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)

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin returned from two days of talks in Shanghai on Thursday.  After debriefing President Trump on the results the president announced a decision to apply a 10 percent tariff on $300 billion worth of Chinese products.

This announcement would answer the question of whether the Chinese were willing to restart discussions from the previous point of contention.  Obviously they are not.
The Wall Street financial/investment class will go bananas.  U.S. based multinationals who have invested massively in Chinese manufacturing are apoplectic.  The ‘Wall Street’ -vs- Main Street battle now enters a new phase of confrontation and adversarialism.
As we have discussed, President Trump consistently implied he did not see how any deal with China is possible unless they were willing to fundamentally restructure their trade position. It has been clear -validated by the G20 outcome- that President Trump is not going to accept anything less than a full and complete structural change in the U.S. trade position with China. Lighthizer’s severe compliance and enforcement clauses, specific to each unique trade sector, are non-negotiable.
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An excellent discussion between White House Trade Advisor Peter Navarro and Fox Business host Maria Bartiromo about the current state of President Trump’s Main Street policy and economy.  The second half of the interview is the best part. Navarro outlines the background of the second quarter GDP result, and he hits the nail on the head. Hi Pete.
As CTH previously highlighted, the two primary drags on the Q2 release are also the most volatile: Export/Import contributions (-.65%), and Inventory contributions (-.86%) [table 2]. However, consumer spending was much stronger than anticipated (+4.3%) showing the internal strength of the U.S. labor market and the impact of wage growth which now exceeds 5.5 percent.  The rebound in Q3 is going to be very, very good.

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Note to Mr. Navarro: Enjoy the winning. Relax, you’re solid. Despite the financial punditry class consistently trying to downbeat the good news; you don’t have to carry the burden of adversarialism. You’re a good warrior; we know.  You don’t have to prove your salt. The American people can see the results, and the entire MAGAnomic team, including you, have our full support. Have some fun.
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We previously outlined Mr. Zhongtian Liu [HERE] as part of the early 2018 explanation for how China was exploiting the NAFTA loophole as an end-run around tariffs.  Today the Central District of California U.S. Attorney announces his indictment.

LOS ANGELES– A federal grand jury indictment unsealed late Tuesday alleges a complex financial fraud scheme in which a Chinese company exported to the United States huge amounts of aluminum – disguised as “pallets” to avoid customs duties of up to 400 percent – and “sold” the purported pallets to related entities to fraudulently inflate the company’s revenues and deceive investors around the world.
The 53-page indictment alleges that China Zhongwang Holdings Limited, Asia’s largest aluminum extrusion company; Zhongtian Liu, the company’s former president and chairman; and several individual and corporate co-defendants lied to U.S. Customs and Border Protection to avoid paying the United States $1.8 billion in anti-dumping and countervailing duties (AD/CVD) that were imposed in 2011 on certain types of extruded aluminum imported into the United States from China.

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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.
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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:
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It was only a matter of time before someone explained how the Chinese advisors to Chairman Xi Jinping are using President Trump’s inability to hold the coup plotters accountable as evidence they can wait out the President.
This is the crossover, where a lack of accountability for “Spygate” now begins to negatively influence the geopolitical, economic and strategic position of President Trump.  However, there’s an upside to this dynamic….
In several interviews the president has noted his preference to keep the DOJ and FBI issues at a distance and deferred action to others. The economic reset is President Trump’s #1 priority.  If Trump identifies the lack of DOJ and FBI accountability as an impediment to the economic program, he may become much more engaged.

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SHANGHAI—Plodding progress in trade negotiations between the U.S. and China this week is partly the result of a new tactic from Beijing, which increasingly thinks waiting may produce a more-favorable agreement.

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Good interview between Fox Business’ Maria Bartiromo and former White House trade official Clete Willems.  Essentially Willems confirms the current outlook of the Trump administration that a deal with China is not likely in the short-term; however, Willems is optimistic of the probability in the longer term (as China realizes consequences).

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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.
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This was rumored earlier today [New York Times] and [Axios]. Now Confirmed.
President Trump has announced via Twitter that Director of National Intelligence Dan Coats is departing. He will be leaving office on August 15th, 2019.  President Trump has announced the nomination of Representative John Ratcliffe to be the next head of the Office of Director of National Intelligence.

Representative John Ratcliffe is a member of the House Judiciary Committee and House Intelligence Committee.  Ratcliffe is one of only a few people who has seen all of the unredacted DOJ and FBI evidence within the documents congress has previously asked the President to declassify.
Representative John Ratcliffe currently holds a top-level security clearance.  John Ratcliffe is very even tempered albeit direct by natural disposition.
Ratcliffe’s nomination, and confirmation should be unremarkable.
However, due to the information that Ratcliffe already holds about the overall intelligence community operation in 2015 through 2019, we can expect the deepest part of the Deep State to immediately begin a process to impede any confirmation effort.   Ratcliffe is a risk, and he will likely be controversialized in a political effort to block his nomination.
Earlier today Ratcliffe spoke to Maria Bartiromo about ongoing concerns around the DOJ, CIA, and FBI operations in 2016:
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