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“In wine there is wisdom, in beer there is freedom, and in water there is bacteria.” - See who said it and why it matters at the bottom.
Illustration: Eniola Odetunde/Axios
The manufacturing industry got a huge boost from President Trump's election, seeing a groundswell of job gains during his first year in office. But the trade war with China has undone that progress: Jobs in the sector have stalled out and turned negative in 2019.
Why it matters: Reviving American manufacturing was a central tenet of Trump's 2016 campaign, and the industry's retrenchment shows how another Trump constituency is now being punished as a result of his trade war. (The nation's farmers are also struggling mightily.)
By the numbers: In Trump’s first 30 months as president, manufacturers added 499,000 jobs, some 314,000 more than were added in President Obama's last 30 months on the job — a 170% increase.
Yes, but: That progress has evaporated this year. Manufacturing employment has slowed, and in October employers cut jobs in the sector by the highest number in a decade.
What's happening: "Our plan is to try to hold on until the end of the year without raising prices," says Gary Yacoubian, CEO of speaker company SVS Sound, based in Youngstown, Ohio.
What's next: Things will likely get worse before they get better, Joe Brusuelas, chief economist at tax and consulting firm RSM, tells Axios.
While sentiment indicators have been split, the jobs data and reports from businesses are painting a clear picture of the U.S. manufacturing industry's stress.
What they're saying: Timothy Fiore, chairman of the ISM survey committee, which tracks the sector through its purchasing managers index, said his report may be underestimating the damage. (His company's latest report showed manufacturing contracting for the fourth straight month.)
The Federal Reserve's latest Beige Book, which tracks businesses around the country, has a recurring theme.
House Speaker Nancy Pelosi is pushing to remove a so-called liability shield for online content in the revised trade agreement between the U.S., Mexico and Canada, potentially holding up the deal. (WSJ)
Private-sector employers added 67,000 new jobs in November, the slowest pace of jobs growth since May and about 90,000 less than expected. (ADP)
Chinese telecom giant Huawei is suing the FCC for cutting off its sales in the U.S., saying the commission has no evidence it is a security threat. (N.Y. Times)
“Given the high valuations I see, plus these divergences between many different indices, I am aware that many bull markets have ended with a rally similar to what we have seen since August,” says Ned Davis, founder of Ned Davis Research. (CNBC)
Manufacturing has been in a tailspin for much of the year, but it represents a scant fraction of American jobs. What economists and fund managers are really concerned about is the services sector, which makes up around 70% of U.S. employment.
Driving the news: ISM's non-manufacturing PMI report released Wednesday showed a weaker-than-expected reading that was 5.4 points below October, but continued to expand with a reading above 50. It was the 124th consecutive month the index has shown growth.
Why it matters: Unlike the manufacturing sector, services data has disappointed but has yet to fall into contraction in the U.S. and much of the rest of the industrialized world.
Bad news has continued for the hedge fund industry this year. Overall hedge fund returns have continued to trail both the S&P 500 and a mix of 50% global stocks and 50% global bonds by a wide margin.
What's happening: There are too many hedge funds, and too many of them are using simple hedging and shorting strategies that don't work, Dev Kantesaria, founder and portfolio manager of Valley Forge Capital Management, argues. And that may be changing soon.
What we're hearing: "Hedge funds have a troubled future," Kantesaria tells Axios in an email. "The idea of controlling risk through financial engineering such as hedging and shorting is a broken model."
What's next: Kantesaria isn't calling for a full-on wipe out of the industry, but does expect new managers will increasingly be crowded out as dollars flow only to the largest hedge funds, or "those with $1 billion or more in assets, despite mediocre performance over the last decade," he says.
Food delivery apps look to have found a sweet spot as data shows more than a quarter (27%) of Americans spend up to $50 each month on delivery.
The big picture: Competition among delivery companies is getting serious as more sign exclusive agreements with restaurants, closing the door on competition.
What's happening: The number of Americans considering DoorDash has doubled since the beginning of the year, according to data from YouGov provided first to Axios. Americans’ awareness of DoorDash also has shot up dramatically this year from 35% in January to 63% in December.
On the other side: Only around 2% of survey respondents said they would consider using Delivery.com, and just 5% said they would try Postmates.
Founding Father Benjamin Franklin said the wise words at the top of the newsletter. For a time, American leaders forgot his wisdom and banned the sale of alcohol with the 18th Amendment to the Constitution.