U.S. Treasury Secretary Steven Mnuchin appears on FOX Business to discuss the U.S-China ‘phase-one’ trade agreement, the benefits, enforcement mechanisms and retention of tariffs and particular sanctions until compliance can be reviewed.
Phase-1 establishes the baselines; resets the ability of U.S. companies to enter China; establishes rules for market entry; and sets the parameters for enforcement.  Any future phase is contingent upon evaluation of phase-one enforcement mechanisms.

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U.S. Trade Representative Robert Lighthizer is a smart, serious and deliberate professional on a very specific and important mission for the United States.  In my opinion Lighthizer is the most under-appreciated member of an exceptionally good economic team. Everything about Lighthizer’s approach is based on enforcement.
Ambassador Lighthizer has been consistent over multiple years, on his intention to create enforceable trade reform between the U.S. and China, or, if needed, decouple the two economies if China fails to accept the necessary structural reforms.
Tonight, as the Chinese delegation arrives, Lighthizer discusses the U.S-China ‘phase-one’ agreement with Lou Dobbs. WATCH:

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As you review this story keep in the back of your mind that U.S. DC Attorney Jessie Liu has been recently moved to head the Financial Crimes Division of the Treasury Department.
CTH noted last year when John Fry, an intelligence analyst with the IRS’s law enforcement arm, was arrested that something more was happening in the background of his case and the DOJ case against Natalie Sours-Edwards.   Today Ms. Sours-Edwards pleads guilty to downloading & distributing the financial records of people connected to the Trump orbit.
You might remember back in May 2018 when sketchy porn lawyer Michael Avenetti was releasing U.S. Treasury notifications on Michael Cohen received from an unknown source within the Treasury Department [See Here].  You might also remember when New Yorker’s Ronan Farrow wrote a sympathetic article after talking to the leaking treasury official [See Here].  As a result the Treasury Inspector General began an investigation.

(VIA DOJ) Natalie Mayflower Sours Edwards Illegally Repeatedly Transmitted SARs and Other Sensitive Government Information To A Reporter Resulting In Approximately 12 News Articles Over 1-Year Period.
Ms. Sours-Edwards, a former senior adviser at the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”), pled guilty today to conspiring to unlawfully disclose Suspicious Activity Reports (“SARs”).
Beginning in approximately October 2017, and lasting until her arrest in October 2018, EDWARDS agreed to and did unlawfully disclose numerous SARs to a reporter (“Reporter-1”), the substance of which were published over the course of approximately 12 articles by a news organization for which Reporter-1 worked (“News Organization-1”).

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Secretary of Treasury Steven Mnuchin appears with Maria Bartiromo to discuss the latest round of sanctions against Iran.  Secretary Mnuchin notes the economic engagement by China with Iran may open up Beijing to countermeasures for violating sanctions.
Additionally, Secretary Mnuchin outlines some aspects of the U.S-China ‘phase-one’ trade agreement and affirms the key point of enforcement mechanisms built into the agreement by U.S.T.R. Robert Lighthizer.  The official signing is this coming Wednesday.

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The BLS released the December jobs report earlier today showing a stable 145,000 new job gains last month, and the unemployment rate remaining a very low 3.5%.
During an interview discussing the health of the U.S. economy in 2020 with National Economic Council Director Larry Kudlow, the DOW Jones industrial average crossed 29,000 for the first time in history.

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Earlier today Secretary of State Mike Pompeo and Secretary of Treasury Steven Mnuchin held a press conference in the White House to announce new sanctions against Iran. The secretaries also took questions from the press pool. [Video and Transcript Below]

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[Transcript] – SECRETARY MNUCHIN: Good morning, everybody. Thank you for being here today. I’d just like to make a brief comment before we talk about Iran sanctions. I’m sure everybody saw that the DOW hit 29,000. The President’s economic plans are clearly working. We’re looking forward to the China signing, USMCA, and a very strong economy this year.
As previously announced by the President, we are announcing additional sanctions against the Iranian regime as a result of the attack on U.S. and allied troops.
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A new ADP Payroll Report shows job gains of 202,000 from November to December 2019 far surpassing expectations. The increase was the largest gain since April ’19: “largest gain since April, driven mainly by professional and business services. Job creation was strong across companies of all sizes, led predominantly by mid-sized companies.”

(Reuters) – U.S. private payrolls increased by the most in eight months in December, pointing to sustained labor market strength though job gains last month were likely flattered by a seasonal quirk.
The ADP National Employment Report on Wednesday showed private payrolls jumped by 202,000 jobs last month, the largest gain since April, after an upwardly revised 124,000 rise in November.

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The Bureau of Economic Analysis (BEA) has released Q4 (November) import/export data showing a considerable drop in the U.S. trade deficit. [Release Here]  Exports increased approximately .7 percent ($208.6 billion) while imports dropped one percent ($251.7 billion.  Lowering the overall trade deficit to $43.1 billion.

While the pundits are surprised at the strong result, it should not come as a surprise to many CTH readers.  During Q2 (June) and Q3 (July, Aug, Sept) the rate of GDP growth was impacted -in part- by inflated U.S. purchases as companies bought holiday merchandise earlier than normal.  This was an effort to avoid looming tariffs, and as a result companies increased their overall inventory.  We predicted Q4 purchases (Oct, Nov, Dec) would be lower specifically because of this backlog of retail inventory.
With the massively successful holiday season now over, those inventories have sold.  Specifically because the value of imports are deducted from the GDP calculations, there will likely be a much stronger Q4 GDP growth resulting from less import activity.
The Wall Street financial pundits are too focused on the multinational side of the ledger; and they simultaneously don’t review data from a Main Street perspective; therefore they don’t see -or pretend not to see- the common sense equation staring them in the face.
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Any headline that uses the phrase “France Warns” immediately requires a background review to understand the big picture driving French fears.
Just like Canadian Prime Minister Justin Trudeau thinking he could outwit President Trump’s policies on NAFTA trade (he failed), Trudeau’s bestie, French President Emmanuel Macron, has stupidly exhibited similar shortsightedness.  In the case of both leaders their weasel moves have put their nations’ into a precarious economic position.
To consider the future for France, it would be wise to remember last year when President Trump arrived to attend the G-7 in Biarritz, France, President Macron was waiting at the Hotel du Palais to ambush Trump for an unscheduled luncheon (pictured below):

This was just one example in a series of scripted weasel-moves played by Macron in an attempt to pontificate his importance for the international audience.  Another example from the same event was Macron inviting the Iranian foreign Minister to the G7 for sideline meetings unrelated to the topics being discussed in Biarritz.
In an effort to create leverage against the U.S. position, President Macron never discussed his Iranian invitation -in advance- with the U.S. delegation.  It did not go over well.
The EU, and specifically France, have a dependence on foreign energy sources as a result of their ridiculous climate policies and narrow thinking.  In essence the EU wants to do business and receive oil from Iran; however, U.S. sanctions against Iran forbid those business deals.  Ergo Macron attempted to inject influence and position his interests.
As stated, the ambush approach did not go well, but POTUS played it cool.
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A good day for a MAGAnomic pause and reminder…
In 2015 we discussed candidate Trump’s economic positions and how they would impact the economy.  CTH anticipated that MAGAnomics would be reversing three decades of federal reserve monetary policy. After about a year of analysis and discussion, in 2016 CTH presented a theory: “A new Dimension in Modern Economics“.

CTH shared a possibility of what could happen if Trump Economic Policy was shifted to favor Main St. over Wall St.  One aspect we presented was how Federal Reserve monetary policy would be oddly disconnected from its ability to influence inflation… Today:

SAN DIEGO (Reuters) – The Federal Reserve could find itself fighting too-low inflation for years to come, San Francisco Federal Reserve President Mary Daly said on Friday, and may need a new policy framework to lift inflation back up to the Fed’s 2% goal.
“We don’t have a really good understanding of why it’s been so difficult to get inflation back up,” Daly said at the annual American Economics Association meeting in San Diego.

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