Well, this will not come as a surprise to CTH readers, but it affirms prior suspicion of Chairman Xi Jinping’s motives and intents in the pre-G20 trip to North Korea.  There is also an aspect to this propaganda highlighting that Beijing actually had this narrative written prior to the outcome, I’ll explain below.

As predicted, China’s state media are proclaiming that Chairman Xi Jinping, playing the role of magnanimous panda, is responsible for the success and restart of the discussions between President Trump and Chairman Kim Jong-un of North Korea:

CHINA – […] Ten days before the Kim-Trump meeting, President Xi Jinping made a historic visit to North Korea, with one of the key aims being to show political support and help North Korea and the US to break the deadlock in their negotiations, Zheng said.

Xi also met Trump in Osaka on the sidelines of the G20 Summit on Saturday, when they also discussed the peninsula issue. Xi has encouraged both Kim and Trump to push forward negotiations and reach an agreement eventually.

Zheng said the third Kim-Trump meeting proves that China’s mediation and encouragement are effective, and at least the friendly atmosphere of the region has been rebuilt successfully.

“Without China’s encouragement, Trump might not be so confident to propose such a meeting at the DMZ so soon, since he would not have been sure what Kim was thinking,” according to Zheng. (more)

The article is the typical propaganda from a currently hostile Beijing toward President Trump who they now openly see as an adversary and have dropped the panda mask.

So you might read that first part as boilerplate Beijing propaganda, which it is; however, in the latter part of the state-media presentation the footprints of the dragon plan becomes visible.  Read (emphasis mine):

[…] Trump said talks with North Korea would resume, and the US team would be led by US special representative for North Korea Steve Biegun, CNN reported.

This shows that after North Korea expressed anger over US Secretary of State Mike Pompeo and demanded the US remove him from the nuclear talks after the unsuccessful Hanoi summit, the Trump administration has made a decision and given a positive response to North Korea, Zheng said.

Hawkish diplomats like Pompeo and National Security Advisor John Bolton are given a smaller role now since Trump has found these senior officials could make negotiations with North Korea very difficult, Diao noted.

“If Trump gives special authorization to Biegun and allows him report to the Oval Office directly, he can minimize the negative impact from hawkish politicians like Pompeo. Fortunately, it seems like Biegun is an acceptable figure for North Korea,” Diao said.  (read more)

Obviously Beijing is hoping readers don’t actually watch the video of Trump’s visit to the DMZ; especially the video from the DPRK propaganda piece, where Kim Jong-Un is warmly greeting Secretary Mike Pompeo, and especially where the two, Pompeo and Kim, are smiling and laughing together.

Two points indicated by this article:

#1) The outline of this Beijing script was actually written before the DPRK visit.  Obviously they didn’t consider or expect the visible fallacy of the Pompeo interaction with Kim Jong-un.  The visible facts don’t fit the Beijing script; and, more importantly….

#2)  As we suspected and wrote earlier in the year, it was Beijing’s control agents who were opposed to Secretary Mike Pompeo as an emissary in the talks.  China doesn’t want Pompeo in the picture.  He is viewed as a risk to their interests.

Expanding on #2, it becomes even more clear that Beijing (Chairman Xi) is controlling all of the officials in/around Kim Jong-un.  The Pompeo factor highlights: Yes, THIS IS INDEED a hostage rescue effort; and we are seeing just how severe the scale of control is.  [Keep in mind, those reading this are very far ahead of anyone in understanding what this is all about.]

Chairman Xi Jinping not only controls North Korea as a proxy province, but this is even more evidence Xi controls everyone -at the highest levels of DPRK government- in/around Chairman Kim Jong-un.  Can you imagine the scale of 24/7 stress this hostage is going through?

Slowly President Trump is changing the dynamic and actually removing the tentacles of Chinese control over North Korea.  However, this is a stunningly complex dynamic to try and negotiate through.

Understanding the dynamic of a hostage rescue effort we certainly have respect and appreciation for the success President Trump has been able to achieve so far.

Fox News host Tucker Carlson traveled to Osaka Japan for the G20 meeting between President Trump and China’s Chairman Xi Jinping.  After the summit meeting Carlson interviews President Trump and broadcast the interview this evening:

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Additionally, Tucker Carlson traveled with President Trump to South Korea for the DMZ visit with Kim Jong-un.

President Trump has completely reset the pre-existing hostile dynamic that existed between the U.S. and North Korea.  By focusing on the root cause of the issue, Beijing China, Trump has been able to reach a position with Kim Jong-un that seemed impossible two years ago.

All over southeast Asia the media reports are optimistic, positive and upbeat with the possibility of a generational crisis finally coming to an end.   President Trump is being called a hero bringing peace to Korea.

(Tweet Link)

The North Korean state-run media has broadcast the video below.

I have no idea what the narrator is saying, but it’s obvious the primary message is one of optimism and hope. Yes, it’s propaganda, but propaganda with a message of optimism and peace is the best kind of propaganda.

Watch the cinematography of the video and it’s obvious the DPRK message is positive. The emphasis on Moon Jae-in also indicates a hopefulness of a unified Korea. WATCH:

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Happiness and optimism is the message, and it’s clear Kim Jong-un is comfortable and joyful around U.S. President Trump.

The more this message is broadcast the greater likelihood President Trump will achieve a peace agreement.  In essence this is the type of propaganda where Kim Jong-un is putting pressure on himself by elevating the optimistic expectations of his country.

In my humble opinion this approach is a coordinated feature (aided by DJT), not a happenstance.  President Trump indicated the value of this messaging when he delivered the first video to Kim Jong-un in Singapore highlighting what is possible.

Both Trump and Kim are creating a scenario where momentum to peace is unstoppable.  Moon Jae-in appears to have seen the brilliance of this approach now; and is positioning himself to facilitate not impede.   This Trump-Kim strategy weakens the illicit influence of Beijing’s dragon masters and strengthens Kim amid his own people.

Also worth noting in this regional dynamic, the Asian community loves Ivanka Trump and anywhere she goes they report on her with great regard and expressions of affection.

China, Japan, Korea and Asia writ large treat Ivanka Trump as an imperial princess delivering hope with a joyful spirit.  They friggin’ love her, and President Trump knows how to leverage that influence.

Today, July 1st, is the first day of the third quarter 2019.  As typical some of the earliest economic reporting from June is released.  One of the first reports comes from the Institute for Supply Management (ISM) as they compile the manufacturing sector.

As noted in the ISM review, manufacturing growth remains strong with an overall index of 51.7 (anything above 50 is growth), and the results are stronger than initially predicted by the financial media (Wall Street).

The manufacturing production index for June is 54.1 versus last month’s 51.3 (May); generally this means manufacturing outputs are growing, order backlogs are being reduced, orders are being fulfilled faster.  This is an indication that new production investment is now coming on-line and delivering actual products from orders.

In the past CTH had noted the heavy Main Street investment which began in 2017 would start to come on-line in Q2 2019, it generally takes about two years for a new manufacturing facility to start producing, and then increases in production efficiency follow.  The ISM result shows we were pretty close with that forecast.

Within the review there are particular notes for additional interest.  First, the June manufacturing employment index is 54.5, very strong; (last month 53.7).  In essence manufacturers are hiring at a fast rate.  One cause is better weather (seasonal), and the majority cause is filling the jobs from new production facilities coming on-line.

Secondly, and very interestingly, the June price index is 47.9 (deflation) and reflects a very significant drop in manufacturing material prices from May’s 53.2 index.  This is exactly the opposite result of what all financial media were claiming would happen based on tariff predictions.  The prices of manufacturing materials are lower in June, significantly lower, which will ultimately mean no higher consumer prices.

A key point to note is how lower prices are not driven by excess inventory.  The inventory index in June is 49.1 (lower than May’s 50.9).  So it’s the actual material cost and production efficiencies driving lower manufacturing prices.

So the question is: “if tariffs are present -even enhanced higher- and not driving manufacturing material prices higher, then what’s lowering that price”?

The answer is likely a combination of two factors:

#1) Global material supply is consistent, but global demand is weak.  It’s the U.S. material demand that leads the world.  As the U.S. economy is the strongest economy, the in-bound manufacturing supply costs reflect prices lowered because we are the biggest customer (and strongest need).

#2) China has to retain manufacturing position.  To retain position Beijing is subsidizing export costs.  In essence China is offsetting the tariffs by lowering their prices.  Yes, China paying the tariffs – not the U.S. consumer.

When reviewing President Trump’s economic policies in 2015 and 2016, CTH saw the potential for significant Main Street wage growth starting in Q2 2018.  The wage result in the second quarter 2018 jumped to 3.4% and has remained in that range for over a year.

At the same time in 2015/2016 CTH saw the potential for significant ‘new’ Main Street manufacturing coming on-line in Q2 2019.  We are happy to report all things are on track.

“Against the backdrop of a slower economy and heightened uncertainty on the trade front, the fact that manufacturers are not only hiring but doing so at a faster pace suggests a degree of confidence in the business outlook.”

~ Jim Baird, chief investment officer at Plante Moran Financial Advisors.

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