President Trump meets with Saudi Crown Prince Mohammed Bin Salman (MbS) today at the White House. This is their first meeting since the “Great Realignment” began {Go Deep} and there is much to discuss:

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[Transcript] 12:07 P.M. EDT – PRESIDENT TRUMP: Thank you very much, everybody. It’s a great honor to have the Crown Prince with us.

Saudi Arabia has been a very great friend and a big purchaser of equipment and lots of other things. And one of the biggest investments in the United States is their — I guess it’s your big investment — is buying stock in companies and various other things in the United States and creating jobs.

We’ve become very good friends over a fairly short period of time. I was in Saudi Arabia in May. And we are bringing back hundreds of billions of dollars into the United States. And we understand that, and they understand that.

Some of the things that — have been approved and are currently under construction and will be delivered to Saudi Arabia very soon, and that’s for their protection. But if you look, in terms of dollars, $3 billion, $533 million, $525 million — that’s peanuts for you. (Laughter.) You should have increased it. $880 million, $645 million, $6 billion — that’s for frigates; $889 million, $63 million — and that’s for various artillery.

Some of the things that we’re now working on and that have been ordered and will shortly be started in construction and delivered: the THAAD system — $13 billion; the C-130 airplanes, the Hercules, great plane — $3.8 billion; the Bradley Vehicles — that’s the tanks — $1.2 billion; and the P-8 Poseidons — $1.4 billion. And what it does is it really means many, many jobs. We’re talking about over 40,000 jobs in the United States.

So we make the best equipment in the world. There’s nobody even close. And Saudi Arabia is buying a lot of this equipment, and a lot of people are at work making the equipment, not only for us — because we, as you know, we’re getting a $700 billion military proposal. And that’s even a lot for you guys. But we’re getting a $700 billion military plan this year, and 716 will be next year — $716 billion.

So we really have a great friendship, a great relationship. I would really have to say the relationship was, to put it mildly, very, very strained during the Obama administration. And the relationship, now, is probably as good as it’s really ever been, and I think will probably only get better. Tremendous investments made in our country. And that means jobs for our workers, jobs for our people.

Also, defense. We’re talking about defense, and we’re working very hard with Saudi Arabia. And they’re also footing a big part of the bill for defense — the whole Middle East. And we know what’s happened in the Middle East. And it has not been a pretty picture for the United States or for anybody.

And a lot of things are changing, and they’re changing very rapidly. As you know, ISIS is now — we’ve recaptured almost 100 percent of the territory, as you probably have heard before anybody. But we’ve captured close to 100 percent of the territory held by ISIS. We’ve moved very rapidly, very quickly. And that’s, really, coming to an end in that part of the world — it’s coming to an end. And we’ll be able to get out of certain areas that we’ve wanted to get out of for a long period of time. And other countries can handle it. At this point, they’ll be able to handle it.

So it’s a great honor to have you and your representatives here. Crown Prince, thank you very much. Thank you for being here.

CROWN PRINCE BIN SALMAN: Thank you, Mr. President. Actually, the relations between Saudi Arabia and United States of America, it’s old relation. We are the oldest ally for the United States of America in the Middle East.

PRESIDENT TRUMP: Right.

CROWN PRINCE BIN SALMAN: More than 80 years of alliance and big interest — politically, economically, and security, in different area — a lot of area. And the foundation for relation, it’s really huge and really deep.

And a different issue — we know that today, the relation, it’s the cause of more than 4 million jobs in the United of States of America, directly and non-directly. Also, it’s a cause for a lot of jobs in Saudi Arabia directly and non-directly.

And, as you know, Mr. President, from day one you’ve reached this office, we’ve planned to tackle 200 billion U.S. dollars for opportunities in the next four years, but it end up with 400 billion U.S. dollar for opportunities.

We’ve talked to you, Mr. President, about the military deals, the implementation, and it is more than 50 percent. And, also, the implementation overall in the 400 billion U.S. dollar of opportunity, more than 55 percent.

PRESIDENT TRUMP: Right.

CROWN PRINCE BIN SALMAN: We planned this for next 10 years, but it happens in one year, we implement 55 percent, though. So this is signal that there is a lot of things could be tackled in the close future, and more opportunities. And that why we are here today, to be sure that we’ve tackled all the opportunities and achieve it, and also get rid of all the threats facing our both countries and the whole world.

So I am very glad to be here today.

PRESIDENT TRUMP: Well that’s right. And you know, one thing that you have been really focused on is the terrorism threat and the funding of terrorism. And whether it’s Saudi Arabia or other countries, as we know, there will be no funding. It is — we have a zero tolerance for the funding of terrorists, and we’re working very hard. And I will say that Saudi Arabia has been working very hard on that, as are certain other countries in the Middle East.

When I was there in May, I think it was one of the most incredible two-day meetings that I’ve ever seen — that anybody has ever seen. It was an amazing two-day period. We had 56 countries. We had — everybody was there at the head of every country. Virtually — I guess, in every case, it was the head of the country. And we talked about terrorism and the funding of terrorism. And it will not be allowed. It will not be allowed. That would be the one thing that would end the relationship with any country. So I think there’s a very big focus on that — the funding of terrorism — meaning, it’s over.

And the other thing that I really am very happy about is that we talked about 400 billion dollars’ worth of investment, of which we’ve already invested and seen invested $200 billion to our companies, to various other places, and people that make things. So a lot of places throughout the United States are benefitting by this massive investment made by Saudi Arabia to buy product from the United States.

And again, we make the best military product in the world, whether it’s missiles or planes or anything else. There’s nobody that even comes close. So I just want to thank you and I want to congratulate you on everything. Thank you very much.

CROWN PRINCE BIN SALMAN: Thank you, Mr. President.

PRESIDENT TRUMP: Thank you very much, everybody.

Q Can you comment on the bombings in Austin, Mr. President?

PRESIDENT TRUMP: The bombings in Austin are terrible. The local, state, and federal are working hand-in-hand to get to the bottom of it. This is obviously a very, very sick individual, or maybe individuals. These are sick people, and we will get to the bottom of it. We will be very strong. We have all sorts of federal agencies over there right now. We’re searching.

What’s going on in Austin — a great place, tremendous place — is absolutely disgraceful. So we have a lot of power over there. We’re looking; it’s not easy to find. But these are sick people and we have to find them as soon as possible. We have to find them, really, immediately.

I will say, working with Texas, working with the local governments has been great. But we have to produce, we have to find this very sick person or people.

Thank you all very much.

Q How was your call with President Putin?

PRESIDENT TRUMP: I had a call with President Putin and congratulated him on the victory — his electoral victory.

The call had to do, also, with the fact that we will probably get together in the not-too-distant future so that we can discuss arms, we can discuss the arms race. As you know, he made a statement that being in an arms race is not a great thing. That was right after the election — one of the first statements he made.

And we are spending $700 billion this year on our military, and a lot of it is that we are going to remain stronger than any other nation in the world by far.

We had a very good call, and I suspect that we’ll probably be meeting in the not-too-distant future to discuss the arms race, which is getting out of control, but we will never allow anybody to have anything even close to what we have. And also to discuss Ukraine and Syria and North Korea and various other things.

So I think, probably, we’ll be seeing President Putin in the not-too-distant future.

Q How are you going to counter Iran? This is a Saudi —

PRESIDENT TRUMP: Well, we’re going to see what happens. The Iran deal is coming up. It’s probably another month or so, and you’re going to see what I do. But Iran has not been treating that part of the world, or the world itself, appropriately. A lot of bad things are happening in Iran. The deal is coming up in one month, and you will see what happens. Okay?

Q Your Royal Highness, should the President pull out of the Iran deal?

CROWN PRINCE BIN SALMAN: Well, we’ll talk about that today.

PRESIDENT TRUMP: (Laughs.) Okay? Thank you very much, everybody.

END – 12:18 P.M. EDT (LINK)

Against the backdrop of ‘Phase 2’ trade policy initiatives based on reciprocity, U.S. Commerce Secretary Wilbur Ross talks to CNBC about tariffs, carve-outs and protecting national security ahead of his meeting with the European commissioner for trade.

The hypocritical European Union has expansive protectionist tariffs against U.S. products and has threatened retaliation if the U.S. enforces the Trump administration about trade reciprocity.

Additionally, the Trump administration (Ross, Lighthizer, Navarro and Mnuchin) are focusing on China’s trade theft of intellectual property. According to Reuters reporting there is a possibility of $60 billion in trade tariffs being enforced against China for their IP violations and practices.

WASHINGTON (Reuters) – The Trump administration is expected to unveil up to $60 billion in new tariffs on Chinese imports by Friday, targeting technology, telecommunications and intellectual property, two officials briefed on the matter said Monday. (more)

However, Chinese Premier Li Keqiang puts the panda mask on by saying: “We don’t want to see a trade war” with U.S., and hopes to negotiate disputes. The U.S. market is the customer for the manufactured products by China and Beijing understands the U.S. team holds the leverage.

The White House releases the following President Trump video along with a message to submit your own tax relief success story to them.  Smart plan:

It is going to take a heck of a lot of deep-weed education to cut through the economic gaslighting of the multinational corporations, Wall Street and their purchased institutional media.  However, I give the White House team (Secretary Ross, Secretary Mnuchin, Ambassador Lighthizer and Adviser Peter Navarro) a measure of strong credit for beginning:

WHITE HOUSE:  Measurement of trade flows is usually an uncontroversial topic relegated to macroeconomic classrooms and government technocrats. Recent debates about trade policy have brought the topic out of the shadows, and we hope to clarify how economists measure trade.

Every day there are international transactions for tens of thousands of different products. Physical goods, interchangeably called merchandise, are what usually comes to mind first. However, an increasing share of international trade is in services that are not physically transported between countries—think about financial insurance, licensing of trademarks, or services like consulting.

To make the world a bit more complicated, goods and services are increasingly bundled together, such as when a manufacturer sells a piece of machinery along with an international maintenance contract. The machinery is a good, but the maintenance agreement is a service.

From a macroeconomic perspective, economists typically use the balance of payments (BOP) basis. The BOP captures flows of what we would normally think of as imports and exports of goods, but also includes a series of adjustments. This process better aligns trade data with national income accounts such as GDP. The BOP has the added advantage of being applicable to service transactions as well.

The International Monetary Fund defines BOP as “a statistical statement that systematically summarizes, for a specific time period, the economic transactions of an economy with the rest of the world.” BOP transactions are valued using BPM6 methodology that emphasizes using balance sheet analysis to understand international economic developments and to improve comparability with other countries.

In order to construct the BOP, start with the customs value of imports and exports. A frequently used U.S. government data source reports monthly “customs basis” for transactions. There are different methods of customs valuation.

The transaction value method is the price actually paid by the buyer for the imported goods and includes all payments made as a condition of sale. But the transaction may or may not occur at the border—some international shipments change ownership when loaded, others when unloaded, some even at a specified point in transit.

Recognizing this array of contracts, alternative methods that evaluate imports based on identical or similar goods, deductive value, or computed value are used in various situations. Government statistics are specific about where the customs value is reported, with common specifications including “free on board” (f.o.b.), “free alongside ship” (f.a.s.), or “customs, insurance, and freight” (c.i.f) to designate how much of shipping costs are included in the transaction value.

Starting from the customs value, a series of adjustments are made to arrive at BOP. These adjustments are typically fairly small, but they can be significant in aggregate. The current U.S. adjustments are:

In 2017, the aggregate difference between customs goods imports and BOP goods imports was $19.0 billion on a customs basis of $2.34 trillion. For goods exports, the correction was similar—a difference of $4.0 billion on a customs basis of $1.55 trillion.

Subtracting imports from exports gives the trade balance. Trade balances can be calculated for goods, for services, for goods and services, for one country, for a group of countries, or for the whole world.

The most inclusive measure of trade covers both goods and services. Some economists worry about the measurement of trade in services, which may be subject to inconsistencies, and so prefer to focus on trade in goods alone. After all, goods are tangible things that are easier to count.

Others prefer to focus on goods alone because on average all goods-producing industries have higher wages than all service-producing industries; in Q3 of 2017 average total compensation per hour worked in goods-producing industries was about 20 percent higher at $39.97 while the same measure for service-producing industries was $32.21.

Although BOP accounting is similar across nations, each country can interpret BOP methods slightly differently, which leads to differences in reported values of surpluses and deficits. These details are typically spelled out in exhaustive detail in government documents that could be prescribed as a cure for insomnia. For an example, see the Bureau of Economic Analysis document here.

To illustrate some of the concepts presented in this post, consider U.S. bilateral trade balances with Canada. In 2017, the U.S. goods and services balance was a surplus of $2.77 billion. The goods alone balance on a BOP basis was a U.S. deficit of $23.16 billion, but on a customs basis it was a deficit of $17.58 billion. Note that the difference between the BOP goods and services balance and the BOP goods alone balance implies a trade surplus in services of $25.93 billion.

In contrast, Canadian statistics report a goods and services trade surplus with the United States of $26.76 billion, using the Canadian BOP methodology. The goods alone balance is $40.50 billion on a BOP basis.

One important difference in BOP methodology between the Canadian and U.S. approaches is the treatment of re-exported goods. USTR raised a related issue, on the role of re-exports in Census-based bilateral trade balances, in its 2018 Annual Report.  (link)

Earlier today President Donald Trump and First Lady Melania Trump welcomed Irish Prime Minister Leo Varadkar to the White House.  Part of the festivities included the presentation of a Shamrock Bowl by the Prime Minister to the American people.

Terrific ‘big picture’ interview and discussion between National Trade Council Director Peter Navarro and CNBC’s Rick Santelli about President Trump’s trade policies, the threat of China, and the future of how our nation will deal with allies and trading partners.

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A perpetual trade deficit is detrimental to our American economy because it is financed with debt. We can buy more than we make because we borrow from trading partners. The trade deficit simply means we purchase more foreign goods, and send more money overseas, than they purchase from us. We then turn around and borrow back the money we just paid.

Another broad concern revolves around national security. A perpetual trade deficit is a statement about the competitiveness of the U.S. economy itself. By purchasing manufactured goods overseas for a long enough period of time, U.S. companies lose the expertise and even the factories to make those products; ex: try finding a pair of shoes made in the America. As the United States loses manufacturing competitiveness, we outsource more jobs, and our total standard of living declines.

It’s well known that Republican Speaker of the House Paul Ryan doesn’t want to be in an actual leadership position; and it’s also well known -enhanced by the campaign, and victory, of Donald Trump- that Republicans did not want to win the majority position and face having to reveal their true UniParty agenda.

The evidence of this UniParty positioning has been staring the electorate in the face, repeatedly and brutally, since candidate Donald Trump actually campaigned on key tenets of the Republican party and found himself being openly opposed by GOP leadership.

Now, a stunning discovery surfaces of Paul Ryan’s Congressional Leadership SuperPAC, congressionalleadershipfund.org, actually campaigning for the Democrat, Conor Lamb, in the recent PA18 congressional race.

As evidenced by Big League Politics the Paul Ryan SuperPAC sent a mailer to Pennsylvania CD-18 voters touting Lamb’s favorable position on gun ownership rights:

(link to source)

Now, there will be some who think this is just a bone-headed move by Paul Ryan because the Democrats already held a +50,000 registration advantage in the district and the SuperPAC didn’t know this mailer would actually end up supporting Lamb.  However, as mentioned, there’s a history here that tells us “a mistake” is likely not the case.

The real motive, based on an honest review of history, is the professional UniParty apparatus knew that Democrat Conor Lamb needed a lift to offset the cross party voting that was reflected in the district voting (by over 20 points) for Donald Trump in 2016.

The DC Republican apparatus is quite comfortable losing their majority position so long as they are not forced to support Trump policies which are entirely against their financial interests.  [How Mitch McConnell Crushed The Tea-Party]

Even before candidate Trump entered the 2016 presidential race, the agenda was visible for anyone who was willing to admit it.  In 2014 the same Republican leadership paid Democrats to vote against the Republican primary winner of the Mississippi Senate race (Cochran -vs- McDaniel) simply because Mitch McConnell didn’t like the idea of having an actual Republican in the seat.

Remember, this is the GOP wing of the UniParty who operate on behalf of the U.S. Chamber of Commerce {DEEP DIVE} and support: comprehensive immigration reform to include amnesty; lax border security to allow cheap labor; Omnibus spending as reflected in their Obama budget-fulfillment votes; the retention of ObamaCare as mandated by the U.S. CoC; the expansion of federal common core education standards; the Wall Street trade agenda to include TPP.  All of these “DC-Republican” positions are opposed by the current Republican President and the majority of Republican voters.

Enhancing and emphasizing my argument that this mailer as a deliberate effort to elect a Democrat, I would remind everyone of a few brutally obvious points: ♦the Republican controlled senate voted unanimously to block any Trump recess appointments (summer 2017); ♦and also the reality that both the House and Senate had no legislative constructs prepared for a Trump victory in January/February 2017; ♦and top off the cake of duplicity with the fact it was Republican controlled House and Senate committees who willingly opened ridiculous investigations against their own elected president claiming a ‘Vast Planetary Russian Collusion Conspiracy’.

In short, both Republicans and Democrats want the threat of Donald Trump removed.

There is no desire on the part of Paul Ryan/Kevin McCarthy or Mitch McConnell/John Cornyn to actually win seats in 2018.  These GOP “leaders” would just as soon lose their majority position so they can go back to the comfortable indulgences of remaining in leadership in the minority status.

In the minority the leadership of the GOP are no longer threatened by President Trump and can hide behind the smokescreen of loyal opposition.

Substantively nothing changes, and the GOP leaders are just as well compensated in the minority by the lobbyist industry within DC.

The only threat to the financial interests of the GOP is President Donald Trump remaining in office and having to actually face carrying out a conservative Trump agenda in 2019 and 2020.  That Trump agenda is entirely against their “establishment republican” interests.

The Paul Ryan mailer to elect a Democrat is just another example of how corrupt the entire UniParty political apparatus is within Washington DC.

That truism is entirely why this MAGA graphic, from 2015, remains accurate:

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Koch, Ryan, Koch, McConnell, Murdoch