MARY REICHARD, HOST: Today is Monday, May 21st. Thank you for turning to WORLD Radio to help start your day. Good morning. I’m Mary Reichard.
NICK EICHER, HOST: And I’m Nick Eicher. Coming next on The World and Everything in It, the Monday Moneybeat.
KUDLOW: They’re showing us some substance and that’s a sign of respect; it’s a constructive approach…
White House chief economic adviser Larry Kudlow on Friday at the White House. He was talking about progress in trade talks between the United States and China.
The aim had been to lower tensions and stave off a trade war. And for now Treasury Secretary Steven Mnuchin says after three days of trade talks in Washington, the two sides are in broad agreement.
MNUCHIN: We have agreed to put the tariffs on hold while we try to execute the framework. The president has been very clear since the first meeting with President Xi in Mar-a-Lago that we are going to reduce the trade deficit…
What President Trump wants is a specific commitment to reduce it. What’s meant by trade deficit is that American consumers purchase more Chinese goods than Chinese consumers purchase American goods. The trade deficit amount is $375 billion and that’s more than with any other country.
In order to balance that out, Trump had threatened tariffs on Chinese products. That would make those inexpensive Chinese goods more expensive and thus less desirable to American consumers. The president says China unfairly subsidizes products for export, and that makes it difficult for American manufacturers to compete on price.
REICHARD: On Saturday, negotiators for the two countries finished up trade talks in Washington and put out a statement. For its part, Beijing agreed to a significant increase in its purchases of American goods and services, but no specific number. China says increased purchases would, in the words of the statement, “meet the growing consumption needs of the Chinese people and the need for high-quality economic development.”
Larry Kudlow, the White House economic adviser, is not worried at this point about the lack of specifics.
KUDLOW: No deal yet, to be sure. And it’s going to probably going to take awhile; it’s a process. But, they’re coming to play; I believe they want to make a deal…
China agreed to “meaningful increases” of U.S. agriculture and energy exports, as well as greater efforts to increase trade in manufactured goods and services. Washington will send a team to China to work out the details.
EICHER: Legalization of marijuana in Oregon has not shut down the black market. An apparent oversupply is making its way to some two dozen states where pot remains illegal. U.S. Attorney Billy Williams says the federal government’s top prosecution priority would involve things like interstate trafficking, organized crime, and cases involving underage marijuana use.
That’s significant, because in the eyes of the federal government, marijuana is still illegal. It signals the U.S. attorney has no plans to bring any federal charges against growers and retailers as long as they are abiding by Oregon’s liberalized law.
Legalization of marijuana there has caused the price to drop to about half the street price in 2015, when sales first became legal. The illegal markets outside the state are far more lucrative.
REICHARD: A very quiet week on Wall Street extended a recent streak of relative calm.
On Friday, at market close, the market’s benchmark index, the Standard & Poor’s 500, notched its 10th day in a row without a gain or drop of 1 percent or more.
That’s the longest period of calm going back to January 26th.
The market has returned to quieter trading, even as U.S. companies report fatter profits, and investors worry about rising interest rates and the recent uncertainty of a trade war.
EICHER: So, for the week, here are the numbers:
Both the S&P 500 and the Dow shed half a percentage point. The Nasdaq dropped seven-tenths of a point. And the index of smaller company stocks, the Russell 2000, gained 1.2 percent. That leaves all the indexes up slightly overall for the year, and the Dow now almost perfectly flat.
And that’s this week’s Monday Moneybeat.