Treasury Secretary Steven Mnuchin, speaking on
“Fox News Sunday” from the Group of Seven meeting in Biarritz, France, said
Trump would have the ability under the International Emergency Economic Powers
Act, if he declared an emergency. White House economic director Larry Kudlow
agreed, in an interview on CNN’s “State of the Union,” but said “there’s
nothing right now in the cards” to do so.
Some China hardliners in the Trump administration have been
urging the president to invoke the law on a number of fronts over the past two
years. Using it as a way to curb U.S. investment into China would be extreme,
though, and take aim at operations of American businesses ranging from
automakers General Motors
Co. and Tesla Inc. ,
to industrial companies such as Caterpillar
Inc. and retail giants including Walmart Inc.
Experts say applying the law, known as IEEPA, in this
fashion was never the intent of the legislation, but it wouldn’t be the first
time the administration has looked into it. Trump cited the power when he
threatened in May to place levies on Mexican goods as a way to force curbs on
the flow of undocumented immigrants across the U.S.-Mexican border.
The intensifying trade battle between the world’s two
largest economies, and the potential for Trump to push the limits of
presidential authority, has roiled markets. The Dow Jones Industrial Average
fell 623 points, or 2.4%, on Friday, trimming its 2019 gains to below 10%, and
pushing it lower on a year-over-year basis.
More
https://www.bloomberg.com/news/articles/2019-08-25/trump-aides-say-he-has-power-to-force-u-s-companies-from-china
Quitting Chinese market will be
suicide for US firms
By
Hu Weijia Source:Global Times Published: 2019/8/25 21:25:29
US
President Donald Trump has ordered US companies to "immediately start
looking for an alternative to China." If US firms obey his dictate, such
actions will have serious consequences.
China is now the biggest market for some US-based enterprises, such as US
automaker General Motors (GM). The automaker's China sales came to 3.65 million
cars in 2018, exceeding its total sales in the US market, where GM delivered
nearly 3 million vehicles. Some statistics have shown that China's car market
is even bigger than those of the US and Japan combined. GM is already facing
weak sales in the US. The automaker will suffer a fatal blow if it loses the
Chinese market.
GM is a big player in the US auto industry, an important component of the US
economy that is particularly prominent in some Midwestern and Southern
states.
According to statista.com, motor vehicle and parts dealers in the US had about
2 million employees as of March 2019. If GM's profits fall or it loses money,
the whole US auto industry will be affected, the country's auto supply chain
will shrink and mass unemployment will result.
In China, the vehicle industry is a fully competitive market. If GM withdraws
from China, homegrown brands and automakers from countries outside
the US will fill the gap in auto sales. As long as China has the world's
largest vehicle market, there will be no shortage of auto-related investment.
China has the initiative in this game.
There's not much chance that GM will obey Trump's outburst. The automaker needs
its factories to be close to its customers to survive in a fiercely competitive
market.
To keep its foothold in China, GM has to keep producing in China - despite
Trump's order.
If Trump pressures US companies to take sides between the US and China, many of
them will probably choose the latter. US business groups have already expressed
their fierce opposition to Trump's gyrating trade policy.
"We do not want to see a further deterioration of US China
relations," Myron Brilliant, executive vice president and head of
international affairs at the US Chamber of Commerce, was quoted by media
reports as saying.
US companies are welcome to invest and operate in the Chinese market, but if
some US companies want to obey Trump's order and join Washington's trade war,
the result is bleak. A decision to give up the Chinese market is just suicide.
China-US trade war a test of
endurance
Source:Global
Times Published: 2019/8/24 20:27:55
After
China on Friday unveiled additional tariffs on $75 billion of US goods, the US
reacted vehemently. Washington announced on the same day that it will hike tariff
rates on $250 billion worth of Chinese goods from 25 to 30 percent, and another
$300 billion in Chinese products currently tariffed at a rate of 10 percent
will be tariffed at 15 percent.
The US has clearly shown a drastic mood swing due to China's counterattacks.
Since countermeasure is a common practice in tariff wars, the US' bullying
attitude seems particularly ridiculous.
Such a move from the US side demonstrates its arrogance and narcissism. The US
is launching a brutal trade war with caprice. After it takes action, it must be
prepared for counterfire. But the US side seems unable to withstand such
strikes. It obviously need to review the rules of the trade war.
We need to teach the US side some common sense about the trade war. It is an
extreme gamble which will lead to a lose-lose result. Temper is useless in a
trade war. No one believes that a trade war can be won by one side
unilaterally. When the US advocates how many benefits the trade war can bring
to itself, the entire world laughs at its overt lie.
Washington is about to impose additional tariffs on all Chinese products
exported to the US. It has already played its best cards, and the latest cards
have been played with emotions. Apparently, the US cannot accept such a
reality: Why can China still remain firm and unshakable after the US has
applied maximum pressure?
The US is far too confident. It has chosen China, the world's second-largest
economy, whose market size is very close to the US', as an opponent to reset
global trade rules. This is a serious strategic mistake. The current US
administration misunderstands how to apply strength in modern international
relations. It believes that maximum pressure is not only a way to achieve
unreasonable goals, but also a shortcut to those goals.
But the reality is that the US' maximum pressure has met with setbacks in
various directions. In recent years, the US has been stirring up things in
diplomacy but has achieved barely anything.
China and the US are the two largest economies in the world. The overall
economic strength of the US is stronger than that of China. The US may be good
at fighting a "trade blitzkrieg," but when it comes to a protracted
trade war, Chinese society has an obvious advantage digesting problems caused
by the trade war.
The US side is increasingly feeling the burden due to the political timetable
of elections and the concerns over economic recession. Its ambitions come with
worries.
More
Former Fed official says Trump’s
trade war with China is a ‘stagflationary shock’
By Greg Robb Published: Aug 24, 2019 4:25 p.m. ET
President Donald Trump’s trade war with China is likely to generate a
supply shock for the U.S. economy similar to the stagflation that hamstrung the
U.S. economy after the 1973-1974 OPEC oil embargo, a former top Federal Reserve
official said, on the sidelines of the Fed’s Jackson Hole conference.
“It’s a stagflationary shock. Hopefully a small one,” Alan Blinder said,
in an interview.
Blinder was vice chair of the Federal Reserve board between 1994 and
1996.
In the 1970s, oil prices quadrupled in the wake of the OPEC ban on oil
exports.
This resulted in slow economic growth and higher inflation, something
central bankers had never seen before.
At first, the Fed didn’t know how to respond, Blinder said.
There are no perfect answers for policy makers. The central bank can
either respond to the inflation or the stagnation, he said.
Supply shocks disrupt the efficiency of the economy,“ an economic
machine that was able to produce this much output will now produce less,”
Blinder said.
After a while, businesses will adjust, he said.
Blinder said he is not sure whether the OPEC embargo is a perfect
analogy for the Trump trade war.
One notable difference is that when the U.S. responded to the oil embargo,
“we weren’t’ making enemies, he said.
Blinder said it was hard for the Fed to guage the future given the
president’s actions.
“The trend seems bad,” he said.
If it weren’t for the distortions Trump is causing to international
trade, Blinder would not be worried about a severe economic downturn.
More
Elsewhere, Germany reels under the bad impact of negative
interest rates. Just wait till they come to America.
Germany in Uproar as Negative
Rates Threaten Saving Obsession
Nicholas Comfort, Stephan Kahl and Birgit
Jennen, Bloomberg • August 25, 2019
Most Germans live by the credo that saving is a virtue, but the European
Central Bank’s negative interest rates risk making a mockery of the national
obsession, prompting politicians to seek ways to insulate thrifty citizens and
keep the burden on the country’s beleaguered banks.
Finance Minister Olaf Scholz says he’ll look into whether it’s possible
to prevent German banks from charging most retail-banking clients for deposits,
after such a measure was proposed by the leader of Bavaria. Lenders have
rejected the idea, saying bans don’t ultimately help clients and could even
destabilize financial markets.
Germany’s overcrowded banking industry has long contended with sub-par
profitability, but after five years of negative rates, lenders are running out
of ways to offset the hit to earnings. With the country gearing up for regional
elections next month, the ECB is an easy target for a country known for its
risk-averse attitude to money and its habit of hording savings in checking
accounts. At 2.35 trillion euros ($2.6 trillion), no other country in the euro
area has a larger pile of retail deposits.
Germany’s citizens also save far more of their disposable income than
most other Europeans. The country’s savings rate was around 10% in 2017, almost
twice the euro-area average, according to Deutsche Bank AG. On average, Germans
held more than 40% of their financial assets in the form of bank deposits in
2018.
Negative rates, which mean deposits decline over time rather than
increase, “would be bad for all savers,” said Juergen Dengel, a 40-year-old
civil servant from Bonn. If negative rates were introduced at his bank, he
would consider withdrawing his money and using it to build a home -- even if
that meant going into debt.
“This is a total political football,” said Klaus Fleischer, a professor
specializing in finance at the Munich University of Applied Sciences. “People
love to hear someone standing up for them when their savings melt away.”
Not everyone’s in favor of outlawing deposit charges, though. “A ban on
negative rates might be attractive for savers, but then we have to also think
of how we’d support unprofitable but systemically-relevant banks,” said Ingrid
Arndt-Brauer, a lawmaker for the Social Democratic Party, Angela Merkel’s
junior coalition partner.
---- Double Whammy
Negative rates are a double whammy for lenders. Euro-area banks pay more
than 7 billion euros a year to deposit funds overnight with their central bank,
while at the same time their income from lending is eroded. That has helped
push the share prices of many European lenders to record lows and has left
Germany’s Deutsche Bank and Commerzbank AG reeling from falling revenue and
shrinking profitability.
Banks across Europe already pass on negative rates to corporate clients
and aren’t ruling out doing the same to retail customers. In Germany, the issue
has exploded onto the front pages of the country’s largest tabloid, with
Bavarian Premier Markus Soeder even calling for a ban on deposits of up to
100,000 euros.
“These suggestions show how far the undesired side effects of the ECB’s
negative rates stretch,” Germany’s banking lobby said in a statement, referring
to the central bank’s deposit rate of minus 0.4%. Still, banks cannot ignore
the market as a whole when setting their conditions -- even when rates fall
below zero, the group said.
Some German retail banks already charge customers for holding as little
as 100,000 euros in deposit accounts, though they have have yet to extend the
policy to the bulk of their customers.
More
"In
economics, hope and faith coexist with great scientific pretension."
John Kenneth
Galbraith.
Crooks
and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, is President Trump the new Hoover?
Opinion: The Trump era could wind up like the 1930s
After nearly a decade of good times, things, all of a
sudden, looked wobbly. The stock market fell sharply. The president—a wealthy
man who had never been elected to office before, but was very sure of himself,
thank you very much— reassured Americans that all was well and the future
bright.
Even so, the president thought one thing was needed to make
things better: tariffs on America’s trade partners. Many economists and
lawmakers argued against this, saying it would hurt trade, kill jobs and slow,
if not contract, the economy. The president dismissed their reasoning, and into
place the tariffs went.
As economic uncertainty mounted, many investors moved into
gold, which was perceived as a safe haven (so much so that the Treasury feared
it might
run out of bullion ).
And even though the economy had previously been good, many
Americans feared immigrants were coming to take their jobs and sought to keep
them out. Sure, Europeans were generally OK, particularly if they were from
places like Norway, Sweden and Germany—in other words, if they looked
“American.” The mood towards others was far less hospitable, and efforts were
made to bar entire ethnic groups.
More ominously, the anti-immigrant mood dovetailed with a
resurgence by white supremacist groups like the Ku Klux Klan, which widened its
hateful, racist agenda to include (along with blacks, of course) Jews and
Catholics. Elites—well-educated Americans who lived in urban areas—were also
despised. Klan membership soared to an estimated 2.5% to 6.5% of the
population. Think about that. If that was today, that would mean some 21
million Americans in the KKK.
In short, it was a hateful, divisive, dangerous time—even
though the economy had been good.
If
the past is prologue, then the situation that President Trump finds himself
in—and our country finds itself in—increasingly resembles what we’ve seen
before. Don’t get me wrong: This isn’t 1929. But there are worrisome signs.
Hate crimes are on the rise: The FBI reported 7,175 hate crimes in 2017—a 17%
jump from 2016. Among a sizable minority of Americans, there’s an
anti-immigrant frenzy, the likes of which hasn’t been seen in this country
since the 1920s. Emma Lazarus’s poem on the Statue of Liberty—“Give me your
tired, your poor, your huddled masses yearning to breathe free”—that was just
meant for Europeans, the White House now claims. It’s another reminder, and a
dangerous one, that history can be whitewashed for the ignorant.
----We’re told that the economy is the best it’s ever been.
Yet stocks have cooled: the S&P 500 SPX, -2.59% stands where it did in January
2018. The economy is growing, but it’s slowing rapidly. Job growth is slowing— the
Labor Department said the economy had about 501,000 fewer jobs as of March
2019 than first estimated, based on its surveys of business establishments.
Half a million—and even before this, monthly job growth had shifted into a
lower gear.
The new data clearly shows that the economy didn’t get the
giant boost that President Trump promised his tax cuts and his deficit-busting
spending would provide. So what do we have? Low interest rates, a monstrous
deficit—up 27% in just a year and back in $1 trillion territory—and a soaring
national debt. It has jumped over the $20 trillion, $21 trillion and now $22
trillion mark on his watch, and is now bigger than the U.S. economy itself
(though it’s fair to point out that the debt is divided into two tranches:
about 3/4 is held by the public and about 1/4 is intragovernmental debt). In
the fiscal year that ends Sept. 30, interest on all this red ink will be nearly
$400 billion. Next year taxpayers will fork over even more.
Herbert Hoover was warned about tariffs and didn’t listen.
Trump—who promised us that “trade wars are easy to win, believe me” (he now
denies saying this) didn’t listen either. We’re now bogged down in a nasty
battle with a country whose economy, is by some measures bigger than ours. The
cost to you this year: $600, says a JP Morgan Chase report out this week. It adds
you’ll take a $1,000 hit next year if Trump makes good on his threat to hit
China (in other words you) with tariffs on another $300 billion worth of goods.
More
Nothing is so admirable
in politics as a short memory.
John Kenneth Galbraith.
Technology Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
Updates as they get reported. Is converting sunlight to usable cheap AC or DC
energy mankind’s future from the 21st century onwards?
Can't get thinner than this:
Synthesis of atomically flat boron sheets
Date:
August 23, 2019
Source:
Tokyo Institute of Technology
Summary:
Scientists have found a simple method for producing atomically thin layers of
oxidized borophene, a promising 2D boron-based nanomaterial that could serve in
a variety of fields.
Since its rediscovery and characterization in 2004, graphene has been
the focus of countless research efforts across multiple fields. It is a very
versatile material consisting of a two-dimensional (2D) carbon network; in
other words, it comprises a thin sheet of carbon that has a thickness of one
atom. Graphene is not only stronger than the strongest steels, but also has a
myriad of interesting chemical, electronic, and mechanical characteristics that
has left scientists wondering if similar 2D networks of other materials could
have such useful properties.
One novel 2D material that was recently reported is borophene, an
analogue of graphene but consisting of boron atoms instead of carbon atoms.
However, as one would expect for 2D sheets of any material, the synthesis of
borophene has proved to be challenging. Researchers either require the use of a
substrate to make borophene more stable or coupling boron with hydroxyl groups
(OH-), which causes the structure to not be atomically flat.
In a recent study conducted at Tokyo Institute of Technology, a research
team including Tetsuya Kambe, Akiyoshi Kuzume and Kimihisa Yamamoto was
successful in synthesizing atomically flat oxidized borophene sheets through a
simple solution-based method. First, they synthesized stacked layers of
borophene oxide through a fairly simple process using a potassium borohydride
salt (KBH4 ). An X-ray analysis revealed the 2D-layered structure of
the material, in which layers of boron atoms forming a hexagonal 2D network
with oxygen atoms as bridges were intercalated with layers containing potassium
atoms. Then, the subsequent necessary step was to find a way to exfoliate
atomically thin layers of the borophene oxide network. The researchers achieved
this by putting the material in dimethylformamide, which is a commonly used
organic solvent. Various types of measurements were carried out to verify the
structure of the exfoliated sheets, including electron microscopy,
spectroscopy, and atomic force microscopy. The results confirmed that the
proposed method was effective for producing the desired atomically flat
oxidized borophene sheets.
Finally, the researchers performed resistivity measurements to analyze
the conducting properties of stacked borophene sheets and found an interesting
characteristic referred to as anisotropy. This means that the sheets exhibited
different types of conductivity depending on the direction of the current flow.
The material behaved like a semiconductor in the inter-plane direction, whereas
it exhibited metal-like behavior in the in-plane direction of the boron
network. The mechanisms behind these two types of conducting behaviors were
elucidated as well. "It is important to note that our boron sheets can be
handled easily at ambient conditions," remarks Dr. Kambe, indicating that
this pioneering research could be the basis for finding potential applications
for borophene.
Finding facile methods for the synthesis of borophene and
borophene-based compounds is crucial to conducting further research on this
interesting material and its potential uses.
"Like graphene, borophene is
expected to have unique properties, including extraordinary mechanical
characteristics and metallic behavior that could be exploited in a variety of
fields," states Dr. Kambe. Hopefully, future findings and developments on
2D materials will enable us to employ their exotic properties and tailor them
to suit our needs.
"Tariffs don't work. If anything, they hurt
the economy because if you're a typical American worker, you have a finite
amount of income to spend. If you have to spend more on the necessity products
that you need to live, you have less to spend on the services that you want to
buy. And you definitely don't have anything left over to save.”
Gary Cohn. President Trump's former
director of the National Economic Council.
The monthly Coppock Indicators
finished July
DJIA: 26,864 +53 Up. NASDAQ: 8,175 +65 Down.
SP5 00: 2,980 +53 Up.
The S&P and Dow remain up, but in very unconvincing fashion. The NASDAQ remains down. Like the Fed, I would await a better data
driven signal.
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