Wall Street Multinationals React to U.S-China Trade Decoupling…

Originally outlined over two years ago. Reposted by request, because we are watching it play out in real time: Believe me, at the heart of the professional/political opposition the issue is the 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; they have been outlined for a long time, even before the election victory in November ’16.

If you get too far into the weeds the larger picture can be 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 monetary 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, expanded outside of the USA. hence, globalist investing…. investing in foreign manufacturing; multinational corporations moved manufacturing outside the U.S. and into Asia (China).

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 and trade policies that benefited their, now international, 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 monetary policy allowing the blending of commercial banking with institutional investments (Glass-Stegal repeal), 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 U.S. 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 began supporting a parallel, smaller 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, both domestically and internationally.

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 monetary policy and trade policy is geared toward helping the underlying company (Main Street MAGAnomics), and not toward the bets therein (Wall St – Investment).

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, Uber and Amazon, and a host of internet stocks.) 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. monetary 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 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 overseas investments; and yet the Main Street economy can continue growing, and have access to capital, uninterrupted.

U.S. companies who have actual connection to a growing internal U.S. economy can succeed; based on the advantages of the new economic environment and MAGA trade policy, specifically in the areas of manufacturing, domestic supply chain 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.  Those assets are heavily dependent on prior overseas investments in China.

♦China and the EU have devalued their currency, and continue to devalue their currency, in an effort to block the impacts from President Trump and the ‘America First’ trade policy.  In essence they are trying to maintain their part of a global economic system of manufacturing and export.

However, because those currencies are pegged against the dollar, the resulting effect is a rising dollar value. In essence, the globalist IMF is now blaming President Trump for having a strong economy that forces international competition to devalue their currency.

That’s the stupid hypocrisy of global banking outlooks. They make a decision to devalue their currency, which causes the dollar value to rise, and then turn around and blame the U.S. dollar for being overvalued.

The root cause of the devaluation is unaddressed in the Wall Street/Globalist argument. The EU and China are trying to retain their global manufacturing position and offset the impact of President Trump’s tariffs by lowering the end value of their exports.

President Trump is now engaged in a massive and multidimensional effort to re-balance the entire global trade and wealth dynamic. By putting tariffs on foreign imports he has counterbalanced the never-ending Marshall Plan trade program and demanded renegotiation(s).

Trump’s trade goal is reciprocity; free and fair trade.  However, the EU and Asia, specifically China, don’t want to give up a decades-long multi-generational advantage. This is part of the fight.

Because so many shifts -policy nudges- have taken place in the past several decades few academics and even fewer MSM observers are able to understand or explain how Trump planned to get off the service-driven economic path and chart a better course.

President Trump began a process for less dependence on foreign companies for cheap goods, (the cornerstone of a service economy), and began a return to a more balanced U.S. larger economic model where the manufacturing and a production base can be re-established and competitive based on American entrepreneurship and innovation.

No other economy in the world innovates like the U.S.A, Trump sees this as a key advantage across all industry – including manufacturing.  The benefit of cheap overseas labor, which is considered a global market disadvantage for the U.S, is offset by utilizing innovation and energy independence.  Additionally, the wage rates in the Asian manufacturing economies have risen as their national wealth has increased.

The third highest variable cost of goods beyond raw materials first, labor second, is energy.  By unleashing the energy sector -fully developed- the manufacturing price of any given product will allow for global trade competition even with higher U.S. wage prices.

In 2019 the Total Cost of Production (TCP) is now entirely different than it was in 2016.

The U.S. has a key strategic advantage with raw manufacturing materials such as: iron ore, coal, steel, precious metals and vast mineral assets which are needed in most new modern era manufacturing.  Trump’s policies stopped selling those valuable national assets to countries we compete against – they belong to the American people, they should be used for the benefit of American citizens. Period.

As the U.S. economy expands; and as blue-collar manufacturing returns; the demand for labor increases, and as a consequence so too does the U.S. wage rate (currently +3.4%) which was stagnant (or non-existent) for the past three decades.  Total compensation for U.S. workers is now growing at a +5.5 percent rate.

As the wage rate increases, and as the economy expands, the governmental dependency model is reshaped and simultaneously receipts to the U.S. treasury improve. More money into the U.S Treasury and less dependence on welfare programs have a combined exponential impact. You gain a dollar, and have no need to spend a dollar.

As the GDP of the U.S. expands, we stop thinking about how to best divide a limited economic pie, and begin thinking about how many more economic pies we can create.

So yeah, there’s going to be pain – for them: massive economic pain as the process of reestablishing a fair trading system is rebuilt; and also for U.S. interests that are dependent on returns from prior investments in China.

The dynamic of reciprocal and balanced trade is the essential policy that benefits Main Street USA.  Unfortunately, in the initial phase where putting ‘America First’ is the priority, the policy is against the interests of the multinationals on Wall Street connected to Chinese manufacturing.

As a result, President Trump has to fight adverse economic opponents on multiple fronts…. and their purchased mercenary army we know as DC politicians….

♦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 – HERE

Advertisements
This entry was posted in Big Government, Decepticons, Donald Trump, Economy, Election 2020, media bias, President Trump, Trade Deal, Uncategorized, US dept of agriculture, US Treasury, USA. Bookmark the permalink.

77 Responses to Wall Street Multinationals React to U.S-China Trade Decoupling…

  1. Pedro Morales says:

    Xi of China has miscalculated big time. The Chinese oligarchs will not allow him to continue a protracted trade war. When the Chinese were dirt poor living in the rice paddies, they could play the long game. All those Chinese billionaires are just like Wall Street. they will not tolerate and economic collapse due to Xi’s miscalculation. Today was a bad day for the US market. But it was in response to Chinese news not US economic weakness. Warren Buffet is sitting on $150 billion in cash ready to invest. So are others. This is a temporary correction due to that a$$hole Fed dink Powell and to the devaluation.

    Liked by 18 people

  2. 1970novass396 says:

    We’re either at or near The CrossRoads…Saddle Up

    Liked by 3 people

  3. Sean Supsky says:

    Make America Great Again

    Returning the financial independence.

    Returning the familial control to families.

    Returning to the Constitution of self-governance.

    MAGA

    Liked by 9 people

  4. Zippy says:

    Kyle Bass saw the global financial crisis coming and made a fortune from betting it WOULD happen (“shorting”). He’s predicted what is happening NOW over FOUR years ago based upon extensive digging for FUNDAMENTAL factors. His prediction was just TOO EARLY. Note his correct call made just a few months ago which is now shown to be correct:

    Kyle Bass Sees Potential China-U.S. Currency Pact as Just a Big Yuan Short
    7 Mar 2019

    https://www.bloomberg.com/news/articles/2019-03-07/kyle-bass-just-sees-a-big-yuan-short-in-pact-for-stable-currency

    The “strongest ever” currency deal, as U.S. Treasury Secretary Steven Mnuchin has dubbed it, hasn’t shaken the resolve of longtime China bear Kyle Bass.

    Any provision for China to keep its currency stable as part of a trade agreement that’s in the works will fail to support the yuan against the dollar, according to the Hayman Capital Management founder. The firm entered its short bet on the offshore yuan in 2015. And Bass is staying the course even as some Wall Street banks revise forecasts to predict strength in the Chinese currency, which is outperforming almost all its counterparts across Asia in 2019.

    Bass says it’s just a matter of time before China’s darkening economic picture changes the whole narrative, spurring a weaker yuan and forcing policy makers to eat into foreign-exchange reserves to support it. He argues that China’s $3.1 trillion stockpile — the world’s largest — can only fall so far. In his view, a drop below the $1.5 trillion-to-$2 trillion range could impede the flow of trade, much of which is financed in greenbacks.

    For him, that means China will eventually have to abandon any pledge for currency stability, sparking a sizable yuan depreciation.

    “The Chinese can say they’ll do whatever they can do to keep it stable, but in the end, they’re losing reserves,” Bass said in a phone interview this week. “There’s a number at which the Chinese economy will actually come to a halt, meaning they won’t be able to operate imports and exports.”

    ‘China Was Never Our Friend,’ Says Kyle Bass
    14 May 2019

    Kyle Bass Says China Is ‘Just a Paper Tiger’
    11 Feb 2019

    Gordon Chang: On Hong Kong Protest, Chinese Economy, Trade War, & Trump’s New Tariffs

    Liked by 8 people

    • Zippy says:

      Note that China expert Gordon Chang says EXACTLY what I’ve been saying here – there simply IS NO dealing with China as their government and system currently exists and as far as the future is concerned it is US or THEM. They simply DO NOT COMPLY with agreements they’ve already made. He says there IS NO and can BE NO coexistence as things currently stand. Also, just like I have, he states that they must be “pushed over the edge” before there will be any real change there.

      Liked by 4 people

      • Zippy says:

        Arthur Waldron is a Lauder Professor of International Relations, University of Pennsylvania Center for the Study of Contemporary China.

        Liked by 3 people

    • Mike in a Truck says:

      The last four Presidents sold out America while encouraging these multinational companies to relocate to China. Too bad yer gonna lose your asses.No tears from me. As the Red Chinese economy slowly implodes, the middle class in that country will really feel the pain. An unhappy,unproductive, economically faltering population is the last thing the ChiComs want. Look at its vassel Hong Kong. Plenty of unhappy folks there and theres only one way this will end- brutally.Behold your future Emporer Xi.

      Liked by 3 people

    • MostlyRight says:

      Being four years early on a bear market is no way to succeed. My son, who sits at a Bloomberg terminal all day helping manage $17 billion bought options middle of last week to short several stocks and sold today…50% return in four days. That is how you succeed in a bear market.

      Liked by 1 person

    • Nancy Steger says:

      Excellent! Thank you.

      Like

  5. doofusdawg says:

    Would like to point out another disconnect between the globalists and the green movement. It may be a lot cheaper to make a pair of sneakers in China but it sure as hell takes a lot more energy/carbon to get that shoe to market in the U.S. What happened to the grow local movement that was pushed by the previous first lady. How many more thousands of fertile acres need to be converted to soy bean production for the sole purpose of exporting to China so that big ag can maintain their annuity. And don’t even bring up ethanol. The left claims climate change will cause millions to starve but let’s keep burning corn. What a cluster.

    Liked by 1 person

  6. Will this Main street vs. Wall St. economic bias now shrink the gap between CEO pay vs avg. worker pay? We are already narrowing the wealth gap as lower-comp. employees are seeing higher wage gains than higher compensated employees. Will the gap shrink because CEOs get much less, or wage earners get much more, or a 50/50 combination?

    Like

    • Ringo Phonebone says:

      Everybody is compensated based on the scarcity of their skills. It is a marketplace like anything else. The more skilled (talented) a person is, the fewer people at that level exist, and that commands higher compensation (professional sports as an example). If you are one of many with a common skill set (think labor) you cannot rise above your peers unless you learn new skills which are more scarce than your existing ones. As more jobs become available here, compensation will also rise because of a scarcity of workers. CEO pay and worker pay is not a zero sum game. Both are in the same marketplace.

      Liked by 6 people

      • I’m asking because much of CEO pay is in stock and options which can appreciate unlike dollars in today’s zero interest environment. As we decouple our main st. economy from Wall St., CEOs may decide to take the cash as the game of smoke and mirrors will be over. Example: “I know lemonade stands that make more money than Tesla.”
        Sundance has outlined before how Wall St. makes money on a series of bets, and other bets on the first bets, and so on. Once all that money and that stock market casino dries up, will CEO pay, overall go down? Especially for start ups who do nothing.

        Liked by 2 people

        • underwhelmingposter says:

          The stocks and options for stock for C level employees are their incentive package. If they grow the business, the value grows, dividends increase, the stock goes up, they make money.
          If you hold options at less than current pricing, you pay the option price. So it is a loss for you right away. If you make money on those options, you first must make up the loss.

          It is a financial way to hold a C level’s feet to the grindstone. Sure, it is a perk, but only if the C levels do a good job.

          Like

    • TheLastDemocrat says:

      Regarding the economy, CEO pay relative to average worker pay is irrelevant.
      Here is a hypothetical. Assume the Coke company ONLY sells coca cola. They buy sugar and water and whatever secret ingredients, put it through production. Let’s assume they distribute their own product to vendors, who must then distribute it to retailers, who then sell it. Assume a common price for a 12 oz can of coke is a dollar.

      Coke needs employees. Accountants, software people, logistics, HR people, etc., but they especially need people to bring in the sugar and water, feed it to the production line, and they need people to operate the production line. Then, people to throw crates of coke on delivery trucks.

      These jobs require some skill. More than just a warm body, but it requires average intelligence and steady work ethic. Assume these somewhat skilled laborers get $12/hour.

      Assume Oreos is a company doing something similar, but cookies. Oreos wants the same people to work. Oreo has to offer $13 per hour to attract them away from Coke.

      Coke in turn has to go to $13. And you have a new prevailing semi-skilled worker wage in that locale.

      You have a CEO at a million per year. You decide to replace CEO #1 with another promising CEO. CEO #2 is clever at making employees happy, with cheerful break rooms, a free six-pack of coke for all, per week, and free daycare. CEO #2 boosts advertising in new and different ways to boost sales a lot. CEO #2 figures out how to get water a bit cheaper per gallon, and how to get sugar cheaper per pound. CEO #2 figures out how to get more bottles of coke produced through the production facility. Maybe with better maintenance, who knows.

      Coke ends up boosting sales, and profit per unit.

      What should CEO #2 be paid? 15% more than CEO #1, 30% more, 1% more?

      That is for Coke to decide. Why would Coke voluntarily pay this new CEO $1.5 million if they could get CEO #2 for 1.2 million? However, if CEO #2 will only leave former position for Coke for $2 million, then Coke merely has to decide if the boost in profitability will cover the additional million per year in CEO wage.

      If and when Coke makes a poor decision, there is some other CEO at Pepsi, or at RC Cola, trying to do better. If Coke limits what they are willing to pay a CEO, because they have become staffed by a bunch of SJW, then it is their loss. Coke sticks to 1 million/year, and the profitability it provides, rather than going to 2 million and reaping a lot of gain.

      This assumes you know what you are getting when you aspire to get a 2 million per year CEO. Which is very abstract, so you don’t really now.

      However, we all know one thing for sure: the employee you can get for $9/hour is lousy compared to the person you can get with $12 / hour.

      If your business is really crummy, you have to pay more for these workers to be willing to put up with your sheist. Or, you get the bottom of the barrel employees.

      These pay rate decisions are totally separate pay decisions. A CEO is more like investing in a new technology. The semi-skilled laborers are more like a commodity, where you pretty much know what you will get for your $9 / hour. More like the price of a pound of sugar.

      A company performs well or poorly as a function of how well they pay the CEO, and the productivity they get out of the CEO. If they pay “too much,” their competitors figure out the competitive burden, and fare better. If they pay too little, they fail to capitalize on opportunity / fail to sustain and boost profitability.

      Nearly all of us have seen “Undercover Boss.” A CEO is NOT more out of touch with semi-skilled labor just because the boss makes more money than another CEO. Workers do not get demoralized to know their boss has a nicer house. Undercover Boss shows what many want: a decent job, with respect, that allows them to have their little slice of the pie, their little place in the sun. If a laborer wants the CEO life, well, then, go start your own company, or somehow get the skills and experience that genuine CEOs have. You cannot have it both ways.

      [i was just having a talk with my kid, saying he should take his talents and go make some money, and then he can buy all of this pricey stuff he is asking for. He declares that it is too much stress – he has had a couple one-day gigs – lemonade stand, etc., – and he just wants a job where he shows up, works, gets his steady pay, and goes home. Fine – just don’t expect the CEO life on the laborer work life.]

      This “wage gap” is a piece of propaganda designed by Marxists to make us laborers hate our bosses, and to tear down Capitalism. On the face of it, it seems “immoral.”

      High CEO pay is not immoral. [Unless the CEO is doing things that are immoral, such as when laborers do not get bathroom breaks, must buy work supplies against wages and so remain in debt to employer / “company store,” etc.]

      Attracting the optimal CEO makes wealth, makes jobs.

      Big nonprofits are not necessarily wasting donated money if they hire a high-dollar CEO. If ASPCA spends a million for CEO, then goes to another CEO for 2 million, and saves the lives of 50% more dogs, is that MORE immoral?

      Frankly, this is so fundamental that anyone barking up this tree should be embarrassed. Our public school systems should be embarrassed that ANYONE enters COLLEGE without this stuff in their head as fundamentals. Yet, I play a role each year in professional training, where all have a bachelors, and I ask how many have taken ONE basic economic course. Reliably, about a QUARTER have.

      Sadly, if they have, they have not taken the economics I have had, which BEGAN in 7th grade!

      Liked by 6 people

      • Flight93Gal says:

        Note to TheLastDemocrat,

        Economics????

        • First, 90% of the colleges and universities teach anti-capitalist and pro social justice Marxism.

        • Second, when asked, I bet a majority of college graduates CAN’T even spell Economics, let alone understand its meaning.

        Liked by 4 people

        • FrankieZee says:

          If it doesn’t have the word FREE associated with it, they don’t want to know anything about it. That is why so many young kids are enamored with these left wing politicians. Free this, Free that, Free everything is their mantra.

          Liked by 1 person

          • steph_gray says:

            Hmmm – at this rate some day they may even perk up their ears at the words “free market”?

            On second thought… naaaahh!

            Like

      • big jim says:

        the problem with <$10hr employees is they cant survive on it
        so

        they get public assistance
        sec.8
        food stamps
        medicaid
        etc.

        in many cases as .gov is now their primary employer
        providing shelter, food utility assistance

        the $10hr job is literally their part time side hustle and if they loose it

        no biggie

        unlimited public assistance creates a slave class that damages the overall economy

        and before im bombed

        im NOT Talking about legitimate disability etc.

        Like

  7. Carrie says:

    I used to have some investments with GS. My bankerwas British and we argued about everything, Brexit, Trump, Hilary, China, tariffs – everything. Not surprisingly he made a lot of bad calls, namely Brexit (still hoping it comes to fruition), President Trump, the economy, etc. He was simply blinded by the group think. Those big banks really are arrogant and ignorant- a terrible combination. I finally left for a smaller bank and a new banker who’s a staunch Trump supporter (and he brings me donuts too 😉)

    Liked by 11 people

  8. Jason Ross says:

    During the Warring Kingdoms period, warlords would burn wheat and rice fields to leverage their power. How is this any different from China stating it won’t buy agricultural products from the U.S.????
    We are in conflict with China. War. We are at war. Trump was elected because he spoke the truth.
    All this posturing by the globalists is treason.

    Liked by 5 people

    • snarkybeach says:

      my first thought was “How will China feed their people if they don’t buy US goods?”

      Liked by 4 people

    • underwhelmingposter says:

      They also ravaged their own land so approaching armies would find no food for sustenance! The Germans did that in “Barbarosa” while on the offense and when they retreated there were no supplies!

      Like

  9. Moe Grimm says:

    What’s happened Fri. and today is really not complicated. Home today I listened to a CNBC guest Kyle Bass CIO Hayman capital. He stated he’s “not a Trump voter”, BUT WHAT MUST BE REALIZED is “this is a clash of cultures”. And that, one side (U.S.) is truthful and deals in good faith while Chine “has never dealt in good faith”…. and “would you actually be willing to sacrifice our long term strategic and economic viability”? Mind you, he’s talking to NBC Universal Corp. issue morons in a virtual tizzy about the market aka orange man bad. Bass further states it is “CHINA with their backs against the wall” and they full well know importers can “easily turn to Vietnam and others in the pacific rim and and S. America to fill voids and become more reliable partners and in capacity as well.” Supposedly it was China who got up and walked after bringing up the recent indictment of Liu Zhongtian and too the arrest in Canada of the Meng Wanzhou. Chine is reeling – and they know it. They need dollars to prop up their currency they just devaluated (again)… they’re counting on the American Coward section (again). THIS will pass. Quickly at that.

    Insofar as ANYONE having to take a near term to even 5 yr. financial hit, I sure did today, I say Tough Schidt. Your Mao Mart “super-center” will have to find a different supply chain. It’s your turn in the barrel. Men and women have sacrificed far more in support of this Country. Take the hit, smile, and keep MOUTH SHUT. The only way out is through. It’s amazing how cowardly this Country has become. Sickening.

    Liked by 10 people

    • Zippy says:

      “this is a clash of cultures”. And that, one side (U.S.) is truthful and deals in good faith while Chine “has never dealt in good faith”

      And it’s not just because of their government:

      To Steal a Book Is an Elegant Offense: Intellectual Property Law in Chinese Civilization (Studies in East Asian Law, Harvard University)

      https://www.amazon.com/Steal-Book-Elegant-Offense-Intellectual/dp/0804729603

      One of several studies:

      JOURNAL OF CHINESE ECONOMICS, 2014 Vol. 2. No. 2, pp 73-78

      Call for Copy – The Culture of Counterfeit in China
      by Ling Jiang

      Abstract: The aim of this paper is to deepen the understanding of Chinese counterfeit phenomenon by exploring the effect of culture. Counterfeit activities are shaped by Chinese historical, social and political reasons. Intellectual property rights protections don’t have an obvious presence on Chinese soil. The discussion of counterfeit consumer behavior research via the effect of culture is provided.

      Liked by 3 people

    • InAz says:

      These “not a Trump voter” people with money sure love what President Trump is doing though

      Liked by 2 people

    • H.R. says:

      Moe Grimm: “The only way out is through.”

      Best line in a great comment, Moe. I’m retired, but I set up my stock portfolio with all dividend-paying companies that I thought had good long term viability. So the value of my portfolio to a big OWIE! today, but next month I’ll still get the same dividend checks next month; no difference.

      Part of my portfolio is not subject to mandatory withdrawals, but I have several years before I have to take mandatory withdrawals from the other part of my portfolio. I think I’ll “make it through.”

      I do sympathize with those who are at the age where they having to take mandatory withdrawals. This transition period from Wall Street to Main Street is a hit to them. No way to sugarcoat that. On the bright side, at least the regressive Marxist Dems didn’t get in and just confiscate everyone’s retirement savings altogether.

      Liked by 3 people

  10. trapper says:

    I keep coming back to the notion that all the evidence points to the conclusion that the Wall Street globalists are neither as smart nor as quick on the uptake as we give them credit for. Leaving aside those driven by globalist ideology, the remainder are purely money driven, but don’t seen to get it. There are trillions at stake. Right. And there are trillions to be made. But Trump has reconfigured the maze and moved the cheese and many don’t seem to have grasped that.

    The game is now US manufacturing. That is where the money will be for quite some time. Moving manufacturing from China to the US, and opening other new US manufacturing plants that never even had a China counterpart, is where the game is now, where the money is. Anyone who has money tied up in China will be left with warehouses full of $3 Chinese-made sneakers, unable to sell them in the US, and trying to sell them to the unemployed Chinese workers who made them. Good luck with that.

    Wake up! The game is over here now! Perhaps we need to put signs on the cheese to get their attention.

    Liked by 7 people

    • 1970novass396 says:

      Truth is the wall streeters didn’t have to be smart since the game was rigged for them from the get go

      Liked by 4 people

    • Moe Grimm says:

      Ah. Then they can EAT their $150.00 “swoosh” sneakers (aka “shoes”) backed by a punk named Collin Kapernick on the payroll of Nike cowards. “Shoes” made in chine that fall apart in often less than 2 months!

      Liked by 2 people

    • The Boss says:

      Nicely put trapper.

      I’ll just add that the past two trading days are little more than a temper tantrum by a bunch of globalist babies who struggle with potty training.

      Liked by 1 person

    • KingBroly says:

      They’re not smart. They rigged the system against everyone else, but failed to realize that they were getting played all along. President Trump knew this, came along, and is playing both sides at the same time. Corporate Tax Cut? Fine. Well, I’ll just use that gap to implement tariffs to screw you both over until one of you blinks. These Wall Street people use analytics to disassociate themselves from people in everyday life. To them, we’re numbers. But there are some things numbers just can’t equate.

      Liked by 2 people

    • ann says:

      fluctuations, adjustment and apocalyptic cries are to be expected.
      To regain personal & national independence Restoring economic national security is nonnegotiable I’d always anticipated a bumpy ride. No worthwhile gain comes without pain.
      This interregnum shall pass; perseverance is indicated as we finally have loyal leaders who know what they are about : Team Trump . MAGA onwards 🦅

      Liked by 3 people

    • underwhelmingposter says:

      I would think (hope) that all unions (excepting NEA and SEIU) would be all over this with positive support. Trumka alluded to it. More manufacturing jobs, more opportunity for representation. Fewer jobs, no union power (or members).

      Liked by 1 person

  11. William Schneider says:

    Thanks Sundance for the refresher course on maganomics. I for one needed that. My stocks are plummeting because the masses do not understand what you just shared. In the end I am still supporting Trump and his reset of world economy. May God help him and all of us.

    Liked by 7 people

  12. My guess is that Hayman Capital is a small agile firm vs. the bloated, too big to fail megabanks. It’s not that they are necessarily greedy nor are they necessarily ideologues. Sure many are, but in a company that large it is extremely hard to change course and unwind investments due to the many layers (time, hierarchy, regulatory, political).

    Liked by 1 person

  13. ChampagneReady says:

    Imagine that; China getting upset that they can’t hijack 500 billion dollars a year anymore from the United States.

    Stuff it China, that gravy train is over ! And count on it, Trump will bring you to your knees.

    Liked by 7 people

  14. James Carpenter says:

    Today has been a massive hit on part of my retirement funding. It will be reflected in the dollars and cents I have to live on. And I couldn’t be more pleased to abide this current loss given the circumstances.
    Decoupling from China is long overdue. The sooner we claw free of them the sooner we can repair and grow our own economic base and our national security.
    And our youngsters? Maybe I do without at some level while upheaval settles into reallignment so that they might be able to enjoy their country as I have mine.

    Liked by 10 people

    • butch cassidy says:

      The market is just like some of these posters on this site, up and down. Let’s see what it looks like at the end of the week. You got a great attitude about this and I agree totally. Have a great week.

      Liked by 5 people

    • Jason Ross says:

      What is infuriating is that the stock market is so panicky and speculative in the modern era.

      Looking at the DOW 30, did the intrinsic value of the goods and services of these high-tech companies get reduced by a third in the last eight hours? Did the demand for these products decrease ten or twenty percent? Did their suppliers vanish? The answer to all of these is no.

      If Americans were cognizant of basic economics, and if the media would refrain from 180-point font shock headlines, people would just go about their lives as normal, paying three cents more for cans of soup and fourteen cents more for a plastic cell phone cover. And the manufacturers would find it easy peasy to come home instead of China.

      Whatever increase Americans would have to pay at Wal Mart for their groceries and knick knacks is more than offset by the relatively stable price at the gas pump. We have domestic output to thank for decent gas prices. Why we don’t realign to other domestic products is beyond me.

      It realy should not be that painful.

      Liked by 3 people

      • Maybe SD or someone can provide his proper quote. But I believe he stated that there will be pain and the markets will correct as we become more of a main st. economy. I believe he said the Teslas of the world will be valued for what they are – unprofitable debt machines. Therefore stocks of all cap levels will be obliterated and the strong will survive.

        Like

    • GB Bari says:

      I checked – my retirement investment funds were all hit significantly over the past week. But I have long recognized that computer-driven trading with lots of controlling algorithms tends to exaggerate (via its increased speed and volume capacity) the normal human reaction. Hence the volatility.
      No problem though, despite being retired, I’m optimistic and staying in for the long haul.

      Liked by 6 people

      • H.R. says:

        Good point about the computer-driven trading. It does contribute to the bigger, faster swings.

        I didn’t know you were retired GB. I’ve mentioned that I am, here and there, but I never happened to catch a comment of yours where you have mentioned you are retired (or I did and forgot [insert embarrassed emoji here]).

        My son, early 40s, rarely looks at the market. He does a review of plan performance vs. goals with his advisor once or twice per year and then forgets about the market. Time is on his side.

        Retirees are a mixed bag. Some will have significant negative financial effects from this transition. Others, not so much, depending on age and how their investments are allocated.

        Enjoy your retirement. (I still get up at 4:30 am. 40-some years of that is hard to shake off.)

        Liked by 4 people

        • GB Bari says:

          Hah. Good on ya’. I’m still sawing logs at O’dark-thirty. Despite having to get up pre-dawn like you for the last year or two of my active employment due to commuting / parking issues, it was NEVER a part of my natural circadian rhythm.

          I worked part time starting at age 14, and full time starting at 20, so 46 years of working before retiring. Managed to earn three college degrees, and help raise my family during the process. It’s been a blast.

          This temporary China crap doesn’t begin to compare with the importance and magnitude of keeping a marriage intact for 47 years plus raising decent, capable, and independent children in the process. 🙂

          Liked by 5 people

      • 👍🏼👍🏼👍🏼

        Like

  15. redline says:

    Dow goes back to where it was at the beginning of June? Two months ago? This doesn’t really bother me much, it’s hardly a Chicken Little – level event, let alone a “plunge”. .

    Liked by 5 people

  16. rustybritches says:

    my Stocks are taking a bad hit this past week but its not PT fault and I am going to continue to support him and will walk threw this too as I have many other things in my life.;
    When Obama came into office I lost 50% of my stocks and bonds and it took almost 6 years before I was able to see any coming of that turn around and This too shall pass and I just have been saying a lot of prayers this after noon because like every one I am sick and very angary and I just don’t think that what some of the people are saying is right and maybe some should just shut up and keep their own counsel.

    Liked by 6 people

  17. I appreciate all the financial comments about currency, tariffs and stocks. Very interesting. fyi – I’m so poor a mouse ran through my kitchen and was carrying its own lunch – and when I think of stock, I think of boiling down left over bones, talons and beaks to make chicken stock. MAGA anyhow from the lower branches!

    Liked by 11 people

  18. Reloader says:

    Those of use who are U.S. Military veterans, or current active duty, pledged in an oath to defend this country. The oath implicitly included giving our lives if necessary (it does not include this explicitly), the oath is considered by many to have been “a blank check,” and there is no provision for recanting it … ever.

    Given the state of the finances of this country, with national debt and annual deficits and such, now commonly considered to be insurmountable … who here would give all that they have, including their lives, if they could eliminate these burdens?

    Is this what Donald J. Trump is doing?

    Liked by 3 people

  19. Pyrthroes says:

    By Western cultures’ immemorial Rule-of-Three, whereby major socio-cultural/political-economic turns occur at intervals of three 24-year generations, two 36-year societal epochs, ChiCom dirigiste poseurs are due to come a cropper 72 years from Mao’s accession in 1949, just as did Soviets’ Lenin-Stalinist in 1917 – 1953, then 1954 – 1990+.

    On this basis, the 72-year post WW II era ended precisely on-schedule with Pres. Trump’s inaugural in 2017, initiating a long-awaited generational turnover that has Globulists (sic) weltering in fiscal gore. As trans-generational Grand Theft loses leverage, Cathay’s latest Son of Heaven vainly rattles sabers; but military/naval force cannot attain his Belt-and-Road ambitions aimed at compensating Central Planners’ inevitable default-to-zero, securing PRC supply-chains by suborning fellow crony-socialists to debt peonage via booty-sharing graft.

    Herewith a chrono/geopolitical projection: Whatever the short-term, repressive outcome, Hong Kong is a precursor to ChiComs’ Soviet-style deliquescence c. 1949 + 72 = end-2021. Whatever form this takes, the likely Warring States result will render any PRC redux impossible. Just as Japan’s Nikkei 225 index peaked on December 31, 1989, still non-recovered after thirty years, so China’s vaunted tyranny with its blasphemous “social credit” ratings will take a flying leap; and Good Riddance to it.

    Liked by 4 people

    • AMK says:

      I always learn a new word from Pyrthroes posts!
      Deliquescent definition is – tending to melt or dissolve; especially : tending to undergo gradual dissolution and liquefaction by the attraction and absorption of moisture from the air.

      Liked by 2 people

  20. bottomfeeder says:

    Bargains, bargains everywhere you look. Today is a great opportunity to increase my dividend growth holdings. A little pain on my current holdings will likely result in much profit on my newly discounted holdings. We’re not yet at fire sale prices, but that could be on the horizon. I deeply appreciate Sundance helping me understand some of the dynamics and help me stay out of the reactionary fear frame of mind. It is good the President has built our military to the point that China may not think an adventure against the US is a winning proposition. Though China is not Venezuela … yet …, communism/socialism/authoritarianism always leaves the people impoverished. Lord, please wake our little snowflakes to the truth. It was the best of times, it was the worst of times…

    Liked by 2 people

  21. Fools Gold says:

    Can anyone honestly say Ted Cruz would have done this for Main Street, us?

    Liked by 3 people

  22. treehouseron says:

    I’m a businessman but on a very small scale, I have a small retail store but I’m just telling you… since this is now all out war, all it does is open up tons of options for President Trump, because he’s got the upper hand IN EVERY WAY.

    If we’re now in all out war, then think of how that changes things to his benefit.

    All of our other trade deals now are contingent on us and the other country dividing up China’s piece of the pie.

    How China doesn’t see this is frankly mind blowing to me.

    Liked by 2 people

  23. MVW says:

    China has turned up the heat to make life miserable tor Trump, so many Politicians owned, only 6 corps to own the whole media, shoot some Walmart shoppers, etc.

    The looming problem is agriculture. We have our own issues with late planting, cold spring, flooding, but China also has same ag trouble Plus army worms munching on their corn. Every 400 years China dynasties turn over due to this same cold, wet and drought cycles killing agriculture.

    So, yes, tariffs, big new tariffs in the US for China, but the double whammy is the killer cycle of unfavorable to agriculture…WEATHER. 30 years of it coming.

    Liked by 2 people

    • Waiting for POTUS to make China an offer they can’t refuse:

      Buy our Ag today, or our Administration will buy it instead.
      Then we’ll BURN 10% of those Soybeans EVERY MONTH
      … to make storage room for that month’s purchases
      … and RAISE the PRICE of the remainder by 20%
      … SPLITTING our JOINT PROFITS with our Bilateral Ag Partner Brazil
      … until China lives up to its Ag Purchase Commitment.

      Like

  24. Flight93Gal says:

    So I just watched an excellent interview with Navarro on Dobbs, who questioned the impact that the VSGPOTUS imposed tariffs on China had on the Consumer Price Index (CPI), as presented by Chris Wallace on Fox News Sunday.

    Dobbs questioned the validity of the CPI impact as displayed by the chyron and asked Navarro to comment on its veracity since Wallace INSISTED the chyron was accurate and was provided by the White House. And the chyron of course showed a GIANT spike in CPI that caused economic pain and suffering blah, blah, blah.

    Navarro INSISTED the chyron was wrong and did NOT come from the White House and instead came from Goldman Sachs, who created it to support its pro China, multinational, anti-Trump, orange man bad messaging.

    Another example of Wall Street versus Main Street.

    Disgusting. But Predictable. And this time, a VISUAL DISPLAY of fake news!

    Liked by 2 people

  25. steph_gray says:

    All I could think of while reading sundance’s brilliant explanation of the betting-on-investment game that the Wall Street part of the stock market has become was this scene in the movie Trading Places:

    Randolph Duke: Good, William! Now, some of our clients are speculating that the price of gold will rise in the future. And we have other clients who are speculating that the price of gold will fall. They place their orders with us, and we buy or sell their gold for them.

    Mortimer Duke: Tell him the good part.

    Randolph Duke: The good part, William, is that, no matter whether our clients make money or lose money, Duke & Duke get the commissions.

    Mortimer Duke: Well? What do you think, Valentine?

    Billy Ray: Sounds to me like you guys a couple of bookies.

    Randolph Duke: [chuckling, patting Billy Ray on the back] I told you he’d understand.

    Liked by 1 person

  26. dufrst says:

    Trump is absolutely right. China is paying these tariffs and manipulating their currency to keep their production base in tact. Without this production base, the Communist enterprise system they have will collapse and their government will come under tremendous pressure from their population. Keep in mind there is a tradeoff from their population of freedom for prosperity. Without the prosperity, the people will demand their freedom. This is the Communist Party’s greatest fear!

    Trump doesn’t have to do anything. China has essentially given him a green light to further increasing tariffs. Trump gets to collect tariffs at no cost to US consumers. It doesn’t get any better than that. China is already playing this whole situation wrong but such is their paranoia about keeping employment levels low that they don’t realize they are further strengthening Trump’s hand. Weakening their currency brings about inflation in the domestic economy. It protects jobs, but it destroys purchasing power. Not too mention, much of the debt in China is dollar denominated debt, which must be pay back in more expensive dollars. China is giving Trump a pin to prick their gigantic debt bubble!

    On the other side, while a strong dollar hurts exports for US companies, it will increase domestic business investment because consumers are already benefitting from low unemployment, higher wages and scant inflation. Now with a stronger dollar, the price of commodities will decline, which further strengthens the purchasing power of US consumers.

    China reminds me of Japan in WW2. They are facing an awoken giants but can’t bring themselves to acknowledge it. Instead of seeking an accommodation, they continue to rather suffer blow after blow until they are put at absolute peril and made to accept terms far worse than if they would have sought the earlier accommodation. This will happen to China. Unfortunately, when Trump is done with them, they may not be in a position to accept any type of terms because their system would have completely collapsed!

    Liked by 1 person

  27. Pokey says:

    PDJT is completely on the right track for American economic interests. But Chuck Schumer and the rest of the Demcommie Party will be the political beneficiaries of a tanking Wall Street in the months leading up to the election. As with 2008, watch for the Demcommies to start figuring out ways to trash the US stock markets in order to regain control of economic policy for the Globalist Commie Cabal.

    The trashing that occurred yesterday was started by the big selloff of Amazon shares by Amazon’s own CEO. Jeff Bezos, who is an integral member of the Globalist Commie Cabal and simultaneously in control of the largest number of Demcommie politicians, will actively be helping Chuck and Nancy to bottom out everyone’s 401K plans by early September of 2020. Take it to the bank, as it were.

    The Globalist Commie Cabal Adjunct Media will start the hue and cry about PDJT taking actions to destabilize the economy any time now to make the stock market destruction look like the fault of PDJT. The only US Presidential elections that have not been affected by this activity have been when Demcommie Presidents have been running for a second term. Somehow, even terrible economic decisions are propped up by Wall Street during those election cycles.

    The Globalist Commie Cabal has been working tirelessly since the election of George Herbert Walker Bush to control the economies of the entire world’s nations. Until PDJT came along the were succeeding fabulously.

    Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s