Markets around the world have fallen in reaction to a mysterious new coronavirus that has reportedly infected more than 40,000 people in China, killing more than 900 people, and grinding normal activity to a halt in the world’s second-largest economy

As infections have spread to other countries and regions, including Japan, South Korea, the U.S., and Western Europe, the World Health Organization (WHO) declared the outbreak a global emergency on January 30, 2020. But the epidemic is more than just a health problem. 

Some experts suggest that the outbreak could cost China more than $60 billion, further slowing the country’s already-weakened economy. And China’s economic problems could also spill over to the rest of the world as travel to and from the country is restricted, and manufacturers look for different outlets for their goods, and for components to manufacture their products.

How is the Outbreak Affecting the Global Economy?

China’s economy, the second-largest in the world, is vital to global markets. One-third of world economic growth is attributed to China, and companies around the world depend on China for production and manufacturing of goods. 

Apple, for example, announced that it would look for new suppliers of parts while China deals with the outbreak. Car manufacturer Tesla also temporarily closed its factory in China. Meanwhile, coffee chain Starbucks and Scandinavian furniture design store Ikea both temporarily closed more than half of their Chinese stores, according to the New York Times. 

The timing of the outbreak comes only days after China and the United States concluded the first part of a trade deal, on January 15, 2020, which committed China to purchasing $200 billion worth of American products over the next two years. 

The trade war caused two years of tension between China and the United States, as the two took turns raising tariffs on each other’s exports. China’s GDP grew at 6.1% in 2019, the lowest rate of growth for China’s economy in roughly 30 years, according to the Wall Street Journal. 

More about the virus

The virus outbreak has been traced to the city of Wuhan, home to 11 million people and one of China’s big economic centers. Wuhan produces $213 billion of goods and is responsible for 1.6% of China’s GDP, according to reports. 

The lockdown on travel in Wuhan could slow down production in the city, which is crucial for transportation, manufacturing, and shipping logistics in China. In fact, Wuhan is the largest city for water, land, and air transportation in inland China, according to reports. The rail system in Wuhan, which is currently shut down, connects passengers to major cities including Beijing, Hong Kong, and Shanghai.

The outbreak is also happening during the Lunar New Year, a major holiday for travel in China. More than 3 billion people were expected to travel throughout China for holiday celebrations, which started on January 25th. China’s government extended the Lunar New Year three extra days through February 2nd in response to the outbreak, which is expected to slow manufacturing as people stay home from work. 

SARS Outbreak

From 2002 to 2003, China dealt with an outbreak of different strain of coronavirus that caused Severe Acute Respiratory Syndrome (SARS). SARS killed approximately 800 people, according to the New York Times.

The economic impact of the current epidemic is expected to be larger than SARS, which cost the global economy $54 billion, according to reports.

The new strain appears to be spreading more quickly than past epidemics. It took five months for the number of cases of SARS to reach more than 5,000 people. This new strain first showed up in patients in December, 2019, and spread to more than 5,000 people in a month, according to CNBC.

Investing during times of volatility

Outbreaks like the one in China can lead to uncertainty and volatility in the stock market.

Volatility is a normal part of investing. Protect yourself by following the Stash Way—invest regularly and diversify your investments.

The post The Chinese Economy is Taking More Than A Sick Day appeared first on Stash Learn.

Before his initial arrest in November 2018, Ghosn was known for revitalizing the Japanese automobile company Nissan and for overseeing an alliance between three of the world’s biggest car companies: Renault, Nissan, and Mitsubishi. Ghosn was first arrested for allegedly under-reporting his Nissan income by approximately $43 million, and other reported financial misconduct. He had been under house arrest since April 2019.

Ghosn’s Career

Originally from Brazil, Ghosn started his career in the car business at the French auto tire manufacturer Michelin, where he worked for 18 years and eventually ran the company’s North American business. He then spent three years as a vice president at the French company Renault.

In 1999, Renault purchased 36.8% of Nissan, creating a partnership called the Renault-Nissan alliance. Ghosn moved to Tokyo to lead Nissan and bail it out of $35 billion of debt. By cutting 14% of Nissan’s employees and cutting costs, Ghosh reportedly turned around Nissan’s business.

Ghosn became the Chairman CEO of both Renault and Nissan by 2008. He was the first person to be the CEO of two Fortune 500 countries simultaneously. Additionally, he was an executive in Japan, where non-Japanese CEOs are unusual. Nissan acquired 34% of Mitsubishi in 2016, further expanding the Renault-Nissan partnership. Ghosn took on another title as the Chairman of Mitsubishi.

Ghosn’s Arrest

In 2017, Ghosn earned $18.2 million annually, and was the second-highest-paid auto executive globally, according to Bloomberg. After stepping down from his CEO role in 2017, Nissan alleged that Ghosn had underreported his income from 2009 to 2017 with the help of an aide. Both Ghosn and the aide were arrested in Tokyo in 2018.

Nissan also alleges that Ghosn funneled $5 million of company money to a third party company in Oman to enrich himself. Renault also claims that Ghosn had been sending money to the same company in Oman, and that he had used company money to pay for his 2016 wedding.

Ghosn was under house arrest awaiting trial with 24/7 surveillance when he escaped Japan by fitting himself into a case used to carry audio equipment. Accompanied by two men, Ghosn flew to Turkey and then to Beirut, Lebanon, where he reportedly hopes to clear his name. Meanwhile, international police organization Interpol issued a Red Notice to Lebanon, urging the country to locate and arrest Ghosn.

Do Your Research

Carlos Ghosn is far from the first executive to possibly face—and to try to avoid—consequences for alleged corporate malfeasance.

While uncertainty is part of investing, it’s important to try to arm yourself with as much information as possible when deciding whether or not to invest in a company.  Remember to research company leadership and culture when you’re considering purchasing company stock.

The post Carlos Ghosn Escapes to Lebanon appeared first on Stash Learn.

In fact, President Trump expanded the economic battle to other countries this week, by slapping new tariffs on Argentina, Brazil, and France.

This week, Trump said he plans to impose new tariffs on industrial aluminum and steel from Argentina and Brazil. He said he’d also ramp up tariffs on a variety of popular French imports to the U.S.

By increasing tariffs on imported goods such as steel, the president hopes to make good on his 2016 promise to invigorate American companies, according to Fortune. However, steel companies are struggling, with U.S. Steel reporting a third-quarter loss of $35 million.

The trade war goes global

President Trump announced by tweet on December 2, 2019, that the United States would impose a 25% tariff on steel and a 10% tariff on aluminum from Argentina and Brazil as well as a 100% tariff on $2.4 billion worth of French foods and products.

Argentina and Brazil had previously been excluded from steel and aluminum tariffs in 2018 when the U.S.  reportedly imported $2.6 billion of steel from Brazil and $700 million of steel from Argentina.

President Trump alleged in the Twitter thread that both countries manipulate their currencies, hurting the American economy. Experts have disputed this allegation, claiming that Argentina and Brazil are actually trying to strengthen their currencies against the dollar. Instead, the president could be taxing Argentina and Brazil because they’ve sold billions of dollars worth of soybeans to China, which has halved its soybean purchases from the U.S. according to Bloomberg.

France has also been caught up in the trade war. In July, 2019, France passed a law placing a 3% tax called the Digital Services Tax on big American tech companies that operate in France such as Facebook, Amazon, and Google.

Responding to this tech tariff at the NATO summit this week, the Trump administration suggested that it would tax $2.4 billion worth of French goods at 100%, which could double the price of French favorites like wine, cheese, and cookware in the U.S.

The French Economy Minister Bruno Le Maire alleged that this 100% tariff would elicit a strong response from the entire European Union. The European Union on the whole recently became subject to American tariffs on $7.5 billion worth of European products.

South Korea too

In January, 2018, the Trump administration imposed a 50% tariff on washing machines from South Korea and a 30% tariff on solar panels from China. The move followed a push by domestic manufacturers of both products to get U.S. trade officials to impose taxes on imports, as a way to protect them from international competitors.  

The trade war’s impact on the U.S. economy

The trade war is reportedly costing American consumers. With the current tariffs in place, American households will spend an extra $2,031 per year, according to the National Foundation for American Policy.

Additionally, though Trump’s steel tariffs initially boosted the industry in 2018 with the creation of jobs and an increase in steel prices, the manufacturing sector remained slow for the fourth consecutive quarter as of December 2019.

Farmers say they are struggling because of the trade war as well. Countries such as China are raising tariffs on American agricultural products in response to the United States’ increased tariffs on Chinese goods, which some agricultural experts say may cost American farmers.  For example, China bought 5.9 million tons of soybeans from the United States during the first half of 2019, less than half of the 13.4 million tons that China purchased in the first half of 2018.

Background on the Trade War

• A trade war is when countries start waging an economic battle with each other using tariffs. One country will put tariffs on another’s goods, and the other will retaliate in kind.
• Over the last 30 years, the U.S. has signed numerous trade treaties to avoid trade wars, including the North American Free Trade Agreement (NAFTA).
• Agreements like this reduced the threat of trade wars, in part by eliminating many tariffs on exported and imported products.
• The Trump administration has been able to raise tariffs because of Section 301 of the Trade Act of 1974. Section 301 states that the United States can raise tariffs on countries that violate trade agreements or demonstrate unfair trade practices.
• Since 2018, the United States and China have notably been taking turns raising tariffs on each other’s exports. In May 2019, the United States doubled tariffs on $250 billion of Chinese products and China responded by announcing tariffs on $60 billion of American products. Steel, soybeans, whiskey, lumber, and other products have been caught in the crossfire of the trade war.

The post The Trade War Isn’t Just About China appeared first on Stash Learn.

• Following European Union (EU) parliamentary approval, the UK officially left the EU on Friday, January 31, 2020. There will be an 11-month transition period, during which the UK will adhere to previous EU trading rules and regulations as the new relationship gets ironed out, according to reports.
• On Thursday, December 12, Boris Johnshon’s conservative party won the majority of votes in a general election. Johnson’s victory is likely to pave the way for the U.K.’s departure from the European Union.

Brexit has hit the rocks again.

Over the weekend, British members of parliament rejected Prime Minister Boris Johnson’s plan to remove the United Kingdom (UK) from the European Union by the end of October, and they have asked for an extension to attempt a solution.

Brexit has consumed the UK for nearly three years, as the country and its governing representatives have been unable to agree on exact terms for its departure from the single European market, which could mean a big shakeup for one of the world’s largest economies, and possibly markets around the world.

If you’re confused about what Brexit is, or why it matters, read on.

What’s the European Union?

The European Union (EU) is a group of 28 countries that function as a single trading bloc. Ratified in 1993, the union has its roots following the calamity of World War II.

Its purpose is to foster economic and political partnership. The hope?  Countries that trade together will be less likely to declare war on each other.

The EU functions as a single market, which means goods (like refrigerators and eggs) can be shipped without paying tariffs and duties. Citizens of the individual countries and visitors to the region are allowed to move around all the countries as though it was one gigantic country.

Think about the border between Oklahoma and Texas—the highway patrol may change, but there are no customs or border security and people can move from Norman to Austin whenever they want.

The EU has its own parliament in Brussels and puts its stamp on rules that affect the nations under its umbrella. These rules can affect prices on trade, environmental policy, and how people can travel from country to country.

Many countries in the EU have abandoned their currency and adopted the euro. Great Britain chose not to and continues to use the pound sterling.

What’s Brexit?

The movement to leave the EU is known as Brexit, short for “British Exit.”

On June 23, 2016, the people of the United Kingdom voted on a referendum. The question? To stay in or leave the EU. The decision? The results surprised the world (and many people in the UK). Experts predicted that the UK would overwhelmingly vote to stay in the EU. But the experts were wrong.

The UK voted to leave the EU by a tiny margin.

The reasons why are complicated. What many people saw in Great Britain as a positive, such as ease of travel and citizenship from country to country, others saw as a negative, including increased immigration, globalization, and loss of native culture.

And not everyone in Great Britain likes taking orders from Brussels. Many who voted to leave the EU have said they think that U.K. decisions should be left to the U.K. and that it should have control over its own borders, and its own economy.

Brexiteers also point to costs: Britain pays 13 billion pounds annually to belong to the bloc, for which it also gets about 4 billion pounds in spending.

Politicians have struggled for years to make the Brexit deal a reality. Theresa May, the prime minister prior to Johnson, was unable to convince parliament to vote for a deal she had painstakingly worked out with the EU. She stepped down as prime minister in May 2019.

Johnson has also struggled, going as far as shutting down parliament so he could complete Brexit without further legislative debate by the October 31 deadline.

One of the most complicated sticking points relates to the border with the Republic of Ireland, which will remain in the EU, while Northern Ireland will depart in Brexit. Questions linger over whether Northern Ireland will continue to be subject to EU trading rules, and where to put a customs border.

As an FYI: The UK includes England, Wales, and Scotland, as well as Northern Ireland. The Republic of Ireland, on the same land mass as Northern Ireland, is an independent country.  Tensions between the UK and Ireland have run high for centuries.

Brexit, the UK economy, and world markets

With a GDP of nearly $3 trillion, as of 2018, the U.K.’s economy is currently the fifth-largest in the world. It’s also connected to many others in the region and around the globe.

London, for example, is one of the biggest financial centers in the world, and it is often seen as an entryway to markets in the rest of Europe. That status may change after Brexit, according to some experts.

Britain’s trading border with the EU is currently wide open, and approximately 50% of its exports go to the EU. Following Brexit, its trading businesses would suddenly be subject to tariffs and other trade impediments.

Similarly, its trading partners in the EU would also be subject to new tariffs and other potential financial burdens with a separated UK.

You may have heard the term no-deal Brexit. That’s the possibility that the UK could leave without any deal with the EU in place. Some economists and other market watchers say this could cause huge financial problems, including a recession in the UK, and problems for markets around the world.

Follow the Stash Way

Markets can be volatile, and sometimes what happens in other parts of the globe can affect what goes on in our own economy. That’s why Stash recommends following the Stash Way, which includes investing for the long term, regular investing, and diversification.

You can learn more about the Stash Way here.

The post What You Need to Know About Brexit appeared first on Stash Learn.

The proposed changes would relate primarily to car manufacturing, but they also concern agriculture and trade dispute resolutions.

Here’s what it all means (and what it means for you):

What is NAFTA?

NAFTA, signed into law nearly 25 years ago, is the largest trade deal in the world, affecting hundreds of millions of workers and consumers, and trillions of dollars worth of economic production.

It created a single trading bloc in North America, and affects nearly all aspects of the economies of the three nations involved in the treaty, which have a combined GDP of $21 trillion.

NAFTA affects more than just cars. It eliminates most tariffs and provides for the seamless import and export of goods across the three nations including agricultural products, textiles, insurance and intellectual property, among other things.

What changes to NAFTA is Trump proposing?

The Trump administration hopes to make alterations regarding car manufacturing, as well as agricultural tariffs and trade dispute resolutions.

NAFTA is the largest trade deal in the world, affecting hundreds of millions of workers and consumers

The new NAFTA rules would require 75% of the value of North America automobiles to be made in the NAFTA zone, up from 62.5%, according to the New York Times. U.S. car manufacturers routinely import parts from overseas, primarily from China and other parts of Asia.

The new rules also stipulate that 40% to 45% of all NAFTA zone car manufacturing would have to occur in countries where workers earn $16 or more per hour.

That tweak could result in more automobile manufacturing being handled in the U.S., according to reports.

The changes would be in place for 16 years, but would be revisited every six years.

Why is Trump doing this?

President Trump has made overhauling NAFTA a signature part of his agenda. He has blamed NAFTA for losses in manufacturing and a decline in wages in the U.S.

What does this mean for you?

Changes to NAFTA that make it more expensive to manufacture cars could result in higher prices for automobiles in the U.S.

What’s a bilateral agreement?

Trade agreements can exist between various nations, or just two nations. When they are between two nations, they are known as bilateral agreements. When they are between multiple countries, they are called multilateral agreements. (When three nations are involved, they can sometimes be called trilateral deals.)

Trump has proposed turning NAFTA, currently a trilateral deal, into two bilateral treaties. His administration has negotiated the recent changes with Mexico, eliminating Canada from the deal-making process.

Trump has suggested that Canada would have to negotiate its own bilateral deal with the U.S., or face new tariffs on its exports.

However, Canada is a part of the original NAFTA agreement, and numerous U.S. states and Mexico see it as critical to the trade bloc and for exports. Canada is also a key ally and defense partner for the U.S.

Fans and critics of NAFTA

Supporters of NAFTA credit it with an uptick in manufacturing across the three countries, and reduced prices for consumers. Critics, however, say it has led to job losses, particularly in the U.S. where the cost of manufacturing is much higher than Mexico.

Trade between the three countries has quadrupled to $800 billion since 1994, according to the U.S. Department of State, which also claims that NAFTA supports 3 million U.S. jobs that depend on exports.

Are there other trade agreements?

Yes. The U.S. has negotiated a total of 14 trade agreements, with 20 countries. Others include the Central American Free Trade Agreement, and numerous bilateral agreements with countries including Israel, Panama, and South Korea.

Trump pulled out of a trade treaty called the Trans-Pacific Partnership agreement in 2017, which would have eliminated numerous tariffs between 12 countries including Japan, Canada, Mexico, Vietnam and Australia.

With the U.S., the TPP would have created the largest trading bloc in the world, worth about 40% of all global trade.

The president has stated his preference for one-on-one trade deals, where he can potentially leverage the economic might of the U.S. against smaller countries.

Important note

Trump does not have the authority to revise NAFTA on his own. Congress must weigh in and approve changes with a vote.

Who created NAFTA?

President Bill Clinton signed the NAFTA agreement into law in 1994, but President Ronald Reagan floated the idea for a free trade zone in the 1980s. NAFTA  generally eliminates the tariffs between the Canada, Mexico, and the U.S.

The post What is NAFTA? How Trump’s Trade Deal with Mexico Could Affect You appeared first on Stash Learn.

On Friday, U.S. tariffs on $34 billion worth of Chinese goods officially kicked in. China responded with tariffs of its own on U.S. products.

What’s a trade war?

A trade war is when one country puts tariffs, or taxes, on another’s imports. The other country then responds with tariffs of its own.

What’s a tariff?

A tariff, sometimes called a duty, is a tax typically imposed by one nation on another’s imports. (In some cases, tariffs can be levied on exports.) The tariff is generally calculated as a percentage of the import’s total value, including freight and insurance charges.

The U.S. has put taxes on products many U.S. manufacturers import as part of their supply chains, such as auto and jet engine parts, as well as compressors and electrical components. China, in turn, is reportedly putting taxes on soybeans, aircraft, and cars.

How a trade war could affect you

There are concerns that a trade war will increase costs to buy goods for U.S. consumers. There are also worries that tariffs could cost workers their jobs in various manufacturing industries, as expenses increase.

For example, on the import side, numerous industries depend on cheap steel, which they get from China and other markets, to manufacture products. Tariffs are likely to increase the cost of steel at home, and those increases are likely to be passed along to the consumer in the form of higher prices.

On the export side, China is placing tariffs on our agricultural products and beef, which will make these products more expensive to sell in China. U.S. soybean farmers are one group who are likely to get hit by tariffs from China. (In related news, U.S. exporters of cheese say they’re feeling the pinch from a parallel trade war running with Mexico.)

Why is this happening?

President Trump ran on an “America First” platform, which aims to advance the interests of U.S. manufacturers, in part by withdrawing from trade treaties and prior trade agreements.

In recent months, the U.S. has put tariffs on foreign steel and aluminum, not only from China but also Canada and Mexico. It has also taxed solar panels and washing machines, primarily from Asia.

The Trump administration is planning another round of tariffs on an additional $216 billion worth of Chinese products later this summer and into the fall, according to reports.

The post Trump’s Trade War With China Begins appeared first on Stash Learn.

The Canadian government took a giant leap toward legalizing marijuana and is poised to become the second country in the world to end cannabis prohibition on a national scale.

Bill-45, the Cannabis Act, has completed its journey after more than a year of working its way through Canada’s legislature. The effort is supported by Canada’s Liberal party and Prime Minister Justin Trudeau, and was also a key part of Trudeau’s campaign platform in 2015.

Uruguay became the first country to legalize marijuana for recreational use in 2013, and many other countries have decriminalized it, though bar sales. In the U.S., nine states have legalized marijuana for recreational use, though it remains illegal under federal law.

Canada will become the first G7 country to cross the reefer Rubicon.

Canada gives legalization the green light

Under the new legal framework, Canada’s new regulations will allow people ages 18 and over to purchase marijuana from licensed stores. They will also be able to grow their own at home, except where prohibited by local laws. Stores selling cannabis for recreational consumption could open as soon as August or September.

Ultimately, how and when those stores open to the public will be up to individual provinces and territories.

But possible dangers to public health are on the government’s radar, too. It’s expected that the Canadian government will set up marketing and public-relations campaigns to educate and inform about the effects of marijuana use—similar to what you might see in the U.S. concerning tobacco.

Seeing green

Proponents of legalization in Canada look at the potential financial benefits—specifically, that recreational sales could generate revenues of more than $4 billion per year, according to a report from professional services firm Deloitte.

All told, it could be an economic boon for Canada. Entrepreneurs should get the chance to jump into a once-blacklisted market, thousands of jobs will likely be created, and the government should reap the benefits of increased tax revenues.

In the U.S., legal marijuana has created more than 123,000 jobs, according to industry data.

And as far as taxation, government officials hope to levy a 10% sales tax, or roughly $1 per every gram sold—whichever is greater.

How you can capitalize

A G7 country fully legalizing cannabis is a first, and will likely act as a shot in the arm for the fledgling marijuana industry. A number of companies, some publicly-traded, already work in and around the industry, but they’re still considered to be treading on risky ground; as has investing in those companies.

Examples include Cronos Group (CRON), Aurora Cannabis (ACB), and GW Pharmaceuticals (GWPH).

In the U.S., for example, marijuana companies operating in states where cannabis is legal are still largely shut out of the traditional banking system, and are under threat of shutdown from the federal government.

But some of the world’s largest companies operate out of Canada, where laws were more lax even before legalization. Now, with an end to national prohibition, companies and investors have a safe space, legally speaking, in which they can conduct business.

Though the industry is still on shaky ground and therefore, somewhat risky, you can invest in the marijuana industry on Stash.

The post In Canada, Marijuana Prohibition is About to Go Up in Smoke appeared first on Stash Learn.

The accord, which waived economic sanctions on Iran in exchange for a halt to its nuclear weapons program, was originally put into place by the Obama administration in 2015.

Under the deal, Iran agreed to concessions, most notably reducing its uranium stockpile, and allowing inspectors from the International Atomic Energy Agency to monitor its declared nuclear sites.

Trump, however, has decided to reverse course and withdraw the U.S. from the agreement, while also reinstating sanctions on Iran.

What’s a sanction?

A sanction is a type of penalty, typically levied by one nation or group of nations on another in an effort to deter or punish certain behavior.

In this case, Iran was sanctioned by the U.S. for attempting to build a nuclear weapon. Those economic sanctions–which are commercial or financial in nature–were meant to put pressure on the Iranian government by hurting the country’s economy through blocked trade and transactions.

In pulling out of the nuclear pact, Trump announced that the U.S. will reinstate sanctions previously lifted under the deal.

American allies, including leaders from France, the U.K., and Germany, unsuccessfully tried to pressure Trump into recertifying the deal.

Why is Trump pulling out of the deal?

There isn’t a clear answer, though Trump has said that he wants an agreement that sticks tougher restraints on Iran, including limits on its nuclear fuel production. He also opposes the current deal’s sunset provision, which allows Iran to resume its nuclear program after 2030.

Trump has called the accord, in its current form, the “worst deal” and “an embarrassment.”

Trump has also claimed that Iran was cheating or not sticking to the terms of the deal; A claim to which he has provided no evidence, and that his own intelligence agencies have refuted.

The immediate fallout

The immediate effects of Trump’s decision are that American allies–notably countries in the European Union–will be alienated, and strain already tense relationships.

“France, Germany, and the UK regret the U.S. decision to leave the JCPOA,” French President Emmanuel Macron tweeted following Trump’s announcement. “The nuclear non-proliferation regime is at stake.”

Iran, taking America’s cue, could also decide to violate the terms of the deal and ramp up nuclear activities.

Iranian leaders have, however, said they’re willing to continue working within the accord’s framework with its co-signers for the time being.

Business and the economy

There are also many business dealings–between both American and European companies–in the works involving Iran. Boeing, for example, could lose $20 billion in aircraft sales to Iran as a result of Trump’s decision. General Electric, also, had deals in place to supply Iran’s oil and gas sector with equipment, which could now be threatened.

Another company, Volkswagen, returned to Iran after 17 years once the nuclear deal was signed and sanctions were lifted. Now that the deal is off, it may need to once again pull out of the country.

French aerospace company Airbus, like Boeing, may also need to scuttle its plans to sell planes in IranAir, Iran’s national carrier.

As the reinstatement of sanctions all but puts a stop to those deals and more, it could also create stock market volatility and have other economic effects.

Trump’s decision also increases the possibility of military action in the future–assuming Iran resumes work toward building a nuclear weapon.

What you should prepare for

For the average American,  the single biggest–or at least most noticeable–consequence of Trump’s decision is likely to be rising fuel prices.

Gas prices have already been on the rise over the past year, and reinstating economic sanctions on Iran, the world’s fifth-largest oil producer, could result in higher prices at the pump.

The terms of the nuclear deal allowed Iran to export oil to other countries. But with sanctions reinstated, it will no longer be able to export, and as a result, the global oil supply will get smaller. Lower supply can lead to higher gas and home heating prices.

Aside from costlier commodities, your portfolio could also be in for a wild ride as the markets react.

For example, the markets dropped considerably after Trump announced tariffs on Chinese goods, stoking fears of a trade war. The markets could act similarly regarding Iran.

There’s also a strong possibility that defense and aerospace stocks could rise or drop if the U.S. considers military action. The same could be true for domestic oil companies if world oil supplies shrink.

The post Trump Scrapped the Iran Nuclear Deal, and Here’s How It Could Affect You appeared first on Stash Learn.

Read more about recent US tariffs on aluminum and steel.

That could increase costs for U.S. consumers, and also reduce demand for U.S. exports, which could dent our economy, according to experts.

Why is this happening?

Over the last 30 years, the U.S. has entered into numerous trade treaties.

You may be familiar with the North American Free Trade Agreement (NAFTA). These treaties are complex multilateral agreements that favor negotiations between all countries that sign.

Winning trade wars isn’t easy, as history has shown us.

Agreements like this reduced the threat of trade wars, in part by eliminating many tariffs on exported and imported products.

Trump has argued such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete.

In 2017, the U.S. signed a less comprehensive trade treaty with China, but Trump has said recently that products from China–in particular steel–have cost the U.S. 6 million jobs, and have caused 60,000 factories to close. Economists reportedly dispute these figures.

Trade wars: High school history class flashback

Winning trade wars isn’t easy, as history has shown us. Many analysts are digging back into their history books to remember the Smoot-Hawley Act tariffs and the “trade wars” that collided with the Great Depression of the 1930s.

The Act bumped the average U.S. tariffs to 45 percent from 38 percent. Still, other countries were not happy with the U.S. in the early 1930s. Several countries, including Canada, immediately responded with their own tariffs. Soon other countries jumped into the fray and a global trade war broke out in 1931, thus sparking a European financial crisis.

While Smoot-Hawley has been blamed for worsening the Great Depression, most economists say the conditions that drove down the U.S. economy were far more complex than that. The tariff-related Act was introduced before the Great Depression, although its impact was largely felt during those tough subsequent years.

President Richard Nixon temporarily introduced tariffs back in 1971 to fight stagflation. President George W. Bush briefly introduced steel tariffs in 2003 but repealed them several months later after the tariffs were seen to have negatively affected the economy.

What makes this time different?

The move by this administration is unusual because the president is justifying them on the grounds of national security.

Read more about how China is responding to President Trump’s tariffs.

How can a trade war affect U.S. consumers?

There are concerns that a trade war will increase costs to buy goods for U.S. consumers. There are also concerns that tariffs could cost workers their jobs in various manufacturing industries, as expenses increase.

On the import side, numerous industries depend on cheap steel to manufacture products. Tariffs are likely to increase the cost of steel at home, and those increases are likely to be passed along to consumer in the form of higher prices.

On the export side, China is likely to place tariffs on our agricultural products, which will make these products more expensive to sell in China.

Similarly, tariffs could hit tech companies such as Apple, which reported that more than 20% of its global sales in this past quarter came from China and the greater China region, which includes Hong Kong and Taiwan.

The post What’s a Trade War? appeared first on Stash Learn.

Three key indexes, the Dow Jones Industrial Average, the S&P 500 and the tech-heavy Nasdaq all lost more than 2% of their value, according to reports. The Dow lost more than 700 points in afternoon trading.

Markets reacted to fears that the tariffs could prompt a trade war, which has the potential to damage the U.S. economy, and cut down on Gross Domestic Product (GDP) growth.

The tariffs that Trump announced today will target up to 1,300 items produced in China, including aeronautics, high-speed rail, alternative energy vehicles, and high tech products, according to CNBC. It is also meant to punish China for what the administration has said is intellectual property theft from U.S. businesses.

Earlier in March, Trump said he would place a tariff of 25% on foreign steel, and one of 10% on aluminum imports. While China is the largest steel producer in the world, those tariffs will potentially affect metals produced in several countries. Similarly in January, the president announced tariffs on foreign-made solar panels and washing machines.

What are tariffs?

A tariff, sometimes called a duty,  is a tax typically imposed by one nation on another’s imports. (In some cases, tariffs can be levied on exports.) The tariff is generally calculated as percentage of the import’s total value, including freight and insurance charges.

In principle, governments impose tariffs to make their own products more competitive and affordable, and to generate revenues.

What’s a trade war?

A trade war is when countries engage in a tit-for-tat over tariffs. In response to U.S. tariffs on Chinese goods and services, China could impose tariffs of its own on U.S. steel, as well as other exports.

That could increase costs for U.S. consumers, and also reduce demand for U.S. exports, which could dent our economy, according to experts.

Over the last 20 years, the U.S. has entered into numerous trade treaties, the most famous of which is perhaps the North American Free Trade Agreement (NAFTA). These treaties, which are complex multilateral agreements that favor negotiations between all countries that sign, have reduced the threat of trade wars, in part by eliminating many tariffs on exported and imported products.

Trump has argued such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete.

In 2017, the U.S. signed a less comprehensive trade treaty with China, but Trump has said recently that products from China have cost the U.S. 6 million jobs, and have caused 60,000 factories to close. Economists reportedly dispute these figures.

China threatens retaliation

Chinese officials said they would take whatever action they deemed necessary to protect their interests in the face of new tariffs. That could include placing tariffs of their own on the $19.4 billion of agricultural products the U.S. ships to China each year, the majority of which is soybeans, according to reports.

A tariff, sometimes called a duty,  is a tax typically imposed by one nation on another’s imports.

“China absolutely won’t sit back and allow its legitimate rights and interests to be harmed and will take all necessary measures to protect” them, China’s Commerce Ministry said in a statement Thursday, according the Wall Street Journal.

Good to know: As the Trump administration announced the tariffs on China, it also said it would exempt trading partners including Argentina, the European Union, and South Korea from recent aluminum and steel tariffs.

How a trade war could affect you

Meanwhile, various businesses and trade groups expressed fears that the tariffs would increase costs for U.S. consumers, and could potentially result in job losses in the tech sector.

“Increased tariffs and trade wars risk the nearly 2.5 million American jobs associated with trade involving technology products,” Gary Shapiro, president and CEO, Consumer Technology Association, said in an emailed statement on Thursday.  “Such a move threatens U.S. economic growth and wipes out the benefits of our recent tax reform.”

The consumer technology industry represented more than 10 percent of the U.S. gross domestic product in 2017, according to the CTA.

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That’s a leading reason why this week, after President Trump announced new tariffs on steel and aluminum, major indexes fell in reaction to the news.

The Dow Jones Industrial Average dropped 420 points on Thursday, and was down more than 300 points in late morning trading Friday. Similarly, the S&P 500 and the tech-heavy Nasdaq each fell more than 1% on Thursday, and both indexes continued their slide on Friday in morning trading.

Fears of an extended trade war–where other countries could retaliate by slapping tariffs of their own on U.S.-made steel and aluminum, rattled investors and the larger markets.

So what are tariffs and trade wars, and how do they relate to the stock market?

Let’s break it down.

What’s a tariff?

Trump has proposed putting a tariff of 25% on foreign steel, and one of 10% on aluminum imports, according to reports.

A tariff, sometimes called a duty,  is a tax typically imposed by one nation on another’s imports. (In some cases, tariffs can be levied on exports.) The tariff is generally calculated as percentage of the import’s total value, including freight and insurance charges.

In principle, governments impose tariffs to make their own products more competitive and affordable, and to generate revenues.

A trade war is when countries engage in a tit for tat over tariffs.

Think of it this way: The additional taxes imposed will make it more expensive for U.S. companies to buy foreign steel, so they may instead turn to steel made by U.S.-based manufacturers.  And if they do buy the more expensive foreign product, the tariff adds to U.S. coffers.

What’s a trade war?

A trade war is when countries engage in a tit-for-tat over tariffs. In response to U.S. tariffs on foreign steel and aluminum, countries such as China, the largest steel producer in the world, could impose tariffs of their own on U.S. steel, as well as our other exports.

That could reduce demand for U.S. exports, which could dent our economy.

In fact, leaders from various countries and trading blocs have already weighed in, suggesting they might do just that.

“The United States must know that if these unilateral decisions were to be maintained and confirmed, they would lead to a strong, coordinated and united answer from the European Union,” Bruno Le Maire, France’s minister of finance, told USA Today.

Chinese leaders have reportedly said they’d do what they need to protect their own markets, and have hinted they might retaliate further by putting tariffs on other U.S. products, such as our exports of soybeans, which totaled about $12.4 billion in 2017, according to reports.

Yet other countries from Canada to Mexico have also voiced concerns.

“Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers,” Foreign Minister Chrystia Freeland told Reuters in a statement.

Canada is the largest supplier of aluminum and steel to the U.S., and also purchases more than half of its steel from the U.S.

Steel and aluminum are in everything

Soda and beer cans, electrical components for smartphones, automobiles, building construction materials, and paper clips–you can’t go far without encountering aluminum and steel. Both materials are in most everything we use every day.

And executives from some of the leading business councils in the U.S. weighed in about the potential impact of the new tariffs, with some expressing fears that the duties will increase the costs of manufacturing.

“President Trump shouldn’’t undercut his own goal of helping U.S. manufacturers “win” again by imposing counterproductive tariffs on steel imports,” The Association of Equipment Manufacturers said in a statement.

Similarly, Molly Day, vice president of the National Small Business Association, told CNBC:

“This kind of tariff, while seemingly targeted, could have widespread implications and likely will result in increased prices of many goods,” said Day.

Why did the stock market fall?

Perhaps the most potent force in the stock market in recent weeks has been the fear of inflation. Signs of inflation caused major indexes to experience corrections in February, resulting in losses of at least 10%.

And the tariffs could potentially increase costs for U.S. businesses, according to reports, which could cause an uptick in inflation, as businesses raise prices to cope. When inflation rises, the Federal Reserve, the nation’s central bank responsible for setting monetary policy, usually responds by increasing interest rates to combat it.

Higher interest rates, in turn, can make it more expensive for businesses to operate, which can put further pressure on stock prices.

More background

Trump ran on an “America First” platform, which aims to advance the interests of U.S. manufacturers, in part by withdrawing from trade treaties.

Over the last 20 years, the U.S. has entered into numerous trade treaties, the most famous of which is perhaps the North American Free Trade Agreement (NAFTA). These treaties, which are complex multilateral agreements that favor negotiations between all countries that sign, have reduced the threat of trade wars by eliminating many tariffs on exported and imported products.

Trump has argued such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete.

And this isn’t the first time the Trump administration has moved to impose tariffs. In January, it approved steep tariffs on imported solar panels and washing machines.

The move followed a push by domestic manufacturers of both products to get U.S. trade officials to impose taxes on imports, as a way to protect them from international competitors.

China is the largest manufacturer of solar components in the world, and its prices are generally far cheaper than those for American products. American manufacturers of solar products have said a flood of imports from China has hampered their ability to manufacture.

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The move follows a push by domestic manufacturers of both products to get U.S. trade officials to impose taxes on imports, as a way to protect them from international competitors.

Late last year, Whirlpool and GE Appliances asked for a 50% tax on washers from overseas competitors including Samsung and LG, both based in South Korea, which they accused of dumping cheap products in the U.S. Similarly, solar panel manufacturers Suniva and SolarWind had petitioned for tariffs, primarily on Chinese solar components.

China is the largest manufacturer of solar components in the world, and its prices are generally far cheaper than those for American products. American manufacturers of solar products have said a flood of imports from China has hampered their ability to manufacture.

The tariffs will add up to 50% on imported washers and parts, and up to 30% on solar components, according to the Office of the U.S. Trade Representative, the federal agency responsible for setting trade policy.

What’s a tariff?

A tariff, sometimes called a duty,  is a tax typically imposed by one nation on another’s imports. (In some cases, they can be levied on exports.) The tariff is generally calculated as percentage of the import’s total value, including freight and insurance charges.

In principle, governments impose tariffs to make their own products more competitive and affordable, and to generate revenues.

Think of it this way: The additional taxes imposed on LG washers will make them more expensive for U.S. consumers to buy, so they’re likely to shop around and buy cheaper models, presumably made by U.S.-based manufacturers.  And if they do buy the more expensive foreign product, the tariff adds to U.S. coffers.

The problem is that tariffs can also spark something called a trade war. That’s when nations retaliate by increasing prices for products they export, or by imposing their own tariffs on imports. That, in turn, can make things more expensive for consumers in both countries.

South Korea has already said it will appeal the tariffs to the World Trade Organization, and LG has said it plans to increase the prices of the washers it ships to the U.S. in retaliation.

“It’s likely this will result in higher prices and fewer choices for consumers,” John Taylor, senior vice president for LG Electronics, told USA Today this week.

How does this affect the solar industry?

The solar industry in the U.S. has really taken off because the price of solar panels, 80% of which are manufactured overseas, has fallen by about 70% since 2010, according to reports.

But the U.S. solar industry is based on innovation and installation, more than manufacturing solar components, experts say.

Shares of First Solar, a U.S.-based manufacturer of solar components increased 7% following the tariff announcement.

Solar installation is currently a $29 billion industry, and it’s the fastest growing segment of the solar market in the U.S., according to Slate.

While the tariff on solar products is likely to help companies manufacturing solar panels and other components in the U.S., it’s likely to hurt the companies that install solar systems in consumer homes and rooftops, as costs for components go up.

For example, shares of First Solar, a U.S.-based manufacturer of solar components increased 7% following the tariff announcement.*

Solar installers, however, expressed concern about the tariffs.

“The gains that may materialize in module manufacturing won’t be nearly as much as the near certain losses in the rest of the US manufacturing supply chain and installation jobs,” Kevin Bassalleck,  the president of Affordable Solar, based in Albuquerque, told Business Insider.

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China’s Internet conglomerate Tencent Holdings overtook Facebook by size on Tuesday, with a market capitalization of $534.5 billion, compared to Facebook’s $519 billion, according to reports.

Tencent’s share price has surged following strong third quarter earnings, reported last week, with profits increasing nearly 70% in the quarter.

What’s Tencent?

Tencent is a tech conglomerate offering Internet services, an online advertising platform, and mobile games, among other things. It’s perhaps best-known, however, for its WeChat messaging service, which has close to 1 billion users who send about 38 billion messages each day, according to Reuters.

Market cap, is the total dollar value of a company’s shares. It’s often used to evaluate a company’s overall size

Tencent was founded by entrepreneur Ma Huateng in 1998. It has invested in numerous U.S. startups, including Snap and Tesla. Ma has an estimated net worth of $42 billion, according to CNN.

Earlier this month, Tencent caused a stir when it snapped up 12% of Snap after the U.S.-based messaging app company reported less than stellar earnings.

Tencent is now the fifth-largest publicly traded company in the world, according to Reuters. It ranks behind Apple, whose market capitalization of $873 billion makes it the most valuable company in the world, as well as Google parent company Alphabet, Microsoft, and Amazon.

[infogram id=”5624b090-27a2-48c8-b10f-fac165874e59″ prefix=”qmT” format=”interactive” title=”Tencent Chart”]

Largest publicly traded companies by market cap.

What is a market capitalization?

A market capitalization, or market cap, is the total dollar value of a company’s shares. It’s often used to evaluate a company’s overall size.

Market cap is determined using a simple calculation: You multiply the company’s share price by the number of shares available for sale. In this case, Tencent’s share price was about 440 Hong Kong dollars. It has about 1 billion shares outstanding.

That gives Tencent a market cap of roughly 4.17 trillion Hong Kong dollars, or $534.5 billion, according to CNBC. It’s the first Chinese company to reach the $500 billion market cap mark, beating out rival Alibaba, the Chinese eCommerce company.

The post China Social Media Giant Tencent is Now More Valuable Than Facebook appeared first on Stash Learn.

The MCSI Emerging Market Index, which is a composite of some of the biggest company stocks in developing nations is up 30% for the year. But tech stocks in the same index are up 54% over the same time period, which means they’re increasing at a rate nearly twice as high as the total index, the Wall Street Journal reports.

There are also roughly 30 emerging market economies primarily in Africa, Eastern Europe and Asia

The tech gains in the emerging nations reportedly represent a turnaround from previous years, as the major industries that drove index gains were commodities, financial services, and utilities. In the 1990s, technology stocks only made up 5% of the index, today they represent more than a quarter.  

It’s been a strong year for tech stocks in the U.S. as well, with the S&P North American Technology index up 26% for the year.

A few of the big drivers of emerging market gains are China’s eCommerce platform Alibaba, Internet services company Tencent Holdings, and electronics powerhouse Samsung.

Source: Wall Street Journal and FactSet

What are emerging markets?

There are also roughly 30 emerging market economies primarily in Africa, Eastern Europe and Asia. Some of the largest emerging nations are referred to as the BRIC nations of Brazil, Russia, India, and China.  But there are as many as two dozen others, including Malaysia, Mexico, South Africa, Taiwan, Turkey, and Vietnam.

(China is something of a paradox. It’s the world’s second largest economy, but it’s also considered a developing nation.)

Generally speaking, these countries are less affluent, and the standard of living tends to be lower. Literacy may not be as high as in developed countries, and there also can be less political and economic stability. The currency of these countries can also be subject to dramatic swings, which can affect investments.

Manufacturing tends to be less advanced, and it tends to focus on components that find their way into finished products made elsewhere. Many of these countries also supply natural resources that are necessary in manufacturing, such as petroleum, wood and non-precious metal.

While investments in developed nations carry the potential for rapid growth, there’s also more risk involved for a variety of factors related to the stability of these economies, including currency fluctuations and the potential for political unrest.

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Robotics and artificial intelligence are exciting new fields that are currently enabling machines to work alongside people in a variety of manufacturing industries including automotive and electronics production.

Robots and artificial intelligence will drive $15.7 trillion of global economic gains by 2030

Pretty soon, robots and other thinking machines will be helping everywhere, assisting in health care, energy production, even farming.  

Robots, robots, everywhere

A new study from consultancy PriceWaterhouseCoopers (PWC) about artificial intelligence predicts the world is on the cusp of enormous change, driven by robots and the next generation of thinking computers. The study forecasts enormous productivity gains for economies across the globe as robots and artificial intelligence enable greater efficiency.

The two countries expected to benefit most from advances in artificial intelligence are the United States and China, also the two largest economies in the world. But emerging markets have an opportunity to ramp up really fast.

Here are some highlights from the report:

Robots and artificial intelligence will drive $15.7 trillion of global economic gains by 2030. Roughly half of these gains will come from increases in productivity. The other half will come from increased consumer demand as products become more specialized and targeted to individual buyers.

While all economies in the world will experience the economic impact from smarter machines, China and the U.S. will experience 70% of the total GDP gains. PWC estimates the U.S. will see economic increases worth $3.7 trillion. China will see nearly twice as much economic gain, valued at $7 trillion.

Emerging market economies, or nations whose economies are still developing, stand to gain the most from robotics and artificial intelligence. Think of it this way: advanced economies like the U.S. already have extremely sophisticated systems in place for manufacturing, production, and delivery of services.

Developing nations have a huge opportunity to become market leaders by adopting artificial intelligence in processes more quickly.

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