The trade and economy mega-thread (1 Viewer)

[superchuck500]

Is there a trade deal with China? Is it really a deal or just a pull-back to status quo ante? Is Trump advancing US interests in this well-executed trade battle plan or was this poorly conceived from the start . . . and harmful?

I think the jury's still out, but I haven't seen that the Chinese are offering much in compromise - and it's not even clear if there's going to be an agreement. But it's clear they are working on something and I'm sure Trump will sell it as the greatest trade deal ever. The proof will be in the details.

 

[MT15]

I think everyone understands it... the issue is there are only 2 logical ways to address it... The US as a whole has to spend less for production labor (or pay people less), or people (US consumers) have to be willing to pay more for items made in the US.... because cheap Chinese products produced with quasi-slave labor are not going anywhere... and people already cry that they aren't paid enough, and that things cost too much....

just wanted to add that the middle class is largely correct if they say they aren’t paid enough. Wages have been stagnant for decades.

I do think that Samiam is correct though, we have to be forward looking, and prepare for the future, rather than trying to rig capitalism to ignore it’s own principles.

 

[efil4]

Well, I do believe that is what Trump was trying to do with Tariffs... Make China pay more and try to help US manufacturing...

Joe,

I hope you get this ....China does not pay. They dont ship their goods here and receive a bill to pay the tariff.

There is a distributor here in the US that is responsible for receiving the shipment, shipping the merchandise and accepting the payment for said merchandise when it gets to the retailer.

That is a US company. Paying the tariff.

Simply put. If that anvil sold wholesale for $10 ( retail $12 ) in the US, that price is including ALL costs- mfg, shipping ( overseas), marketing etc.
If the tariff adds $2 to those costs, the US distributor isnt selling to the retailers at that price any longer. He now selling it for $12 to the retailers. They then sell it for $14.
The ONLY way that hurts China is if you STOP buying Chinese anvils.

I suspect that Chinese anvils are not that big in demand. So its relatively easy to stop. Now think of every product that China makes that gets shipped here. Try and stop that. Thats the ONLY way to hurt China. Tariffs are not hurting them because there are 5.5 billion other people on the planet they can approach to sell to as well.

Thats the gist of the tariffs are not working argument. Has been since day 1.

 

[efil4]

Yes.. I understand that... and that strengthens my concerns for America...

We can still lead in Mfg....just a different area. Do we need factories to mass produce plastic toy guns?

 

[UncleTrvlingJim]

Sure it was a drag, it could have been even better, things can always be better. But like Kramer said recently on CNBC, these are some of the best jobs numbers we have ever seen.

Also, I am glad to see you approve of the way Trump has handled the economy outside of the trade wars.

The number of jobs created under the first 3 years of Trump is actually less than the last 3 years of jobs created under Obama. Job growth has actually slowed down -- but not really by much. That's not a knock against Trump -- it's hard to keep up high job growth 11 years into an economic recovery and we're pretty much up at full employment.

My point is, we're seeing the same job growth, the same GDP (other than a 1 year spike), now as we did under Obama. But we now have more debt.

I think the tax cuts were not the most effective method to continue stimulating the economy. First, I'm generally of the opinion that when the economy is good, which it was in 2016, you should start to pay down the deficit by increasing taxes and cutting spending, and instead we did the opposite. Second, if we were really dissatisfied with 2% GDP growth and 220k jobs per month of job creation, a more effective stimulus in 2016 would have been more demand side stimulus. Corporations and "the rich" had plenty of cash, and interest rates were low, so access to capital was not an impediment to economic growth.

I generally think President's get way too much credit and way too much blame for the economy, but that's the way it has always been, and probably will always be.

 

[wardorican]

While doing my Christmas shopping I found this... I guess that the USA just doesn't make anvils anymore and we need them shipped in from China?

Take the Joe Christmas Challenge.. See how many thing that you buy as gifts this Christmas that Says Made in China... Probably 100% of everything you give this season I will wager.

Hmm.. well, let's see.

So far.. a jewelry item.. likely made in China, but can't confirm yet. two small items made in Japan. One leather bag made in India. expensive headphones made in Japan.. small electronic (USB splitter), made in China...wool socks made in the USA...other set of wool socks also made in USA... boots for the kid are probably China, but not sure. Same for a decent belt I got.

 

[wardorican]

In the least surprising news....

Fed study finds Trump tariffs backfired

A study by Federal Reserve economists found that President Trump’s initial round of trade tariffs in 2018 backfired on the U.S. manufacturing sector.

www.marketwatch.com

President Donald Trump’s strategy to use import tariffs to protect and boost U.S. manufacturers backfired and led to job losses and higher prices, according to a Federal Reserve study released this week.

“We find that the 2018 tariffs are associated with relative reductions in manufacturing employment and relative increases in producer prices,” concluded Fed economists Aaron Flaaen and Justin Pierce, in an academic paper.

While the tariffs did reduce competition for some industries in the domestic U.S. market, this was more than offset by the effects of rising input costs and retaliatory tariffs, the study found.

“While the longer-term effects of the tariffs may differ from those that we estimate here, the results indicate that the tariffs, thus far, have not led to increased activity in the U.S. manufacturing sector,” the study said.

The top ten industries hit by higher prices were: aluminum sheet, steel product, boilers, forging, primary aluminum production, secondary aluminum smelting, architectural metals, transportation equipment, general purpose machinery and household appliances.

Here's the full report.
https://www.federalreserve.gov/econres/feds/files/2019086pap.pdf

 

[superchuck500]

also this

 

[Nebaghead]

also this

From just the Agriculture items, it sounds like we paid 28 Billion to farmers in Aid for 31 Billion in increased agriculture trade from China for the first 2 years. How much tax revenue do we generate from 31 Billion because we essential added 28 billion of debt. No one even knows how the agreement will be enforced. What happens if they don't buy the expected amounts?

 

[superchuck500]

The Fed has been quietly expanding its balance sheet.

 

[wardorican]

The Fed has been quietly expanding its balance sheet.

Is this due to the repo market stuff I don't fully understand? Or is it a lack of liquidity due to banks having to have more capital?

The thing is, where is the liquid money going? If it's going into the stock market, then it's not really coming back out. If it were going to cap ex... we'd see more robust growth and cash flow in the system.

 

[wardorican]

And I'd love to see that asset chart longer term..like 20-30 years, for perspective.

 

[superchuck500]

Is this due to the repo market stuff I don't fully understand? Or is it a lack of liquidity due to banks having to have more capital?

The thing is, where is the liquid money going? If it's going into the stock market, then it's not really coming back out. If it were going to cap ex... we'd see more robust growth and cash flow in the system.

I don’t think it’s repo/liquidity, I think it was yield inversion that prompted it. It’s basically accommodative, Fed had been selling off it’s sheet then when key signs showed slowdown, it reversed and starting buying (raising demand and putting cash in the market).

It appears for now that the rate cuts and sheet acquisition have helped quite a bit.

 

[Intensesaint]

Global markets surge after Trump acquittal: https://finance.yahoo.com/news/stocks-open-broadly-higher-heading-144248198.html

Also, both jobs and wages increase beyond expectations: https://finance.yahoo.com/news/u-jobs-top-estimates-225-133001952.html

 

[MT15]

Didn’t the market surge when he was impeached also? You sure you’re not looking for a link that really isn’t there?

 

[Intensesaint]

Didn’t the market surge when he was impeached also? You sure you’re not looking for a link that really isn’t there?

That's because the markets knew the frivolous impeachment proceedings by the democrats would amount to nothing.

Here's why the stock market is ignoring Trump's impeachment by the House

Investors care about positives, like the trade deal, and ignore the impeachment of President Trump because he's unlikely to be removed.

www.cnbc.com

Also the New China trade deal was happening around the same time so that also impacted the markets.

 

[MT15]

So, let me state your position, to see if I understand.

The markets surged during his impeachment because they knew the outcome was never in doubt, and the markets surged today in a wave of relief over the outcome that they knew was never in doubt? Seems a bit circular.

Sorry, I think Trump has very little bearing on the stock market, at least right now. His biggest effect, after the tax cut, which wasn’t really his idea, was the slump we had during the long government shutdown.

It’s not just Tump. I don’t think presidents in general usually have a big effect on the markets. He sure loves to claim all the credit though when it does well, but none of the blame when it stalls. We should see this for the empty boasting that it is, imo.

 

[Intensesaint]

So, let me state your position, to see if I understand.

The markets surged during his impeachment because they knew the outcome was never in doubt, and the markets surged today in a wave of relief over the outcome that they knew was never in doubt? Seems a bit circular.

Sorry, I think Trump has very little bearing on the stock market, at least right now. His biggest effect, after the tax cut, which wasn’t really his idea, was the slump we had during the long government shutdown.

It’s not just Tump. I don’t think presidents in general usually have a big effect on the markets. He sure loves to claim all the credit though when it does well, but none of the blame when it stalls. We should see this for the empty boasting that it is, imo.

I don't need you to state my position for me.

You don't see me saying. Let me state your position. You just want to disregard any positive news on the economy because it will make Trump look good in the eyes of the voting populace and you hope the economy tanks so it will make him look bad.

 

[MT15]

Well, that’s completely untrue and uncalled for. You are just seeing what you want to see. I was pointing out your entirely circular logic, true, but I was trying to be polite about it.

Trump supporters have to be the angriest, meanest people in the world.