The trade and economy mega-thread (9 Viewers)

[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]

House passed spending bill- on to Senate.

the canary in the coal mine is chirping quite vigorously. Apparently we are ignoring it and headed deeper into mine.

oh and remember, the 10yr is the leading benchmark rate for mortgages/credit. It rises, mortgage and credit interest rates rise.

 

[superchuck500]

House passed spending bill- on to Senate.

the canary in the coal mine is chirping quite vigorously. Apparently we are ignoring it and headed deeper into mine.

oh and remember, the 10yr is the leading benchmark rate for mortgages/credit. It rises, mortgage and credit interest rates rise.

The 30 year fixed rate I just saw on a ticker is 6.94%.

 

[superchuck500]

If the bond market trend continues (seems likely unless the Senate pares the bill way back), how long before Trump starts railing on Powell to lower rates - which of course he won't do.

 

[efil4]

If the bond market trend continues (seems likely unless the Senate pares the bill way back), how long before Trump starts railing on Powell to lower rates - which of course he won't do.

i think that will start today- Bessent HAS to be aware of what is happening.

Lowering rates isnt going to stave off the reckoning. But they assume they will be out of office by then. Sadly, it wont be long.

Once consumers start to pull back on consuming, things will snowball pretty quick. So the only way you can temporarily hold it together is with lowering rates ( that have their own set of consequences ) or print money ( which has its own set of consequences )

Trump entering Micky Loomis cap management territory.

 

[superchuck500]

i think that will start today- Bessent HAS to be aware of what is happening.

Lowering rates isnt going to stave off the reckoning. But they assume they will be out of office by then. Sadly, it wont be long.

Once consumers start to pull back on consuming, things will snowball pretty quick. So the only way you can temporarily hold it together is with lowering rates ( that have their own set of consequences ) or print money ( which has its own set of consequences )

Trump entering Micky Loomis cap management territory.

Powell won't cut rates without support from the inflation and employment metrics - he follows the FED's statutory mandate, it's not discretionary in his view. We'll have to see how Trump handles that, because we all know that Trump sees everything as discretionary and based on the single standard of whether it helps Trump.

 

[efil4]

Something interesting i just read ( a side bar to what @UriUT just posted on the "tax bill" thread )

the top 10% will see a tax break of anywhere between $2400-$10k.

When i googled what the "top 10% " was, i found that the top 10% of income earners are responsible for almost 50% of total consumption in the US.

didnt know that.

Which makes this game the Administration is playing quite fraught with danger. While you may be giving them a tax break, if you spike inflation, their $ ( dollar ) purchasing power is dropping. If their purchasing power is dropping, the natural reaction is to stop purchasing.

The lower half of earners all will see their taxes stay flat or a bit of an increase- but they too will see their purchasing power reduced and they will certainly cut back much faster.


so begins the spiral ( or feedback loop ) - whew i dont envy ANYONE working at the FED when it comes to policy with this Administration. They are hell bent on enacting what they want, regardless of consequences.

 

[bird]

i think that will start today- Bessent HAS to be aware of what is happening.

Lowering rates isnt going to stave off the reckoning. But they assume they will be out of office by then. Sadly, it wont be long.

Once consumers start to pull back on consuming, things will snowball pretty quick. So the only way you can temporarily hold it together is with lowering rates ( that have their own set of consequences ) or print money ( which has its own set of consequences )

Trump entering Micky Loomis cap management territory.

Bessent may be aware. That being said either he doesn’t care or he is keeping his piehole shut because he wants to stay in the power holding group. He is worth half a billion.

Republicans do not care about deficits and debt. They care about maintaining the position of wealth. And they use divide and conquer as well as agitprop playing on tribalism, racism and misogyny.

This. Is. War.

 

[superchuck500]

Something interesting i just read ( a side bar to what @UriUT just posted on the "tax bill" thread )

the top 10% will see a tax break of anywhere between $2400-$10k.

When i googled what the "top 10% " was, i found that the top 10% of income earners are responsible for almost 50% of total consumption in the US.

didnt know that.

Which makes this game the Administration is playing quite fraught with danger. While you may be giving them a tax break, if you spike inflation, their $ ( dollar ) purchasing power is dropping. If their purchasing power is dropping, the natural reaction is to stop purchasing.

The lower half of earners all will see their taxes stay flat or a bit of an increase- but they too will see their purchasing power reduced and they will certainly cut back much faster.


so begins the spiral ( or feedback loop ) - whew i dont envy ANYONE working at the FED when it comes to policy with this Administration. They are hell bent on enacting what they want, regardless of consequences.

They may be responsible for 50% of consumption but that's because they have the means. That's where the discretionary money is and that's were the consumption is.

But I think there is solid research (not looking for it now) that shows that dollar per dollar, providing more household budget support to the lower strata results in more direct consumption than the upper strata. This is because the lower strata almost certainly will spend it either in direct new spending or in near-term savings (then spent for things like repairs, travel, and DIY). Whereas, dollar for dollar, money saved/returned in the upper strata are not "needed" and a larger percentage ends up in long-term investment.

In other words tax cuts and other funding to lower income drives growth more than upper income cuts.

 

[coldseat]

Bessent may be aware. That being said either he doesn’t care or he is keeping his piehole shut because he wants to stay in the power holding group. He is worth half a billion.

Republicans do not care about deficits and debt. They care about maintaining the position of wealth. And they use divide and conquer as well as agitprop playing on tribalism, racism and misogyny.

This. Is. War.

Just one correction there. Bessent isn't keeping his piehole shut, he's lying to the American public and pushing this administrations extreme conspiracy theories. And that means he has no real power, he's just a hired mouthpiece. He may be knowledgeable when it comes to the economy, but he has relinquished all of that knowledge to play the fool in service of this Trump administrations desired mock reality. And doing it with as smug a face as somebody could possibly have. I hope he chokes on a ham sandwich.

 

[efil4]

They may be responsible for 50% of consumption but that's because they have the means. That's where the discretionary money is and that's were the consumption is.

But I think there is solid research (not looking for it now) that shows that dollar per dollar, providing more household budget support to the lower strata results in more direct consumption than the upper strata. This is because the lower strata almost certainly will spend it either in direct new spending or in near-term savings (then spent for things like repairs, travel, and DIY). Whereas, dollar for dollar, money saved/returned in the upper strata are not "needed" and a larger percentage ends up in long-term investment.

In other words tax cuts and other funding to lower income drives growth more than upper income cuts.

totally agree- my point was that the discretionary money in that 10% - when that dollar isnt a "dollar" any longer - they will pull back

its a given that the lower half will begin to tighten consumption.

All this as it relates to the economic health of the US- we are getting to a point where if both begin to tighten consumption, we will be in a bad spot.

Ive always believed, as you pointed out, spurring the lower half will lead to growth ( consumption - travel, repairs, etc ) more than the top 10% ( because the top 10% will use that to build more wealth thru investing )

We keep targeting the wrong crowd when it comes to tax breaks/putting more discretionary income in pockets.

 

[UriUT]

totally agree- my point was that the discretionary money in that 10% - when that dollar isnt a "dollar" any longer - they will pull back

its a given that the lower half will begin to tighten consumption.

All this as it relates to the economic health of the US- we are getting to a point where if both begin to tighten consumption, we will be in a bad spot.

Ive always believed, as you pointed out, spurring the lower half will lead to growth ( consumption - travel, repairs, etc ) more than the top 10% ( because the top 10% will use that to build more wealth thru investing )

We keep targeting the wrong crowd when it comes to tax breaks/putting more discretionary income in pockets.

There are studies out there that in highly educated areas, the economic impact permeates downward to the lesser educated. Thus that area is enriched, even for those without a high school diploma. The idea is those with higher income would have higher disposable income and therefore would spend...on restaurants, craft items, etc. And we're not talking about the billionaires here. Everyone has a cap on what they can consume after all (Brewster's millions). Think Boston, SF, San Jose, Austin, etc.

That's an example how government investment can impact an economy...a government with proper resources backed by proper taxing.

 

[efil4]

There are studies out there that in highly educated areas, the economic impact permeates downward to the lesser educated. Thus that area is enriched, even for those without a high school diploma. The idea is those with higher income would have higher disposable income and therefore would spend...on restaurants, craft items, etc. And we're not talking about the billionaires here. Everyone has a cap on what they can consume after all (Brewster's millions). Think Boston, SF, San Jose, Austin, etc.

And to that point, it works same way in reverse ( in times of economic stress/uncertainty ) - and the first folks to feel it are those lesser educated because folks are no longer spending on restaurants/craft items, boutique shopping etc. So those businesses reliant on that spending start to pare back on employment and people start to go unemployed.

I was thinking about this just driving into work this am. I pass a car wash every day. Ive used it in the past. Its one of those "tunnel car wash" types. Its $15 for a wash ( just 6 months ago it was $13 ) I have 4 cars- if we all were to go 2x a month, thats $120/mo JUST TO WASH CAR.

or i go get a gallon bucket from Dollar Store, a sponge, and maybe splurge on Meguiars car wash soap for $8/gal - all told spend $12~ and wash the cars myself for 15 min and put $108 back in my pocket.

Now if the wash gets 200 cars a day and just HALF decide that its no longer viable to pay $15/wash, the owner has a quick decision to make. Neither of which are good for employees/ hours/earnings.

then you multiply that across all the small businesses that rely on that spending, see it slowing up, having to make same decisions.

That theory is correct - but we keep forgetting it cuts both ways.

 

[UriUT]

And to that point, it works same way in reverse ( in times of economic stress/uncertainty ) - and the first folks to feel it are those lesser educated because folks are no longer spending on restaurants/craft items, boutique shopping etc. So those businesses reliant on that spending start to pare back on employment and people start to go unemployed.

I was thinking about this just driving into work this am. I pass a car wash every day. Ive used it in the past. Its one of those "tunnel car wash" types. Its $15 for a wash ( just 6 months ago it was $13 ) I have 4 cars- if we all were to go 2x a month, thats $120/mo JUST TO WASH CAR.

or i go get a gallon bucket from Dollar Store, a sponge, and maybe splurge on Meguiars car wash soap for $8/gal - all told spend $12~ and wash the cars myself for 15 min and put $108 back in my pocket.

Now if the wash gets 200 cars a day and just HALF decide that its no longer viable to pay $15/wash, the owner has a quick decision to make. Neither of which are good for employees/ hours/earnings.

then you multiply that across all the small businesses that rely on that spending, see it slowing up, having to make same decisions.

That theory is correct - but we keep forgetting it cuts both ways.

Right, I didn't mean to say we support only the well off. It was supplement to pulling up the less unfortunate. Talent, innovation, hard work aren't exclusive to the top bracket. That's why I support Harris's plan to help those less fortunate by providing equal opportunities.

 

[efil4]

That's why I support Harris's plan to help those less fortunate by providing equal opportunities.

100%

THATS where you get the most "bang for your buck" -

my 21 yr old about to graduate college - she will earn around $52,000/yr at her teaching job. She already has planned out her budget.

If you give her an additional $5000/yr - she will spend it. Not save it, spend it. Now do that across 10s of millions of others and you can see what that does, economically.

 

[UriUT]

100%

THATS where you get the most "bang for your buck" -

my 21 yr old about to graduate college - she will earn around $52,000/yr at her teaching job. She already has planned out her budget.

If you give her an additional $5000/yr - she will spend it. Not save it, spend it. Now do that across 10s of millions of others and you can see what that does, economically.

This government help isn't limited in the immediate short term consumption either. The kid that is saved from starvation may turn into someone that would change the world.

There is a study that providing school lunches improve the performance of the students. These are things that private entities won't provide. It's a shame that we are not a problem solving government any longer.

 

[efil4]

This government help isn't limited in the immediate short term consumption either. The kid that is saved from starvation may turn into someone that would change the world.

There is a study that providing school lunches improve the performance of the students. These are things that private entities won't provide. It's a shame that we are not a problem solving government any longer.

the worst part- that is totally all about "national security" as well.

But so many have been duped into thinking otherwise.

 

[Optimus Prime]

A Republican push to dismantle clean energy incentives threatens to reverberate across the US by costing more than 830,000 jobs, raising energy bills for US households and threatening to unleash millions more tonnes of the planet-heating pollution that is causing the climate crisis, experts have warned.

A major tax bill passed by the Republican-held House of Representatives on Thursday morning will, as currently written, demolish key components of climate legislation signed by Joe Biden that has spurred a record torrent of renewable energy and electric vehicle investment in the US.

Under the reconciliation bill, tax credits for cleaner cars will end this year, with incentives for wind, solar and even nuclear energy projects scaled down and then eliminated by 2032. Clean energy manufacturing tax credits will be axed by 2031, while Americans seeking to upgrade their homes to cleaner or more energy efficient appliances will get no further subsidy after the end of this year.


“This bill is worse than what people envisioned – it pulls the rug out from facilities banking on these incentives, it raises everyday household costs by hundreds of dollars and undercuts any sort of action on climate change,” said Robbie Orvis, senior director at Energy Innovation, a non-partisan climate policy thinktank.

You can’t overstate how significant this will be in weakening the US’s position. With inflation, tariffs and rising electricity use, it really couldn’t come at a worse time. It’s a really damaging bill.”

Since the passage of the 2022 Inflation Reduction Act, more than $320bn has flowed mostly to Republican-held districts in the form of new clean energy development and electric car construction. A further $522bn in investment is in the pipeline but is now menaced by the Republican bill’s removal of tax incentives.

“You’re talking about half a trillion dollars of investment at risk from these changes,” said Orvis. “Over 10 years, we found that these changes would reduce US GDP by over $1tn.”……….

Trump’s tax bill to cost 830,000 jobs and drive up bills and pollution emissions, experts warn

Bill will unleash millions more tonnes of planet-heating pollution and couldn’t come at a worse time, say experts

www.theguardian.com

 

[efil4]

A Republican push to dismantle clean energy incentives threatens to reverberate across the US by costing more than 830,000 jobs, raising energy bills for US households and threatening to unleash millions more tonnes of the planet-heating pollution that is causing the climate crisis, experts have warned.

A major tax bill passed by the Republican-held House of Representatives on Thursday morning will, as currently written, demolish key components of climate legislation signed by Joe Biden that has spurred a record torrent of renewable energy and electric vehicle investment in the US.

Under the reconciliation bill, tax credits for cleaner cars will end this year, with incentives for wind, solar and even nuclear energy projects scaled down and then eliminated by 2032. Clean energy manufacturing tax credits will be axed by 2031, while Americans seeking to upgrade their homes to cleaner or more energy efficient appliances will get no further subsidy after the end of this year.


“This bill is worse than what people envisioned – it pulls the rug out from facilities banking on these incentives, it raises everyday household costs by hundreds of dollars and undercuts any sort of action on climate change,” said Robbie Orvis, senior director at Energy Innovation, a non-partisan climate policy thinktank.

You can’t overstate how significant this will be in weakening the US’s position. With inflation, tariffs and rising electricity use, it really couldn’t come at a worse time. It’s a really damaging bill.”

Since the passage of the 2022 Inflation Reduction Act, more than $320bn has flowed mostly to Republican-held districts in the form of new clean energy development and electric car construction. A further $522bn in investment is in the pipeline but is now menaced by the Republican bill’s removal of tax incentives.

“You’re talking about half a trillion dollars of investment at risk from these changes,” said Orvis. “Over 10 years, we found that these changes would reduce US GDP by over $1tn.”……….

Trump’s tax bill to cost 830,000 jobs and drive up bills and pollution emissions, experts warn

Bill will unleash millions more tonnes of planet-heating pollution and couldn’t come at a worse time, say experts

www.theguardian.com

the bill is over 800 pages with an additional 40 pages inserted just yesterday- it will take weeks to parse out the damaging effects of parts of the bill that are not getting publicized, but will have adverse effects for so many.