President Trump is having dinner tonight with Tim Cook, aka “Tim Apple.”  This dinner comes on the heels of USTR Lighthizer announcing a postponement of “next step” 10 percent tariffs against Chinese manufactured products…  Interestingly, the one of the product groups within the delay is personal computers…. Interestingly, Tim Apple was going to launch production assembly of the Macintosh personal computer in China.

To say that Tim Cook has been attempting to define and quantify the strength of President Trump’s tariff position against China would be an understatement.  Even before president-elect Trump took office, Tim Cook was engaged on this specific aspect.
As a responsible steward for the brand, the engagement by “Tim Apple” makes lots of sense. The engaged approach by CEO Cook is what all multinationals should do.  Advocate for their interests; keep an open mind to aspects that are larger than self-interest; keep a respectful seat at the table; and be a responsible steward for his American shareholders.
Ultimately Tim Cook is recognizing President Trump will advance those policies that benefit Main Street and he will avoid policies that do not benefit Main Street. Trump’s Main Street economic patriotism is likely a paradigm shift for Cook; amid a career experience of politicians advancing Wall Street interests.  Hence, the constant evaluation.
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Finally an economic analyst gets prime-time media pundits to listen as he describes the fundamental difference between the U.S. “Economy” (Main Street) and the U.S. “Markets” (Wall Street).  Charles Payne understands most of this, but El-Erian has it nailed.
Allianz Group chief economic advisor, Mohamed El-Erian, accurately describes what is happening in an era where deglobalization is taking place. The U.S. economy is strong; however, the multinationals on Wall Street -invested overseas- are exposed.  Thus there’s a disconnect and accompanying market volatility.
This is well worth watching because this is the first well-regarded financial pundit that is speaking truth to Wall Street in terms the panel pundits will understand/accept.

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There is nothing that China and the EU can do to stop the de-globalization process; and efforts to stimulate their economy, more quantitative easing (pumping money) while the global supply chains are being shifted, are futile.
The more a nations’ economy is dependent on exports, the more exposure they have to the inherent downsides of de-globalization.   U.S. companies that are invested in these nations will lose their investment over time; some rapidly.  This will keep the stock market volatile, yet the Main Street USA economy is thriving.
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Chopper pressers are the best pressers.  A confident, cool and assertively diplomatic President Donald Trump holds an impromptu press conference with media as he departs New Jersey for a campaign rally in New Hampshire. [Video and Transcript Below]

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[Transcript] – THE PRESIDENT: So, tremendous retail numbers were announced today, which really is a great indicator of how well our country is doing, how well our economy is doing. Those are real numbers. Walmart announced; others announced. We had some tremendous numbers come out today, which I’m sure you saw. So we’re very happy about that. We’re doing very well.
The economy is incredible. The consumer — probably above all else, the consumer is doing incredibly.
So, go ahead. Any questions?
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Commerce Secretary Wilbur Ross appears (in studio) on CNBC to discuss the current state of the U.S. economy, the ongoing issues with communist China, the ‘next step’ trade tariffs and the situation in Hong Kong.

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Early on Tuesday United States Trade Representative Robert Lighthizer announced the modification of “next step” tariffs on Chinese products.  [See Here] “Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.”

President Trump responded to the delay/modification when questioned in New Jersey.  President Trump noted a “very productive” phone call between Lighthizer and Vice-Premier Liu He of China:

[Transcript Segment] – […] Q Why did you make the decision on the tariffs, to delay the implementation of the tariffs?
THE PRESIDENT: Only to help, I think, a lot of different groups of people. And we had a very good talk yesterday with China — a very, very productive call. I think they want to do something. I think they’d like to do something dramatic. I was not sure whether or not they wanted to wait until a Democrat has a chance to get in. Hopefully that’s not going to happen because the economy would go to hell in a handbasket very fast.

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The situation in Hong Kong is a geopolitical dynamic that will likely become much more volatile in the next few weeks, months and/or years.  One constant in an ever-changing universe is how the UniParty in DC will attempt to drag the U.S. into the issues.

First, Hong Kong is China.  Whether a generation of people look back with regret to the time when Great Britain ceded the territory to Beijing is irrelevant.  China has, and will have, full control over Hong Kong; and that’s the way it is.  This will not be reversed.
Any effort for the people within Hong Kong to reverse the situation and escape the clutches of oppressive communism while retaining their liberty will only lead to massive bloodshed.
Unfortunately for Hong Kong, as President Trump decouples the U.S. economy from the duplicitous communist Chinese enterprise, Beijing will grasp more control over the heavily Western-influenced economic strata in/around Hong Kong.
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As the U.S-China trade confrontation continues, China is running out of dollars.  Beijing is burning through cash to prop up its manufacturing industries; and the currency devaluation only exacerbates the problem.  A weak Yuan, makes their exports cheap; but China is an economy of dependency, and relies upon dollars to pay bills.
Against this growing internal financial crisis, videos seem to confirm Chinese military moving into regions around Hong Kong as protests continue.  Hong Kong nationals staged a three-day protest at Hong Kong’s international airport to draw attention to their plight.

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HONG KONG (Reuters) – Hong Kong police fired tear gas at demonstrators in the working class district of Sham Shui Po on Sunday, as yet another day of protest marches turned into a confrontation between police and activists.
Ten straight weekends of increasingly violent protests have plunged Hong Kong into its most serious political crisis in decades, posing a challenge to the central government in Beijing.(link)

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White House Manufacturing and Trade Policy Advisor Peter Navarro appears on CNBC to discuss the turbulent week on Wall Street and the current status of the U.S. trade position with China.  Pundits are starting to accept that bigger tariffs are on the horizon.  Team Trump is not backing down; and our U.S. position is much stronger.
On one hand, Wall Street loves cheap money (low fed rates). However, on the other hand 51% of all Chinese manufacturing is done by U.S. owned multinationals; and those corporations don’t want to see the retention efforts of China undermined with a lower dollar value (lower fed rate). As a consequence Wall Street is schizophrenic.

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On the issue of manufacturers leaving China, Forbes has this outlook: “American businesses now have a month to prepare their supply chains for the impending tariff changes. Companies that do well will be the ones who have taken Trump at his word, rather than to doubt the Disruptor-in-Chief’s position on China. Further disruptions are coming to the U.S. supplier network, impacting how equity analysts view companies, recommend their stocks, and — in a broader sense — impacting the business cycle, already long in the tooth.” (link)
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It is hard to believe but it’s been three years since we first outlined what would happen if candidate Donald Trump’s “America First” policy was implemented.  Specifically how the Federal Reserve would essentially become disconnected and functionally obsolescent for a few years.  As a result of the evidence visible, we are in a unique position to explain.
Staying in the big picture, a disconnected Fed was very predictable.  In the past 35 years the Wall Street multinationals gained as cheap money flowed overseas to start global manufacturing operations; Main Street USA suffered.  When you reverse this process by punishing the multinationals (tariffs), shifting the global supply chain, and changing the best location for investment dollars, Main Street USA benefits.  President Trump August 7th tweets statement:

Notice the “we are competing against other countries” part of the statement.  This is key to understanding what is in the future.  The Wall Street ‘multinationals’, corporations making and selling goods, are invested in production within other countries.
On one hand, Wall Street loves cheap money (low fed rates). However, on the other hand Wall Street multinationals are invested in overseas manufacturing; and those corporations don’t want to see the retention efforts of China and the EU undermined with a lower dollar value (lower fed rate).  So Wall Street is schizophrenic (check the stock market).
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Wow. Go Wilburine!  U.S. Commerce Secretary Wilbur Ross has slapped a whopping $4.4 billion countervailing duty on Chinese cabinet manufacturers.  The rate of manufacturing subsidy identified within the ‘wood cabinet‘ study shows a massive 229% subsidy rate via discounted land, free lumber, electricity, raw materials, direct grants from government and discounted loans from Chinese banks to enhance export incentives.

The current study and duty only applies to wood cabinets and vanities, but if you ever wondered how come Chinese furniture is so cheap, well, it’s not a stretch to consider those same subsidy rates likely apply to their household furniture and wood products.

(Bloomberg) Add $4.4 billion in imported cabinets to the long list of Chinese goods slapped with U.S. levies in the escalating trade dispute between Washington and Beijing.
The Commerce Department said Tuesday it will ask the U.S. Customs and Border Protection to collect cash deposits from importers of the wooden cabinets and vanities from China based on subsidy rates of as much as 229%. Commerce issued a preliminary determination in response to a petition filed earlier this year by the American Kitchen Cabinet Alliance, alleging at least $2 billion in harm from the Chinese shipments.

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