First lady Melania Trump gives ‘Fox & Friends’ co-host Ainsley Earhardt a behind-the-scenes look at the White House Christmas decorations and shares her holiday message to Americans.

President Trump took all the ‘dragon slayers’ with him to Argentina likely anticipating a rapid Chinese evolution from Panda to Dragon.  Trump’s delegation selection sends exactly that message.  If cunning Chairman Xi exhibits wounded sensibilities, well, tough.

China deployed the panda mask for over a year in an effort to wait-out President Trump, fair enough; however, that strategy has a severe downside.

If lack of engagement is part of Beijing’s economic defense mechanism, ie. retaining the status quo,  you can expect President Trump to provoke the confrontation.

Does Xi feel rucky?

SHANGHAI (Reuters) – China and the United States can reach a trade agreement at the G20 meeting in Argentina this week, the state-run China Daily newspaper said in an editorial on Friday, but Washington must be “fair minded” if it wants to defuse spiraling tensions.

“Beijing wants a deal, just as Washington does. And it is willing to cooperate with Washington in dealing with concerns about trade if they are fair-minded,” the paper said.

“Should there be any other aspirations, such as taking advantage of the trade spat to throttle Chinese growth, then an agreement is unlikely to be reached.”

World leaders started arriving on Thursday in Buenos Aires ahead of the gathering of the Group of 20, where global trade tensions, fueled by U.S. President Donald Trump’s trade war with China, are expected to dominate the agenda.  (read more)

There is no doubt in my mind that President Trump has a very well thought out long-term strategy regarding China. President Trump takes strategic messaging toward the people of china very importantly. President Trump has, very publicly, complimented the friendship he feels toward President Xi Jinping; and praises Chairman Xi for his character, strength and purposeful leadership. Trump knows how to play their panda/dragon games.

Each time China takes aggressive action (red dragon) China projects a panda face through silence and non-response to opinion of that action;…. and then the  action continues. The red dragon has a tendency to say one necessary thing publicly, while manipulating another necessary thing privately. The Art of War.

President Trump is the first U.S. President to understand how the red dragon hides behind the panda mask. Chairman Xi and President Trump are scheduled for a dinner on Saturday night; their first face-to-face meeting in a year.

The entire planet is focused on the dynamic of Chairman Xi and President Trump.  Billions waged on the position of an eyebrow, or the hint of a smile.  Epic stuff.  In the multinational finance world this is bigger than the moon landing, world cup and Olympics combined.  Every nuance and inference to be reviewed in slow-mo replay by hedge-fund managers looking for any indication of hope.

The funniest thing is Donald Trump doesn’t care about all that.  He has the desired ‘America First’ outcome gamed out; POTUS is only looking to see which direction Xi is leaning.  From there Trump puts the instructions to the team (Mnuchin, Pompeo, Ross, Lighthizer and Navarro); yet even they don’t know the full plan, no-one does except President Trump… for a reason.

The Wall Street global financial crowd is on pins-and-needles hoping desperately the confrontation between China and the U.S. doesn’t escalate.

Meanwhile, blue-collar Main Street USA is hoping ‘bull-in-a-china-shop-Trump‘ shows up and punches Xi in the nose; diplomatically of course.

Peter Navarro, Trump’s hardline trade adviser, will attend the meeting between the leaders, a U.S. official told Reuters. Another official said Navarro’s addition was meant to send a message to China about the administration’s resolve on trade. Navarro has advocated a tough stance against Beijing. (more)

President Donald Trump and Fist Lady Melania Trump arrive in Buenos Aires, Argentina, for the G20 Summit of world leaders.  Secretary of Treasury Steven Mnuchin and Secretary of State Mike Pompeo arrived with the first couple met by local dignitaries.

This is one of those reports that seems small and appears way over there on the periphery. However, if MAGAnomics and trade are important to you, this story is very much worth paying attention to.

As CTH shared last week the White House reached out to EU auto executives to request a meeting.  There is a VERY STRONG likelihood the message within this meeting will surround potential tariffs, and questions from team Trump about the intents of EU (mostly German) automakers against the backdrop of the USMCA.

The potential for auto-tariffs terrifies the EU (specifically Germany), because most of their profits from within the industry come from access to the U.S. market.   Few major markets in the world can afford the scale of automobile purchases as a wealthy U.S.A. does.  The profit margins are much smaller in all other countries.  Without the U.S. market, these auto companies would be in deep financial trouble.  Enter Trump’s leverage:

BERLIN (Reuters) – Top executives from German carmakers Volkswagen, BMW and Daimler are finalizing plans for a White House meeting on trade policy next week, German and U.S. officials said on Thursday.

Officials from the carmakers, asking not to be named, said the meeting was tentatively set for Tuesday, and would include VW Chief Executive Herbert Diess, Daimler CEO Dieter Zetsche and BMW production chief Oliver Zipse.

President Donald Trump has been harshly critical of German automakers and what he sees as an unfair trade imbalance on autos.

He has threatened for months to impose tariffs on vehicles assembled in the EU, a move that could upend the industry’s business model for selling cars in the United States.

However, he has refrained from such a measure while Washington and Brussels undertake talks to cut other trade barriers.

The CEOs plan to make clear they cannot negotiate on behalf of the EU, people close to the matter said last week. (read more)

I love that last line: “CEOs plan to make clear they cannot negotiate on behalf of the EU“, that’s funny; and the best part is Trump knows exactly the silliness of that statement.  Whatever the German auto-sector demands, the EU delivers – P.E.R.I.O.D.

But seriously, the primary question for the U.S. team revolves around seeking to understand how the EU companies will comply with the new U.S-Mexico-Canada  (USMCA) trade pact to avoid the import tariffs.  [Angela Merkel is irrelevant]

The answer is more important to Mexico and the U.S. because no-one is foolish enough to build a manufacturing plant in the left-wing North known as Canada.  So POTUS wants to know how the EU is going to comply with the new 75% origination rules within the U.S. and Mexico agreement.

The outcome of the EU answer(s) will likely determine the scale of tariff that President Trump is considering on the entire industry.  President Trump is actually constructing a 10/25-year economic ‘business plan‘ for the entire country.

Stay tuned…. this is the fun stuff!

President Trump delivers remarks to the media prior to departing the White House en route to Argentina for the G20 summit.  The president remarks about the plea agreement by Michael Cohen to special counsel Robert Mueller.

The New York Post has an article today, surrounding an interview with President Trump, where the topic of declassifying the evidence behind ‘Spygate’ surfaced.

To say there is a massive schism amid supporters of the President on this issue would be an understatement.

On one hand the declassification would potentially, and finally, outline the scale of the FBI/DOJ politicization and weaponization of intelligence against the President – exposing the entire ‘spygate’ scandal in all its glory.  On the other hand that potential is also seen as political leverage against the schemes of DC and all the characters.

Here’s the quotes that matter:

(New York Post) […]  “If they go down the presidential harassment track, if they want go and harass the president and the administration, I think that would be the best thing that would happen to me. I’m a counter-puncher and I will hit them so hard they’d never been hit like that.”

“I think that would help my campaign. If they want to play tough, I will do it. They will see how devastating those pages are.”

“It’s much more powerful if I do it then,” Trump said, “because if we had done it already, it would already be yesterday’s news.”

Trump added Wednesday that his lawyer Emmet Flood thought it would be better politically to wait.

“He didn’t want me to do it yet, because I can save it,” Trump said.

The president also pushed back on the notion that all the Justice Department documents should eventually be released for the sake of transparency.

“Some things maybe the public shouldn’t see because they are so bad,” Trump said, making clear it wasn’t damaging to him, but to others. “Maybe it’s better that the public not see what’s been going on with this country.”  (more)

From the CTH perspective this interview essentially solidifies something we have been outlining for several months: President Trump is applying the consideration of leverage to his decision-making.

Many have refused to accept “leverage” was part of President Trump’s primary determination and decision-making.  CTH has been heavily criticized for even presenting such analysis.  Hopefully, this interview puts an end to those criticisms.

Leverage is the primary filter here; and it’s not just leverage against domestic political enemies.

President Trump has fifty years of business skills in various predatory and adversarial financial deals.  Leverage, or the ability to force an opponent to take an action that benefits your position, is the most valuable weapon in deals; business or politics the same is true.

This type of leverage is extremely valuable and it’s not just against Democrats, Obama and the Never Trump alliance (ie. Sea Island group).  President Trump is in a fight against multiple enemies from all sides, across all aisles and political alignments.  The declassification leverage is like an atomic hammer that strikes everyone in a 360° blast radius.

And it is not limited to domestic adversaries.  This leverage has a geopolitical value.

Think about geopolitical trade deals with Five-Eyes allies.  Think about how President Trump may need an ally to take a position adverse to their preferred interests. The potential for declassification of intelligence documents showing complicit corruption within the U.K. and Australia could destroy politicians external to the U.S.

Think about an ally being asked to take a position on China (trade), Iran (sanctions), Russia (energy), etc.  Movement on any of these geopolitical issues, and many more, can be tilted -in part- based on the threat of sunlight or declassification. Leverage is a tool.

Getting particular democrats to support the USMCA; what’s that worth?

Getting a southern border wall and sensible immigration law; what’s that worth?

What does President Trump value?  What is important to him?

What part of the transactional relationship can be enhanced by leverage?   Pro-tip: it’s not personal; it is not leverage to benefit Trump personally; he doesn’t care about that shallow stuff… his view of the horizon is much longer, much further; much more consequential.

It annoys the heck out of many people, me included, that Donald Trump is willing to absorb so much inbound fire, unnecessarily; which, by extension, means that his supporters are forced to absorb so much inbound and unnecessary fire; but he is.

What is President Trump’s primary objective?   Save the U.S.A. through economics.

Economic security is national security.

I think much of our angst is because we look too short-term; and the media does a great job of convincing us President Trump is selfish.  Perhaps they are correct. Perhaps I’m wrong; but I see this leverage issue as something Trump views as important – obviously; or he wouldn’t approach it that way.

Would President Trump trade a $500 billion per year positive benefit to the U.S. economy in exchange for never outlining the fraud against him?

Would President Trump accept new jobs for a million Americans in exchange for never outlining the 2016 fraud against him?

Yeah.

He would.

Without question.

And he wouldn’t care if it meant he could never win in 2020.

He ain’t a politician.

Piss you off?

Probably.

That’s Trump.

The issue is basic to the construct of the USMCA (NAFTA replacement).

BMW made a multi-billion-dollar investment in Mexico in anticipation of exploiting the NAFTA loophole.  President Trump has closed the loophole.  The new USMCA agreement requires 75% of automobile parts made in North America; and 45% must come from plants with minimum labor costs ($16/hr), or face tariffs upon export to the U.S.

As a result BMW is now considering opening those higher-wage component supply operations in the U.S.

LOS ANGELES (Reuters) – BMW (BMWG.DE) is considering a second U.S. manufacturing plant that could produce engines and transmissions, Chief Executive Harald Krueger said on Tuesday, shortly after a report that U.S. President Donald Trump would impose tariffs on imported cars from next week

[…] BMW is considering changes to U.S. operations as sales in the region grow, Krueger said. BMW has a U.S. vehicle assembly plant, in South Carolina, is planning to open a Mexico factory next year, and is considering changes to its current scheme of importing engines and transmissions.

“We’re at the range where you could think about a second location” in the United States, he said, adding that such a factory would provide a natural currency hedge. (more)

Oddly enough we predicted this likely move in August: […]  At the 30,000 ft level, the USMCA deal positions Mexico to retain their current multinational investments; and through a series of sector-by-sector standards on origination the deal simultaneously closes the fatal NAFTA loophole.  The agreement makes an economic manufacturing partnership between the U.S. and Mexico; and for assembly products third parties will have to produce parts and origination material within the U.S. and Mexico.

U.S.T.R. Lighthizer put some details forward:

♦The NAFTA Loophole closure is explained in Summary Form HERE; with emphasis on the Auto-Sector.  The key is a 75% part origination level for auto-assembly; and a 40-45% level for parts with a minimum $16/hr wage rate.  The source-origination rate (75%) is even higher than all previously forecast negotiation results.

Example of downstream consequences/benefits:  German auto-maker BMW recently built a $2 billion assembly plant in Mexico (almost complete).  Most of their core parts were coming from the EU (steel/aluminum casting components) and/or Asia (electronics).  Now the assembly plant will have to source 75% of the auto-parts from the U.S. and Mexico, with 45% of those parts from facilities paying $16/hr.  Result: BMW will need to modify their supply chain and build auto parts in the U.S. and Mexico.

(USMCA LINK to Article 32 pdf)

Prior to the USMCA both Canada and Mexico structured key parts of their independent trade agreements to take advantage of their unique access to the U.S. market.  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 by going through Canada and Mexico they would continue to exploit this approach.

The NAFTA loophole was/is a zero-sum issue: Either Can/Mex agree to give veto authority to the U.S. –OR– President Trump had no option to exit NAFTA completely. Well, Canada and Mexico agreed to the former, so there was no need for the latter.

Secretary of State Mike Pompeo delivers remarks to the media following a briefing of senators on Capitol Hill.  The media was primarily focused on the issues surrounding the murder of Kashoggi; and the opportunity to create a wedge issue for the Trump administration.

Many Decepticon senators, benefactors from Qatari (Muslim Brotherhood) financing against the policy of Saudi Arabia, are aligned with left-wing opposition to the President on this issue. Instability in the middle-east is a very lucrative business model for personal financial gain.

A small but interesting development in the relationship between the U.S. and Mexico highlights a backstory CTH suspected several months ago {Go Deep}. August 25th:

As USTR Robert Lighthizer was working with the trade officials representing outgoing Mexican President Peña Nieto, White House adviser/emissary Jared Kushner was quietly working behind the scenes with AMLO trade adviser Jesus Seade and outlining the possibilities if they partnered with strategic economic objectives in mind.

As a result of Kusher’s dogged efforts to bring an entirely new dual-nationalist ‘focus’ within the trade construct, removing the historic globalist baseline, the outcome of the trade deal is excellent for both the U.S. and Mexico.  So today:

MEXICO – […] Kushner will receive the prize “for his contributions to achieve the negotiation of the new United States-Mexico-Canada Agreement (USMCA),” according to a statement by Mexico’s Foreign Relations Secretariat.

Peña Nieto will present Kushner, President Trump’s son-in-law, with the award on Thursday at the Group of 20 summit in Argentina, according to the Reforma newspaper.

“Mr. Kushner’s participation was a determinant factor to start the process of renegotiation of [the North American Free Trade Agreement], avoiding a unilateral exit by the United States from said treaty, and his constant and effective involvement was key in achieving a successful close of negotiations,” reads the official statement on the award.

It’s likely to be Peña Nieto’s last major act as president, as he is due to hand over power to President-elect Andrés Manuel López Obrador on Saturday. (read more)

It will take time for Mexico to withdraw from prior corrupt agreements with multinational corporations who have invested in exploitative enterprise and bribed corrupt Mexican officials.   President Trump is EXACTLY the guy AMLO needs to help guide him through a complex business and economic process of extracting his country from the tentacles of economic exploitation.

BACKSTORY CTH September 2018: […]  Previous Mexican Presidents structured economic policy around accepting multinational corporate investment, facilitating the requests of Wall Street investment banks, and the predictable parasitic outcomes that follow. Exfiltration of wealth and exploitation of resources/labor are an outcropping of predatory multinational trade exploitation, ie. “globalism”.

Retention of the multinational schemes generally leads to massive corruption. In the U.S. this corruption is known as “lobbying”, in Mexico the process is called ‘bribery’; however, the activity is the same.

The incoming Mexican President, Lopez-Obrador (AMLO), is more of an economic nationalist; and quite remarkably his economic outlook, at least as his team has described the objectives so far, is quite Trumpian.

You might even say: “Make Mexico Great Again”.

Both U.S. President Trump and Mexican President-elect AMLO have similar outlooks toward predatory multinational corporations and economic exploitation. If you think about how Mexico was used by the multinationals in the past twenty years; and then think about a very real possibility of a U.S President and Mexican President having an economic friendship; well,… holy cats, those multinationals could be remarkably nervous right now.

AMLO supports labor and has an actual agenda to create a strong working-class or middle-class.  The wealth disparity within Mexico has always been a foundational issue that has led to a tremendous amount of corruption.

Similarly, President Trump supports labor.  Likely because of his positive relationships with labor unions as a private sector builder, Trump was the only republican candidate who advanced pragmatic opinion toward organized labor in 2015, 2016 and, as president, in White House meetings where he invited labor officials.  President Trump’s economic agenda is laser focused on a strong middle-class.

AMLO views Wall Street multinationals as predatory by disposition; Mexico has suffered from industrial exploitation, especially in the agriculture sector.  President Trump also views those same multinationals as tending toward predatory behavior, and he has targeted many specific corporations for attention due to their participation in the erosion of the American middle-class and the U.S. manufacturing base.

AMLO is a strong Mexican Nationalist. President Trump is a strong American Nationalist. Within almost all of President Trump’s foreign policy speeches on economics, he openly accepts that all nations should make decisions based on their individual and nationalistic needs.  Trump does not see economic nationalism as adversarial; he points out that trade agreements based on both interests are entirely possible, and actually easy to construct.

As long as AMLO stays away from the authoritarian tendencies of power, ie. government ownership of private industry – and the slippery slope of soft-Marxism, surprisingly he and President Trump are likely to have a great deal more in common than most would think. Both populists; both nationalists; both rebuke the elitist trappings of globalism and intend on executing economic policies for the majority of their citizens.

Because they have more in common on the economics of policy, this explains why the framework of the U.S-Mexico trade agreement between Robert Lighthizer (representing Trump) and Jesus Seade (representing AMLO) was possible to construct.

Lighthizer and Seade held long meetings after formal U.S-Mexico daily negotiations, and together this relationship appears to have been very important in how the deal framework was structured. Right now both teams are filling in the details based on common objectives.

With AMLO and President Trump, Mexico and the U.S. have joint-interests in an economic trade bloc. It is actually quite stunning when you think about the economic power that both nations can hold if their mutual and individual interests remain at the forefront.

President Trump and President Lopez-Obrador have common objectives; and with the economic approach outlined by AMLO toward using Mexico’s energy resources as leverage for expanded investment, the U.S. is well positioned to help.  Mexico needs independent collateral to break the cycle of dependency on overseas money (investment).  Mexico needs policies and partners that can make Mexico, and the Mexican people, independently wealthy.   Guess who the bestest partner would be?  Yup, President Trump.

President Trump is well positioned to assist Mexico via a united trade bloc with expanded cross-border investment for economic development.

AMLO wants a higher standard of living for Mexican workers; President Trump wants greater parity between Mexican workers and their U.S. counterparts. Heck, it was U.S. Commerce Secretary Wilbur Ross and USTR Robert Lighthizer who first proposed raising the Mexican minimum wage. Now both countries have agreed to an incremental Mexican minimum wage aspect of $16/hr within the auto sector.

Combining the wage aspect with the content and origination agreement, this has become a win/win for both AMLO and President Trump. The multinationals within the auto-sector might not like it, but they’ve already put a massive amount of money into plant and manufacturing investment in their existing Mexican footprint. They have no choice.

In an generally overlooked outcome the nationalist interests of Mexico, specific to AMLO, are very close to alignment with the nationalist MAGA agenda of President Trump.

The U.S. economy is expanding at an unprecedented rate, and Mexico prepares to surf the MAGAnomic tsunami known as Donald Trump.

President Trump can see that independent economic future for Mexico based on a partnership that protects the interests of both nations.  It certainly appears that AMLO can see the same vision.

Remarkable times.

UPDATE: Republican Cindy Hyde-Smith easily wins: 55-45

The Mississippi Senate Seat of retired senator Thad Cochran will be decided today as Republican Cindy Hyde-Smith and Democrat Mike Espy have a runoff today.

Mississippi has a history of sketchy political power schemes between professional democrats and professional republicans that often crosses party boundaries. The outcomes are often under the control of a few big money interests; ie. “The Big Club”.  That said, polls in Mississippi close at 8:00pm EST.

New York Times – Election Results Here

Decision Desk HQ – Election Results Here