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WASHINGTON — President Donald Trump said in his State of the Union address on Tuesday that he plans to rebuild the U.S. military by increasing the Pentagon’s budget and by reassessing military alliances and agreements with foreign nations.

The Trump administration has approved two defense-friendly budget bills that have elevated the Pentagon’s spending power to $700 billion in 2018 and $717 billion in 2019.

“We are also getting other nations to pay their fair share,” Trump said pivoting to the defense budgets of NATO allies.

“For years, the United States was being treated very unfairly by NATO, but now we have secured a $100 billion dollar increase in defense spending from NATO allies,” Trump said.

In July, Trump threatened to reduce U.S. military support if allies did not increase defense spending and pushed for the 28 other members to spend more money.

In 2017, the U.S. accounted for 51.1 percent of NATO’s combined GDP and 71.7 percent of its combined defense expenditure. In short, the U.S. contributed more funds to NATO than Germany, France, Italy, Spain, the United Kingdom and Canada combined.

While U.S. spending in constant dollar terms has risen slightly since 2014, its share of NATO’s overall spending has fallen. When measured as a share of gross domestic product, the U.S. still spends more than the 2 percent target. But its contribution has fallen from 4.78 percent of GDP in 2011 to 3.50 percent this year, according to figures provided by NATO.

In all, the U.S. spent $685.9 billion on defense in 2017.

Acting Secretary of Defense Patrick Shanahan said of Trump’s speech: “In his State of Union address tonight, President Trump reaffirmed his unwavering commitment to support our troops and to protect American national security interests at home and abroad. Under President Trump’s leadership, we are focused on the full implementation of the National Defense Strategy: increasing lethality, strengthening alliances and partnerships, and reforming the way we do business.”

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Stocks rally on US-China trade deal but bond investors fear recession

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Trade talks between the U.S. and China appear to be making some progress and are scheduled to continue in the coming week. That has helped lift stocks, with the S&P 500 up 2.5 percent and the Dow gaining 3 percent in the past week.

The Federal Reserve’s about-face on policy in January has also helped lift stocks and keep bond yields low. After its Jan. 30 meeting, the central bank indicated it is not in a hurry to raise interest rates, and that it could slow down the process to reduce its balance sheet.

For their part, stock investors love low interest rates and an easy Fed. Lower rates also means bond yields do not need to move higher, particularly in an economy that is growing slower with no inflation pressures.

Important for investors is that when these two markets trade in the same direction, there ultimately is a breakout and one dictates direction.

“I think there’s a couple of things in the bond market that don’t connect to reality the way the equity market sees it,” said Hogan.

In his view, the stock market is moving higher based on three assumptions: An end to the U.S.-China trade fight, an accomodative Fed, and continued economic stability in both the U.S. and China.

Conversely, “I don’t think the bond market is behind that narrative,” Hogan added. “The bond market is looking at the economic data stream and reflecting on the negatives.”

Vinay Pande, head of trading strategies at UBS Global Wealth Management, said that the bond market is not trading as if it were reflecting the same growth expectations of the stock market. “Most economists think the economy is slowing, but we don’t know how much it’s slowing. That’s a bit of an issue for the Fed, and that’s why they’re going to be on hold.”

He explained that currently, bonds look as if they see growth a full percentage point below what economists have forecast. The median fourth quarter GDP growth forecast is 2.4 percent, while first quarter is 2 percent, according to CNBC/Moody’s Analytics Rapid Update.

“Is the bond market expressing the longer term consensus? No, it’s not,” said Pande. “The bond market is really trading like it’s a reinsurance market,” where reinsurers will raise prices with each successive event: If there were hurricanes five years in a row, they would still charge as though another hurricane was expected in the sixth year.

That is how the bond market is now responding to weak data — as if it is forecasting an economic storm, or even recession that may not come.

“There’s a muscle memory to this,” Pande added.

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US behind China in the marketing of 5G: ex-national security advisor

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These governments have flagged concerns that the technology would enable Chinese espionage. Huawei and others have repeatedly denied the claims.

“The competition is China and whoever wins this competition is going to be a very dominant player on the globe and China has a very seductive, appealing message: ‘We’re cheap, we’re reliable, we don’t put strings on our technology,'” Jones said.

“What they don’t say is, ‘we don’t share our technology, we don’t train you on our technology, we don’t give you the keys, we don’t give you the encryption and we won’t partner with your domestic countries’,” he added.

“The U.S. technology that we’re developing will do just the opposite of that, and it’ll make us more secure. It’ll enable our individual citizens to have a private secure cell phone, it’ll enable our corporations to have protection of their intellectual properties and it’ll enable our governments to be more secure,” Jones told CNBC.

A spokesperson for Huawei has previously told CNBC that the company sees no rational reason to exclude Huawei from building 5G infrastructure in any country in the world. “Any exclusion of a supplier in a market with few suppliers usually results in poorer quality at higher prices,” the company stated.

Jones said that when it came to 5G, there was a clear choice for U.S. allies.

“You can either go for the cheap, seductive but extremely vulnerable system that will take all of your privacy, your intellectual property and your secrets back to Beijing. Or you can invest a little bit more money and have a more secure society,” he said.

A spokesperson for Huawei was not immediately available to comment on Jones’ remarks.

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Google is building a solar power project above fishing ponds in Taiwan

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“There’s a number of things attractive about renewables, besides the low carbon part of it. Prices are coming down to historic lows, and it makes sense from a price perspective,” said Daniel M. Kammen, professor of energy, UC Berkeley and former science envoy for the U.S. State Department.

The price to generate solar power has fallen dramatically over the past decade, from several hundred dollars per megawatt hour to as low as $25/megawatt hour currently, and the prices are expected to go as low as $14/megawatt hour, according to a recent forecast from energy market consultant Wood Mackenzie.

In a recent interview, Mike Terrell, head of energy market development at Google, said that the investments in renewable energy make “business sense,” citing inexpensive prices as a major factor. In the third quarter of 2018, corporate buyers of renewable projects, led by tech companies, experienced this largest single-quarter surge in purchase of large-scale solar projects, growing from 13 percent to 15 percent of the market, according to Wood Mackenzie.

Since 2010, Google has signed more than 30 solar and wind projects across the Americas and Europe, making it the largest corporate purchaser of renewable energy. The Taiwan project is not the first Google solar venture to be built in an unusual or difficult location. Google buys power from a project located in Chile’s infamously remote Atacama Desert, a place Hanna referred to as “one of the driest places on Earth.” The EL Romero Solar PV Plant has supplied clean energy that is equivalent to 240,000 homes and is the largest solar plant in Latin America, and one of the largest plants in the world.

In January, Google announced that in line with its construction of new data centers — which are energy-intensive operations — in Tennessee and Alabama, it is purchasing 413 megawatts of energy output from 1.6 million solar panels across several new solar power plants being constructed by NextEra Energy, Invenergy and the Tennessee Valley Authority. Two 150-megawatt solar projects in the TVA deal will be the largest ever for Google.

The 10-megawatt project in Taiwan — for which Google has partnered with Diode Ventures, Taiyen Green Energy, J&V Energy and New Green Power — is on track to be completed in 2020 and comes at a time when Google is investing in data centers in Taiwan.

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