An article from Reuters discussing the position of the International Monetary Fund (IMF) is interesting.   Essentially the IMF is warning that “global economies” will contract by $455 billion next year due to the ongoing trade conflict between the U.S., China, the EU and to a lesser extent, Japan.  Yes Alice, there are hundreds of billions at stake.
There’s really no reason to doubt the amount estimated, though I think it’s on the short side, but the yearly value seems in line.  I have no doubt President Trump will cost the “Global Economy” $455 billion…. because that money will be transferring back to the America First economy. That’s what happens as MAGAnomics reverses the IMF trade (wealth distribution) model.

The IMF is correct in part (the effect), incorrect in part (the cause), and mostly hypocritical.  The Euro-minded IMF rails against the high value of the U.S. dollar, but simultaneously ignores the motives behind the intentional devaluation of currencies that are pegged against the dollar.

WASHINGTON (Reuters) – The International Monetary Fund said on Wednesday the U.S. dollar was overvalued by 6% to 12%, based on near-term economic fundamentals, while the euro, the Japanese yen and China’s yuan were seen as broadly in line with fundamentals.

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Against the intense leverage being applied by President Trump, last week Beijing doubled-down and threatened punishment against any company that would leave China and begin manufacturing elsewhere.
The totalitarian response was predictable and expected.  However, also predictable was the corporate response to the threats.
As we shared:  “China is counting on prior western investment being so significant that a corporation will be reluctant to withdraw. However, in this outlook Beijing seriously underestimates the free market because communist controlled China doesn’t understand the action of a inherently free market.
The first loss is the best loss. If walking away from an investment provides more financial security and stability than attempting to retain a grip on a tenuous position – corporations will walk away.” (more)
Now today – “Nintendo Moves Some Switch Production Out of China”:

TOKYO— Nintendo Co. is shifting some production of its Switch videogame console to Southeast Asia from China to limit the impact of possible U.S. tariffs on Chinese-made electronics, said people who work on Nintendo’s supply chain.
It is another example of manufacturers adapting to the tariff threat. Taiwan’s Foxconn Technology Group said Tuesday that it was ready to move assembly of Apple Inc.’s iPhones out of China if necessary, and Japan’s Sharp Corp. , which is controlled by Foxconn, said last week that it planned to move production of personal computers to Taiwan or Vietnam.

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Earlier this morning President Donald Trump called in to CNBC to discuss a variety of subjects including: the ongoing trade negotiations with China; the threat of tariffs on Mexico over illegal immigration; the federal reserve; the status of the economy; the duplicity of the U.S. Chamber of Commerce; collusion by democrats; the upcoming G20 summit in Japan, and much, much, more.
During the interview President Trump directly calls out the U.S. Chamber of Commerce for their anti-American position and self-interested advocacy for Wall Street multinational corporations. Additionally, President Trump pushes back against the claim that tariffs lead to higher U.S. prices, citing examples of China subsidizing their exports and low U.S. inflation.  Must Watch:

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(LOL… POTUS Trump chomping-at-the-bit to get tariffs on the EU.)

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Further evidence there will be no further engagement with China surfaces in an announced specific shift in directive from President Trump today focusing Commerce Secretary Wilbur Ross and USTR Lighthizer on a sector, not a specific nation.
The auto industry is the key sector on two specific trade fronts: the EU trade reset and the ongoing negotiations with Japan.  Both trade agreements center heavily on the auto-sector; and both Japan and the EU have cemented intransigent trade positions.

Enter President Trump to cut the Gordian knot.
It’s a small but important note that President Trump had previously assigned geographic trade responsibilities.  Wilbur Ross has the EU as his primary focus and Robert Lighthizer has authority over Asia.  Today the White House connects the objective of both Ross and Lighthizer as President Trump instructs the U.S. Trade Representative to engage in discussions around the specifics of the auto-sector:

White House – […] Following an extensive review of the Department of Commerce’s Section 232 automobile report, President Trump today issued a proclamation directing the United States Trade Representative to negotiate agreements to address the national security threat, which is causing harm to the American automobile industry. (more)

The President has designated the auto industry as a critical component of national security [More Here].  With Ross’s report in hand, the possibility of increasing tariffs on foreign automobiles is the leverage POTUS gives to Lighthizer along with the mandate to engage.
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Funny how that happens. Less than 24 hours after President Trump declared new tech telecommunication is a national security issue; and one day after Secretary Wilbur Ross bans Huawei (and affiliates) from buying parts and components from U.S. companies without U.S. government approval; all of a sudden the UK is having second thoughts.
…Huh, go figure:

LONDON (Reuters) – China’s Huawei poses such a grave security risk to the United Kingdom that the government must not allow it to have even a limited role in building 5G networks, a former head of Britain’s MI6 foreign spy service said on Thursday.
In what some have compared to the Cold War arms race, the United States is worried that 5G dominance would give any global competitor such as China an advantage Washington is not ready to accept.

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Oh dear, this doesn’t bode well for those who are concerned about U.S. imposed 20% auto tariffs on EU, mostly German, automobiles.  [NOTE: Pay attention to the timing here as it relates to Nord Stream 2] Germany’s chancellor Angela Merkel has announced she will no longer uphold her prior agreement for NATO military spending.

At the 2014 NATO meeting in Wales, all NATO members agreed they would immediately begin a process to increase their military spending to two percent of GDP.  However, over time, and in direct contravention to the purpose of the effort, Germany (Merkel) began secretly working behind the scenes with Russia (Putin) on the Nord Stream II gas pipeline.
The Nord Stream 2 pipeline delivers natural gas from Russia to Germany.  That pipeline is expected to go on-line this November, 2019.  Today, Angela Merkel announces she will no longer uphold Germany’s financial commitments to NATO. These two issues are directly related.  It now looks like Merkel made a back-door agreement with Russia on NATO.

(Via Daily Mail) Germany’s military spending is set to fall below its NATO targets, in the latest flashpoint in Berlin’s long-running row with Washington.
The latest German budget plans, revealed on Monday, will see defence spending drop well below the two per cent of GDP expected from NATO members.
U.S. ambassador Richard Grenell said the cuts were a ‘worrisome signal’, while President Donald Trump has repeatedly accused Germany of freeloading on U.S. military might.

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Secretary of State Mike Pompeo goes one-on-one with Martha MacCallum to discuss his message to the World Economic Forum in Davos, Switzerland and Trump’s approach to NATO.  This is a really strong interview.
Secretary Pompeo brilliantly outlines the value of the nation state, and the principle that when a coalition is formed all members within that coalition (ie. NATO) have a responsibility to participate.  Watch:

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Yesterday, Secretary of State Mike Pompeo delivered a video-conference message to the assembly of international economic leadership in Davos. [Full remarks and transcript below]

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[Transcript] SECRETARY POMPEO: Good morning, and thank you, Borge, for your kind introduction. And thank you to the World Economic Forum for the invitation to speak today. It’s 18 degrees Fahrenheit here in Washington, D.C. You see the Lincoln Memorial to my back. So while I’m not here in person, I at least feel like I’m in Davos with the weather.
It’s interesting times that we live in. Over the past few years, all around the world, voters have tuned out politicians and political alliances that they thought weren’t representing their interests. A few examples of new directions that people have taken: Brexit; the election of President Macron in France; the rise of the Five Star Movement in Italy; Mahathir’s comeback in Malaysia; and of course, Borge, as you referenced, the election of President Donald Trump.
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Canadian media are reporting that General Motors plans to shut down operation in Oshawa, Canada.   This is quite possibly an outcome that portends the sign of things to come…

CANADA – Numerous sources have told CTV Toronto that General Motors is planning to close all operations in Oshawa, Ont., affecting thousands of high-paying jobs.
The announcement is expected to be made on Monday, in the city of about 159,000 people located roughly 60 kilometres east of Toronto.  Sources said they believe the Oshawa closures are part of a global restructuring. (read more)

GM holds considerable risk exposure within the current state of international trade and economics as it relates to the auto industry.  As a result of the ongoing U.S-China trade confrontation, GM holds risk as a result of heavy investment in China.  Add to that exposure the very significant financial impacts about to start for heavy manufacturing operations inside countries aligned with the Paris Climate Treaty, and the risk increases.
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An article published originally in the U.K. Telegraph, and republished via Yahoo News outlines growing fear within the U.K. government and British intelligence officers surrounding President Trump discovering how far they were involved within “Spygate”.
The facts are not uncommon to anyone who has done research into the events of 2015 and 2016; however, the interesting aspect surrounds the current level of anxiety which indicates something is soon to become very public.
The central concern of the British officials surrounds President Trump declassifying evidence that will outline a coordinated effort by a weaponized U.S. intelligence apparatus to use their foreign counterparts for two aspects:  (1) to spy on the Trump campaign in 2016; and (2) to help carryout an entrapment scheme that would become the baseline for the FBI’s counterintelligence operation which evolved into Mueller’s Russian election interference investigation (aka. the “insurance policy”).
According to the Telegraph outline the current U.K. Prime Minister is intentionally being kept out of the communication loop because British intelligence are fearful President Trump might ask about her knowledge.  Keeping Theresa May blind to the U.K operations against Trump provides plausible deniability if questioned.  Additionally, all British embassy staff in the U.S. have been told to say absolutely nothing if questioned.
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