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.”
Posts Tagged ‘trade’
Notes From Underground: More Perspective In the Time Of Reflection
September 12, 2018Notes From Underground: But National Security IS Trade Policy
June 7, 2018Tonight 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.
Notes From Underground: The Importance of Being Lighthizer
May 24, 2018The 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.
Notes From Underground: The 10-Year Finally Hits 3% and It is Meaningless
April 24, 2018The concentration of the media on round numbers is going to drive me to drink that bottle of Pappy Van Winkle. In true philosophical inquiry, round numbers never fit in the square pegs of the unbalanced thinking at Notes From Underground. In Tuesday’s post I am going to run through several points that I’ve mentioned over the past several months. All of these issues will have some relation to the developing narrative that we are experiencing in the markets:
Notes From Underground: Flattening Curves — All Action and No Talk
April 11, 2018In the political realm, the concern about tariffs has been lessened as Chinese President Xi took the high road with some silky conversation. It is not in the Chinese interest to raise the level of shouting/tweeting, nor to allow the YUAN to depreciate. The last blog post weighed the harm China would do to itself if the YUAN were to depreciate for it would then have to face the acrimony of many nations it is trying to placate. From a TECHNICAL perspective, it appears that the YUAN is going to test three-year lows between 6.11/6.20 to the dollar. As the Chinese tensions eased, the world now turns its eyes to Syria.
Notes From Underground: The Week That Was …?
March 26, 2018What 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).
Notes From Underground: Kudlow’s Dilemma, Tariffs Versus King Dollar
March 18, 2018The 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.
Notes From Underground: The Unemployment Number is Wall Street’s Version of Picasso’s `The Dream’
March 11, 2018It was the best that Wall Street could dream of: It was a huge headline nonfarm payroll number with a large number of workers jumping into the labor market, which kept the unemployment rate at 4.1% and wage growth at a very tepid pace. Average hourly earnings were 0.1%, which is nirvana for the wealth managers: solid economic growth with stagnant wages. This may certainly be a one-off month as NFP could return to its average or wages begin to rise by at least 0.3% every month. Rick Santelli and Ed Lazear made the case that the increase in the labor participation rate was a great outcome as long time unemployed are gaining confidence in the genuine strength of the economy. The return of the long-term unemployed will show the real amount of slack in the economy, reflecting even more downward pressure on wages. If the slack is greater than the FOMC has previously believed, then the FED may well slow its rate increases. People returning to the labor force is a positive but it may be another kink in the Fed’s models.
Notes From Underground: Things to Contemplate
March 6, 2018Let’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.