If there was a five-click dial available as a severity meter between the U.S. and China, something happened internally in Beijing, over the last 72 hours, because that dial just triggered movement from 3 to 4… Keep watching everything in the world of geopolitics with a mental 360° radar sweep looking for Chinese influence/interests.

Nuance and subtlety is everything in China. Culturally harsh tones are seen as a sign of weakness and considered intensely impolite in public displays between officials; especially within approved and released statements by officials representing the government.
Therefore, when we see China publicly use strong language – it indicates a level of internal disposition beyond the defined western angst. Big Panda becomes Red Dragon; there is no mid-status or evolutionary phase.

SHANGHAI (Reuters) – China’s state media on Monday lashed out at the policies of U.S. President Donald Trump in an usually direct attack, accusing him of “starring in his own carefully orchestrated street fighter-style deceitful drama”.
Trump’s wish for others to play along with his drama is “wishful thinking,” the ruling Communist Party’s People’s Daily newspaper said in an editorial.

(more…)

U.S. Trade Representative Robert Lighthizer and a delegation of out-going and in-coming Mexican trade officials have been conducting intensive NAFTA negotiation talks for the past several weeks.  The out-going Mexican officials, led by Ildefonso Guajardo, are optimistic terms of agreement can be reached with the U.S; the incoming Mexican officials led by AMLO’s Jesus Seade, not so much.
The key issue is still the NAFTA fatal flaw that allows both Canada and Mexico to exploit their access to the U.S. market as brokers for imported Asian parts, assembled in Mexico/Canada, and the finished goods shipped into the U.S.  That structural issue remains unresolved; hence the impasse.
Meanwhile, Canadian Foreign Minister Chrystia Freeland wants to reenter the trade discussion after being shut out since the beginning of May.

(Reuters) – Canada is “very keen” on concluding negotiations to renew the North American Free Trade Agreement as soon as possible, Foreign Minister Chrystia Freeland said on Saturday, amid signs of progress after months of delays.

(more…)

When President Trump withdrew the U.S. from the intensely short-sighted JCPOA (Iran deal), there was a period of preparation for our allies and partners prior to the re-institution of the first round of U.S. sanctions against Iran.   The transition period ends tomorrow as the sanctions begin August 6th, 2018.
Europe and NATO allies are under pressure to discontinue any trade action/terms with Iran as the U.S. sanctions will also apply toward any nation that engages in economic transactions with the Iranian regime.

(more…)

PHASE II – President Trump tweeted earlier today about the ongoing geopolitical contest that is priority #1 in defending U.S. interests and retaining our economic strength.
Do not be surprised if North Korea launches another provocative missile test soon. Watch China, not N.Korea. It’s Chairman Xi’s people in the DPRK who are taking action. Kim Jong-Un is an expendable proxy regime. The war is the U.S. -vs- China trade and economic confrontation. North Korea is the Potemkin backdrop for the Beijing puppeteer.

(LINK)

As POTUS Trump and the U.S. trade team target ever increasing tariff pressure upon Beijing to change their behavior, keep a close eye on North Korea. Given the zero-sum approach of the Chinese; and their history of weaponizing the DPRK; we could expect to see Beijing roll out nuclear antagonism again in an overt effort to gain concessions.
(more…)

Larry Kudlow has fully immersed himself in MAGA.  The evolution from supporter to believer likely comes from the increase in proximity to President Trump and the resolve therein.   Good stuff.
In this segment the Chairman of the National Economic Council discusses the background of the U.S. -v- China trade reset and the long-term goal of open global markets with Zero tariffs, Zero non-trade barriers and Zero subsidies.

.
Everyone has a role to play…
(more…)

National Economic Council Chairman Larry Kudlow discusses the July jobs report with Fox News host Stuart “Grumbles” Varney.

.
Stuart “Grumbles” Varney and Neil “Eeyore” Cavuto are cut from the same GOPe Wall Street cloth:
(more…)

The Bureau of Labor Statistics (BLS) released the July 2018 employment report today (full pdf with tables below) highlighting continued growth in jobs.  Overall private employment gained 170,000 jobs, while government employment decreased 13,000 jobs for a net gain of 156,000 new jobs.   The BLS unemployment rate dropped to 3.9%.
[*Note this footnote:  “The change in total nonfarm payroll employment for May was revised up to +268,000, and the change for June was revised up to +248,000. With these revisions, employment gains in May and June combined were 59,000 more than previously reported.”]  Huh, funny that…. some revision eh?
July’s labor participation is holding steady at 62.9%, with 155,965,000 employed within the U.S. workforce. (Table A-1)
Blue and White-collar Main Street jobs continue to lead the MAGAnomic resurgence. (table B-1) Construction jobs increased 19,000 jobs; manufacturing gained 37,000 jobs; and trade/transportation and utilities gaining 15,000.
With extra cash in their pockets, the U.S. worker/consumer continued to spend and retail employment added 7,100 new workers in July.   (Table B1) Interestingly, and reinforcing a long-ago CTH prediction, the consumer spending growth (leading to increases in employment) is specifically in the consumable goods sector (food, clothing, etc.).   This is connected to the increase in work-time (table B2); an oft overlooked aspect to the economy.
Truck transportation gained 4,400 jobs in July (everyone needs truckers), which is in line with the high wage growth (3.4%) within this sub-set of the transportation industry.

(more…)

President Trump has moved into Phase II of the U.S./China confrontation.  Part of that confrontation is to use the inherent weakness of the Chinese economy against them.  To understand the weakness is to understand the China ‘One-Belt / ‘One-World‘ economic trade strategy.  Here’s an outline of the economic battle-space we are witnessing.
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 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…)

Commerce Secretary Wilbur Ross appears on Fox News this morning to discuss Phase II in the economic confrontation with China.  The hurt will increase until behavior changes.
Phase II is direct, deliberate and fully confrontational trade engagement with extreme prejudice to financially hurt the Chinese economy and present the communist regime with examples of what will lie ahead if they do not concede to U.S. terms.
The first objective in Phase II is to convince the Chinese the war is real.  Beijing cannot yet fathom the United States is not going to allow the import of low cost manufactured goods…. they believe, wrongly, against a history with all previous administrations, that President Trump is bluffing.

(more…)

As POTUS Trump and the U.S. trade team target ever increasing tariff pressure upon Beijing to change their behavior, keep a close eye on North Korea. Given the zero-sum approach of the Chinese; and their history of weaponizing the DPRK; we could expect to see Beijing roll out nuclear antagonism again in an overt effort to gain concessions.
Commerce Secretary Wilbur Ross discusses the need to hit China with even more economic pressure. WATCH:

.
Main Street U.S.A., the American worker and the American farmer know what is at stake. The globalist Wall Street financial class, and their financial media, can gripe and moan, but that is not going to deter President Trump from this critical trade reset.  When Secretary Ross says: “we’re going to win this“, he speaks with knowledge of who controls the maximum leverage…. it ain’t Chairman Xi.
(more…)