National Economic Council Director Larry Kudlow on trade negotiations with China, and how the EU is positioning to off-set global economic contraction. Additionally, Kudlow discusses the aspects of the July jobs report overlooked by Wall Street pundits.
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Do not overlook or underestimate the importance of the bigger picture behind the global economic forecasts and the collective alignment against U.S. President Donald Trump. The ‘America First’ program is against their interests. There are trillions at stake.
Asia, primarily China, and the EU rely on common alignment with the multinationals who control Wall Street and have influenced U.S. trade and economic policy for 35 years.
The June figures show surpluses, in billions of dollars, with South and Central America ($4.8), Hong Kong ($2.3), Brazil ($1.3), and United Kingdom ($0.1).
Deficits were recorded, in billions of dollars, with China ($30.2), European Union ($15.9), Mexico ($9.2), Japan ($6.2), Germany ($5.2), Canada ($3.3), Italy ($2.6), France ($1.9), Taiwan ($1.7), India ($1.6), South Korea ($1.4), OPEC ($0.3), Saudi Arabia ($0.3), and Singapore ($0.1). (BEA Release)
The IMF is now upgrading their forecast of U.S. economic growth; and admitting -in essence- that President Trump’s America-First agenda is relocating global wealth back to the primary host nation known as the U.S.A. The increase in their forecast isn’t a small increase, it is essentially adding .3 percent (from 2.3% to 2.6%) or $60 billion more.
In the bigger picture this is why President Trump is the most transformative economic President in the last 75 years. The post-WWII Marshall Plan was set up to allow Europe and Asia to place tariffs on exported American industrial products. Those tariffs were used by the EU and Japan to rebuild their infrastructure after a devastating war. However, there was never a built in mechanism to end the tariffs…. until President Trump came along and said: “it’s over”!
After about 20 years (+/-), say 1970 to be fair, the EU and Japan received enough money to rebuild. But instead of ending the one-way payment system, Asia and the EU sought to keep going and build their economies larger than the U.S. Additionally, the U.S. was carrying the cost of protecting the EU (via NATO) and Japan with our military. The EU and Japan didn’t need to spend a dime on defense because the U.S. essentially took over that role. But that military role, just like the tariffs, never ended. Again, until Trump.
The U.S. economy was the host for around 50 years of parasitic wealth exfiltration, or as most would say “distribution”. [Note I use the term *exfiltration* because it better highlights that American citizens paid higher prices for stuff, and paid higher taxes within the overall economic scheme, than was needed.]
President Trump is the first and only president who said: “enough”, and prior politicians who didn’t stop the process were “stupid” etc. etc. Obviously, he is 100% correct.
For the past 30 years the U.S. was a sucker to keep letting the process remain in place while we lost our manufacturing base to overseas incentives. The investment process from Wall Street (removal of Glass-Stegal) only made the process much more severe and faster. Wall Street was now investing in companies whose best bet (higher profit return) was to pour money overseas. This process created the “Rust Belt”, and damn near destroyed the aggregate manufacturing industry.
Fast forward to 2017 through today, and President Trump is now engaged in a massive and multidimensional effort to re-balance the entire global wealth dynamic. By putting tariffs on foreign imports he has counterbalanced the never-ending Marshal Plan trade program and demanded renegotiation(s). Trump’s goal is reciprocity; however, the EU and Asia, specifically China, don’t want to give up a decades-long multi-generational advantage. This is part of the fight.
One could argue that China’s rise happened inside this period, and as a consequence they have no comprehension of an economic history without the institutional advantages. They’ve never competed with the U.S. under any terms of equivelence or fairness; they’ve only ever known the advantages. Combine that with the Chinese communist mindset and you get the extreme severity of their position.
So yeah, there’s going to be pain – for them; massive economic pain – as the process of reestablishing a fair trading system is rebuilt. This dynamic is the essence of reciprocity that benefits Main Street USA. Unfortunately, putting ‘America First’ is now also against the interests of the multinationals on Wall Street; so President Trump has to fight adverse economic opponents on multiple fronts…. and their purchased mercenary army we know as DC politicians.
No-one, ever, could take on all these interests. Think about it… The EU, Asia, World Bank, International Monetary Fund, China, Russia, U.S. Chamber of Commerce, Iran, U.S. Congress, Democrats, U.S. Senate, Wall Street, the Big Club, Lobbyists, Hollywood, Corporate Media (foreign and domestic), and the ankle-biters in Never Trump…. All of these financial interests are aligned against Main Street USA and against President Trump.
Name one individual who could take them on simultaneously and still be winning, bigly.
They say he’s one man. They say they have him outnumbered. Yet somehow, as unreal as it seems, he’s the one who appears to have them surrounded.
The Bureau of Labor Statistics (BLS) releases the jobs data for July. Overall employment rose by 164,000 new jobs; that’s great. Average hourly wages grew by 8 cents to $27.98, a year-over-year growth of 3.2 percent; again great. 163.4 million people working is the highest number of people working in history; more good news. [Data release link]
However, there’s an even better result in a very important data-point. 363,000 people moved from part-time to full-time employment. The move from PT to FT employment is a key indicator of a very strong economy and workers are benefiting in benefits, wages, and total compensation which now exceeds 5.5 percent growth.
[CNBC NEWS] Economists had expected the unemployment rate to drop to 3.6%, which would have tied a 50-year low, but an influx of 370,000 new workers to the labor force brought the participation rate up to 63%, its highest since March. The total labor force of 163.4 million set a record high.
The report “illustrates that, for all the concern over weak global growth and trade policy, the domestic economy is still holding up reasonably well,” said Andrew Hunter, senior U.S. economist at Capital Economics. (read more)
Rally Time! Tonight President Trump travels to Cincinnati, Ohio, for a MAGA rally at U.S. Bank Arena. The President is expected to deliver remarks at 7:00pm EDT with pre-rally events and speakers ongoing.
Chopper pressers are the best pressers. As President Trump departs the White House traveling to Cincinnati, Ohio, for a MAGA rally, the high energy POTUS stops to answer questions from the press pool. [Video Below – Transcript ADDED]
Q Mr. President, why the tariffs against China now? And are you concerned about the nosedive the Dow took today as a result?
THE PRESIDENT: No, I’m not concerned about that at all. I expected that a little bit because people don’t understand quite yet about what’s happened.
We’ve taxed China on 300 billion dollars’ worth of goods and products being sold into our country. And China eats it because they have to pay it. Because what they do is they devalue their currency and they push money out.
Our people haven’t paid, as you know. We’re also charging them 25 percent on $250 billion. So we’re taking in many billions of dollars. There’s been absolutely no inflation. And frankly, it hasn’t cost our consumer anything; it costs China.
Now, what has happened is a lot of companies are moving out of China so they can, you know, avoid. And China has had a rough twenty- — this is their worst year in 27 years, according to yesterday’s Wall Street Journal. I don’t want that.
But when my people came home, they said we’re talking. We have another meeting in early September. I said, “That’s fine.” But in the meantime, until such time as there’s a deal, we’ll be taxing them.
We’re just getting — and we’re getting very good numbers from the border. The 21,000 soldiers supplied by Mexico. And I want to thank Mexico. They’re doing a great job. The numbers are way down at the border.
Q On North Korea, sir. On North Korea, they apparently just launched their third missile in about a week. Is Kim testing you?
THE PRESIDENT: I think it’s very much under control. Very much under control.
Q President Trump, we’re talking about a full-blown trade war here. What do you say to American —
THE PRESIDENT: Well, what would you say it is?
Q No, I’m asking you —
THE PRESIDENT: Let me ask you a question.
Q What do you say to American business owners —
THE PRESIDENT: Right. Right. Right.
Q — and consumers who are going to pay the price for these tariffs, sir.
THE PRESIDENT: Sure. Sure. What would you say when China, for the last 20 years, has been taking hundreds of billions of dollars out of our country? And we had a President that would never do anything — a number of Presidents that never would do anything about it. What would you say?
For many years, China has been taking money out by the hundreds of billions of dollars a year. We have rebuilt China. So now it’s time that we change things around. If they don’t want to trade with us anymore, that would be fine with me. We’d save a lot of money.
Q Mr. President, sir, do you believe that Xi is slow-walking this? And is this 10 percent tariff a bit of a hurry-up call?
THE PRESIDENT: No, I don’t know. I think President Xi, who’s somebody I like a lot, I think he wants to make a deal. But frankly, he’s not going fast enough. He said he was going to be buying from our farmers; he didn’t do that. He said he was going to stop fentanyl from coming into our country — it’s all coming out of China; he didn’t do that. We’re losing thousands of people to fentanyl. And this was time.
And very importantly, for many years — you know this better than anybody; you’ve been covering it for a long time — for many years, China has been taking out hundreds of billions of dollars a year and rebuilding China. It’s time that we rebuild our country.
And, you know, the one thing I have to say — and you have to say this: What China is doing is they’re devaluing their currency and they’re pumping money out like they’ve never done before. And they’re paying for these tariffs; we’re not.
Q Are you concerned by reports that the Chinese army may be preparing to intervene in Hong Kong against the demonstrators? And what do you say to the accusation that the U.S. is somehow behind these protests?
THE PRESIDENT: Well, something is probably happening with Hong Kong because when you look at, you know, what’s going on, they’ve had riots for a long period of time. And I don’t know what China’s attitude is. Somebody said that at some point they’re going to want to stop that. But that’s between Hong Kong and that’s between China, because Hong Kong is a part of China. They’ll have to deal with that themselves. They don’t need advice.
Q You put a date — you put a date of September 1 on these tariffs. Are you giving Xi a chance to negotiate himself out of this?
THE PRESIDENT: No. No, no, no. It’s September 1. The reason is, it takes a long time for the ships to come over. And it’s a period of time. So I’m giving him four — like a four-week period of time before the tariffs go on.
But we’re now taking in tariffs on 10 percent on over $300 billion, and 25 percent on $250 billion. And it’s been proven that our people are not paying for those tariffs.
Q Mr. President —
THE PRESIDENT: Go ahead. Go ahead.
Q Thank you. About North Korea, North Korea launched two missiles again yesterday. How did you feel about that? And —
THE PRESIDENT: Short-range missiles. We never made an agreement on that. I have no problem. We’ll see what happens. But these are short-range missiles. They’re very standard.
Q And your response to Bernie Sanders who says —
THE PRESIDENT: Go ahead. What?
Q — that you are a pathological liar, sir?
THE PRESIDENT: Go ahead.
Q Thank you. Mr. President, are you concerned about reports that your DNI nominee, Congressman Ratcliffe, has embellished his record at all — that Democrats plan to oppose his nomination?
THE PRESIDENT: Congressman Ratcliffe is an outstanding man and I’m sure that he’ll be able to do very well. I think he’s just outstanding. Highly respected by everybody that knows him.
Q On Huawei, what will you do on Huawei to give relief to the companies —
THE PRESIDENT: Well, we’ve not changed on Huawei. We’re not allowing Huawei into our country. We’re not changed on that. We can do business for non-security things with Huawei because that’s — you know, we’ll do that. But anything having to do with national security, we’re not dealing with Huawei.
Q Mr. President, what do you think about the decision to not prosecute James Comey for leaking?
THE PRESIDENT: Well, I haven’t actually heard that. I know there’s a lot of things going on. That’s a piece of it, I guess. But I really don’t know. I haven’t spoken to them about that.
I would, frankly, be surprised, because what James Comey did was illegal. So I would be surprised, but I don’t know anything about that.
Q Mr. President, in Cincinnati, at your rally tonight, are you prepared to tell your supporters to stop if they begin chanting something problematic?
THE PRESIDENT: I don’t know what’s going to happen. I can tell you this: I’m going to Cincinnati. The arena is a very large one. And we’ve sold it out. We could sell it out probably 10 times, from what I hear. The applications for seats, as you know — never had an empty seat — the applications are very big. I have no idea.
We have a great group of people. They love our country. They love the job we’re doing. And when they see the kind of people that want to represent us from the last two nights, that’s not what they want.
I don’t know — I can’t tell you whether or not they’re going to do that chant. If they do the chant, we’ll have to see what happens.
Q Will you stop it, sir? You think you will?
THE PRESIDENT: I don’t know that you can stop people. I don’t know that you can. I mean, we’ll see what we can do. I’d prefer that they don’t, but if they do it, we’ll have to make a decision then.
Q Mr. President, do you have a message — do you have a message for them now, like before they go in?
THE PRESIDENT: I do have a message. My message is for the people I’m going to — so, we had over 100,000 applications for whatever the size of the — I think it’s a 14,000-seat arena. But we’re way over a hundred and — I think 122,000 applications for those seats.
You know what my message is? I love them. And I think they love me.
Q So your message is not “don’t do this”?
THE PRESIDENT: I actually think they love me.
Q India has rejected your offer of help on Kashmir. India is also — India has rejected your offer of help on Kashmir. India says Kashmir is a bilateral issue between India and Pakistan.
THE PRESIDENT: Have they accepted the offer or not?
Q No, they have not.
THE PRESIDENT: Well, that’s up to — it’s really up to Prime Minister Modi. And I met with Prime Minister Khan; I got along great with — I think they’re a fantastic people, Khan and Modi. I mean, I would imagine they can get along very well.
But if they wanted somebody to intervene or to help them — and I spoke with Pakistan about that, and I spoke, frankly, to India about it. But that’s been going on, that battle, for a long time.
Q How do you want to resolve the Kashmir —
THE PRESIDENT: If I can — if they wanted me to, I would certainly intervene.
Yeah.
Q Is the U.S. government involved in the death of Hamza bin Laden?
THE PRESIDENT: I can’t comment about that. But he was very threatening to our country. He was saying very bad things about our country. I will let you make your own comment about it.
Q Did you hear anything about it?
THE PRESIDENT: But I don’t comment. But I will say, Hamza bin Laden was very threatening to our country, and you can’t do that. As far as anything beyond that, I have no comment.
Q Mr. President, Robert Mueller said last week that Russia is interfering in U.S. elections right now. Did you raise that with Vladimir Putin yesterday?
THE PRESIDENT: You don’t really believe this. Do you believe this?
Q He said it last week. Did you raise that with President Putin yesterday?
THE PRESIDENT: We didn’t talk about that. I spoke with President Putin of Russia yesterday. They’re having massive fires in the — in their forests. They have tremendous — I’ve never seen anything like it. It’s very big.
I just offered our assistance because we’re very good at putting out forest fires, frankly. And if they should need it, I offered our assistance. We had a good talk — a short talk but a good talk. And I think he appreciated it.
So we would be able to help them. It’s — these are massive fires like I haven’t seen. That was the primary importance of the conversation. And I think they — I think they very much appreciated it.
Q Mueller said right now, he believes, Russia is interfering with the election.
THE PRESIDENT: Well, I watched Mueller. I’m not sure Mueller knows what’s going on, if you want to know the truth. But all I do know is he said, “No collusion with us. No collusion,” and ultimately “no obstruction,” because it led to no obstruction by a very smart group of people, including our Attorney General. So, no collusion, no obstruction.
As far as Mueller’s performance, you would have to say it was, maybe, not so good.
Q On the Fed, sir? Sir, on the Fed? Mr. President, on the Fed, why wasn’t a quarter rate cut good enough?
THE PRESIDENT: So, our country is doing very well. We’re setting records in every way, including employment, unemployment. We have now more people working in the United States than ever before. The stock market, it will take a little hit, but it will be phenomenal because ultimately it will be much better because of what I’m doing. Somebody should have done this with China a long time ago. They decided not to do it; they made a big mistake.
But I will say this: There has never been a time in the history of our country like we have right now. The highest number of people employed, the best employment numbers for African Americans, Hispanic, women — for everybody. I mean, the best numbers we’ve ever had.
Our military is being rebuilt and it’s almost fully rebuilt. It’s going to be at a level, in a very short period of time, stronger and better than ever before with new aircraft, new missiles, new everything. Hopefully, we don’t have to use it.
Go ahead.
Q Mr. President, what did you think of the Democratic debate last night? Biden and, specifically, the charge from Congresswoman Gabbard that you’re assisting al Qaeda.
THE PRESIDENT: So, yeah, nobody knows what she meant by that. I think even you probably didn’t like that statement, John. She doesn’t know what she’s talking about. If you remember, a short while ago, I defeated ISIS. We have 100 percent of the caliphate.
So, you know, you’re always going to have somebody around. We’re — right now we have captured over 10,000. We have 2,500 ISIS fighters that we want Europe to take because they were going back into Europe — into France, into Germany, into various places. So we have, right now, 2,500 ISIS that we captured. We’ve captured 100 percent of the caliphate. And we’ve done a big job on al Qaeda and everybody else.
So for her to make that statement is ridiculous, frankly. For her to make that statement is so ridiculous. And she has taken a lot of heat on it because nobody has done more against that war than I have.
So we have thousands ISIS fighters that we want Europe to take. And let’s see if they take them. And if they don’t take them, we’ll probably have to release them to Europe.
Q Will you still negotiate, sir? Sir, can you still negotiate with Kim after what he’s done this week?
THE PRESIDENT: Say it? What?
Q Can you still negotiate with Kim after what he’s done now?
THE PRESIDENT: Oh, sure. Sure. Because these are short range missiles. We never discussed that. We discussed nuclear. What we talk about is nuclear. Those are short-range missiles. Sure. And a lot of other countries test that kind of missile also.
Q Mr. President, why was the tariff 10 percent and not 25? And then on the Fed —
THE PRESIDENT: (Laughs.) Oh, that’s funny.
Q — you said a quarter point wasn’t good enough. What would be good enough for you on the Fed, sir?
THE PRESIDENT: That’s so interesting, because everyone says, “Gee, that’s so tough.” And now you’re saying I should have done more.
Q But why didn’t you do more?
THE PRESIDENT: Look, I did more than anybody thought with the first $250 billion. And the 10 percent is for a short-term period, and then I can always do much more or I can do less, depending on what happens with respect to a deal.
But I’m very happy the way it is right now. My people came back. They’re going to meet again in September. I said, “Look, if you meet, that’s great.” But in the meantime, we’re going to pay — they’re going to pay a tariff and it’ll be a very substantial tariff.
Now, if you remember, when I did the 25 percent, I did it in stages. And this can also be lifted, ultimately, in stages, or it can be taken off. But it can be lifted in stages. So we’re starting at 10 percent, and it can be lifted up to well beyond 25 percent. But we’re not looking to do that necessarily.
But this would be done in stages. So I put on 10 percent on 300 — it’s approximately $300 billion. We already have a 25 percent tariff on the first $250 billion. So, the 10 percent follows the $250 billion at 25 percent.
Q Mr. President, thank you. Are you considering a blockade or quarantine of Venezuela, given the amount of foreign involvement from Russia, China, and Iran?
THE PRESIDENT: Yes, I am.
Q You are considering it?
THE PRESIDENT: Yes, I am. Yes. Yes, I am.
Q I want to ask you, Mr. President, since the Mueller hearing, 116 House Democrats have said they want to launch a House inquiry. Why do you think that number continues to go up?
THE PRESIDENT: You know, it’s interesting — nobody has even mentioned this question to me in so long.
Q Right.
THE PRESIDENT: Until last night at the very end, it wasn’t even mentioned in the debates. People aren’t even thinking — it’s a hoax. I don’t know if you know that. You know it’s a hoax, right?
So, nobody has mentioned it to me.
One thing I will say that you haven’t covered: Two days ago, a highly respected judge in the Southern District of New York, in Manhattan, came out with a decision on the whole Russia hoax, and he said exactly that: it’s a hoax.
You ought to read the decision. This is a decision by a judge who is highly respected — who was appointed by Bill Clinton when he was President — and he came out and he said, “It’s a hoax.” And that’s exactly what it is. This was a case brought by the Democrats against me, and nobody wants to talk about it. You know why? Because it’s fake news.
Q Mr. President, what did you tell Putin about the INF Treaty?
THE PRESIDENT: We didn’t discuss the INF. Mostly, we discussed the forest fires in Siberia and other parts of Russia. And I said, “Look, we have the greatest equipment. If we can help you, let us know.” Large sections are burning. And so I said to President Putin, “If we can help you, let me know.”
Q But we’re pulling out of the treaty tomorrow.
THE PRESIDENT: Well, we’ll see what happens.
By the way, I will say, Russia would like to do something on a nuclear treaty. And that’s okay with me. They’d like to do something, and so would I.
Q What’s your response to Elizabeth Warren’s comment last night that —
THE PRESIDENT: Say it again.
Q What’s your response to Elizabeth Warren’s comment last night that white supremacy should be considered domestic terrorism?
THE PRESIDENT: Well, I think, Elizabeth — I mean, I’ve watched Elizabeth Warren, sometimes referred to as “Pocahontas,” with her phony try at an ancestry that she didn’t have. I’ve watched her and, I don’t know, to me, she doesn’t have credibility. It’s possible I’ll have to run against her. But everything she did was a fraud. She got into colleges, she got teaching jobs. She said she was of Indian heritage. It turned out to be a lie. So Elizabeth Warren really has a big lack of credibility.
Q Mr. President, what did you think about the statements from —
THE PRESIDENT: The which?
Q The statements between Tulsi Gabbard and Kamala Harris. Do you think Tulsi really got Kamala (inaudible)?
THE PRESIDENT: I didn’t really — no, I didn’t look. I think that Kamala did not do well last night. I think that — I think Biden did okay. He came through. He came limping through, as I say about Sleepy Joe. He limped right through it. But he got through it. He really did. I think he was okay.
I think Kamala had a bad night last night, I would say. But it’s really boiling down to four or five of them. Let’s face it. I don’t think — I don’t see anybody coming from (inaudible).
Q Do you have a message for Poland on the anniversary of Warsaw Uprising, which is today?
THE PRESIDENT: Well, I have a lot of respect for Poland. And, as you know, the people of Poland like me, and I like them. And I’m going to be going to Poland fairly soon. And I know they’re building an installation that — and they’re putting in all of the money — 100 percent of the money. So they’re building something very nice for the United States to have.
Go ahead.
Q On Nancy Pelosi — I’m sorry. Just so I don’t have to yell at you here, if you don’t mind. House Speaker Nancy Pelosi — I don’t know if you saw — but she described Jared Kushner as a kind of Baltimore slumlord because he owns property there. Do you think your son-in-law bears any responsibility for those conditions?
THE PRESIDENT: No. I think the responsibility is the people that have run Baltimore for so many years, obviously headed up by Elijah Cummings. They’ve run Baltimore into the ground. We’ve given billions and billions of dollars to Baltimore. The people of Baltimore appreciate what I’ve done for them by bringing this up.
It’s the number one city, proportionately, in the United States on crime. I saw a statistic where it’s worse than Honduras, right now. And I think what the people of Baltimore — I think they really appreciate what I’m doing. The money was stolen or misspent or wasted. And a lot of things happened. A lot of bad things.
But the government, for many years, has been very good to Baltimore. We have to help the people. Elijah Cummings has not helped the people. But maybe at some point we’ll get together and we’ll get it straightened out. But what happened in Baltimore is disgraceful. And it’s not only Baltimore, it’s other Democrat-run cities, and you ought to report on it sometime. Thank you.
Q Mr. President, (inaudible).
THE PRESIDENT: Well, I haven’t seen the (inaudible) at all, but I’ll take a look at them. But I will tell you, the church has loved me and I love them. You know, we’ve got about 84 percent of the vote. And the churches love Donald Trump and I love them.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin returned from two days of talks in Shanghai on Thursday. After debriefing President Trump on the results the president announced a decision to apply a 10 percent tariff on $300 billion worth of Chinese products.
This announcement would answer the question of whether the Chinese were willing to restart discussions from the previous point of contention. Obviously they are not.
The Wall Street financial/investment class will go bananas. U.S. based multinationals who have invested massively in Chinese manufacturing are apoplectic. The ‘Wall Street’ -vs- Main Street battle now enters a new phase of confrontation and adversarialism.
As we have discussed, President Trump consistently implied he did not see how any deal with China is possible unless they were willing to fundamentally restructure their trade position. It has been clear -validated by the G20 outcome- that President Trump is not going to accept anything less than a full and complete structural change in the U.S. trade position with China. Lighthizer’s severe compliance and enforcement clauses, specific to each unique trade sector, are non-negotiable.
There was always only a very small chance a trade deal with China will be reached. The reforms within the original Lighthizer and Vice-Premier Liu He agreement were antithetical to Beijing. Chairman Xi Jinping and the communist politburo rejected them.
For Beijing the compliance and enforcement sections within the agreement were too severe and did not allow China to retain control over the trade terms.
The agreement was rejected.
President Trump understands Chairman Xi is looking at this as a zero-sum position. As we stated earlier, it’s was not a matter of “if” Trump would apply more tariffs; it was always a matter of “when” Trump would apply the tariffs.
Price inflation is low because manufacturing economies (EU and China) are devaluing their currency, and subsidizing their industries (China), in an effort to avoid Trump’s trade policies (tariffs). Their efforts increase the value of the dollar and we are importing deflation. As a consequence of those factors, and the high value of the dollar, any tariffs on Chinese imports will not raise consumer prices.
The .25 point lowering of the federal reserve rate did nothing to lower the value of the dollar. Now is the perfect time to hit China will larger tariffs. There will be no U.S-China trade deal unless Beijing agrees to the compliance issues.
An excellent discussion between White House Trade Advisor Peter Navarro and Fox Business host Maria Bartiromo about the current state of President Trump’s Main Street policy and economy. The second half of the interview is the best part. Navarro outlines the background of the second quarter GDP result, and he hits the nail on the head. Hi Pete.
As CTH previously highlighted, the two primary drags on the Q2 release are also the most volatile: Export/Import contributions (-.65%), and Inventory contributions (-.86%) [table 2]. However, consumer spending was much stronger than anticipated (+4.3%) showing the internal strength of the U.S. labor market and the impact of wage growth which now exceeds 5.5 percent. The rebound in Q3 is going to be very, very good.
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Note to Mr. Navarro: Enjoy the winning. Relax, you’re solid. Despite the financial punditry class consistently trying to downbeat the good news; you don’t have to carry the burden of adversarialism. You’re a good warrior; we know. You don’t have to prove your salt. The American people can see the results, and the entire MAGAnomic team, including you, have our full support. Have some fun.
GO PLACIDLY amid the noise and the haste, and remember what peace there may be in silence. As far as possible, without surrender, be on good terms with all persons.
Speak your truth quietly and clearly; and listen to others, even to the dull and the ignorant; they too have their story.
Avoid loud and aggressive persons; they are vexatious to the spirit. If you compare yourself with others, you may become vain or bitter, for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans. Keep interested in your own career, however humble; it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs, for the world is full of trickery. But let this not blind you to what virtue there is; many persons strive for high ideals, and everywhere life is full of heroism.
Be yourself. Especially do not feign affection. Neither be cynical about love; for in the face of all aridity and disenchantment, it is as perennial as the grass.
Take kindly the counsel of the years, gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune. But do not distress yourself with dark imaginings. Many fears are born of fatigue and loneliness.
Beyond a wholesome discipline, be gentle with yourself. You are a child of the universe no less than the trees and the stars; you have a right to be here.
And whether or not it is clear to you, no doubt the universe is unfolding as it should. Therefore be at peace with God, whatever you conceive Him to be. And whatever your labors and aspirations, in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.
Tonight CNN is the broadcast host for the second night of Democrat presidential primary debates in Detroit Michigan. After a live lotto-draw, the line-up was announced for only the 20 presidential candidates who the DNC qualified the second set of debates.
[Former Senator Mike Gravel, Mayor Wayne Messam, former Representative Joe Sestak and billionaire Tom Steyer did not qualify for the second round of debates. Sad.]
Tonight puts all of the peoples’ of color candidates together. In a luck-o’-the draw, ‘spank me’ Harris is in position to finish off ‘creepy’ Joe Biden. Consequently, most of the pressure is upon Creepy to have a good debate and stop the downward spiral of support losses to Spank Me and How.
However, that possible conflict opens the door for fellow New Yorkers Gillibrand and Booker to play the creed-card, mounting racist attacks with opening statements in Spanglish while comrade De Blasio attempts to gain traction.
CNN holds exclusive broadcast rights to the debate. Consider this an open discussion thread for anyone watching…
We previously outlined Mr. Zhongtian Liu [HERE] as part of the early 2018 explanation for how China was exploiting the NAFTA loophole as an end-run around tariffs. Today the Central District of California U.S. Attorney announces his indictment.
LOS ANGELES– A federal grand jury indictment unsealed late Tuesday alleges a complex financial fraud scheme in which a Chinese company exported to the United States huge amounts of aluminum – disguised as “pallets” to avoid customs duties of up to 400 percent – and “sold” the purported pallets to related entities to fraudulently inflate the company’s revenues and deceive investors around the world.
The 53-page indictment alleges that China Zhongwang Holdings Limited, Asia’s largest aluminum extrusion company; Zhongtian Liu, the company’s former president and chairman; and several individual and corporate co-defendants lied to U.S. Customs and Border Protection to avoid paying the United States $1.8 billion in anti-dumping and countervailing duties (AD/CVD) that were imposed in 2011 on certain types of extruded aluminum imported into the United States from China.
The aluminum sold to United States-based companies controlled by Liu were simply aluminum extrusions that were spot-welded together to make them appear to be functional pallets, which would be finished goods not subject to the duties, according to the indictment. In reality, there were no customers for the 2.2 million pallets imported by the Liu-controlled companies between 2011 and 2014, and no pallets were ever sold. (read more)
In 2015 CTH outlined how candidate Donald Trump’s proposals were in-line with those who had long argued for a return of “economic nationalism”. We also outlined when those proposals (now policy) are implemented, Fed action would be essentially irrelevant.
The Federal Reserve is pegged to the Wall Street Economy. President Trump’s policies are pegged to the Main Street Economy. There is a disconnect; a new dimension in U.S. economics; and very few people understand what happens in this space between them.
Thirty-five years ago Fed monetary policy impacted the U.S. economy directly because almost all activity (durable good manufacturing) was within our borders. The natural dynamic of inflation could be influenced by the Fed. Rate changes could offset inflation and also enhance domestic investment etc.
However, as time progressed that manufacturing activity -the basic underpinning of middle-class jobs, wages etc- shifted overseas. When monetary policy became controlled by multinationals (Wall Street influencers purchasing politicians), capital investment moved to generate purely higher profits. Businesses, specifically manufacturing, went abroad. As a consequence the determination of prices, ie ‘inflation’, was no longer influenced by the Fed because the actual economic activity was/is outside the U.S. borders.
We see this today.
President Trump’s middle-class policy, through tariffs, is intended to bring manufacturing back to the U.S. China and the EU are trying to keep their manufacturing foothold by devaluing their currency and subsidizing their industries.
This action by China and the EU lowers the value of their currency, increases the value of the dollar, and simultaneously lowers the prices of their exports. This offsets the U.S. tariffs, and the China/EU stuff costs less to import. In essence, we import deflation.
No action by the U.S. Fed can change this pricing mechanism because the price determination is outside the reach of the Fed. Hence, the disconnect.
NEW YORK (Reuters) – The U.S. dollar rose to two-year highs on Wednesday after Federal Reserve Chair Jerome Powell, having made the first cut to interest rates since 2008, signaled the move was not the start of a rate-cutting cycle.
[…] In a widely expected move, the U.S. central bank cut rates by 25 basis points to shore up the economy against risks including global weakness. But in the subsequent press conference, Powell said he viewed the cut as a “mid-cycle policy adjustment” rather than a broader loosening of monetary policy.
[…] The statement upended expectations of some market participants who anticipated confirmation of further rate cuts. A day prior, traders had forecast at 35% chance of three cuts by the end of the year; on Wednesday afternoon that figure had fallen to 12%, according to CME Group’s FedWatch tool.
“They acknowledged strong labor markets, recent reasonable signs of moderate growth. It still leaves the playing field wide open as to what they’re going to do in future months,” said Tony Bedikian, head of global markets at Citizens Bank in Boston. (more)
♦RATE CHANGES – Currently multinational investment is in a holding pattern, waiting to see what happens with President Trump’s global trade reset. Manufacturing multinationals don’t know exactly where to put their investment money because they are waiting to see what happens with trade and tariffs. They don’t want to invest in a new China factory only to see the end product become subject to POTUS Trump tariffs.
The Fed views those stalled investment dollars through the prism of a global economy, their historic reference. Financial pundits have also been selling the global economy model for 35 years; so they too mistakenly view stalled (unappropriated) investment dollars as a sign the U.S. economy might be weakening. It ain’t.
We are in the aforementioned flux space where Trump is favoring Main Street…. and all trade policy is shifted therein.
U.S. Federal Reserve lending rates won’t make the multinationals move their investment money until the geopolitical trade reset is worked out. Ergo, lower Fed rates won’t currently help Wall Street…. Nor will lower Fed rates have much impact on Main Street because internal U.S. economic influences are larger and stronger than the Fed influence.
Because the Fed cannot influence prices of manufactured goods, the Fed cannot influence inflation. The U.S. worker wage rates are stronger than any inflation; again the disconnect that CTH has noted for three years that will work in favor of the middle-class.
So long as the Fed is pegged to Wall Street, meaning has primary focus on lending to U.S. manufacturing multinationals; and as long as that lending (investment) is stalled pending the outcome of Trump’s trade and economic reset; the Fed is essentially irrelevant on the bigger dynamic.
If a variable rate mortgage loan goes up by $100/month, and simultaneously (outside of the Fed influence) the worker is getting a $300/month wage increase (currently 5.5% wage growth), there is no material negative impact.
If a variable rate mortgage loan goes down by $100/month, and the worker is still getting a $300/month wage increase, blue collar spending and savings jumps [current status], no substantive downside. The blue-collar spending is a self-fulfilling prophecy. This is the reason why we noted in 2016 the Fed would essentially be irrelevant to Main Street.
The Fed remains pegged to Wall Street.
Trump policy remains pegged to Main Street.
We are in the space between.
Until this dynamic changes and the majority of the underlying economic activity is returned to the U.S action by the Fed is essentially moot to Main Street.
Once the U.S. economy rebalances; meaning once the trade policy brings more production based manufacturing and assembly back into the U.S; and once we reverse the 35-year Wall Street dynamic and become a more production-driven economy (where the best return on investment is inside the USA); then yes, Fed action will start to have influence.
When? Once the USMCA is ratified, President Trump will trigger tariffs on China. This will move all of the multinationals who are in a ‘holding pattern’ because they will see what areas are safe. Capital investment will flow very fast.
Where? The China exodus will benefit North America (USMCA) and those ASEAN nations who have partnered with Trump and made proactive trade agreements. That’s where the capital investment will flow.
The Bureau of Economic Analysis (BEA) released significant wage and salary datayesterday which held stunning upward revisions for 2018 and 2019. Wage growth of 5.5% combined with low inflation remaining at 1.4 percent; the disposable income of U.S. workers jumped to a stunning 4.1%. [Data Tables]
Within the revised BEA data, we find employee compensation rose 4.5% in 2017 and 5% in 2018. Importantly the growth trend continued into 2019, with compensation increasing 3.4 percent in the first six months alone. Year-over-year wages and salaries were revised upward to 5.3% for May, and 5.5% in June. These are stunning increases in worker pay.
There are various economic indicators we have shared through the years, but wage growth is one of the more critical. First, wage growth lags behind business activity – workers don’t get pay raises until after business volume demands/provides it. Second, wage growth is generally uni-directional – once businesses hike pay, the increases cement.
(VIA WSJ) […] Recall how liberals blamed “secular stagnation” as the reason worker incomes weren’t growing faster during the latter years of Barack Obama’s Presidency. Yet employee compensation has increased by $150 billion more in the first six months of 2019 than all of 2016.
Compensation increased 42% more during the first two years of the Trump Presidency than in 2015 and 2016. This refutes the claim by liberals that the economy has merely continued on the same trajectory since 2017 as it was before.
The economy barely skirted recession in the final Obama years, and economic policy changed in 2017. Deregulation has unleashed repressed animal spirits, especially in energy. Tax reform has also spurred business investment in new facilities and equipment, which over time should translate into higher worker productivity and wages.
Those reforms are continuing to pay economic dividends despite the damage from Mr. Trump’s trade policies. While Democrats and even some conservatives complain that workers haven’t benefited from tax reform, the evidence suggests otherwise. (read more)
SUMMARY: The U.S. consumer is driving the economy. The jobs and labor market remains strong. Wage growth is rising in proportion to the diminished availability of the labor pool. Price inflation is low because manufacturing economies (EU and China) are devaluing their currency, and subsidizing their industries (China), in an effort to avoid Trump’s trade policies (tariffs). Their efforts increase the value of the dollar and we are importing deflation.
Simultaneously, global manufacturers -multinationals- need access to the U.S. consumer market. As President Trump applies a series of strategic global trade moves, intended to draw manufacturing back to the U.S., those multinationals are in somewhat of a holding pattern for further investment. Simply, the multinationals are trying to figure out where to put their investment capital for the highest return.
Example: The U.S. economy is strong, unemployment is low and wage rates up; so if China is a non-option, the profit determination shifts. Where to manufacture? It might be more profitable for a multinational in either Southeast Asia or North America. The key is which country has a long-term agreement with the U.S. That’s why the USMCA is critical.
CTH still predicts POTUS Trump will eliminate the uncertainty as soon as the USMCA is ratified. I suspect President Trump will drop massive tariffs on all Chinese goods.
Think of China like a big lake filled with U.S. economic value. Through his Asian discussions with Vietnam, S Korea, Malaysia, Singapore, Australia, Japan, et al, President Trump has stealthily built a thin levy, an ASEAN dam of sorts, that will direct the China lake of economic value into Southeast Asia.
Once the USMCA is signed, Trump will blow the dam by triggering the tariffs. This will move all of the multinationals who are in a ‘holding pattern’, and capital investment will flow fast. The China exodus will benefit North America (USMCA) and those ASEAN nations who have partnered with Trump and made proactive trade agreements.
I have created this site to help people have fun in the kitchen. I write about enjoying life both in and out of my kitchen. Life is short! Make the most of it and enjoy!
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
Sec. Wilbur Ross
Centinel2012 