This is a good development.  I strongly appreciate a U.S. President who believes in the intelligence of the U.S. voter to understand what is taking place.

President Trump is not selling the U.S. electorate short on their ability to understand the financial dynamic of ‘globalists -vs- nationalists’. President Trump is calling attention to currency manipulation by China and the EU. [Tweet]

In the big picture, what these global economies are doing is trying to offset President Trump’s ‘America First’ policy.  There are trillions at stake, and when you stand back and evaluate the scale of economic cost in this process you begin to recognize the severity of ideology and history of controlled financial manipulation.

By lowering the value of their currency, China and the EU are attempting to block the impact of tariffs against their export position.  Lowering the price of Chinese Yuan (Renminbi) or Euro (€) makes their exports cheaper to a stronger U.S. dollar.  This is what has been happening for the past six months. There are trillions at stake.

Despite what the Wall Street financial pundits have been saying, we have been importing their manufactured deflation for six months. U.S. consumers are not paying the tariffs on imported goods.  The devaluation of currency is why costs of import goods are actually less year-over-year (dollar strong). This is a strategy on their part to counter Trump, tariffs, etc. The globalist economies are trying to wait out Trump 2020.  We see the evidence of this in the CPI import prices:

(Source Link)

A stronger dollar and a weakened euro or yuan (or any other currency) makes the imported goods cost less (paid in dollars).  This offsets any tariff impact and keeps the U.S. prices low.  In essence we are importing deflation.

Stand back and contemplate the scale of globalist ideology at work in this dynamic.

The nations that devalue their currency drive up inflation within their own economy.  In German, France, etc., and/or in China,… bread, cheese, butter or basically any product costs more.  People within those economies pay more for their “stuff” as the central planning group drive down the value of their currency; it hurts the internal citizens of the country doing the devaluation.  Inflation hurts them; their wages buy less; stuff costs them more.

But the ‘Big Club’ within the domestic economy doesn’t care about the cost to their citizens, they are trying to fight Trump.

In an effort to carry out their globalist ideological fight to stop Trump from reclaiming wealth (through new trade positions and the return of blue-collar manufacturing), these nations are willing to subsidize an effort to retain status even if it means hurting their own citizens in the process.

Bottom-line they are driving down their own currency, trying to defeat U.S. policies, while waiting out Trump 2020 and hoping he is defeated.

So long as the devalued nations trade among themselves the lower value of their currency doesn’t necessarily cost them anything.  However, as soon as they engage with the non-manipulated currency (ie. USA), where the currency is not devalued, their lowered currency costs them a bunch.

In the short term, their exports to the U.S. drop in cost and we import their deflation.  However, in turn they cannot afford to purchase U.S. products and this can hurt our exports.   Fortunately, the U.S. economy is not necessarily dependent on exports; we use around 80% of the stuff we make or generate internally.  But with a higher dollar U.S. agricultural exports go up in price…. hence the Big AG multinationals rail against Trump.

The moves by China and the EU to lower their currency, makes our exports more expensive;  in turn this effect becomes fuel for the Big Club multinationals (Wall Street) to rail against President Trump.   Again, this is all part of the globalist plan to defeat Trump.

Within this dynamic U.S. inflation is low, because the prices for durable good imports are now intentionally lowered.  Simultaneously the prices of perishable goods remains low because the domestic supply is being exported less.

CTH predicted this dynamic back in 2016 when we said the prices of imports would not rise even with tariffs, and the prices of domestics would likely fall.  It’s one of the key reasons we said U.S. inflation would be detached from massive growth in the U.S. economy.   In essence, the entire world of suppliers are trying to keep the U.S. economy as customers for imported goods… they desperately don’t want to see the U.S. take their jobs back into America.

Right now an American worker with higher wages can buy imported stuff cheap; and can also travel cheap if desired (our dollar is strong).

Again, 80% of our GDP is internal; we are generally a self-sufficient nation… that is our strength.  But the globalists can only hold out so long before their intentionally constructed anti-Trump dynamic makes their own citizens misery so bad they will grab the pitchforks….

The globalists are hoping they don’t have to wait longer than November 2020.

There are trillions at stake !

President Trump is launching the 2020 campaign tonight at 8:00pm in Orlando at the Amway Center.  The event has turned into a “45 Festival” as tens-of-thousands of supporters participate in the day-long events.  RSBN is broadcasting a livestream:

National Economic Council Chairman Larry Kudlow appears on Fox News immediately following the announcement that President Trump and Chairman Xi will have an “extended meeting” at the G20.

President Trump tweeted about a phone call this morning with Chinese Chairman Xi Jinping. There will be a G20 meeting between Trump and Xi. So, extending our conversation from yesterday…. the “magnanimous panda” approach appears confirmed.

[White House] President Donald J. Trump spoke with President Xi Jinping of China this morning. The two leaders discussed the importance of leveling the playing field for U.S. farmers, workers, and businesses through a fair and reciprocal economic relationship. This includes addressing structural barriers to trade with China and achieving meaningful reforms that are enforceable and verifiable. The leaders also discussed regional security issues. The two Presidents look forward to meeting again in Osaka, Japan at the G20 Summit. (read more)

With Chairman Xi Jinping traveling to North Korea for talks with his captive Kim Jong Un prior to the G20; and with the meeting between Xi and Trump confirmed; it certainly looks like Beijing is deflecting the weakness of their economic/trade position by shifting the optic toward a geopolitical magnanimous panda.  The scale of the uprising in Hong Kong was also a likely influence on the margins.

What we don’t know is whether Xi will tell/threaten Kim Jong Un to wait-out President Trump, with warnings that Trump may not be around to save him after 2020…. If Xi takes that approach with Kim it means his thinking is similar; if so, the Chairman is taking a big gamble on his own economic survival by trying to wait-out President Trump.

However, if Xi tells Kim Jong Un that Kim’s captivity is over, then the denuclearization of North Korea will be the visible outcome.  In this scenario Xi will play the role of magnanimous panda and *guide* Kim into the West.  South Korean President Moon Jae-in will be heralded as the hero so that Xi doesn’t look like he lost to Trump.

President Trump has threatened more tariffs and more consequential action as it relates to non-tariff barriers, IP protection, forced technology transfers etc as a result of China reneging on their prior agreement. In essence, President Trump has put Chairman Xi under threat. Beijing’s traditional and cultural position would be no-meeting and no negotiation while under threats.

Chairman Xi agreeing to meet with President Trump at the G20 would normally be a sign of weakness due to Trump threats.  This indicates that some outcome from the meeting with Kim will flip “weakness” to “strength” in the eyes of China.

My best guess would be the magnanimous panda play.

However, watch out for the delay and stall approach to wait-out Trump until 2020.