TRUMP TARIFFS & TRADE WARS

OBSERVATIONS: AN EPOCHAL EVENT & VESSEL OF DIVINE INTERVENTION?

President Donald Trump’s election victory on November 5 was an epochal event in American history. The American people gave Trump a mandate with almost 51% of the vote. He received over 73 million votes, more than four million more than his opponent. A new American Coalition of traditional Republican voters united with lower middle class, working class, African Americans, Hispanics, and white women — provided the monumental victory. At such a significant time, it is important to consider how America arrived at such a historical moment and what must be accomplished in the years ahead.

Retrospectively, Americans must understand how they came to this place in their history. According to the exit polls, a whopping 72% of Americans understood that their country was on the wrong path. America’s political ideology, culture, and traditions were under assault by the so-called “progressive” wing of the Democrat Party. The Biden-Harris administration weakened the economy, caused inflation rates not seen since the 1970s, opened U.S. borders to some 15 million people, facilitated their relocation throughout the U.S. and so weaponized the legal system to wage lawfare against Trump, his major political and legal advisors, and against many of his supporters.

In the realm of foreign and defense policy, the Biden Admin is accountable for the debacle of the withdrawal from Afghanistan; the failure to deter the war in Ukraine; the horrific attacks against Israel on October 7, 2023; and the subsequent wars it unleashed. Significantly, the Biden-Harris regime failed to deter Communist China’s hyper-aggression directed against U.S. allies like the Philippines and partners like Taiwan, and most importantly against the American people through the deaths of a quarter of a million of our fellow citizens from Chinese-provided fentanyl and the intellectual capture of so many of the American elite who parrot the Chinese Communist Party’s (CCP) policy positions to advance the CCP’s interests.

The deeper cause of how America arrived at this point is the embrace of Marxism by the Democratic Party and thus its increasing totalitarianism and alienation from the American people. In its embrace of this ideology, the Democrat Party demonstrated that it had completely become detached from the American experience, ideology, history and culture in its effort to transform America into a one-party state on the road to totalitarianism. The American people saw this effort to continue the “fundamental transformation” of America — as Obama identified it on the eve of the 2008 election — and rejected it.

Prospectively, there is so much that must be accomplished to repair the great costs that the Biden-Harris administration has inflicted upon the American people. As Trump has already stated in the immediate aftermath of his historic election victory, his first actions will be to “dismantle the Deep State and return power to the American People.” His stated goal is to return the government to the people, not the unelected bureaucrats that have installed themselves as a fourth branch of government. As such, the reform of government employment policies will be a major objective for his administration.

Likewise, a second Trump administration will address inflation, uncontrolled illegal immigration, economic stagnation and the enormous national debt that risks destroying the Republic. The U.S. is in dire fiscal and economic circumstances and Trump will have to confront these issues immediately as they will be thrust upon him on January 20th.

In foreign and defense policy, the situation is just as dire. U.S. conventional and nuclear forces must be strengthened. The defense industrial base must be restored to meet the threat from Communist China. The principal danger, the CCP, must be defeated by cutting it off from U.S. trade and investment — decoupling must be pursued with vigor. Furthermore, all Chinese entities should be prohibited from raising capital in U.S. markets. It’s hyper-aggression must be checked by credible U.S. military power in conjunction with its allies and partners, like Japan, Korea, Australia, Thailand, India, and Taiwan.

Increasingly, Americans recognize that the CCP is illegitimate. It is the product of Soviet imperialism,

and so is a colonial government ruling the Chinese people. Xi Jinping has no more legitimacy to rule the great Chinese people than we do. The second Trump administration will need to use the bully pulpit of our nation to inform the world of the CCP’s illegitimate control over the people of China.

Trump’s victory also provides the opportunity to save more than America.  It provides the chance to defend Western civilization, upon which America’s foundation, history, politics, culture and intellectual life are anchored. The Progressive Left’s (that is, Communists’) attack against America’s political ideology, history and culture is part of a broader effort to destroy Western civilization. Initially, the left undermined it through the “ideas industry,” universities, K-12 education, think tanks, media, social media, television and film. Then they labored hammer and tongs to overthrow it. Trump has the opportunity to repair the tremendous damage that the left has done carefully and deliberately to Western civilization. Working with European, British, Australian, New Zealand and Canadian allies and other people around the world who value the contributions of Western civilization, Trump can begin to fix the damage.

Under Trump, the direction of the nation is clear — as it is for any ship embarking on a new journey.  The ship of America must be sounded, the damage repaired and a renewed course, like the ones originally charted by the celestial constellations that guided Washington, Jackson, Lincoln, Theodore Roosevelt and Reagan, must be set.  If we stay true to our constitutional principles, America will once again have a fair wind and a following sea as it returns to its political ideology, principles and traditions. That course opens the door to the best years in America’s history.

The American people understood their plight and were searching for decades for an effective leader, only to be disappointed and frustrated with Republican Party candidates, which led to a profound alienation of the base from the Party establishment. Trump had brilliant careers in real estate and television before he entered politics. But he chose to throw his hat into the ring, because he identified with what was happening to the American people.

In turn, the American people saw clearly that Trump was the vessel that would enact their course change.  His tremendous courage, acumen, charisma, indefatigable physical stamina, thick skin, and political instincts are without parallel in modern American history. As such, the American people have unquestionably placed their trust in him to empower the saving of America. Trump has accepted that sacred challenge. He has excelled and will do so again in this colossal task, because it is evident to Americans that he loves America, the American people, and is a fighter.  The American people gave Trump his victory, because they saw that Trump’s triumph is America’s.

James Fanell and Bradley Thayer – American Greatness,

WHAT YOU NEED TO KNOW!

THE FED IS TRAPPED – AGAIN!

It wasn’t that long ago that the Fed remained on the sidelines while Inflation raged, explaining that Inflation was only Transitory. We all know how that turned out.

Well the Fed is clearly again in a position of their own doing as they appear to be between a “rock and hard place”! With The Fed funds rate still at 4.75% and the trajectory of cuts rapidly diminishing, US financial conditions are basically as ‘loose’ as they were before the Fed rate-hiking cycle started. (Don’t tell me the Fed isn’t political).

How do you fight Inflation this way??

RESEARCH

1- TRUMP TARIFFS & TRADE WARS

• • Though Tariffs are paid by importers, studies show that doesn’t necessarily translate into direct consumer price inflation.
  • Trump believes that the US Consumer is the winning Trump Card. Without it China and other export lead mercantilist nations are seriously jeopardized.
  • The Trump Card is the strategic play to start a manufacturing reshoring shift back to the US.
  • This shift will result in jobs, tax revenues and potentially ignite a revitalized US Investment and Re-Privatization paradigm.
  • This is a big gamble by the new Trump Administration, but they view the current mercantilist driven debt path as being an existential threat to US’ survival.

2- TARIFFS, MERCHANDISING & “BIG 6” MARGINS

• • TARIFFS: The word “tariff” and its derivatives appeared in more earnings call transcripts in the latest quarter at 1,969 globally. This is higher than at any time since the eve of the pandemic in the first quarter of 2020. This is far below the peak of more than 6,000 CEOs who wanted to talk about tariffs in the third quarter of 2019, when the Trump 1.0 measures were having their effect. So companies are not fully prepared for another trade war.
  • AFFORDABILITY: What the Q3 earnings calls pointed out is that consumer-facing companies remain very worried about making their products affordable for customers. By Goldman’s count, mentions of “affordability” in earnings calls have reached a new high in Q3.
  • PROFIT: Company profits are acting as a great protector against disappointing economic growth.
  • MARGINS: Margins appear to be the Mag-7 real secret sauce. While profit margins accounted for 12.3 percentage points or roughly half of the Big Six’s 24.5% earnings growth. High-margin companies receive a far higher valuation than they have historically, some 2.5 standard deviations above the 35-year norm. As these companies are continuing to surprise on the upside and widen their margins, the money invested in them so far has been well rewarded.

It’s a little hard to imagine this continuing!

DEVELOPMENTS TO WATCH

THE PLIGHT OF OUR FARMERS & US AGRICULTURE CONTINUES TO GO UNREPORTED!

• • PRICE DECLINES: Price declines have been especially acute for corn and soybeans, two staples of the Midwest agriculture sector.
    • The most recent USDA forecast expects net cash farm income to slip by 7.2% in 2024, driven by a 27.7% decline in crop cash receipts. 
    • If realized, net farm income would fall more than 25% below its recent peak in 2022.
  • SUSTAINABLE PRODUCTIVITY INCREASES:  Real farm output, which includes crop production, animal production and aquaculture, rose 24% in Q2-2024 over the same quarter in 2019. 
    • Farm output is currently at its highest recorded level since at least 1997, a testament to the resilience of the nation’s farmers and ranchers.
  • GLOBAL DEMAND: Global appetite for U.S. agricultural products may lessen if the dollar appreciates against other currencies (like we currently expect).
  • TARIFFS: The increased likelihood of higher tariffs on U.S. imports under the Trump Administration may result in retaliatory tariffs from our trading partners, putting agricultural exports at risk.

UNITED NATIONS COP29 IS “DEADER THAN A DOORNAIL!”

COP29: “Ministers told to ‘cut theatrics’, ‘move faster’ and ‘get down to business’

amid growing frustration at slow progress” — The Guardian

• • “Cut the theatrics,” UN climate chief Simon Steele told country representatives in Baku, after talks over the key issue of climate finance stalled, with developing countries insisting they need over $1tn a year and richer nations balking at the cost.
  • There was a lot of frustration at COP29, with progress on a climate finance agreement very slow.  Shirley Matheson, WWF global NDC enhancement lead, said: “There’s a lot of frustration in the room. There’s a lot of anxiety. There’s a need for parties to really get together and work through this.”
  • The internationally agreed goal to keep the world’s temperature rise below 1.5C is now “Deader than a Doornail”, climate scientists have said. Three of the five leading research groups monitoring global temperatures consider 2024 on track to be at least 1.5C (2.7F) hotter than pre-industrial times.

GLOBAL ECONOMIC REPORTING

HOUSING STARTS / BUILDING PERMITS

• • Privately-owned US Housing Starts fell by 3.1% in October from prior 1.353mln to 1.311mln, beneath the 1.33mln forecast. 
  • Single-family housing starts in October fell 6.9% to 970,000. 
  • Privately owned building permits declined by 0.6% from 1.425mln to 1.416mln, beneath the 1.43mln forecast. 

EMPLOYMENT – THE MESSAGE IN JOB SWITCHERS & QUITS

• • The “switcher’s premium” hit an all-time high in 2022 as the Great Resignation put negotiating power emphatically in the hands of employees. That’s declined; it’s now lower than the norm for the last quarter-century, and earlier this year even went negative.
  • The JOLTS is now back below its norm with the quit rate now where it was in early 2008, when the economy was beginning to weaken alarmingly. This is further evidence that workers are finding that the labor market is turning against them