Trade war suspended, for 90 days at least

[caulfield12]

https://www.bbc.com/news/world-latin-america-46413196

Big news is for American soybean farmers and Qualcomm acquisition being unblocked, as well as attempting to crack down on fentanyl.

Still a million things that could go wrong on the thorny issues that China won’t give in on, but Trump can declare a temporary victory and the stock market should jump again.

[NorthSideSox72]

The trade war was not suspended. They agreed to not add any NEW tariffs for at least 90 days while negotiations occur. Also it is only about China, not the other dozen trade war fronts being fought over right now.

Do you work for the New York Post or something with this headline?

 

[Soxbadger]

Im wondering where this NAFTA thing is going. Im not really sure a President can unilaterally undo an act if Congress.

[caulfield12]

1 hour ago, NorthSideSox72 said:

The trade war was not suspended. They agreed to not add any NEW tariffs for at least 90 days while negotiations occur. Also it is only about China, not the other dozen trade war fronts being fought over right now.

Do you work for the New York Post or something with this headline?

 

Fine, trade war takes a temporary break/breather, in terms of MARKET PERCEPTIONS.  Another writer said "trade war drifts into 2019" if you prefer that take.

As far as NAFTA II, if they can even agree on a name for it (USMCA is Trump's preference)...it's definitely going to be blocked by the new House in January unless there are some significant changes.   That's not to mention the fact that Mexico just swore in a more left-wing politician as president, so it remains to be seen (he was supposedly going to honor that agreement).  We're theoretically going to be able to sell more dairy products to Canada, but one of the stickiest remaining issues is the steel/aluminum tariffs between the 3 countries.

Edited December 3, 2018 by caulfield12

[caulfield12]

Or how about "truce"?

Dow Futures (E-Mini Dow 2018, YMZ8) up almost 500 points, market should open at around 26,000...or 3.7% off the all-time high of around 27,000.

[NorthSideSox72]

11 hours ago, Soxbadger said:

Im wondering where this NAFTA thing is going. Im not really sure a President can unilaterally undo an act if Congress.

Depends on the nature of the treaty I believe. If the conditions were ratified by Congress, then the President can only make the changes which were specifically granted to the Executive in the Act. And I don't know what those parameters are in this case.

What's funny about all this is that the "NAFTA 2" or whatever we call it isn't some massive change. It's like 95% the same agreement, with some additions/removals/tweaks. Granted a few of the changes are important, like around Dairy, but this isn't some huge shift. All this noise for what really just amounts to a refresh of the original agreement.

 

[southsider2k5]

1 hour ago, NorthSideSox72 said:

Depends on the nature of the treaty I believe. If the conditions were ratified by Congress, then the President can only make the changes which were specifically granted to the Executive in the Act. And I don't know what those parameters are in this case.

What's funny about all this is that the "NAFTA 2" or whatever we call it isn't some massive change. It's like 95% the same agreement, with some additions/removals/tweaks. Granted a few of the changes are important, like around Dairy, but this isn't some huge shift. All this noise for what really just amounts to a refresh of the original agreement.

 

It is just enough of a change to further dupe the cult.

[lostfan]

1 hour ago, NorthSideSox72 said:

Depends on the nature of the treaty I believe. If the conditions were ratified by Congress, then the President can only make the changes which were specifically granted to the Executive in the Act. And I don't know what those parameters are in this case.

What's funny about all this is that the "NAFTA 2" or whatever we call it isn't some massive change. It's like 95% the same agreement, with some additions/removals/tweaks. Granted a few of the changes are important, like around Dairy, but this isn't some huge shift. All this noise for what really just amounts to a refresh of the original agreement.

 

Most expensive document title change in history.

[bmags]

23 minutes ago, lostfan said:

Most expensive document title change in history.

NAFT(+TPPABCUS)A

[lostfan]

1 minute ago, bmags said:

NAFT(+TPPABCUS)A

The funny thing about all this to me is Canada and Mexico have both long been 100% open to renegotiating NAFTA. It never needed to be some acrimonious thing.

[bmags]

1 minute ago, lostfan said:

The funny thing about all this to me is Canada and Mexico have both long been 100% open to renegotiating NAFTA. It never needed to be some acrimonious thing.

The contentious pieces were renegotiated in TPP by opening up other markets for them. Otherwise known as "the single worst deal in history".

[caulfield12]

https://www.cnn.com/2018/12/04/investing/stock-market-today-dow-jones/index.html

[southsider2k5]

Surprise, surprise, turns out a lot of what was said this weekend about the trade war being over probably isn't true, including the Chinese auto tariffs going to zero.

[Balta1701]

4 hours ago, caulfield12 said:

https://www.cnn.com/2018/12/04/investing/stock-market-today-dow-jones/index.html

That went well.

[caulfield12]

Maybe Trump can rail against the "rise of the computers" instead of Powell...that might play better with his base, the idea that algorithms are deciding their futures with little to no human input.   Railing against the inverted yield curve and its predictive reliability for forecasting a recession might not go over quite so well. 

Or we can just default back to "it's Mnuchin's DAMN fault!!!"

 

Some attributed the dramatic declines to a lack of buyers, but Cramer already knew the culprits: complex algorithmic programs set up by professional money managers to sell when the odds of future market losses increase.

In other words, when an event that often precedes a recession occurs — in Tuesday's case, short-term interest rates trading above long-term rates in a so-called yield curve inversion — some trading algorithms will automatically begin selling securities because the chances of an economic slowdown just got higher.

Cramer, host of "Mad Money," drew a comparison with football. Some plays can seem very risky, but when you consider the percentage chances of them going right, there's no choice but to implement them in the field. These programs make the same kind of calculation.

So, when the two-year and the five-year yield curves inverted on Tuesday, some hedge funds' programs automatically sold the S&P 500, which tends to fall in times of economic weakness, and others automatically sold shares of the big banks, which suffer when long-term rates are lower, Cramer said.

"Why? Because historically, this situation has produced negative results for the bank stocks and these hedge funds are trying to get out ahead of others who fear those negative results but just don't know they're going to fear them. It's a footrace," he explained. "This curve, as they call it, overrides whatever you hear about good employment or consumer balance sheets or robust lending. It's predictive."

Worse, the charts are signaling more pain ahead: based on Cramer's analysis, many hedge funds likely sold the S&P 500 when it dipped below its 200-day moving average because, in the past, that move tended to bring more downside.

"Here's the problem: there are now so many hedge funds using the same algorithm, same programs [that] there simply aren't enough investors willing to take the other side of the trade. If we all know that stocks go down on certain triggers, then who the heck would want to buy stocks?" Cramer said.

"That's how you get a day like today, where the market goes into free-fall," the "Mad Money" host continued. "When the percentages are against you and the algorithms are in charge, ... nobody wants to try to be a hero and bet against them."

 

https://www.cnbc.com/2018/12/04/cramer-this-sell-off-was-caused-by-a-computer-driven-footrace.html?__source=yahoo|finance|headline|story|&par=yahoo&yptr=yahoo

[pettie4sox]

My retirement account has taken a beating.  MAGA!

[southsider2k5]

The computers did it has been an excuse for decades now. 

[NorthSideSox72]

28 minutes ago, southsider2k5 said:

The computers did it has been an excuse for decades now. 

Sometimes it's true. See: Knight Trading and their debacle that triggered the Flash Crash.

 

[StrangeSox]

Interesting data on the impact of the tariffs so far

 

 

[caulfield12]

Oops!  

Not so fast.  I think Trump now has to hoping someone like Tim Cook, Howard Schultz or Jeffrey Bezos is “kidnapped” by the Chinese while travelling to a business meeting in Asia in a reprisal after the same just was done to the Huawei CTO in Vancouver.

Since that transpired over the weekend while Trump was simultaneously blathering on about the supposed concessions that the Chinese made at G-20...it’s going to really piss off the Chinese, not to mention the whole tech sector is getting massacred.

Bye bye, Mnuchin!

Edited December 6, 2018 by caulfield12

[lostfan]

I genuinely don't think Trump knows that countries don't actually pay tariffs.

[Eminor3rd]

Somebody please correct my assessment of this if I’m wrong. This is how I see it:

This is, at best, rearranging economic deck chairs, and at worst, essentially illegal double taxation.

Trump lowers corporate taxes in exchange for the lobbying support and donations that made him president. He jacks up military spending in exchange for votes from middle America.

Now he has a revenue issue. 

So he enacts tariffs that add revenue, but all the increases in production cost that results from the tariffs comes out of the pockets of the private market. Exporters that continue to sell pass the cost of the tariffs on to the buyers, who pass the costs on to their customers and/or employees. The only domestic companies that get way ahead are those that can only now compete with the exporters in price. 

So essentially the only winners are (1) Trump, who found a way to steal much or all of the money back from the voters while still getting credit for giving it in the first place, and still maintain a tailor-made excuse for cutting public programs, and (2) the few companies that successfully lobbied trump into killing foreign competition with tariffs. 

[southsider2k5]

57 minutes ago, lostfan said:

I genuinely don't think Trump knows  that countries don't actually pay tariffs. anything.

Updated for better accuracy.

[southsider2k5]

16 minutes ago, Eminor3rd said:

Somebody please correct my assessment of this if I’m wrong. This is how I see it:

This is, at best, rearranging economic deck chairs, and at worst, essentially illegal double taxation.

Trump lowers corporate taxes in exchange for the lobbying support and donations that made him president. He jacks up military spending in exchange for votes from middle America.

Now he has a revenue issue. 

So he enacts tariffs that add revenue, but all the increases in production cost that results from the tariffs comes out of the pockets of the private market. Exporters that continue to sell pass the cost of the tariffs on to the buyers, who pass the costs on to their customers and/or employees. The only domestic companies that get way ahead are those that can only now compete with the exporters in price. 

So essentially the only winners are (1) Trump, who found a way to steal much or all of the money back from the voters while still getting credit for giving it in the first place, and still maintain a tailor-made excuse for cutting public programs, and (2) the few companies that successfully lobbied trump into killing foreign competition with tariffs. 

I have zero expectation that this man could figure out a two step plan, let alone something with the complexities of taxation and tariffs.

[caulfield12]

27 minutes ago, Eminor3rd said:

Somebody please correct my assessment of this if I’m wrong. This is how I see it:

This is, at best, rearranging economic deck chairs, and at worst, essentially illegal double taxation.

Trump lowers corporate taxes in exchange for the lobbying support and donations that made him president. He jacks up military spending in exchange for votes from middle America.

Now he has a revenue issue. 

So he enacts tariffs that add revenue, but all the increases in production cost that results from the tariffs comes out of the pockets of the private market. Exporters that continue to sell pass the cost of the tariffs on to the buyers, who pass the costs on to their customers and/or employees. The only domestic companies that get way ahead are those that can only now compete with the exporters in price. 

So essentially the only winners are (1) Trump, who found a way to steal much or all of the money back from the voters while still getting credit for giving it in the first place, and still maintain a tailor-made excuse for cutting public programs, and (2) the few companies that successfully lobbied trump into killing foreign competition with tariffs. 

I don’t see that direct link with military spending and Michigan, WI, IA and PA.

It was simply the Dems doing a terrible job of convincing lots of middle and lower middle class Americans they had a dynamic and actionable plan to improve their lives in any significant way.

The actual revenues from the tariffs are pretty insignificant, compared to the overall budget imbalance.

The stock market is still up around 35% from Election Day, 2016, although near correction territory now...and off 20-30% for some of the technology bellwethers.  Goodbye, FIRE movement, we hardly knew ye.

Fwiw, China is very quickly positioning to move manafacturing to countries like Vietnam and Malaysia to avoid the tariffs...the main companies being hurt are entities like Huawei, ZTE, Apple and everyone along their supply chain, particularly chip and semiconductor manufacturers...or Foxconn’s deal with Wisconsin, which is likely to be blown up.

 

As far as the politics of it all, if the GOP tries to move forward with the Ryan/Mulvaney/Norquist plan of gutting SS and health care...they’re going to destroy any remote chance they had of winning in 2020.  As it stands, Trump will have an incredibly difficult time, and that’s without facing the headwinds of a recession.  Other than a few corporate elites, the majority of “flyover” voters are pissed about the tax cuts and even more pissed about health insurance being held hostage with nary a solution in sight.

With a Federal debt fast approaching $22 trillion, there’s just no way to convince young people, Hispanics or suburban white collar women that they should do anything less than fight desperately to protect their futures, and the imperiled financial futures of their children and grandchildren.

Edited December 6, 2018 by caulfield12