Posts Tagged ‘China’

Notes From Underground: Mexico Tariffs Suffer From the Three Ills

June 2, 2019

And what might those be, you ask? Ill-conceived. Ill-timed. Ill-advised.

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Notes From Underground: Relevant Issues for Today’s Global Macro Environment

May 13, 2019

As the latest drama of the U.S./China trade negotiations unfolds, there are several that continue to boil. The president is tweeting less about stock market valuations and more about the revenue impact from the fresh tariffs On Sunday, Fox News’ Chris Wallace disrobed Larry Kudlow. The economic adviser epitomized the age-old adage: “An honest person sent abroad to lie for their country.” Yes, Mr. President. A tariff is a tax on your populace. If tariffs are great for the U.S. economy, then raise them 1000% and balance the budget without inflicting any harm on Americans’ pocket books. [Yes, that’s sarcasm.]

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Notes From Underground: Back to What’s Driving Markets

May 8, 2019

We have all been bogged down with tweets coming from the White House about China. Because high-speed traders force us to parse the messages and assess the immediate impact on the markets, we’re hostage to President Trump’s tariff policy. The bottom line is that Robert Lighthizer is left to inform the world when China will acquiesce to the U.S.’s demand for reliable and hardened enforcement mechanisms to solidify any genuine agreement. From my perspective, the critical point on global markets is that once China/U.S. trade agreement is done the president will set his sights on targeting the ENORMOUS TRADE IMBALANCE that favors Germany.

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Notes From Underground: Making Sense Of the Jabberwocky

May 7, 2019

Fans of Lewis Carroll should know the whimsical poem from Alice in Wonderland that comes across as complete NONSENSE. The collection of tweets from the White House is the modern day version of the Jabberwocky. On Friday Trump tweeted about how well the talks were going with Chinese and that they were close to completion with a positive outcome. So between that and a strong jobs number, the U.S. equity markets had much to celebrate

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Notes From Underground: Lighthizer, Always At the Ramparts Of Trade Battles

April 8, 2019

As the second quarter begins, the financial markets seem fixated on China/U.S. trade frictions, or lack thereof. This narrative is old and stale. For those new to the realm of international relations, be aware that China will slow-walk these negotiations. There will be many attempts to “agree to disagree.” For example, in Monday morning’s SOUTH CHINA MORNING POST, there was an article titled, “China Refuses to Give Up ‘Developing Country’ Status At WTO Despite US Demands,” about China’s “privileged position” at the World Trade Organization. In the simplest terms, the WTO allows for countries to self-define as developing country status. This brings certain rights that allow for longer transition periods before they have to be in full compliance with WTO rules and regulations. This is described as “Special and Differential Treatment.”

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Notes From Underground: How Many Fed Speakers Does It Take To Make a Greenspan?

February 24, 2019

More than two decades ago, then-Fed Chairman Alan Greenspan said, “I know you think you understand what you thought I said but I’m not sure you realize that what you hear is not what I meant.”

It seems that the cacophony of Fed speakers on Friday accomplished what the so-called Oracle did by his own design .The headlines pulled out the narrative of the FED leaving a larger balance sheet and more reserves thus allowing for more liquidity in the U.S. financial system. Equity markets, bond markets and hard assets all experienced a sigh of relief and rallied in anticipation of removal of what Druckenmiller referred to as the double-barrel approach of FED tightening policy. Fed Vice Chairman Richard Clarida spoke about the FED‘s use of balance sheet and forward guidance dynamics as two exceptional tools the Fed used to combat the Global Financial Crisis. If policy was already at the “effective lower bound” the Fed may invoke a Bank of Japan-type policy of yield curve control (YCC) by capping the rates on longer maturities.

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Notes From Underground: Bye, Bye Pappy Van Winkle

December 6, 2018

At the end of 2017, my readers may recall that I did an unusual thing. I made a prognostication as where the 10-year yield will end the year. I said the 10-year would end the year at 3.41 percent, to which a friend offered up a bottle of Pappy Van Winkle bourbon if the rate reached that level. (The yield was 2.60 percent at the time.) Well, I’m throwing in the towel as it looks like 3.26 percent looks to be the top for the year. I guess I will have to enjoy a lesser-quality libation.

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Notes From Underground: Xi, Am Putin My Readers On?

November 29, 2018

The Twitterverse is atwitter with news bits about the coming meeting this Friday and Saturday. There are rumors that Putin and Trump were going to meet but now the get-together is off. The once-scorned Peter Navarro is to be at the Xi/Trump summit after all. An Argentinian Judge has suggested that Saudi Crown Prince MBS may be arrested for the killing of Jamal Khashoggi. There will be no agreement on free trade in the G-20 communique, especially as Trump has renewed threats against German auto firms with a 25 percent tariff on its exports to the United States. When Donald Trump comes to town it truly portends a three-ring circus.

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Notes From Underground: Irony of Irony

November 15, 2018

President Donald Trump maintains that the Facebook, Google, Twitter bias is the “real collusion” … oh wait, he tweeted that. Seriously, nobody spots the irony?!? Every day, this madness infects the algorithmic condition of the markets. I prefer real intelligence instead of artificial intelligence for genuine intellect understands nuance and irony. (Again, this is not a political statement as we analyze all aspects of politics in an effort to secure profits in global financial, commodity, currency and equity markets.) As Deng Xiaoping would say: “It doesn’t matter whether the cat is black or white, as long as it catches mice.”

It has been more than a week since the last blog post. As Trump’s inner Nixon spills outs, we will continue to monitor the idea of a MASSIVE GLOBAL INFRASTRUCTURE effort, especially since there’s a G-20 meeting in Buenos Aires the weekend of November 30.

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Notes From Underground: Depending On the Outcome of Rational Actors?

August 19, 2018

So much of social science is dependent on various actors making rational decisions. Economics has regularly proven that “actors” certainly fail to act rationally as manias, crashes and panics in repeated form are proof (see Charles Kindleberger). In the realm of politics, the dependence on nation-states to behave rationally has led to many major policy errors. During the Cold War the balance of nuclear weapons prompted both super powers to remain reticent to embark on direct confrontations and avoid an unthinkable shooting war. The fear of world destruction also meant that the USSR and UNITED STATES would leash their “allies” to prevent any direct conflict between the two major hegemonists.

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