Archive for the ‘trade’ Category

Notes From Underground: More Perspective In the Time Of Reflection

September 12, 2018

First, to all of those in the NOTES community who celebrate the Jewish New Year, I wish you a year of health, peace and prosperity. To those who celebrate other spiritual endeavors I offer you a wish for health, peace and prosperity. Now, to the markets. In the past month I have spent time putting issues we’ve been discussing for the last nine years into perspective. Lately, the airwaves are filled with the accolades laid upon the policy makers who SAVED CAPITALISM. Listening¬† to Paulson, Geithner and Bernanke pontificate on how they acted to save the system is enough to send me into fits of rage as the culprits who failed to act to halt the housing bubble praise themselves for the “Courage To Act.”

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Notes From Underground: Areas of Global Macro Concern

July 24, 2018

President Donald Trump’s continuous tweeting creates volatility in the markets but the impact lessens as participants become hardened to the vagaries of the tweets. An area that does concern me, though, is the amount of insider trading I suspect is taking place.

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Notes From Underground: But National Security IS Trade Policy

June 7, 2018

Tonight I am LINKING to the March 1 post about the White House discussed invoking Section 232 of the Trade Expansion Act of 1962. In an effort to justify the idea of placing tariffs on U.S. allies to curb steel and aluminum imports, Commerce Secretary Wilbur Ross noted that a strong steel sector is essential for U.S. national security. Section 232 is so broad that it is organic and can used to justify any action the U.S. deems necessary in regards to trade. In a CNBC interview on Thursday, Ross cited Section 232 again and wrapped it into the tariff discussion by maintaining that we must be strong economically to be strong militarily. Later in the interview he pressed that there can be no military security without economic strength.

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Notes From Underground: The Importance of Being Lighthizer

May 24, 2018

The plot thickens as the media is filled with one leak after another in regards to tariffs or threats to embark on a road to perfidy by invoking section 232 of the 1962 Trade Act: Using the broad cover of national security to justify increased import duties on autos. [In a hat tip to A. Limey] It is time to acknowledge that the “brain” of President Trump’s trade team is Robert Lighthizer.

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Notes From Underground: New FRA Podcast

April 22, 2018

On April 19, the FRA’s Richard Bonugli moderated a discussion between the highly regarded Cal Professor Barry Eichengreen and yours truly. The discussion centered around the issue of China and the Trump administration’s trade policy. The podcast was a result of a piece Eichengreen published at Project Syndicate that I cited in a recent blog post. It was a great honor to partake in a direct discussion with the professor as I have read his work on the global political economy for many years. I advise googling his earlier work on analyzing gold role in the Great Depression and many of his other articles on the EU and the EURO.

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Notes From Underground: No Chinese Devaluation or Massive Liquidation of U.S. Treasuries

April 9, 2018

There are many questions swirling around what possible responses President XI can bring forward to counteract the heightened rhetoric from the Trump administration on imposing tariffs on Chinese goods exported to the U.S. Many news agencies have carried stories about the Chinese responding to Trump tariffs by entering into a policy of depreciating the Chinese yuan, which is currently trading at 6.3075 against the DOLLAR.

This is an interesting view but it would force China to act against the G-20 accord of not manipulating one’s currency. The XI-led government is looking for international support in its effort to combat a trade war so alienating the international economic community would be detrimental to the Chinese interest of global support. The narrative some analysts are spinning is to recall China’s 2 percent devaluation of its currency in August 2015, which sent global currency and markets into a frenzy, especially as stocks were reeling from deflationary fears.

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Notes From Underground: The Week That Was …?

March 26, 2018

What a week last week turned out to be (and that was if you just followed the headlines). Tariffs are taxing the global financial markets as they try to guesstimate the economic impact from the effect of tit-for-tat responses to the initial U.S. measures efforts to gain support for dealing with Chinese trade violations. The FOMC added to market volatility as the suspense over three or four rate hikes still impacts the DOT PLOTS. The Bank of England confused markets as they voted 7-2 to sustain the current interest rate policy, even though consensus assumed a 25 basis point increase. By week’s end the confusion reverberating around the globe did serious damage to equity markets as the S&PS were down almost 6 percent on the week and the European stock indices continued their continued their selloff, making them the weakest of all regions (in contravention to the punditry’s call for the buying of European stocks).

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Notes From Underground: Kudlow’s Dilemma, Tariffs Versus King Dollar

March 18, 2018

The newswires were flushed with either praise about the appointment of Larry Kudlow to lead the National Economic Council, or concerns about his past dalliances with drugs and supply-side economics. This BLOG doesn’t care about one’s past human foibles as we all have failings. But the addiction to supply-side economics is and will be an issue of concern as the White House attempts to push forward with a coherent policy. The great showpiece of last week’s media frenzy over Kudlow was the transparency of what I have referred to as the mainstream media’s desire for access versus genuine discourse. CNBC was giddy over the idea that one of the network’s talking heads was going to be a key figure in forthcoming economic discussions and old loyalty OUGHT to provide greater ACCESS. The questions for the consumers of financial news will be who abuses the relationship more. But enough editorializing.

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Notes From Underground: Things to Contemplate

March 6, 2018

Let’s discuss the concept of tariffs with a wider historical perspective:

The Bretton Woods system crafted at the end of World War II provided the U.S. with both an enormous privilege and an enormous burden (a blessing and a curse, if you will). The U.S. acted as the provider with massive amounts of global liquidity but it also became the repository of the FREE world’s excess capacity. The Marshall Plan and the Alliance For Progress acted to spread dollars to our allies in an effort to counteract COMECON and the influence of the Soviet Empire.

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