• Same story, different day...........year ie more of the same fiat floods the world
  • There are no markets
  • "Spreading the ideas of freedom loving people on matters regarding high finance, politics, constructionist Constitution, and mental masturbation of all types"

Trump's Economic, Tax & Spending Plans

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Posting this one as a little food for thought, nothing more. It's someone's opinion and it is not favorable to Trump in any way, shape or form. Take it fwiw and dyodd.

Tariffic Tuesday, Part 12 – Trump Ramps Up Tariff Talk Ahead of G20 Meeting

by ilene
Tue, 11/27/2018 - 14:48



Tariffic Tuesday, Part 12 – Trump Ramps Up Tariff Talk Ahead of G20 Meeting

Courtesy of Phil of Phil's Stock World


Does he do it on purpose?


As much as the President likes to complain about the market not performing well, more often than not he's the primary cause of poor performance. Yesterday, for example, we were having a lovely bounce (albeit on very low volume) but then Trump suddenly decides to say he's moving ahead and boosting tariffs on $200Bn worth of Chinese goods from the current 10% to 25% – which is up 150% from where they are now and will sock American Consumers with an additional $30Bn in taxes, crippling disposable income and boosting inflation. But it's $30Bn more in tax breaks he can give to his friends so – winning!

In an interview with The Wall Street Journal, Mr. Trump suggested that if negotiations don’t produce a favorable outcome for the U.S., he would also put tariffs on the rest of Chinese imports that are currently not subject to duties.​
"The rest" is another $267Bn with of goods and 25% of that would be yet another $66Bn picked from the pockets of American Shoppers. So we're talking about $96Bn worth of additional taxes aimed at the people who can least afford it and the chances of Trump not [imposing taxes] but instead making a deal with Xi this weekend that widens his already out-of-control budget deficit by $96Bn are slim to none – just as I've warned about from the start. These tariffs have nothing to do with China and everything to do with making middle Americans (the suckers who voted for him) pay for his tax cuts, while wrapping it in a flag of patriotic protectionism that hasn't bought a single job back to our shores in two years.



Trump has done NOTHING for jobs and, in fact, Trump's first 22 months in office created just 4.1M jobs while Obama's last 22 months in office created 4.8M jobs – Trump inherited a triple and turned it into a double and, at this pace, it will dribble out into a weak single.

In fact, for the Red States he supposedly cares about – it's already a ground out as he's LOST 2% of the Jobs in 2018 while the Blue States, with their higher minimum wages and crazy tax policies and Obamacare programs, keep growing.

Now that GM has announced 14,0000 job cuts right in the heart of Trump Country, we don't expect that chart to improve and a continued trade war with China will shut down farming and equipment sales, leading to tens of thousands of additional job losses for the idiots who voted for Trump, thinking he actually gave a damn about them.

These aren't "accidental" losses, these are job losses caused by poor trade policies and poor economic policies and even poor environmental policies as GM is killing production of the Impala, Volt and Cruze – economy cars no longer in demand as relaxed Government mileage requirements led to a shift back towards SUVs and Trucks. Those 3 models had 170,000 units sold in the first 3 quarters vs. over 400,000 Siverado trucks, which GM makes more money on and the salespeople have more incentive to sell now that the "Big Brother Government" is no longer requiring that GM watch their fleet mileage.



Silverados are made in Silao Mexico, Oshawa Canada and Valencia Venezuela and those cities are becoming great again while Cruzes, Impalas and Volts are made in Detroit, Flint & Hamtamck Michigan and Lordstown Ohio (the name didn't save them). Gee, who'd have thought that removing the incentives to make small cars and removing the penalties for making gas-guzzling trucks would have moved jobs from American factories making small cars to foreign factories making large trucks? Yep, I guess no one could have seen that coming, so we should blame Obama, right?

That's why I have no pity for Trump voters in those places – Trump TOLD YOU what he was going to do and now he did it, and these are the real-life consequences, not the fantasy outcomes he said would happen. One can only hope they learn a lesson that will last until November of 2020 – when we can once again vote for change – which is sadly what a lot of Trump's voters will be begging for long before then...

Meanwhile, back to trade talks (or lack thereof) – according to the WSJ:

Chinese Vice Premier Liu He, Mr. Xi’s economic envoy, traveled to Germany this week to attend a China-Europe forum instead of going to Washington to meet with U.S. negotiators. People close to the Chinese government said Mr. Liu’s trip to Germany had been planned for a while, but the timing was firmed up after Mr. Liu decided not to go to Washington for any pre-summit talks.


The President said tariffs could also be placed on Apple (AAPL) iPhones and laptop computers imported from China if the U.S. decides to put tariffs on additional goods – that's not helping the market much as AAPL drops back to $171, dragging the Nasdaq, Dow and S&P along with it. In a September letter to U.S. trade authorities, the iPhone maker said tariffs would disadvantage the company compared with foreign competitors and lead to higher U.S. consumer prices.

As you can see from the map, owning an android phone makes you a Republican but being a Republican doesn't preclude you from owning an iPhone so Apple taxes will be another shock to many in Trump's base as iPhones are just too darned popular to be contained by political boundaries.

Speaking of political boundaries (and World War III), Ukrainian President Petro Poroshenko said the country’s parliament had approved his declaration of martial law for 30 days starting Wednesday, for a number of provinces most vulnerable to Russian aggression. Russia, which thinks they can now do whatever they want under the watch of a Putin Puppet President, seized 3 Ukranian Naval Ships and US Ambassador, Nikki Haley came out swinging on the President's behalf saying Russia's actions "will further increase tensions with Ukraine." Wow, that's a strong response from the Trump Administration almost as strong as when Trump asked Putin if he meddled in the US elections and Putin said "no" and Trump made him do a pinky swear….



We don’t like what’s happening (a clear act of war by Russia against the Ukraine) and hopefully it will get straightened out,” said Mr. Trump, who had to pause while Putin had a drink of water but then added that the U.S. is consulting with allies in Europe about the incident.

NATO Secretary General Jens Stoltenberg said the events marked a serious escalation of tensions in the region. “Russia has to understand that its actions have consequences,” said Mr. Stoltenberg, who called on Russia to release the Ukrainian ships and naval personnel. This morning, a court in Crimea has ordered one of the 24 Ukrainian sailors captured by Russia at the weekend to be detained for two months on charges of illegally crossing Russian borders.

Ukrainian troops have been fighting Russian-backed separatists in eastern Ukraine since 2014 but the hostilities have largely subsided since a truce was signed in 2015 but Russia build a bridge across the strait in May – the kind you might send troops across if you were looking to invade the rest of the Ukraine through Crimea…

Market-wise, we're still watching the same bounce lines we were watching yesterday. My comment to our Members in the morning chat was:

Still the same 10% lines and index lines we'll be watching as last week's slide below them was just a spike on the daily chart now that it's been erased, so we're at:​
  • Dow 24,300 with a weak bounce at 24,800 and a strong bounce at 25,300
  • S&P 2,640 with a weak bounce at 2,710 and a strong bounce at 2,780
  • Nasdaq 6,870 with a weak bounce at 7,080 and a strong bounce at 7,230
  • Russell 1,485 with a weak bounce at 1,530 and a strong bounce at 1,575
  • NYSE 11,880 with a weak bounce at 12,150 and a strong bounce at 12,400

Another nice thing about the simple bounce line chart is it's easy to see where the inflection points are and this morning it's the NYSE, which is just over 12,150 at 12,195 at the moment. Then we'd look to see if the Nasdaq confirms a comeback but, at 6,651 after already being up 120 (1.8%) it's way beyond unlikely that we'll get another 200 points so we should be very skeptical of all approaches to the weak bounce lines while the Nas is still more than 10% down.​
So, if anything, the NYSE failing 12,150 would confirm that the low-volume pop isn't likely to stick and then we can look to short the laggard on the way back down. How's that for a morning plan?​



If Trump can pull a trade deal out of his ass – that would probably prevent major damage but if we ratchet up trade war with China at the same time as the charts flash bear market signs – then we can only assume that Trump is also looking to undo Obama's market rally – as well as everything else…​

 

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Trump cites 'chicken tax' on imported light trucks to justify car tariffs in warning to GM – but ignores how Ford and Mercedes get around it

  • President Trump has been railing against General Motors ever since it announced the closure of U.S. auto plants and worker layoffs
  • He's now threatening to expand the 'chicken tax' to the auto industry
  • He argues it would help build more cars in America and keep GM plants open
  • But auto makers fear such a move will raise costs and start a trade war
  • The 'chicken tax' is a Cold War-era tariff on light-duty truck imports
  • Some automakers - like Ford and Mercedes - have found ways around it
https://www.dailymail.co.uk/news/ar...ht-trucks-justify-car-tariffs-warning-GM.html
 

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Time for GM Workers to Strike
RT America


Published on Nov 28, 2018
RT Correspondent Daniel Bushell takes a look at claims President Trump has failed to deliver on major campaign promises after GM announced it plans to lay off 14,000 workers. Host Anya Parampil talks to Kevin Gustafson, organizer with Democracy at Work DC, to ask why the lay-offs are coming now.
 

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Trump reaches a 90 day CEASEFIRE in disruptive trade war with China: President agrees to no new tariffs at G20 summit to allow trade negotiations with Beijing to continue

  • Trump and Chinese President Xi reached the truce on Saturday in Argentina
  • U.S. will revoke plans to impose new tariffs on certain Chinese goods in January
  • China also agreed to label deadly opioid fentanyl a controlled substance there
  • White House advisor said dinner between Trump and Xi went 'very well'
  • It was Trump's last event at G20 before boarding Air Force One to DC
  • It was Trump and Xi's first face-to-face meeting since the trade war began
https://www.dailymail.co.uk/news/ar...g-Air-Force-One-Houston-Bushs-remains-DC.html
 

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Trump is the only world leader at the G-20 summit to NOT sign statement supporting commitment to fight climate change

  • President Donald Trump and 19 other world leaders wrapped up a summit in Buenos Aires on Saturday
  • The G-20 conference ended with 19 leaders signing on to a pledge reiterating commitment to fighting climate change
  • Trump was the only leader who declined to sign the statement in support of the Paris accord on fighting climate change
  • The U.S. leader has expressed skepticism with regard to climate change and whether it is caused by humans
https://www.dailymail.co.uk/news/ar...pporting-commitment-fight-climate-change.html
 

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Senior aides push back on Trump's claim that China agreed to cut auto tariffs

By Jim Puzzanghera, Los Angeles Times
7 hrs ago


WASHINGTON - President Donald Trump's top economic advisers pushed back Monday on his claim that China has agreed to eliminate tariffs on U.S. auto imports, saying no such agreement had been struck.

The unusual dispute was the latest to suggest that Trump's handshake agreement on trade during a working dinner Saturday night in Argentina with Chinese President Xi Jinping remains open to divergent interpretation, even in the White House.

On Sunday night, after returning to the White House from the Group of 20 economic summit in Argentina, Trump declared on Twitter that China "has agreed to reduce and remove tariffs on cars coming into China from the U.S."

If true, that would mark an achievement for the White House because the Chinese tariff is 40 percent. It caused auto stocks to jump Monday as part of a broad stock market gain based on the pause in the U.S.-China trade war.

But Trump's top economic advisers made clear Monday that no agreement to reduce and remove the tariffs yet existed, despite Trump's boast.
"We don't yet have a specific agreement on that, but I will just tell you ... we expect those tariffs to go to zero," Larry Kudlow, Trump's top economic adviser, told reporters in a conference call from the White House.

Chinese officials did not confirm any agreement.

China had reduced the tariff to 15 percent on July 1 for car imports from all nations. But several days later, it boosted it to 40 percent for U.S. imports in response to tariffs the Trump administration had levied in the tit-for-tat trade dispute.

U.S. companies sold about $10.2 billion worth of passenger vehicles in China in 2017, according to the Commerce Department. The U.S. tariff on auto imports from China is 27.5 percent.

Trump touted his working dinner with Xi, after the G-20 summit in Buenos Aires, as an "extraordinary" meeting that could bring about "massive and very positive change, on trade and far beyond."

"Relations with China have taken a BIG leap forward!" Trump tweeted. "Very good things will happen. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed. Level the field!"

Other than Trump's agreement to delay any new tariffs for 90 days, however, officials from the two economic superpowers offered different interpretations of what the two leaders promised at the table.

Treasury Secretary Steven T. Mnuchin gave mixed messages, appearing to confirm the auto tariff cut but then backing off.

"There is an immediate focus on reducing auto tariffs," Mnuchin told reporters. "There's a lot of work to be done over the next 90 days."

White House trade adviser Peter Navarro also wouldn't confirm China was lifting auto tariffs. He told NPR that the issue "certainly came up in discussions" between Trump and Xi.

"That's just one of the many tariffs that have to be reduced," Navarro said.

Kudlow said he believed that China had committed to reduce the auto tariffs.

"That is my understanding, that is President Trump's understanding and hopefully we'll see some quote unquote immediate action there," Kudlow said.

Pressed on how low the auto tariffs would go, Kudlow would not give a number but said he expected them to disappear eventually.

Robert Lighthizer, the U.S. trade representative, will lead the negotiations with China on auto tariffs and other trade issues during the 90-day truce, Kudlow said. Kudlow told reporters twice on the call that the 90 days would begin Jan. 1, but the White House later corrected him to say the period began Dec. 1.

The two nations are "pretty close" to some agreements on China's alleged theft of U.S. intellectual property and policies that force U.S. companies to transfer technology to Beijing in order to do business in China, he said.

"We're going to move very fast," Kudlow said.

Trump had threatened to increase U.S. tariffs to 25 percent from 10 percent on $200 billion in Chinese imports, starting on Jan 1. He temporarily pushed the deadline back after Xi said China would purchase more U.S. agricultural and energy products to help ease the trade imbalance.

China acknowledged that but neither side provided any details or timeline, so it was difficult to know if the deal marked a breakthrough or not.
Kudlow said the Trump administration would watch China closely to make sure it lives up to its commitments.

"We've been down this road before historically and the story has always been disappointing. Stuff that they said would get done doesn't get done," Kudlow said.

"I'm not questioning them right now, but the history has not been great," he added. "We have a lot of things to do, a lot of hurdles."

Visit the Los Angeles Times at www.latimes.com

http://www.msn.com/en-us/news/polit...eed-to-cut-auto-tariffs/ar-BBQrFaM?ocid=ientp
 

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Trump hopes to bring end to arms race with Russia and China
RT


Published on Dec 4, 2018
Donald Trump has said he would like to see an end to what he called an 'uncontrollable' global arms race, and lamented his country's huge military spending.
 

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Huawei founder's daughter arrested on U.S. request, clouding China trade truce

Reuters
By Julie Gordon and Karen Freifeld
4 hrs ago


The daughter of Chinese tech giant Huawei's founder has been arrested in Canada and is facing extradition to the United States, dealing a blow to hopes of an easing of Sino-U.S. trade tensions and rocking global stock markets.

The shock arrest of Meng Wanzhou, who is also Huawei Technologies Co Ltd's chief financial officer, raises fresh doubts over a 90-day truce on trade struck between Presidents Donald Trump and Xi Jinping on Saturday - the day she was detained.

The arrest is related to violations of U.S. sanctions, a person familiar with the matter said. Reuters was unable to determine the precise nature of the violations.

The arrest and any potential sanctions on the world's second biggest smartphone maker could have major repercussions on the global technology supply chain. Shares in Asian suppliers to Huawei, which also counts Qualcomm Inc and Intel among its major suppliers, tumbled on Thursday.

Meng, one of the vice chairs on the company's board and the daughter of company founder Ren Zhengfei, was arrested on Dec. 1 at the request of U.S. authorities and a court hearing has been set for Friday, a Canadian Justice Department spokesman said. Trump and Xi had dined in Argentina on Dec. 1 at the G20 summit.

Sources told Reuters in April that U.S. authorities have been probing Huawei, the world's largest telecoms equipment maker, since at least 2016 for allegedly shipping U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws.

Huawei confirmed the arrest in a statement and said that it has been provided little information of the charges, adding that it was "not aware of any wrongdoing by Ms. Meng".

She was detained when she was transferring flights in Canada, it added.

China's embassy in Canada said it resolutely opposed the arrest and called for Meng's immediate release.

In April, the sources told Reuters the U.S. Justice Department probe was being handled by the U.S. attorney's office in Brooklyn.

The U.S. Justice Department on Wednesday declined to comment. A spokesman for the U.S. attorney's office in Brooklyn also declined to comment.

CHINESE MEDIA BACKLASH

The arrest drew a sharp response on Chinese social media.

A user of China's Twitter-like Weibo platform said Chinese should boycott products made by U.S. tech giant Apple Inc and instead buy Huawei products to show support for one of China's national champions.

Jia Wenshan, a professor at Chapman University in California, said the arrest was part of a broader geo-political strategy from the Trump administration to counter China and it "runs a huge risk of derailing the U.S.-China trade talks".

Mei Xinyu, a researcher at a think tank run by the Ministry of Commerce, wrote in an article on the official People's Daily Overseas Edition's WeChat account that the arrest was a warning that the Trump administration might abandon its deal with China.

"We can be sure that in the near future a bumpy road of fights followed by talks will be the norm of China-U.S. relations," Mei wrote. "China must become accustomed to this new environment of struggle and treat all of the U.S. government’s promises with caution."

While Meng's arrest comes at a delicate time in U.S.-China relations, it was not clear if the timing was coincidental.

Arthur Kroeber, founder of Gavekal Dragonomics, said it was unlikely that Beijing would retaliate in kind against the local U.S. business community, whose interests have partly overlapped with China’s in the trade war and been a source of leverage for Beijing.

"You can play hardball with a small country but you can't do it with the U.S.," he said. "Actually it hurts them to make life difficult" for U.S. companies.

The probe of Huawei is similar to one that threatened the survival of China's ZTE Corp, which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran.

Earlier this year, the United States banned American firms from selling parts and software to ZTE, which then paid $1 billion this summer as part of a deal to get the ban lifted.

It was not immediately clear how Huawei's business operations might be affected by the arrest.

HONG KONG CONNECTION

In January 2013, Reuters reported that Hong Kong-based Skycom Tech Co Ltd, which attempted to sell embargoed Hewlett-Packard computer equipment to Iran's largest mobile-phone operator, had much closer ties to Huawei than previously known.

Meng, who also has gone by the English names Cathy and Sabrina, served on the board of Skycom between February 2008 and April 2009, according to Skycom records filed with Hong Kong's Companies Registry.

Several other past and present Skycom directors appear to have connections to Huawei.

The news about the arrest comes the same day Britain's BT Group said it was removing Huawei's equipment from the core of its existing 3G and 4G mobile operations and would not use the Chinese company in central parts of the next network.

Huawei has said it complies with all applicable export control and sanctions laws and U.S. and other regulations.

Meng's arrest drew a quick reaction in Washington.

U.S. Senator Ben Sasse praised the move and said that it was "for breaking U.S. sanctions against Iran." He added: "Sometimes Chinese aggression is explicitly state-sponsored and sometimes it's laundered through many of Beijing's so-called 'private' sector entities."

U.S. stock futures and Asian shares tumbled as news of the arrest heightened the sense a major collision was brewing between the world's two largest economic powers, not just over tariffs but also over technological hegemony.

Shares of Huawei suppliers slumped on Thursday as investors fretted over the arrest. Samsung Electronics fell 2.3 percent, while Chinasoft International Ltd sank as much as 13 percent.

(Reporting by Makini Brice; Additional reporting by Julie Gordon in Vancouver, David Ljunggren in Ottawa, Diane Bartz in Washington, Tony Munroe and Christian Shepherd in Beijing, Josh Horwitz and John Ruwitch in Shanghai and Jessie Pang in Hong Kong; Writing by Chris Sanders and Anne Marie Roantree; Editing by Sonya Hepinstall and Muralikumar Anantharaman)

http://www.msn.com/en-us/money/comp...uding-china-trade-truce/ar-BBQy2MM?ocid=ientp
 

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'We didn't know!': Trump and Trudeau race to distance themselves from the arrest of Huawei heiress in Canada over fears of a backlash in Chinese trade

  • Donald Trump and Justin Trudeau distanced themselves from claims they knew Meng Wanzhou was going to be arrested in Canada on Saturday
  • A White House official said Trump did not know about a US request for her extradition as he had signed a trade agreement with China on the same day
  • Huawei is one of the largest telecom technology companies in the world
  • Meng faces extradition to the US over alleged violations of American sanctions against Iran

https://www.dailymail.co.uk/news/ar...eau-unaware-plans-arrest-Huawei-official.html
 

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Just a little food for thought. Take it fwiw and dyodd.

What Didn't Happen At G20 Is Far More Important Than What Did


by Tyler Durden
Tue, 12/11/2018 - 00:05


Authored by Alastair Crooke via The Strategic Culture Foundation,

Sometimes what doesn’t occur tells us much more than what did – as in Sherlock Holmes’ case of the dog that did not bark in the night. Yes, two things did not occur at the G20, at the end of last week: Why? And what do they signify?

What these two lacunae tell us is something important: that Mr Trump’s presidency has reached a key point of inflection – the end of the beginning, or perhaps even the beginning of the end?



First, there was ‘no deal’ with China. As Christopher Balding, former associate professor of business and economics at the HSBC Business School in China, frankly put it:

“It cannot be emphasized enough: This is not a deal, and it is not a resolution. This is an agreement to delay further escalation. Neither side really gave anything, except some cotton candy sweeteners. Nothing fundamental”.
Most of the subsequent media commentary has focussed on the prospects of a return to the Cold War trenches at the end of ninety days (a deadline which incidentally China has yet to confirm) or, even sooner, as Trump returns to Twitter belligerency. But the real question is not what happens towards the end of the first quarter 2019, but why was there ‘no deal’ on Saturday?

Trump has been promising ‘big’: “I am a tariff man”, he proclaims in a tweet, adding: “Make America Rich Again”. And, the Administration keeps repeating that the US economy is strong, whilst the Chinese one is weak: ‘We have all the leverage’, the Administration outs at regular intervals. We can ‘tariff’ double the goods, and double the tariffs too, Trump warns, whilst the US exercises its military muscle, regularly, right into Xi’s face.

And then? Come G20, ‘nothing’. Trump stalks the edges of G20 looking tense and defensive. He was no alpha-male, dominating these events. He looked crocked. It was all a bit of a dud, really.

Recall however, that the G20 followed immediately in the wake of the ‘guilty plea’ to Robert Mueller, for lying to Congress, by Trump’s former lawyer and fixer, Michael Cohen. This, as Harvard Law Professor Dershowitz notes, is evidence of Mueller again creating new crimes (through entrapment), in place of investigating the possibility of past crimes – yet Mueller, clearly is still ‘after’ Trump: And maybe, he will not prove any crime (collusion, were it to have occurred, is no crime anyway) – but that is not the point. Mueller is cornering Trump politically, as opposed to legally, through painting him as sleazy, and surrounded by liars and scoundrels. Mueller is targeting Trump’s vanity: shredding Trump’s self-image as somehow a heroic figure set on restoring the greatness of America: Making America Rich Again. Mueller is slowly paralysing the President’s potency, whilst making him appear a mere empty vessel.

Former US diplomat, James Jatras thus hints at the answer to ‘why no deal’:

“With the Democrats set to take over in the House of Representatives in just over a month, we'll soon see intensified investigations coordinated with Mueller to find any possible pretext for impeachment in Trump’s business or private life. It’s conventional wisdom that even if the Democrat-controlled House can find something to support articles of impeachment, the GOP-held Senate will be Trump’s firewall. Bunk. Democrats rallied around their president Bill Clinton but it was Republicans who threw Richard Nixon to the wolves. Are there a dozen or so Republican Senators who would be ready to dump Trump and install Mike Pence in the Oval Office? You betcha. Start with Mitt Romney.”​
And what might, in Trump’s view, stand between him and the unbearable indignity – and blow to his ego – of being ‘dumped’ by his party, and being further humiliated by being hounded from office? Well, what wouldn’t is a collapsing market, and an US economy stalling into approaching recession. That, in itself, could possibly deliver the President precisely into the hands of those Republican Senators who despise him, and who would side with the Democrats in a heartbeat, if they thought they could get away with dumping the President – just as Jatras suggests.

The US market was already sinking into the doldrums in the week before the G20. The trade-war fear, initially discounted, has begun gripping market sentiment. And tell-tale harbingers (though not definitive) of a recessional economy are being espied (such as the inversion of part of the Treasury yield curve, and the oil futures curve having been in contango. Both are considered as signals of a global economy that may be slowing).

The point here is simply that Trump has, very explicitly, hitched his presidential fortunes to a rising stock market and a roaring economy. So, if it might stop the market from puncturing his business-savvy image, why not a offer a trade-war respite with China? Why not give the markets a pre-Christmas goosing?

Then there was the other notable G20 omission: another dog that significantly failed to bark. The Presidents of two pre-eminent military and nuclear powers, who sit astride major geo-political faultlines, and who need to talk, circled each other, closed-faced, and without stretching out hands – they could not find even, the subterfuge for sitting together.

Why? Ostensibly, because a tug-boat and a couple of Ukrainian armed coastal vessels were told to enter the Azoz ‘Sea’, whilst ignoring the required norms of obtaining prior permission. Really? For that? How bizarre. Trump no longer can pull Mr Putin aside, send away his aides, to sit and talk? Even more interesting, was that the Kremlin spokesman subsequently said that there ‘had been exchanges’ with Washington, and that John Bolton would be coming to Moscow, to discuss a possible future meeting between Trump and Putin. And that couldn’t have been done face-to-face in Buenos Aires because of an arrested tugboat? And that such meeting now requires Bolton’s prior imprimatur and involvement?

All in all, President Trump emerges from this summit, a pussy-cat. Big on talk, short on action: Short on action domestically; short on action in cleaning the swamp; and short on action generally. Jatras concludes, more in sorrow than in anger, “it would be only a small exaggeration to say that with respect to foreign and security policy, Trump is now a mere figurehead of the permanent state. Even if Trump and Putin do happen to meet again, what can the latter expect the former to say that would make any difference?”.

Why? We can only speculate: Simply, it may be that he fears that the markets and economy are turning against him. Perhaps Trump fears a Republican ‘Brutus’ will smell his weakness (stripped of his market-raising ‘magic’), and plunge the dagger in his back?

In his book, Principles for Navigating Big Debt Crises, Ray Dalio of Bridgewater Associates distinguishes between different debt cycles: the short-term cycles, and debt ‘super-cycles’. Short-term debt cycles move more or less in parallel with the underlying economic cycles, and last on average 7-8 years – in line with the average length of economic cycles. Debt ‘super-cycles’ typically last 50-75 years, and have a long history. Dalio notes their mention in the Old Testament, which described the need to wipe out debt every 50 years or so, whence it was known as the ‘Year of Jubilee’.

“Debt super-cycles always end with a big bang”, Nils Jensen writes: “The previous debt super-cycle ended with the breakout of World War II, and a new debt super-cycle commenced its life when the canons fell silent in 1945. We are now almost 75 years into the current super-cycle; i.e. it will go down in history as one of the longer ones”.
It is Trump’s misfortune that his Presidency seems to be coinciding with the end to not just ‘any’ super-cycle, but to a turbo-charged, global debt super-cycle, fuelled by radical interest rate suppression, and massive credit creation (which may explain its ‘longevity’).

‘Doubly unfortunate’, perhaps, because at the same time – for related reasons – the US simply is running out of fiscal ‘space’. The Treasury has a big (a repeating, dollar, Trillion-plus) borrowing requirement, in this and coming years, and foreigners are no longer buying US debt. In short, for the first time in seventy years, the Reserve Currency holder is finding it hard to finance itself – and in the current atmosphere of Washington polarisation – the US cannot reform itself, either. It is stuck.

This represents the primordial paradox that is binding the US President: Politically he needs a rising market and a roaring economy, but the ‘Oracles’ are mouthing that the Goldilocks market already may be behind him. He wants the Fed to lift the market aloft, but the Fed is more concerned to prepare for the next phase to the economic cycle. For that, it needs the elbow-room to be able to drop interest rates by 4%, which of course is impossible now. And the Fed needs a leaner balance sheet – in case of needing to charge to the rescue of the economy.

So here is the tension that ‘binds’ Trump: He can act politically, and risk a deeper end-of-cycle ‘big bang’; or act sagely, to limit the potential consequences of a possible debt crisis. But, acting ‘sagely’ also implies understanding that America’s fiscal situation of having to sell a mountain of US debt paper, on a market bereft of foreign buyers is likely to lead interest rates up – and stock prices down (as institutions sell shares to buy the higher yielding USTs). In short,politically he wants shares up and interest rates down, but America’s present fiscal situation is likely to impose the inverse – and therefore expose him to the potential ‘Brutus’ lurking in the Senate corridors.



Which will he choose? Well, we can see it already: Trump is desperate to keep the equity market up. His own security is tied to it: He is bullying Jerome Powell to halt the projected Fed interest rate interest rate hikes; and he wants the price of oil down – so that Powell has no excuse (of rising inflation), to hike rates further. So anxious was Trump, it seems, that he was ready to issue several oil waivers in respect to purchasers of Iranian oil. His 25 November tweet makes the link between low oil prices and his expectation that the Fed should forego hikes, quite explicit:

So great that oil prices are falling (thank you President T). Add that, which is like a big Tax Cut, to our other good Economic news. Inflation down (are you listening Fed)!​

What does all this mean? It means that Trump, whose entire business acculturation favours debt – more debt and low or zero-based interest rates – will hope to get his way – and he may partially. The signs are that the Fed will raise rates this month, but may slow the pace of rises next year. (At least, this is what the shape of the futures curves would imply).

But the auguries are adverse:

World trade is slowing;
China is slowing;
Japan is slowing;
Germany and Europe are slowing ; and
the first shoots, hinting that the US has peaked in 2Q18, are poking through the soil.​

Trump may end with neither a roaring stock market – nor, more ominously, a bond market, painlessly digesting the Trillions of US debt.

In terms of foreign policy, the Hawks run it: Pence, Navarro and Lighthizer will pursue their ‘all-government’ cold war with China, but who knows what will be the state of the US market in 90 days.

I would not bet on those additional tariffs and 25% rates emerging in April. Xi has played it perfectly: Sun Tzu would be proud.

And Mr Bolton will continue to press Russia at all points of its border; to disrupt it economically, through a regular diet of sanctions; trouble-raising in Ukraine, and trying to diss Russia’s political process in Syria (the Astana Process).

https://www.zerohedge.com/news/2018-12-10/what-didnt-happen-g20-far-more-important-what-did