Does America View Its Trade Relationships as Fair?
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
Understandably, most people are not experts on the subject of trade.
But while the average person won’t likely be able to guess the U.S. trade deficit with Mexico, perceptions of trade relationships in the public eye are still a crucial indicator.
If the majority of Americans think they are getting the short end of the stick on international trade, this sentiment ultimately affects how politicians campaign, how policy decisions are made, and the success of the wider economy.
U.S. Perceptions of Trade
In today’s chart, we break down the data from a recent Gallup poll on how Americans view the country’s trade relationships.
At a high level, here is how it looks by country:
|U.S. Trade Partner||Fair||Unfair||Don't know / No opinion|
Source: Gallup, June 18-24, 2018
The majority of Americans think relationships with Canada (65%), the European Union (56%), and Japan (55%) are fair. When it comes to Mexico, respondents are split (44% fair, 46% unfair).
Meanwhile, it’s clear that most Americans think they are getting the short end of the stick with China, with 62% of respondents describing the relationship as unfair.
The China Problem
China is America’s largest trading partner, so this negative sentiment has meaningful implications.
The balance of trade that the U.S. has with China is also crystal clear: in 2017, the two countries traded $636 billion of goods, but the vast majority of this number comes from Chinese imports into the United States:
Most economists actually think that trade deficits are less important than they appear, but this trade gap is also visceral for many people. After all, U.S. exports barely make a dent in the mix, and this sends a message that America is “losing”.
Between the above trade deficit, intellectual property issues, and jobs going overseas, it’s understandable why the perception of Chinese-U.S. trade is under fire in terms of public sentiment.
And with the start of the recent trade war, the view on China could sour even further.
The Partisan Perspective
Interestingly, Democrats and Republicans have very different views on U.S. relationships, including the one with China:
|U.S. Trade Partner||Fair (Democrats)||Fair (Republicans)|
Source: Gallup, June 18-24, 2018
Comparing Republicans and Democrats, three different relationships have opinion gaps of about 30%: Canada, European Union, and Mexico. In all cases, Democrats favored the relationships far more than Republicans.
That said, when it comes to China and Japan, the parties are slightly more aligned.
Only a minority in both parties thought the U.S. trade relationship with China was fair, with 21% of Republicans and 38% of Democrats in agreement.
Pandemic Recovery: Have BEACH Stocks Bounced Back?
BEACH stocks—bookings, entertainment, airlines, cruises, and hotels—were pulverized at the beginning of the pandemic. Here’s how they’ve bounced back.
Pandemic Recovery: Have BEACH Stocks Bounced Back?
The travel and entertainment industries have had a volatile ride over the last year.
During the initial stages of the pandemic, when panic and uncertainty ran rife, BEACH stocks–booking, entertainment, airlines, cruises, and hotels—were left scrambling. Collectively, $332 billion in market cap washed away.
Now, it appears the tide might be turning for these companies, buoyed by vaccine breakthroughs and glimmers of hope for a return to normalcy.
This infographic looks at the growth in market cap value across BEACH stocks one year from when the WHO officially declared COVID-19 a pandemic.
Washing Back to Shore?
BEACH stocks have gained a collective $376 billion in market cap in the year since the pandemic was declared, with about half the companies trading at their respective all-time highs.
In fact, about 70% of BEACH stocks have actually outperformed the S&P 500, which returned 43.7% during the same period.
|Company||Ticker||Category||Market Cap: 03/11/20 ($B)||Market Cap: 03/11/21 ($B)||Change|
|Alaska Air Group||ALK||Airlines||5.7||8.1||42%|
|Delta Air Lines||DAL||Airlines||29.1||30.9||6%|
|Caesars Entertainment||CZR||Casino & Hotel||2.2||20.8||824%|
|Norwegian Cruise Lines||NCLH||Cruise & Casino||4.3||10.9||151%|
|Royal Caribbean Cruises||RCL||Cruise & Casino||10.8||22.4||108%|
|Carnival||CCL||Cruise & Casino||16.4||31.8||93%|
|Penn National Gaming||PENN||Entertainment & Live Events||2.6||20.4||661%|
|Six Flags||SIX||Entertainment & Live Events||1.7||4.1||142%|
|Live Nation||LYV||Entertainment & Live Events||10.8||19.3||79%|
|The Walt Disney Co||DIS||Entertainment & Live Events||201.2||357.1||77%|
|Cedar Fair||FUN||Entertainment & Live Events||1.8||2.8||57%|
|Choice Hotels International||CHH||Hotels||4.5||5.9||30%|
|Marriott Vacations Worldwide||VAC||Hotels & Resorts||3.8||7.7||103%|
|Vail Resorts||MTN||Hotels & Resorts||7.1||13.4||88%|
|Park Hotels & Resorts||PK||Hotels & Resorts||3.4||5.3||58%|
|Wyndham Hotels & Resorts||WH||Hotels & Resorts||4.2||6.4||51%|
|MGM Resorts International||MGM||Resorts & Casino||10.2||19.3||89%|
|Wynn Resorts||WYNN||Resorts & Casino||9.7||15.9||64%|
|Las Vegas Sands||LVS||Resorts & Casino||40.7||48.2||18%|
BEACH Stocks Leaders and Laggards
When dissecting this basket of stocks by industry, it’s clear that much of the recovery story is lopsided. One reason for this, despite the pandemic, is that there are more granular, idiosyncratic trends occurring within these sectors.
Let’s look at what’s propelling the leaders, and dragging down the laggards:
Leading: Online Betting
There’s reason to be bullish on gambling stocks. Since late 2018, some 20 states have legalized sports betting, with more expecting to follow. Relative to other areas, the pandemic has been kind to gambling stocks. Many of those with an online presence have witnessed a spike in traffic, as more people continue to flock towards online betting.
Within the BEACH stocks basket, Penn National Gaming and Caesars Entertainment are clear outliers, having grown an epic 661% and 823% respectively. In addition, the broader industry (measured by the BETZ ETF) has nearly doubled the performance of the S&P 500 since its inception.
The return to normalcy will be much more delayed for airlines. Global RPKs, an industry metric, are not expected to reach pre-pandemic levels until 2024.
Actions of insiders also seem to match this negative sentiment. Warren Buffett, once a staunch supporter of airlines, decided to call it quits during the pandemic—dumping his entire position.
U.S. airline executives have collectively been selling their stakes much more aggressively than in the last few years. To add insult to injury, there’s significant shorting of airline stocks as well. At a short interest of 11.6%, American Airlines is most heavily shorted BEACH stock.
In a year where social interactions and gatherings have largely disappeared, so too has much of the business activity for hotels. For instance, Hilton sales suffered a 58% decline year-over-year.
But even without the pandemic, the hotel industry had their work cut out for them, through a growing and formidable competitor in Airbnb. Airbnb can scale its network beyond what any hotel can. This is evident in its room count, which is greater than the largest hotels combined.
More Bumps On The Road Ahead?
The investing landscape today looks to be disconnected from reality, in part because of the forward-looking nature of markets. Even though things are dire today, there’s a belief that light exists at the end of the tunnel.
But the path to recovery isn’t quite so linear. When the dust settles, it’ll become more apparent which industries will “return to normal” and which have set out permanently on a new trajectory.
Mapped: The Top 10 Billionaire Cities
Where do the most billionaires live? For years, NYC has topped the list of billionaire cities, but 2020 marked a monumental shift.
Mapped: The Top 10 Billionaire Cities in 2020
In 2020, the world gained 493 new billionaires—that’s one every 17 hours.
For the last seven years, New York City has been home to more billionaires than any other city in the world. However, last year marked a monumental shift in the status quo.
Beijing has unseated the Big Apple, and is now home to 100 billionaires. That’s one more billionaire than the 99 living in New York City.
Today’s map uses data from Forbes to display the top 10 cities that house the most billionaires.
Where do the Most Billionaires Live?
The richest of the rich are quite concentrated in cities, but some cities seem to best suit the billionaire lifestyle. Here’s a breakdown of the top 10 billionaire capitals and the collective net worth of all the ultra wealthy that live there.
|Rank||City||Region||Number of Billionaires||Net Worth of the City's Billionaires|
|#2||New York City||🇺🇸 North America||99||$560.5B|
|#3||Hong Kong||🇨🇳 Asia||80||$448.4B|
|#9||San Fransisco||🇺🇸 North America||48||$190.0B|
Some cities have some obvious billionaires that come to mind. New York’s richest person and former mayor, Michael Bloomberg, is worth $59 billion. Beijing’s richest billionaire is the founder of TikTok (among other things), Zhang Yiming with a net worth of $35.6 billion.
In terms of the locations themselves, London, New York, and San Francisco are the only Western cities to make the list. Though New York was ousted from the top position last year, altogether the city’s billionaires are still worth more than Beijing’s.
One new city to make the top 10 list of billionaire cities was Hangzhou, the home of Jack Ma. It booted out Singapore from the 10th spot.
East Meets West
More than half of the top 10 cities are located in Asia, providing evidence of the shift eastwards when it comes to seats of wealth. Five of the six Asian cities listed are all in China.
What’s helped lead to this?
The country has seen an e-commerce boom, not in the least thanks to the pandemic. Additionally, the efficient handling of COVID-19 has allowed the economy to get back on track much more quickly than other countries. According to the BBC, 50% of China’s new billionaires have made their wealth either through tech or manufacturing.
Four of the Chinese cities on the list also had the biggest billionaire growth in 2020. Each of them gained more than 10 net new billionaires:
- 🇨🇳 Hangzhou: 21
- 🇨🇳 Shanghai: 18
- 🇨🇳 Shenzhen: 24
- 🇨🇳 Beijing: 33
The only other city to gain more than 10 new billionaires in 2020 was San Francisco with 11.
Now sitting at 698 billionaires, China is coming up on the 724 held by the United States. Beijing overtaking NYC could be the beginning of a larger tipping point.
Asia-Pacific’s collective 1,149 billionaires are worth $4.7 trillion, while U.S. billionaires are worth $4.4 trillion in total wealth.
Overall, it looks like the wealth tides may be turning as China continues to progress economically and more billionaires become based in the East over the West.
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