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.

 

[efil4]

Why the bond market matters for your finances and the economy

A selloff hit bonds overnight amid fallout from President Donald Trump's tariffs.

abcnews.go.com

Why the bond market matters to the avg Americans.

@superchuck500 posted this on EE

Must read.

Carney’s Checkmate: How Canada's Quiet Bond Play Forced Trump to Drop Tariffs

Carney, Japan And The EU proved America's Idiot Emperor Has No Clothes

deanblundell.substack.com

 

[UriUT]

@superchuck500 posted this on EE

Must read.

Carney’s Checkmate: How Canada's Quiet Bond Play Forced Trump to Drop Tariffs

Carney, Japan And The EU proved America's Idiot Emperor Has No Clothes

deanblundell.substack.com

Yeah that's interesting. I had heard rumors that Canada was off loading their us treasuries early in the year (edit: to the brits). Then they denied it; instead as mentioned in that article, publicly declaring that they were reissuing their own bonds. Japan's foreign minister kinda hinted a move on march 1st, and again, denied it per the article i posted before. Most certainly, warnings are sent privately, and Trump like a moron thinks he has the upper hand when dealing with equal trade partners.

It's this mercantilists' mindset of trade needing a winner and a loser. We're the loser long term now with these tariffs and trade wars. Businesses will not invest in expensive long term factories if there isn't stability. China has been losing manufacturing and foreign investment for quite some times now. The investment cratered recently; due in part to zero covid, Gestapo arrests of foreign businessmen and ease dropping devices, antagonism to the west vis a vis taiwan, and their production costs as their population are getting richer and older. We are facing the same environment with Trump's authoritarian moves.

Here's an introductory briefer for anyone interested on trade deficits (current account deficits).

Current Account Deficits

There can be consequences when the amount a country spends abroad is wildly different from what it receives from the outside world

www.imf.org

Keep in mind that we cannot judge trade deficits from bilateral trades (China and the US for example).

Moreover, in practice, private capital often flows from developing to advanced economies. Advanced economies, such as the United States (see chart), run current account deficits, whereas developing and emerging market economies often run surpluses or near surpluses. Very poor countries typically run large current account deficits, in proportion to their GDP, that are financed by official grants and loans.

A common complaint about economics is that the answer to any question is, “It all depends.” It is true that economic theory tells us that whether a deficit is good or bad depends on the factors giving rise to that deficit, but economic theory also tells us what to look for in assessing the desirability of a deficit.

What's not mentioned in that article is that for the US, a trade deficit can occur when the economy is doing very well. That means, we can afford stuff and domestically, we cannot satisfy that demand. Therefore, we import more goods, which in turn, creates a trade deficit. Also, current accounts (trade deficits) must equal capital accounts...meaning when we have a current accounts deficit, capital (investment etc) will return back. tl;dr.....Trump's an idiot who doesn't understand basic economics and interprets trade deficit as fraud. Maybe China...but we brought that up with the WTO.

Ugh...what could've been had hillary won. TPP would've isolated China. We then get a reprieve with them shooting themselves in the the foot with zero covid, their real-estate bubble, and scaring off investors. Now we're doing this again...because the last trade war with China really helped us???? Yeah not.


edit:
Oh what's comical in all this....the oil prices indicate low demand because they expect a global recessions much like 2020. Oil prices cratered to $55.5. Russia, our handler it seems, needs I believe oil prices above that. I forgot the exact amount. Their economy will not be able to withstand that.

 

[UriUT]

And another reminder....at our height post wwii, we owned a 1/3 share of the whole global gpd (edit. sorry, looked this up just now...my memory is terrible...we held 50%). We now hold 25% of the global gdp with a fraction of the population. And we buy into this BS that the world is cheating us????? We are the idiots folding a royal flush. Idiots.

 

[superchuck500]

 

[efil4]

Yeah that's interesting. I had heard rumors that Canada was off loading their us treasuries early in the year (edit: to the brits). Then they denied it; instead as mentioned in that article, publicly declaring that they were reissuing their own bonds. Japan's foreign minister kinda hinted a move on march 1st, and again, denied it per the article i posted before. Most certainly, warnings are sent privately, and Trump like a moron thinks he has the upper hand when dealing with equal trade partners.

It's this mercantilists' mindset of trade needing a winner and a loser. We're the loser long term now with these tariffs and trade wars. Businesses will not invest in expensive long term factories if there isn't stability. China has been losing manufacturing and foreign investment for quite some times now. The investment cratered recently; due in part to zero covid, Gestapo arrests of foreign businessmen and ease dropping devices, antagonism to the west vis a vis taiwan, and their production costs as their population are getting richer and older. We are facing the same environment with Trump's authoritarian moves.

Here's an introductory briefer for anyone interested on trade deficits (current account deficits).

Current Account Deficits

There can be consequences when the amount a country spends abroad is wildly different from what it receives from the outside world

www.imf.org

Keep in mind that we cannot judge trade deficits from bilateral trades (China and the US for example).





What's not mentioned in that article is that for the US, a trade deficit can occur when the economy is doing very well. That means, we can afford stuff and domestically, we cannot satisfy that demand. Therefore, we import more goods, which in turn, creates a trade deficit. Also, current accounts (trade deficits) must equal capital accounts...meaning when we have a current accounts deficit, capital (investment etc) will return back. tl;dr.....Trump's an idiot who doesn't understand basic economics and interprets trade deficit as fraud. Maybe China...but we brought that up with the WTO.

Ugh...what could've been had hillary won. TPP would've isolated China. We then get a reprieve with them shooting themselves in the the foot with zero covid, their real-estate bubble, and scaring off investors. Now we're doing this again...because the last trade war with China really helped us???? Yeah not.


edit:
Oh what's comical in all this....the oil prices indicate low demand because they expect a global recessions much like 2020. Oil prices cratered to $55.5. Russia, our handler it seems, needs I believe oil prices above that. I forgot the exact amount. Their economy will not be able to withstand that.

its $60/bbl - thats their lowest. Anything under and they lose money. March 2025 Russia was down 17% in revenue year-over-year. If prices stay depressed for 3-6 mo, or we indeed enter recession here late this year, their economy is in Soviet era numbers.

Couldnt happen to a better country.

 

[UncleTrvlingJim]

I have a question - whenever you sell, aren’t you immediately on the hook for any capital gains? When I started thinking about actually selling the majority of our stocks, I thought of the amount of unrealized capital gains and knew it would be a nightmare for our taxes.

Unlike the truly wealthy, we pay a lot of taxes anyway every year.

As @efil4 said, not within my 401k plan.
But yes, outside your retirement accounts you trigger capital gains tax.... long term capital gains are taxed at 0, 15 or 20% depending on your income level. Short term capital gains are taxed as ordinary income. It's generally why long term dollar cost averaging (a set buy every month that you hold onto for years), is the best strategy.

 

[superchuck500]

 

[efil4]

performative. Call me so i can tell the NRCC that even Xi came begging.

China fully understands Trumps ego. They are going to goad him into a really dumb move soon - i hope not, and probability is low, but it aint 0%

 

[superchuck500]

performative. Call me so i can tell the NRCC that even Xi came begging.

China fully understands Trumps ego. They are going to goad him into a really dumb move soon - i hope not, and probability is low, but it aint 0%

China said “now that all US goods are totally unmarketable in China, we see no reason to add any additional tariffs from this point.”

 

[UriUT]

its $60/bbl - thats their lowest. Anything under and they lose money. March 2025 Russia was down 17% in revenue year-over-year. If prices stay depressed for 3-6 mo, or we indeed enter recession here late this year, their economy is in Soviet era numbers.

Couldnt happen to a better country.

I have to find a win in this crazy time. Soon I'll lose my voting rights because all my important documents are lost somewhere in this place....ugh...

 

[efil4]

OMG-

" Trump has told his team that China must be the first to make the move, as the White House believes it is Beijing that has chosen to retaliate and further escalate the trade war."


This is Putin on Ukraine invasion- to a tee.

"Why are you fighting back/escalating the war we started?"

 

[MT15]

Slow learners indeed.

 

[MT15]

performative. Call me so i can tell the NRCC that even Xi came begging.

China fully understands Trumps ego. They are going to goad him into a really dumb move soon - i hope not, and probability is low, but it aint 0%

To be fair, almost everyone who isn’t in a cult or clueless understands Trump’s ego.

 

[DJ1BigTymer]

To be fair, almost everyone who isn’t in a cult or clueless understands Trump’s ego psychopathy.

fify

 

[RobF]

I was saying to a friend, it's probably better talking to a psychologist than it is an economist trying to understand what's going on.

This bit is fascinating, because Trump, I think, psychologically needs China to back down and give in, or at least approach him in a way he can frame it as China backing down and giving in. I think, despite his rhetoric, he could and quite possibly will cave in on tariffs, even entirely, just so long as he can spin it, no matter how ludicrously, as a win.

I can't be sure whether he entirely believes his own rhetoric about tariffs are magic, but he definitely cares about his self-image, and I do think he'll happily ditch even things he actually does believe in if he thinks it'll buy him a boost in his own popularity. Just so long as he has an excuse to claim his backing down as winning. I do not believe for a second his ego would let him sacrifice his self-image otherwise, possibly ever, for anything.

But China aren't letting him.

I don't know what happens next. Some would argue the pragmatic thing would be for China to let the pressure build, and then give him a small way out, and I can see that happening. But the counter-argument to that is that if you give him anything, he'll come back for more. It's quite literally bullying. So I can also see China giving nothing, not an inch, that Trump could claim as a victory.

 

[Optimus Prime]

Donald Trump’s whiplash decisions on tariffs have brought uncertainty to a sector of the US economy usually squarely behind the president: the gun industry.

For gunmakers, tariffs pose the risk of sharply raising costs on imported raw materials, such as copper, steel and aluminum, as well as safety products like gun locks and lockable cases that often are made overseas.

Most of the guns sold in the US come from US-based manufacturers such as Smith & Wesson and Ruger, but they require components sourced from around the world.

The accessories and safety tools included in many gun packages, too, often come from companies that rely primarily on offshore factories.

Imported guns mostly come from Australia, Brazil and Italy, according to a 2024 report on firearm commerce from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

With tariff policy in constant flux, gunmakers and adjacent companies are trying to adapt to a situation that remains fluid.……..

US gunmakers scrambling to adapt to Trump’s uncertain tariff threats

The gun industry relies on materials from overseas, which could be subject to punishing tariffs that drive prices higher

www.theguardian.com

 

[Optimus Prime]

 

[superchuck500]

Clown show