The Trump Economy

[SoCal Deek]

7 hours ago, plenzmd1 said:

Have you read this report? Tell me what you disagree with the main analysis that Trumps tariffs are hurting the American economy

Oh come on! Did you read my comment? Yes, on the surface it looks to be hurting the American economy but if you ever want to make anything here again we’d better stand up to China now. Or...we could just say screw it since we only have eleven years to live.

[TPS]

On 8/30/2019 at 2:46 PM, KRC said:

 

I imagine GG or TPS will correct me, but trade deficits are not necessarily a bad thing. You have the potential to make more money with deficits (depends on purchasing of treasuries, etc.). However, there is a point where it is no longer economically beneficial for the U.S. (which should obviously be our focus). We should focus on making it more equitable when we have crossed that threshold where it is no longer beneficial.

 

IP theft is a different story.

 

In both cases, Trump is using tariffs as a hammer to get them to work on IP theft and to lessen the trade imbalance. Whether you agree or not with the approach, that is what he is using as leverage. Short-term pain for long-term gain.

There's a lot in that first paragraph.  "Free trade theory" is based on the idea that each country will produce what they are most efficient at given their resources. In practice, what has driven trade flows with China is US corporations moving production to take advantage of cheaper wages, so-called "labor arbitrage" -- this is NOT what trade theory is based on. 

US corporations started the process.  China (and South Korea) followed the Japanese model of development, which is to allow US companies in so you can absorb their technology, then create your own competitive corporations.  The largest part of the Chinese trade deficit was (may still be) consumer products that US corporations outsourced.  From the US perspective, it was good for Wall Street (higher profits and stock prices), but millions of manufacturing jobs were outsourced. 

 

The main issue now is that China manages its currency with the dollar, preventing the yuan from strengthening, which is why it buys the treasuries--buying the treasuries (and other US assets) prevents the $ from depreciating, which the trade flows would normally cause.  Going back 5-6 years ago, the gains from labor arbitrage became very small as Chinese wages increased and US wages stagnated.  Trump's tariff tantrum may cause some firms to move back, but it's a very complicated process since manufacturers rely on extensive supply chains that feed their own processes. It's quite possible that firms move to other low wage (Asian) countries and not the US.  

 

Personally, I think it's more important now to put pressure on US corps to stop the focus on short-term profits and stock prices, and go back to being good social stewards in the US.  I posted a link recently about a statement from a group of high profiled CEOs stating this.

[Tiberius]

 

 

Quote

the Associated Press reports from Lincoln, Neb.: “The Nebraska Corn Board and the Nebraska Corn Growers Association issued a joint statement criticizing the Trump administration for continuing to issue oil refinery waivers that thwart ethanol production and for a trade policy that they said has damaged agriculture. ‘Many of our corn farmers have stood with Trump for a long time, but that may soon change,’ Dan Nerud, a Dorchester farmer and president of the 2,400-member Nebraska Corn Growers Association, said in a release.” The statement also said, “As harvest approaches after an extremely difficult year for agriculture, many Nebraska corn farmers are outraged by the Trump administration’s lack of support for the American farmer.”

 

29 minutes ago, TPS said:

There's a lot in that first paragraph.  "Free trade theory" is based on the idea that each country will produce what they are most efficient at given their resources. In practice, what has driven trade flows with China is US corporations moving production to take advantage of cheaper wages, so-called "labor arbitrage" -- this is NOT what trade theory is based on. 

US corporations started the process.  China (and South Korea) followed the Japanese model of development, which is to allow US companies in so you can absorb their technology, then create your own competitive corporations.  The largest part of the Chinese trade deficit was (may still be) consumer products that US corporations outsourced.  From the US perspective, it was good for Wall Street (higher profits and stock prices), but millions of manufacturing jobs were outsourced. 

 

The main issue now is that China manages its currency with the dollar, preventing the yuan from strengthening, which is why it buys the treasuries--buying the treasuries (and other US assets) prevents the $ from depreciating, which the trade flows would normally cause.  Going back 5-6 years ago, the gains from labor arbitrage became very small as Chinese wages increased and US wages stagnated.  Trump's tariff tantrum may cause some firms to move back, but it's a very complicated process since manufacturers rely on extensive supply chains that feed their own processes. It's quite possible that firms move to other low wage (Asian) countries and not the US.  

 

Personally, I think it's more important now to put pressure on US corps to stop the focus on short-term profits and stock prices, and go back to being good social stewards in the US.  I posted a link recently about a statement from a group of high profiled CEOs stating this.

It was also good for US consumers who pay less for goods. 

[row_33]

start screaming Depression, media

 

DJ down 300, one of the worst declines ever

 

almost under 26,000

 

 

[3rdnlng]

7 minutes ago, row_33 said:

start screaming Depression, media

 

DJ down 300, one of the worst declines ever

 

almost under 26,000

 

 

Gee, I wonder if Dorian has anything to do with this?

[row_33]

55 minutes ago, 3rdnlng said:

Gee, I wonder if Dorian has anything to do with this?

 

the media is quick to jump on "one single headline" to blame for the ad hoc trend, then dumps it quick

 

used to have a game for my long obsolete IBM PC Jr. called Wizard of Wall Street which did a great job with options/puts/calls

 

let me go back and replay each day with 20/20 hindsight, made billions of dollars

 

 

[GG]

52 minutes ago, 3rdnlng said:

Gee, I wonder if Dorian has anything to do with this?

 

Not much.

[row_33]

18 minutes ago, GG said:

 

Not much.

 

the point was that the drop in the Dow in a day may be "TOP 40" historically

 

but it's starting the day above 26,000

 

so it's a blip

 

context

context

context

 

 

[GG]

2 minutes ago, row_33 said:

 

the point was that the drop in the Dow in a day may be "TOP 40" historically

 

but it's starting the day above 26,000

 

so it's a blip

 

context

context

context

 

 

 

Which has nothing to do with whether Dorian has affected the stock prices.

[3rdnlng]

2 minutes ago, GG said:

 

Which has nothing to do with whether Dorian has affected the stock prices.

Are you saying that weather instances have no affect on the stock market?

[GG]

8 minutes ago, 3rdnlng said:

Are you saying that weather instances have no affect on the stock market?

 

Not when it's predicted path is avoiding landfall.    There's far more negative data and sentiment following Labor Day to cause the market to swoon then the unpredictable hurricane.

[row_33]

28 minutes ago, GG said:

 

Which has nothing to do with whether Dorian has affected the stock prices.

 

i'm not into the 10,000 word arguments on here

 

my work is paid for real value added and we are subject to an equal opponent ripping through our Report and the outcome matters BIG TIME to my client

 

the arguments about the economy are the direct opposite of my work day, i laugh at it all

 

[GG]

1 minute ago, row_33 said:

 

i'm not into the 10,000 word arguments on here

 

my work is paid for real value added and we are subject to an equal opponent ripping through our Report and the outcome matters BIG TIME to my client

 

the arguments about the economy are the direct opposite of my work day, i laugh at it all

 

 

If you have real clients, I hope you provide more coherent advice than your spouts on this site.

[row_33]

13 minutes ago, GG said:

 

If you have real clients, I hope you provide more coherent advice than your spouts on this site.

 

 

i would not posit that professional Reports and schedules have ANYTHING to do with dicking around here

 

i guess you might someday aspire to be part of an actual situation with professional Reports and schedules issued that matter to those paying for them?

 

 

[GG]

6 minutes ago, row_33 said:

 

 

i would not posit that professional Reports and schedules have ANYTHING to do with dicking around here

 

i guess you might someday aspire to be part of an actual situation with professional Reports and schedules issued that matter to those paying for them?

 

 

 

I rest my case

[row_33]

so we used to have a team of Economists, a few emeritus, that would write reports telling the government the effect of mergers on the stock price

 

eventually the gov't wizened up and realized no value was being added here, it was a jenga tower of assumptions that was meaningless

 

nice gig though, giving opinions based on 1,000 assumptions and when it doesn't pan out, you blame assumption #737 for not coming through

 

******..........

 

 

 

 

[row_33]

nevermind....

 

Edited September 3, 2019 by row_33

[GG]

11 minutes ago, row_33 said:

so we used to have a team of Economists, a few emeritus, that would write reports telling the government the effect of mergers on the stock price

 

eventually the gov't wizened up and realized no value was being added here, it was a jenga tower of assumptions that was meaningless

 

nice gig though, giving opinions based on 1,000 assumptions and when it doesn't pan out, you blame assumption #737 for not coming through

 

******..........

 

 

 

 

 

Therein lies the problem, having Economists evaluate M&A outcomes.

[row_33]

for some reason GG has never been even a 1% member of "that side" to put on the ignore list

 

i won't let this gibberish change my mind

 

 

[GG]

1 minute ago, row_33 said:

for some reason GG has never been even a 1% member of "that side" to put on the ignore list

 

i won't let this gibberish change my mind

 

 

 

You can't even come up with a coherent insult.  Very Canadian of you.

[Tiberius]

GG and Row 

[TPS]

7 hours ago, Tiberius said:

 

 

 

It was also good for US consumers who pay less for goods. 

Yes on their Wal-Mart wages...

[Albwan]

6 hours ago, row_33 said:

start screaming Depression, media

 

DJ down 300, one of the worst declines ever

 

almost under 26,000

 

 

As a bonus .....STORMY IS BAAAACK!!!

[Tiberius]

7 minutes ago, TPS said:

Yes on their Wal-Mart wages...

Biggest private employer, I think, right? 

[keepthefaith]

15 minutes ago, TPS said:

Yes on their Wal-Mart wages...

 

Reduces the U.S. carbon footprint.  They can work and shop at the same location.  A mini commune. 

[TPS]

8 hours ago, 3rdnlng said:

Gee, I wonder if Dorian has anything to do with this?

This explains it.

https://www.bloomberg.com/news/articles/2019-09-03/u-s-manufacturing-contracts-for-first-time-in-three-years

 

[row_33]

ah yes, that one storyline that the media tells us carried the entire reaction on Wall Street 

 

oops, it back up 200 so i guess yesterday's screaming headlines are forgotten

 

 

[Koko78]

18 hours ago, Albwan said:

As a bonus .....STORMY IS BAAAACK!!!

 

It will be interesting to see if she testifies before Congress just as obviously coked-up as her TV interview.

Edited September 4, 2019 by Koko78

[Buffalo_Gal]

Mixed economic numbers today.
 

 

And .... (ASDP is a typo, should be ADP). The "recession" question is sarcasm from him. 
 

 

[GG]

On 9/3/2019 at 12:05 PM, 3rdnlng said:

Gee, I wonder if Dorian has anything to do with this?

 

Note the market today, with Dorian hitting US.   

[3rdnlng]

7 minutes ago, GG said:

 

Note the market today, with Dorian hitting US.   

Are you trying to get an "Uncle" out of me? My original premise was that the market's drop could have been caused by pretty much anything. Maybe it's up today because Dorian looks not quite as bad (overall) as originally thought. Maybe it was because of the economic news for August or maybe it was because there is optimism with the China negotiations or the olive branch thrown to the people on Hong Kong.

[GG]

1 minute ago, 3rdnlng said:

Are you trying to get an "Uncle" out of me? My original premise was that the market's drop could have been caused by pretty much anything. Maybe it's up today because Dorian looks not quite as bad (overall) as originally thought. Maybe it was because of the economic news for August or maybe it was because there is optimism with the China negotiations or the olive branch thrown to the people on Hong Kong.

 

Call it whatever you want, but the hurricane was not a major driver of the market this week.   Economic data, trade news and Fed signals were.  

[3rdnlng]

4 minutes ago, GG said:

 

Call it whatever you want, but the hurricane was not a major driver of the market this week.   Economic data, trade news and Fed signals were.  

I don't disagree with you. I was just pointing it out that the market can be affected by many different things. The one thing I won't do though is to get into a long ongoing debate with you like you do with others here who pretty much agree with you. I'll spare the other posters here.

[TPS]

1 hour ago, Buffalo_Gal said:

Mixed economic numbers today.
 

 

And .... (ASDP is a typo, should be ADP). The "recession" question is sarcasm from him. 
 

 

The pain is coming from Trump's trade war impacting manufacturing, and the ISM manufacturing index showed contraction this week, with a measure below 50 which is recession indicator. On the other hand, Services and overall consumption are doing fine.  Essentially, there is ammunition to support recession talk, and there is ammo to support the Trump loyalists.

In the meantime, markets are hyper-sensitive to any trade talk, as we've seen this week.  If manufacturing continues to decline, then it will filter into jobs, consumption, and services, and, yes, maybe even a formal recession...

[row_33]

49 minutes ago, GG said:

 

Call it whatever you want, but the hurricane was not a major driver of the market this week.   Economic data, trade news and Fed signals were.  

 

up 400 today, so where was all the great economic data, trade news, Dorian and Fed signals to make it rise?

 

might hit 27,000 tomorrow....

 

[Buffalo_Gal]

7 minutes ago, TPS said:

The pain is coming from Trump's trade war impacting manufacturing, and the ISM manufacturing index showed contraction this week, with a measure below 50 which is recession indicator. On the other hand, Services and overall consumption are doing fine.  Essentially, there is ammunition to support recession talk, and there is ammo to support the Trump loyalists.

In the meantime, markets are hyper-sensitive to any trade talk, as we've seen this week.  If manufacturing continues to decline, then it will filter into jobs, consumption, and services, and, yes, maybe even a formal recession...

"Trump loyalists"?  I think you mean "Recession cheerleaders who hate President Trump so much, they will cheer to see their neighbors out of work and on public assistance" versus those who like the economic good times.

 

[GG]

13 minutes ago, row_33 said:

 

up 400 today, so where was all the great economic data, trade news, Dorian and Fed signals to make it rise?

 

might hit 27,000 tomorrow....

 

 

Do your own homework, Sue.

 

But I'll give you a hint - there are 3 reasons on the front page of WSJ.com

[row_33]

DJIA drops 300, libtard media screams it's a massive plummet with a Depression starting in 5 seconds

 

CONTINUES rising and goes up 400 and crickets on the possible good things this entails...

 

 

Economics became your new major when you totally flunked Introductory Financial Accounting in business school

 

 

[B-Man]

 

 

 

Private payroll growth way above Wall Street estimates despite recession fears.

 

 

 

 

 

.

[3rdnlng]

https://www.cnbc.com/2019/08/29/grossly-irresponsible-larry-summers-blasts-ex-fed-presidents-call-to-thwart-trump-in-2020.html?__twitter_impression=true&recirc=taboolainternal

 

Former New York Fed President Bill Dudley’s push for the central bank to consider the 2020 election when crafting monetary policy is “grossly irresponsible” behavior, economist Larry Summers told CNBC on Thursday.

Dudley, in a Wednesday post on Bloomberg, suggested the Federal Reserve could, and should, try to sway the election against President Donald Trump. Dudley urged current central bankers not to lower interest rates further to cover for any negative effects on the U.S. economy that may arise due to the president’s China trade war.

 

“For a former trusted official of the Fed, whose thinking is inevitably going to be tied to the Fed, to recommend that they ... [use] rates so as to subvert the economy and influence a presidential election is grossly irresponsible, and is an abuse of the privilege of being a former Fed official,” said Summers, who formerly was Treasury secretary under President Bill Clinton and as an economic advisor to President Barack Obama.

Summers, a longtime Trump critic who had been considered by Obama for Fed chief, said that Dudley’s remarks took the discussion “out of the realm of economics” and “into the realm of politics.”