CTH was wondering how long it would take for President Trump to point out the brutally obvious…. Thanks to some advanced planning that everyone ignored, there are multiple trade alternatives to China:

Perhaps now people will reference President Trump’s long-game strategy which has been evident since his marathon Asia trip in November 2017.
Long before media pundits starting noticing/considering how serious President Trump was about structurally resetting the entire landscape of a U.S-China trade relationship,  President Trump quietly and methodically laid the groundwork with personal visits to: Prime Minister Shinzo Abe (Japan); President Moon Jae-in (S-Korea); President Tran Dai Quang (Vietnam); and President Rodrigo Duerte (Philippines).
Oh, how quickly the media forgot.
(more…)

This is the big one.  This is the inflection moment.  Tonight around 5:00pm Chinese Vice-Chairman Liu He will engage with team U.S.A. on the substantive issues around the future of the U.S-China trade relationship.   Trillions at stake.
At midnight tonight the tariffs on Round One of Chinese goods are scheduled to increase from 10 percent to 25 percent.  Round Two is yet determined.  The background for the disposition of TEAM USA was outlined HERE.

Mnuchin – Trump – Lighthizer and Ross

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnunchin previously worked a 150-page outline agreement with China on seven chapters of trade issues covering: Theft of U.S. intellectual property; protection for trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation.  Last week China reversed course on all of the substantive agreements. 
Today Vice-Chairman Liu He is going to try to justify to President Trump why China can no longer accept the commitments they made over the past three months.
It cannot be overstated how everything in/around DC must first be filtered through the prism of this inflection point.  At the heart of U.S. politics, the majority of the Senate Chamber is aligned with the Chinese through purchased multinational lobbying interests. Again, there are trillions at stake.  Wall Street through K-Street has paid the Big Club to defend their multinational/financial interests from President Trump.
(more…)

[Originally posted in 2017] To understand the China ‘One-Belt / ‘One-World‘ economic trade strategy it becomes necessary to understand how structurally weak the Chinese economy was when created.
People often talk about the ‘strength’ of China’s economic model; and indeed within a specific part of their economy -manufacturing- they do have economic strength.
However, the underlying critical architecture of the Chinese economic model is structurally flawed and President Trump with his current economic team understand the weakness better than all international adversaries.
Lets take a stroll and lightly discuss.
China is a central planning economy. Meaning it never was an outcropping of natural economic conditions. China was/is controlled as a communist style central-planning government; As such, it is important to reference the basic structural reality that China’s economy was created from the top down.
This construct of government creation is a key big picture distinction that sets the backdrop to understand how weak the economy really is.
(more…)

The selected facial impressions are buckets of awesome.

The baseline when reviewing economic data from China is to remember the entire economy is controlled by the communist central government.  If they say the economy is “less strong” than previously expected, generally we can anticipate the truth is much worse.
The second aspect to remember is that many U.S. manufacturers made anticipatory advanced purchases, building up inventory ahead of possible tariffs, in the 3rd and 4th quarters of 2018.  Those advance purchases can amplify any manufacturing slow down.

BEIJING (Reuters) – China is expected to report on Monday that economic growth cooled to its slowest in 28 years in 2018 amid weakening domestic demand and bruising U.S. tariffs, adding pressure on Beijing to roll out more support measures to avert a sharper slowdown.
Growing signs of weakness in China — which has generated nearly a third of global growth in the past decade — are stoking worries about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers.

(more…)

A big day for geopolitical moves.

Earlier today President Donald Trump, Secretary of State Mike Pompeo and North Korean Minister Kim Yong Chol held a 90 minute meeting at the White House discussing ongoing talks and negotiations between the U.S. and North Korea.

Following the meeting the White House announced there would be a second summit between President Trump and Chairman Kim Jong-un:

“President Donald J. Trump met with Kim Yong Chol for an hour and half, to discuss denuclearization and a second summit, which will take place near the end of February. The President looks forward to meeting with Chairman Kim at a place to be announced at a later date.”  (link)

(Via Fox News) […] The face-to-face came after Secretary of State Mike Pompeo met with Kim Yong-chol, North Korea’s lead negotiator, in the nation’s capital early Friday morning to negotiate terms that could lead to a second nuclear summit between Trump and Pyongyang leader Kim Jong-un.

(more…)

The official, albeit preliminary, U.S.T.R. delegation from the United States is on the ground in China to begin initial discussions of “technical details” surrounding the ongoing trade dispute.  The preliminary talks are today (Jan 7th) through Wed (Jan 9th).

The prior notice from USTR announced the delegation: •Ambassador Jeffrey Gerrish, Deputy U.S. Trade Representative (pictured above – center); •Ambassador Gregg Doud, USTR Chief Agricultural Negotiator; •Under Secretary for Trade and Foreign Agricultural Affairs Ted McKinney, U.S. Department of Agriculture; •Under Secretary of Commerce for International Trade Gilbert B. Kaplan, U.S. Department of Commerce; •Assistant Secretary for Fossil Energy Steven Winberg, U.S. Department of Energy; and •Under Secretary for International Affairs David Malpass, U.S. Department of the Treasury.

The delegation will be accompanied by senior officials from the White House, USTR, and the U.S. departments of Agriculture, Commerce, Energy, State, and Treasury. (link)

Tu Xinquan, director of the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing is quoted as saying Beijing’s first phase will be focused on technical details before more important voices “make hard political decisions.”
(more…)

In the realm of everything geopolitical in consequence, a recent article from an interview with Brazilian President Jair Bolsonaro highlights the globalists’ worst nightmare. And the comments from the WTO reflects the global influence of President Donald J Trump.

Before getting to two key points, rather stunningly delicious points, it’s worth remembering that Brazil is the “B” in the ‘BRICS alliance’.  Before U.S. President Donald Trump took center stage in the world of international influence, the former governments of Brazil, Russia, India, China and South Africa (BRICS) had formed a coalition.  Each nation represented an enlarged -and growing- regional trade/economic influence.
Shortly after taking office; and with hindsight – prior to the China confrontation; President Trump began a systematic process of challenging various economic influencers.  This is the origin of the Trump Doctrine .
By expanding U.S. energy development, strategically engaging with OPEC (Gulf Cooperation Council) States, and simultaneously engaging with Baltic States at the Three Seas Summit in Warsaw Poland, President Trump established the groundwork for downward pressure on oil prices.  This comprehensive and geopolitical energy strategy diminished the ability of Russia to maintain a consistent external financial influence.
(more…)

I apologize in advance for my shortcomings in trying to de-wonk multinational economics and the financial constructs that impact, at the core, the U.S. worker and consumer.  It’s a big issue to tackle in digestible portions.  However, that said some inflationary statistics are presenting an opportunity for expanded discussion.
Reuters has an article out today highlighting inflationary data as released by the Bureau of Labor Statistics (BLS) [DATA HERE]. The overall summary is the Consumer Price Index is stable or flat reflecting low inflation on measured goods; however, that’s not the part that bears emphasis.   Instead I would direct attention to this:

The Fed’s preferred inflation measure, the core PCE price index excluding food and energy, increased 1.8 percent year-on-year in October, the smallest gain since February, after rising 1.9 percent the prior month. It hit the U.S. central bank’s 2 percent target in March for the first time since April 2012.

At the heart of the controlled monetary system; at the epicenter of the multinational global control mechanisms; inside the offices of the global economic elites; there is a system of financial manipulation with tentacles that reach into your pocket.  This system seems hard to understand, but it is critical to do so… so we need to try and understand it.
(more…)

Early this morning China transmitted and interesting tweet position that was/is a transparent display of their panda mask. In essence the panda play was a call for team USA to drop the zero-sum outlook and seek a win/win. Given the historic nature of Chinese negotiations the tweet was rather funny. However, it does highlight the dance.
Additionally, a few hours later President Trump tweeted about ongoing U.S-China trade discussions and something to watch for:
Moments ago we received the first indications of Chairman Xi’s panda play:

(Via Wall Street Journal) China agreed to reduce tariffs on U.S. autos to 15%, down from 40% currently, during a phone call with U.S. officials that opened the latest round of trade talks aimed at settling a trade dispute festering between the world’s two largest economic powers, according to a person familiar with the matter.

(more…)