Ever since last year, nothing has grabbed economists' attention as much as the whipsawing evolution of the US-China trade war. Just last week, the IMF downgraded its global growth forecast for 2020, citing trade and geopolitical tensions.
But economic forecasters are misunderstanding the primary cause of the current global slowdown, which means that they'll also miss what's coming next.
In hindsight, it's clear that actual global industrial production growth started slowing at the end of 2017. In other words, the year-over-year pace of increase in the world's total industrial output began a sustained decline in late 2017. That's the definition of a global industrial slowdown.
Most analysts focus on the global purchasing managers' index (PMI) data for their read on global growth because it's published each month about a month and a half before the actual production data. While the global PMI generally has a positive correlation with global industrial production growth, it doesn't measure actual industrial production, as it's based on a survey of purchasing executives about conditions facing their companies. It's really a proxy for industrial production growth, which measures real output for all companies within the manufacturing, mining and utilities industries.
In this case, while the global manufacturing PMI also started easing at the end of 2017, its decline didn't become evident until a few months into 2018, when the sustained nature of the downturn became increasingly difficult to dismiss as meaningless "noise." Coincidentally, that's just about when President Trump began his trade war, slapping tariffs on washing machines and steel and aluminum imports. Because the trade war was front and center, economists thought it was to blame for the drop in PMI and global industrial growth.
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DAILY BUSINESS REPORT - Financial Updates, International Markets and Business News
Showing posts with label Donald Trump. Show all posts
Showing posts with label Donald Trump. Show all posts
October 25, 2019
June 17, 2019
Wilbur Ross Warns Not To Expect A US-China Deal At G-20 Meeting
To anyone expecting a major breakthrough at the June 28-29 Osaka G-20 meeting, Wilbur Ross has a simple message: "Don't."
Speaking to the WSJ, US Commerce Secretary Wilbur Ross sharply played down prospects of a "major" trade deal if President Trump and China’s President Xi Jinping meet at the Group of 20 summit in Japan later this month (which they very well may not as Xi has yet to commit to a meeting which would show him at a power disadvantage to Trump), but nonetheless he said he believes the two sides will ultimately get back to negotiations.
"I think the most that will come out of the G-20 might be an agreement to actively resume talks,” Ross said in a phone interview Sunday. “At the presidential level they’re not going to talk about the details of how do you enforce a trade agreement."
So what is the best case scenario? Well: a return to square one, such diplomatic relations are now well in negative territory: “The most that might come is new ground rules for discussion and some sort of schedule for when detailed technical talks might resume,” said Mr. Ross.
Read the entire article
Speaking to the WSJ, US Commerce Secretary Wilbur Ross sharply played down prospects of a "major" trade deal if President Trump and China’s President Xi Jinping meet at the Group of 20 summit in Japan later this month (which they very well may not as Xi has yet to commit to a meeting which would show him at a power disadvantage to Trump), but nonetheless he said he believes the two sides will ultimately get back to negotiations.
"I think the most that will come out of the G-20 might be an agreement to actively resume talks,” Ross said in a phone interview Sunday. “At the presidential level they’re not going to talk about the details of how do you enforce a trade agreement."
So what is the best case scenario? Well: a return to square one, such diplomatic relations are now well in negative territory: “The most that might come is new ground rules for discussion and some sort of schedule for when detailed technical talks might resume,” said Mr. Ross.
Read the entire article
May 31, 2019
"This Is A Black Swan Event": Markets Turmoil As Trump Unleashes Tariffs On Mexico "Until Illegal Immigration Stops"
Amid negotations and escalations in the process of moving USMCA through Congress, Trump has decided to go after one on America's closest trade partners: "On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed. Details from the White House to follow."
The White House warning that it will hike Mexico tariffs to 25% by October 1, if the border crisis persists, as Trump is activating a scorched earth approach whereby he will "punish" any offshore nation that he believes is transgressing, by imposing tariffs.
Meanwhile, moments after Trump's shock tweet, the Mexican deputy foreign minister Seade said that if President's threat to impose tariffs is carried out, "it would be disastrous", and Mexico would "respond strongly", adding that "we will not remain with out arms folded" before the tariff deadline "to see if it is serious."
Read the entire article
The White House warning that it will hike Mexico tariffs to 25% by October 1, if the border crisis persists, as Trump is activating a scorched earth approach whereby he will "punish" any offshore nation that he believes is transgressing, by imposing tariffs.
Meanwhile, moments after Trump's shock tweet, the Mexican deputy foreign minister Seade said that if President's threat to impose tariffs is carried out, "it would be disastrous", and Mexico would "respond strongly", adding that "we will not remain with out arms folded" before the tariff deadline "to see if it is serious."
Read the entire article
May 20, 2019
Huawei will not bow to US pressure: founder
Chinese telecoms giant Huawei is ready to deal with Washington’s crackdown and will reduce its reliance on US components, its founder told Japanese media.
President Donald Trump effectively barred Huawei from the US market on Wednesday and added it to a list which would restrict US sales to the firm amid an escalating trade war with Beijing.
“We have already been preparing for this,” Huawei founder and CEO Ren Zhengfei told a group of Japanese journalists Saturday in his first interview since Trump’s move.
Ren said Huawei would continue to develop its own components to reduce its dependence on outside suppliers.
Huawei is a rapidly expanding leader in 5G technology but remains dependent on foreign suppliers.
It buys about $67 billion worth of components each year, including about $11 billion from US suppliers, according to The Nikkei business daily.
The usually elusive Ren, 74, has come out of the shadows in recent months in the face of increasing pressure on his company.
Read the entire article
President Donald Trump effectively barred Huawei from the US market on Wednesday and added it to a list which would restrict US sales to the firm amid an escalating trade war with Beijing.
“We have already been preparing for this,” Huawei founder and CEO Ren Zhengfei told a group of Japanese journalists Saturday in his first interview since Trump’s move.
Ren said Huawei would continue to develop its own components to reduce its dependence on outside suppliers.
Huawei is a rapidly expanding leader in 5G technology but remains dependent on foreign suppliers.
It buys about $67 billion worth of components each year, including about $11 billion from US suppliers, according to The Nikkei business daily.
The usually elusive Ren, 74, has come out of the shadows in recent months in the face of increasing pressure on his company.
Read the entire article
May 13, 2019
Why One Bank Thinks That Much More Market Pain Will Be Needed To Close Any Trade Deal
Futures are sharply lower again after the weekend failed to provide any substantive evidence that the "constructive" tone suggested by both Steven Mnuchin and Liu He on Friday was present, and in fact, soundbites from both president Trump and Chinese media indicated that the latest trade war escalation may last well into 2020 without a resolution, with China potentially waiting to see if Joe Biden is be elected president, helping to resolve the trade war.
Yet while we now know how and why the trade talks unraveled so fast thanks to a detailed expose by the WSJ, which reports that "U.S. and Chinese governments both sent signals ahead of their trade talks in Washington last week that a pact was so near they would discuss the logistics of a signing ceremony" but "in a matter of days, the dynamic shifted so markedly that the Chinese deliberated whether to even show up after President Trump ordered a last-minute increase in tariffs on Chinese imports because the U.S. viewed China as reneging on previous commitments", the question remains what this means for markets.
While there have been various "hot takes" on what the latest escalation means for risk assets, with many suggesting that a "no deal" outcome potentially triggering a plunge in the S&P below 2,600 and forcing the Fed to cut rates, one of the better assessments of the future state of capital markets as a function of the ongoing trade war, comes from Bank of America's chief economist Ethan Harris, who in "Once more to the brink" writes that his "long-standing view on the trade war is that the Trump Administration wants deals and will compromise, but only after it extracts the maximum concessions." To Harris, this is a pattern of big demands and moderate concessions that we have seen play out repeatedly. And this case is no different: both the US and China want a deal, "but motivating the inevitable compromise requires some combination of market, economic and political pain."
Specifically, we have seen this framework play out in the past year in two ways:
Read the entire article
Yet while we now know how and why the trade talks unraveled so fast thanks to a detailed expose by the WSJ, which reports that "U.S. and Chinese governments both sent signals ahead of their trade talks in Washington last week that a pact was so near they would discuss the logistics of a signing ceremony" but "in a matter of days, the dynamic shifted so markedly that the Chinese deliberated whether to even show up after President Trump ordered a last-minute increase in tariffs on Chinese imports because the U.S. viewed China as reneging on previous commitments", the question remains what this means for markets.
While there have been various "hot takes" on what the latest escalation means for risk assets, with many suggesting that a "no deal" outcome potentially triggering a plunge in the S&P below 2,600 and forcing the Fed to cut rates, one of the better assessments of the future state of capital markets as a function of the ongoing trade war, comes from Bank of America's chief economist Ethan Harris, who in "Once more to the brink" writes that his "long-standing view on the trade war is that the Trump Administration wants deals and will compromise, but only after it extracts the maximum concessions." To Harris, this is a pattern of big demands and moderate concessions that we have seen play out repeatedly. And this case is no different: both the US and China want a deal, "but motivating the inevitable compromise requires some combination of market, economic and political pain."
Specifically, we have seen this framework play out in the past year in two ways:
Read the entire article
October 12, 2018
Whalen: Donald Trump Is Right About The Fed
President Donald Trump has been criticizing the Federal Open Market Committee for raising interest rates. The reaction of the US equity markets is self explanatory. But while the economist love cult in the Big Media may take umbrage at President Trump’s critique of the central bank, in fact Trump is dead right.
First, the Fed’s actions in terms of buying $4 trillion in Treasury debt and mortgage paper has badly crippled the value of the fixed income market as a measure of risk. The Treasury yield curve no longer accurately describes the term structure of interest rates or risk premiums. This means that the Treasury yield curve is useless as an indicator of or guide for policy. Nobody at the Federal Reserve Board understands this issue or cares.
Second, Operation Twist further manipulated and distorted the Treasury market. By selling short-term paper and buying long dated securities, the Fed suppressed long-term interest rates, again making indicators like the 10-year Treasury bond useless as an measure of risk. Without QE 2-3 and Operation Twist, the 10-Year Treasury would be well over 4% by now. Instead it is 3% and change and will probably rally to test 3% between now and year end.
Third is the real issuing bothering President Trump, even if he cannot find the precise words, namely liquidity. We have the illusion of liquidity in the financial markets today. Sell Side firms are prohibited by Dodd-Frank and the Volcker Rule from deploying capital in the cash equity and debt markets. All bank portfolios are now passive. No trading, no market making. There is nobody to catch the falling knife.
The only credit being extended today in the short-term markets is with collateral. There is no longer any unsecured lending between banks and, especially, non-banks. As we noted in The Institutional Risk Analyst earlier this week, there are scores of nonbank lenders in mortgages, autos and consumer unsecured lending that are ready to go belly up. Half of the non-bank mortgage lenders in the US are in default on their bank credit lines. As in 2007, the model builders at the Fed in Washington have no idea nor do they care to hear outside opinions.
Read the entire article
First, the Fed’s actions in terms of buying $4 trillion in Treasury debt and mortgage paper has badly crippled the value of the fixed income market as a measure of risk. The Treasury yield curve no longer accurately describes the term structure of interest rates or risk premiums. This means that the Treasury yield curve is useless as an indicator of or guide for policy. Nobody at the Federal Reserve Board understands this issue or cares.
Second, Operation Twist further manipulated and distorted the Treasury market. By selling short-term paper and buying long dated securities, the Fed suppressed long-term interest rates, again making indicators like the 10-year Treasury bond useless as an measure of risk. Without QE 2-3 and Operation Twist, the 10-Year Treasury would be well over 4% by now. Instead it is 3% and change and will probably rally to test 3% between now and year end.
Third is the real issuing bothering President Trump, even if he cannot find the precise words, namely liquidity. We have the illusion of liquidity in the financial markets today. Sell Side firms are prohibited by Dodd-Frank and the Volcker Rule from deploying capital in the cash equity and debt markets. All bank portfolios are now passive. No trading, no market making. There is nobody to catch the falling knife.
The only credit being extended today in the short-term markets is with collateral. There is no longer any unsecured lending between banks and, especially, non-banks. As we noted in The Institutional Risk Analyst earlier this week, there are scores of nonbank lenders in mortgages, autos and consumer unsecured lending that are ready to go belly up. Half of the non-bank mortgage lenders in the US are in default on their bank credit lines. As in 2007, the model builders at the Fed in Washington have no idea nor do they care to hear outside opinions.
Read the entire article
June 28, 2018
Lynn: "There Will Be A Financial Crash... And Trump Will Be Blamed"
I’m of the opinion that many today are throwing the “baby out with the bathwater” when they claim the conservative versus liberal (right vs. left) construct is phony, or bogus.
Conservatives have lost political ground because they have accepted the moral premises of the Political Left. However, liberals use deception to hide their real motives while, simultaneously, blackmailing conservatives by means of conservative values.
How typical was the mainstream media’s “poor immigrant children” narrative that played the emotional heartstrings of dummies everywhere, like violins.
In the immigration debate, as in the gun control polemic, liberals don’t actually care for the children; at least not in the ways they profess. They instead callously use the “children” as a means to consolidate their political power.
This explains why liberals never rejoiced for the offspring of lawless invaders when Trump signed the executive order to keep illegal immigrant families together. Instead, they claimed Trump “caved” before the [manufactured] “humanitarian and political crisis”. It’s also why children still attend schools in gun-free zones, while anti-gun protester David Hogg is protected by armed guards; because he’s more important than the other children now.
Read the entire article
Conservatives have lost political ground because they have accepted the moral premises of the Political Left. However, liberals use deception to hide their real motives while, simultaneously, blackmailing conservatives by means of conservative values.
How typical was the mainstream media’s “poor immigrant children” narrative that played the emotional heartstrings of dummies everywhere, like violins.
In the immigration debate, as in the gun control polemic, liberals don’t actually care for the children; at least not in the ways they profess. They instead callously use the “children” as a means to consolidate their political power.
This explains why liberals never rejoiced for the offspring of lawless invaders when Trump signed the executive order to keep illegal immigrant families together. Instead, they claimed Trump “caved” before the [manufactured] “humanitarian and political crisis”. It’s also why children still attend schools in gun-free zones, while anti-gun protester David Hogg is protected by armed guards; because he’s more important than the other children now.
Read the entire article
May 4, 2018
US-China Trade Talks End Without A Deal After Trump Hikes Deficit Cut Demand
Moments ago, the US trade delegation led by Treasury Sec. Steven Mnuchin, and which included Commerce Sec. Wilbur Ross, US Trade Rep. Robert Lighthizer, and White House trade adviser Peter Navarro, left China after two days of U.S.-China trade discussions ended on Friday without a concrete deal, only an agreement to keep on talking.
On Friday afternoon, China’s official Xinhua News Agency reported that both sides reached a consensus on some trade issues, without providing details. More importantly, they acknowledged major disagreements on some matters and will continue communicating to work toward making more progress.
The biggest surprise, according to the FT, is that heading into the talks the US delegation asked China to cut the bilateral trade deficit by $200BN by 2020, reduce tariffs and cut subsidies for emerging industries, according to a document seen by the Financial Times.
The surprise is that the revised $200BN target is already double the $100BN amount that President Trump demanded just two months ago be wiped from last year’s $337BN US deficit in goods and services. According to the document, the US aimed to cut the deficit by $100bn in the year beginning June 1, and by a further $100bn between June 2019 and May 2020.
Some more details on the list of US demands from the WSJ:
Read the entire article
On Friday afternoon, China’s official Xinhua News Agency reported that both sides reached a consensus on some trade issues, without providing details. More importantly, they acknowledged major disagreements on some matters and will continue communicating to work toward making more progress.
The biggest surprise, according to the FT, is that heading into the talks the US delegation asked China to cut the bilateral trade deficit by $200BN by 2020, reduce tariffs and cut subsidies for emerging industries, according to a document seen by the Financial Times.
The surprise is that the revised $200BN target is already double the $100BN amount that President Trump demanded just two months ago be wiped from last year’s $337BN US deficit in goods and services. According to the document, the US aimed to cut the deficit by $100bn in the year beginning June 1, and by a further $100bn between June 2019 and May 2020.
Some more details on the list of US demands from the WSJ:
Read the entire article
April 17, 2018
Trader: Why Trump Is On Track To Win The "Currency Devaluation Game"
Yesterday morning, Trump raised may eyebrows with his tweet accusing China and Russia of "unacceptable" currency devaluation: after all it was Trump's own policies that sent the ruble reeling in the past month, while the Chinese yuan was as its highest against the dollar since the August 2015 devaluation.
Still, for at least one trader - former Lehman employee and current Bloomberg macro commentator Mark Cudmore - Trump's FX tweet was more 4D chess and less clueless economist, and suggests that Trump is, in fact, on track to win the currency devaluation game. He explains why in his latest macro view note:
Trump on Track to Win the Currency Devaluation Game
Trump’s confusing Monday FX-related tweet emphasized his desire for a weak dollar. He’s likely to get his wish in the long run, even if he’s already seen more greenback depreciation than growth and interest rates would have warranted in isolation.
President Trump tweeted that “Russia and China are playing the Currency Devaluation game as the U.S. keeps raising rates. Not acceptable!”
The yuan has climbed 9.5% against the dollar in the past year. The ruble has fallen 7.5% versus the dollar this month, but only because of U.S. sanctions. Despite that violent Trump-prompted correction, Russia’s currency has still gained versus the dollar since he won the presidential election in November 2016.
Read the entire article
Still, for at least one trader - former Lehman employee and current Bloomberg macro commentator Mark Cudmore - Trump's FX tweet was more 4D chess and less clueless economist, and suggests that Trump is, in fact, on track to win the currency devaluation game. He explains why in his latest macro view note:
Trump on Track to Win the Currency Devaluation Game
Trump’s confusing Monday FX-related tweet emphasized his desire for a weak dollar. He’s likely to get his wish in the long run, even if he’s already seen more greenback depreciation than growth and interest rates would have warranted in isolation.
President Trump tweeted that “Russia and China are playing the Currency Devaluation game as the U.S. keeps raising rates. Not acceptable!”
The yuan has climbed 9.5% against the dollar in the past year. The ruble has fallen 7.5% versus the dollar this month, but only because of U.S. sanctions. Despite that violent Trump-prompted correction, Russia’s currency has still gained versus the dollar since he won the presidential election in November 2016.
Read the entire article
April 5, 2018
It's The Trump Slump - But David Stockman Says "Don't Blame The Donald!"
The are few snarkier defenders of the current rotten financial status quo than Ben White of Politico's Money Morning. So it's not surprising that he is out this week with the latest Trumb-o-phobe meme from Swamp Dweller's Central.
To wit, the renewed stock market swoon is purportedly all the Donald's fault owing to his unhinged tweet storms, protectionist trade initiatives and attacks on the casino's sacred cow of the moment, Amazon:
WELCOME TO THE TRUMP SLUMP - President Donald Trump is killing his own stock market rally. The president's tweet storm attacking Amazon and his protectionist trade actions against China and other nations helped crush the stock market on Monday with the Dow falling over 700 points in late afternoon trade before closing down 458, or close to 2 percent.
The tech-heavy Nasdaq fell even further, led by a five percent drop in Amazon after the president ripped the company over its delivery deals with the United States Postal Service. The Dow, Nasdaq and S&P are all now down for the year. The Dow has plunged 11 percent since its all-time high of 26,616 on Jan. 26, entering official correction territory.
Traders, money managers and economists on Monday laid much of the blame for recent declines on Trump, who spent most of 2017 bragging on a near daily basis about the massive run-up in stock prices that followed his election and the passage of sweeping corporate tax cuts.
The above is just unadulterated rubbish, of course. It's a tribute to the mindless anti-Trump bias that dominates the Imperial City press and the context-free Recency Bias that passes for financial analysis.
On at least this matter, the Donald is definitely not guilty because he hasn't been around nearly long enough to take the blame or the praise for anything related to the economy. The phony stock market boom has been gestating for three decades owing to central bank monetary madness; the up-leg since election day reflects nothing more than the final phase of an horribly metastasized financial bubble that has now reached its sell-by date.
Read the entire article
To wit, the renewed stock market swoon is purportedly all the Donald's fault owing to his unhinged tweet storms, protectionist trade initiatives and attacks on the casino's sacred cow of the moment, Amazon:
WELCOME TO THE TRUMP SLUMP - President Donald Trump is killing his own stock market rally. The president's tweet storm attacking Amazon and his protectionist trade actions against China and other nations helped crush the stock market on Monday with the Dow falling over 700 points in late afternoon trade before closing down 458, or close to 2 percent.
The tech-heavy Nasdaq fell even further, led by a five percent drop in Amazon after the president ripped the company over its delivery deals with the United States Postal Service. The Dow, Nasdaq and S&P are all now down for the year. The Dow has plunged 11 percent since its all-time high of 26,616 on Jan. 26, entering official correction territory.
Traders, money managers and economists on Monday laid much of the blame for recent declines on Trump, who spent most of 2017 bragging on a near daily basis about the massive run-up in stock prices that followed his election and the passage of sweeping corporate tax cuts.
The above is just unadulterated rubbish, of course. It's a tribute to the mindless anti-Trump bias that dominates the Imperial City press and the context-free Recency Bias that passes for financial analysis.
On at least this matter, the Donald is definitely not guilty because he hasn't been around nearly long enough to take the blame or the praise for anything related to the economy. The phony stock market boom has been gestating for three decades owing to central bank monetary madness; the up-leg since election day reflects nothing more than the final phase of an horribly metastasized financial bubble that has now reached its sell-by date.
Read the entire article
March 29, 2018
Trump: "Amazon Pays Little Or No Taxes, Puts Thousands Of Retailers Out Of Business"
If President Trump's tweet was not enough, White House spokesperson Raj Shah has just confirmed that tax policies need to catch up to Amazon, and President Trump would support tax changes aimed at leveling the playing field, which now favors the online retailer as Amazon has advantage over brick and mortar stores.
“Right now, there is no Internet sales tax and as a result companies like Amazon can buy and sell goods without having to pay basic retail taxes,”
AMZN is extending its losses on these latest headlines...
As we detailed earlier, the main driver behind yesterday's FANG plunge, was a report in Axios, according to which it was not Facebook that Trump wants to go after, but rather Amazon:
“He’s obsessed with Amazon,” a source told Axios. "Obsessed", and added that Trump has allegedly talked about changing Amazon’s tax treatment because he’s worried about mom-and-pop retailers being put out of business. Another Axios source said that POTUS has "wondered aloud if there may be any way to go after Amazon with antitrust or competition law."
Trump’s deep-seated antipathy toward Amazon surfaces when discussing tax policy and antitrust cases. The president would love to clip CEO Jeff Bezos’ wings. But he doesn’t have a plan to make that happen.
Read the entire article
“Right now, there is no Internet sales tax and as a result companies like Amazon can buy and sell goods without having to pay basic retail taxes,”
AMZN is extending its losses on these latest headlines...
As we detailed earlier, the main driver behind yesterday's FANG plunge, was a report in Axios, according to which it was not Facebook that Trump wants to go after, but rather Amazon:
“He’s obsessed with Amazon,” a source told Axios. "Obsessed", and added that Trump has allegedly talked about changing Amazon’s tax treatment because he’s worried about mom-and-pop retailers being put out of business. Another Axios source said that POTUS has "wondered aloud if there may be any way to go after Amazon with antitrust or competition law."
Trump’s deep-seated antipathy toward Amazon surfaces when discussing tax policy and antitrust cases. The president would love to clip CEO Jeff Bezos’ wings. But he doesn’t have a plan to make that happen.
Read the entire article
March 5, 2018
Trump Warns "It's Time For Change" In The Countries Responsible For America's Trade Deficit
Update: President Trump is showing absolutely zero signs of backing away from his trade tariffs plan and has just tweeted...
"We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. "
Which as the chart below shows is true. Trump has a warning...
"Sorry, it’s time for a change! MAKE AMERICA GREAT AGAIN!"
While establishment globalists doth protest loudly of the Steel (and Aluminum) impositions that President Trump is proclaiming, it appears their memories of recent historic reality is gravely absent (or willfully being ignored).
On Friday, Peter Navarro, Trump's newly reincarnated foreign trade advisor, made clear that this is not a 'first strike' in the 'trade war', this is America's retaliation to years of abuse:
“I don’t believe any country in the world is going to retaliate for the simple reason we are the most lucrative and biggest market in the world,” Navarro told Fox News Friday.
“They know they’re cheating us. All we’re doing is standing up for ourselves.”
One look at the record US trade deficit, with both the entire world, (and more specifically China alone and Europe alone), and one could make the case that he is correct.
Read the entire article
"We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. "
Which as the chart below shows is true. Trump has a warning...
"Sorry, it’s time for a change! MAKE AMERICA GREAT AGAIN!"
While establishment globalists doth protest loudly of the Steel (and Aluminum) impositions that President Trump is proclaiming, it appears their memories of recent historic reality is gravely absent (or willfully being ignored).
On Friday, Peter Navarro, Trump's newly reincarnated foreign trade advisor, made clear that this is not a 'first strike' in the 'trade war', this is America's retaliation to years of abuse:
“I don’t believe any country in the world is going to retaliate for the simple reason we are the most lucrative and biggest market in the world,” Navarro told Fox News Friday.
“They know they’re cheating us. All we’re doing is standing up for ourselves.”
One look at the record US trade deficit, with both the entire world, (and more specifically China alone and Europe alone), and one could make the case that he is correct.
Read the entire article
February 1, 2018
10 Amazing Facts About America’s Economic Recovery From Trump’s State Of The Union Address
If the U.S. economy continues to surge under President Trump, I may need to change the name of my website. In December 2009 I started “The Economic Collapse”, and it was quite an appropriate title at the time. In fact, the 10 years immediately preceding the Trump presidency was one of the worst stretches for the U.S. economy in our entire history. But now things are changing. Manufacturers are coming back to America, unemployment is falling, and the stock market has been soaring.
During his State of the Union address, President Trump called this “our new American moment”, and at this time it is hard for anyone to disagree with him. Things are definitely better for ordinary Americans than they were under previous administrations, and even some of Trump’s most hardcore critics are starting to come around.
The Democrats were hoping to use Trump’s speech to launch a new wave of attacks against him, but that massively backfired. The State of the Union address may have been Trump’s best performance to date, and even a CBS News poll found that his speech got an astounding 75 percent approval rating.
No matter how Democrats try to spin things, the truth is that there is a lot of good economic news right now. The following are 10 amazing facts about America’s economic recovery that come directly from the transcript of Trump’s State of the Union address…
Read the entire article
During his State of the Union address, President Trump called this “our new American moment”, and at this time it is hard for anyone to disagree with him. Things are definitely better for ordinary Americans than they were under previous administrations, and even some of Trump’s most hardcore critics are starting to come around.
The Democrats were hoping to use Trump’s speech to launch a new wave of attacks against him, but that massively backfired. The State of the Union address may have been Trump’s best performance to date, and even a CBS News poll found that his speech got an astounding 75 percent approval rating.
No matter how Democrats try to spin things, the truth is that there is a lot of good economic news right now. The following are 10 amazing facts about America’s economic recovery that come directly from the transcript of Trump’s State of the Union address…
Read the entire article
January 31, 2018
US Futures Rebound After Trump's SOTU Speech; Dollar Slide Resumes Ahead Of Fed
S&P futures rebounded 0.3% from the worst two-day selloff since Sept. 2016, and European and Asian stocks rose modestly from early weakness after Trump's SOTU address did not deliver any major surprises, while traders were cautious ahead of the Fed’s last rate decision under Janet Yellen’s leadership expected to lean on the hawkish side.
On Tuesday, U.S. stocks tumbled amid concerns about a recent sharp rally in bond yields. Health-care shares slumped after Amazon.com, Berkshire Hathaway and JPMorgan agreed to collaborate on ways to offer health-care services to their employees; drugmakers will be in the spotlight again as Trump says prescription drug prices will come down "substantially."
Despite the recent drop, it’s been a stellar month for stock markets, with major gains across most major gauges that were followed this week by the MSCI All-Country World Index’s biggest two-day slide since September 2016. Investors will now focus on Wednesday’s Federal Reserve rate decision, the ongoing earnings season and more big economic data points to see if the uptrend can resume.
On Tuesday night, Donald Trump sought to connect his presidency to the nation’s prosperity in his first State of the Union address, arguing the U.S. has arrived at a “new American moment” of wealth and opportunity. Trump vowed the “era of economic surrender is over,” but stopped short of naming the targets of his efforts to narrow the U.S.’s ballooning trade deficit, which prevented a major market reaction.
Trump also stated the US is finally seeing rising wages and that unemployment claims have hit a 45-year low. Trump also called on Congress to produce a bill that generates at least USD 1.5tln for new infrastructure investment and said that they will work to fix bad trade deals.
Read the entire article
On Tuesday, U.S. stocks tumbled amid concerns about a recent sharp rally in bond yields. Health-care shares slumped after Amazon.com, Berkshire Hathaway and JPMorgan agreed to collaborate on ways to offer health-care services to their employees; drugmakers will be in the spotlight again as Trump says prescription drug prices will come down "substantially."
Despite the recent drop, it’s been a stellar month for stock markets, with major gains across most major gauges that were followed this week by the MSCI All-Country World Index’s biggest two-day slide since September 2016. Investors will now focus on Wednesday’s Federal Reserve rate decision, the ongoing earnings season and more big economic data points to see if the uptrend can resume.
On Tuesday night, Donald Trump sought to connect his presidency to the nation’s prosperity in his first State of the Union address, arguing the U.S. has arrived at a “new American moment” of wealth and opportunity. Trump vowed the “era of economic surrender is over,” but stopped short of naming the targets of his efforts to narrow the U.S.’s ballooning trade deficit, which prevented a major market reaction.
Trump also stated the US is finally seeing rising wages and that unemployment claims have hit a 45-year low. Trump also called on Congress to produce a bill that generates at least USD 1.5tln for new infrastructure investment and said that they will work to fix bad trade deals.
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September 28, 2017
The “Trump Tax Plan” - Details & Analysis
Business tax changes:
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- A 20% corporate tax rate. This is the first time Trump has publicly backed down from one of his earliest campaign promises: a 15% corporate tax rate. The budget math required for a 15% rate was too difficult, so the somewhat higher rate is the opening bid. The current statutory federal rate is 35%.
- A 25% rate for pass-through businesses. Instead of getting taxed at an individual rate for business profits, people who own their own business would pay at the pass-through rate. The plan also says it will consider rules to prevent “personal income” from being taxed at this rate. Mnuchin previously suggested there may be limitations on what types of businesses get this rate — it could apply only to goods producers and not service-oriented companies to prevent people from creating limited-liability corporations to store their assets and receive a lower rate.
- Elimination of some business deductions, industry-specific incentives, and more. There are few details, but the plan includes language regarding the “streamlining” of business tax breaks.
- A one-time repatriation tax. All overseas assets from US-owned companies would be considered repatriated and taxed at a one-time lower rate — this is designed to bring corporate profits back from overseas. Illiquid assets like real estate would be taxed at a lower rate than cash or cash equivalents, and the payments would be spread out over time. While there is no precise number in the plan, officials have indicated the rate could end up somewhere around 10%.
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June 15, 2017
Peak Economic Delusion Signals Coming Crisis
In my article 'The Trump Collapse Scapegoat Narrative Has Now Been Launched', I discussed the ongoing and highly obvious plan by globalists and international financiers to pull the plug on their fiat support for stock markets and portions of the general economy while blaming the Trump Administration (and the conservative ideal) for the subsequent crash. Numerous economic shocks and negative data which had been simmering for years before the 2016 elections are rising to the surface of the normally oblivious mainstream. This recently culminated in a surprise stock dive that stunned investors; investors that have grown used to the Dow moving perpetually upward, while the economic media immediately began connecting the entire event to Trump and the “Comey memos”, which likely do not exist.
My position according to Trump's behavior and cabinet selection is that he is aware of this agenda and is playing along. That said, there is another important issue to consider - the participation of the ignorant in helping the Ponzi con-game continue.
There is a famous investor's anecdote from Joe Kennedy, the father of John F. Kennedy, about the onset of the Great Depression – he relates that one day, just before the crash of 1929, a shoe shine boy tried to give him stock tips. He realized at that moment that when the shoe shiner is offering market tips the market is too popular for its own good. He cashed out of the market and avoided the crash that many people now wrongly assume was the “cause” of the Great Depression.
I don't know that this story is true, but if it is, it is an interesting example of peak economic delusion. We do not have quite the same investment environment as existed in those days. Today, algorithmic computers dominate the functions of the stock market, chasing headlines and each other, but this does not and will not save the economy from another depression. In fact, all they have done along with substantial aid from central banks is artificially elevate equities while every other fiscal indicator implodes.
Read the entire article
My position according to Trump's behavior and cabinet selection is that he is aware of this agenda and is playing along. That said, there is another important issue to consider - the participation of the ignorant in helping the Ponzi con-game continue.
There is a famous investor's anecdote from Joe Kennedy, the father of John F. Kennedy, about the onset of the Great Depression – he relates that one day, just before the crash of 1929, a shoe shine boy tried to give him stock tips. He realized at that moment that when the shoe shiner is offering market tips the market is too popular for its own good. He cashed out of the market and avoided the crash that many people now wrongly assume was the “cause” of the Great Depression.
I don't know that this story is true, but if it is, it is an interesting example of peak economic delusion. We do not have quite the same investment environment as existed in those days. Today, algorithmic computers dominate the functions of the stock market, chasing headlines and each other, but this does not and will not save the economy from another depression. In fact, all they have done along with substantial aid from central banks is artificially elevate equities while every other fiscal indicator implodes.
Read the entire article
May 29, 2017
The Next Stock Market Crash Will Be Blamed On Donald Trump But It Will Be The Federal Reserve’s Fault Instead
A stock market crash is coming, and the Democrats and the mainstream media are going to blame Donald Trump for it even though it won’t be his fault. The truth is that we were headed for a major financial crisis no matter who won the election. The Dow Jones Industrial Average is up a staggering 230 percent since the lows of 2009, and no stock market rally in our history has ever reached the 10 year mark without at least a 20 percent downturn. At this point stocks are about as overvalued as they have ever been, and every other time we have seen a bubble of this magnitude a historic stock market crash has always followed. Those that are hoping that this time will somehow be different are simply being delusional.
Since November 7th, the Dow is up by about 3,000 points. That is an extremely impressive rally, and President Trump has been taking a great deal of credit for it.
But perhaps he should not have been so eager to take credit, because what goes up must come down. The following is an excerpt from a recent Vanity Fair article…
According to Douglas Ramsay, chief investment officer of the Leuthold Group, Trump administration officials will come to regret gloating about the market’s performance. That’s because Trump enters the White House during one of the most richly valued stock markets in U.S. history. The last president to come in at such valuations was George W. Bush, and the dot-com bubble burst soon afterward. Bill Clinton began his second term in a more overvalued stock market in 1997, and exited unscathed. But if his timing were different by just a year, he would have been blamed for the early-aughts market crash.
This stock market bubble was not primarily created by Barack Obama, Donald Trump or any other politician. Rather, the Federal Reserve was primarily responsible for creating it by pushing interest rates all the way to the floor during the Obama era and by flooding the financial system with hot money during several stages of quantitative easing.
Read the entire article
Since November 7th, the Dow is up by about 3,000 points. That is an extremely impressive rally, and President Trump has been taking a great deal of credit for it.
But perhaps he should not have been so eager to take credit, because what goes up must come down. The following is an excerpt from a recent Vanity Fair article…
According to Douglas Ramsay, chief investment officer of the Leuthold Group, Trump administration officials will come to regret gloating about the market’s performance. That’s because Trump enters the White House during one of the most richly valued stock markets in U.S. history. The last president to come in at such valuations was George W. Bush, and the dot-com bubble burst soon afterward. Bill Clinton began his second term in a more overvalued stock market in 1997, and exited unscathed. But if his timing were different by just a year, he would have been blamed for the early-aughts market crash.
This stock market bubble was not primarily created by Barack Obama, Donald Trump or any other politician. Rather, the Federal Reserve was primarily responsible for creating it by pushing interest rates all the way to the floor during the Obama era and by flooding the financial system with hot money during several stages of quantitative easing.
Read the entire article
April 19, 2017
Goldman Pours Cold Water On Trump's Fiscal Stimulus Plan
Goldman Sachs' Chief US Political Economist Alec Phillips writes that tax reform faces a risk of failure, but tax cuts remain likely... in 2018 and investors need to stay realistic about the impact of fiscal stimulus.
President Trump’s campaign proposals initially raised expectations of several forms of fiscal stimulus, driving investor optimism on both infrastructure spending and various elements of tax reform. However, we expect only tax cuts to have a meaningful effect on growth over the next couple of years. Three risks are behind this view: tax reform failure, fiscal constraints, and delayed enactment.
Debates, delays, distractions
First, tax reform faces a real risk of failure. If Republicans pursue revenue-neutral tax reform, they are likely to encounter the same challenges they encountered in passing their health legislation. Inclusion of controversial proposals like the border-adjusted tax (BAT) or even the repeal of corporate interest expense deductibility, for example, could sink the effort. Views on these issues do not follow traditional party lines, which could easily lead to some Republican opposition (we have already seen significant opposition to the BAT, for example). With few if any Democratic lawmakers likely to vote for the tax bill, Republicans would need nearly unanimous support from their own party. Thus, while revenue-neutral tax reform might be preferable from a policy perspective, imposing this restriction would lower the odds of enactment by next year.
In light of the challenges tax reform faces, we believe that President Trump, who did not emphasize revenue-neutrality during the campaign, is likely to eventually endorse more limited reforms that result in a net tax cut. However, the size of such a cut would be limited by fiscal constraints; centrist Republican lawmakers seem especially likely to balk at large tax cuts that would eventually require deep spending cuts to maintain fiscal sustainability. Dynamic scoring and other budget accounting strategies might provide several hundred billion dollars’ worth of room for a tax cut in 10-year budget projections, but alone would allow for only a very modest cut. Our current expectation is a tax cut of $1.75tn over ten years, taking effect in 2018.
Read the entire article
President Trump’s campaign proposals initially raised expectations of several forms of fiscal stimulus, driving investor optimism on both infrastructure spending and various elements of tax reform. However, we expect only tax cuts to have a meaningful effect on growth over the next couple of years. Three risks are behind this view: tax reform failure, fiscal constraints, and delayed enactment.
Debates, delays, distractions
First, tax reform faces a real risk of failure. If Republicans pursue revenue-neutral tax reform, they are likely to encounter the same challenges they encountered in passing their health legislation. Inclusion of controversial proposals like the border-adjusted tax (BAT) or even the repeal of corporate interest expense deductibility, for example, could sink the effort. Views on these issues do not follow traditional party lines, which could easily lead to some Republican opposition (we have already seen significant opposition to the BAT, for example). With few if any Democratic lawmakers likely to vote for the tax bill, Republicans would need nearly unanimous support from their own party. Thus, while revenue-neutral tax reform might be preferable from a policy perspective, imposing this restriction would lower the odds of enactment by next year.
In light of the challenges tax reform faces, we believe that President Trump, who did not emphasize revenue-neutrality during the campaign, is likely to eventually endorse more limited reforms that result in a net tax cut. However, the size of such a cut would be limited by fiscal constraints; centrist Republican lawmakers seem especially likely to balk at large tax cuts that would eventually require deep spending cuts to maintain fiscal sustainability. Dynamic scoring and other budget accounting strategies might provide several hundred billion dollars’ worth of room for a tax cut in 10-year budget projections, but alone would allow for only a very modest cut. Our current expectation is a tax cut of $1.75tn over ten years, taking effect in 2018.
Read the entire article
February 14, 2017
What Will Trump Do About The Central-Bank Cartel?
The US is by far the biggest economy in the world. Its financial markets — be it equity, bonds or derivatives markets — are the largest and most liquid. The Greenback is the most important transaction currency. Many currencies in the world — be it the euro, the Chinese renminbi, the British pound or the Swiss franc — have actually been built upon the US dollar.
The world is effectively on a US-dollar-standard, and the US Federal Reserve (Fed) has risen to the unofficial status of the world’s central bank. The rise of the Greenback has to a large extent been propelled by international banking, which has basically “dollarized” in terms of its lending and issuing activities.
The Fed Sets Global Policy
The Fed’s policy not only determines credit and liquidity conditions in the US, but does so in many financial markets around the world as well. For instance, movements of long-term US interest rates regularly have effects on credit and equity markets in, say, Europe and Asia. The Fed’s actions are the blueprint for monetary policymaking in many countries around the world.
The graph shows the Fed’s supply of newly created US dollar liquidity sent to other central banks around the world. It also shows the so-called “euro cross currency basis swap,” which can be interpreted as a “stress indicator”: If it drops into negative territory, it means that euro banks find it increasingly difficult to obtain US dollar credit in the free market place. The Fed’s injection of new US dollar balances into the financial system has helped to reduce the euro currency basis swap. Since late 2016, however, it has started to venture again into negative territory — potentially signaling that euro banks are again heading for trouble.
Read the entire article
The world is effectively on a US-dollar-standard, and the US Federal Reserve (Fed) has risen to the unofficial status of the world’s central bank. The rise of the Greenback has to a large extent been propelled by international banking, which has basically “dollarized” in terms of its lending and issuing activities.
The Fed Sets Global Policy
The Fed’s policy not only determines credit and liquidity conditions in the US, but does so in many financial markets around the world as well. For instance, movements of long-term US interest rates regularly have effects on credit and equity markets in, say, Europe and Asia. The Fed’s actions are the blueprint for monetary policymaking in many countries around the world.
The graph shows the Fed’s supply of newly created US dollar liquidity sent to other central banks around the world. It also shows the so-called “euro cross currency basis swap,” which can be interpreted as a “stress indicator”: If it drops into negative territory, it means that euro banks find it increasingly difficult to obtain US dollar credit in the free market place. The Fed’s injection of new US dollar balances into the financial system has helped to reduce the euro currency basis swap. Since late 2016, however, it has started to venture again into negative territory — potentially signaling that euro banks are again heading for trouble.
Read the entire article
January 31, 2017
Is Trump About To Hammer The Federal Reserve?
Back in October of 2015 I wrote a post titled De-Fang the Federal Reserve – The Conspiracy on How the Fed is Being Integrated into the Multilateral Framework. It served as a summary of how the Fed acted as the global central bank almost from its inception in 1913 and how this would change in the lead up to a multilateral monetary framework.
The Trump mandate on “America First” is being misconstrued as an isolationist policy but is in fact the cover for integrating America into the emerging multilateral. This is difficult to see for most because it is hard to reconcile the idea of an isolationist mandate with that of a multilateral mandate. It appears to most that America is dumping the globalist script when in fact the script is in fact the same only the characters and events have changed. The theme remains the same.
This is one of the main reasons why the media is in fact pushing this isolationist script. It prevents Americans from accurately deciphering the shift towards the multilateral. The opposition to the Federal Reserve and the establishment was built up through alternative media to the point where the masses are now clamoring for the changes which in fact were always required in order to make the multilateral transition.
The most obvious point is a changing role for the Federal Reserve. In a multilateral world it will no longer be required to serve the function as an international central bank providing access to a reserve asset. The Fed will be transformed to focus on domestic concerns while the international mandates begin to transition to an institution like the International Monetary Fund and the SDR asset.
Read the entire article
The Trump mandate on “America First” is being misconstrued as an isolationist policy but is in fact the cover for integrating America into the emerging multilateral. This is difficult to see for most because it is hard to reconcile the idea of an isolationist mandate with that of a multilateral mandate. It appears to most that America is dumping the globalist script when in fact the script is in fact the same only the characters and events have changed. The theme remains the same.
This is one of the main reasons why the media is in fact pushing this isolationist script. It prevents Americans from accurately deciphering the shift towards the multilateral. The opposition to the Federal Reserve and the establishment was built up through alternative media to the point where the masses are now clamoring for the changes which in fact were always required in order to make the multilateral transition.
The most obvious point is a changing role for the Federal Reserve. In a multilateral world it will no longer be required to serve the function as an international central bank providing access to a reserve asset. The Fed will be transformed to focus on domestic concerns while the international mandates begin to transition to an institution like the International Monetary Fund and the SDR asset.
Read the entire article
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