The PPI is the Producer Price Index.  The CPI is the Consumer Price Index.  The PPI reflects the price product producers are getting for their goods and services.  The CPI reflects the price consumers are paying for their goods and services.  They generally run together as lower production prices usually mean lower consumer prices.
Here again today, the fed is perplexed.  With a growing economy, and with labor market tightening, the people who control the monetary policy have continued to anticipate inflation, rises in the PPI and CPI.  However, as we have outlined, it’s not happening.
It’s a little wonky, but basically prices are NOT going up.  The Fed is perplexed.  We predicted this:

[…] The Labor Department said its producer price index for final demand slipped 0.1 percent last month, weighed by decreasing costs for services. That was the largest decline since August 2016 and reversed June’s 0.1 percent gain.
In the 12 months through July, the PPI increased 1.9 percent after rising 2.0 percent in the year through June. Economists had forecast the PPI to tick up 0.1 percent last month and 2.2 percent from a year ago. (read more)

Neither the PPI nor the CPI measure changes in food or energy costs.  Those high consumption sectors have always been removed from Fed measures.
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Well, many of us were waiting for this – and we have discovered exactly what most CTH readers anticipated, China is a paper tiger.
Last night China finally delivered the official communist government position outlining their perceived leverage over the U.S. and President Trump’s economic diplomacy and economic security platform.
China has always used The Global Times to communicate their official communist state positions.  Last night China delivered their warning; oh, you’re gonna love this:

“US needs correct logic in dealing with North Korea”.

[…] The US asks China for help when it cannot solve its problems with North Korea. Some US elites even want to urge China to claim full responsibility for the issue or they will threaten to retaliate. Under this logic, isn’t it reasonable for North Korea to attack its southern neighbor when it is under military threat from the US?
Moreover, those US elites may not have considered the leverage China has over the US. What if China restricts the usage of iPhones and the number of Chinese students to the US, or imports fewer US agricultural products? (link for more)

Now, it is critical to emphasize this is the official outlook of the Chinese Communist regime and what they perceive as their leverage over the United States.  This is the official outlook of the party apparatus behind Xi Jinping.
So let’s look at their position in sequence.
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As you know CTH takes a different approach at significant world events. We try to share the untold stories as they shake out, in real time, in granular details not noted by the MSM.  We discuss the stuff on the way to the destination.  That way when we arrive at a ‘way point’ we have a historic reference, a back-story, to comprehend consequential headlines when they happen.
With that in mind, here’s another non-discussed granular detail, spotted recently, building toward a much more significant geopolitical outcome, vis-a-vis Russia.
You might remember on August 4th President Trump and French President Emmanuel had a phone call.  The outline of the phone conversation is HERE, but there was no real reason for them to be chatting…. or was there?
Western media has paid virtually no attention to how Trump’s big picture economic policy enmeshes and bolsters his national security policy.
Quite literally, and I really want to emphasize this, Secretary Mnuchin (Treasury) and Secretary Ross (Commerce) are just as important as Secretary Mattis (Defense) and Secretary Tillerson (State).
Stop and think about that for a minute.
When President Trump went to Saudi Arabia for the Arab Security Summit the two most visibly active cabinet members were Mnuchin and Ross.  When has a Treasury Secretary and Commerce Secretary ever had as much importance during world security events?
Think about it.
Who was Obama’s Commerce Secretary during Iran negotiations?
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– “Walking in a Winner Wonderland” –

Two years ago CTH began discussing the ramifications to a new emphasis on the economy outlined as a possibility of candidate Donald Trump’s economic policy outlook. Within the overall discussion we walked through the anticipated changes possible if A.) Trump won the election, and B.) Trump began instituting Main Street economic policy ahead of Wall Street policy (the past 20+ years).
We discussed the new dimension that would occur between two economic engines (Main Street -vs- Wall Street) as three decades of federal policy shifted. CTH outlined anticipated economic activity in the space between the two dynamics.

Part of those discussions focused on energy costs (we see them lowering), product costs (we explained how inflation would be weird), and importantly, wage rates. It takes several months of policy emphasis, actual outcomes, before the labor market wage rates would grow. We anticipated seeing that impact in Q1 of Fiscal Year 2018, which is October 1st 2017.
Today the Job Opening and Labor Turnover Survey, “JOLTS report”, begins to show the initial stages of that wage rate increasing trend. The job market has tightened,… considerably. *Note* We are ending fiscal year Q4 (July, Aug, Sept.) and the trend within MAGAnomics is responding according to predictions. For those of us who argued these policy theories for the past two decades, these results are really cool.
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The latest quarterly poll of small business owners shows an overall confidence index of +106, the highest level in a decade.  This 3rd quarter results is a full 11 points higher than the Quarter 2 confidence level that was also high.
This indicates growing optimism in the most important economic index for MAGAnomics, Main Street.  President Trump continues to focus economic policy away from Wall Street and toward Main Street, with removal of burdensome regulations and improvements to capital access and national economic interests.

WASHINGTON, D.C. — Small-business owners’ optimism about their business situation has edged up in the past quarter to a new 10-year high. The Wells Fargo/Gallup Small Business Index for the third quarter is at +106, up 11 points since Quarter 2 and the highest since +113 measured in the second quarter of 2007. Index scores between the first and third quarters of 2016 ranged between 64 and 68.
These results are based on July 10-14 interviewing with a random sample of small-business owners nationwide. Owners are asked to evaluate both their present business situation and expectations about their business going forward.

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White House Advisor Sebastian Gorka discusses the unanimous U.N. resolution today putting massive sanctions against North Korea – BACK STORY HERE–

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President Donald J Trump delivers the weekly address for August 4th, 2017.  Touching on the immigration RAISE act and outlining the ongoing MAGAnomic growth.
In the final analysis, the exceptional results from President Trump national economic policy platform, MAGAnomics, are, unfortunately, a risk to the professional political class who prefer, and have previously structured, multinational global economics as their baseline for controlled U.S. economic outcomes for three decades.
President Trump succeeding in his America-First economic platform undermines the U.S. lobbying community, the Big Club, who pay politicians for control over the U.S. economy.  However, if you follow the flow of their own private capital investments you will notice they are putting their private money into U.S. assets while simultaneously advocating collective financial policy -over your money- that retains a gobalist economic worldview.

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MAGAnomics, Main Street economic priority, is slowly working and the signs are as evident as the surges in the second quarter U.S. GDP (2.6%). Just imagine if DC was on board with Main Street? Imagine the explosive economy if DC politicians removed the anchor that is ObamaCare and simultaneously unleashed the U.S. fiscal policy with lowered tax rates on middle-class Americans, sub-chapter-S-Corps., and small businesses. Imagine.
The economy would blow through 3% growth within months and four, five and even six percent GDP growth would be entirely possible. The accompanying wage rates would necessarily skyrocket.
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President Trump’s strategic approach using economic leverage to gain U.S. national security has established a very rare victory in the U.N. with unanimous support for Security Council sanctions against North Korea.  Yes, China and Russia supported.
Remember, from Day #1 of his administration President Trump was faced with a threat from N-Korea.  On his departure President Obama told the incoming new President Trump that North Korea would be his #1 Geopolitical national security challenge.
The MSM will likely never give President Trump credit for the remarkable long-term economic strategy he deployed to gain China and Russia’s support today.

UNITED NATIONS (Reuters) – The United Nations Security Council imposed new sanctions on North Korea on Saturday that could slash by a third the Asian state’s $3 billion annual export revenue over Pyongyang’s two intercontinental ballistic missile tests in July.

The U.S.-drafted resolution bans North Korean exports of coal, iron, iron ore, lead, lead ore and seafood. It also prohibits countries from increasing the current numbers of North Korean laborers working abroad, bans new joint ventures with North Korea and any new investment in current joint ventures.

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After spending 72 hours looking specifically at the motives of those pushing almost identical paragraphs including the catchphrases: “holdovers”, “purging loyalists“, “unfettered access” and “Caroline Glick“; it comes as no surprise to hear the administration perceives the anti-McMasters crowd as having “jumped the shark”… “reached too far”, and  “exposed their agenda” etc.
Ironically HR McMaster appears to be safer than ever in his position as National Security Adviser not specifically because of anything he has done, but as an actual outcome of the piranha approach taken by his detractors.  The severity of his opposition’s group-think actually exposed the common denominator.

“General McMaster and I are working very well together.  He is a good man and very pro–Israel. I am grateful for the work he continues to do serving our country.”

~ President Donald Trump, August 4th, 2017

HR McMaster might not get the Afghanistan policy outcome he prefers, but his position as NSA appears safe; and we won’t have to go to war against Iran to appease his opposition.  This looks like a genuine win/win/win.  Bannon wins on Afghanistan policy; McMaster wins on Iran policy; America-First wins because we’re not going into another war in either Iran or North Korea.  Perfect.

WASHINGTON […]  John Kelly, Trump’s new chief of staff, has told McMaster he supports him remaining as national security adviser, Politico reported, citing two unnamed senior White House aides.

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U.S. Ambassador Nikki Haley is structuring a U.N. Security Council resolution toward North Korea by targeting a ban on DPRK exports.  This approach is in line with the larger Trump strategy to leverage economic sanctions as pressure on North Korea to stop advancing military expansion and nuclear weapons.
However, how President Trump has set Nikki Haley up for success on this resolution is something for the history books to write about:

♦First: A review of the possible enhanced sanctions against N-Korea should be incorporated with the larger issue of policy toward the DPRK’s enabler, China.  President Trump, Secretary Mnuchin and Secretary Ross have positioned a severely consequential trade reset between the U.S. and China.  [Trump and Ross delayed an announcement on trade sanctions against China which was scheduled for today.]
♦Second: The enhanced U.S. energy export initiatives, in conjunction with lower oil prices, an outcome of U.S. energy policy and a mutually beneficial relationship between President Trump and Arab states in the GCC, have severely weakened the economic position of Russia.
Russia’s energy export economy is dependent on energy prices remaining high. President Trump has brilliantly worked the geopolitical economic relationships to leverage influence over a large portion of the Russian economy.
Combine these two points and you discover the leverage President Trump’s team has created.
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