On Friday the “markets” were suddenly hit by two revelations. The first was Fed Chair, Jerome Powell’s heavily anticipated, with bated breath Jackson Hole pontification, for a calmed sea approach as to signal ever-the-more “extraordinary measures” of central banker largess were at the ready.
What they received was more in-line with: at the moment “we’ll wait and see.”
The petulant child known as “markets” was not too happy, but yet, appeared to give Mr. Powell a bit of leeway as to finish his discussion and remarks before rendering its final verdict and tantrum. But that was not too pass…
Before Mr. Powell appeared to make his closing remarks (I’ll garner he was still probably taking questions from the requisite salivating gaggle of reporters) China made its own retaliatory tit-for-tat tariffs known, releasing its own $75Billion dollar tariff outline.
The timing in regards to Mr. Powell’s speech and the Chinese release told one all they needed to know about what really matters in this trade war. i.e., what is the Fed going to do.
I can only surmise the politburo had two responses at the ready, one: if they’re (The Fed) going to signal a big cut – we’ll devalue the Yuan overnight “bigly.” Or: If they (again, the Fed) show indecision or, more of a “wait and see,” we’ll just issue tit-for-tat type tariffs to signify a more subtle tone for escalation.
The latter had the complete opposite effect. i.e., enter the President…
The timing for a response via the President set itself up in a way that one had to wonder if this entire thing was actually a movie script. For the President left absolutely no questions about not only how he viewed the current Fed and its Chair – but that he was serious in how he going to both frame his argument and call the fight. To wit:
Before Powell’s speech…
After Mr. Powell’s “we’ll see” speech…
After China spoke as Mr. Powell was probably still speaking…
Regardless of what one thinks, one thing is not up for discussion: He’s not going to mince words on how he views any and all parties in relationship to his trade stance. And that dear readers is something completely anathema to the calculations of any political appointee or politburo. i.e., it’s the issue that needs to be paid strict attention to for any insight.
If you view his (the President’s) response from a purely business stand-point for strategy and/or tactics – this does not shock or, surprise anyone. It’s actually par for the course in most daily business situations. Because, from a business standpoint: The response was pure blood-sport. And in business – all business is blood-sport. Period.
To view it only via the political?
It’s like bringing home a rescued fighting dog into a home filled with toy poodles and cats. i.e., you’re going to be surprised when you come home after your first long day at the office. But anyone who truly understands dogs will not.
And make no mistake about it – we are currently in a junk-yard dog-eat-dog steel-cage death-match when it comes to trade, with more than one foe that has to be addressed at any time. i.e., having the luxury of only having to take on one at a time is going to be just that – a luxury that’s all but impossible.
If you thought otherwise, then now is time to “get your mind right” as they say, because it’s going to get a whole lot worse before it gets better. But there’s a reason why this fight is needed. The reason?
Just look at the empty downtowns and once former self-reinforcing economies that were peppered across the entirety of the U.S. that are no longer here. Ever truly wonder why? I mean truly wonder. Here’s a hint…
Wall Street Globalization enabled via the political indemnification of outrageously one sided trade deals that allowed for the legal stripping of America’s manufacturing base under the guise of “free trade.”
It’s been nothing more than today’s global version of the political, financial and/or industrial “carpetbagger” on steroids. I also found it hysterically comical when watching, reading or listening to the somewhat unhinged responses being made via many of the so-called “smart-crowd” of Wall Street.
Ray Dalio even made his thoughts known expressing such wisdom as to inform those still watching CNBC™ the difference between negotiating with China’s “top down” system and the U.S.’s “bottom up.”
Maybe it’s just me, and I’m sure it is, but I think the street version of such “genius” is called the difference between a Communist regime – and a Capitalist one.
I use the term “street” because it appears something like that is no longer taught in schools. Or even considered on Wall Street any longer, which bears its own abhorrence.
Mr. Dalio has also been in front of as many cameras and microphones that’ll have him on lately to explain why “Now is the time to invest in China.” Maybe someone should say: Uh-oh, Ray. But I digress.
When it comes to farmers, workers, _________(fill in the blank) or better said, when it comes to Americans, they fully understand that there’s going to be pain, maybe a whole lot of it when it comes to renegotiating these trade imbalances. Both from a monetary standpoint, as well as a competitive one.
But they’ve been paying for these imbalances daily for decades and have had to live with the consequences as their standard of living has been lowered so third-world back water countries that don’t follow 1/10 of the environmental, safety and other concerns are allowed to ship competing products at fractions on the $dollar.
Think I’m off base? Think of it this way…
It has allowed people like Warren Buffett to play his ukulele to a sycophantic chorus of mainstream business/financial media outlets during his shareholder meetings – as he ships another American factory producing an iconic, once typical, American staple brand (Fruit of the Loom®) out of Kentucky to relocate in Mexico with no prior warning.
But hey, he’s jolly “Uncle Warren, right? Right?
But that is just one example in 2014 of the long, long list that has been ever-increasing for decades. Need I mention GE™? Well, since I just did…
Wasn’t Jeff Immelt just wonderful as a CEO? Or how’d he do with that whole “Jobs Czar” thingy? Not all that well, but hey, he must have his reasons right?
Listen, who can blame him for the aftermath that’s resulted since his tenure at GE. I mean, he was so busy, he didn’t even know there was a completely extra second corporate funded jet trailing his when traveling – for 16 years! You know, just “in case” he developed a flat tire I guess during a
junket business development meeting.
Dear Jeff: How are those GE share prices holding on? Still flying like your planes? Sorry, too soon? If you would like to know, just call one of your many former employees, or current shareholders for clues. I’ll garner they’ll be happy to let you know. I’m just sure of it.
Listen: I’m fully confident that the American workforce and its entrepreneurs are not made up like the caricatures of doe-eyed next-in-rotation fund-manager set that’s paraded across mainstream media every-time there’s some form of sell-off in the markets.
We all know there’s going to be some real pain coming from all of this. Although I can only speak for myself, in discussions I’ve had with others, they are fully cognizant of the facts, and of the mindset – it’s needed, and badly. And more to the point: and now!
The American worker, entrepreneur and more can compete against anyone when the tables for that competition are set to a fair and equitable framework. Sometimes, just because of our founding principles (Which are: capitalistic, not: communistic. Regardless of what they preach and teach in schools today) we’ve overcame some consequential impediments.
But America is sick and tired, actually, more like completely fed-up and infuriatingly ticked-off on the current status quo that “Wall Street” along with the Fed and others has enabled to fester into this perverted spawn known as “globalism.” All at The U.S.’s expense.
I may speak for myself, but I know I’m not alone. We’re through with it, and we’re ready now, more than ever, to roll up our sleeves and get back to work doing it by ourselves if need be, or with others that want to trade fairly.
“Wall Street” and the “globalized” finance and political crowd are about to feel what mainstreet America has been feeling everyday for decades.
But as the old saying goes: Better to pull the band-aid off now, all at once. rather than live the daily cuts America’s downtowns and mainstreets have been living day after day for decades.
That price has already been paid.
© 2019 Mark St.Cyr