The administration’s media point person for discussions following the Hanoi Summit between President Trump and Chairman Kim Jong-un is National Security Advisor John Bolton.
Ambassador Bolton appears on the Sunday talk circuit to discuss the ongoing negotiations. As anticipated none of the interviewers focused on the Chinese aspect at all. Don’t look for President Trump to respond to Chairman Kim directly; instead watch how President Trump’s entire team responds to China. Chairman Xi Jinping controls Kim Jong-un.
Likely Treasury (Mnuchin) and State (Pompeo) will focus on DPRK sanctions violations; likely USTR (Lighthizer) and Commerce (Ross) focus on hard-line trade position; likely USTR, Commerce and State focus on tech issues (Hauwei and 5G) and pressure allies. All of these targeted approaches rightly focus on China (cause), not North Korea (symptom).
Mrs. Michelle Malkin delivered a strong call-to-arms at CPAC surrounding the insufferable Big Club’s republican corporate agenda toward immigration.
Wolverine Speech and Transcript Below:
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[Transcript] Good afternoon. Thank you to CPAC for the invitation. My name is Michelle Malkin. I identify as an American. A proud, unhyphenated, unapologetic, fully assimilated American. My pronouns are U.S.A.
America is good and America is great. Of these basic truths, there is or should be little dispute among us here. But two questions loom large: 1) For how long will the America we grew up in remain good and great? And 2) To whom shall we entrust the existential responsibility of securing the goodness and greatness passed down peacefully for generations?
I wish I could stand here and chirp happily to you about positive news. Yes, unemployment rates are at historic lows, regulations and taxes are being cut, some stellar judges have been confirmed, and the reckless, feckless liberal media has finally, finally self-immolated like a slow-motion downing of the Hindenburg.
Yes, we have much to thank President Trump for as he battles the Beltway swamp, the deep state, the administrative state, and the fake news fourth estate. But there is no sugarcoating America’s long-term forecast. We face fearful odds. The game is rigged. The playing field is manifestly unlevel.
My first book Invasion in 2002, exposed how border failures and systemic non-enforcement of our visa program rules created a national security crisis that led to 9/11. My last book, Sold Out, which I co-authored in 2015 with former American computer programmer-turned-labor lawyer John Miano, documented how Big Business and Big Government created an economic crisis by exploiting the H-1B tech worker visa program and other foreign employment visas for cheap labor.
I’ve been accused of being a grifter for wanting to inform and educate citizens about these destructive rackets. But it’s the GOP sellouts in bed with open borders – like the ones who hijacked the tea party movement to shill for amnesty – who are the real grifters cashing in and practicing deceit at the expense of their base.
Our shining city on a hill has become a much-abused doormat to the world. Building the border wall is just half the battle. The numbers tell all. Our future is dimmed. The odds are fearful.
We currently grant one million legal permanent residencies to people from around the world every year. The number of green card holders is expected to increase by 10 million by 2025. That’s more than the current combined population of Dallas, St. Louis, Denver, Boston, Chicago, Los Angeles, and Atlanta. Now multiply that number by at least three and a half.
Thanks to our chain migration system, created in 1952 and expanded exponentially by Congress in 1965 and 1990, these new immigrants can sponsor their entire extended families: parents, spouses, adult children and their children, and siblings and their children. Princeton University researchers found that recently admitted immigrants sponsored an average of 3.45 additional relatives each.
An estimated 85,000 refugees and 20,000-plus asylees enter the country annually through an overwhelmed system so rife with fraud and abuse that the process is jokingly dubbed “refugee roulette” by immigration lawyers. In total, from fiscal year 2008 to 2017, the U.S. gave green cards to more than 2 million migrants for various humanitarian claims – a population larger than the city of Philadelphia.
Nearly half a million more immigrants in that time frame got in through the diversity visa lottery. Illegal aliens are eligible if a legal family member wins the jackpot. Tens of thousands are pouring in from terrorism breeding grounds through the lottery unvetted, unmonitored and unassimilated. Thanks again to chain migration, immigration lotto winners’ spouses and unmarried children under 21 all get passes into the country, too.
Nearly half of all illegal aliens in the country have violated the terms of their short-term visitor or work visas. More than 10.8 million people received such visas alone in fiscal year 2015, including 500,000 foreign university and graduate students on academic visas and nearly 700,000 total foreign guest workers (both skilled and unskilled, not to mention their spouses, many of whom are allowed to work here as well).
Congress has repeatedly mandated a nationwide visa entry-exit system to track legal short-term visa holders. But one has yet to be built—even in the wake of the 9/11 terrorist attacks, which were perpetrated in part by several illegal alien visa overstayers. E-verify has been stalled. Sanctuary cities metastasized. And BOTH parties are to blame – yeah I’m looking at you, Paul Ryan, Mitch McConnell, the Bush family, Mitt Romney and the ghost of John McCain.
This unrelenting inflow of new green card holders, short-term foreign visa holders, legal temporary workers, refugees and asylees is supplemented by 13 to 30 million illegal aliens who expect amnesty and chain migration privileges from Washington despite breaking immigration laws governing everything from border jumping to ID fraud, benefits fraud, tax fraud, and marriage fraud, to human and drug trafficking, to employment rules, deportation orders, and visa overstays.
The feds have proved themselves serially unwilling and incapable of handling the lapses, backlogs, overload, and yes, invasion. The numbers tell all. Open borders anarchy, multiplied by endless chain migration, amnesty, and cheap labor pipelines, endangers our general welfare and the blessings of liberty. By every clear measure, the war is not on immigrants but on American sovereignty.
I’ve been called white for stating the facts. I’m not white. I’m just right. Both native-born and immigrant families like mine, which revere the rule of law, common traditions, constitutional principles, one identity and one tongue, have been replaced by militantly unassimilable and hostile generations…of future Democrat voters whose tribal allegiance to the Left has only hardened over time.
It’s insane that we have elected Republicans on Capitol Hill doing the bidding of the illegal alien DREAMer racket. Until and unless we reclaim the right of self-determination over the numbers, we are doomed.
My fellow Americans, we stand at the bridge as Horatius stood at the narrow bridge over the Tiber River alone facing fearful odds as hordes of Etruscans marched towards him and cowards cut and run behind him. Like his enemies, our enemies are both foreign AND domestic.
Inside are flimsily defended borders, we are not at peace, or rather, the radical Left is not at peace with us. From the comfort of TV green rooms, Beltway backrooms, corporate boardrooms, and conference ballrooms, it may not look like civil war is imminent. But threats and outright violence against ordinary, law-abiding people are now regularized features, not random bugs, of political life in these dis-United States.
College students are being punched, elderly citizens are being harassed, MAGA hat wearers are being kicked off planes and assaulted in school hallways and restaurants, conservative speakers are being mobbed and Molotov cocktailed, ICE agents and their families are being targeted, pro-lifers are being kicked and menaced, pro-Trump, anti-jihad moms on social media are being monitored and doxxed.
The madness is beyond parody.
Last week, social justice media warriors whipped up hysteria over a Mar a Lago pastry chef’s Instagram posts. Where are the sanctuary spaces for law-abiding conservatives who simply want to exercise their rights to free speech and peaceable assembly?
The divide in this country is between decent people who stand up for America and dastardly people who want to bring America to its knees.
We certainly should make common cause with others across the aisle who shares our values, but we should not rush to embrace those whose fundamental aim is to smear and destroy us all. That’s suicidal. Which is why I cannot stand here and stay silent about the role Van Jones has played in attempting to silence the Right.
My objection is not to his support for criminal justice reform. I have dedicated much of my own time, energy, and money to fighting wrongful convictions, false allegations, and prosecutorial and forensic misconduct. Next time you need a conservative to talk about criminal justice reform, call me. You don’t need someone who’s going to spew fake news pro illegal alien propaganda to talk CJR to conservatives.
Fact check: The most recent research by the Federation for American Immigration Reform found that illegal aliens are up to 5.5 times more likely than Americans to be incarcerated in state prisons compared to Americans and legal residents.
But my most vehement objection is to this stage being used to lend legitimacy to the George Soros-funded organization Color of Change, which dedicated to censoring and sabotaging right-leaning groups for championing the free market, opposing radical Islam, and exposing open borders.
Seven years ago, Van Jones’ group pressured Pepsi, McDonald’s, Intuit and other companies to cut ties to the mainstream American Legislative Exchange Council(ALEC), a half-century-old association of state legislators who believe in “the Jeffersonian principles of free markets, limited government, federalism, and individual liberty.” What was ALEC’s crime? Crafting model legislation on voter ID to protect election integrity, immigration enforcement measures and self-defense legislation to strengthen Second Amendment rights.
Color of Change and the smear machine racket known as the Southern Poverty Law Center use the same playbook to marginalize and criminalize mainstream conservatives, anti-jihad groups, and immigration hawks as “hate groups” and push us out of the public square.
They conspire with payment processors and Silicon Valley to deprive the Right of our voices and our ability to make a living. So many speaking up and fighting on the front lines for liberty and security are being detwittered depaypaled defacebooked deplatformed – people like Laura Loomer and Gavin McInnes and the Center for Immigration Studies and Robert Spencer and so many others.
Many are in this room. Stand up if you are one of them. Many have been forced to beg for money to help them fight in court to restore their reputations. Many have been barred from this room.
Nice is not enough. Logic and facts and appeals to decency and fairness are not enough. Bemoaning double standards is not enough. Ultimately our future will not be secured in a Fox News anchor chair or a think tank office or on a cruise ship or at a cushy GOP retreat. The future is on the frontlines. At the edge of the bridge.
Then out spake brave Horatius, the captain of the Gate. To every man upon this earth death cometh soon or late. And how can man die better than facing fearful odds, for the ashes of his fathers and the temples of his Gods.
Instead of throwing allies under that bridge, movement conservatives who have preached so comfortably here in the Beltway about defending America while preserving the status quo need to help provide financial and moral support to the disrupters willing to fight fire with fire.
Maybe it’s providence that I am privileged to speak here on the 7th anniversary of Andrew Breitbart’s death. He was a disrupter. We need more disrupters. We need legislative action at the local and state level.
We need politicians who will DO SOMETHING to stop the sowers of hate and their handmaidens. Use the tools at your disposal. Don’t just stand there. DO SOMETHING.
Diversity is NOT our strength. Unity is. Our common purpose is the common defense of our nation. Good people make America great.
The Canadian government shocked the professional financial and economic media with their latest fourth quarter GDP release showing the economy has essentially come to a grinding halt at 0.1% growth. [Compare to U.S. GDP growth of 3%]
The Canadian Q4 GDP growth isn’t one percent, it’s one-tenth of one percent: 0.1%, essentially halted; but everyone discussing this is missing something very important.
[FP] Canada’s economy practically came to a halt in the final three months of 2018, in a much deeper-than-expected slowdown that brings the underlying strength of the expansion into doubt.
The country’s economy grew by just 0.1 per cent in the fourth quarter, for an annualized pace of 0.4 per cent, Statistics Canada said Friday from Ottawa. That’s the worst quarterly performance in two and a half years, down from annualized 2 per cent in the third quarter and well below economist expectations for a 1 per cent annualized increase.
While a slowdown was widely expected in the final months of the year due to falling oil prices, it’s a much bleaker picture than anyone anticipated with weakness extending well beyond the energy sector. Consumption spending grew at the slowest pace in almost four years, housing fell by the most in a decade, business investment dropped sharply for a second straight quarter, and domestic demand posted its largest decline since 2015. (read more)
The financial punditry go on to give multiple reasons for the drop and all of them are factually accurate. However, there’s a key aspect that I cannot find discussed in any analysis of the data.
A very specific key aspect.
First, let me say CTH does not want to see the Canadian economy falter; not even a little bit. By disposition CTH wants to see economic abundance for everyone, especially our close friends and allies. But stand back, look at the bigger, BIG, picture, the media always avoid discussing…. you’ve got to ask yourself how can Canada be slowing down at the exact same time the USA economy is skyrocketing?…. There’s a connection.
Again, all of the currently expressed financial reasons for the slowdown are accurate; I am not disputing them. However, it’s what they are not discussing that really matters.
In the third paragraph of the FP article I highlighted a partial sentence: “business investment dropped sharply for a second straight quarter.” That means sharp drops in business investment for Canada in the time-frame July 2018 through December 2018.
Now pause, and reference the U.S. fourth quarter: “Consumer spending continued to grow solidly and, most encouragingly, business investment growth recovered sharply after a dip in the third quarter. Despite big external headwinds and financial market volatility in the fourth quarter, U.S. firms are not retrenching sharply on capex.”
Astute economic followers will note what the background is.
♦In July, August, September (Q3) of 2018 the new NAFTA negotiation was in the final stages. The U.S. and Mexico had already come to the terms; Canada was the outlier having to re-join an agreement in September where they previously abandoned negotiations.
♦On October 1st, 2018, the first day of Q4, the USMCA was unveiled. Now the U.S., Mexico and Canada were all committed. Throughout the fourth quarter, all business interests had an opportunity to review the much anticipated USMCA outcome and details.
Multinational corporations, domestic corporations, U.S. and Canadian businesses were all looking for the same very specific detail: What happened with the NAFTA loophole?
Within the new USMCA the critically important NAFTA loophole was closed.
Over the past three decades both Canada and Mexico structured key parts of their independent trade agreements to take advantage of their unique access to the U.S. market. Under the existing NAFTA, Mexico and Canada generate billions in economic activity through exploiting the NAFTA loophole.
China, Asia (writ large), and the EU enter into trade agreements with Mexico and Canada as back-doors into the U.S. market. So long as corporations can avoid U.S. tariffs (and rules of origin that pertain to those tariffs), by going through Canada and Mexico they would continue to exploit this approach.
By shipping parts to Mexico and/or Canada; and by deploying satellite assembly facilities in Canada and/or Mexico; China, Asia and to a lesser extent EU corporations exploited a NAFTA loophole for rules of origin on finished goods.
Through a process of building, assembling or partially manufacturing their products in Mexico/Canada those foreign corporations could skirt U.S. trade tariffs and direct U.S. trade agreements. The finished foreign products entered the U.S. under NAFTA rules.
Why deal with the U.S. when you can just deal with Mexico, and use NAFTA rules to ship your product directly into the U.S. market?
This exploitative approach, a backdoor to the U.S. market, was the primary reason for massive foreign investment in Canada and Mexico; it was also the primary reason why candidate Donald Trump, now President Donald Trump, wanted to shut down that loophole and renegotiate NAFTA.
At the conclusion of Round #6, just before giving up on Chrystia Freeland for good, this was the direct issue at the heart of a very frustrated U.S.T.R. Lighthizer’s strongly worded response to Canada:
[…] In another proposal, Canada reserved the right to treat the United States and Mexico even worse than other countries if they enter into future agreements. Those other countries may, in fact, even include China, if there is an agreement between China and [Canada]. This proposal, I think if the United States had made it, would be dubbed a “poison pill.” We did not make it, though. Obviously, this is unacceptable to us, and my guess is it is to the Mexican side also. (read full remarks)
This loophole was the primary reason U.S. manufacturers relocated operations to Mexico. Corporations within the U.S. Auto-Sector could enhance profits by building in Mexico or Canada using cheap parts imported from Asia/China. The labor factor was not as big a part of the overall cost consideration as cheaper machined parts and imported raw materials.
If the U.S. applied the same tariffs to Canada and Mexico we apply to all trade nations, then the benefit of using Canada and Mexico -by those trade nations- is lost.
Corporations will no longer have any advantage, and many are likely to just deal directly with the U.S. This was the reason Trump, Lighthizer and Ross to retained Steel and Aluminum tariffs on Canada and Mexico until they agreed to the new USMCA rules.
When Trump took away the flawed NAFTA market access; and when Trump removed the ability of Mexico and Canada to broker themselves for economic benefit; there was no longer a financial benefit behind corporations investing in Canada. Under a binding trade pact between the USMCA partners, the NAFTA flaw is closed.
As a direct outcome billions of investment dollars are now being removed from any future consideration into Canada.
That’s the overarching reason for the Canadian GDP to halt.
Here’s the proverbial $64,000 question: Can Canada re-engineer their economy and actually begin to “make” products again, not just simply “assemble” foreign products from other nations?
Can Canada reverse three-decades of specifically structured economic policy decisions that were centered around this “assembly” (brokered) economy?
Can the environmentalists be put back into a box while heavy manufacturing and raw material development are reconstituted?
Can the environmentalists allow natural resource development? Oil development, mining operations, lowered overall energy costs, etc?
Can Canada somehow lower national energy costs so that Heavy manufacturing might consider restarting? (NOTE: heavy manufacturing requires massive energy use.)
Can Canada find any industrial development investors who would be willing to take a chance on all the above?
See the problem?
The Canadian economy is not likely going to get better without a radical shift in Canadian political perspectives and outlook(s).
Then again, perhaps that’s really why Justin and Chrystia were so damned set on protecting their “cultural industries” (ie. media) from competition.
At the end of all progressive leftism; when you carry out their policies to their logical conclusion; what we find is this massive wealth disparity between the haves and the have-nots.
This is not supposition.
History is an empirical guide that cannot be ignored.
All you have to do is look back at the past thirty years for an example of what happens when government control, leftist policies, are carried out. The middle-class is wiped out; wages stagnate or decrease; the wealth gap keeps increasing; crony-government benefits those with the largest financial influence over political policy.
By design the process benefits the most elite, the investment class and those with political power.
Within their progressive outlook, wealth is defined as a singularly limited economic pie and the elites step forward to announce their distribution model which requires increased taxation.
As a result, immediately disparity increases. And so they, as professional politicians, historically propose solutions – their solutions. However, their solutions are actually the preferred solutions of their campaign contributors, ie. Wall Street. The same Wall Street that funds lobbyists, like the U.S. Chamber of Commerce, to set the economic legislative priorities of congress.
Meanwhile our visit to the grocery store, food, energy etc. leaves us dealing with price increases at jaw-dropping levels. This is what happens when multinationals take over, a production economy becomes a service economy.
To keep the underemployed pitchforks at bay, government policy (now directed by Wall Street globalists and corporations) subsidizes the income gap. EBT, WIC, SNAP and food stamp assistance necessarily skyrockets.
Temporarily the pitchforks are dropped, but economic independence turns to dependence; people become even more frustrated. With government policy adjusted for self-preservation, deficits necessarily explode.
The factual counter to this decades-long corrupt process is represented within the middle-class policies of President Donald Trump.
Yes, Trump is the anti-elite; not necessarily in persona (he is that also) but in actual outcome of policy. Notice how right now working-class wages are rising. Notice how the value of work is now increasing… and, more importantly, notice how the ‘wealth gap’ in the past two years is actually closing.
President Trump doesn’t achieve this by redistributing a limited amount of American economic wealth; he achieves these results by creating even more economic pies. Trump’s economic policies actually increase all American wealth. The American middle-class becomes more valuable…. 600,000 high-wage manufacturing jobs are created. The American worker becomes more valuable.
For the first time in many decades the chief executive of the United States walked into office concerned about the fiscal stability of the average American, without a single IOU on his Oval Office desk. For the first time ever, a titan of American Main Street is in the oval office.
Witnessing President Trump bringing skilled labor union leaders into the White House on Day #1 was evidence therein. Meeting with manufacturing giants in the Auto industry is even more evidence. People can attempt to obfuscate it, but actions speak louder than words. President Trump is Main Street, period.
Additionally, President Trump’s economic DNA outlook is comprised of American business interests at a micro-cellular level. As a direct result of Trump’s MAGAnomics the distance between the Wall Street economy and the Main Street economy narrows.
How long until Main Street once again surpasses Wall Street is up for debate. However, regardless of how long it takes, within the narrowing process we find a shift from “dependence” to “independence”; all created by Trump’s America-First economy.
This prosperity is achieved with the common sense principle behind Making America Great Again.
Okay, now USTR Robert Lighthizer’s cautiously worded enforcement testimony starts to take on a fuller context. When Ambassador Lighthizer was testifying before the mostly decepticon House Ways and Means Committee, he started to outline his newly designed trade enforcement mechanism… but he stopped; he didn’t want to reveal too much.
Now listen to Larry Kudlow describe “enforcement”. WATCH:
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If you watched the USTR testimony you would have seen how the “enforcement” mechanism within the U.S-China trade negotiations was the priority for Lighthizer’s focus; and he specifically mentioned “layered” enforcement triggers, specific to each sector, and issue.
CTH has never seen a U.S. Trade Representative so structurally willing to clear-cut the entire bamboo forest if needed. Lighthizer is intensely focused on enforcement.
Congressional reps were focusing most questions around Chinese purchases of U.S. goods. Lighthizer was blowing through those questions like annoying gnats. That’s not the focus of his structural engagement with the Chinese team. Lighthizer is going much deeper, into issues of much greater consequence than simply purchases via imports/exports.
While increased Chinese purchases to lower the deficit are a part of the goal, they are a very small part of the goal. The protection of U.S. intellectual property; the removal of non-tariff trade barriers; the protection of U.S. ownership rights as Americans operate inside China; the confrontation of currency manipulation, and the sector by sector enforcement provisions are Lighthizer’s primary objective.
If you overlay the comments by NEC Chairman Larry Kudlow (above), with the insightful commentary about ‘enforcement’ by USTR Lighthizer earlier, we can see the picture emerging.
Lighthizer wasn’t specific, Kudlow gave more detail.
What Kudlow is outlining is what Lighthizer hinted toward.
Each of the sectors within the U.S-China trade agreement will have their own specific multi-staged enforcement mechanism that triggers one-way tariffs if China violates the terms; and China cannot retaliate.
Each trade sector will be protected on: [1] intellectual property rights (copyright, patents etc); [2] non tariff barriers (artificial Chinese regulatory hurdles); [3] private ownership external to the controlling reach of Chinese state-owned dictates; [4] as well as financial access and larger currency manipulation schemes.
Within each trade sector; and upon each protected aspect; Lighthizer is building-in a multi-tiered tariff system that would immediately punish the Chinese State-Owned system (all companies therein) with staged, one-way tariffs and countervailing duties that cannot be avoided and China cannot retaliate against.
In essence, and in practice, it sounds like the sector-specific American product protection means: if China violates the sector-specific terms, any terms, the equivalent (or closest equivalent) Chinese product would automatically cost more…. and the U.S. product would cost less. An enforcement system giving U.S. producers and owners an immediate benefit; and giving China an immediate punishment.
[This would also likely apply to U.S. companies with Chinese controlling interests.]
This sounds like the enforcement framework within a heavy MOU; that is then guaranteed to transfer into the final, legal and binding agreement; and be applied to every element, within every sector, across the entirety of the U.S. commerce relationship with China.
Lighthizer described “steps” and “layers” of this protection at every level, and across every element, of commercial engagement with China. However, Lighthizer didn’t describe the punishment; it sounds like Larry Kudlow did.
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En route to the White House from Hanoi, Vietnam, Air-Force One stopped in Alaska for refueling. During the stopover President Trump delivered remarks to U.S. troops stationed at Elmendorf AFB.
President Trump was greeted by Alaska Governor Mike Dunleavy who accompanied the president to a base hangar where U.S. troops were gathered.
White House Council of Economic Advisers Chair Kevin Hassett discusses the U.S. economy’s 2.6 percent growth in the fourth quarter, and the outlook for the U.S. economy through the rest of 2019.
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Notice how most of the financial pundits are focusing on what the “global economy” needs; specifically what the EU and China need to do to gain economic growth. From that position, the U.S. trade reset is adverse to their financial interest; those financial interests are driven by Wall Street not Main Street.
Economic nationalists who understand the concept of ‘America First’ focus on what the USA economy needs, and do not accept a position that the U.S. should acquiesce our position to benefit the economic needs of other nations. That’s the primary difference.
Few understand the MAGAnomic reset and what was predicted to happen in the space between disconnecting a Wall Street economic engine (globalism and multinationals) and restarting a Main Street economic engine (nationalism/America-First). In 2016 CTH explained where we would be today.
President Trump’s MAGAnomic trade and foreign policy agenda is jaw-dropping in scale, scope and consequence. There are multiple simultaneous aspects to each policy objective; however, many have been visible for a long time – some even before the election victory in November ’16.
♦ When U.S. banks were allowed to merge their investment divisions with their commercial banking operations (the removal of Glass Stegal) something changed on Wall Street.
Companies who are evaluated based on their financial results, profits and losses, remained in their traditional role as traded stocks on the U.S. Stock Market and were evaluated accordingly. However, over time investment instruments -which are secondary to actual company results- created a sub-set within Wall Street that detached from actual bottom line company results.
The resulting secondary financial market system was essentially ‘investment markets’. Both ordinary company stocks and the investment market stocks operate on the same stock exchanges. But the underlying valuation is tied to entirely different metrics.
Financial products were developed (as investment instruments) that are essentially wagers or bets on the outcomes of actual companies traded on Wall Street. Those bets/wagers form the hedge markets and are [essentially] people trading on expectations of performance. The “derivatives market” is the ‘betting system’.
♦Ford Motor Company (only chosen as a commonly known entity) has a stock valuation based on their actual company performance in the market of manufacturing and consumer purchasing of their product. However, there can be thousands of financial instruments wagering on the actual outcome of their performance.
There are two initial bets on these outcomes that form the basis for Hedge-fund activity. Bet ‘A’ that Ford hits a profit number, or bet ‘B’ that they don’t. There are financial instruments created to place each wager. [The wagers form the derivatives] But it doesn’t stop there.
Additionally, more financial products are created that bet on the outcomes of the A/B bets. A secondary financial product might find two sides betting on both A outcome and B outcome.
Party C bets the “A” bet is accurate, and party D bets against the A bet. Party E bets the “B” bet is accurate, and party F bets against the B. If it stopped there we would only have six total participants. But it doesn’t stop there, it goes on and on and on…
The outcome of the bets forms the basis for the tenuous investment markets. The important part to understand is that the investment funds are not necessarily attached to the original company stock, they are now attached to the outcome of bet(s). Hence an inherent disconnect is created.
Subsequently, if the actual stock doesn’t meet it’s expected P-n-L outcome (if the company actually doesn’t do well), and if the financial investment was betting against the outcome, the value of the investment actually goes up. The company performance and the investment bets on the outcome of that performance are two entirely different aspects of the stock market. [Hence two metrics.]
♦Understanding the disconnect between an actual company on the stock market, and the bets for and against that company stock, helps to understand what can happen when fiscal policy is geared toward the underlying company (Main Street MAGAnomics), and not toward the bets therein (Investment Class).
The U.S. stock markets’ overall value can increase with Main Street policy, and yet the investment class can simultaneously decrease in value even though the company(ies) in the stock market is/are doing better. This detachment is critical to understand because the ‘real economy’ is based on the company, the ‘paper economy’ is based on the financial investment instruments betting on the company.
Trillions can be lost in investment instruments, and yet the overall stock market -as valued by company operations/profits- can increase.
Here’s the critical part – Conversely, there are now classes of companies on the U.S. stock exchange that never make a dime in profit, yet the value of the company increases.
This dynamic is possible because the financial investment bets are not connected to the bottom line profit. (Examples include Tesla Motors, Amazon and a host of internet stocks like Facebook and Twitter.) It is this investment group of companies that stands to lose the most if/when the underlying system of betting on them stops or slows.
Specifically due to most recent U.S. fiscal policy, modern multinational banks, including all of the investment products therein, are more closely attached to this investment system on Wall Street. It stands to reason they are at greater risk of financial losses overall with a shift in economic policy.
That financial and economic risk is the basic reason behind Trump and Mnuchin putting a protective, secondary and parallel, banking system in place for Main Street.
Big multinational banks can suffer big losses from their investments, and yet the Main Street economy can continue growing, and have access to capital, uninterrupted.
Bottom Line: U.S. companies who have actual connection to a growing U.S. economy can succeed; based on the advantages of the new economic environment and MAGA policy, specifically in the areas of manufacturing, trade and the ancillary benefactors.
Meanwhile U.S. investment assets (multinational investment portfolios) that are disconnected from the actual results of those benefiting U.S. companies, and as a consequence also disconnected from the U.S. economic expansion, can simultaneously drop in value even though the U.S. economy is thriving.
National Economic Council Director Larry Kudlow appears on CNBC to discuss the latest releases of economic stats and the on-going trade talks between the U.S. and China. Kudlow notes the U.S. and China are making progress specifically due to USTR Robert Lighthizer. Interesting interview.
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Nuance and team subtlety are important here. Larry Kudlow is a loyal soldier, no question, but his economic leaning is toward trade outcomes that benefit Wall Street… Robert Lighthizer is a fierce battle-hardened trade expert, with an outlook that is multi-generational toward Main Street.
Listen to Lighthizer talk about the economic future for his grandkids in his congressional testimony yesterday and you’ll see what I mean. NO COMPROMISE with China. Lighthizer is prepared to fight all of Main Street’s enemies, including congress.
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This is a library of News Events not reported by the Main Stream Media documenting & connecting the dots on How the Obama Marxist Liberal agenda is destroying America
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