It has been a little more than a year since former President Donald Trump signed the landmark phase one trade agreement with China. Beijing committed to purchasing more than $200 billion of U.S. goods and services over two years, while Washington would gradually curtail tariffs. Did either side meet the provisions outlined in the trade pact?
A Phase One Failure
According to a new study by the Peterson Institute for International Economics, the phase one trade deal was largely a "failure" as Chinese acquisitions fell approximately 40% short of the target. While the coronavirus pandemic was somewhat of a contributor, Beijing was never on track to accomplishing the objectives of the agreement.
Here is what the report revealed:
China met only 57% of U.S. manufacturing goods (automobiles, aircraft, parts, and engines).
Agricultural products were 18% below the target in 2020.
Energy imports reached only one-third of commitments, although natural gas hit 89% of the goal.
Semiconductors and semiconductor manufacturing equipment exceeded the target by 27%.
Sales of medical products to China spiked 111%.
While America's trade deficit with China contracted with former President Donald Trump at the helm, the broader national gap climbed. President Joe Biden will be launching a review of the U.S.-China phase one deal moving forward. Chad Brown, an economist and senior research staffer, wrote in the report:
"The Biden administration plans to review the phase one trade agreement President Donald Trump forged with China in late 2019. Good. Much of the deal was a failure. According to evidence from the deal’s first year, China was never on pace to meet that commitment, with the economic devastation of the Covid-19 pandemic only partly to blame. Attempting to manage trade – to meet Trump’s objective of reducing the bilateral trade deficit – was self-defeating from the start. It did not help that neither China nor the United States was willing to de-escalate their debilitating tariff war."
Lockdown Crashes British Economy
It turns out the Brits cannot keep calm and carry on and keep up a stiff upper lip and all that. The United Kingdom's economic collapse was so horrific in 2020 that it had not been emulated in more than 300 years. Is it any surprise that strict lockdowns paralyzed one of the world's largest economies?
New Office for National Statistics (ONS) data revealed that Britain's economic output crashed 9.9% last year, the most significant drop since 1709 when the nation went through the "Great Frost" – and poor hygiene. Finance Minister Rishi Sunak commented on the data, calling it "a serious shock."
“Today’s figures show that the economy has experienced a serious shock as a result of the pandemic, which has been felt by countries around the world,” Sunak said in a statement. ONS researchers anticipate that the economy will contract by 4% in the first three months of 2021 due to the recent lockdown and Brexit disruption. The Bank of England (BoE) does not expect the economy to return to pre-pandemic levels until the beginning of 2022. Others believe the recovery will take a lot longer than another year.
As ZeroHedge recently noted, "The market cap of AAPL (Apple) is now roughly equivalent to the entire output of the U.K."
It was not all bad news. The U.K. escaped a technical recession as the gross domestic product expanded 1% in the fourth quarter, helping the country avert back-to-back quarterly contractions. Perhaps Great Britain can fancy a cuppa and sip on some tea until the financial crisis and pandemic are over.
Bauer-Outage on Recency Bias
Right-handed pitcher Trevor Bauer recently inked a three-year, $102 million deal with the Los Angeles Dodgers. The agreement makes him one of the highest-paid players on an average annual value (AAV) basis. It was a unique contract for the 2020 National League Cy Young winner because of the flexibility it contains, something that most star players like to avoid. The deal includes opt-outs and still provides the Dodgers, which has put together a sort of super team, long-term payroll flexibility.
But while it was a Bauer-outage for opposing teams in 2020, is the buzz over the former Cleveland Indians picture a case of recency bias?
During last year's shortened 60-game season with the Cincinnati Reds, he compiled a 5-4 record with a 1.73 ERA, two shutouts, and a 2.7 WAR (wins above replacement). These were incredible numbers. But who did he face? Mostly sub-500 clubs that have not been intimidating for years. That said, his single postseason start against the Atlanta Braves was a stunning performance, striking out 12 and only giving up two hits in a losing effort.
When he pitched seven seasons for the Indians, he was a good pitcher. But was Bauer worth $105 million? During his career with the Indians, he only had one year below a 4.00 ERA and a WAR above three just once. So, does a single season in which he pitched against subpar teams warrant a massive contract? One word: Inconsistency.
It was a lackluster free-agent class for starting pitchers. He was the best in the crowd, and he might be maturing and evolving as a pitcher, evident in his incredible spin rate for his breaking balls and fastballs, topping 2,800 RPM.
Bauer is a unique pitcher. One of his demands is to pitch every fourth day, a tradition that dates back to the 1970s but was abandoned in the 1980s when teams adopted five-man rotations. If he can stay healthy and maintain this upward trajectory, perhaps Bauer will become more of a consistent pitcher. While baseball has become famous for its analytics, teams are still falling prey to recency bias.
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Read more from Andrew Moran.
