Trump Winning; E.U. Buckles
Dear Rundown Reader,
Our geopolitical future is murky.
Corporate America is not happy about Trump’s trade war, citing increased costs and warning of higher prices for consumers.
Coca-Cola joined automakers in that camp this week.
Meanwhile, the E.U. buckled Wednesday and conceded to help ease trade tensions with the U.S.
It seems Trump is actually winning… For now at least.
Today’s Rundown unpacks everything you need to know about what could be next as the trade war plays out.
But first a few letters from followers:
“I’m willing to try it (tightening our belts) just exactly where it’ll take as as hard to say.”
“Yep, I think most would tighten their belts, for a while.”
“Yes, I’ll tighten my belt. It would be nice if others did the same… Been carrying them for decades and my back is getting REAL sore!”
Trump’s cash bailout for farmers have some calling it a veiled form of social welfare. Do you agree? Is that tightening the belt? Who pays for this bailout?
Now the other side’s take:
“Whoever supports tariffs is one strange cookie, they do nothing but cause investors to flee the markets and cause unnecessary fear in the economy.”
“This is a dangerous path, and the common folks are NOT going to be winners. I’m fairly sure no one with this ‘tariffs good’ POV cares about such matters. Any claim held that this is for the ‘greater good’ is just self-serving spin and marketing jargon.”
Thanks for the letters. Keep it coming.
Your Rundown for Thursday, July 26, 2018…
A Tag-Team Smackdown Coming for China?
A trade war ceasefire is on.
In part at least…
President Trump and the E.U.’s Jean-Claude Juncker met Wednesday and in a shocking turn of events it looks like Trump’s winning the trade war.
Bloomberg reports, the E.U. agreed to “bolster transatlantic economic ties and threw in a vow to buy more American soybeans.”
That is if Trump eliminates tariffs recently imposed on a swath of Eurozone goods.
The deal also commits the E.U. to buying more liquefied natural gas from the U.S., reports The Wall Street Journal.
Score update… White House – 1, E.U. – 0
Speaking in a joint press conference Wednesday President Trump stated, the U.S. and E.U. would work to “reduce differences on regulatory standards between the two economies.”
This would also include a hold on any new tariffs. “A nod to Mr. Trump’s threats to apply tariffs on imported cars,” notes The Journal.
Will the ceasefire hold?
As it stands today, that’s hard to tell. A schedule for completing the deal is not outlined, and we’re soley operating on faith. Faith is not fact.
Trump could stub his toe on a piece of IKEA furniture tomorrow and tariffs could be back on.
We’ll have to wait and see how this plays out.
The next layer of this deal is what it means for China.
Some experts believe the deal signifies a new tag-team partnership with Trump arming up allies to put the screws to China.
Krishna Guha, vice chairman at Evercore, states, “it is at least as likely that the U.S. is reducing trade tension with its allies in order to improve its leverage and staying power in what we continue to fear will be a prolonged trial of strength with Beijing,” reports Bloomberg.
The other camp claims Trump’s ability to negotiate is why he’s winning, essentially arguing that threats work.
Yes, they do. And sometimes they blow up in your face.
Trump’s winning the trade war today, but this war is far from over.
Now, turning to the markets this morning…
Market Rundown for Thurs., July 26
Yield on the 10-Year Treasury stays flat at 2.965% this morning, up 0.029.
Bears love citing a flattened yield curve as the new harbinger of doom, yet the bull marches on. Any concern on your end? Write in and tell us.
S&P 500 futures are down 5.00 at 2,836.
Trade war concessions are made and futures dip. The trade war ratchets up and futures rise. Welcome to the year of irrationality… How’s your portfolio holding up. Winning, losing?
Oil continues its prolonged stay under $70, now sitting at $69.21.
Gold’s down $3.90 to $1,227.
Bitcoin goes for $8,192 this morning, according to CoinDesk. Day 2 above 8K. 48 days left before we can trust this price.
We’ll talk again on Friday.
For the Rundown,