The U.S. Steel and Aluminum industry has been a key focus of President Trump in an effort to reestablish a critical industry for America. Part of the administration strategy was broad-based tariffs aimed at curbing China’s dumping of government subsidized product globally. The broad global application of the tariffs defeated the Chinese trans-shipment strategy to avoid them.
Despite opposition from Wall Street republicans and democrats purchased by K-Street lobbyists, the administration policy has been exceptionally successful at driving investment into the U.S. manufacturing base.  The multinationals are furious.

(U.S. Steel) United States Steel Corporation is investing more than $1 billion in the place where our reputation as a trusted industry leader was first forged more than a century ago: our Mon Valley Works near Pittsburgh.
The investment involves the construction of a cutting-edge, sustainable endless casting and rolling facility at Mon Valley’s Edgar Thomson Plant in Braddock, Pa., – the first of its kind in the United States – and a new cogeneration facility with state-of-the-art emissions control technology at the nearby Clairton Plant in Clairton, Pa. (link)

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Well, it looks like the outcome of a horsetrading deal is starting to assemble.  President Trump meeting with Nancy Pelosi, Chuck Schumer et al, to discuss a $2 trillion infrastructure deal.   Despite their schemes and plots this is worth watching:

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Democrats don’t want the baggage of a tax increase heading into 2020… so Schumer punts the financing of the $2 trillion to President Trump; forcing the White House to deal with the dirty part (likelihood a gas tax increase), while Schumer/Pelosi keep clean hands on the high-brow aspect of beautiful infrastructure. That part is politically predictable.
That said, CTH can see the outline a deal where Democrats exchange votes for President Trump’s trade deals (specifically USMCA); to offset the Wall Street Republicans that will vote against the trade agreements; in return for provisions of an infrastructure deal that will benefit Pelosi/Schumer.
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The U.S. economic numbers continue to gain strength.  Ahead of his departure to China for ongoing trade negotiations, Treasury Secretary Steven Mnuchin discusses the current state of the economy with Maria Bartiromo.

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Secretary Mnuchin and USTR Lighthizer arrive in China tomorrow.  This meeting will determine their recommendations to President Trump as to whether a deal can be reached. If no, the potential to re-institute delayed round-two tariffs is possible.
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National Economic Council Chairman Larry Kudlow appears on Fox Business to discuss the latest strong economic numbers including GDP growth, rising wages, low inflation, and strong capital investment.  Additionally, Kudlow discusses current status of U.S. trade negotiations with China and a looming battle against the Decpeticons for USMCA.

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On the latest Op-ed by Iowa Decepticon Senator Chuck Grassley.  As I mentioned last week, the Grassley/Johnson letter to AG Bill Barr is exhibit “A” in how DC attempts to leverage their own financial interests against the outsider that is Donald Trump.
Senate Finance Chairman Grassley’s move last week was a shot across the bow, but generally only noticed by those who travel the deep weeds of corrupt DC leverage strategy.  Essentially, Grassley saying he won’t allow Trump to expose the deep state corruption unless Trump concedes to Wall Street’s demands on trade deals.
It only took a few days for the evidence of this leverage move to surface as Grassley, acting on behalf of his K-Street donors, writes an Op-ed stating if Trump doesn’t drop the Steel and Aluminum tariffs, then he can consider the USMCA “dead”.   An absolutely typical Decepticon move.
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The professional financial punditry can’t explain it.  Flummoxed academics run around bumping into walls amid economic numbers that continue to defy expectations.  All caused by a simple return to common sense ‘America First’ MAGAnomics.
Low unemployment (3.8%); wages growing (+3.2%); inflation stable (1.6%). These measures all have a cumulative impact on paycheck-to-paycheck Americans. Prices for durable goods are stable and wage growth is exceeding inflation. That means more disposable income in the middle-class…DUH. Which, when combined with the increased pay from lower middle-class tax rates, is exactly the intended outcome of MAGAnomics.

Today the BEA is out with consumer spending results for the first quarter that defy expectations.  Consumer spending on goods increases 1.7%. Overall spending +.09 in March, reaches highest gain in ten years. The deplorables are spending their higher wages.  Go figure.  Meanwhile core inflation drops to 1.6%.  The pundits are shocked.

(Reuters Headline) “U.S. consumer spending roars back, but inflation tame” – WASHINGTON (Reuters) – U.S. consumer spending increased by the most in more than 9-1/2 years in March as households stepped up purchases of motor vehicles, but price pressures remained muted, with a key inflation measure posting its smallest annual gain in 14 months.

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President Donald Trump hosts Japanese Prime Minister Shinzo Abe for a round of golf today, while First Lady Melania Trump hosts Madame Akie Abe in DC.
The relationship between the Trump’s and the Abe’s goes back quite a while and is rooted in a genuine friendship.  The president and prime minister are strong competitors on trade and economic policy; however, the competition is founded on respect.

Prime Minister Abe’s economic policies are rooted in the growth process taught by Edwards Demming.  If you follow their professional business ideology, it is easy to see how President Trump and Prime Minister Abe would face-off around a standard of excellence.
When combined the economies of the United States and Japan account for approximately 30 percent of all global gross domestic product.
This is really old-school business stuff.  Each leader, is essentially an economic policy coach for his country; creating strategies and championing growth in a challenge to see who can succeed the most.  They respect each-other, but this is old school. PM Abe isn’t about to concede to a deal where Japanese growth is ceded; however, he will not cheat to achieve success (unlike Xi).  So friendly adversarial negotiations continue.  Good stuff.
Meanwhile First-Lady Melania Trump and Madame Akie Abe toured some of the historic sites in the capital, including the Washington Monument and US National Arboretum.
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In 2015 CTH outlined candidate Trump’s economic positions and how they would impact the economy.  We anticipated that MAGAnomics would be reversing three decades of federal reserve monetary policy. After about a year of analysis, in 2016 CTH presented a theory: “A new Dimension in Modern Economics“.
The theory was based on a likelihood of what would happen if MAGA 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 National Economic Council Director Larry Kudlow appears on CNBC to discuss the latest first quarter GDP growth rate of 3.2% and the status of the U.S. economy.   Kudlow notes the rate of inflation is disconnected from the GDP growth.

CTH 2016[…]  Understanding the distance between the real Main Street economic engine and the false Wall Street economic engine will help all of us to understand the scope of an upcoming economic lag; which, rather remarkably I would add, is a very interesting dynamic.

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Japanese Prime Minister Shinzo Abe and Madam Akie Abe will be having dinner tonight with President Donald Trump and First Lady to celebrate Melania’s birthday.  The prime minister and the president are close personal friends and will likely play golf tomorrow.
The Trump-Abe relationship existed for many years prior to becoming U.S. President. Their respect for each-other is genuine.  Abe and Trump are competitors on trade and economics and their strategies within that competition are actually fun to watch. The long-standing friendship underpins a very genuine alliance of U.S-Japanese interests.
In advance of the dinner tonight PM Abe and President Trump meet in the Oval Office ahead of a bilateral delegation meeting to discuss trade and regional matters. They also take questions from the media [Video and Transcript Below]

[Transcript] 4:35 P.M. EDT – PRESIDENT TRUMP: Thank you very much. It’s an honor to have my friend, Prime Minister Abe — Japan. We have many things to discuss, including trade, including some of the numbers that just came out this morning. We had a very big number at 3.2 GDP for the first quarter — usually the worst quarter. That also included the little bit of a dispute we had during the quarter. So 3.2 is far above expectation. I guess many people were thinking it would be in the ones, maybe between one and two. And 3.2 is great.
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President Donald Trump: “The GDP numbers were just announced and they were far higher than even the high expectation. There were many people who thought it would less than 2, and they were at 3.2.”
“Inflation numbers are very low. The gasoline prices are coming down. I called up OPEC. I said, “You got to bring them down. You got to bring them down.” And gasoline is coming down. We’re doing great.”
“GDP is an incredible number. But remember this: Not only that, we have a great growth — which is growth. We have great growth and also very, very low inflation. Our economy is doing great. Number one in the world. We’re number-one economy right now in the world and it’s not even close.  So thank you very much.”
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The Bureau of Economic Analysis (BEA) released the first quarter GDP numbers today and far exceeded all forecasts. The rate of growth in the first quarter was measured at 3.2% far above the anticipated 2.5% range; and the annual rate of inflation remains low at 1.7%.

The economy grew at a surprising rate of 3.2% in the first quarter, well above the consensus forecast of 2.5%. Also reported Friday was the latest PCE inflation data for the first quarter, showing core inflation at 1.7% year over year, down from 1.9% in the fourth quarter. (more)

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