Can manufacturing jobs come back to the US?

There have been many political figures in the US campaigning for being the next US president, especially on the Democratic Party's side. The Democratic Party just had its first round debate on the 26th of June and the candidates spoke out about their ruling plans for the US if they get elected. After watching the debate, I think that the Democratic candidates agree on many issues and only disagree on some minor details. The main focus of the Democratic Party is to narrow the wealth gap in the society. Many candidates propose higher taxes on corporation and super wealthy individuals and provide more social care including higher minimum wages and better health care for more people. Moreover, some candidates propose creating more jobs and bringing in back manufacturing jobs to the US. In the previous presidential candidate, the current president, Donald Trump, also promised to bring back manufacturing jobs. However, how likely are these manufacturing jobs coming back to the US?

I completely agree with the Democratic candidate, Elizabeth Warrant, that corporations are only loyal to profits. Therefore, if they can make more money by keeping manufacturing jobs in the US, they will do so. Then the key question is whether companies can make more money if they bring back manufacturing jobs to the US or not. I do not think that any company can make more money from bring back manufacturing jobs under most circumstances. There are only two circumstances which I think can bring back the manufacturing jobs to the US. The first circumstance is to set up tariffs to make the prices of importing from overseas and manufacturing in the US equally expensive. The other circumstance is to give subsidies to companies and make manufacturing in the US more attractive. Both options are bad. Even if we ignore the potential political tension caused by these acts, these two methods are not going to produce an economic efficiency in the US economy. The US economy has much greater advantages in other fields, especially in the cutting edge technology; focusing too much on the basic manufacturing sector can weaken the investment in the field which the US is much better at or needs much more.

Overall, bringing back the manufacturing jobs to the US makes much more political sense than economic sense.

The come back of cryptocurrency

The price of Bitcoin is heading to $13,000; many commentators believe the ongoing price surge is boosted by the marktet enthusiasm surrounding the Facebook's ambition in the cryptocurrency field. Facebook is not an ordinary player in the cryptocurrency world and it is one of the leading tech companies in the world. This definitely gives the cryptocurrency believers a lot more confidence. Moreover, some people think that some investors begin to use more cryptocurrency as a safe asset to counter the highly uncertain global political and economic environment instead of the traditional gold reserve.

However, as I mentioned previously, Facebook's plan about its cryptocurrency, Libra, makes it different from the traditional cryptocurrencies. The value behind Libra is based on fiat money that Facebook plans to use low risk assets including the US Treasury bills and deposits of various currencies as reserves to back Libra. Therefore, the value of Libra does not necessarily reflect the values of other cryptocurrencies. Furthermore, the uncertainty in the world is about a process of deglobalisation. The ideas of globalisation and removing borders are the same as the ideas supporting the cryptocurrency; therefore, a process of deglobalisation should potentially reduce the value of cryptocurrency.

Overall, I do not think that there is any fundamental factor change behind the rise of Bitcoin price.

Tax on the super wealthy

Several billionaires, including George Soros and Chris Hughers, back the plan of taxing on the super wealthy (the top 0.1%), they believe that this tax can be helpful to many aspects, such as environmental issue, health care and others. However, some billionaires dislike the idea for the obvious reason. Politically, the Democratic Party is fully behind this plan and several Democratic presidential candidates even propose some very radical plans about how they are going to tax the super wealthy if they can win the presidential election next year.

If an economy seems to be full of opportunities, then people will generally dislike this idea, because each individual sees themselves may get super rich one day in the future, then the heavy tax on the super tax is seen by people to be the tax on their futures. Therefore, high tax rates may not be popular in the rapidly developing economies, and high tax rates are not helpful for generating rapid economic development. However, in a stable economy where the economic growth is stable and relatively low, people have much fewer opportunities to climb up their social ladder, many people are locked in their social classes. Under such circumstance, the wealth gap within the society becomes a significant issue which can lead to social instability, and a tax on the super wealth which can narrow the wealth gap significantly seems necessary.

I think that the billionaires who back the plan see the necessity of the tax in the US society and they also want to guide how the government uses the tax collected from them.

Independence and accountability

There are some institutions which people want to be independent, such as central banks, because people want these institutions to focus their tasks without distraction from the outside environment. Being independent has some obvious advantages that they can focus on their tasks and maximise the benefits in long run. However, the disadvantages are also obvious. When making an organization completely independent, it is very likely to make it accountable. Then here comes the contradiction between independence and accountability. 

Sometimes we want both; however, this is definitely impossible. Accountability and independence are almost exactly opposed against each other. Accountability means some degree of punishment is possible when necessary. Punishment involves a cost of conducting the activity and it will have a negative impact on the punished party. Of course, giving the independent organisation the power to monitor itself and even punish itself when necessary is not helpful for holding the organisation accountable. Then another party is needed to be pointed to monitor the organization. However, being a regulator does not mean the necessity of being held accountable as well. Therefore, another party has to be pointed to monitor this regulator, this story will go on and on. This will either end up with a closed cycle or someone who has enormous power to monitor everything. 

Overall, it is impossible to be independent and held accountable at the same time. Only dictator is completely independent; on the other hand, a closed cycle means people hold each other accountable, but with some form of collaboration, no monitor is done and all are independent.

Sovereign Wealth Fund

The size of sovereign wealth funds has increased dramatically over the last decade; the top three sovereign wealth fund associations in terms of total assets are Norway Government Pension Fund Global, China Investment Corporation, and Abu Dhabi Investment Authority. Norway Government Pension Fund Global has total assets worth $1,072,840,000,000, according to Sovereign Wealth Fund Institute. Traditionally, sovereign wealth funds invest in relatively assets with low risks as an insurance for the circumstance of their economies not performing very well; however, recent years, some sovereign wealth funds are involving in some relatively risky investment projects, including venture capitals. In addition, the silicon valley has attracted billions of dollars from the sovereign wealth funds, many large tech companies including Tesla, Alphabet, Apple have received investment from these sovereign wealth funds.

We can see that definitely some sovereign wealth funds have switched their strategies. These funds' returns can be very volatile under the strategies. This is not necessarily good or bad, this will depend on the goals these funds are established for. If the fund is established for providing pensions for its population, then such strategy may be concerned to be too risky, as the fund is likely to fail to provide stable returns in order to pay pensions to its population. However, the funds can serve many different purposes. One purpose I think is something which can make a huge difference to the economy as well as the country. Sovereign wealth funds can serve as subsidies to support these innovative companies. Some innovative companies may not be able to earn sufficient profits to support themselves at early stage but have huge potentials to push the development in terms of economy, technology and various ways. Moreover, it can help the development in the sectors where both risk and benefits for the public (private benefit may not be high enough) are high, if lucky enough, the private sector may find a more efficient way to make itself richer as well as the public life improved under the support from sovereign wealth fund.

To conclude, the tradition way is investing against risk, and the new strategy which is carried out by some sovereign wealth fund I think is investing in future.

When should companies invest in 5G?

In the UK, EE has provided 5G services in several cities already and other telecom companies are also planning to release their 5G services later this year or early next year; furthermore, BBC used the 5G to live stream Trump's state visit to the UK. Meanwhile, in China, the state controlled telecom companies are launching 5G services in several major cities. However, some countries seem late to join the 5G party.

At the moment, Huawei is the leader in the 5G sector, and it can reduce the cost of building a 5G network significantly. This is why some of America's allies insist on using Huawei equipment to build their 5G networks. However, even with using Huawei's equipment, it is not cheap to build a 5G network to replace the current 4G network. Then despite the fast speed and other benefits brought by 5G, the companies and countries always have to analyse both the cost and benefit. Is it wise to build the 5G network right now?

For the private telecom companies, it is a difficult choice. Building a 5G network can help them to win the competition against those which are reluctant of providing 5G services; however, the risk is also obvious. First, in many Western countries, their governments are facing pressure from the US, so there is a probability that their governments may ban using Huawei's equipment, then the cost of building a 5G network will increase significantly and the time of finishing building the network is also likely to be delayed. Secondly, at the moment, the application of this technology is at its very early stage, the market knows 5G has a great potential but does not how exactly people can take advantage of this new technology. How long it takes for the market to figure out the most effective application of this technology is another uncertainty. If it takes too long, it means the telecom companies will suffer a long period of losses from providing 5G services. Thirdly, how many customers are willing to upgrade their services once the companies build their 5G network right now. At the moment, if someone wants to get 5G service, he or she does not only need to upgrade their services with their network providers, but also needs to get a smartphone which supports 5G and such smartphone is not cheap. So how many people are willing to pay for 5G services right now means how much cash these providers can get after burning so much cash for building the services.

However, for governments, the story is much more straightforward. Although we are unsure about how we are going to use 5G, it is almost certain that 5G has enormous potential. Governments should focus on the benefit of the entire population in the long run; based on this belief, they should invest in building the 5G network. Helping to build a 5G network can reduce the private sector cost, so it will be faster to provide 5G services for its population and potentially lower the costs for its population. More importantly, the application can only gain development when 5G is there and gets enough users. If the number of 5G users is very insignificant, it is unattractive for the private sector to invest in technologies and products relating to 5G.

Overall, I think that 5G network should be built as early as possible and the government should help the private sector to build the network by subsidies and/or other policies since the private sector may not have sufficient incentives to build a 5G network to cover the entire population.

Libra

Facebook has revealed its plans for a new digital cryptocurrency, Libra; before the release, the public already heard about this new cryptocurrency and speculated for months. More details will be released in the coming months. There has been a plenty of articles summarizing the details which have been released so far, so I am not going to do another summary. However, I still want to point out some important facts which interest me.

First, the mainstream payment companies (such as Visa, Mastercard, and Paypal) are backing this new cryptocurrency. This can certainly help to strengthen the popularity of this digital cryptocurrency once it appears in the market. Secondly, it seems the plan does not only attract the online platforms and stores (e.g Uber, Booking Holdings and Spotify), but also attract some telecom companies as well. Moreover, this plan also gets local businesses such as convenience stores involved. Therefore, it is unlike other digital cryptocurrencies which focus the online platform. Thirdly, it is not a much less revolutionary scheme. Although it adapts to the blockchain system, the network will be governed by a Geneva-based independent non-profit association called the Libra Association and the independent association is planned to be run by 100 "diverse" members with equal rights, and there have been 28 initial members including Uber, Lyft, Spotify, Mastercard, Visa, eBay and Paypal. Therefore, it is a relatively centralised system. Moreover, this digital cryptocurrency is not independent of fiat money, it is backed by a reserve of low-risk assets including US Treasuries and bank deposits in various currencies.

These three important facts I think make Libra more doable in the real world and more likely to seek approval from governments. However, I still cannot be optimistic about this plan, since I do not think any government would be willing to support any cryptocurrency and give away one of its important policy tool, money, though Libra is backed by the fiat money system.

Will the trade talk be reopened?

The US business group is pressuring Washington to reopen the trade talk with China and end the ongoing trade war; over 600 companies including Walmart sent a letter to the US president to ask for an end of the trade war with China. China and the US are putting tariffs on each other's goods; meanwhile, India is also placing tariffs on US imports, mainly agricultural and chemical goods, and escalating its trade tension with the US. At the moment, the US wants to achieve three goals by its trade war with China. The first goal is to reduce the US trade deficit with China, the second goal is to keep its economic and political dominance, and the last goal is to take a lead in the 5G though China is already leading the 5G. 

However, the trade war also brings an economic pain for the US economy and the US population. The human cost in the US is much higher than the human cost in China; therefore, even after the tariffs, the Chinese products may still have lower prices than the US products. Under such circumstance, for many US households, they are still buying the same products but with higher prices. Furthermore, it may also hurt the US product sales as well. Nowadays, people have to admit that it is almost impossible to avoid Chinese products. So a fraction of people's incomes will be allocated to the Chinese products which they cannot avoid (meaning they cannot find a US alternative to this Chinese product), when the Chinese product prices increase, this fraction will increase, and the fraction which is spent on the alternative products to Chinese products will reduce, this can force people to look for cheaper imported goods (maybe not necessarily Chinese imports) and reduce their consumption on US products. Of course, we cannot ignore that price increase will lead to a general reduction on consumption and US companies also lose orders from Chinese companies. Therefore, a trade war with China is not good for consumers as well as US companies. 

The US president is asking for another talk with the Chinese  president at the coming G20 summit; however, China has not released its response yet. China, of course, wants to resolve the trade war; however, it does not mean China will do whatever the US requests. At the moment, both sides want to reopen the trade talk, but the main disagreement still remains and I do not think either side want to make itself seem weak. Therefore, the possibility of reopening the trade talk is still clouded.

Game of chicken and process speed

Game of chicken exists when two people are fighting against until one backs down otherwise both will be destroyed by the crash. In the modern world of politics and economics, games of chicken are played by countries, individuals and organizations; although they may have differentiated strength in the games they play, for example, they may face a less damaging consequence after the "crash". However, how fast the game is progressing can make a difference to the game result.

First, when individual people are playing the game against each other, this makes a lot of sense, because people's abilities are constrained to the time. When they have less time, they will not have sufficient time to receive information, process information and make decisions, therefore, they will not be very likely to deliver the same decision as if they have the sufficient time. Secondly, time will affect people's judgement, if the process is continuously generating a loss, then when the time period is longer, even if the total loss stays the same, since people are loss averse and can strengthen their feelings over time, they will feel more dissatisfied and angrier, they will change their strategies over time. This does not only happen to individuals, this can also happen to countries and organizations. Because countries have their citizens and organizations (companies) have their shareholders, they have the feelings and the power to change the strategy. Thirdly, in the real world, there are more than two strategies in the game. Often people are negotiating when they are playing the game of chicken, the purpose of playing the game of chicken is often to give themselves more advantages on the negotiation table. When they have more time, they are more likely to reach a mutually beneficial agreement, so they are more likely to be less aggressive when playing the game of chicken; however, if they only have a very limited time, they want to gain more from the negotiation, so they are more likely to play more aggressively in order to give them more advantages on the negotiation table, which makes the game more dangerous.

Tech subscription

More and more service companies are now selling subscriptions rather than selling a one time charge product. For example, although you can still pay a one time charge to get a copy of Microsoft Office, Microsoft is putting much more efforts to sell its subscription, Office 365, which contains Microsoft Office and other services. We can see that many other tech companies, including Adobe, and game developers, are also switching their sales strategies. Sometimes, this is because of the nature of their products. For example, the cloud services have such nature, especially the cloud storage services. When people are using the cloud storage services, they need to use the services continuously, they often cannot afford buying and maintaining such expensive servers, and they may not have the knowledge to set up and maintain the servers; therefore, it makes much more sense for ordinary consumers to pay subscription fees to gain access to such services. However, not all cloud services are used by their users continuously, the users may want to pay a fee when they actually use the service. For example, some people are paying for their Netflix subscriptions, but they are not watching Netflix very frequently or they may only watch one or two certain films or TV programs, it is cheaper for them to pay what they watch if possible than to pay a subscription fee. Why don't these tech companies give such option (some actually do provide such alternatives, but more and more are switching away from this traditional strategy)?

There are several reasons for this switching. First, these tech companies are likely to earn more revenues from such strategy, because people often overestimate their commitment, for example, people overestimate their commitment to gyms. Secondly, many tech companies want to move platforms to the cloud, they see the cloud is the future of technology mainstream. Thirdly, subscription model is financially desirable. It can produce a much more certain finance future and more beautiful balance sheets, as long as they can maintain the sizes of their clients, their revenues are much more predictable. Fourthly, both companies and consumers do not need to worry about product upgrades, products can be upgraded at any time. Companies do not need to worry about releasing a major update at a scheduled rate (even if it is not quite ready yet), and consumers do not need to worry if they need to wait for the next major upgrade.

Technology split

There is an article on Financial Times, "US-China trade war risks global technology split" (https://www.ft.com/content/0e6c322e-8c4e-11e9-a1c1-51bf8f989972). I think that a technology split is totally possible, since we did see a similar split in the past. The Cold War between the US and Russia put up an iron curtain between the Western world and the Soviet Union; the US and Russia both carefully protected their technology, information from being leaked to the other country, so the two countries were developing their technology almost independently. The technology developed by the two countries was different; moreover, even when they were developing one specific item, just as fighters, their focuses were different. In addition, not only these countries had different technology development paths, their allies also followed their leaders entering these two paths. For example, China had a history of following the Soviet Union technology development path, since the access to the Soviet technology was much easier. However, once the Cold War ended, we can see that many countries which followed the Soviet Union path started to adapt the American technology. Even Russia is adapting to the American technology.

If the tension between the US and China keeps escalating, the technology exchange will decline (actually is starting to decline at the moment), without sufficient information exchange, a technology split is almost inevitable. When a technology split occurs, it will increase the technology competition between the two countries, and the two countries will also be blindfolded since they will have no information about the other's technology development progress and other important details. In addition, a technology split does not only mean different technology development, but also means the two countries may adapt to different standards. This could be a bit more problematic, once the two countries reopen themselves to each other, as it will take much longer to get back to the same track. Of course, the reunion may let the two countries inspire each other and produce greater technology innovation.

Vicious circle in climate issue

Energy group BP said in its annual market review that the demand for energy consumption rose 2.9 per cent last year, led by the US and China, since the carbon emission also rose 2 per cent, there could be a link between carbon emission and energy demand. BP's chief economist, Spencer Dale, warned there could be a potential worry vicious cycle.

This cycle is not difficult to understand. When the weather becomes more extreme, we often need more air condition and/or heating, air condition and heating both needs more energy. Especially when we still largely rely on unsustainable energy sources, such as fossil fuels, the increased demand for energy will worsen the climate issue, leading to even more extreme weather.

This cycle can go on and on; it is extremely necessary and urgent to have a tipping point where the unsustainable energy is mostly replaced by renewable energy. There have been several major changes which have the potential to be the tipping point. The high speed electric trains the electric vehicles have such potential to be the tipping point. In the US, cars are the main transport, if they are replaced by electric vehicles, the carbon emission will drop dramatically. In addition, when more people can travel in high speed trains, the carbon emission from cars and planes will drop dramatically.

Overall, we need to pay more attention to our environment, but luckily there have been some impressive progresses done.

How strong is the monopoly power held in big tech's hands?

The US Federal Trade Commission and the Department of Justice have launched an antitrust probe into Amazon, Facebook, Apple and Google (Amazon and Facebook watched by the FTC, Apple and Google watched by the DOJ). It is undeniable that these companies have some degree of oligopolistic power. They are not the traditional oligopoly that they do not control some rare natural resources like some crude oil oligopoly. How do they gain and expand their oligopolistic power? They are building their own platforms and ecosystems to make their clients become more and more dependent on their products, platforms and ecosystems.

Some people might have such experience. Once they bought their first iPhone, then they started to buy other Apple's products including music from iTunes, after a while, they found themselves living in Apple's ecosystem. And when they enter this ecosystem, it is extremely difficult for them to get out of this ecosystem, because the convenience brought by the ecosystem is so significant and attractive. Moreover, even if they are able to get out one ecosystem, they are likely to find themselves quick adapt to another ecosystem by another tech oligopoly. Ecosystem is so power in terms of gaining market power, because ecosystem is able to bring a closed system, which can be treated as a separate market from the big general market and is entirely controlled by the firm who builds this ecosystem. In an ecosystem, the tech company can control the content, the technology, the charges and many other elements; more importantly, this system is relatively isolated from the outside. These big tech companies can lock their clients into their ecosystems; and because of the existence of these clients, other content developers including software developers, hardware developers, whoever want to win these clients, have to comply with the large tech companies who control the ecosystems.

Since these large tech companies have built up their ecosystems, as long as they have the control over their ecosystems, their oligopolistic power is almost unbreakable.

The Big Tech

Recently the tech stock market is facing some serious pressure. The Fed is launching antitrust probe into most of the US big tech companies, including Apple, Facebook and Alphabet; the news has seriously added downside pressure on these stock prices. I think that this is bad for these large tech companies, but these companies will not be broken up, instead they will pay to get a settlement with the government.

The tech companies have grown to enormous sizes, it is almost impossible for the government to find a fair and efficient way to break up these companies. Often sizes can provide better productivity and efficiency. This is also true for these large tech companies, may be even more true. The most obvious example is Amazon. If Amazon did not have its current size, we would not have the next day delivery for most regions. Some improvement is only made possible because of the size. A larger company has a larger number of clients and users (users are not necessarily the clients), they collect more data. By analysing the data collected, they can better understand the market and their users and clients, thus increasing the likelihoood of providing better services at lower costs. This is at least partially, and will definitely be used by these tech companies for defending themselves. Breaking up large tech companies is not something impossible; however, to break up large tech companies correctly is not easy. Breaking up companies correctly means these things. First, breaking up companies will significantly increase the market competition. Secondly, the productivity and the market price will not be affected significantly. Thirdly, it will make these companies almost impossible to grow to their current sizes in the future.

Why do you still need to buy games on Stadia?

Today Google released the price and the release date for its gaming platform, Stadia. According to the release, no matter which version of Stadia you choose, you will still need to pay a significant proportion of games on the platform (for Stadia Pro subscribers, they have free access to some games; for Stadia Base users, they have to pay all the games). Some people are comparing Stadia with Netflix and say Stadia is the gaming version of Netflix. In some ways, they are correct. By using Stadia, people no longer need to download the games they want to play, worry about their hardware, they can immediately start playing the games whenever they want to play, just like people watching films on Netflix. However, even if people subscribe the Pro version which will cost $9.99 per month (to be honest, this is relatively cheap, especially after Apple announcing its $1000 monitor stand), why will they still need to pay for the games? Why doesn't Google offer free games to its Pro subscribers, though the Pro subscribers will get some discounts when they purchase some certain games?

In my opinion, this may be caused by two side factors. For Google, if they offer free access to all games for its Pro subscribers, they have to pay for the game providers. Some games are very expensive, since the production costs are high; Google doubts if it can collect enough profits to pay for the game providers to make them continue providing games and attract more game developers. For game developers, receiving payment from Google may not be ideal. At this moment, game providers are uncertain about how much Google is able and willing to pay. Although this might increase the quantity, this would reduce the margin significantly, which may not be able to be compensated by the boosted quantity. The strategy that Google chooses at this moment may indicate that both Google and the game providers are not so confident. I think if Google totally believed its gaming platform, Stadia, would succeed, Google would increase the subscription fees for the Pro version much above the current level (maybe $35 or even higher), guaranteed some certain payment levels for its game providers (which means if the game providers' revenues received are below the guaranteed level, they will receive compensations from Google).

At this moment, I am very excited about Google releasing Stadia. I am not excited about the games I can get instant access to games, I am excited because I can see that in the future, people will work on the cloud and no longer need to depend on the hardware they have. People can get access to a simple Windows desktop and use Microsoft Office on a Huawei smartphone (maybe other smartphones also have a similar feature, but I personally only use this feature on a Huawei smartphone); in  the future, people may be able to do any kind of work via any kind of console they have access to. I am looking forward to seeing this future coming.

Centrality, the measure of influence

Centrality is an important concept in social networking and measures the influence of one node in its network. There are many approaches to measure centrality, such as degree centrality, betweenness centrality, eigenvector centrality and etc. Degree centrality may be the simplest and the most intuitive measure of centrality; however, why other measures also exist? This is because the imperfection in these centrality measures. I am not going to talk about the technical details about these centrality measures. It is very complex when we are trying to measure the influence. There are two questions that we need to answer. The first one is what influence is and the second one is what factors determine influence.

Influence is the power that determine the outcome of the entire network. When one is more influential, it means this person (or party) has greater power to determine the outcome. This is not a tricky question, and can be solved by a dictionary. However, the second question really makes the entire thing much more complicated. There are so many factors determining the influence of a node in the network. For example, the influence can be determined by how many other nodes are connected this node. The direction of information flow can be another determinant. There are other factors. Even if we are possible to list out all the determinants, there will be another issue, which is the most important determinant and which is the least important and how they are different from each other in terms of their power determining the influence. Different people can have different answers to these questions, which means there is no universally agreed measure of influence.

Is it wise to be different?

We all know the answer to this question, which is it depends. Sometimes being different is merely being stupid, while sometimes being different makes you a genius. We know there are certain circumstances when we want to be different if possible and today I want to talk about one such circumstance. When a bubble is about to burst, people want to act differently just right before the bubble bursts, so they can maximise their returns and avoid losses caused by the bubble burst. However, this is extremely difficult and people may only act based on their luck. There is one interesting factor that it seems those advisers from the major financial institutions are generally not smart when they face a bubble, they often provide similar investment strategies for their clients and in some ways help the bubble to grow bigger. Why do they provide similar investment strategies? Why don't they act differently and be the smart ones?

These advisers from the large institutions are of course smart in general; otherwise, they will not have their positions in these institutions. Many of them graduated from top universities so their intellectual abilities should not be doubted. In my opinion, because they are smart, they do not act differently. As a big institution, being different is very risky while being similar is almost risk-free. When investors come to these large institutions, they want to receive more complete information and better analysis and advice. If all other institutions provide the same analysis and advice and one institution provide something different, then the investors are less likely doubt the advice given by the majority of the industry, they are much more likely to doubt the advice given by this different one. Moreover, being difficult is more likely to make a mistake, because being different from most large institutions means being different from the market expectation. Acting against the market expectation is going to make a loss, and the only chance of making profits is there is a shift in the market expectation in the very near future. Waiting too long is a problem in investment because when acting against the market expectation, it means paying premiums every day to maintain the position level, and it is possible to wait too long to see the shift before being bankrupt. In addition, investors are loss averse, waiting for the shift is painful, every day their doubts will increase when they are suffering losses every day before the shift finally comes. It is likely to see the shift comes later than the adviser who give a different opinion gets fired.

However, on the other hand, as long as being the same as other large players, it is risk-free. First, investors will have nothing to complain about, as they are receiving correct information about the market expectation. Secondly, if there is anything wrong, since the entire industry gets it wrong, it is just a bad luck. Thirdly, it is too big to fail. If the entire industry gets wrong, the government has to step in and rescue the failed institutions, especially those big ones.

To conclude, it is simply not wise for large institutions to be different from their large peers.

The tension between the US and Mexico

The tension between the US and Mexico has lasted since Donald Trump became the US president. The current US president has a reputation of being tough on illegal immigrants and making more strict migration policies. Mexico is a neighbour country of the US, inevitably the number of Mexican immigrants is larger than the numbers of most of other countries' immigrants in the US. This may be the major factor that leads to the tension between the US and Mexico.

However, the tension does not limit to the US migration policy, it has extended to the trade policy as well. The US president has repeatedly said in the public that the border wall between the US and Mexico will be paid by Mexico. One of his methods is to pay by Mexico's trade surplus with the US, and linking tariffs with Mexico's efforts on controlling immigration is just a more detailed plan of this method. We should not be surprised to see this being proposed or happening, as he proposed this method as early as his presidential election around two years ago. People should definitely see this coming.

What we should be really surprised about is that the market has not got used to this president yet. The world stock market fell sharply in response to the president's threat, which should be expected to some degree. Moreover, the trade war between the US and Mexico is not a very new topic, the president has been talking about it for some time; we cannot simply think his words are just bluffing just because we have not seen his action yet. Yes, this president is more unpredictable than most presidents in the US history; however, some certain patterns are there and we can make some expectations about this president based on these patterns.

Overall, I do not think that Donald Trump made a surprising move, I think that rather the stock market surprisingly still does not know how to respond to this president.