Originally outlined a year ago. Reposted by request. At the heart of the professional/political opposition the issue is money; there are trillions at stake.

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.

If we get too far in the weeds the larger picture is lost. CTH objective is to continue pointing focus toward the larger horizon, and then at specific inflection points to dive into the topic and explain how each moment is connected to the larger strategy.

Today we repost an earlier dive into how MAGAnomic policy interacts with multinational Wall Street, the stock market, the U.S. financial system and perhaps your personal financial value. Again, reference and source material is included at the end of the outline.

If you understand the basic elements behind the new dimension in American economics, you already understand how three decades of DC legislative and regulatory policy was structured to benefit Wall Street and not Main Street. The intentional shift in fiscal policy is what created the distance between two entirely divergent economic engines.

REMEMBER […] there had to be a point where the value of the second economy (Wall Street) surpassed the value of the first economy (Main Street).

Investments, and the bets therein, needed to expand outside of the USA. hence, globalist investing.

However, a second more consequential aspect happened simultaneously. The politicians became more valuable to the Wall Street team than the Main Street team; and Wall Street had deeper pockets because their economy was now larger.

As a consequence Wall Street started funding political candidates and asking for legislation that benefited their interests.

When Main Street was purchasing the legislative influence the outcomes were -generally speaking- beneficial to Main Street, and by direct attachment those outcomes also benefited the average American inside the real economy.

When Wall Street began purchasing the legislative influence, the outcomes therein became beneficial to Wall Street. Those benefits are detached from improving the livelihoods of main street Americans because the benefits are “global”. Global financial interests, multinational investment interests -and corporations therein- became the primary filter through which the DC legislative outcomes were considered.

There is a natural disconnect. (more)

As an outcome of national financial policy blending commercial banking with institutional investment banking something happened on Wall Street that few understand. If we take the time to understand what happened we can understand why the Stock Market grew and what risks exist today as the financial policy is reversed to benefit Main Street.

President Trump and Treasury Secretary Mnuchin have already begun assembling and delivering a new banking system.

Instead of attempting to put Glass-Stegal regulations back into massive banking systems, the Trump administration is creating a parallel financial system of less-regulated small commercial banks, credit unions and traditional lenders who can operate to the benefit of Main Street without the burdensome regulation of the mega-banks and multinationals. This really is one of the more brilliant solutions to work around a uniquely American economic problem.

♦ 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.

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 fiscal 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.

♦The Modern Third Dimension in American Economics – HERE

♦How Multinationals have Exported U.S. Wealth – HERE

♦The “Fed” Can’t Figure out the New Economics – HERE

♦The FED Begins to Question the Economic Assumptions – HERE

♦Treasury Secretary Mnuchin begins creating a Parallel Banking System – HERE

♦Proof “America-First” has disconnected Main Street from Wall Street – HER

Delivering a very classy and uniting concession speech current Kansas Republican Governor Jeff Colyer concedes the GOP primary race to Kansas Secretary of State Kris Kobach.

TOPEKA, Kan. — A week after the highly contested vote for the Kansas GOP gubernatorial primary, Gov. Jeff Colyer has conceded the race to Secretary of State Kris Kobach.

In a statement Thursday night Colyer said he believed he was doing the right thing by conceding, and hoped to see Kansas remain in republican hands. At the time of the announcement, Kobach led Colyer by 345 votes after Sedgewick and Johnson Counties certified their votes Thursday. A total of 91 out 105 counties had certified their results.

Colyer went on to say he would endorse Kris Kobach in the run. Kobach will now face Democratic Sen. Laura Kelly in the general election in November. (watch video concession statement here)

It really is a very classy concession speech.  Top shelf.  Well done.

It’s not a bluff; it’s never a bluff…. He doesn’t bluff.  I’ve looked through the interviews, writing and granules of opponents describing hundreds of deals, and I cannot find a single person who ever said that Donald Trump was bluffing during any negotiations.

NYT cont. […] In recent days, officials from the Commerce Ministry, the police and other agencies have summoned exporters to ask about plans to lay off workers or shift supply chains to other countries.

With stocks slumping and the currency dropping 9 percent against the dollar since mid-April, censors have been deleting a torrent of criticism online, some of it directed at President Xi Jinping’s leadership.  State news outlets, by contrast, have sought to promote the official line, with the authorities restricting the use of the phrase “trade war.”

[…] If the trade war escalates — and Mr. Trump has shown no sign of backing down — some worry that the public’s faith in the economy could be shaken, exposing the nation to much more serious problems than a drop in exports. New economic data on Tuesday showed slower growth in investment and consumer spending, and there are fears that the financial crisis in Turkey could spread.

China’s leaders have argued that they can outlast Mr. Trump in a trade standoff. Their authoritarian system can stifle dissent and quickly redirect resources, and they expect Washington to be gridlocked and come under pressure from voters feeling the pain of trade disruptions.

But the Communist Party is vulnerable in its own way. It needs growth to justify its monopoly on power and is obsessed with preventing social instability. Mr. Xi’s strongman grip may be hindering effective policymaking, as officials fail to pass on bad news, defer decisions to him and rigidly carry out his orders, for better or worse.  (read more)

It would appear that Chairman Xi, like Justin from Canada, is rolling the economic dice based on advice from those close to him, and betting the 2018 mid-term elections will block President Trump from carrying out the America-First, pro-middle-class, U.S. trade reset.

In a typical Beijing maneuver Chairman Xi appears to be counting on the stupidity of the American voter to help China create leverage in the aftermath of POTUS Trump destroying all former dragon trade strategies.

If the MAGA movement can hold the 2018 mid-term elections, and if we can deliver Trump the victory he/we need, there is going to be a seismic shift in the entire global trade system the likes of which have never been contemplated.  A massive shift so economically consequential it is simply too incredible to even quantify.

Trillions will pour into the U.S.

Press Secretary Sarah Huckabee Sanders delivers the White House press briefing for Tuesday August 14, 2018.  Anticipated start time 2:30pm EST:

UPDATE: Video Added

WH Livestream Link – Fox News Livestream Link – GST Livestream Link

The National Federation of Independent Businesses (NFIB) is an assembly and survey of small business owners throughout the U.S.  In the latest survey (full pdf here) overall optimism is the second highest ever recorded at 107.9 (the highest reading was 108 in 1983).

The full press release is available here.  The full pdf of the survey is available here. The executive summary outlines the overall content and highlights the sentiment amid Main Street U.S.A.:

[…] Although some panned any celebration of the 4.1 percent second quarter GDP growth, small business owners beg to disagree. At least in the small business sector of the economy, Main Street’s performance over the last 21 months is unprecedented based on reports for the past 45 years by hundreds of thousands of NFIB’s member firms. Owners have never been so optimistic for so long. This has translated to improved employment and investment spending that buoys GDP growth, even at the end of what will be the longest expansion in modern history.

Consumer sentiment is at record high levels. Consumer spending, which accounts for 70 percent of our economy, posted 4 percent growth in Q2. Historically revised data show that consumers have been saving much more than thought, and income gains in recent months have been solid, providing support for spending in the second half. The record levels of firms reporting higher compensation is a clear indication that wages will be rising further in the second half.

COMPENSATION ANALYSIS: Reports of higher worker compensation gained a point from June to a net 32 percent of all firms, 3 points below May’s record reading of 35 percent. Plans to raise compensation rose 1 point to a net 22 percent, historically strong.

Government measures of wage and compensation gains follow movements in NFIB plans to raise compensation but with a 3 quarter lag, so government reports of rising compensation will increase even more in the second half of the year.

Owners complain at record rates about labor quality issues, with 88 percent of those hiring or trying to hire in June reporting few or no qualified applicants for their open positions. The frequency of reports of positive profit trends was unchanged at a net negative 1 percent, one of the very best readings in the survey’s 45 year history.  (report)

♦ 35% of all businesses have raised wages; 22% more plan to raise wages.  As CTH continues to note, the Bureau of Labor Statistics report on wage growth lags behind the actual NFIB survey results direct from the employers.

♦ 70% of all U.S. workers work in small businesses.

Again for emphasis: This is MAGAnomics in action.  Main Street is benefiting.  Blue and White collar Main Street is benefiting.  The Middle-Class is the primary beneficiary.

For more than 30 years the Main Street economic engine has been intentionally stalled by U.S. economic policy that has favored Wall Street and pushed a service-driven-economy narrative on the U.S. workers.   Using targeted MAGAnomic Main Street policy President Trump has reversed the trend.

Main Street, and the U.S. Middle Class, is growing again.

Enjoy this.

President Trump really is “a blue-collar billionaire“.

President Trump speaks at a joint fundraiser in Utica, New York on behalf of GOP Congresswoman Claudia Tenney. The event marks Trump’s first visit to Upstate New York since being elected in 2016.  Anticipated start time 5:45 – 6:00pm EST

UPDATE: Video Added

Fox News Livestream – Alternate Livestream #1 – GST Livestream Link

President Trump speaks at a joint fundraiser in Utica, New York on behalf of GOP Congresswoman Claudia Tenney. The event marks Trump’s first visit to Upstate New York since being elected in 2016.  Anticipated start time 5:45 – 6:00pm EST

Fox News Livestream – Alternate Livestream #1 – GST Livestream Link

President Donald Trump Delivers Remarks and Participates in a Signing Ceremony for H.R. 5515, the “John S. McCain National Defense Authorization Act for Fiscal Year 2019” at Fort Drum, New York.  Start time 2:30pm EST

WH Livestream Link – RSBN Livestream Link – Fox News Livestream Link

Methinks Maria Bartiromo is the only media person who has caught on to “the secret“.

Within her wording and presentation today, inside this interview Fox News Maria Bartiromo hints toward her understanding of the Trump trade strategy as it pertains to Mexico, Canada and ::cough:: NAFTA ::cough::

Nudge/Nudge – Elbow/Elbow – Wink/Wink – Say no more/Say no more!

.

After the end of Round #6 (January 2018), it was obvious to POTUS Trump a NAFTA renegotiated deal was impossible.  In March, 2018, Team Trump stealthily began moving in a different direction.  In June,2018, Canada accidentally made the admission there were no ongoing talks between the U.S. and Canada.  The reasoning is simple yet stunning.

Trade watchers, Wall Street experts, financial pundits and the entire media apparatus are missing what Team USA are doing right in front of their faces…. they’ve obviously never followed or studied Trump’s out-of-the-box problem solving when it comes to complex deals.

Without drawing any attention to the shift, Trump put NAFTA in the corner and began an entirely new bilateral trade discussion with Mexico. [ie. Forgetaboudit… just leave NAFTA over there; but let people think what we are doing is NAFTA]

Instead of following customary sequential steps: (1) waiting for endless NAFTA negotiations that can never be resolved; (2) and then announcing the NAFTA withdrawal; (3) and then dealing with the political fallout and financial backlash; (4) and then beginning bilateral trade discussions, etc. etc.  Team Trump brilliantly and quietly strategized an end-around.

Team U.S.A. reversed the sequencing (but didn’t announce it).

1. Negotiate the Mexico bilateral.
2. Announce the Mexican bilateral agreement.
3. Offer Canada a bilateral (slightly different terms).
4. Announce the Canadian bilateral agreement.
5. Dissolve NAFTA.

Instead of beginning new, bilateral, comprehensive trade constructs after trilateral NAFTA is dissolved, they end the new, bilateral, comprehensive agreements with trilateral NAFTA being dissolved.

Ergo, no political backlash and no political influence. By the time anyone realizes NAFTA is dead – it’s moot.  No formal trilateral NAFTA exit strategy is needed because new deals are already on the books.

The problems with NAFTA are systemic and there are too many political and multinational lobbyists conniving and scheming to retain the status quo. There are far too many political interests involved that are financially connected to the current NAFTA.

In essence, too many interests shouting outside the door for anyone at the table to hear a word the other is saying.  Too much noise near the table for any reasonable new negotiations to take place…. So Trump took them to another building and no-one noticed they had left… Wall Street and K-Street are still shouting at the door.

Everyone thinks Trump is renegotiating NAFTA; that’s just what Team Wolverine want everyone to think… that allows the team maneuvering space.  NAFTA has already ended, they just haven’t told anyone yet.

How can you not admire the sheer brilliance of how President Trump can guide his economic team through the byzantine labyrinth of DC politics; and end up with an entirely new set of deals that benefits the U.S. and shifts the entire economic sphere in favor of American interests; while no-one has the slightest clue how he’s doing it… yet he’s doing it right in front of their face.

This is infinite levels of winfinity.

.

To winfinity and beyond!

In what can only be described as the nonsensical rantings of an ideologue who refuses to even fathom the geopolitical Trump changes around him, Turkish President Recep Erdogan writes an op-ed in the New York Times to tell Americans POTUS Trump, and like-minded allies, are bullying/destroying the Turkish economy because his authoritarian regime has imprisoned an American pastor.

DUH!

This is not difficult to figure out.  Release American pastor Andrew Brunson, and President Trump will consider stopping. Keep the U.S. citizen detained and President Trump will continue destroying the Turkish economy.  This is not hard to figure out once you accept the United States is unapologetically going to target any nation that targets American citizens.

President Erdogan is finding out that Brunson is the most expensive hostage in the history of hostage taking; however, with POTUS Trump in command it’s the kidnappers paying the price…. funny how that happens.

Further into Erdogan’s diatribe he warns: “a failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies.” Again hilarious.

DO IT.  Please, DO IT.  Leave NATO and the U.S./Europe is no longer constrained to confront the extremist duplicity of Turkey.   Remember, when Turkey shot down the Russian fighter jet in November 2015?… then ran behind the skirt of NATO for protection against Russian retaliation.  Remember that?

Recep Erdogan now threatens to form closer relationships with Russia as retaliation for the way the U.S. and NATO allies are confronting his duplicity.  Hollow threats.  Remember when the Russian Ambassador to Turkey was killed by a Turkish jihadist shouting allahu akbar?

Between extremist Turkey shooting down the SU-24 (’15 )and then extremist Turkey killing the Russian ambassador (’16), it’s not like Russia would not welcome the opportunity for greater, shall we say, “influence”, with an intended goal of retribution.

From the Op-Ed:

…[…] “In recent weeks, the United States has taken a series of steps to escalate tensions with Turkey, citing the arrest by the Turkish police of an American citizen, Andrew Brunson, on charges of aiding a terrorist organization. Instead of respecting the judicial process, as I urged President Trump to do in our many meetings and conversations, the United States issued blatant threats against a friendly nation and proceeded to impose sanctions on several members of my cabinet. This decision was unacceptable, irrational and ultimately detrimental to our longstanding friendship.” …

Embrace the pain Erdogan; it is not going to stop.

…”He’s horrid, just horrid; there’s no telling what that, that man, will do next…. and the mean tweets are, well, just too much…. Too much.  But still… yet… it, his people seem to like him more than our own people seem to like us… how can this be? America this, America that, always with this America-First nonsense.. He’s horrible”…  “Junker even got smashed this morning because he couldn’t calm his nerves again. Poor man”… “The beast just terrifies all of us” …  “Shhhh, I think he’s coming”…

.