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tricouri funny
Mexico's deputy foreign minister, Jesus Seade, said on Saturday he sent a letter to the top U.S. trade official expressing surprise and concern over a labor enforcement provision proposed by a U.S. congressional committee in the new North American trade deal.


Ousted president given two years in reform centre over millions of dollars stuffed in suitcases


Seats that changed hands this time have been disconnecting from the party since Blair


Political mood is shifting against long-running attachment to fiscal surpluses


The United States and China cooled their trade war on Friday, announcing a "Phase one" agreement that reduces some U.S. tariffs in exchange for what U.S. officials said would be a big jump in Chinese purchases of American farm products and other goods.


U.S. Treasury Secretary Steven Mnuchin said on Saturday a "phase one" trade deal between the United States and China was "very good" for global economic growth, and added that the second phase could come in several steps.


Pro-democracy movement fears new leader will just be a front for the generals


us dollar currency counterfeit hundred


President Trump railed against the US dollar's relative strength through much of 2019, but eight major currencies are on track to outperform the dollar this year.

The US dollar index DXY is up roughly 1.2% in the year-to-date, surging in strength despite summer recession warnings and continued trade war tensions. It performed best against the Turkish lira this year, a Bank of America note comparing major currencies said Friday. 

Trump reportedly asked White House aides to look into ways to devalue the American currency in early July. A weaker dollar would give the US an advantage in international trade, but currency manipulation would also cut into the country's reputation abroad. Trump even critiqued China in the summer for how its central bank allowed the yuan to slip below a key psychological level in early August.

Here are the eight major currencies that outperformed the US dollar in 2019, ranked in ascending order. Performance is as of December 11.

8. Singapore dollar

Performance against US dollar: 0.4%



7. Taiwanese dollar

Performance against US dollar: 0.7%



6. Japanese yen

Performance against US dollar: 1.0%



5. Indonesian rupiah

Performance against US dollar: 2.5%



4. Mexican peso

Performance against US dollar: 2.8%



3. British pound

Performance against US dollar: 3.4%



2. Canadian dollar

Performance against US dollar: 3.5%



1. Russian ruble

Performance against US dollar: 10.2%

Now read more markets coverage from Markets Insider and Business Insider:

We just got a stark warning that the US economy is slowing as trade tensions persist

In the wake of its recent crisis, the Fed boosts repo operations to calm lending worries before the new year

A leaked memo suggests Amtrak is considering airline-style changes to its ticketing policies, including nonrefundable fares and change fees





A Swatch unit that supplies parts to much of the watch market faces a possible sales ban next year by Switzerland's Competition Commission (Weka), newspaper Schweiz am Wochenende reported on Saturday.


Latest results for Robey Warshaw show M&A trio earned £48m last year


cloud war azure v aws 4x3

  • Amazon Web Services has the largest share of the public cloud market.
  • However, Microsoft is catching up — not only in market share, but also by beating AWS to win the crucial $10 billion Joint Enterprise Defense Infrastructure (JEDI) contract with the Pentagon.
  • We talked to 13 executives at companies that partner with these cloud platforms for their take on the rivalry between the two, and whether Microsoft can win.
  • The verdict: Amazon's lead will be hard, but not impossible, to beat, they say. Even if Microsoft doesn't topple AWS, they say, there's still a bright future for it in a market that doesn't necessarily want only one cloud to win.
  • Click here to read more BI Prime stories.

Amazon has the top spot when it comes to cloud market share, but Microsoft is presenting more of a threat than ever.

Amazon Web Services essentially invented the modern cloud computing market in the mid-'00s, and dominates it to this day. According to estimates from Gartner, AWS has 47.8% market share, with its position reinforced by new products in databases, AI, and other fields.

But Microsoft, the runner-up, is catching up, with its arsenal of long-time enterprise customers. Already, analysts say that AWS — which has historically prided itself on paying attention to customers, not competitors — is showing rare signs of becoming more reactive to Microsoft's big moves.

Underscoring the mounting competition was Microsoft's big surprise win of the Joint Enterprise Defense Infrastructure (JEDI) contract, a $10 billion deal to move the Department of Defense's sensitive information onto the cloud. Amazon is currently challenging Microsoft's win, and AWS CEO Andy Jassy has said the company feels the decision was "not adjudicated fairly" because of political interference.

Even technologically, Amazon appears to be chasing Microsoft in other areas: At its annual re:Invent conference this month, AWS announced that its Outposts product is now available — representing Amazon's big push into hybrid cloud, a market in which Microsoft has long established itself. Likewise, AWS announced Amazon Braket, a new quantum computing service that helps it keep pace with similar efforts from Microsoft and Google.

Amid all of this, Amazon has only recently eased up on long-standing rules that actually prevent partners from mentioning terms like "multi-cloud," which imply that there are other options out there than AWS.

With all this at play, we asked 13 executives at AWS partner companies about whether Microsoft has a chance of beating Amazon for the top cloud spot.

SEE ALSO: Amazon's recent body language about its cloud business shows how seriously it's taking Microsoft's 'aggressive front'

Panzura CEO Patrick Harr: 'It's going to be a big battle between the two.'

"We've seen pretty big uptick in Azure. They're a very powerful channel and have a very powerful sales team. They have a very strong application base. With that opportunity we'll see what happens in the future. It's going to be a big battle between the two...Microsoft has a very strong [partner] program. That will certainly present an opportunity for them to continue to accelerate. I think Azure has started to invest very heavily on the partner side and bring the advantages they have to the downstream channel."





Chadd Kenney, vice president and chief technologist of Clumio: 'They're attracting developers over.'

"I'd say that my perception is AWS has a much more developer friendly platform. Microsoft is doing well on traditional business applications. As businesses start to take on legacy applications, Microsoft will pick up a bit. One thing is, Azure is picking up a lot more new innovative services and they're attracting developers over."



Mike Maciag, CMO of Dynatrace: 'I don't think there will be a single winner.'

"What I do know is the world very rarely settles on one thing. I've seen Microsoft come up and Google come up. In customers we see a real desire to have flexibility of deployment...I think people want choice. Who wins the ultimate battle? I don't think there will be a single winner."



Benoit Dageville, cofounder and president of product at Snowflake: 'The adoption of cloud had two different waves.'

"The adoption of cloud had two different waves. The early adopters were startups that went directly to cloud and became very big. Amazon benefited from that wave. Now everyone is moving to the cloud, including big enterprises. The second wave is benefiting Microsoft."



Richard Dolan, CMO and co-founder of Effectual: 'I don't think' Microsoft can win at this point.

"I don't think so at this point. I think there are specific use cases that can be applicable. AWS has taken almost 50% of the cloud share. It's hard to combat against that. Alibaba has beaten [Google]. It's a very competitive market to get into. They'll grow. Surpass? I don't think they can at this point."



Sahir Azam, chief product officer of MongoDB: 'Microsoft still has a shot at it.'

"It's hard to know what Microsoft's cloud revenue is, versus the things that more directly compete with infrastructure. It's very clear that Microsoft is #2. It's our benefit to see multiple cloud providers. Whether they'll be bigger than AWS, who knows. Microsoft still has a shot at it. I will add that since Google is reforming with Thomas Kurian, we've seen Google spike up in the market. If anything, the reality is that it will be a three cloud race versus a two cloud race."



Peter Guagenti, CMO of MemSQL: 'My money will be on one of the Chinese providers.'

"Microsoft has a solid chance of it. They built their business on supporting developers. My money will be on one of the Chinese providers before Microsoft and Google. They are innovating and being aggressive about entering new markets."



Ratmir Timashev, cofounder and executive vice president of worldwide sales and marketing at Veeam: 'It depends on the market segment.'

"I think Microsoft definitely has its own market. I don't want to call it a niche because it's not a niche. AWS has its own market, and Microsoft has its own market. For Veeam, from our customer base, it's approximately 50/50. I know AWS has a bigger market share than Azure, but in our customer base, it's 50/50. For our customers who are modernizing their data centers and use Windows, Azure is the most convenient. It depends on the market segment."



Trend Micro CEO and cofounder Eva Chen: 'It's gravity that might drag them down.'

"AWS is really good with new startups that are born in the cloud. Lots of those enterprises just started and need to catch up. They're not born from the cloud. Both Amazon and Microsoft need to pay more attention to this...Whoever can serve this wave of customers will be better off. Of course, Microsoft has better customers on this side. It's gravity that might drag them down. AWS does need to be more careful about Azure."



Tolga Tarhan, CTO of Onica: 'AWS is so far ahead in their service portfolio.'

"Maybe I'm biased. I think all the hyper-scalers have their benefits. AWS is so far ahead in their service portfolio. The mindshare they have among developers is a huge asset. I think the three big guys will do well, but the lead that AWS has will stay."



Ofer Bengal, CEO and cofounder of Redis Labs: 'If they play their cards right, they can.'

"In a way, if they play their cards right, they can. They are big enough to do tons of stuff like AWS. They are in the enterprise world and have been selling to big enterprises for years. In that way, AWS is behind. Microsoft is in the enterprise world. They have contracts and agreements in place. If they work hard and continue to do the right thing, they have a chance...They were able to change the market perception and people's perception of the company as the big guys destroying everyone. Now, this is AWS."





Doug Hanna, COO of Grafana Labs: 'It's definitely a competitive market with Amazon.'

"I think AWS has a really large head start, with the level of scale and market penetration they have...Companies are intentionally taking a multi-cloud strategy because of pricing pressure. It's definitely a competitive market with Amazon."



Armon Dadgar, cofounder and CTO of HashiCorp: 'The market doesn't want one cloud to win.'

"My guess is what happens is you see a relatively easy split. You see Microsoft catching up aggressively. That being said, AWS isn't resting. They're growing their sales team really fast. Amazon is intent on not losing market share, while Microsoft has relationships with everyone. If you play this out five to six years from now it starts to look like the server market, like Dell and HP. No one wins. I don't think we'll see a situation where one cloud provider is 70%...The market doesn't want one cloud to win and the market will always get whatever it wants."

Got a tip? Contact this reporter via email at rmchan@businessinsider.com, Signal at 646.376.6106, Telegram at @rosaliechan, or Twitter DM at @rosaliechan17. (PR pitches by email only, please.) Other types of secure messaging available upon request. You can also contact Business Insider securely via SecureDrop.





Chipotle secret menu quesadilla

Brian Niccol dreams of quesadillas. 

The CEO of Chipotle has name-dropped the cheesy offering — not currently on the chain's menu — in more than one interview with Business Insider since he started at the company in March 2018. In January, he said that the quesadilla was Chipotle customers' top-requested menu item. And, Niccol has been craving it himself. 

"The quesadilla is really good, because there's nothing better than a really hot tortilla," Niccol told Business Insider in an interview in November, when asked about his go-to Chipotle orders.

"Our tortillas are fabulous," Niccol continued. "They're really hot and you put our chicken or barbacoa in there with some cheese and then ... you can dip it in some guac. It's just really, really good."

Chipotle Quesadilla

Chipotle has not added its quesadilla to the official menu because the process of heating up a quesadilla would slow down the chain's rapid burrito and burrito bowl assembly line. However, BTIG analyst Peter Saleh said that this might change as Chipotle doubles down on its second, digital make line. 

"The faster the digital mix grows, the more, I think, innovation they may be able to pull out on the second make line," Saleh said. "Aside from maybe a side item like a queso blanco or something like that, I would think the next major entrée innovation is going to be something around along the lines of the quesadilla."

Saleh said that, while Chipotle should have a quesadilla on the menu, the chain does not need to roll it out immediately as there are other things driving sales at the moment. However, he predicts it could likely be a 2020 or 2021 initiative for the chain as the digital make line allows for more flexibility. 

Chipotle rolled out its first digital-only menu items in January, with a line of Lifestyle Bowls. These bowls only featured ingredients that were already available, but they were a massive success for the chain. Niccol said in January that they helped reintroduce customers to options that already existed on the menu.  

With Chipotle completing the digitization of its second make line earlier this year, the chain is increasingly looking at the secondary burrito assembly line as a restaurant within a restaurant. It is a weapon that none of Chipotle's rivals possess, with the potential to double the chain's maximum output. 

 "No one else has a dedicated digital restaurant within every restaurant," Chipotle's chief technology officer Curt Garner said. 

This "second restaurant" could potentially mean more flexibility around what is on Chipotle's menu, or the creation of an entirely new digital-only menu. With customers ordering ahead instead of standing in front of employees to order, Chipotle can afford to add menu items that take a few more seconds to make. 

"As they push more and more digital," Saleh said, "now they're getting up to 20%, as they get the 30%, maybe 40%, they can start to introduce some items, at least on the digital side, that might require little bit more time to make." 

Currently, more than 18% of Chipotle's business comes from digital sales. Chipotle's chief financial officer, Jack Hartung, expects that to more than double. 

"We have restaurants that are as high as 40%," Hartung said, noting that even these are not fully maxing out what is possible. "I don't see why our whole company can't get up into that 30%, 40%, 50%."  

For now, however, Niccol will have to stick with his current go-to order. 

"I always do like white rice, barbacoa, and fajita of veggies," Niccol said. "And our spicy salsa." 

Read the full story on how Niccol turned around Chipotle here.

SEE ALSO: Chipotle's new steak might become a permanent addition to the menu. Here's why that would be a great idea for the chain.

Join the conversation about this story »

NOW WATCH: At its peak, Forever 21 made $4.4 billion in revenue. Here's what led to the brand's downfall and bankruptcy.



China and the United States' "phase one" trade agreement is good news for all and will "provide stability in global trade", the Chinese government's top diplomat Wang Yi said during a visit to Slovenia on Saturday.


China plans to set a lower economic growth target of around 6% in 2020 from this year's 6-6.5%, relying on increased state infrastructure spending to ward off a sharper slowdown, policy sources said.


The United States and China have agreed on the terms of a "phase one" trade deal that reduces some U.S. tariffs on Chinese goods while boosting Chinese purchases of American farm, energy and manufactured goods and addressing some U.S. complaints about intellectual property practices.


French carmaker Renault has offered the chairman of Volkswagen's SEAT brand, Luca de Meo, the job of chief executive, Spanish newspaper La Vanguardia reported on Saturday, citing anonymous sources.


High Alpha managing partner Scott Dorsey

  • Scott Dorsey is hoping to help build Indianapolis into a tech hub.
  • Dorsey was the cofounder of Indianapolis-based ExactTarget, which Salesforce bought in 2013 for $2.5 billion.
  • He now runs a venture firm and startup studio in the city called High Alpha that's helping to build and fund the next-generation of Indianapolis-based tech companies.
  • The city has many features that make it an attractive place for tech, particularly enterprise software firms, including a wealth of talent and proximity to plenty of Fortune 500 companies looking for technological solutions to their business problems, he said.
  • Click here for more BI Prime stories.

If you were asked to name the top tech hubs in the US, you'd probably list San Francisco or Silicon Valley, New York, and maybe Boston, Seattle, or Austin.

Scott Dorsey is hoping that someday soon you'll include Indianapolis on that list.

Indiana's state capital has all the right ingredients to become a tech center, according to Dorsey, a managing partner at High Alpha, a venture firm and startup studio based there. Dorsey knows first-hand that the city can foster innovation. He founded and helped build cloud marketing service provider ExactTarget in the city before selling the company to Salesforce in 2013 for $2.5 billion.

"There's an unusual amount of talent ... right here in Indy," Dorsey told Business Insider in a recent interview. "We have all the conditions in place," he continued, "to create a lot more ExactTargets."

Indianapolis has a good collection of high-quality nearby universities churning out business-school graduates and software and other engineers, including Purdue, Indiana University, and Notre Dame, he noted. Plus Softbank has continued to invest in the former ExactTarget operation there; the largest tower in Indiana is now named Salesforce Tower after the company expanded and moved its Indianapolis operations there. So there are plenty of well-trained and experienced tech workers and aspiring tech entrepreneurs in the area, he said.

Additionally, the city is a short nonstop flight away from the tech, financial centers of New York and Boston. And it's centrally located in relation to the the headquarters of a plethora of Midwest-based Fortune 500 companies, many of which are searching for technological solutions to their business problems, he said. Those are the type of potential customers that Silicon Valley-based enterprise software firms may have a difficult time understanding and connecting with, he said.

"That proximity advantage we have of not being all the way on the West Coast gives us, I think, an edge around customer accessibility," he said.

Dorsey's firm is creating new Indianapolis-based startups

Dorsey himself is trying to play a big role in transforming Indianapolis into a tech center. High Alpha, which he cofounded in 2015, both incubates and funds local startups.

The firm has its own team of business design people who are continuously exploring new startup ideas in the enterprise software space. They solicit concepts from corporations, other venture firms, entrepreneurs, and from High Alpha's own staff. Every quarter or so, the firm holds what it calls a sprint week, in which it takes the four most promising ideas the team has been exploring and attempts to flesh them out. At the end of the week, it holds an internal pitch competition and selects the best one or two concepts to turn into startups.

High Alpha turns the concepts into companies, funds them, helps recruit their leadership teams, and assists them in building out their initial product. The firm has a staff of 35 and for the first six to 12 months after the startups launch, High Alpha's employees serve as support staff for them, taking care of their payroll and taxes, helping them recruit employees and build their brands.

"We're very hands-on during that forming stage," Dorsey said.

Thus far, High Alpha has founded 17 companies through its studio, three of which have been acquired.

Once the companies get off the ground and are ready for seed-stage capital, High Alpha starts to transition from acting as a kind of incubator to taking on more of an advisory role. But it continues to assist the startups, often giving them funding through its separate venture funds and also by helping them attract the outside financing they need to grow and mature.

Indianapolis is still nascent as a tech hub

Unlike New York or Silicon Valley, Indianapolis doesn't have a deep reservoir of venture capital, so startups there often have to rely on sources outside the state to get funding, he said. Dorsey and his colleagues have built relationships with venture firms on both coasts and have been successful in getting them to back the startups it's founded.

Emergence Capital, a Silicon Valley venture firm that specializes in funding enterprise software startups, is one of the biggest investors in High Alpha and two of its partners, Santi Subotovsky and Gordon Ritter, sit on High Alpha's board.

Meanwhile, Silicon Valley-based Menlo Ventures, recently invested in Zylo, a High Alpha startup that helps companies manage their enterprise software subscriptions. And, Sigstr, which also came out of High Alpha's studio and offers and email marketing service, counts Boston's Battery Ventures among its investors.

To be sure, Indianapolis still has a long way to go to be considered in the same breath as the established tech hubs. Last year, venture capitalists invested $367.7 million in Indiana-based startups, according to the National Venture Capital Association and Pitchbook. That amount ranked 23rd among all states, trailing far behind the $77.3 billion venture funders put into California-based firms.

Some 88 Indiana companies got venture funding last year, putting the state in 19th place in that category, according to the NVCA and Pitchbook. By contrast 2,869 firms got venture funding in top-ranked California.

Still, Dorsey is bullish on Indianapolis and he's happy to be using the experience and insights he gained from building ExactTarget to help other budding Indiana entrepreneurs.

"That's been one most rewarding aspects to what we've done at ExactTarget and now at high alpha, is just helping to transform our community — helping to transform the tech community, creating jobs, creating a tech hub," he said.

Got a tip about venture capital or startups? Contact this reporter via email at twolverton@businessinsider.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

SEE ALSO: Emergence Capital backed Salesforce before its IPO. Here's why one of the VC firm's partners thinks the $141 billion software giant is vulnerable to a next-generation enterprise software startup.

Join the conversation about this story »

NOW WATCH: Apple just released iOS 13.2 with 60 new emoji and emoji variations. Here's how everyday people submit their own emoji.



warren buffett

  • Warren Buffett said an 89-year-old carpet saleswoman would "run rings around" the best corporate executives and business-school graduates in America.
  • Berkshire Hathaway's billionaire boss praised Rose "Mrs B" Blumkin after he bought her company, Nebraska Furniture Mart, for about $55 million in 1983.
  • ''Put her up against the top graduates of the top business schools or chief executives of the Fortune 500 and, assuming an even start with the same resources, she'd run rings around them,'' Buffett said, according to the New York Times.
  • Mrs B founded Nebraska Furniture Mart with $500 in 1937. It now generates an estimated $1.6 billion in sales and more than $80 million in after-tax profits each year.
  • View Business Insider's homepage for more stories.

Warren Buffett said an 89-year-old carpet saleswoman would "run rings around" the best corporate executives and business-school graduates in America.

Berkshire Hathaway's billionaire boss praised Rose "Mrs B" Blumkin after he bought 90% of her company, Nebraska Furniture Mart, for about $55 million in 1983.

''Put her up against the top graduates of the top business schools or chief executives of the Fortune 500 and, assuming an even start with the same resources, she'd run rings around them,'' Buffett said in 1984, according to the New York Times.

If Buffett was starting a business and could draft any of the top 25 business-school graduates or Fortune 500 CEOs, or pick Mrs B, "I'd take Mrs B," he said in a NBC interview after the takeover. "There aren't any other Mrs Bs."

Mrs B founded Nebraska Furniture Mart in 1937, and enlisted her children and grandchildren to grow it into the biggest home-furnishings store in the nation.

Today, the business generates about $1.6 billion in sales and more than $80 million in after-tax profits, Glen Arnold estimates in "The Deals of Warren Buffett Volume 2: The Making of a Billionaire."

Humble beginnings

Mrs B was born in 1893 in a village near Minsk, Belarus. She began working in her mother's grocery store at age six, and was managing six people, all men, by the age of 16.

At 23, virtually penniless with no formal schooling and unable to speak English, Mrs B journeyed to the US to reunite with her husband, who had fled there to avoid being drafted into the Russian army.

She traveled across Siberia on the Trans-Siberian Railroad without a ticket or passport, convincing a guard on the Russia-China border to let her pass by promising him a big bottle of brandy upon her return, Arnold writes.

Soon after Mrs B made it to Iowa, she and her husband moved to Omaha, where she sold second-hand clothing and sent money home to help her parents and five siblings make the trip to America as well.

In 1937, aged 43, with four children, Mrs B started Nebraska Furniture Mart with $500 and stocked it with $2,000 of merchandise. Fearing she wouldn't be able to repay her creditors, she sold all the furniture and appliances in her home, including her refrigerator.

Mrs B's strategy was to undercut her rivals, prompting them to organize boycotts and haul her into court for violating fair-trade laws. During one trial, she explained that she turned a profit by selling everything at 10% above cost. The judge not only acquitted her, he bought $1,400 worth of carpet from her the next day. 

Buffett buys the company

Buffett was a longtime admirer of Nebraska Furniture Mart. At least 12 years before he bought it, he described it as a "really good business" to a writer he was showing around town, Arnold writes.

Mrs B resisted selling for years, but eventually warmed to the idea at the age of 89 in 1983. She felt bossed around by her children, and didn't want them to squabble over the company and pay steep estate taxes when she passed away. She decided to cash out and distribute the windfall among her family members.

Buffett approached Mrs B's son, Louie, about a buyout. The famed investor reassured him that the Blumkin family would continue to run the company, and Berkshire would take a long-term view as its owner.

When Buffett brought the deal to Mrs B, he didn't check the store's inventory or real-estate titles, audit the accounts, or conduct any due diligence. The agreement was done with a smile, a handshake, and a 1 1/4 page contract that Buffett drafted.

Part of Buffett's appraisal was imagining being a rival retailer. "I'd rather wrestle grizzlies than compete with Mrs B and her progeny," he said.

Mrs B retires, then decides to open a rival store

After Buffett's takeover, Mrs B remained chairman and continued selling carpets.

"She runs rings around the competition," Buffett wrote in his 1987 letter to shareholders.

"It's clear to me that she's gathering speed and may well reach her full potential in another five or 10 years," he continued. "Therefore, I've persuaded the board to scrap our mandatory retirement-at-100 policy. (And it's about time: with every passing year, this policy has seemed sillier to me.)"

Mrs B eventually retired in 1989, aged 95, after a disagreement with her grandsons. However, she grew restless after three months and opened a rival store called Mrs B's Clearance and Factory Outlet across the street from Nebraska Furniture Mart, the Times said.

She grew it into Omaha's third-largest carpet store in three years, and Buffett bought it in 1992 and merged it with her family business. He joked that he wouldn't let Mrs B retire again without signing a non-compete agreement.

The tireless Mrs B worked at the store until she was 103. She died a year later, in 1998. Her grandchildren and great-grandchildren now run the business.

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption



trader red screen

  • Vincent Deluard, the director of global macro strategy at INTL FCStone, says some of Silicon Valley's worst traits are popping up in other areas of the marketplace.
  • He notes the flood of companies that haven't been able to turn a profit, even in a highly favorable economic backdrop characterized by loose lending conditions.
  • Deluard thinks "all the ingredients" are in place for a meltdown.
  • Click here for more BI Prime stories.

Silicon Valley unicorns are in the spotlight for all the wrong reasons.

Imprudent cash burns, massive debt piles, and business models that "may not achieve profitability" (Uber) or "elevate the world's consciousness" (WeWork) top the list of the more outlandish attributes these companies possess.

As investors, we like to think that pockets of market turmoil are generally sequestered and free of contagion. But that's not always the case.

Vincent Deluard, the director of global macro strategy at INTL FCStone, doesn't think these issues are going away anytime soon. What's more, he sees them popping up in places outside of Silicon Valley.

"Lack of profit is not just a unicorn, start-uppy phenomenon," he said in a recent interview with Real Vision. "If you look at the Russell 2000, about a third of Russell 2000 companies do not make profit."

He continued: "I counted — about 18% of the companies lost money in 15 of the past 16 quarters."

To Deluard, this is a shockingly high proportion that makes little sense. He argues that — amid a favorable economic backdrop rife with cheap capital — a larger portion of these unprofitable firms should be thriving.

"You have tax rates at the lowest they've been since the end of the war," he said. "We have the unemployment rate at the lowest it's been — since again — the end of the war. Interest rates at about a 5,000 year low, and still you have a third of the market that cannot turn a profit under these circumstances.

He continued: "At the same time, you've seen this explosion in debt per share, 3x to 4x on the Russell 2000."

Deluard aruges that, at some point, investors are going to stop tolerating these types of business models and start unwinding positions. And once that process commences, a vicious feedback loop of selling could occur.

"You have all the ingredients for — I think — a major correction," he concluded.

His comments on unprofitable companies were echoed recently by billionaire Bond King Jeffrey Gundlach, who warned of "zombie companies" that are still in business solely because of artificially low interest rates.

But Gundlach takes Deluard's market-correction forecast and does it one better: he's expecting a full-fledged economic contraction.

"We are battling tooth and nail the next recession," Gundlach said in a recent interview with Yahoo Finance. "The Fed has but done — and the central banks — everything they can to avert the next recession. But a recession will come."

SEE ALSO: An investment chief who oversees $65 billion, refuses to watch CNBC, and doesn't have a Bloomberg terminal shares the books and podcasts he 'can't praise enough'

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption



warren buffett pitches a baseball

  • Warren Buffett took a $60 million hit after the Red Sox won the World Series in 2007, according to the Boston Globe.
  • The famed investor's Berkshire Hathaway conglomerate made the payout after insuring a promotion by one of its businesses, Jordan's Furniture.
  • Jordan's Furniture offered refunds on all sofas, beds, mattresses, and dining-room tables sold between March 8 and April 16 if the Red Sox won the baseball championship that year.
  • Nearly 30,000 people received free furniture as a result.
  • The promotion didn't seem crazy at the time, as the Red Sox didn't win the championship for 86 years between 1918 and 2004.
  • View Business Insider's homepage for more stories.

Warren Buffett took a $60 million hit after the Red Sox won the World Series in 2007.

The famed investor's Berkshire Hathaway conglomerate made the payout after insuring a promotion by one of its businesses, Jordan's Furniture.

The retailer offered refunds on all sofas, beds, mattresses, and dining-room tables sold between March 8 and April 16 if the Red Sox won the baseball championship that year, according to Boston.com.

"It cost Berkshire Hathaway $60 million, or something like that," Buffett said at Fenway Park last week, according to the Boston Globe.

He revealed the damage to the Globe's managing director, Linda Henry — whose husband John is the principal owner of the Red Sox — as part of Curated Conversations, an interview series by HUBweek and Boston.com.

Nearly 30,000 people received free furniture thanks to Jordan's "Monster Deal" promotion, according to ABC News. The $60 million payout suggests they spent on average about $2,000 each on eligible products. 

Jordan's CEO Eliot Tatelman wasn't annoyed about refunding his customers — and not just because Buffett footed the bill.

"I've always been a Red Sox fan, lived in Boston my whole life," he told ABC News. "I said, 'what a great way to support the team, what a great way to tie ourselves in with the Red Sox, and what a great way to get everybody rooting for the Red Sox and sell a lot of furniture.'"

Tatelman's promotion didn't seem crazy at the time. The Red Sox suffered one of the longest championship droughts in baseball history, winning the title in 1918 before waiting 86 years until they won it again in 2004.

Superstitious fans blamed the team's struggles on the "Curse of the Bambino," as the Red Sox sold legendary hitter Babe Ruth to the New York Yankees in 1920.

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Push to use Chinese-made computers in government offices also poses local challenge


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California Governor Gavin Newsom on Friday rejected a bankruptcy reorganization plan submitted by PG&E Corp , the state's largest investor-owned utility, saying its proposal fails to meet the requirements of a recently enacted wildfire law.


The U.S. government said on Friday China would buy an additional $32 billion in U.S. farm goods over the next two years as part of an initial trade deal.


Bristol-Myers Squibb Co on Friday said it won a $752 million jury verdict against Gilead Sciences Inc in a U.S. patent dispute relating to technology for treating cancer.


The U.S. Justice Department is preparing to take legal action against Live Nation Entertainment on allegations the concert promoter has sought to strong-arm concert venues into using its dominant Ticketmaster subsidiary, a source familiar with the planned legal action said on Friday.


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07:14 Take Five: What's the deal? (Reuters)
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Saks Fifth Avenue owner Hudson's Bay Co has fallen short of securing enough shareholder support for a C$1.9 billion($1.4 billion) deal to take the department store operator private, people familiar with the matter said on Friday.


Travis Kalanick

  • Uber's co-founder and former CEO Travis Kalanick continues to cash out his stake in the ride-hailing company, selling off close to $166 million worth of shares this week. 
  • The ousted chief executive has sold off a little more than $2 billion worth of Uber stock since the company's post-IPO lockup period in early November, an act that has rapidly liquidated his stake in the company. 
  • Kalanick holds a little more than 21 million shares in the company as of December 13th, which is less than a quarter of his original stake in the company. 
  • Visit Business Insider's homepage for more stories.

Uber co-founder and former CEO Travis Kalanick dumped close to $166 million of company stock over the past three days, continuing a selling streak that began in the first week of November. 

The 43-year-old founder sold a little over 5.8 million shares between December 11th and December 13th, according to an SEC filing. As of December 13th, the former chief executive holds 21 million shares. 

Kalanick raised eyebrows by selling close to $1.7 billion worth of Uber stock in November right after the company's post-IPO lockup period. Early investors were allowed to offload shares for the first time on November 6, and the subsequent sales dragged the stock to record lows.

But he has continued to sell off shares in December. In total, the Uber co-founder seems to have liquidated over $2 billion in Uber stock since early November.

Uber's stock closed at $28.69/share on Friday. The company, which originally priced its stock at $45/share, has so far had a disappointing run on the stock market since its May debut

Kalanick was ousted from the ride-hailing company back in 2017, after a series of scandals and some serious boardroom drama. Uber CEO Dara Khosrowshahi was appointed in his place to right the ship. 

Since his departure from Uber, Kalanick has pivoted away from ride-hailing and into the ghost kitchen space. His new startup CloudKitchen leases kitchens to help delivery-only restaurants optimize their space. Aside from investing $300 million of his own money into the company, the charismatic startup founder managed to garner $400 million from Saudi Arabia's sovereign wealth fund, The Wall Street Journal reported.

SEE ALSO: WeWork, SmileDirectClub, and Peloton: Here are the 5 biggest 'unicorn' IPO flops of 2019

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Canadian financial regulator the Ontario Securities Commission said on Friday it has dismissed a request by Catalyst for a cease trade order relating to proposed take-private deal of Hudson's Bay .


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Kent Walker, Google

  • A new tool created by Google programmers reportedly allowed its employees to send Google's top lawyer Kent Walker an automated email notification every time they open an internal document, to flood Walker's inbox in protest over the company's more restrictive policies over its internal documents. 
  • The protest was part of a wider storm of criticism raging amongst Googlers after Walker sent out an internal memo last month, arguing that the sheer number of Google employees made it difficult to operate at the same level of transparency as before, Bloomberg's Ryan Gallagher and Mark Bergen reported Friday
  • Google has made a conscious effort to double down on its 'need to know' data-sharing policies, and recently fired four employees, alleging that they violated its policies on accessing sensitive data. 
  • Visit Business Insider's homepage for more stories.

A group of Googlers unhappy with the company's expanding 'need to know' restrictions on internal documents have come up with a clever form of protest: A new tool that sends auto alerts to Google's top lawyer every time an employee opens a company document.  

The tool, which is detailed in a report on Friday by Bloomberg's Ryan Gallagher and Mark Bergen, is the latest example of employee unrest at the internet company. 

Many employees are openly unhappy with Google's conscious efforts to change its corporate culture. When Chief Legal Officer Kent Walker sent out a memo last month, arguing that the 21-year old company was too big to continue allowing workers to access any internal document, it provoked a storm of criticism, according to the Bloomberg report.

"When we were smaller, we all worked as one team, on one product, and everyone understood how business decisions were made," Walker reportedly wrote. "It's harder to give a company of over 100,000 people the full context on everything."

Google did not respond immediately to a request for comment. 

As Google grows larger, the company appears to be making a conscious effort to change its famously transparent corporate culture. The company recently fired four employees, alleging that they violated its policies on accessing sensitive data. 

The employees deny Google's charges, and say the company fired them for protected labor organizing. They recently filed unfair labor practice charges with the National Labor Relations Board. 

And when Google cofounders Larry Page and Sergey Brin announced that they were stepping down from their executive positions at Google's parent company Alphabet, Google activists saw it as a letdown to the company's original values. 

"Some had seriously hoped Sergey and Larry would step in and fix Google. Instead of righting the sinking ship, they jumped ship," a tweet from a group of Google activists said. 

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NOW WATCH: Why it's so hard for planes to land on water



Apple CEO Tim Cook


Shares of Apple rose as much as 1.3% on Friday to a fresh record as China and the US reached a phase-one trade deal that includes some relief from tariffs.

With the agreement, Apple has narrowly avoided a 15% tariff that would've been applied to some of its most popular products had a scheduled round of tariffs gone into effect on Sunday.

That would've hiked the prices of some of Apple's flagship products. According to Daniel Ives of Wedbush, the price of the iPhone could've gone up by as much as $150, which would've lowered demand for the product by as much as 8%. The iPad and MacBook could also have been subject to price increases.

Apple had been pushing back against the proposed tariffs. In November, the company filed requests to be excluded from the round, according to Bloomberg. Even President Donald Trump said during a visit to an Apple facility in Texas that he was looking into whether Apple should be exempt from the tax.

Most of Apple's supply chain is in China, including an iPhone assembly plant in Zhengzhou that is responsible for producing half of the iPhones in the world.

If the increase in Apple's stock price holds through the end of trading Friday, it will mark a four-day streak of gains for the company. Earlier in the week, Apple was unseated as the world's most valuable public company when its roughly $1.2 trillion market valuation was beaten by Saudi Aramco's market capitalization of more than $2 trillion.

Apple was up 72% year-to-date through Thursday's close.

aapl

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Mark Zuckerberg

  • Tech giants like Apple and Microsoft were kings of the stock market this decade.
  • Now Mark Haefele — chief investment officer for UBS Global Wealth Management — is naming fields that could outperform in the 2020s the way big tech has in the 2010s.
  • Haefele says stocks are his firm's top bet in coming years, even though they're on track for smaller gains over the next decade.
  • But he's hardly bearish on tech, and says investments in 5G wireless technology, artificial intelligence, and big data are also likely to outperform.
  • Click here for more BI Prime stories.

Big tech conquered the world in the 2010s, and the FAANG stocks and their peers might be sorry to see the decade end.

Mark Haefele — the chief investment officer for UBS Global Wealth Management — says a period of smaller stock gains is coming. And he's urging investors to incorporate new and more targeted ideas if they want to stay ahead in the 2020s.

"Although returns are likely to be lower in the 2020s than the 2010s, we believe stocks are still likely to outperform other publicly listed asset classes," he said. "Large-cap technology stocks probably won't repeat their performance of the last decade, but other parts of the market do have the potential to deliver above-average growth."

Haefele says these four trends have the potential to stand out the way tech did in the years ahead.

(1) Sustainability

Haefele says the growing attention to climate change and ways to mitigate or reverse it will result in opportunities to invest in new companies, new products, and green bonds. He points specifically to the growing talk from European leaders about investments in green technology.

"Consumers, governments, and regulators are all going to be big drivers of a shift toward sustainable investments and products over the next decade, and we think that investors who get ahead of that trend will be rewarded," he wrote.

One way to invest in sustainable companies is the iShares MSCI ACWI Low Carbon Target ETF.

(2) Genetic therapies

There's been tremendous innovation in medications that treat diseases on a genetic level, and Haefele thinks that, too, is just getting started.

"We are now seeing a whole new generation of gene and cell therapies gaining regulatory approval to treat certain rare diseases and cancers," he said. "Large-cap pharma is sitting up and taking note, and we therefore expect to see heightened deal activity in the next decade."

He adds that diversification is particularly important in this field because of the high rate of failure for early-stage drug developers. Two ETFs that include several of those companies are the ARK Genomic Revolution ETF and the Invesco Dynamic Biotech and Genome ETF.

(3) Digital transformation

Haefele hardly thinks tech's time in the sun is over, and picks a series of industries that are likely to advance and attract more investment in the years ahead. For example, he says 5G wireless revenue will nearly double in 2020, a springboard to even more growth afterward.

"The combination of 5G, artificial intelligence (AI), big data, and cloud computing will define a new era of digital transformation and innovation in the decade ahead," he said. "We advise diversified investing focused on six key themes: digital data, enabling technologies, E-commerce, fintech, healthtech, and security and safety."

Investors can gain exposure to some of those themes through the Global X Fintech ETFAmplify Online Retail ETF, and the First Trust Nasdaq Cybersecurity ETF.

(4) Water

The global population continues to grow, and that means demand for water will continue to climb. Haefele says the two most populous countries in the world, China and India, need far more fresh water than they have. He also notes that European countries are creating new water safety regulations that will encourage new investments.  

"The world faces a mismatch between water demand and supply, which will be exacerbated in the decade ahead by the effects of demographics and climate change," he said. "Owing to the urgency and scale of water-related issues, and the need for capital spending in emerging markets, we expect continuous revenue and profit growth for the entire water value chain."

One way to get exposure to that issue is through the Invesco Global Water ETF.

SEE ALSO: BANK OF AMERICA: WeWork and other IPO disasters could start a domino effect that sends US stocks tumbling. Here's how.

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The prime minister must work to convince sceptics that leaving the EU is not an act of self-harm


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trader surprised shocked

  • Assets in exchange-traded funds are poised to hit $50 trillion by 2030, according to a note from Bank of America released Wednesday. 
  • The ETF market is already seeing a growth rate of 25% that will bring the total market to $5.3 trillion in assets at the end of 2020, Bank of America said.
  • Investors such as Michael Burry and Howard Marks have disparaged passive investing, which leans heavily on ETFs. Still, ETFs are gaining because of tax efficiency, cost, liquidity, and transparency, according to the report. 
  • Read more on Business Insider.

In the next decade, the size of the exchange-traded fund market will see explosive growth, according to Bank of America. 

In 2030, the ETF market will hit $50 trillion in assets, "driven by a continued move to passive and increased awareness of the attractive tax efficiency, cost, liquidity and transparency characteristics of ETFs," Bank of America analysts led by Mary Ann Bartels wrote in a note Wednesday. 

The ETF market is already seeing a growth rate of 25% that will bring the total market to $5.3 trillion in assets at the end of 2020, according to Bank of America. That means that over the next year, $1 trillion will pour into the popular investment vehicle, which is a basket of securities that trades on an exchange like a stock. 

baml

In 2020, a "relatively constructive" market view will fuel ETF asset growth, as well as stable interest rates and tightening credit spreads, the note said. 

"Fixed income ETF flows will continue to punch above their weight," Bartels wrote. In addition, she predicts that fee pressures will continue and that thematic ETFs will see strong growth. 

ETFs are a pillar of passive investing, which investors such as Howard Marks, Jeffrey Gundlach, and Michael Burry have called out as a "bubble" in the market that could prove to be dangerous. 

Still, passive investing has grown because of the ease and benefits it offers investors, according to Bank of America. Over the last decade, total assets in ETFs ballooned from $770 billion to $4.3 trillion.

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Bank is part way through a revamp and looking to reduce costs by €1.3bn this year


trump xi

  • President Donald Trump confirmed Friday that the US would lower tariffs against China as part of an interim trade agreement.
  • China had announced moments earlier that the two sides reached an agreement on the text of a so-called phase-one deal.
  • Trump said that as part of the agreement, the US would lower the tariff rate on some Chinese products to 7.5% from 15% and cancel plans to hit virtually all imports from that country.
  • Visit Business Insider's homepage for more stories.

President Donald Trump confirmed Friday that the US would lower tariffs against China as part of an interim trade agreement and that further escalations would be suspended.

China had announced moments earlier that the two sides reached an agreement on the text of a so-called phase-one deal, which could pave the way for a broader pact to defuse a 19-month trade dispute between the largest economies.

"We have agreed to a very large Phase One Deal with China," Trump tweeted. "They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more."

Trump said the US would lower the tariff rate on $120 billion worth of Chinese products to 7.5% from 15% as part of the agreement and cancel Sunday's plans to target virtually all imports from that country. A 25% tariff will remain on three separate tranches of Chinese goods that were valued at about $250 billion last year.

At a news conference in Beijing, Vice Commerce Minister Wang Shouwen said the US would remove some of those tariffs gradually.

China is expected to make changes to the way it manages its economy in return, a statement from the Office of the US Trade Representative said, including through unspecified intellectual-property protections and steps to open its financial-services sector.

The phase-one agreement included a commitment from China to purchase more American agricultural products, which it had placed steep tariffs on last year to retaliate against the Trump administration.

But both sides declined to confirm the $50 billion quota Trump has touted. That would be more than double the value of soybeans, corn, and other farm products China imported from the US in 2017.

The text of the agreement, which is nine chapters long, still faces a series of logistical hurdles, including translations and legal reviews. It would then need to be signed by both sides. 

Trump said the US would "immediately" try to reach a more comprehensive economic détente with China, which White House advisers have said would require at least two more rounds of negotiations.

"We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election," Trump said. "This is an amazing deal for all. Thank you!"

SEE ALSO: Trump promised to eliminate America's budget deficit. But government spending just pushed the 12-month total past $1 trillion for the 2nd straight month.

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FILE PHOTO: A boy and his father walk through the toy section of Walmart on Black Friday, a day that kicks off the holiday shopping season, in King of Prussia, Pennsylvania, U.S., on November 29, 2019. REUTERS/Sarah Silbiger/File Photo

  • US retail sales grew less than expected in November, rising 0.2% compared to the 0.5% estimate from economists surveyed by Bloomberg.
  • The lagging sales data signals slower economic growth than hoped for in the fourth-quarter, as the US-China trade war also pulled the US manufacturing sector further into a recession last month.
  • November's soft retail trend could also be a result of this year's late Thanksgiving, JPMorgan Chase economist Daniel Silver said in a Thursday note. The timing "could have pushed some holiday shopping from November to December," he wrote.
  • Visit the Business Insider homepage for more stories.

US retail sales grew less than anticipated in November, suggesting the nation's economy is still taking hits from the US-China trade war.

Overall sales increased 0.2% last month, according to the Commerce Department, falling under the 0.5% consensus estimate from economists surveyed by Bloomberg. The metric was dragged lower by declines in the apparel and restaurant industries, hinting at weakening consumer spending trends as the year comes to a close.

October's figure was revised higher to reflect a 0.4% monthly climb.

The modest sales increase signals slower economic growth through the end of the decade. The US manufacturing industry fell deeper into a recession last month, placing greater pressure on other sectors to offset losses and pull fourth-quarter GDP higher.

The Federal Reserve is also holding off on granting additional stimulus, pausing its rate cuts to see whether the economy can return to past levels of growth after its trio of cuts through 2019.

While November sales fell under expectations, the lag could also be a result of 2019's shifted holiday season, JPMorgan Chase economist Daniel Silver said in a Thursday note. December's sales data will offer greater clarity on whether the US consumer is cooling, since "the late timing of Thanksgiving this year could have pushed some holiday shopping from November to December," Silver wrote.

Early analysis of holiday season spending suggests December should offset last month's slump. The "early" holiday season posted the strongest sales since 2013 after jumping 2.2% year-over-year, Bank of America analysts wrote in a December 4 note, defining the period as the 21 days ending on Black Friday. The retail strength was primarily driven by promotions starting before Black Friday and a shift to e-commerce platforms, where consumers can more easily compare items and find deals.

Even if fourth-quarter growth disappoints, the greater US economy is positioned to accelerate in the new year as a "phase one" deal between the US and China alleviates some trade pressures. President Trump announced Friday that the US has agreed to pull back tariffs on Chinese goods as part of the interim deal. The president also canceled plans to levy 15% tariffs on Chinese goods including smartphones and toys, which were previously scheduled to go into effect December 15.

Now read more markets coverage from Markets Insider and Business Insider:

In the wake of its recent crisis, the Fed boosts repo operations to calm lending worries before the new year

Bets against Peloton's stock are hovering near a record high — even after a recent plunge kickstarted by the company's ill-fated commercial

Bill.com surged 60% in its first day of trading. We talked to its CEO and a big backer about the fintech unicorn's IPO and why it's good to be boring post-WeWork.

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption



The FTSE is higher while sterling hits its highest level against the dollar since June last year.


FILE PHOTO: Paul and Vanessa Kummer check the soybeans on their farm near Colfax, North Dakota, U.S., August 6, 2019. REUTERS/Dan Koeck/File Photo

  • The United States and China on Friday announced a "Phase One" deal that would prevent an immediate escalation of the trade war between the two largest global economies.
  • Speaking to reporters at the White House, President Trump said the Chinese had agreed to buy $50 billion of American agricultural goods as part of the trade agreement.
  • But there's one big reason to be skeptical of that figure: China has never come anywhere close to buying US farm goods at that amount.
  • That would be double the historic rate of the China's purchases of US farm goods, given that China at its peak only bought $25.9 billion of American agricultural products in 2012, according to Labor Department data illustrated in the graph below.
  • Visit Business Insider's homepage for more coverage.

The United States and China announced a "Phase One" deal that would prevent an immediate escalation of the trade war between the two largest global economies on Friday.

It would, for the time being, cancel the $160 billion in tariffs that President Trump was slated to kick in on Dec. 15 that would have taxed virtually every remaining good China sold to the United States. He also agreed to cut in half tariffs on more than $100 billion a year of products like lawn mowers and clothing.

The final terms governing commerce between Washington and Beijing are still being hammered out, but Trump is expected to roll back over time the $360 billion in tariffs on Chinese goods already in place.

Speaking to reporters at the White House, Trump said the Chinese had agreed to buy $50 billion of American agricultural goods as part of the trade agreement. The Chinese government hasn't confirmed it though and avoided giving firm figures in its own announcement.

"I think they'll hit $50 billion," Trump said. "They've already stepped it up."

But there's one big reason to be skeptical of that figure: China has never come anywhere close to buying US farm goods at that amount.

It would be double the historic rate of the China's purchases of US farm goods, given that China at its peak only bought $25.9 billion of American agricultural products in 2012, according to Labor Department data illustrated in the graph below.

agriculture exports to china

In 2018 — when Trump started the trade war — farm exports to China were cut in half from the year before to only $9.2 billion. Analysts projected that it would slump a bit further to $8 billion this year.

The increased rate of purchases could provide relief to farmers who have suffered billions in Chinese sales. But there are still many hurdles as they try reestablish their trade relationship with China, according to Matt McAlvanah, the spokesperson for Farmers for Free Trade, an advocacy group. 

McAlvanah previously told Business Insider that "it's very difficult to regain markets farmers have spent decades cultivating. These relationships are built over time, they're built on trust — and when they go away overnight, they don't come back overnight." 

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