White House trade and manufacturing policy advisor Peter Navarro, appears with Lou Dobbs to discuss the current status of the U.S.-China trade conflict.
Within the interview Navarro discusses the impact of China devaluing their currency as a strategy to avoid U.S. tariffs on Chinese imports. WATCH:
National Economic Council Director Larry Kudlow on trade negotiations with China, and how the EU is positioning to off-set global economic contraction. Additionally, Kudlow discusses the aspects of the July jobs report overlooked by Wall Street pundits.
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.
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.
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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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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Earlier today President Trump sent a warning tweet about Apple possibly incurring tariffs on their products if they continue a plan for manufacturing in China. Later in the day the president answered direct questions about those possible tariffs.
Additionally, Secretary Wilbur Ross was very insightful 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, there’s a very clear picture; however, most pundits and trade analysts will likely ignore the message.
Subtle as a brick through a window…. yet it’s amazing how many people can’t see it.
Secretary Ross warned the professional investment class that the current objective for Secretary Mnuchin and USTR Lighthizer is to find out if Beijing is willing to re-engage from the starting point where they left-off when talks collapsed. That’s a big tell.
After several phone calls and staff contacts if the U.S. team doesn’t know the answer to that question, well, there’s almost zero likelihood of any optimistic outlook. In essence, the only value within the current engagement is financial ‘optics’ to stabilize markets.
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.
(more…)
A major win for the Trump administration as the Supreme Court has just ruled to stay a lower court ruling that blocked the President from using $2.5 billion in defense funds to build border security wall. This means the Department of Homeland Security can now use $2.5 billion in defense appropriations to build the border wall. A massive win!
The ruling was 5-4 with the liberal justices in the minority.
WASHINGTON — The Supreme Court on Friday allowed the Trump administration to move forward with plans to build a wall along parts of the Mexican border while litigation over paying for it proceeds.