…As Chocolate Cake Diplomacy Faces Biggest Test Yet
Well, it looks like Donald Trump’s “great friendship” with Xi Jinping (forged as it was, not in fire, but over “the most beautiful piece of chocolate cake you’ve ever seen”), is going to be put to the test over the next couple of weeks.
On Friday, in the official statement that accompanied the announcement of his decision to move ahead with tariffs on Chinese goods despite the trade truce Steve Mnuchin struck with Chinese Vice Premier Liu He last month, Trump said the following:
My great friendship with President Xi of China and our country’s relationship with China are both very important to me.
Kind words for one’s “rapist”:
Xi, according to Bloomberg, is now set to go “blow for blow” with Trump on trade – and hopefully that means something different than it means when Trump goes “blow for blow” with Russian hookers.
Continue reading ‘Blow For Blow’: U.S.-China Trade Spat Devolves Into Name-Calling…
Following is the opening segment of this week’s edition of Notes From the Rabbit Hole, NFTRH 504. For months now we have been tracking a divergence in the key cyclical Semiconductor Equipment segment (I am short AMAT & LRCX) to the broader Semi sector and this week put more context to the divergence.
A Bull in a China Shop
In light of the developing trade war between the US and China, let’s review the all-important Semiconductor sector and in particular, the Semi Equipment segment, which is a key economic early bird (and canary in a coal mine).
Various sectors took hits on Friday as Trump moved forward with Tariffs on China. But most of those sectors and industries are follow-on aspects of the economic cycle, which got its start when the early bird chirped in early 2013.
With China in Trump’s crosshairs and China a very key player in Semi Fab Equipment, there is a fundamental reason that the Equipment companies are faltering. From SEMI by way of a post at nftrh.com in March.
“SEMI predicts Samsung will lead the pack in fab equipment spending in both 2018 and 2019, even though it will invest less each year than in 2017. By contrast, China will dramatically increase its year-over-year (YOY) fab equipment spending for the next two years – by 57 percent in 2018 and 60 percent in 2019 – to support fab projects from both overseas and domestic companies. The China spending surge will thrust it past Korea as the top spending region in 2019.”
The rate of Semi Fab spending growth was easing and a heavy reliance was being put on China to pick up the slack. Here is a screenshot from that post…
Continue reading A Bull in a China Shop
By Doktor Zoom
You would be forgiven for thinking that maybe House Republicans had found even a speck of human decency in their hearts, considering headlines that claimed they were considering a “compromise bill” on immigration that would even “end family separation.”
Here we go.
On Wednesday afternoon, as the dollar was surging on the back of a hawkish hike from the Fed, WSJ reported that Donald Trump would in all likelihood make good on his threat to go ahead with tariffs on billions in Chinese goods, with an announcement likely coming on Friday.
That decision (were it to pan out) would confirm reports from a couple of weeks ago when Trump, seemingly swayed by the isolationist/protectionist contingent’s rebuke of a trade truce struck by Steve Mnuchin during a meeting with Chinese Vice Premier Liu He, reversed course on an implicit agreement to hold off on further escalations.
WSJ’s post helped catalyze a reversal in the greenback, which renewed its ascent on Thursday following the dovish spin Draghi put on an otherwise hawkish ECB decision.
Fast forward to Thursday afternoon and these headlines hit:
Continue reading Trump Approves Tariffs On $50 Billion In Chinese Goods, Escalating Trade War
…Small Businesses Go All-In On Trump’s Pedal To The Metal Populism
Listen, if you’re a small business, you’re feeling pretty goddamn “tremendous” about Trump’s economy, which is running on a sugar high from late-cycle fiscal stimulus and deficit-funded tax cuts.
Specifically, the NFIB Small Business Optimism Index rose last month to the second highest level in the survey’s 45-year history.
“Main Street optimism is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes,” NFIB President and CEO Juanita Duggan said Tuesday, adding that “for years, owners have continuously signaled that when taxes and regulations ease, earnings and employee compensation increase.”
And look at this:
Continue reading ‘Main Street Optimism Is On A Stratospheric Trajectory’…
By James Howard Kunstler
Why not war with Canada? That pissant “nation” is cluttering up the northern half of OUR Continent, which we struggled mightily to free from wicked Old Europe. What doesn’t Justin Trudeau get about that? And when we’re done with him, how about a few rounds with Frau Merkel and the wee frog, Monsieur Macron? I’d like to see the Golden Golem of Greatness in a leotard and one of those Mexican wrestling masks, tossing these peevish international dwarves out of the ring like so many sacks of potting soil.
And now it’s off to Singapore for a championship bout with the opponent known as “Little Rocket Man.” There’s an odd expectation that these two avatars of unreality will settle the hash that has been simmering for sixty years between the divided Korea and the USA. Mr. Trump will make a deal to turn North Korea into a golfer’s paradise and Mr. Kim will promise to beat his nuclear arsenal into nine irons and putters. And then they’ll celebrate on Air Force One with bags of Big Macs and Buckets o’Chicken. (Let the aides and advisors fight over the Singapore Noodles and squid beaks in garlic sauce.)
Continue reading World Wrassling Diplomacy
By James Howard Kunstler
The ill-feeling among leaders of the G-7 nations — essentially, the West plus Japan — was mirrored early this morning in the puking financial market futures, so odious, apparently, is the presence of America’s Golden Golem of Greatness at the Quebec meet-up of First World poobahs. It’s hard to blame them. The GGG refuses to play nice in the sandbox of the old order.
Like many observers here in the USA, I can’t tell exactly whether Donald Trump is out of his mind or justifiably blowing up out-of-date relationships and conventions in a world that is desperately seeking a new disposition of things. The West had a mighty good run in the decades since the fiascos of the mid-20th century. My guess is that we’re witnessing a slow-burning panic over the impossibility of maintaining the enviable standard of living we’ve all enjoyed.
Continue reading The Summer of Discontent
Markets gave Trump the benefit of the doubt to start the new week after a weekend that found the President spending what certainly seemed like an inordinate amount of time assailing various (and in some cases entirely imaginary) foes on Twitter.
Seemingly oblivious to the optics, Trump regaled the world on Monday morning with his thoughts on farmers, soybean taxes, “all sorts of trade barriers”, deficits, the constitutionality of the special counsel probe, his power to pardon himself and “Witch Hunts” that he says are being conducted by “conflicted” Democrats and unnamed “others” who he says are “angry” at him for reasons he didn’t specify.
That went on for nearly three hours.
Despite that, stocks were fine, seemingly content to ignore the incessant rantings of a guy who is now openly suggesting that he’d absolve himself of responsibility for crimes he committed on the off chance anyone actually ends up producing proof of those crimes and seemingly resigned to the notion that, as Goldman put it over the weekend, “US trade policy is a conundrum.”
Continue reading Pardon Him
By James Howard Kunstler
Picking up a trope conceived months back, the melodrama of US governance is looking more and more like Herman Melville’s Moby Dick, with the FBI as the doomed ship Pequod, with R. Mueller as Captain Ahab and D.J. Trump as the white whale. In the classic book, of course, the wounded whale finally sends the ship to the bottom, crew and all (but one), and swims away to the freedom of the deep blue sea.
Forgive the barrage of movie metaphor, but there’s quite a bit of the 1944 classic Gaslight in here too — and sure, I’m not the first to notice. In that film, the wicked Charles Boyer manipulates his wife, played by Ingrid Bergman, into thinking she’s lost her marbles, in order to cover up his own crimes. That’s how I feel when I turn to The New York Times every morning — for instance, today’s edition, with the front-page story Trump Proxies Drop by Briefings on Use of F.B.I. Informant (which headline was actually changed on the landing page to Trump’s Lawyer and Chief of Staff Appear at Briefings on F.B.I.’s Russia Informant).
Continue reading Fishy Business