July Retail Sales Growth: 6.4% “Unexpected”, “Well Beyond Expectations”, “well beyond what experts predicted”…

Remember that 2016 conversation about retail inflation, Q2 wage growth, durable goods spending and non-durable goods expenditures…  Well, in a growing economy; a bigly expanding economy; with wages actually increasing as an authentic outcome of expanded hiring and jobs, jobs, jobs… in conjunction with lowered tax rates…. you get more money in your pocket.

This natural Main Street dynamic leads to increased consumer spending, specifically in the retail sectors influenced by who?… Oh, yeah, those middle-class economic beneficiaries of all the above.

The expert financial pundits are shocked, shocked I tell you… shocked; when, all of a sudden, the convergence of MAGAnomic Main Street policies delivers results.  DUH!

The Commerce Department – Economic and Statistics Administration – released the figures from July 2018 retail sales today (full pdf available here), showing an incredibly strong .5% increase in spending in July, bringing a 6.4% increase year-over-year;  and the results have dropped the jaws of the “experts”:

“Economists polled by Reuters had forecast retail sales nudging up 0.1 percent in July.” (link)

“Retail spending in the United States increased a half-percent during the month of July — well beyond what experts predicted.” (link)

“U.S. retail sales rose more than expected in July as households boosted purchases of motor vehicles and clothing, suggesting the economy remained strong” (link)

(pdf link)

With expanded jobs available; higher wages and the highest workforce in the history of the country currently; and with more U.S. workers re-entering the workforce again; and with expanded optimism and opportunity; the retail sector is a natural benefactor.

Notice the drop in the “sporting goods, hobby, etc.” sector?  Americans love to work… when you’re working, you’re earning…. when you’re earning you ain’t playing as much etc.

Retail sales growth is directly related to the middle-class.  Retail store volume is directly related to the wealth of the middle class.  Build a strong Main Street and you simultaneously build a strong, financially secure, middle-class.  It is a self-fulfilling economic prophecy; this is common sense.

Remember, two-thirds of our GDP, and the subsequent economic growth measured by GDP growth, is directly influenced by retail sales.  The more goods Americans purchase, the higher our GDP growth in the making, manufacturing, distribution and selling of those goods.   This is the Main Street growth cycle dynamic never discussed when all of the economic emphasis is on a service-driven economy (Wall Street).

BIG PICTURE – As a direct result of President Trump’s multifaceted economic strategy, manufacturing companies are having to look at TCO which is “Total Cost of Ownership”. You see, President Trump is not only approaching manufacturing growth policy from the trade-agreement and investment side, his policies also approach the larger impacts on raw material, energy and labor.

This multi-pronged policy approach forces companies to look at transportation and location costs of manufacturing. In combination with more favorable tax rates; if domestic costs of material and energy drop, in addition to drops in regulatory and compliance costs of operating the business, the total operating cost differences drop dramatically.

This means labor and transportation costs become a larger part of the consideration in “where” to manufacture. All of these costs contribute to the TCO. Transportation costs are very expensive on durable goods imported. If the durable goods are made domestically, the transportation costs per unit shipped drop significantly. The TCO analysis then further reduces to looking at labor.

U.S. Labor is more expensive, yes. However, if material costs, energy costs, regulatory costs, taxes and transportation costs are part of the TCO equation – then higher labor costs can be offset by the previously mentioned savings.

… […] Chinese wages have been rising by about 15% a year since 2000. As a result, the Chinese labor cost in dollars per unit of output is now about four times what it was in 2000. We estimate that about 25% of what is now offshored would come back if companies quantified the total cost. These products would generally have characteristics such as high freight cost vs. labor cost, frequent design changes, volatility in demand, intellectual property risk, and regulatory and compliance requirements. (link)

For two years CTH has repeatedly stated that under Trump’s proposals “total costs” drop so dramatically, that off-shored manufacturing is no longer the best play. We are seeing that shake out right now. For the first time in 30 years companies are reviewing the TCO of products and finding less and less financial reasons for off-shore manufacturing.

Their response?….  Well, we need more workers !!

Winnamins baby… moar winnamins.

Multinational Wall Street -vs- Main Street U.S.A…

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

Breaking: Jeff Colyer Concedes To Kris Kobach in Kansas GOP Primary…

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.

Nervous Pandas Get Twitchy Watching Shrinking Bamboo Forest…

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.

Sarah Sanders White House Press Briefing – 2:30pm EST Livestream

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 LinkFox News Livestream LinkGST Livestream Link

Stunning MAGAnomic Sentiment: Small Business Optimism Survey Second Highest Reading in History….

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 MAGA Campaign Speech in Utica, New York – 5:45pm Livestream

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 LivestreamAlternate Livestream #1GST Livestream Link

President Trump MAGA Campaign Speech in Utica, New York – 5:45pm Livestream

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 LivestreamAlternate Livestream #1GST Livestream Link

President Trump Delivers Remarks During Fort Drum, NY, Defense Ceremony – 2:30pm Livestream…

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 LinkRSBN Livestream LinkFox News Livestream Link

Sunday Talks: Maria Bartiromo Talks U.S. Bilateral Trade With Mexico…

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!