Two years ago, the Omicron scourge hit the U.S. hard. The Federal Reserve had been keeping interest rates ultra-low, but it wanted to begin a monetary tightening cycle. Fed Chairman Jerome Powell, though, couldn’t be sure how badly the Covid variant would slow the economy because he had no idea how viral the new strain would be. Would it shut down the economy again? Would it be more restrictive, causing the country to revert to the closing of all stores except those designated with emergency status, something that was simply wiping out all shops with stretched balance sheets? Who knew? The thing moved so fast that the last thing Powell could do was raise rates. Yet, the Fed chief was roundly criticized for avoiding tightening because the economy wouldn’t slow down; nor would inflation. He waited four months to be sure before taking rates in March 2020 up to a range 0.25% to 0.50%, a shrewd decision, in retrospect, because at that point Omicron had played out and the crippling impact had run its course. The U.S. ended its tough restrictions on Covid in the spring of 2022, right about the time the Fed began the most aggressive tightening cycle in its history. (Including the March hike, central bankers increased the fed funds overnight bank lending rate 10 more times to the current range of 5.25% to 5.50%.) U.S. gross domestic product (GDP) grew 2.1% in 2022, a decent rate all considering. Now consider China. The country adopted a strict Covid policy that prevailed through 2022 causing its GDP to fall to 3% way below the Chinese government’s 5.5% target. In retrospect, that was the beginning of phase two of the slowdown in China, phase one being when then-U.S. President Donald Trump began, and phase two when current President Joe Biden continued, if not accelerated, the economic separation between our two countries. We didn’t know it at the time but it wasn’t Trump’s tariffs as much as his admonitions that it was time to break with cooperation because it had been one-sided. Our continual building of factories and expansion together had failed to make for a level playing field. China could not be counted on as a reliable trading partner. There were really three reasons: (1) the Chinese no longer attempted to change their rapacious ways with American industry; (2) their foreign policy plans were unwavering in their insistence of domination of the lesser developed world via the Belt and Road Initiative; and (3) three their military, always the power behind the throne, decided to go toe-to-toe with the United States by appropriating the most sophisticated semiconductor chips while beginning a policy of intimidation of Taiwan in order to force Taiwan Semiconductor Manufacturing Company , the largest chip foundry, or factory, in the world, to favor the makers of Chinese chips. Given that we had pretty much ceded the making of our best chips to TSMC, the threat was real and nefarious, meant to drive home plans for a one-country strategy, a strategy never abandoned by China and one that had been sub rosa accepted unchallenged until August 2022 when then-House Speaker Nancy Pelosi (D-Calif.) visited the country. That break proved crucial to the geopolitical strategies of both countries. It signaled that not only was it no longer business as usual but that our nation was going to cease tolerating any designs on Taiwan even as China was unwilling to acknowledge that our policy had changed when Pelosi visited. The one country status that we had tacitly accepted ended – and with it any hope of economic connection with China save Nike and Club names Apple (AAPL) and Starbucks (SBUX), plus existing plants by some multinationals. New plants seemed and became out of the question, something in retrospect probably seemed unlikely when Biden replaced Trump. The hardline had gotten harder and with it new jobs coming from the U.S. In retrospect that was crucial to what has become of the two nations, at least as measured by the two stock markets. The S & P 500 advanced 14% over the next two years, but China’s market sank nearly 1.5% during the same period. The decline, as minor as it seemed, masked the tremendous rot underneath, as youth unemployment exploded to more than 20% before it ceased to be reported, and the cracks in the Chinese property market became evident and then accelerated to the point where we expect things to grow only worse. Meanwhile, Chinese President Xi Jinping acted as if nothing had weakened and only strengthened his hold on lifetime power. Now, cut to the most recent events, and we seem almost unaware of the significance of Xi visiting San Francisco. The trip seemed far more important to Xi than to us. In fact, we could ask what the heck was he doing here. Was it really about trying to restore more normal relations or was it about bringing American companies back to China and a hoped-for lessening of restrictions on Club holding Nvidia (NVDA), which makes the powerful chips most needed if China is going to be sure to control the thought processes of its industry and its people while bolstering its military. If those were the desires, it was apparently an abject failure on his end but one he can’t afford to accept if he is going to restart his economy. No other country is as strong as the U.S. or has the possibility of providing the kind of employment away from property, which we know is a total disaster even as we seem to think that a command economy can’t have such a disaster. Now we find a China that needs us so badly that its president’s hat and hand gesture must be followed up on with more enticement. Staying away from the U.S. seems out of the question. Unless Xi adopts Keynesian economics which he seems to rule out at every turn. The impact on our country is stunningly missing. Have you noticed its lack of import? It’s so obvious that we don’t need China. We don’t want their imports; witness our blocking of their cheap electric cars. We want to wean ourselves off their supply chain as it turned out to be a lot more fragile than we thought. It’s taking longer and many are recalcitrant as reshoring costs a fortune. We seem to want to ignore the low cost of doing more business in Mexico. It seems as if it might run afoul of a policy set by Trump. Did you notice how the U.S. auto companies were hesitant to suggest that they might move manufacturing to China? They were toothless in the face of the striking United Auto Workers (UAW) that seemed to know that the so-called nuclear option wouldn’t be used. The cowering auto execs lost it all to end the six-week UAW walkout – and yes, it does seem like it all, because they were boxed into the U.S., into the union portion of the U.S. even more so. What does it all mean to our country? I think it means that our soft landing is, in retrospect, more remarkable because China hasn’t helped one bit with commerce that at one point when Trump was president, seemed most needed. We have caught and passed the Chinese and seemed to leave them well behind us DESPITE the most aggressive Fed tightening cycle in our nation’s history. The gulf is not metaphorical. We ARE NOT going to help the Chinese. They don’t seem to know how to, or can’t, help us. I think the testament of our growth is ignored by those who can’t believe that Powell has the gumption to slow inflation far more than slow the economy. We handled Covid better than China. It didn’t help the Chinese cause that they refused the Pfizer vaccine. We handled the declines in our oil and natural gas and industrial and financial troubles better, in part because of our gigantic stimulus. Yes, our budget deficit is huge and should be crushing our stock market. But the two don’t seem to relate. Maybe something will be done about it, maybe something won’t. It just all seems so much more manageable than whatever the hell is going on in China. But as we close out this 2023 year with a stock market that has such a hard time quitting, we should be thankful that our nation came out of Covid stronger than it came in, while China came out much weaker without a plan to get stronger and without any chance of gaining largesse from the American government and American industry; the latter of which doesn’t seem to be suffering from the Chinese downturn. That included, of all companies, Apple, which took whatever share was to be gained from the once toothful colossal that now seems toothless despite our own inferiority complex otherwise. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust is long.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Federal Reserve Chairman Jerome Powell, wearing a face mask, testifies before the House of Representatives Financial Services Committee during a hearing on oversight of the Treasury Department and Federal Reserve response to the outbreak of the coronavirus disease (COVID-19), on Capitol Hill in Washington, U.S., June 30, 2020.
Tasos Katopodis | Reuters
Two years ago, the Omicron scourge hit the U.S. hard. The Federal Reserve had been keeping interest rates ultra-low, but it wanted to begin a monetary tightening cycle. Fed Chairman Jerome Powell, though, couldn’t be sure how badly the Covid variant would slow the economy because he had no idea how viral the new strain would be. Would it shut down the economy again? Would it be more restrictive, causing the country to revert to the closing of all stores except those designated with emergency status, something that was simply wiping out all shops with stretched balance sheets? Who knew? The thing moved so fast that the last thing Powell could do was raise rates.
Yet, the Fed chief was roundly criticized for avoiding tightening because the economy wouldn’t slow down; nor would inflation. He waited four months to be sure before taking rates in March 2020 up to a range 0.25% to 0.50%, a shrewd decision, in retrospect, because at that point Omicron had played out and the crippling impact had run its course. The U.S. ended its tough restrictions on Covid in the spring of 2022, right about the time the Fed began the most aggressive tightening cycle in its history. (Including the March hike, central bankers increased the fed funds overnight bank lending rate 10 more times to the current range of 5.25% to 5.50%.) U.S. gross domestic product (GDP) grew 2.1% in 2022, a decent rate all considering.
Now consider China. The country adopted a strict Covid policy that prevailed through 2022 causing its GDP to fall to 3% way below the Chinese government’s 5.5% target.
In retrospect, that was the beginning of phase two of the slowdown in China, phase one being when then-U.S. President Donald Trump began, and phase two when current President Joe Biden continued, if not accelerated, the economic separation between our two countries. We didn’t know it at the time but it wasn’t Trump’s tariffs as much as his admonitions that it was time to break with cooperation because it had been one-sided. Our continual building of factories and expansion together had failed to make for a level playing field. China could not be counted on as a reliable trading partner. There were really three reasons: (1) the Chinese no longer attempted to change their rapacious ways with American industry; (2) their foreign policy plans were unwavering in their insistence of domination of the lesser developed world via the Belt and Road Initiative; and (3) three their military, always the power behind the throne, decided to go toe-to-toe with the United States by appropriating the most sophisticated semiconductor chips while beginning a policy of intimidation of Taiwan in order to force Taiwan Semiconductor Manufacturing Company, the largest chip foundry, or factory, in the world, to favor the makers of Chinese chips. Given that we had pretty much ceded the making of our best chips to TSMC, the threat was real and nefarious, meant to drive home plans for a one-country strategy, a strategy never abandoned by China and one that had been sub rosa accepted unchallenged until August 2022 when then-House Speaker Nancy Pelosi (D-Calif.) visited the country.
That break proved crucial to the geopolitical strategies of both countries. It signaled that not only was it no longer business as usual but that our nation was going to cease tolerating any designs on Taiwan even as China was unwilling to acknowledge that our policy had changed when Pelosi visited. The one country status that we had tacitly accepted ended – and with it any hope of economic connection with China save Nike and Club names Apple (AAPL) and Starbucks (SBUX), plus existing plants by some multinationals.
New plants seemed and became out of the question, something in retrospect probably seemed unlikely when Biden replaced Trump. The hardline had gotten harder and with it new jobs coming from the U.S.
In retrospect that was crucial to what has become of the two nations, at least as measured by the two stock markets. The S&P 500 advanced 14% over the next two years, but China’s market sank nearly 1.5% during the same period. The decline, as minor as it seemed, masked the tremendous rot underneath, as youth unemployment exploded to more than 20% before it ceased to be reported, and the cracks in the Chinese property market became evident and then accelerated to the point where we expect things to grow only worse. Meanwhile, Chinese President Xi Jinping acted as if nothing had weakened and only strengthened his hold on lifetime power.
U.S. President Joe Biden and Chinese President Xi Jinping agreed to resume high-level military communication when they met in person Wednesday for the first time in a year in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation conference.
Brendan Smialowski | Afp | Getty Images
Now, cut to the most recent events, and we seem almost unaware of the significance of Xi visiting San Francisco. The trip seemed far more important to Xi than to us. In fact, we could ask what the heck was he doing here. Was it really about trying to restore more normal relations or was it about bringing American companies back to China and a hoped-for lessening of restrictions on Club holding Nvidia (NVDA), which makes the powerful chips most needed if China is going to be sure to control the thought processes of its industry and its people while bolstering its military. If those were the desires, it was apparently an abject failure on his end but one he can’t afford to accept if he is going to restart his economy. No other country is as strong as the U.S. or has the possibility of providing the kind of employment away from property, which we know is a total disaster even as we seem to think that a command economy can’t have such a disaster.
Now we find a China that needs us so badly that its president’s hat and hand gesture must be followed up on with more enticement. Staying away from the U.S. seems out of the question. Unless Xi adopts Keynesian economics which he seems to rule out at every turn.
The impact on our country is stunningly missing. Have you noticed its lack of import? It’s so obvious that we don’t need China. We don’t want their imports; witness our blocking of their cheap electric cars. We want to wean ourselves off their supply chain as it turned out to be a lot more fragile than we thought. It’s taking longer and many are recalcitrant as reshoring costs a fortune. We seem to want to ignore the low cost of doing more business in Mexico. It seems as if it might run afoul of a policy set by Trump. Did you notice how the U.S. auto companies were hesitant to suggest that they might move manufacturing to China? They were toothless in the face of the striking United Auto Workers (UAW) that seemed to know that the so-called nuclear option wouldn’t be used. The cowering auto execs lost it all to end the six-week UAW walkout – and yes, it does seem like it all, because they were boxed into the U.S., into the union portion of the U.S. even more so.
What does it all mean to our country? I think it means that our soft landing is, in retrospect, more remarkable because China hasn’t helped one bit with commerce that at one point when Trump was president, seemed most needed. We have caught and passed the Chinese and seemed to leave them well behind us DESPITE the most aggressive Fed tightening cycle in our nation’s history. The gulf is not metaphorical. We ARE NOT going to help the Chinese. They don’t seem to know how to, or can’t, help us.
I think the testament of our growth is ignored by those who can’t believe that Powell has the gumption to slow inflation far more than slow the economy. We handled Covid better than China. It didn’t help the Chinese cause that they refused the Pfizer vaccine. We handled the declines in our oil and natural gas and industrial and financial troubles better, in part because of our gigantic stimulus. Yes, our budget deficit is huge and should be crushing our stock market. But the two don’t seem to relate. Maybe something will be done about it, maybe something won’t. It just all seems so much more manageable than whatever the hell is going on in China.
But as we close out this 2023 year with a stock market that has such a hard time quitting, we should be thankful that our nation came out of Covid stronger than it came in, while China came out much weaker without a plan to get stronger and without any chance of gaining largesse from the American government and American industry; the latter of which doesn’t seem to be suffering from the Chinese downturn. That included, of all companies, Apple, which took whatever share was to be gained from the once toothful colossal that now seems toothless despite our own inferiority complex otherwise.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.
Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.
The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.
“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.
“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”
Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.
The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.
The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.
Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.
More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.
Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.
“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.
Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.
“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.
Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.
Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.
Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”
“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.
This report by The Canadian Press was first published Sept. 18, 2024.
