For Canada it’s all about politics and face-saving. How to tell? Well, after Canadian Foreign Minister Chrystia Freeland went out of her way last night to tell the media she would not conduct negotiations in the press, Freeland runs back to the press to discuss the ongoing negotiations. She is signaling to a domestic audience…. nothing more.

Domestically Justin and Chrystia from Canada have seen complete collapse in support from the Canadian electorate. Canadians have little confidence that Chrystia and Justin are capable of negotiating a deal that will benefit their economy. Trudeau and Freeland rolled the political dice; played political games; and crapped out.

Mexico (Seade) and the U.S. (Lighthizer) have structured a strong trade agreement that benefits both countries and creates an actual manufacturing and commerce bloc. Canada has no option except acquiescence, if they want to avoid Lighthizer sending a 2205 notification to dissolve the Canadians from the U.S-Mexico deal.

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In January 2018, when still attempting the political use of the negotiations, Freeland burned Lighthizer. The U.S. Trade Rep has not forgotten. Canada’s ability to enter the deal is now dependent on Lighthizer allowing them a way to save face.  Robert Lighthizer, like Trump, really doesn’t care…. The U.S. is in an overwhelming winning position either say…. Hence, Freeland’s continual appearances in the media, she’s shook.

I am reminded how badly Chrystia Freeland screwed up the negotiations in January of 2018 when she demanded that Canada be allowed to arbitrarily set their own trade import standards with China… This was right after idiot Justin signed Canada on to the TPP trade agreement.

Any canucklehead could see that signing on to TPP and simultaneously demanding to set your own standards for manufacturing origination was a poison pill. It would make the NAFTA fatal flaw infinitely worse for the U.S….. any idiot could see that problem. That was the moment when Lighthizer gave up on Canada.

In order for Canada to accept or join, via 2202 modification, they would need to agree to the U.S-Mexico modification terms. For Canada they would have to:

• open their telecommunications and banking sector (eliminate non tariff barriers).
• eliminate soft-wood (lumber) and aeronautics subsidies.
• begin a process of lowering their assembly use of Chinese/Asian goods.
• accept the rules of origin for North American manufacturing.
• eliminate protectionist tariffs on dairy and farm products.
• accept the U.S-Mexico terms for arbitration and dispute resolution.

Trump and Lighthizer are holding all the cards.  They don’t care if Canada doesn’t join; they would likely prefer to go into a one-on-one trade construct where the U.S. will apply auto tariffs on Canadian made vehicles.

The financial media are pushing optimism because Wall Street wants to protect prior Canadian investment, and the professionals know how badly Justin/Chrystia have been outmatched.

POTUS Trump is heading to Indiana today for a MAGA rally.  Don’t anticipate any breaking information (of substance) until tomorrow morning when Lighthizer can debrief with President Trump.

The *tell* is within: “we have agreed not to conduct our negotiations publicly.”

Remember, U.S.T.R. Lighthizer, Jared Kushner, Secretary Ross and the U.S. team have never made a public comment about internal negotiations, ever.  The only trade team that has discussed the dialogue, and specifically their individual terms within the dialogue, is Justin from Canada’s team, specifically Chrystia Freeland.  This has been a weakness of team sparkle socks all along because it highlights their political prism.

So when princess rainbow sparkles and Justin back away from talking about their unicorn demands they are signaling a shift from a political prism toward a more economic-based set of determinations.  Essentially, their political approach has failed; they are weakened.

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“what both sides need” interpreted: Justin and Chrystia are trying to gauge the best retreat from the position of political damage. I’m going to hold-off on expanding consequences to Canada joining until I see if they *actually* do join. However, the biggest part of the U.S./Mexico agreement would eliminate Canada’s ability to use the NAFTA loophole.

The auto-sector (rules of origin) requirements are factually more difficult for Canada to meet than Mexico. Auto companies in Canada will have to change their supply chain completely because Canadian auto assembly plants have a higher content of Asian parts.

Here’s the part of the new agreement that applies:

The United States and Mexico have concluded substantive discussions on new rules of origin and origin procedures, including product-specific rules for passenger vehicles, light trucks, and auto parts. This update to the rules of origin will provide greater incentives to source goods and materials in the United States and North America.

Key Achievement: Increasing Regional Value Content Rule

This deal encourages United States manufacturing and regional economic growth by requiring that 75 percent of auto content be made in the United States and Mexico.

The rules will:

Incentivize billions annually in additional United States vehicle and auto parts production.

Help to preserve and re-shore vehicle and parts production in the United States.

Transform supply chains to use more United States content, especially content that is key to future automobile production and high-paying jobs.

Close gaps in the current NAFTA agreement that incentivized low wages in automobile and parts production.

If Canada joins on to the above agreed terms, they will save most of their current auto-manufacturing.  However, many Canadian car manufacturers will likely have to open ancillary component manufacturing to meet the rules-of-origin threshold; that will likely lead to more component manufacturing and assembly in the U.S.

Think about it? If you are a company supplying an auto manufacturing plant currently in Canada: where are going to safely put your facility (physical plant expansion), given the renewed regulatory and compliance process; and the nature of a six year review for trade-deal continuance?  Answer: In the U.S.

In addition to the above, to join the U.S-Mexico agreement Canada will have to:

• open their telecommunications and banking sector (eliminate non tariff barriers).
• eliminate soft-wood (lumber) and aeronautics subsidies.
• begin a process of lowering their assembly use of Chinese/Asian goods.
• eliminate protectionist tariffs on dairy and farm products.

The bottom line is that Canadian workers will gain considerably if Justin and Chrystia sign on to the current deal.  Yes, it would require several industries within Canada to restart (Steel, Aluminum, Coal, etc.); however, that’s a benefit to the Canadian worker, not a loss.

The big challenge is within the protectionist barriers Canada would have to give up.  Liberal Canada likes to have governmental control over several segments of their economy; loosening regulations and opening up to a free market means less control for the planning authority…. you know, that pesky free enterprise thing.

What happens when the silent majority stand up in full force and elect a president entirely focused on advancing the interests of Main Street over Wall Street?  What happens when that President takes office and begins systematically instituting a comprehensive series of economic policies that are targeted to Make America Great Again?

The middle-class of America benefits.  That’s what happens.  And when economic, trade, and U.S. financial policy are focused to improve the outcomes for the middle-class, the entire landscape of beneficial outcomes within the U.S. economy shifts…. Bigly.

Express Pro Survey – America’s blue collar workers may be one of the most optimistic groups in the country today. According to a new study conducted by The Harris Poll and commissioned by Express Employment Professionals, 85 percent of America’s blue collar workers see their lives heading “in the right direction.”

Sixty-nine (69) percent also say their local communities are heading in the right direction, and 51 percent say the same about the country as whole.

The national survey of 1,049 blue collar workers was conducted online by The Harris Poll between July 9 and 23, 2018, on behalf of Express and offers a detailed, in-depth look at the background and attitudes of those working in blue collar professions.

“There’s been a great deal of chatter about the future and frustrations of America’s blue collar workers,” said Express CEO Bill Stoller. “Our survey reveals that blue collar workers are upbeat, optimistic and proud of the work they do. While the news is often full of stories about economic anxieties, this survey shows workers who are exceptionally optimistic. While they certainly express concerns, it’s clear that the vast majority feel like things will work out for themselves and their families.” (more)

Here’s an interesting dichotomy: Blue collar workers are slightly more likely to identify with the Democratic party, 35 percent vs. 31 percent for Republicans. By a small margin, they think Republicans do a better job of helping blue collar Americans than Democrats, 39 percent vs. 36 percent.  (link)

In general, blue collar workers are optimistic about their personal situation and about the future.

• 85 percent say their lives are heading in the right direction
• 69 percent say their local communities are heading in the right direction
• 58 percent say their states are heading in the right direction
• 51 percent say the country is heading in the right direction

Fifty-five (55) percent say they are better off now than they were five years ago.

• 20 percent say they are worse off
• 26 percent say they are about the same
• 61 percent of skilled trade workers say they are better off; 45 percent of general labor workers say they are better off.

The past year has been good for blue collar workers.

• More than two-thirds (68 percent) report a pay increase in the past year
• Of those that saw a pay increase in the last year, 39 percent received a raise of more than 5 percent
• 45 percent report receiving more responsibilities in the past year
• 35 percent report receiving a promotion in the past year

“I think there is a tendency for those with college degrees to speculate about how blue collar workers are doing,” Stoller said. “But this survey shows that most blue collar workers feel good about themselves and their jobs. They’re proud of who they are and what they do. As we head into Labor Day weekend, this survey shows that America’s labor force is doing well-and that’s good to see.

Full Survey pdf:

https://www.scribd.com/embeds/387360707/content?start_page=1&view_mode=&access_key=key-R6BLvHGj9uPSS16xj6lQ

Earlier this afternoon President Trump announced an initiative to provide federal grants to assist communities with drug abuse and prevention.  Marking the 20 year anniversary of the Office of National Drug Control Policy’s (ONDCP) Drug-Free Communities (DFC) Support Program grant awards, today President Trump announced $90.9 million in grants to 731 local drug prevention coalitions.

Continuing the tradition of transparency in government; during the media availability for the round-table President Trump answered numerous questions. The round-table discussion begins the video below.  The impromptu presser begins around 14:40 of the video:

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*Asked about Don McGahn* – President Trump called him a really good guy, added that he has a lot of affection for Don; said McGahn is likely headed to the private sector. Asked if he was concerned about McGahn’s cooperation with Mueller. POTUS replied: No, adding that he had approved of McGahn speaking to the special counsel.

*Asked about trade negotiations with Canada* – President Trump said negotiations were going really well. Noted that White House and Canadian officials “negotiated late into the evening” last night. A lot of trade deals are working out well.

*Asked about Ron DeSantis remarks today* – President Trump said he didn’t hear DeSantis remarks, but continued to praise him, calling him extraordinary. Hes an extreme talent.

*Asked about the governments response to Puerto Rico following last years hurricanes* – I think we did a fantastic job in Puerto Rico. We’ve put a lot of money and a lot of effort into Puerto Rico. Said Puerto Rico had previously been grappling with electric plant issues before last Hurricane season.

*Asked if he wants to further regulate Google* – We just want fairness. You know what we want? Not regulation…fairness. Reiterated that he thinks Google and Facebook treat conservatives unfairly.

During analysis of the U.S-Mexico trade agreement terms it became obvious that *if* Canada was going to join the pact they would have to almost completely acquiesce and reverse on their former positions.   It now is entirely plausible that just might happen.

When entering the meeting with U.S.T.R. Robert Lighthizer, Canadian Minister Chrystia Freeland spoke specifically about “Canadian workers”.  Justin from Canada has been very cautious in his word choices also speaking about “Canadian workers”.  As Freeland exited the first meeting with Lighthizer the reasoning for their collective word choice is becoming apparent.  Canada is preparing to take a knee, and they are positioning for the least amount of political damage possible.  WATCH the exit of first meeting:

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Team Trump has positioned this perfectly. By using NAFTA section 2202, to construct a modification of the original 1993 agreement, Lighthizer is intending to send a 90-day notification letter to congress informing them the U.S. and Mexico have agreed to modifications of their bilateral trade agreement.

This approach allowed Trump/Lighthizer to positioned Canada with a take it or leave it option.  If Canada didn’t accept, Lighthizer files a simultaneous section 2205 notification withdrawing the U.S. from a NAFTA partnership with Canada.  If Canada did accept Lighthizer adds them to the 2202 (modification) notification.

A 2205 withdrawal meant Canada and the U.S. would need to enter a bilateral trade deal entirely separate from the U.S-Mexico deal.  President Trump already publicly said what the terms of that bilateral would entail.  In the interim he would initiate a 25% tariff on Canadian made automobiles (massive leverage).

However, in order for Canada to accept or join, via 2202 modification, they would need to agree to the modification terms.  For Canada they would have to: drop their protectionist tariffs on the dairy sector, open their telecommunications and banking sectors and eliminate the subsidies on aeronautics and soft-wood Lumber sectors.   In essence open their economy to fair market competition and agree to intellectual property protections.

Canada had to choose between taking on Trump individually, a NAFTA withdrawal, or accepting the terms of modification.  The prism for Canadian decision-making is entirely about politics.  Justin and Chrystia have to make a political decision, or change their perspective and look at the economics.  Incredibly, it now appears Canada is going to accept the modification route.

Today the Bureau of Economic Analysis presented the second estimate for the second quarter GDP growth.  The second review increased the growth upward to 4.2%.

Within the data (full pdf release w/ tables) there are several interesting aspects.

(1) The upward revision to nonresidential fixed investment was mostly accounted for by investment in software. (2) Imports, which are a subtraction in the calculation of GDP, were revised down. Within goods, the downward revision was widespread, the largest contributor was petroleum.

In addition to presenting revised estimates for the second quarter, today’s release presents revised estimates of first-quarter wages and salaries, personal taxes, and contributions for government social insurance. Wages and salaries are now estimated to have increased $122.5 billion in the first quarter of 2018, an upward revision of $0.4 billion.  (source data)

For more than three decades all U.S. economic policy was elevating Wall Street and diminishing Main Street. As a result the middle America blue-collar workers have not had wage gains keeping up with inflation for over 30 years…. Then came the era of Trump.

Overall the MAGAnomic policy of the Trump administration is working on multiple sectors of the Main Street U.S. economy simultaneously.  Keep in mind, all of this is happening BEFORE the trade policies and renegotiated trade deals kick in.

As the Main Street economy continues to expand, wages are increasing.  It is noted that all wage measures are continually being revised upward as the value of labor within the economy continues to thrive.  Due to increased labor value, in combination with decreased tax burdens, workers, specifically middle-class workers, are seeing large increases in actual take-home pay.  This means more spending power, more disposable income, which also fuels the expanding economy.  It’s an upward growth spiral.

More money into the U.S Treasury and less dependence on welfare/social service programs have a combined exponential impact. You gain a dollar, and have no need to spend a dollar – the saved sum is doubled. That is how the SSI and safety net programs are saved under President Trump.

When you elevate your economic thinking you begin to see that all of the “entitlements” or expenditures become more affordable with an economy that is fully functional and expanding.  Growth-Growth-Growth.  Jobs-Jobs-Jobs.

As the GDP of the U.S. expands, so does our ability to meet the growing need of the retiring U.S. worker. We stop thinking about how to best divide a limited economic pie, and begin thinking about how many more economic pies we can create.

The economic models of the entire last generation+ are based on the assumptions of continuing globalist economics which advances, and has advanced, the interest of Wall Street over Main Street.  They were driving a “service-driven economy” message.

Simultaneous to domestic capital investment inside the U.S., the ability of our nation to provide goods and services to meet the economic expansion, means less reliance on imported materials, goods and/or services.   We are making more of our own stuff; exporting at a larger rate; and importing less – specifically due to the energy independence strategy within the larger Trump policy.

Every granular policy is like a small part in a larger machine.  Each individual part of the MAGAnomic policy is working to compliment the larger objective.