video game consoles, cell phones). And the administration branded Beijing a currency manipulator for weakening the yuan, which makes Chinese goods cheaper and more competitive.

The BofA report said it believed the US’s first round of sanctions—25% levies on $250 billion in Chinese products—will stay in place, and the remaining $300 billion will eventually all be subject to 10% tariffs. Plus, the firm indicated, that second round may increase to 25%.

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President Donald Trump said he wanted to delay tariffs on goods that are part of the Christmas shopping season. Pantheon Macroeconomics saw that development as evidence that “Republicans—mindful of elections next year—are very resistant to tariffs on consumer goods.”

For the moment, it’s heartening that despite all the brickbats thrown, a Chinese delegation is still on track to visit Washington in September for face-to-face trade meetings. In response to Trump’s latest moves, China halted purchases of American agricultural products, as well as letting its currency weaken.

Tags: Donald Trump, S&P 500, Tariffs, Trade War

After receiving criticism for the board’s relatively luxurious travel policies, the Los Angeles County Employees’ Retirement System sought to revise its rules governing such activities to implement additional layers of approval before members hop on a plane.

Last month, the Board of Supervisors voted to conduct a sweeping audit of its administrative expenses after an investigation deemed its “spending on education and travel…[is] significantly more than its peer organizations,” Supervisor Mark Ridley-Thomas said.

“Because LACERA’s travel expenses are charged against investment earnings, the Board of Supervisors has a vested interest in ensuring LACERA’s continued fiduciary responsibility to our workforce,” Supervisor Hilda L. Solis said in prepared remarks.

A review by the Los Angeles Times found that international excursions to a list of cities, including Abu Dhabi, Tokyo, Hong Kong, and Paris, have racked up more than $1.3 million in expenses since 2015.

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This week’s revisions imposed additional limits on the number and cost of travel, and implemented a number of “control and compliance standards to ensure that enforceable procedures exist and that the proper paperwork is submitted for travel approvals and expenses to document that the policy is being followed consistently and transparently.”

These restrictions include reducing the number of permitted “educational conferences” for board members to four per fiscal year, down from eight in the current policy for members of a single board, and six per fiscal year for members of both boards within LACERA, down from 12 in the current policy. Only one international conference is permitted by any one member during a fiscal year.

Additionally, the revisions imposed that board members cannot use luxurious ground transportation such as limousines and executive cars, unless the costs of these services are comparable to that of taxis services such as Uber and Lyft.

An additional layer of review and approval for reimbursements related to professionals was tasked to the board’s executive assistants.

The board recently fired Chief Executive Officer Lou Lazatin for undisclosed reasons. She held the position for approximately eight months.

Tags: Board of Supervisors, Los Angeles County Employees Retirement Association (LACERA), Pension, Travel