Mexico’s president-elect Andres Manuel Lopez Obrador “AMLO” easily won yesterday’s election with 54% of the vote; the highest vote total in three decades.  In addition his MORENA party won an absolute majority in both the Mexican Senate (38% +/-) and the Chamber of Deputies (38% +/-).

The multinational financial community is in the process of evaluating how the nationalist win will impact all prior investing.  One of the key issues is NAFTA.  Multinational corporations have poured billions into Mexico as a structural method to utilize the trade deal to gain access to the U.S. market.

Despite his campaign position, AMLO is now affirming a positive intention to renegotiate NAFTA; however, he is speaking from both sides of the current issue.  Example:

[Today] Lopez Obrador said he supports reaching a deal on renegotiating the North American Free Trade Agreement with the United States and Canada.

[…]  Lopez Obrador said he will propose that his own team of experts be included in the talks. The winning candidate said he will make that proposal in a meeting Tuesday with current President Enrique Pena Nieto.

Lopez Obrador told Televisa that he will respect the current team of negotiators, and let them continue representing Mexico until he takes office Dec. 1.

[…] Lopez Obrador said individual and property rights would be guaranteed, promised respect for the autonomy of the central Bank of Mexico and said his government will maintain financial and fiscal discipline.

He said contracts obtained under energy reforms passed under President Enrique Pena Nieto will be scrutinized for any corruption or illegality, but otherwise contracts will be honored.

“There will be no confiscation or expropriation of assets. … Eradicating corruption will be the principal mission,” he said.

[…] The polling firm Consulta Mitofsky predicted Morena allies would take between 56 and 70 seats in the 128-member Senate and between 256 and 291 spots in the 500-seat lower house.  (more)

On NAFTA the bottom line is easily identified.  There are no ongoing negotiations.  The NAFTA fatal flaw, which allows Canada and Mexico to act as pass-throughs for foreign products, is an impossible impasse to overcome.  Neither Mexico or Canada can negotiate away their economic process of importing foreign goods, assembling them, and then using NAFTA to trans-ship the finished product into the U.S market.

Neither Mexico or Canada manufacture much of the product they assemble.  The overwhelming majority of Canadian and Mexican products, including cars, are assembly operations for manufactured goods using parts from Europe and Asia, mostly China.  They do not have the raw materials, infrastructure, or heavy-duty manufacturing plants, to *create* component parts for manufactured goods.  Therefore in order to maintain their three-decades-long economic and trade system they cannot negotiate a NAFTA plan that demands high-content source of origination, for durable goods, from North America.

Nothing can change that.

China has invested tens of billions in ports and transport infrastructure to facilitate the current process.  Those port and transit investments would become functionally obsolescent if Mexico and Canada were forced to stop importing parts for assembly.

♦ In the food sector the Mexican farmer, and by consequence Mexican farm-worker, are caught in the same multinational big AG network.  Archer Daniels Midland (ADM), Monsanto, Nestlé, PepsiCo, Kraft (or, outside the United States, by the company’s alter ego, Mondelēz International).

Once the plowing, planting, nurturing, and harvesting are done, around 80 percent of major crops pass through the hands of four traders: ADM, Bunge, Cargill, and Louis Dreyfus.  This is a controlled market.

For farmers, BIG AG (oligopolies) mean fewer choices of supplier and sometimes no choice at all about whom they will sell to. This leads to “contract farming”, in which farmers grow according to corporate specifications, with all supplies provided by the company, in return for its commitment to purchase the farmers’ output if it is acceptable.

On the Agricultural side of NAFTA president-elect Andres Manuel Lopez Obrador and U.S. President Donald Trump can actually work together.  Neither AMLO, nor Trump, support the continuation of the corporately-controlled, Wall Street profit-driven, status quo.   An interesting dynamic.

Keep in mind this next article about AMLO is from “Reuters”, a media outlet owned, operated, and messaging service of Wall Street:

(Reuters) – Mexico’s next president, Andres Manuel Lopez Obrador, said on Monday he will seek to remain in NAFTA along with the United States and Canada and that he respects the existing Mexican team renegotiating the trade pact.

Lopez Obrador won a landslide election victory on Sunday, getting more than double the votes of his nearest rival, dealing a resounding blow to establishment parties and becoming the first leftist to win the Mexican presidency since one-party rule ended in 2000.

“We are going to accompany the current government in this negotiation, we are going to be very respectful, and we are going to support the signing of the agreement,” he told Milenio TV in an telephone interview, saying the aim was a deal on the North Atlantic Free Trade Agreement that was good for Mexico. (read more)

Overall, Obrador represents an ideological outlook almost identical to former U.S. Presidential Candidate Bernie Sanders.  [coincidentally the same as former Venezuelan president Hugo Chavez].   Hollywood celebrities and avowed leftists will likely embrace Labrador in 2018/2019 as they did Chavez in 2009/2010.  Watch, you’ll see.

AMLO has a governing philosophy almost identical to Bernie Sanders; the problem AMLO faces is his Mexican economic policy starts without any underlying Mexican wealth to spread around.  [Again, the Venezuelan issue]  Socialism only works when you have other people’s money, labor, and property to distribute.  The majority of the value in Mexico is owned by outside multinational interests.  Those multinationals will now have to figure out how to deal with a nationalist who despises their ownership and control.

[Again, see big picture Venezuela]

Eventually, in order to make good on his promises, AMLO is going to need to *take* value from private ownership and redistribute that wealth to his constituents.  That process may take a few years, but it is inevitable.   In the history of the world, a socialist economy has never survived itself (without absolute economic capitulation of the citizens).

When that process happens, those entities who have their wealth expropriated will exit the economic system.  It has always been thus; there has never been a socialist economy where that did not happen.. and that process begins the Venezuelan spiral.

The most dangerous time for a rescue swimmer is the moment when he reaches the desperate and drowning man.  The MOST IMPORTANT aspect for President Trump, and for the survival of the United States, is to make sure the U.S. is not pulled under when Mexico begins to drown.

That, my friends, is why we need the Southern Border Wall.  [Regardless of cost.]

Now, think carefully about AMLO’s quote again today:

“We are conscious of the need to maintain good relations with the United States.”

Yeah, I guarantee they are..

When you plant your tree in another man’s orchard, you might end up paying for your own apples; it’s a risk you take…

….and President Trump knows how to use that leverage better than anyone could possibly fathom; because in this metaphor Beijing relies upon the U.S. for both the seeds and the harvest.  President Trump drops the $200b M.O.A.T (Mother of All Tariffs):

White House – On Friday, I announced plans for tariffs on $50 billion worth of imports from China. These tariffs are being imposed to encourage China to change the unfair practices identified in the Section 301 action with respect to technology and innovation. They also serve as an initial step toward bringing balance to our trade relationship with China.

However and unfortunately, China has determined that it will raise tariffs on $50 billion worth of United States exports. China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong.

This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance in goods. This is unacceptable. Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States.

Therefore, today, I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent. After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced. If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods. The trade relationship between the United States and China must be much more equitable.

I have an excellent relationship with President Xi, and we will continue working together on many issues. But the United States will no longer be taken advantage of on trade by China and other countries in the world.

We will continue using all available tools to create a better and fairer trading system for all Americans.

~ President Donald Trump

Historic Chinese geopolitical policy, vis-a-vis their totalitarian control over political sentiment (action) and diplomacy through silence, is evident in the strategic use of the space between carefully chosen words, not just the words themselves.

Each time China takes aggressive action (red dragon) China projects a panda face through silence and non-response to opinion of that action;…. and the action continues. The red dragon has a tendency to say one necessary thing publicly, while manipulating another necessary thing privately.  The Art of War.

President Trump is the first U.S. President to understand how the red dragon hides behind the panda mask.

It is specifically because he understands that Panda is a mask that President Trump messages warmth toward the Chinese people, and pours vociferous praise upon Xi Jinping, while simultaneously confronting the geopolitical doctrine of the Xi regime.

In essence Trump is mirroring the behavior of China while confronting their economic duplicity.

President Trump will not back down from his position; the U.S. holds all of the leverage and the issue must be addressed.  President Trump has waiting three decades for this moment.  This President and his team are entirely prepared for this.

We are finally confronting the geopolitical Red Dragon, China!

The Olive branch and arrows denote the power of peace and war. The symbol in any figure’s right hand has more significance than one in its left hand. Also important is the direction faced by the symbols central figure. The emphasis on the eagles stare signifies the preferred disposition. An eagle holding an arrow also symbolizes the war for freedom, and its use is commonly referred to the liberation fight of righteous people from abusive influence. The eagle on the original seal created for the Office of the President showed the gaze upon the arrows.

The Eagle and the Arrow – An Aesop’s Fable

An Eagle was soaring through the air. Suddenly it heard the whizz of an Arrow, and felt the dart pierce its breast. Slowly it fluttered down to earth. Its lifeblood pouring out. Looking at the Arrow with which it had been shot, the Eagle realized that the deadly shaft had been feathered with one of its own plumes.

Moral: We often give our enemies the means for our own destruction.

“Markets”