China

Larry Kudlow says GDP will add about .5 of a point with USMCA passed

He says another .5 point will be added to GDP with a Phase I deal with China
 
During the time of Obama (the most "progressive" president in American history), there was a wealth transfer of approximately $4 TRILLION dollars. Not Billions, not 10s of Billions. But 4 Trillion. It was the largest transfer of wealth in human history. You can argue about the causes all you want (bailouts of hedgefunds & banks). But the balance sheet of the Fed went from $880B to $4.5 Trillion. Like it or not, that is the timing. It happened under Obama. The "Obama Progressive Age" certainly sent certain assets on a historic run, but who was left holding the bag?
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Yes. I was against it then too.

Trump also has seen markets explode because of his economic policies. Trump got there by doing the opposite of Obama. He got there while Powell (lol) tightened. Trump has seen a trillion dollars of liquidity taken off the Fed balance sheet (I think it went from $4.5 to 3.6T). Further, I would argue that if Powell had not vacillated in such an extreme fashion (he created headwinds by raising rates too far too fast + he triggered additional quantitative easing) that the US econ would be doing even more right now. We would be at 3.5 GDP growth now instead of 2.5. But Trump's economic policies are so well thought through they overcame Powell (admitting some loose money being taken out was good) and have worked in an extraordinary form. And I would also say, under a different President, Powell's action would likely have actually caused that recession many predicted.
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But this is where I disagree. Trump has several economic policies that are good and I have stated that here repeatedly. I have also stated repeatedly where I think he has enacted bad policy. He is a mixed bag.

The Fed balance sheet was reduced and now it is increasing again at Trump's request. This is one of the bad things.

Powell did not raise rates too high too fast. The rates never approached 3% which is still EXTREMELY low. Yes, raising the rates led to a slow down in the economy. But that isn't the problem. The problem is that with low rates we are eating up capital and sabotaging our future economy. We know this by looking at Japan for the last 30 years. The problem itself is money supply increase which causes many problems with the economy although they are subtle and a bit hidden.

The problems with artificially low Fed rates and money supply growth are hidden by Keynesian economic theory. Your explanation is based on it. But it is a false theory that increasing credit truly stimulates the economy. It increases economic activity but it allows for even encourages malinvestment and wealth consumption.

If Japan is exhibit A, then the EU is exhibit B.

But the SP is now up something like 47% and DOW blew through projections as well. There has been trillions of dollars of new wealth created for shareholders and companies. Cheaper capital is is part of this story.
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I thought Wall Street was hurting Main Street? That was the mantra of Republicans that led to Trump being elected. But now that he is in charge, Wall Street's success is now applauded. I have no problem with stock market raising, but it highlights the flip of the narrative.

But here is the thing. Money supply growth and low Fed rates are a big reason why Wall Street values have gone up so much. Stock price growth rate is higher than the economic growth rate, so the cause effect should be clear.

Cheaper capital isn't always good. That was my point above. If it was so good, Japan and the EU would have much better economic growth rates and the EU's unemployment wouldn't be so bad in many of the countries.

7 million new jobs have been created. But its not just that, and this is a real key, wages are finally rising again. Blue collar wages are rising faster than white collar wages. Black American wages are growing faster than the wage growth of whites. The Trump economic boom is not consumer driven, it is jobs driven. This is what Ive been wanting to see.

And check this out -- when Trump took over, we had millions of 'prime age workers' out of the workforce (I think this is ages 24-49) sitting at home. A generation of Lost Americans. Trump has gotten 1.8 Million of them back into the work force. It's an amazing stat on people Obama had just given up on, had conceded to welfare. And the wages of those workers are now growing faster than the wages of management.
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Now I am back on the same page with you. The good Trump policy has allowed for this. But it could still be much better if monetary policy was better.

The only counter point is if these new jobs were created by the money supply growth, then some day these jobs will have to be eliminated. Jobs and goods production have to support demand and be profitable. The profit "signal" is being distorted because of the money/credit printing and that means that all the economic data that is cited is a bit questionable. We need to clean up clarity of the "signal", and then we can have a much more stable and prosperous economy.
 
Joe Fan said:
.... Trump got there by doing the opposite of Obama. He got there while Powell (lol) tightened. Trump has reversed the Obama effect -- he has seen a trillion dollars of liquidity taken off the Fed balance sheet (I think it went from $4.5 to 3.6T). ...
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ELhWFkPVUAA1a93.jpg
 
I am sure it will be tempting to Trump to get Phase I of a new China trade deal done. It would be a good boost before the 2020s. On the other hand, he's winning and he has to know that. I am for holding their feet to the fire - he is going to win re-election without compromise

Fitch says Chinese corporate bond defaults have surged to a record high in 2020 as a government rescue is no longer guaranteed -- South China Morning Post

Chinese corporate bond defaults to surge to a record high in 2020
 
It is actually good news that the Chinese government is going to let non-profitable companies die. It only hurts the economy more by subsidizing them.

There are going to be dozens of EV companies go out of business now that they ended the EV subsidy in China.
 
The closing of the companies is a good thing because they were being artificially propped up. China's banks failing is a good thing because their business practice was built over leveraging fractional reserve. Those things together would force China to run an economy based on real profitability and savings.

However the World Bank is undoing it all. They are feeding the drug addict. Which just means rock bottom will be much lower when it comes. Better to go cold turkey now. In this context liquidity, aid, "new" deposits = heroin.
 
Telenor picked Swedish firm Ericsson to build next-generation network after an ‘extensive security evaluation’
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That has to be a part of any bid now where China is involved. Of course it has to be involved with US companies too with the close ties with US Fedgov and Big Tech.
 
When Trump came into office, he looked at every single trade deal we had. Every one was lopsided against the US. So bad that you cannot help but wonder what our former trade negotiators were personally reaping out of these bad deals.

Here are a couple of examples --

" .... When a car is produced in Europe and sold in the US, a 2 ½ percent tariff is charged by the U.S. However when a car is manufactured in the U.S. and sold in Europe, the EU charges a 10 percent tariff.

For the agreement with China, a car produced in China is charged a 2 ½ percent tariff when sold in the US. But a US produced car is charged a 25 percent tariff when sold in China. Some cars, like the Corvette, are charged a 50 percent or more tariff.

China was even able to avoid the 2 ½ percent tariff by producing most of the car in China, then sending it to Mexico to be finished. When completed the car is sold in the U.S. and charged no tariff because the car came from Mexico...."
As His Supporters Always Believed, President Trump Has Won the Trade War​

There are several posters in here who fervently argued Trump was wrong to seek to renegotiate, had no idea what he was doing and should just leave it all alone. We were regularly yelled at that tariffs dont work! But once you drill down into the details, it would have been complete insanity to follow their advice
 
Joe Fan said:
In addition to Hong Kong and (all over) Iran, Millennials are currently fighting, to varying degrees, for freedom, liberty and democracy all over the dang place
Iraq
Haiti
Ecuador...These are not all the unusual crazy Marxists slinging slogans. These are folks, to a large part, raised by the internet.
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JF
I truly do not know how American agreed to those bad deals?Just the ones you mentioned hurt union auto workers, loyal Dems.
And how did no one pay attention before Trump?
 
Horn6721 said:
JF
I truly do not know how American agreed to those bad deals?Just the ones you mentioned hurt union auto workers, loyal Dems.
And how did no one pay attention before Trump?
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You have to look who they put on those trade missions. Let's say Dems control the WH, so on their trade delegation with China are some of their biggest donors, Silicon Valley, Hollywood and Wall Street. They get some concessions they want, and that's all they care about. To heck with energy and agriculture, for example. But Rs did this same sort of negotiating too, to be fair (the original NAFTA for example). The politicians themselves have never been the ones involved with the details. Is this what their main donors want? Ok then, lets sign it.

As to Unions that game has always been about appeasing leadership, not the worker bees. Union leaders live very well as a result. I've been saying for 20 years Republicans were leaving votes on the table not going after union workers. Trump is the first R Pres candidate to address them directly and go hard after their votes. One exception, however, is the Teacher Unions (which combined are the biggest). Sadly, we will never get the bulk of the teachers, as there is too much else tied up in that situation and it generally does not have anything to do with trade deals.
 
There are several posters in here who fervently argued Trump was wrong to seek to renegotiate, had no idea what he was doing and should just leave it all alone. We were regularly yelled at that tariffs dont work! But once you drill down into the details, it would have been complete insanity to follow their advice
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If you are talking about me, I agree some of the deals need to be renegotiated. I just don't think that adding tariffs is the only way to do it. You can do it by you know actually negotiating.

It is still unclear to me that the tariff have "worked". I have never said that tariffs will never work to gain leverage. My main point is to be crystal clear what tariffs are and what they do. Where their weight falls directly.
 
From CNN (of all people) - This may be the first news they have reported on in 3 years lacking a negative Trump spin
Has something happening at CNN?


 
Democracy/populism is winning in places like Hong Kong and Tehran. People are rejecting authoritarianism and dictatorship. They are standing up for the idea of liberty and against tyranny. These people are the modern version of the Patriots of 1775. Millennials are taking to the streets in those places and saying they refuse to live this way any longer.

It is sadly ironic the American millennials are going in the opposite direction. The lack of principle, a common theme of mine here, is leading to them aimlessly wandering. It goes for our politicians too. At the moment, Republicans in the Senate even. It's sad to watch.

But, anyway, back to the good news, Taiwan just rejected more control from mainland China in a huge national election.
In Blow to Beijing, Taiwan Re-elects Tsai Ing-wen as President
 
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