National Economic Council Director Larry Kudlow on trade negotiations with China, and how the EU is positioning to off-set global economic contraction.  Additionally, Kudlow discusses the aspects of the July jobs report overlooked by Wall Street pundits.

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Do not overlook or underestimate the importance of the bigger picture behind the global economic forecasts and the collective alignment against U.S. President Donald Trump.  The ‘America First’ program is against their interests. There are trillions at stake.
Asia, primarily China, and the EU rely on common alignment with the multinationals who control Wall Street and have influenced U.S. trade and economic policy for 35 years.
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The Bureau of Economic Analysis (BEA) released significant wage and salary data yesterday which held stunning upward revisions for 2018 and 2019.   Wage growth of 5.5% combined with low inflation remaining at 1.4 percent; the disposable income of U.S. workers jumped to a stunning 4.1%.  [Data Tables]

Within the revised BEA data, we find employee compensation rose 4.5% in 2017 and 5% in 2018.  Importantly the growth trend continued into 2019, with compensation increasing 3.4 percent in the first six months alone.  Year-over-year wages and salaries were revised upward to 5.3% for May, and 5.5% in June.  These are stunning increases in worker pay.
There are various economic indicators we have shared through the years, but wage growth is one of the more critical.  First, wage growth lags behind business activity – workers don’t get pay raises until after business volume demands/provides it.  Second, wage growth is generally uni-directional – once businesses hike pay, the increases cement.
As the Wall Street Journal put it:
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During a surprise event on Friday President Trump invited the press into the oval office where Guatemalan Interior Minister Enrique Degenhart and acting DHS Secretary Kevin McAleenan were signing a joint asylum agreement.  The President then held a press conference filled with lots of news.

[Transcript] – THE PRESIDENT: Well, thank you very much for being here. We appreciate it.  I’m thrilled to be with a very important man in Guatemala, the Minister Enrique Degenhart. And we are doing a very important signing. It’s a historic asylum, or safe third, agreement between our two countries. A very important event.
We’ve long been working with Guatemala, and now we can do it the right way. It’s going to be terrific for them and terrific for the United States.
This landmark agreement will put the coyotes and the smugglers out of business. These are bad people. These are very, very bad, sick, deranged people who make a lot of money off other people’s miseries. It’s going to provide safety for legitimate asylum-seekers, and stop asylum fraud and abuses system.
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The Bureau of Economic Analysis (BEA) has released the data for the second quarter of 2019.  The Q2 GDP growth rate of 2.1 percent beat all economic expectations, and highlights strong consumer spending throughout the U.S. economy.

The two primary drags on the Q2 release are also the most volatile: Export/Import contributions (-.65%), and Inventory contributions (-.86%) [table 2]. However, consumer spending was much stronger than anticipated (+4.3%) showing the internal strength of the U.S. labor market and the impact of wage growth which still exceeds 3.6 percent.
The inflation index is still low at 1.5 percent year-over-year, and highlights a point all economic pundits overlook.  With countries attempting to stop the impact of tariffs on their exports they are devaluing their currency (EU and China) and subsidizing their export industries (China).  This has the cumulative effect of lowering their price. As a consequence, and with a strong dollar, the U.S. is importing deflation.
The Fed can do nothing of substance to impact low price inflation because the causes are external to the U.S. economy.  CTH predicted this in 2016, and we stand by that assertion today because we now have almost three years of empirical data to prove it.
Wall Street wants bad news because Wall Street wants a lower fed rate.  As a direct consequence Wall Street’s multinational corporate media bias over the GDP data release is hilarious. The headline from NBC is typical: “Economic Growth Slows Less Than Expected in Second Quarter”….    Sometimes you just have to laugh.
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President Trump has tweeted support for an American artist A$AP Rocky after Swedish authorities file formal charges which may result in a two-year prison term.
It seems remarkable that a street fight, which did appear to be validly self defense, could result in such a serious situation for this young American musician. President Trump has attempted to help the artist who remains in detention, and expresses disappointment in the status.

ABC News – Rapper A$AP Rocky was charged with assault in Sweden on Thursday over a brawl in the streets of Stockholm on June 30, according to prosecutors.
“I have today commenced criminal proceedings against the three individuals suspected of assault causing actual bodily harm, having come to the conclusion that the events in question constitute a crime and despite claims of self-defence and provocation,” said public prosecutor Daniel Suneson, of the City Public Prosecution Office in Stockholm.

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This is funny.  No, really, it is actually funny.  Yesterday the International Monetary Fund (IMF) revised its outlook of the global economy.  If you read the IMF prior “dire forecast” from July 17th –yes, only a week ago– you’ll discover the humor aspect.
The IMF is now upgrading their forecast of U.S. economic growth; and admitting -in essence- that President Trump’s America-First agenda is relocating global wealth back to the primary host nation known as the U.S.A.   The increase in their forecast isn’t a small increase, it is essentially adding .3 percent (from 2.3% to 2.6%) or $60 billion more.

However, you’d have to go through two-thirds of the Reuters press coverage of the IMF release; and plow through a littany of doom and gloom; before you found this obscure reference: “The IMF raised its forecast for U.S. economic growth to 2.6% in 2019, but left its 2020 forecast for 1.9% growth unchanged.”   Apparently the economic team at Reuters has a sad… harrumph!
Even the Washington Post, despite their earnest efforts, couldn’t actually put a negative spin on the new IMF projection:
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Boris Johnson has succeeded in beating his nearest rival Jeremy Hunt for leadership of the conservative party in the U.K. thereby becoming the next Prime Minister. One of the priority challenges for Prime Minister Johnson will be navigating a successful Brexit.

A full three years after the British electorate voted to leave the European Union, the elites in Britain have continued to stymie the referendum in their effort to remain attached to the communal values of the collective society.  Thus gave rapid rise, recently, to the Brexit Party as a national force led by Nigel Farage.  It’s the UK version of ‘deplorables’ vs ‘elites’.
The British Parliament is filled with elected members who stand in opposition to the majority of the British citizenry.  It is amid this professionally political and elitist disconnect that Boris Johnson must now attempt to deliver Brexit, while the purchased politicians of both institutional parties will oppose his effort. [Sound familiar?]
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At first blush this story is just odd.  A U.S. rap star has been held in prison for two weeks following a fight in Stockholm, Sweden.  Various people, including celebrities, have reached out to the White House and President Trump for help.  According to one report the administration was able to gain better holding conditions, but the entire story is weird.

Apparently the young American musician was stalked by a group prior to a concert, and a physical confrontation started.  Mr. Rocky’s (aka Rakim May) lawyers say the artist acted in self defense, apparently Swedish authorities consider the event very serious.
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Earlier today President Trump and Vice-President Mike Pence together with their spouses, participated in a presentation ceremony with Dutch Prime Minister Mark Rutte.  The Dutch delegation delivered a U.S flag from D-Day to be displayed at the Smithsonian.
During the event President Trump announced a U.S. military defensive action that resulted in the destroying of a hostile Iranian drone. [Video and Transcript Below]

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[Transcript] – THE PRESIDENT: Thank you very much. Thank you. Before I begin, I want to apprise everyone of an incident in the Strait of Hormuz today involving USS Boxer, a Navy amphibious assault ship. The Boxer took defensive action against an Iranian drone, which had closed into a very, very near distance, approximately 1,000 yards, ignoring multiple calls to stand down and was threatening the safety of the ship and the ship’s crew. The drone was immediately destroyed.
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Earlier today President Trump and Dutch Prime Minister Mark Rutte held a press availability prior to bilateral discussions.  [Video and Transcript]

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[Transcript] – PRESIDENT TRUMP: Thank you very much, everybody. It’s a great honor to be with the Prime Minister of the Netherlands. We’ve become friends over the last couple of years.
PRIME MINISTER RUTTE: Absolutely. Yeah.
PRESIDENT TRUMP: We’ve had a lot of good conversations. We’re dealing on trade, we’re dealing on military, we’re dealing on intelligence. And the relationship has never been better.
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