Trump Might Win Reagan-Style Victory over China, Says El-Erian

Donald Trump may forge a new world order while winning the trade war with China, according to Mohamed El-Erian, the chief economic advisor at insurance and financial services giant Allianz.

He likened the odds of a US victory to the triumphant end of the Cold War. “I think we should not underestimate something ‘Reaganesque,’” El-Erian said in a CNBC appearance Monday. His reference was to how the US, during Ronald Reagan’s presidency, in effect bested Moscow. Economic fissures that appeared in the Soviet Union in the 1980s led to its crumbling in 1991.

“If the US goes full-blown with this as about national security, it can actually change the economic dynamics on a global scale,” El-Erian said. “It really can.” He contended that President Trump has a good chance of getting the Chinese regime to agree to ending its intellectual property theft and forced technology transfers, which have vexed US businesses.

While all sides will suffer in an ongoing trade tiff, the economist noted that the US seems to be in a superior position, especially regarding stocks—which traditionally function as a gauge of how investors regard the future.

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Despite two weeks of falling prices, the S&P 500 still is ahead 14% this year. The Shanghai Composite, on the other hand, has dropped about 10% in 2019. Both sides have raised tariffs on each other and talks now appear stalled.

Those betting on an American trade war win have pointed out that the US has an advantage: It imports far more from China, than the US ships to the Chinese.

To be sure, El-Erian doesn’t forecast a Chinese defeat as a slam-dunk. And the stand-off likely will continue for some time, he said. The largest odds favor a short-term Sino-American trade pact, at 65%, he maintained. A “Reagan moment” commanded just 15% and a full-bore trade war, 20%.

Certainly, the China of the 21^st century has a far bigger economic footprint than did the Soviet Union of the 1980s. Beijing’s threat to the US is economic, not military, the reverse of the Cold War landscape.

Tags: China, Donald Trump, Mohamed El-Erian, Trade War

Just after Alabama approved one of the most controversial anti-abortion laws in the country, state officials from Maryland and Colorado took consequential actions against the state in an effort to refute the bill.

Maryland Comptroller Peter Franchot ordered state officials to review Maryland’s pension portfolio for any investments that are affiliated with the state of Alabama, and subsequently divest from them.

Franchot said that Alabama lawmakers “thrust their religious interpretations” into the legal system, and chose to “weaponize their system of laws to punish women who are already experiencing great vulnerability.”

“However, I can work to ensure that Maryland’s taxpayer dollars are not used to subsidize extremism,” he continued in a Facebook post. The Democratic legislator asserted that the state would divest from all Alabama-based companies, including investment managers, brokers, and consultants that are headquartered or have regional offices in the state.

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In addition, he requested that employees and trustees of the pension refrain from traveling to the state “under any circumstances—be it for professional conferences or meetings with investment partners.”

Colorado Secretary of State Jena Griswold also called for a similar travel boycott of the state, saying “Until the laws of Alabama allow for safe and legal access to health care for women, we call on the Election Center to move the location of its trainings from Alabama. I will not authorize the spending of state resources on travel to Alabama for this training or any other purpose.”

Alabama Gov. Kay Ivey received nationwide criticism for her passing of legislation that bans abortion at every stage of pregnancy, and criminalized the procedure for medical professionals with a penalty of up to 99 years in prison. The move banned abortion in most circumstances—even when conception was situated through rape or incest—but allows for abortion to occur when the pregnancy seriously endangers a mother’s well-being.

Franchot implored that he hopes his actions will influence the thinking of Alabama lawmakers and other states who “may be contemplating abusing public laws for theocratic gratification.”

Representatives from Gov. Ivey and Comptroller Franchot’s offices did not respond to calls by press time.

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Tags: Abortion, Alabama, Colorado, Divestment, Jana Griswold, Kay Ivey, Maryland, Pension, Peter Franchot