Escobar: China Taking The Long Road To Solve The Petro-Yuan Puzzle

Few geoeconomic game-changers are more spectacular than yuan-denominated future crude oil contracts – especially when set up by the largest importer of crude on the planet.

And yet Beijing’s media strategy seems to have consisted in substantially play down the official launch of the petro-yuan at the Shanghai International Energy Exchange.

Still, some euphoria was in order. Brent Crude soared to $71 a barrel for the first time since 2015. West Texas Intermediate (WTI) reached the highest level in three years at $66.55 a barrel; then retreated to $65.53.

A series of petro-yuan “firsts” include the first time overseas investors are able to access a Chinese commodity market. Significantly, US dollars will be accepted as deposit and for settlement. In the near future, a basket of currencies will also be accepted as deposit.

Does the launch of the petro-yuan represent the ultimate deathblow to the petrodollar – and the birth of a completely new set of rules? Not so fast. That may take years, and depends on many variables, the most important of which will be China’s capacity to bend, tweak and ultimately rule the global oil market.

As the yuan progressively reaches full consolidation in trade settlement, the petro-yuan threat to the US dollar, inscribed in a complex, long-term process, will disseminate the Holy Grail: crude oil futures contracts priced in yuan fully convertible into gold.

That means China’s vast array of trade partners will be able to convert yuan into gold without having to keep funds in Chinese assets or turn them into US dollars. Exporters facing the wrath of Washington, such as Russia, Iran or Venezuela, may then avoid US sanctions by trading oil in yuan convertible to gold. Iran and Venezuela, for instance, would have no problems redirecting tankers to China in order to sell directly in the Chinese market – if that’s what it takes.

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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.

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Tech Shares Tumble Again as Regulatory Risks Rattle Investors

Technology stocks are suffering one of their worst beatings in years, as investors reassess a sector that has been considered the growth engine of the global economy but now faces the prospect of greater regulatory scrutiny.

The tech-heavy Nasdaq Composite Index fell 2.9% Tuesday. That selloff carried over to the broader market, where the S&P 500 index slumped 1.7%. The Dow Jones Industrial Average fell 1.4%, giving back some of Monday’s 2.8% rebound.

U.S. Treasury yields also declined. Analysts said that reflected in part a move by some investors to reduce risk at the end of the quarter by selling stocks and putting that cash into bonds. Bond prices rise when yields fall.

But tech shares were hit the hardest, dragging down the broader market in the final hour of trading. A series of recent developments pointed to more government oversight of the industry.

Facebook Chief Executive Mark Zuckerberg is planning to testify before Congress about the social-media company’s privacy and data-use standards, according to people familiar with the matter. The company’s shares fell 4.9% on Tuesday and are down 15% this month over concerns about its handling of user data, on track for its worst monthly decline since 2012.

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'PetroYuan' Futures Launch With A Bang, Volume Dominates Brent As Big Traders Step In

As we detailed previously, China’s yuan-denominated crude oil futures launched overnight in Shanghai with 62,500 contracts traded in aggregate, meaning over 62 million barrels of oil changed hands for a notional volume around 27 billion yuan (over $4 billion).

As OilPrice.com's Tsvetana Paraskova notes, Glencore, Trafigura, and Freepoint Commodities were among the first to buy the new contract, Reuters reports.

After an initial surge in volume that outpaced overnight transactions in global benchmark Brent crude in London, trading tapered off toward the end of the session.

Within minutes of the launch, the price had gone up to almost US$70.85 (447 yuan) from a starting price of US$69.94 (440.4 yuan) per barrel. The overall price jump for the short trading session came in at 3.92 percent.

Many awaited the launch eagerly, seeking to tap China’s bustling commodity markets, although doubts remain whether the Shanghai futures contract will be able to become another international oil benchmark. These doubts center on the fact that China is not a market economy, and the government is quick to interfere in the workings of the local commodity markets on any suspicion of a bubble coming.

To prevent such a bubble in oil, the authorities made sure the contract will trade within a set band of 5 percent on either side, with 10 percent on either side for the first trading day. Margin has been set at 7 percent. Storage costs for the crude are higher than the international average in hopes of discouraging speculators.

As a result of these tight reins on the new market segment, some analysts believe international investors would be discouraged to tap the Shanghai oil futures. If the first day of trading is any indication, however, this is not the case, at least not for large commodity trading firms.

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US, China Said To Near Deal To Avert "Tit-For-Tat" Trade War

With its long-anticipated petroyuan contract only hours old, senior government officials in Beijing are reportedly working with the US to try and reach an agreement that would stave off a tit-for-tat trade war between the world's two largest economies, according to the Financial Times and Wall Street Journal.

Treasury Secretary Steve Mnuchin along with trade representative Robert Lighthizer on one side,  and Vice Premier Liu He, effectively China's economy czar and President Xi Jinping' "real second-in-command" on the other, have been negotiating behind the scenes, according to the FT.

And although nothing has been finalized, Liu has assured Mnuchin that China would cave on several US demands, including allowing foreign investment in Chinese securities firms and offering to buy more semiconductors from US semiconductor firms, the FT reported. There's also been talks that China could loosen restrictions on foreign investment in manufacturing, telecom, medical and education.

Mnuchin, who is reportedly considering whether he should plan a trip to Beijing to expedite the negotiations, said Sunday after the US and South Korea reached a trade deal to exempt the South from US aluminum and steel tariffs that he was optimistic the US might reach a similar agreement with China. The Treasury secretary has reportedly handed Liu a list of US priorities, including loosening restrictions on US auto imports.

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"Sea Of Red" - China Stocks, Commodities Crash As Trade Wars Escalate

Following the US imposition of 25% duties on China produce worth at least $50 billion including items in aerospace, information and communication technology and machinery, China has announced plans of reciprocal tariffs on $3 billion of U.S. imports.

China plans to add 15% tariffs on U.S. steel pipes, fruit, wine and other products, the Ministry of Commerce says in a statement, and also plans to add 25% tariffs on pork and recycled aluminum.

Bloomberg provides some more details on the list of goods China will be targetting...

1) fresh fruit, dried fruit and nuts

2) wine

3) denatured ethyl alcohol

4) American ginseng

5) seamless steel pipes

6) pork and pork products

7) aluminum scrap

Who knew America exports ginseng to China?

In the statement, China urged the U.S. to resolve the trade dispute via dialogue.

The reactions are ugly.

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Is China Days Away From Killing The Petrodollar?

Not long ago, there was a popular joke in China that went something like, “Who is Xi Jinping?”

The answer was, “The husband of Peng Liyuan,” the famous singer Xi is married to.

Today, Xi is China’s president. He leads 1.4 billion people. And he’ll likely be the most powerful person in the world soon.

As I mentioned last Wednesday, Trump’s new steel and aluminum tariffs are part of a larger, escalating battle between the US and China.

China is rapidly displacing the US as the dominant global power. This shift is inevitable. China’s economy will be twice as large as the US economy by 2030.

This leaves the US with limited options…

It could kick back and let China displace it as the most powerful country in the world.

It could start a military war with China.

And it could push the current trade battle into an all-out economic war against China.

I think a full-blown economic war is the most likely. Under President Trump, it’s all but certain.

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Russia Is Hoarding Gold At The Fastest Pace In 12 Years

Russia is adding gold to its reserves at the fastest pace in 12 years ...and dumping US Treasuries at the fastest pace since 2011.

The Central Bank of Russia (CBR) has been increasing its holdings of gold every month since March 2015. The country is currently the sixth-largest gold owner after the United States, Germany, Italy, France and China.

According to the CBR, gold reserves spiked to $455.2 billion between March 2 and 9 hitting a historic high not seen since September 2014.

“Our international reserves increased by $2.9 billion or 0.6 percent in a single week, mainly on the strength of positive re-evaluation,” said the regulator.

In January, RT notes  that Russia surpassed China, which reportedly held 1,843 tons of the precious metal at that time. Over the last 15 years, Moscow and Beijing have been aggressively accumulating gold reserves to reduce their dependence on the US dollar.

According to World Gold Council data, last year the CBR became a world leader in stockpiling gold.

The bank has more than doubled the pace of its gold purchases, statistics showed. It has been increasing Russia’s gold reserves to meet the goal set by President Vladimir Putin to make it less vulnerable to geopolitical risks. The Russian gold cache has increased by more than 500 percent since 2000.

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Six Things We Can Learn About US Plutocracy By Looking At Jeff Bezos

1. The rich rule America because of a system wherein money translates directly into political power.
Amazon has increased its spending on Washington lobbying by 400 percent in the last five years, far in excess of its competition. Bezos hasn’t been doing this to be charitable. With growing antitrust concerns, taxation to avoid, lucrative Pentagon deals to secure, and what some experts are describing as an agenda to control the underlying infrastructure of the economy, he needs Washington on his side.

2. Because money equals power and power is relative, plutocrats are naturally incentivized to keep the public poor.
Plutocrats necessarily rule such an oligarchic system as surely as kings rule a kingdom. But if everyone is king, then no one is king. If your entire empire is built on a system where money equals power, then you are necessarily incentivized to keep money out of the hands of the public while amassing as much as possible for yourself.

3. Controlling the media is very important to plutocrats.
Jeff Bezos, the most crafty plutocrat alive, did not purchase the Washington Post in 2013 because he expected newspapers to make a lucrative resurgence. He purchased it so that he could ensure exactly what WaPo did to Bernie Sanders in 2016. The neoliberal Orwellian establishment that Bezos is building his empire upon requires a propaganda mouthpiece, so Bezos purchased a long-trusted US newspaper to accomplish that. WaPo is now easily the most virulently pro-establishment among all large mainstream publications, not just defending establishment narratives but actively attacking anyone who challenges them.

4. Plutocrats form alliances with defense and intelligence agencies.
Jeff Bezos is a contractor with the CIA and sits on a Pentagon advisory board. He is doing everything he can to cozy up and ingratiate himself to the establishment on which his empire is built, up to and including kicking WikiLeaks off Amazon servers in 2010. This dances very creepily with Amazon’s involvement in surveillance systems and digital “assistance” devices like Alexa.

5. The people willing to do anything it takes to get to the top are the ones who get there.
Normal human beings would have a difficult time knowing businesses are dying and workers are getting poorer as their empire grows. Jeff Bezos just keeps growing. He will happily collaborate with depraved intelligence agencies, manipulate and propagandize Americans, and expand the gulf between the rich and the poor just to be king of the world.

6. It will never be enough for them.
Jeff Bezos is worth 131.5 billion dollars as of this writing, and he is getting more ambitious, not less. He doesn’t need that money to buy more stuff; it isn’t about money for him. It’s about power. The impulse to rise to the top of your monkey tribe is an impulse buried deep within our evolutionary heritage, and when that impulse isn’t checked by empathy for your fellow man it creates an unquenchable drive to grow and grow in invincible power no matter what kind of suffering that creates.

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The Bond Market Hits A Tipping Point: What That Means For Stocks

When we earlier discussed the unwillingness of institutional investors to return to the market even as retail investors swing from one mood extreme to another, we showed a chart showing the historical and seemingly relentless selling by virtually every investor class in the past decade, which left just one question for traders: when do the stock buybacks finally stop and put an end to the party?

Answering that question would also require the response to another, far bigger question: when does the bond market stall out, or in other words, when does the endless demand for yield finally fizzle out?

For anyone to claim they have the definitive answer would be folly: after all there have been so many prior occasions in which analysts and pundits declared the end of the all consuming bond bid, only to be mocked by investors gorging on even more corporate debt.  And yet based on recent bond sales, it appears that finally investors may be getting full.

But how is that possible? Just two weeks ago there was an unprecedented $100 billion in bids for CVS's gargantuan  9-part $40 billion IG deal?

Well, as Bloomberg reported recently, in a first indication that the saturation point is approaching, there have been far fewer orders coming in for new bonds, relative to what’s for sale. This has resulted in bond-selling companies paying more interest compared with their other debt, according to Bloomberg data, and once the securities start trading, prices have been falling on more than 50% of new issues, an indication that "flipping" bonds for a profit is now only profitable half the time. And flipping for a profit, or loss - as any bond trader knows - is a well-known leading indicator to the overall strength of the bond market.

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It's Just Starting: Moody's Warns A Deluge Of Retail Bankruptcies Is Coming

2017 was a perfect storm for "brick and mortar" retailers who officially lost the war with Amazon, and no less than 30 retail chains filed for bankruptcy in a year in which the CEO of Urban Outfitters said the "retail bubble has now burst"...

So is the worst over for retail, or is the sector just now approaching the eye of the hurricane?

According to the latest Moody's research report on the retail sector, the rating agency now forecasts at least six retail & apparel issuers defaulting over the next 12 months, with most of these occurring in the first half of the year. 

While the good news is that the industry default rate is expected to peak at 12.43% this March, Moody's cautions that the still-high default forecast for the remainder of 2018 points to more pain before this lower ratings rung in retail stabilizes. Recent defaulters include Tops Markets, which filed for Chapter 11 on February 21, which followed Bon-Ton's filing on February 4. Charlotte Russe and Charming Charlie both defaulted in December, and Claire's has hired restructuring advisors.

Meanwhile, the Toys “R” Us bankruptcy in September its overnight Chapter 7 liquidation has only added to pressures by accentuating potential pressures between vendors and the more stressed retailers, even as it left some 33,000 employees without a job.

The problem is that it only gets worse from there, and the rating agency expects upcoming maturities for distressed issuers will spike in 2019. Defaults are growing as many struggle with high leverage and challenged operating performance. These challenges are compounded by the biggest risk - mounting maturities -  which spike in 2019. Overall, issuers in the Caa1 and lower group face $14.9 billion in public and private maturities due 2018 through 2020 as shown in Exhibit 1. The lion's share of these maturities (Exhibit 2) is attributable to just five issuers:

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China's Impending Middle Class Boom More Likely To Turn To Bust

In 2010, Brookings Institute offered a report stating that the global "middle class" was set to explode, almost entirely from the transition of China's and India's urban poor populations to the middle class (middle class meaning annual incomes per household of four from $14,600 to $146,000 in PPP (purchasing power parity)).

In 2017, the Institute updated the original work (HERE) reiterating that from 2015 to 2030, China, India, and the remainder of Asia-Pacific would add 2.1 billion or 89% of the new entrants to the already 3.2 billion person global middle class.  To round out Brookings' estimate for the middle class from '15 to '30; Europe would add just 9 million (less than 0.4%), N. America 19 million (about 0.8%), Central & S. America about 50 million (2.1%), MENA (Middle East/N. Africa) 90 million (3.9%), and sub-Saharan Africa adding 100 million (4.1%).

I have a major problem with the Brooking Institute's estimates.  Generally, I have major issues with the assumptions but specifically regarding China, I believe the Institute is somewhere from significantly wrong to totally wrong regarding future estimates for China's middle class...which is likely to reduce or undo the estimated growth throughout.

Births in China:

Let's begin with China's births, on an average basis per five years, since 1950 (chart below).  Peak births took place in the 1965-70 period at just over 30 million annually.  But with the introduction of the one-child policy in '71, the UN data makes it plain that China's births continued declining in spite of a continually larger childbearing population (aged 15-45 years old).  Even now with the one-child rollback, births are only set to further decline (detailed HERE).

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Bitcoin Sinks As Google Moves To Ban All Crypto, ICO Ads In June

Mimiccing its biggest rival for ad dollars - Facebook - Google will ban online advertisements promoting cryptocurrencies and initial coin offerings, and "other speculative financial instruments" starting in June.

Some aggressive businesses found a loophole: purposely misspelling words like "bitcoin" in their ads. A Google spokeswoman said the company’s policies will try to anticipate workarounds like this.

The reaction was immediate across the crypto space but for now is somewhat subdued...

Alphabet’s Google said the new policy will become effective in June across ads bought on its search and display-advertising network, as well as its YouTube unit.

But, as The Wall Street Journal reports, the policy also will restrict ads for nontraditional methods of wagering on the future movements of stock prices and foreign-exchange, such as binary options and financial spread-betting, Google said.

Google said last year it removed more than 130 million ads that were used by hackers to mine for cryptocurrency. That is a very small percentage of the ads run on Google’s ad network.

The company’s director of sustainable ads, Scott Spencer, declined to comment on how much potential ad revenue the company would be turning away by enacting the new policy, saying the decision was made to prevent consumer harm.

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Synchronized Global Growth is Ending: Shocks Come Next

Economic pleasant surprises are in the past, as is the buildup of the balance sheet. The future is deleveraging.

Alarm bells are ringing. No one cares. By now, everyone knows stock only go up.

For those in tune with other ideas, Financial Times writer Stephen King suggests the Global Economy is Due for a Downswing.

Jim Bianco at Bianco Research comments on synchronized growth in his report Concerted Economic Growth is in Jeopardy of Ending.

Summary

Less than 50% of the world’s economies are now producing economic data surprises. Realized economic data following suit in the months to come would remove the tailwind of ‘concerted economic growth’ for risk assets and central banks. Emerging markets may be first on the list to experience higher volatility.

Comment

We have all been discussing ‘concerted global economic growth’ since early 2017 as a tailwind to risk assets and central bank policies. The chart below shows the percentage of the world’s economies producing economic data surprises (orange line) and above-average data changes (blue line) since 2004.

Over 90% of economies were indeed posting realized data changes at above-average growth rates in mid-2017. However, reported data has slowed its ascent over the past month led by the Eurozone and Canada. The percentage of economies with upside surprises has fallen to 44%, which has been a leading indicator for actual data changes like payrolls, industrial production, and durable goods orders. Above-average data changes have also rolled over to 67%. A break below 50% would mean ‘concerted economic growth’ should no longer be proclaimed.

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China Reveals Largest Defense Budget In Three Years

China’s government has been relatively vocal in transforming itself into a serious threat against the West — by modernizing its military in anticipation of future wars with Washington. It it therefore not surprising when the official Xinhua news agency reports that China will increase its defense budget by 8.1 percent in 2018, up marginally from last year’s 7 percent.

China has undoubtedly given America’s military-industrial complex and clueless politicians in Washington a stern message, by increasing its defense budget to the highest levels in more than three years, even as the country insists it does not mean harm.

According to the annual budget report, submitted to the first session of the 13th National People’s Congress Monday, the 2018 defense budget will be 1.11 trillion yuan (approximately 175 billion U.S. dollars). In 2017, the country spent roughly 1.02 trillion yuan (approximately 161.87 billion dollars) on its military budget in 2017, or about 1.3 percent of its gross domestic product (GDP).

The United States is the only country that outpaces China in defense spending, with the Pentagon’s expenditures exceeding four times Beijing’s, according to the latest report of the 2018 Military Budgets via the London-based International Institute for Strategic Studies (IISS).

In a speech at an annual Meeting of China’s National People’s Congress, Premier Li Keqiang suggested the country faced “profound changes in the national security environment,” requiring a stronger military.

As we stated before the conference, geopolitical strategists are concerned about President Xi Jinping aggressive military buildup and power grab, which has put Beijing on a crash course for military conflict with Washington.

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BoJ Leaves Policy Stance Unchanged, Optimistic On Global Economy

Having briefly injected some anxiety into markets over reported comments last week about paring back easing in 2019 (which were swiftly denied), Kuroda is likely to err on the dovish side in his comments after BoJ left all monetary policy levers unchanged.

Consensus expectations are that the BOJ to leave all its key policy settings unchanged:

• likely to keep the short-term rate at -0.1% and target for the 10-year JGB yield at around 0%
• also likely to maintain the current pace of purchases of exchange-traded funds and real estate investment trusts
• The BOJ is likely to retain its guideline on the annual pace of JGB accumulation at 80 trillion yen
• Post-meeting comments by Kuroda are likely to be calibrated to avoid stoking upward pressure on the yen. That means he’s likely to avoid specifics if asked again about how or when the BOJ could manage an exit from extreme stimulus.

And that is what we got. All policy levers unchanged.

There was one dissenter - same as before - this guy not only wanted more NIRP, but also more QE, clearly unaware that the BOJ already owns more than half of all Japanese govt bonds.

• BOJ Board Member Kataoka Votes Against Keeping Rates Unchanged
• BOJ Kataoka: Should Take Additional Easing if Delay in Hitting Inflation Target
• BOJ Kataoka: BOJ Should Lower Yields on JGBs of 10-Years and Longer

Language surrounding the global economy is more optimistic.

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Stockman Celebrates The End Of The Goldman Sachs Regency At The White House

The financial commentariat and the robo-machines are all in a tizzy this morning because Gary Cohn up and quit. But we say good riddance: The man gave Trump bad advice on nearly every single issue---trade, taxes, fiscal policy and the Fed.

We didn't make any bones about that viewpoint during our appearance on Fox Business this AM. When Maria Bartiromo asked us about Cohn's departure, our reply was: Hallelujah, the Goldman Sachs Regency in the White House is finally over!

The fact is, we do have a trade crisis, but Gary Cohn and the Wall Street pseudo-free traders don't care and never have. That's because they fiercely support a perverted, self-serving monetary regime that systematically and massively inflates financial assets, even as it strip mines and deflates the main street economy.

As we have been pointing out in this series, there is a perverse symbiosis between the Fed and the Dirty Float central banks of the 10 major countries (China, Vietnam, Mexico, Japan, etc), which account for 90% of the nation's $810 billion trade deficit (2017). Together they have ripped the guts out of the US industrial economy---effectively sending jobs and production abroad and cash flow and liquidated capital to Wall Street.

For its part, the Fed has monkey-hammered US competitiveness. That's the result of its insensible 2.00% inflation policy, which has fatally inflated nominal dollar wages in a world market drowning in cheap labor priced in artificially under-valued currencies.

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The SPY Of Crypto? Coinbase Launches Cryptocurrency Index Fund

Coinbase dashed the hopes of thousands of ripple investors, who've been holding out hope that the exchange would add the coin, when it revealed that its "major announcement" Tuesday afternoon was, in fact, the introduction of the Coinbase Index Fund, a pioneering investing vehicle that just might do to cryptocurrencies what the ETFs like the SPY did for stocks. 

The company published the announcement on its blog:

We’re excited to announce Coinbase Index Fund.

Coinbase Index Fund will give investors exposure to all digital assets listed on Coinbase’s exchange, GDAX, weighted by market capitalization. If a new asset is listed on the exchange, it will be automatically added to the fund.

Index funds have changed the way that many people think about investing. By providing diversified exposure to a broad range of assets, index funds enable investors to track the performance of an entire asset class, rather than having to select individual assets. We’re excited to give our customers the ability to invest in the potential of blockchain-based digital assets as a whole.

Twitter users were unimpressed however because, as the company pointed out, Coinbase and associated exchange GDAX only lists four coins...

The news had some impact on the price of cryptocurrencies, which have been slumping Tuesday, with Ripple lower and the rest bouncing marginally higher...

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Oh Canada! The Looming Economic Meltdown

Canada’s Fourth Quarter economic growth was 1.7% following positive signs of growth earlier in the year. This growth, however modest, is attributable to easy credit and the increased consumer spending. At this time, Canadian households are facing one the largest indebtedness when compared to most other countries. For every $1.00 of income, consumers owe $1.68. This is the highest income to debt ratio in the world. For low-income Canadian households, the $1.00 disposable income to $3.33 debt ratio is even worst.

Canada, along with other nations, especially emerging markets are carrying records levels of consumer debts, may be facing a serious crash as further growth becomes unsustainable.

Canada combined deficit rose to $18.1 billion in 2016, from $12.9 billion in the previous year. Higher debts and increased spending are causing serious concerns that the Canadian economy is on an unsustainable economic path.

A considerable portion of Canada’s future economic growth has been predicated on strengthening and improving the country’s infrastructure. However, Prime Minister Trudeau’s policies are destined to strangle potential economic growth by shifting C$7.2 billion allocated to infrastructure improvements to government programs such as gender equality hiring opportunities. According to the Conference Board of Canada’s Craig Alexander.

Canada appears to be stunting its own economic growth as a matter of policy.

Three major infrastructure projects, The Northern Gateway pipeline ($7.9 billion), the Pacific Northwest LNG project ($36 billion), and possibly the Energy East pipeline ($15.7 billion) would have been instrumental in guaranteeing economic growth for decades to come. However, these have been stymied in favor of Trudeau’s economic egalitarian vision. As a result, investors have been abandoning certain projects. The last time Canada’s saw such heavy-handed government interference in its economy was during the presidency of Trudeau’s father, Pierre Trudeau.

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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.

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Everything You Need To Know About Federal Spending In Five Charts

It’s time to address the budget in a comprehensive fashion. Let’s look at five charts to put everything in context and to show how we got into our current mess.

Our first chart (based on Table 8.2 from the Office of Management and Budget’s Historical Tables) shows what has happened to major spending categories from 1962 to 2017. And all the data is in inflation-adjusted dollars (2009 benchmark) to accurately gauge how and why the burden of federal spending has grown.

This next chart shows the actual percentage increases in the major spending categories during this time period. The two big takeaways are that 1) the defense budget is not the cause of our long-run fiscal problems (though that doesn’t mean it should be exempt from cuts), and 2) entitlement expenditures have exploded.

And if you look at the data I shared from the Congressional Budget Office’s long-run forecast, you would see that these same trends will prevail for the next three decades.

In other words, our fiscal problems start with entitlements and end with entitlements.

If you want to look at the problem with a broader lens, this next chart shows that the problem is domestic spending (i.e., the combination of entitlement and domestic discretionary outlays).

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12 Years In A Row And Counting: The U.S. Has Not Had A Year Of 3 Percent Economic Growth In More Than A Decade

If the U.S. economy is in good shape, then why has economic growth been so anemic for more than a decade?  It has been 12 long years since the economy grew by at least 3 percent, and for most of that time my website has been one of the leading voices chronicling America’s long-term economic problems.  In 2017, U.S. GDP increased by just 2.3 percent, but at least that was better than the pathetic 1.5 percent figure that was posted for 2016.  With Donald Trump in the White House, we have taken some steps in the right direction, but we must never forget that our long-term economic and financial problems continue to steadily get worse.

As I travel around Idaho’s first congressional district, I often tell voters that we have not had a year of 3 percent economic growth since the middle of the Bush administration, and a lot of people have a really hard time believing that this is accurate.  But of course it is 100 percent true, and earlier today CNS News published an article highlighting this fact…

The United States has gone a record 12 straight years without 3-percent growth in real Gross Domestic Product, according to data released today by the Bureau of Economic Analysis.

This drought is highly, highly unusual.  In fact, before this 12 year stretch the previous record was just four years…

Before the current period, when the nation has seen twelve straight years without 3 percent growth in real GDP, the longest stretch of years in which real GDP did not grow by at least 3 percent was during the Great Depression—when there were four straight years (1930-1933) when real GDP did not grow that much.

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