Bad Case of Indigestion
The market is suffering from a strong dose of indigestion today after swallowing the notion Trump worked out a deal with China over the weekend.
Second Thoughts
Both the Market and Trump are having second thoughts about the likelihood of a Trump deal with China.
The DOW is down about 1000 points or so from Sunday’s futures high.
Mike “Mish” Shedlock
Hoover Man
PRESIDENT TRUMP: “…i am a Tariff Man. When people or countries come in to raid the great wealth of our NATION, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.” – Dec 4, 2018
Ford to Announce 25,000 job cuts – December 3, 2018
General Motors to Fire 18,000 workers – November 26, 2018
Homebuilders Admit Housing Market Optimism Has Collapsed – November 19, 2018
And the list goes on and on…
History has shown that tariffs are generally never the best way to correct trade imbalances. In fact, they have this nasty tendency to lead to massive layoffs, and they often eventually lead nations to military conflict.
Obviously, the Donald has no idea who really ends up paying for tariffs (the people do with higher prices). And obviously, he is no serious student on the history of tariffs. Not only do they make a nation’s people poorer, but they are usually the next step towards war. All major wars have been economic wars.
If you haven’t noticed, the prices at the grocery stores have really been going up lately. That shouldn’t surprise anyone who knows that a lot of our food stuff ends up coming from China, or in some association thereof. I recently bought a fly line kit for my fly fishing rod, and I presumed that since it said USA STOCK on it that it was USA Made. My assumption was wrong, the USPS tracking info indicates that it is being shipped from QINGDAO CHINA. I thought I’d get it before the price really went up.
In my humble opinion, we have nothing more than a demagogue for a chief administrator. (Demagogue – a person, especially an orator or political leader, who gains power amid popularity by arousing the emotions, passions, and prejudices of the people.)
The last election was nothing more than the choice between a demagogue and a scammer.
“History has shown that tariffs are generally never the best way to correct trade imbalances. In fact, they have this nasty tendency to lead to massive layoffs, and they often eventually lead nations to military conflict.”
Some 60,000 American factories closed before Trump became President. HP’s Carley Fiorina dumped 30,000 workers and Steve Jobs set up production shop in China, as well. We have already had massive layoffs due to trade imbalance. We have also had American IT workers being dumped for H1B’s, imported to replace them in our own country.
Push back is what happens when a pendulum moves too far in one direction. Also, a cycle always comes back to ZERO degrees.
Glass-Steagall was created to prevent the 1930’s banking crash from ever happening again. In 1999 it was dismantled. A cycle came full circle. What is old, becomes new again. Last time around resulted in a major world war. War drums are already beating loudly.
Trump negotiates like George Costanza:
Trump and Elon Musk, birds of a feather, only with Trump, taxpayer’s and every American’s wealth is stake instead of just shareholders’. Bankruptcy stalks them both. For how long can saying it is so make it so? Maybe possibly Musk can outtalk reality, make good despite his misrepresentations, and intone every conman’s mantra: no harm, no foul. Tragically, it is almost inconceivable that Trump, and hence we, will avoid the reality that Trump’s economic con (manufacturing will return; we can win a trade war ) is vesting upon us. We not only will be poorer, but also will suffer increased disillusion with our economic system, increasing the temptation to follow an even more destructive economic charlatan, a serious socialist the most likely.
The risk of a swing to the other extreme, also driven by populism, is a valid concern. However the people who are abandoning the Republican Party because of the stupidity and anti-science are the generally the educated suburbanites, who aren’t looking to support another populist, especially one promoting a different extreme view of the economy.
“We not only will be poorer, but also will suffer increased disillusion with our economic system, increasing the temptation to follow an even more destructive economic charlatan, a serious socialist the most likely.”
The Year of Jubilee occurred every 50 years. The Kondratieff Cycle is 50 years. Martin Armstrong’s economic confidence cycle is 51.6 years.
It is Ground Hog Day, over and over again. Disillusionment with the economic system is baked into the cake (cycle).
Very few people getting rich in the stock market these days.
In his first year he listened to the grown ups and signed Paul Ryans tax cut and vastly slowed down the regulation state. The result was a little bump up of GDP to right around 3% for 2018. This year he listens to the Tariff Man because the Tariff Man is the geniusy of all men and we will probably see recession is 2019. At the very least we will be back under 2% gdp.
Paul Ryan’s tax cut was an INCOMPETENT giveaway to the rich and to executives.
It gave the middle class only a few dollars and the poor got nothing.
Trump was PLAYED like a fool by Paul Ryan and Koch Brothers.
Trump is surrounded by Koch Brothers stooges since even VP Pence is a Koch Brothers man and Mick Mulvaney whom gives Trump budget advice is also a Koch Brothers man.
It was BEYOND STUPID to allow companies to bring back money from abroad with a low tax rate and then spent it on insane stock buybacks at 10-year markets highs.
Stock buybacks should have a 25% tax on them to stop executives from goosing their own stock and option compensation with clueless and money wasting stock buybacks.
Also stock buybacks should be completely BANNED if the stock price is higher than 60% of the 5 year average stock price.
Also Trump’s single-minded thought that all regulation is bad led to GM closing 5 factories since GM has no point in regular cars anymore since Trump removed CAFE aka the average fuel standard that let GM build gas guzzling SUV’s if they also built some regular cars to balance average fuel consumption.
Also Trump is blind as bat to have done NOTHING to raise the tariffs on regular imported cars. The tariff on regular cars imported to USA is just 2.5% when for SUV’s it is 25%.
Even EU tariffs imported cars at 10% so Trump should immediately increase the tariffs to 10%.
Also Trump’s steel tariffs have made american manufacturing uncompetitive since Trump was STUPID and did not also put tariffs on steel products.
When large part of imported cars value is the steel in them that steel should be tariffed just like steel is tariffed.
Did you steal that rant from Alexandria Ocasio-Cortez?
All you needed to do to realize that the clown in the White House was shooting his mouth off was to link to the Chinese announcement and hit “Translate” on Google.
Are you talking about the clown who couldn’t get GDP above 2% and he had 8 years to do so.
I guess you didn’t look at the chart above where we had high growth for a couple of quarters in 2014 but it didn’t last. Just like the current clown’s economic miracle won’t last. Of course he is still bragging that under him, this is the highest numbered year on record.
And this is how he did it.
Yes, that’s the one – the one that thinks quarterly numbers are the same as annual numbers and forgets that we had two quarters of about 5% growth in early 2014 yet still thinks he is breaking records.
What a loser.
Just remember the fed said Obama economy was crap thats why keep interest rates at zero