It has been a month since I last wrote. My hiatus was inadvertently extended as Ecclesiastes certainly entered my personal life. My sister Joyce suddenly passed away, which caused me to slow my mind and reflect on many things. Losing your baby sister will cause one to ponder, or as it was said in Cool Hand Luke: “When a man’s mother dies and he gets to thinking rabbit and running, a night in the box.” So I have put myself in a mental box. However, I have also experienced the birth of my second grandson, thus to every season a time and purpose.
During the seven-plus years I have been writing Notes From Underground I have shared many life-changing moments with my extended family of readers. So it is with a renewed spirit and laser focus thoughts that I embark on analyzing the global-macro world in search of profitable trades and investments. The FRA podcast I posted January 29 (click the highlighted text) is a renewal of this year’s focus on crafting the NOTES narrative. There has been much in the way of global political events during my hiatus but I will refer to some as significant in various aspects as we proceed.
***The G-20 meeting in Baden-Baden over the weekend ended with no real conclusion as the United States would not compromise on allowing the phrase “RESIST ALL FORMS OF PROTECTIONISM” to be inserted the COMMUNIQUE. The previous G-20 agreements have said the standard, “We will consult closely on exchange markets. We reaffirm our previous exchange rate commitments, including that we will refrain from competitive devaluations and will not target our exchange rates for competitive purposes.” This line is NONSENSE as New Zealand, Australia, and especially Switzerland regularly cite concerns over the strength of their currencies when setting their monetary policy. Even the FED has referenced an overly strong DOLLAR when using the phrase “financial headwinds” as a reason to maintain unreasonably low interest rates and too much liquidity in the system.
The trade issue was really set aside until the full meeting of the G-20 in Hamburg this summer with the ultimate rhetoric of benign neglect: “We will strive to reduce excessive global imbalances, promote greater inclusiveness and fairness and reduce inequality in our pursuit of growth.” So it is incumbent on Germany, China and the U.S. to correct either a massive current account surplus or deficit. While the finance ministers and bankers were in Baden-Baden, Chancellor Merkel was in Washington D.C. holding talks with President Trump. The discussion between the key leaders was “frosty” as Trump was not as diplomatic as he should have been, especially in regards to his personal attacks upon Frau Merkel. But I urge my readers to carefully watch the U.S. DOLLAR as the Trump administration may pursue a weak dollar policy in response to Germany’s threats of legal retaliation in response to any border adjustment tax (BAT). German Finance Minister Schaeuble openly threatened a legal challenge at the WTO if the U.S. institutes the BAT.
If the U.S. cannot improve its excessive trade imbalance through a “tax” program or tariff then look for the DOLLAR to be the mechanism that The Donald utilizes to get the world’s attention. As I warned last month when Ford CEO Mark Fields said, “currency manipulation was the mother of all trade barriers,” watch for the U.S. to pursue a weak dollar policy to placate the National Association of Manufacturers. When auto executives are openly critical of currency manipulation by foreign governments it is time to pay attention, especially when the overwhelming currency positions are LONG DOLLARS and as many analysts bought into the idea of a BAT and its bullish impact on the DOLLAR. Even this weekend’s Barron’s front page comes to the Santelli /Harris position discussed on February 21. The border adjustment tax is a major mistake.
***Thank you for all of your support and if there are any issues that warrant a discussion feel free to contribute in the comments section. I will certainly take everything into consideration.
Tags: Angela Merkel, BAT, border tax adjustment, G-20, Germany, protectionism, U.S. Dollar
March 19, 2017 at 6:54 pm |
Yra,
I’m sorry to hear about Joyce. My thoughts and prayers are with you and your family.
Regards
Mark Selvig
801-598-9094
March 19, 2017 at 7:50 pm |
Your family and close friends sincerely know that you could not have been a better brother to Joyce. We all extend our heartfelt sympathies to you and your whole family.
March 19, 2017 at 8:11 pm |
Yra,
So sorry to hear about Joyce. Scott’s and my condolences are to you, your brothers and your entire family.
With sadness,
Michael
March 20, 2017 at 6:44 pm |
Mike and Scott—be by to pick you up to play golf at 6:45 a.m.Thanks for you thoughts–Yra
March 19, 2017 at 9:07 pm |
My sympathy to you and your family. Look closely and you will see your sister shining through one of you other family members.
March 19, 2017 at 9:19 pm |
Yra,
So Sorry for you loss, my thoughts go out to you and your family.
Tom Sexton
March 21, 2017 at 9:11 am |
Tom–thanks so much .
March 20, 2017 at 12:23 am |
Wish you long life Yra and mazeltov on the birth of your second grandson.
Best wishes
Ariel Bezalel
March 21, 2017 at 9:12 am |
Ariel–thanks so much for you thoughts
March 22, 2017 at 9:02 am |
Bezalel–if i read this week correctly you are a well known craftsmen—does it spill over to the realm of investing???
March 20, 2017 at 3:53 am |
YRA,
I’m sorry for your loss. Glad you are back.
Jim Hughes
J
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March 20, 2017 at 5:42 am |
Hello Yra
I have never met you but am a big fan.
Just wanted to offer my condolences for losing your family member.
May peace be with you and your family. And thank you for your notes.
Mehran Givehchi
>
March 20, 2017 at 6:48 am |
Yra,
I am so sorry to learn about Joyce’s passing. I pray that you will be able to hold on to many happy memories.
Best,
Bonnie
March 20, 2017 at 7:18 am |
Bonnie–thanks so much for your thoughts as I know you knew her from the office—
March 20, 2017 at 7:22 am |
Sorry for your loss, Yra.
Best wishes,
Ron L.
March 20, 2017 at 8:02 am |
Yra,
I can’t say I relate to your loss but I understand the pain of it. It’s senselessness. Sorrow.
I wish you well. And good healing.
In honoring her memory, she remains immortal.
tw
March 20, 2017 at 8:11 am |
Yra, My deepest heart to your family. Family is a gift we all must hold close. My love goes out to you all. Mario D’Ambrosio
March 20, 2017 at 8:43 am |
I am sorry to hear about Joyce. i know you cared for her deeply.
Sara nd I congratulate you on the birth of your grandson.
Marty Liebman
March 20, 2017 at 6:43 pm |
Marty–to you and Sara–thanks so much for your thoughts I hope all is well with you and your family—Yra
March 20, 2017 at 9:26 am |
Sorry to learn of your sister’s passing Yra, may she rest in peace and congratulations to the new addition to the family.
March 20, 2017 at 9:52 am |
Full employment was achieved in spite of a rising dollar, mission accomplished?
Thus one question; why a lower dollar as a goal given full employment exists, to keep the ball in motion?
There was talk of issuing 50yr UST’s, surely the market has been positioning for this?
March 20, 2017 at 12:22 pm |
Chicken–these are serious questions which we will discuss
March 21, 2017 at 11:54 am |
Chicken–do you think the Trump white house believes we are at full employment??????
March 21, 2017 at 9:33 pm
It likely doesn’t matter what the White house wants or believes considering the old guard calls the shots regardless?
http://www.nashvillepost.com/politics/taxation/article/20855424/americans-for-tax-reform-ok-with-gas-tax
March 20, 2017 at 1:38 pm |
“Ecclesiastes certainly entered my personal life” welcome back and now your teaching in other areas with this statement. Spent time today reading Ecclesiastes and it’s meanings and for that I am thankful.
March 20, 2017 at 4:28 pm |
Thank you for guiding me to Ecclesiastes and thoughts of the “moving finger”. Truly “not all our piety or wit can cancel half a line, nor all our tears wash out a word…” (Khayyam).
We always look forward to your sage and energetic understanding of the economic/political/social discourse on matters of import.
The concept of the BAT must be one surely that is only a starting point of discussion. I cannot imagine thrusting such a challenge without considering other alternatives.
March 20, 2017 at 9:33 pm |
Joe Biden poignantly said this after his son’s passing..
“There will come a day, I promise you and your parents, as well, when the thought of your son or daughter or your husband or wife brings a smile to your lips before it brings a tear to your eye. It will happen. My prayer for you is that day will come sooner or later.. But the only thing I have more experience than you in is this: I’m telling you it will come.”
My thoughts and prayers are for you and your sister.
March 21, 2017 at 8:51 am |
Frank C–thank you and everyone else for your beautiful thoughts.A few words is more comforting then you can even imagine
March 21, 2017 at 7:05 am |
Yra, so very sorry to hear of your loss. From experience, Leaving is always baked into the cake, but having those you truly love, respect, are grateful for, who manage to Come into our lives, to find us, is not. For those, I never think of the Loss, only of how to thank them for having Come. Thank you Joyce for coming into my Yra’s life.
Fondly,
Jeremy