If all
else fails, immortality can always be assured by spectacular error.
John Kenneth
Galbraith.
Ignore our
complacent, central bankster rigged stock markets, in the summer silly season, they
are whistling past the graveyard, trying to pretend that scary things from the
escalating Trump Trade War aren’t about to happen. How wrong they are, will
shortly be revealed if President Trump doesn’t back down in his fight with
China’s President Xi.
A disunited America
under the erratic President Trump has met its match in a united China under
President Xi, although both are trapped by internal politics unable to back
away from this shortly to become disastrous trade war. No one on Trump Team
Trade War yet seems to realise that they have met the unmovable object, and
that their unstoppable force has been stopped cold. Trump’s US trade war
bluster is at least a decade too late to achieve its goal.
And it’s only going
to get worse too in President Trump’s attack on NATO and NAFTA. The EUSSR is
never going to buy unsubsidised US LNG because it simply can’t compete against
its competitors. EU companies already buy as much US soybeans as they want, and
are unlikely to significantly step up their purchases, certainly not in any
meaningful way to replace China. Pretty soon Trump Team Trade War must put up
or shut up on import tariffs on European autos. My guess is that they are now
trapped into having to put up tariffs on EU motors.
With US mid term elections
in November, President Trump cannot be seen to whimp out now, so a flurry of insane
mutual assured destructive tariffs comes next. Within weeks, global trade will
sag and eventually slump, with very real damage and collateral damage appearing
in some very unexpected places. A very unfortunate Christmas 2018 looms into
view.
Since getting out
first always beats getting carried out of stock markets last, the smart will
use the rest of August to take profits and scale back. The high frequency algo theft
trading programs won’t see the calamity coming until it actually hits. Justice
of a kind, I suppose.
Below, when elephants
fight. Nothing good comes from this escalating fight but don’t expect this
fight to end anytime soon.
If you put the federal government in charge of the
Sahara Desert, in 5 years there'd be a shortage of sand.
Milton
Friedman.
Tit-For-Tat Becomes the Norm as U.S., China Dig In for Trade War
By Andrew Mayeda
Updated on 4 August 2018, 05:00 GMT+1
The trade
war between the world’s two biggest economies is taking on a life of its own.
When
President Donald Trump first threatened to slap tariffs on Chinese goods in
March to punish Beijing for stealing American intellectual property, trade
experts warned the two nations risked slipping into a downward spiral of
tit-for-tat trade actions. The global economy now appears to be living that
reality, with the trade war settling into a regular rhythm of counterblows.
The latest
shot came Friday, when China released a list of $60 billion in U.S. goods that
Beijing intends to hit with tariffs in retaliation for Trump’s plan to impose
duties on $200 billion in Chinese imports. While the Chinese threat isn’t
proportional in absolute dollars, it’s actually an escalation on a relative
basis, given China buys less from the U.S.
Within hours, White House economic adviser Larry Kudlow promised Trump wouldn’t back down until China changed its trade practices. “Don’t underestimate President Trump’s determination to follow through,” Kudlow told Bloomberg Television in an interview.
“They keep digging the hole deeper, violating the first rule of holes, which is when you’re in one, stop digging,” said William Reinsch, a trade expert at the Center for Strategic and International Studies who worked at the Commerce department during the Clinton administration.
Amid the more heated rhetoric, U.S. stocks ended the week up about 0.8 percent, the fifth straight week of advances. The Chinese equity market this week slumped 5.9 percent, the steepest drop since February.
Hopes had been rising that Trump might drop his trade-war campaign after the president announced a deal last week with European Commission President Jean-Claude Juncker that would see the U.S. and EU cut tariffs and other barriers.
-----But finding common cause with Europe is one thing. America’s differences with China, a one-party state that has promised to open its markets gradually, run deep. U.S. Trade Representative Robert Lighthizer last week called trade tensions a “chronic problem” that would likely take years to resolve. Kudlow cited state subsidies and forced technology transfers as behaviors that the Trump administration wants China to end.
Earlier this
week, the U.S. said it was considering more than doubling to 25 percent the
tariffs for the $200 billion in Chinese imports that are under public review.
The conflict
with China is taking on a “cyclical” pattern with roughly two weeks of
escalation followed by two weeks of relative calm, said Mark Rosenberg, chief
executive at Geoquant Inc., a firm that uses computer models to gauge political
risk.
“These two
sides effectively have equal leverage over one another,” Rosenberg said. “No
one has a real incentive to blink first. That suggests this is going to be a
more protracted conflict.”
The question
is what other tools the two countries may use, once they have no more goods
upon which to impose tariffs.
More
August 3, 2018 / 1:33 PM
China plans tariffs on $60 billion of U.S. goods in latest trade salvo
BEIJING/SINGAPORE (Reuters) - China proposed retaliatory
tariffs on $60 billion (46.14 billion pounds)worth of U.S. goods ranging from
liquefied natural gas (LNG) to some aircraft on Friday, as a senior Chinese
diplomat cast doubt on prospects of talks with Washington to solve their bitter
trade conflict.
The Trump
administration tightened pressure for trade concessions from Beijing this week
by proposing a higher 25 percent tariff on $200 billion worth of Chinese
imports. China vowed to retaliate while also urging Washington to act
rationally and return to talks to resolve the dispute.
The United
States and China implemented tariffs on $34 billion worth of each others’ goods
in July. Washington is expected to soon implement tariffs on an additional $16
billion of Chinese goods, which China has already announced it will match
immediately.
China has
now either imposed or proposed tariffs on $110 billion of U.S. goods,
representing the vast majority of China’s annual imports of American products.
Last year, China imported about $130 billion of U.S. goods.
China’s
finance ministry unveiled new sets of additional tariffs on 5,207 goods
imported from the United States, with the extra levies ranging from 5 to 25
percent.
Timing will
depend on the actions of the United States, the Chinese Commerce Ministry said in
a separate statement.
“The U.S.
side has repeatedly escalated the situation against the interests of both
enterprises and consumers,” it said. “China has to take necessary
countermeasures to defend its dignity and the interests of its people, free
trade and the multilateral system.”
A top
adviser to U.S. President Donald Trump said the newly proposed tariffs were not
as severe as the White House had been bracing for, and he warned China not to
test Trump’s resolve.
----The U.S. president has accused China and others of exploiting the United States in global trade, and has demanded Beijing make a host of concessions to avoid the new duties on $200 billion of Chinese goods, which could be imposed in the weeks after a comment period closes on Sept. 5.
Beijing says
the United States is deliberately creating the trade conflict, using bullying
tactics, and ignoring international negotiating norms so that it can stop the
rise of China as a competitor on the world stage.
The rising
tensions have weighed on Chinese stock and currency markets, with the Chinese
yuan falling against the dollar.
----China is willing to resolve differences with the United States “on the basis of an equal footing and mutual respect,” China’s top diplomat said after meeting U.S. Secretary of State Mike Pompeo.
“He (Pompeo)
was accommodating on this as a direction, and said that he does not want
current frictions to continue,” said State Councillor Wang Yi, who is also
China’s foreign minister.
Answering a
reporter’s question about what was specifically said on trade, Wang said: “We
did not speak in such details.”
“How can
talks take place under this pressure?,” he added.
More
ISM services index in July falls to 11-month low
Published: Aug 3, 2018 10:10 a.m. ET
The numbers: The
Institute for Supply Management said Friday that its non-manufacturing index
fell to 55.7% in July, an 11-month low, from 59.1%.
Economists polled by
MarketWatch expected a 58.6% reading. Any reading above 50% indicates
expansion.
What happened: There was a
sharp 7.4-point drop in what’s called the business activity index, which fell
to 56.5%, and the new-orders sank 6.2 points to 57%. There were complaints
about tariffs and deliveries, as well as overseas growth.
What they’re saying: “Business is
up overall, but a lot of questions loom over the rest of the year. These
include concerns about international markets and the increasing tariffs that
impact the landed costs of goods,” said one purchasing manager in retail trade.
The big picture: The
second-longest post-war economic expansion continues to be the driving force
behind gains, as the index has been above the level indicating expansion for
102 consecutive months. Service businesses are more insulated anyway. As one
manager in health care and social assistance said: “Patients get sick regardless
of what is going on in the economy.”
Why the U.S.-China trade deficit is so huge: Here’s all the stuff America imports
Published: Aug 2, 2018 11:26 a.m. ET
The highs (few) and lows (many) of U.S. trading with China
----The U.S. has run large deficits with China for years and in some cases no longer produces certain goods such as consumer electronics that are popular with Americans. It won’t be easy, and it might even be impossible, to reduce the gap much any time soon.In 2017, the U.S. posted a $376 billion deficit in goods with China. Most glaring is the huge deficit in computers and electronics, but the U.S. is a net importer from China in most market segments except for agriculture.
So far U.S. has excluded Chinese-made cellphones from its tariffs — goods that Americans buy in huge numbers each year.
China has been a big buyer of American-grown soybeans and other crops. Planes made by BA, -0.86% also are a product in demand in China.
What happens next? Who knows? Hardly anyone expected President Trump to go as far as he has in what’s become a high-stakes poker game. But a trade dispute between the two largest economies in the world could result in lasting damage to the global economy if it metastasizes.
Hey Mr. Juncker, About That Bean Order
1 day-edited
Trump claims to have worked out a soybean deal with the EU. It was a lie. Let's now look at kidney beans.
Trump's tariff battle is shaking Wisconsin’s Chippewa Valley Bean Co., and rippling through to its clients, vendors and customers. The result: Kidney Beans Piled to the Rafters.
MENOMONIE, Wis.—After the U.S. slapped tariffs on European steel and aluminum in June, Europe hit back with a tax that, among other things, made American kidney beans 25% more expensive in Europe.
Now, Cindy Brown is running out of room to store kidney beans. One-ton bags of them cover the floors in her cavernous warehouses. Smaller sacks are piled on wood-pallet shelves. Beans fill tall steel bins that dot the grounds. Chippewa Valley Bean Co. had been on track to ship to Europe 60% of its beans traded internationally this year, worth $25 million. Now, “we’re just sitting on our hands,” said Ms. Brown, president of the family company.
Ms. Brown, Chippewa Valley’s president, said the company last month shipped nearly 40% less than what is typical for this time of year. She said 80 shipping containers’ worth of kidney beans, valued at a total of $2 million, are stuck in its warehouses as orders from Europe dry up.
Chippewa Valley handles one in four dark red kidney beans traded internationally, according to Randy Fairman, an agricultural consultant who specializes in dry beans. “If the tariffs hold, the near-term impact will be devastating to small businesses both in the U.S. and the EU,” Mr. Fairman said. “There is no place in the supply chain where a 25% tariff could be absorbed.”
----Lighthizer: Regarding Trump's meeting with Juncker: “Our view is that we are negotiating about agriculture, period,” U.S. Trade Representative Robert Lighthizer told a Senate committee.
Juncker: The U.S. “heavily insisted to insert the whole field of agricultural products. We refused that because I don’t have a mandate and that’s a very sensitive issue in Europe,” Mr. Juncker told reporters right after the meeting.
Lies
There was no deal to do anything but stop the escalation of more tariffs. For discussion, please see Trump's Lies Won't Make Farmers Great Again: There Was No Deal on Agriculture.
Meanwhile, a glut of beans, all kinds, is stacking up.
More
US-China trade war
https://www.scmp.com/topics/us-china-trade-war?aid=197778625&sc_src=email_2312684&sc_llid=738&sc_lid=153832147&sc_uid=164ZJlR5S5&utm_source=emarsys&utm_medium=email&utm_campaign=GME-O-TradeWar&utm_content=row-180803The government solution to a problem is usually as bad as the problem.
Milton Friedman.
The monthly Coppock Indicators finished July.
DJIA: 25,415 +213 Down. NASDAQ:
7,672 +259 Down. SP500: 2,816 +166 Down.
All
three slow indicators moved down in March and have continued down ever since.
For some a new bear signal, for others a take profits and get back to cash
signal.
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