CTH writes a great deal about President Trump’s economic policies, and how those policies are reversing the decades-long erosion of the middle-class.  Factually, substantively and empirically the workers of America are gaining ground. Bigger and better than before, and far beyond what anyone else could have delivered.

This is not a theoretical exercise.  The execution of a broad-based economic and global trade reset is underway. Today’s economic results, the growing strength of our U.S. economy, is a testament to the success of MAGAnomic policy being delivered. These results, when fully realized, will secure our economic future and last for generations.
All of that said, there is something we don’t emphasize enough: The team of Secretary Mnuchin, Secretary Ross, USTR Lighthizer, Trade and Manufacturing advisor Navarro and NEC Director Larry Kudlow, face a scale of opposition almost unfathomable in modern political terms.  There are trillions at stake; hundreds of the most powerful financial interests in the world are against them; and yet this team is succeeding.
(more…)

National Economic Council Chairman Larry Kudlow, appears on CNBC to discuss the U.S-China trade conflict that led to yesterday’s stock market drop. Additionally, Kudlow notes the strong key performance indicators that highlight the strength of the U.S. Main Street economy.

.
Larry Kudlow also held a press conference.
(more…)

White House trade and manufacturing policy advisor Peter Navarro, appears with Lou Dobbs to discuss the current status of the U.S.-China trade conflict.
Within the interview Navarro discusses the impact of China devaluing their currency as a strategy to avoid U.S. tariffs on Chinese imports.  WATCH:

(more…)

Beijing has once again used their proxy province of North Korea to launch small two short-range ballistic missiles as leverage in the U.S. and China trade confrontation.

WASHINGTON – For the fourth time in less than two weeks, North Korea has fired projectiles into the Sea of Japan, a U.S. official said.
The two projectiles, fired on Tuesday morning local time, were assessed to be similar to the short-range ballistic missiles tested by North Korea last week, the official said. (read more)

Moments later President Trump and Treasury Secretary Steven Mnuchin fired a counter-missile directly into the heart of Beijing’s trade currency manipulation:
(more…)

China needs to buy dollars to backstop their own currency (¥uan). When China trades with the U.S. they hold the return dollars as a peg against their weak currency.  Remove the flow of dollars (lessen exports) and they start to run out of strong pegged currency.
What is happening today is not as much direct devaluation by China; rather they are intentionally allowing their currency to drop in value, in an effort to lower export prices and off-set any tariffs from the U.S.   Simultaneously, Beijing is spending internally, burning cash, to keep their economy from weakening.  Their Yuan burn rate is greater than the influx of higher valued dollars needed to hold their position.
They cannot keep this position indefinitely.
First, here’s a solid interview with former CEO Gerald Storch on how the currency devaluation leads to lower prices for U.S. consumers.  Again, emphasizing the point that U.S. consumers are not paying for the tariffs against China.  Watch:

(more…)

With President Trump announcing an additional ten percent tariff on $300 billion of Chinese products, the Chamber of Commerce worm, Tom Donohue, comes out to oppose.
An interesting juxtaposition between two interviews.  The first with National Economic Council Director Larry Kudlow, and the counter point by CoC President Dohohue:

.
In the next interview Donohue surfaces… he has no choice.  Tom Donohue is paid tens of millions by the Wall Street multinationals to retain the current exploitative system of global trade.  Donohue has no influence over President Trump.
(more…)

The Bureau of Labor Statistics (BLS) releases the jobs data for July.  Overall employment rose by 164,000 new jobs; that’s great.  Average hourly wages grew by 8 cents to $27.98, a year-over-year growth of 3.2 percent; again great.  163.4 million people working is the highest number of people working in history; more good news. [Data release link]
However, there’s an even better result in a very important data-point.  363,000 people moved from part-time to full-time employment.   The move from PT to FT employment is a key indicator of a very strong economy and workers are benefiting in benefits, wages, and total compensation which now exceeds 5.5 percent growth.

[CNBC NEWS] Economists had expected the unemployment rate to drop to 3.6%, which would have tied a 50-year low, but an influx of 370,000 new workers to the labor force brought the participation rate up to 63%, its highest since March. The total labor force of 163.4 million set a record high.
The report “illustrates that, for all the concern over weak global growth and trade policy, the domestic economy is still holding up reasonably well,” said Andrew Hunter, senior U.S. economist at Capital Economics. (read more)

In 2015 CTH outlined how candidate Donald Trump’s proposals were in-line with those who had long argued for a return of “economic nationalism”.  We also outlined when those proposals (now policy) are implemented, Fed action would be essentially irrelevant.

The Federal Reserve is pegged to the Wall Street Economy.  President Trump’s policies are pegged to the Main Street Economy.  There is a disconnect; a new dimension in U.S. economics; and very few people understand what happens in this space between them.
Thirty-five years ago Fed monetary policy impacted the U.S. economy directly because almost all activity (durable good manufacturing) was within our borders.  The natural dynamic of inflation could be influenced by the Fed.  Rate changes could offset inflation and also enhance domestic investment etc.
However, as time progressed that manufacturing activity -the basic underpinning of middle-class jobs, wages etc- shifted overseas.  When monetary policy became controlled by multinationals (Wall Street influencers purchasing politicians), capital investment moved to generate purely higher profits.  Businesses, specifically manufacturing, went abroad.  As a consequence the determination of prices, ie ‘inflation’, was no longer influenced by the Fed because the actual economic activity was/is outside the U.S. borders.
(more…)

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:
(more…)

The financial media still doesn’t get it… Obviously! Transfixed and jaw-agape at seemingly at-odds aspects to a new engagement with Beijing, the MSM financial media are clueless. They are genuinely disconnected, and have no idea what is going on.
The majority of financial pundits are perplexed at what they can see on the surface. USTR Robert Ligthizer and Treasury Secretary Steven Mnuchin are beginning discussions with Beijing. Meanwhile President Trump’s tweets seem to dismiss the potential of the deal-making. The media call this mixed-messaging; however, that’s not what this is.

Secretary Wilbur Ross was very insightful last week when he also spoke of the current U.S. perspective toward the U.S-China trade negotiation.  If you have followed the basic road-map of America-First trade policy, there’s was a very clear picture. However, as we expected, most pundits and trade analysts ignored the administration message.
Commerce Secretary Ross warned the professional investment class when he said the current objective for Mnuchin and Lighthizer was to find out if Beijing is willing to re-engage from the starting point where they left-off when talks collapsed.
That was a big tell.
(more…)