Economic Chaos Erupts! – Global Manufacturing Plunges, The Trade War Expands And The Nasdaq Enters Correction Territory

The global economic slowdown is really starting to accelerate.  Just within the past few days, we have gotten more really awful global manufacturing numbers, the trade war has expanded to more nations, and the Nasdaq has officially entered correction territory.  We have not witnessed this sort of global economic environment since the Great Recession, and if the economic chaos continues to escalate it won’t take too much to spark a brand new financial crisis.  Of course the global financial system is far more vulnerable than it was back in 2008, and so if we stay on the path that we are currently on we could be facing a nightmare scenario very rapidly.

Let’s talk about the manufacturing numbers first.  The numbers coming out of Germany are already at a crisis level, and manufacturing is also now contracting in Japan, South Korea and China as well.

Overall, global manufacturing as a whole has now fallen into contraction territory for the first time in seven years

Global manufacturing was the weakest since 2012 last month, a victim of mounting trade tensions and further reason to worry that the world economy is weakening.

With softness in Germany, Japan, the U.K. — as well as the lowest U.S. result in a decade — IHS Markit’s global Purchasing Managers Index fell to 49.8 in May, below the 50 level that divides expansion from contraction.

The reports underscore the growing threat posed by the escalating U.S.-China trade war, and they coincided with a fresh warning from Wall Street about recession risks.

The reason why so many people are freaking out about these numbers is because this is exactly what we would expect to see if we were entering a global recession.

Meanwhile, global financial markets are looking increasingly shaky.  On Monday, the Nasdaq fell another 120 points and it has now officially entered correction territory

Stocks ended mostly lower Monday, June’s first day of trading, amid reports that the U.S. government is planning to target a host of big tech companies with antitrust and business practice probes. Shares of Alphabet, Amazon, Facebook and Apple all weighed on the market during Monday’s session.

The Nasdaq dropped 1.6% to enter correction territory, closing more than 10% below its record high set in late April.

The term “correction territory” might not mean a lot to many of you, so let me put what is happening in terms you may understand.

On Monday alone, America’s most prominent tech stocks lost approximately 150 billion dollars in value.  It looks like the Trump administration is getting ready to go to war with the big tech companies, and that is really, really bad news for tech investors.  The following comes from Breitbart

The Masters of the Universe got hit hard by investors on Monday. Like $150 billion hard.

Shares of the top tech giants fell sharply on Monday after reports that U.S. antitrust regulators had divided up oversight of the sector, with the Department of Justice assuming responsibility for Alphabet and Apple and the Federal Trade Commission taking on Facebook and Amazon. This triggered fears that the government could mount challenges to the business models of the companies.

Shares of Alphabet dived 6.1 percent on Monday after the Wall Street Journal reported that the Justice Department is in the early stage of preparing an antitrust probe of the company. Reuters reported that the Department of Justice is also looking into Apple’s business for possible antitrust violations.

Speaking of war, our trade conflict with China continues to escalate.  The mainstream media hasn’t been talking much about it, but apparently the Chinese have decided to put purchases of U.S. soybeans “on hold” until a trade agreement is reached…

China, the world’s largest soybean buyer, has put purchases of American supplies on hold after the trade war between Washington and Beijing escalated, according to people familiar with the matter.

State-grain buyers haven’t received any further orders to continue with the so-called goodwill buying and don’t expect that to happen given the lack of agreement in trade negotiations, said the people, who asked not to be named because the information is private.

U.S. soybean farmers have been sitting on unprecedented amounts of soybeans in hopes that an end to the trade war would raise prices.

But instead, demand for U.S. soybeans is going to go through the floor, and this could potentially force thousands of soybean farmers into bankruptcy.

And in addition to our trade war with China, the Trump administration has apparently decided that now is a good time to start a trade war with Mexico

From produce to cars, a wide variety of Mexican goods could become more expensive if Trump follows through on his threat to hit Mexican imports with tariffs that soon could climb to 25%. Trump wants to pressure Mexico into doing more to halt the flow of Central American migrants to the U.S. via the Mexican border.

The tariffs, set to begin June 10, would gradually climb to 25% on Oct. 1 if Mexico doesn’t take steps “to dramatically reduce or eliminate” the number of migrants, Trump said Thursday. Such a strategy would hurt American shoppers, the economy and stocks, experts say, just as U.S. growth is slowing and the threat of more tariffs on Chinese imports looms larger.

At least in this case the U.S. and Mexico are still talking, and so perhaps some kind of resolution can be reached.

On top of everything else, the Trump administration has also just decided to add India to the trade war as well

Mr. Trump on Friday said India would be removed from the U.S.’s privileged-trading program called the Generalized System of Preferences on Wednesday. Under the decadeslong program meant for some developing economies, the U.S. had allowed India to avoid tariffs on certain exports to the U.S. in the interest of promoting tighter trade ties and development.

India, the U.S.’s ninth-largest trading partner, is a top beneficiary of the GSP program. Mr. Trump’s move will add tariffs of as much as 7% on Indian exports of goods like chemicals, auto parts and tableware to the U.S., which in 2018 accounted for more than 11%, or $6.3 billion, of India’s total exports of goods valued at $54.4 billion, according to the Congressional Research Service, a research agency for the U.S. Congress.

A global trade war is going to be incredibly painful for everyone, and this is all happening at a time when the global economy was already starting to slow down substantially.

Here in the United States, a lot of businesses are really starting to notice a big decline in economic activity.  Here is just one example that was published on Zero Hedge earlier today…

Down here, in Texas, I am seeing a big drop in economic activity over the last 6 months. Our healthcare businesses’ volume over this period is at 629, down from 770, year-on-year, almost a 20% decline, and the worst six month decline in our 15 year history. We have been pulling out all of the stops for business development, cutting overhead, and running all the QC traps to determine if it is something within our business, within our local market, within our industry, or having to do with the economy in general.

In this period, we have seen seven competitors go out of business in our city. We have recently confirmed similar experiences with colleagues in Kentucky, Colorado, and elsewhere in Texas. One of them asked me, “If this is not temporary, what would the strategy be?” My response was, “Hunker in the bunker and wait for everyone else to die.”

This is what we have all been preparing for, and things are going to get progressively tougher in the months ahead.

Unfortunately, most Americans are completely and totally clueless about what is ahead.  Today, 59 percent of all Americans are living paycheck to paycheck, and the truth is that the vast majority of us are entirely unprepared to go through another recession.

And of course many believe that what we are facing is going to be much worse than just a “recession”.  A perfect storm is rapidly coming together, and the chaos that we have seen so far is nothing compared to what is rapidly approaching.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

U.S. Stocks Have Now Fallen For 5 Weeks In A Row – That Is The Worst Stock Market Streak In Almost 8 Years

We haven’t seen stock prices slide like this in a long time, and if this keeps up we could soon be looking at an avalanche.  Our rapidly escalating trade war with China and more bad U.S. economic numbers pushed stocks down once again this week, and at this point the Dow Industrial Average has now fallen for five weeks in a row.  We haven’t seen a losing streak this long since June 2011, and it is yet another indication that we have reached a major turning point.  Some positive comments about China from President Trump on Friday helped to lift stocks a little, but it wasn’t enough to put stocks into the green for the week.  Of course the S&P 500 and the Nasdaq are both working on losing streaks as well.  According to CNBC, both of them have now declined for three weeks in a row…

But Friday’s gains were not enough to offset this week’s losses. The Dow dropped 0.7% this week to post its fifth consecutive weekly decline, its longest streak since 2011. The S&P 500 and Nasdaq fell a third straight week of losses, their longest slide since December 2018. The weekly losses come at a time when investors are growing more convinced that the trade war will take longer than expected to conclude and could hurt the economy.

Unfortunately, things are not likely to turn around any time soon.  As I discussed yesterday, there is not much optimism that a trade deal with China will happen any time in the foreseeable future, and that is going to continually weigh on the economy.

Meanwhile, we continue to get more numbers that indicate that the U.S. economy is starting to slow down significantly.  On Friday, a key survey of U.S. manufacturing activity plunged to the lowest level in more than 9 years

An IHS Markit “flash” survey of U.S. manufacturers fell to a nine-and-a-half-year low of 50.6 this month from 52.6 in April. Manufacturing conditions have been soft for months.

Even more ominous, was the firm’s survey of U.S. service-oriented companies such as banks and retailers. These slipped to a 39-month low of 50.8 from 52.7.

Lately you have heard me talk about a lot of things that haven’t happened in “8 years” or “9 years”.  In so many areas, we are seeing numbers that we have not seen since the last recession, and many believe that the worst is yet to come.

And actually things are even worse for the retail industry than they were at any point during the last recession.  We are already on pace to absolutely shatter the all-time record for store closings in a single year, and on Friday we learned that yet another retail chain is shutting down all of their stores

In another sign of traditional retailers’ struggles, Topshop plans to close all 11 of its US stores as its parent company seeks to restructure after filing for bankruptcy protection.

Arcadia Group, the London-based owner of fast-fashion chain Topshop Topman, said it was facing “unprecedented” market conditions in the retail sector.

Day after day we just continue to get more numbers that tell us that the U.S. economy is heading in the wrong direction.

And we received more confirmation of that fact when J.P. Morgan economists dramatically slashed their U.S. GDP forecast for the second quarter of this year…

J.P. Morgan economists said they now see much slower second-quarter growth of just 1%, down from their prior forecast of 2.25% and way off the 3.2% reported in the first quarter.

“The April durable goods report was bad, particularly the details relating to capital goods orders and shipments. Coming on the heels of last week’s crummy April retail sales report, it suggests second quarter activity growth is sharply downshifting from the first quarter pace, ” the economists wrote.

Meanwhile, more troubling economic news continues to come in from all over the globe.  We just learned that Mexico’s economy is officially shrinking, and the Chinese government was just forced to take over an insolvent bank for the first time ever

China’s financial regulators said on Friday the country’s banking and insurance regulator and the central bank, will take control of the small, troubled inner Mongolia-based Baoshang Bank due to the serious credit risks it poses. The regulator’s control of Baoshang will last for a year starting on Friday, the People’s Bank of China (PBOC) and China Banking and Insurance Regulatory Commission (CBIRC) said on their websites.

The stage is being set for the sort of global economic meltdown that we have been anticipating.  Of course if the U.S. and China were able to pull off a miracle and agree to a trade deal, that would be a tremendous boost to both the financial markets and the entire global economy.  But the only way that is going to happen is if one side or the other totally caves in.  The Chinese government has made a really big deal about the fact that they are not going to move from their current positions, and so the only way that a deal will happen at this point is if Donald Trump decides to wave a white flag and completely surrender to the Chinese.

What do you think the odds are of that happening?

But as the U.S. economy continues to deteriorate, the pressure on Trump to “do something” is going to be immense.

So we shall see what happens.  For now global financial markets are slowly sliding downhill, but eventually patience is going to run out and at that point we could see a mad dash for the exits.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Stocks And Bonds Are Both Sending The Exact Same Message As Wall Street Braces For A Very Uncertain Future

Slowly but surely, Wall Street is starting to understand that the good times are over.  For months, most investors were absolutely convinced that the U.S. and China would be able to work out a trade deal because the alternative would simply be too painful for both sides.  But now trade talks are completely dead, and Wall Street is starting to come to grips with the reality that we really are facing a very long trade war.  Unless there is a major miracle, this trade war with China is likely to last until the presidential election in 2020, and if Trump wins it could go a lot longer than that.  And of course this comes at a time when the U.S. economy is already slowing down dramatically.  The economic optimism of the last couple of years is being replaced by a deep sense of gloom, and we are starting to see this reflected in the behavior of the markets.

For example, on Thursday we witnessed “dramatic” moves in the bond market as investors engaged in a rush to safety…

Investors rushed into the safety of bonds Thursday and dumped stocks, as it appeared the trade war could be prolonged and more painful for the world economy than expected.

The moves in the bond market were dramatic, with the 10-year Treasury yield dropping about 8 basis points in its biggest one-day move since April 1. At the same, traders in fed funds futures bet on the Fed making two quarter-point rate cuts by the middle of next year and possibly a third in the second half of 2020.

Meanwhile, stocks continued to fall as well, although some positive remarks from President Trump caused a bump late in the day…

Wall Street is coming to grips with the idea that the US-China trade war will get worse before it gets better.

The Dow dropped 286 points, or 1.1%, on Thursday on fears about the tariff battle slowing global growth and dinging corporate profits. The index recovered somewhat toward the end of the day — at one point it was down nearly 450 points.

Unfortunately, stocks and bonds are both telling us the exact same thing.

According to the head of short U.S. rate strategy at Bank of America Merrill Lynch, U.S. financial markets are indicating that “we’re moving toward a worst case scenario, and that could persist for quite some time”

“The market is obviously telling you that it’s quite worried about some of the incoming data, including the PMIs this morning, the ongoing trade rhetoric and the move in risk assets,” said Mark Cabana, head of short U.S. rate strategy at Bank of America Merrill Lynch. Cabana said the market now believes a full blown trade war is coming, with taxes on all of China’s products.

“The concern the market has right now is that we’re moving toward a worst case scenario, and that could persist for quite some time. If that’s the case, then the market is believing the [weak] economic data, and the Fed will likely need to respond to that by trying to offset and prevent a recession,” he said.

Of course there is still enough hope in the marketplace to keep the floor from completely falling out from underneath investors, but at this point even CNBC’s Jim Cramer is admitting that “banking on hope” is not a good strategy…

“If you buy right now on anything other than a slammed, super-growth stock down on a general market pullback, well you’re banking on hope, and hope should never be a part of the equation,” the “Mad Money” host said.

From this point forward, we should start to see things escalate pretty quickly.

Relations with China are going to continue to deteriorate, and problems between the United States and China are going to expand well beyond the economic sphere.

But for the immediate future, most of the focus will be on the economic consequences of the trade war, and most of the “experts” are starting to openly admit that those consequences are going to be quite painful.  The following comes from CNN

“You can’t have the world’s two largest economies in a long, drawn-out mutually destructive trade war and not slow the global economy,” said Art Hogan, chief market strategist at National Securities Corporation.

Of course Hogan is 100 percent correct.  The trade war is going to hurt all of us economically, and very disturbing numbers are rolling in on a daily basis now.  For example, we just learned that new manufacturing orders just fell for the first time since the last recession

American business activity tumbled to a three-year low in May due in large part to concerns about tariffs, according to a report released on Thursday by IHS Markit. New manufacturing orders declined for the first time since August 2009.

And as I pointed out the other day, global exports have also fallen to the lowest level that we have seen since 2009.

Once the dominoes start falling, all of our economic and financial bubbles could start bursting at the same time, and that could potentially create a crisis unlike anything that any of us have ever seen before.

My wife and I are both feeling a tremendous sense of urgency right now.  So many of the things that we have been waiting and watching for are starting to unfold.

Many believed that 2019 was going to represent a major turning point, and that appears to be exactly what is happening.

So hold on to your hats, because the remainder of this year is likely to be extremely “interesting”.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Investors May Be Laughing At China’s “People’s War” Now, But Here Is Why They Won’t Be Laughing For Long…

Wall Street is still treating this crisis as a temporary trade dispute, but the Chinese see things completely differently.  At this point, the narrative in China is that the U.S. has deeply insulted their national honor, and every angry statement from U.S. officials is just digging the knife in a little bit deeper.  The Chinese began their retaliation to Trump’s new tariffs with some new tariffs of their own, but they won’t be stopping there.  As I stated yesterday, China literally has hundreds of different ways that they can hurt us, and the longer this crisis goes the more likely it is that they will utilize all of those weapons.

And we got a hint of what might be coming on Tuesday.  An editorial published in government-run media outlets boldly proclaimed that the conflict between the United States and China was now a “people’s war”

In a series of opinion pieces and on-air editorials, the country’s government-controlled media used strong and nationalistic language to reassure a shaky domestic audience that China’s economy can weather the higher tariffs imposed last Friday by US President Donald Trump.

One strongly worded editorial published by both the Xinhua News Agency and the People’s Daily, the Communist Party mouthpiece, said that while the US was fighting for “greed and arrogance,” China fought to defend “its legitimate rights and interests.”

“The trade war in the United States is the creation of one person and his administration who have swept along the entire population of the country. Whereas the entire country and all the people of China are being threatened. For us, this is a real ‘people’s war,'” the editorial said.

And similar sentiments were expressed on state-owned television during a prime time broadcast

During a prime time broadcast on Monday, CNN reported that the state broadcaster CCTV also aired a statement saying that China would “fight for a new world.”

“As President Xi Jinping pointed out, the Chinese economy is a sea, not a small pond,” anchor Kang Hui said on his 7 p.m. news show. “A rainstorm can destroy a small pond, but it cannot harm the sea. After numerous storms, the sea is still there.” Hui concluded echoing a popular refrain, that “China…doesn’t want to fight, but it is not afraid to fight.”

Amazingly, U.S. stocks actually went up on Tuesday following these remarks.  Apparently investors think that China’s new “people’s war” is pretty funny.

But they won’t be laughing when China starts playing hardball with us.

For example, how much pressure do you think that President Trump will feel when the Chinese suddenly announce a national boycott of U.S. goods in the middle of Trump’s re-election campaign?

As CNBC has pointed out, China has implemented such boycotts numerous times before…

At the height of the South China Sea conflict in 2016, China administered an unofficial boycott of mangoes and bananas from the Philippines. The region is still in dispute.

Years before that, China boycotted salmon from Norway during a hotly contested human rights issue, and Norway eventually relented.

Five years back, the world’s second largest economy also boycotted Japanese cars and minerals over a territorial dispute in the East China Sea.

In addition, a massive Chinese boycott of South Korean goods in 2017 turned out to be an immense blow to the South Korean economy.

What do you think that it would do to the U.S. economy and to U.S. financial markets if China suddenly did the same thing to us?

It would be absolute chaos, and Trump would feel an unbelievable amount of pressure to cave in because his re-election prospects would be diminishing with each passing day.

This is a strategic advantage that the Chinese have over Trump.  They don’t have to worry about the calendar, but Trump does.

And Trump could not hit back by declaring a national boycott of Chinese goods because he does not have that authority.  He could ask his supporters to conduct such a boycott, and undoubtedly some of them would go along, but most Americans would just continue to shop the way that they are shopping right now.

If large U.S. corporations lose all access to the second largest economy in the world, it would be a complete and utter disaster for them.  As Matt Egan has pointed out, the Chinese market has become “a critical growth engine” for some of the largest U.S. brands…

China’s booming middle class is a critical growth engine for Boeing (BA), Apple, Nike (NKE) and other American brands. China is expected to keep growing in importance as a buyer. And America’s insatiable appetite for cheap goods has created a Chinese factory juggernaut that employs millions of workers.

The world’s two largest economies are each other’s biggest trading partners. Nearly $700 billion in goods were sent between China and the United States in 2018 alone. And with $1.1 trillion of Treasuries, China is America’s largest foreign creditor.

In 2018, Apple reported total revenue of 265.6 billion dollars.

51 billion dollars of that total came from China.

Apple is extremely vulnerable, and so are dozens of other large U.S. corporations.

Out in the middle of the country, many farmers are already almost mad enough to pick up their pitchforks and march on Washington because of this trade war.

As a result of our deteriorating trade relationship, soybean exports from the U.S. to China have fallen from $14 billion in 2016 to $12 billion in 2017 to just 3.1 billion in 2018.

Desperately hoping that things would turn around, U.S. soybean farmers have stockpiled an all-time record of almost 1 billion bushels of soybeans

Since December, when U.S. and China negotiators called a truce to tariffs and began signaling that an agreement might be reached, soybean farmers had been holding out hope that sales to China would resume, said Todd Hultman, an Omaha-based grain market analyst with agriculture market data provider DTN. In the meantime, the farmers had been storing a record stockpile of nearly 1 billion bushels.

The latest news of a new round of tariffs, with no agreement in sight, spooked the financial markets and some farmers who had been tentatively optimistic.

And now that trade negotiations have completely fallen apart, the price of soybeans is falling like a rock.  In fact, we just saw it hit the lowest level in a decade.

Needless to say, the American Soybean Association is not at all pleased with the latest developments…

In a statement Monday, the American Soybean Association reacted with frustration edged with anxiety.

“The sentiment out in farm country is getting grimmer by the day,” said John Heisdorffer, a soybean farmer in Keota, Iowa, who is chairman of the ASA. “Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting.”

Of course soybean farmers are far from alone.  Thousands upon thousands of farmers all over America are on the brink of financial ruin, and one J.P. Morgan analyst is describing it as a “perfect storm” for U.S. farmers…

The state of American agriculture is “rapidly deteriorating” into crisis, J.P. Morgan said Tuesday, due to three factors: declining exports, a poor crop of corn and soybeans and the trade war with China.

“Overall, this is a perfect storm for US farmers,” J.P. Morgan analyst Ann Duignan said in a note to investors.

It is funny how that term keeps popping up.  Without a doubt, a perfect storm is rapidly coming together for the entire U.S. economy, but most Americans are still in denial about what is happening.

As for this “trade dispute”, the truth is that it isn’t going to go away any time soon.

In fact, a senior official in the Trump administration just told Axios that “he can’t see the fight getting resolved before the end of the year”…

A senior administration official said the differences between the two sides are so profound that, based on his read of the situation, he can’t see the fight getting resolved before the end of the year.

The longer this trade war lasts, the more painful it will become for the U.S. economy.

And as we move toward a presidential election year, the Chinese will increasingly be the ones with the strategic leverage.

So Wall Street can laugh for now, but the Chinese are fully convinced that they will be having the last laugh in this matter.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Stocks Crater – 3.5 Trillion Dollars In Global Market Cap Wiped Out – China Considers “Dumping U.S. Treasuries”

Wall Street responded to our escalating trade war with China by throwing a bit of a temper tantrum.  On Monday the Dow Jones Industrial Average was down 617 points, and that was the worst day for the Dow since January 3rd.  But things were even worse for the Nasdaq.  It had its worst day since December 4th, and overall the Nasdaq is now down 6.3 percent in just the last six trading sessions.  Of course it isn’t just in the United States that stocks are declining.  Since last Monday, a total of approximately $3.5 trillion in market cap has been wiped out on global stock markets.  And since it doesn’t look like we are going to get any sort of a trade deal any time soon, this could potentially be just the beginning of our problems.

China fired a shot that was heard around the world on Monday when they announced that they would be dramatically raising tariffs on U.S. goods

China will raise tariffs on $60 billion in U.S. goods in retaliation for the U.S. decision to hike duties on Chinese goods, the Chinese Finance Ministry said Monday.

Beijing will increase tariffs on more than 5,000 products to as high as 25%. Duties on some other goods will increase to 20%. Those rates will rise from either 10% or 5% previously.

According to CNBC, these new tariffs are going to be particularly damaging for U.S. farmers…

The duties in large part target U.S. farmers, who largely supported Trump in 2016 but suffered from previous shots in the Trump administration’s trade war with China. The thousands of products include peanuts, sugar, wheat, chicken and turkey.

When you combine the impact of these Chinese tariffs with the unprecedented flooding that we have seen in the middle of the country, the result is that thousands upon thousands of U.S. farmers are going to be pushed into bankruptcy before the end of 2019.

But China might not stop with just increasing tariffs.  According to Global Times Editor in Chief Hu Xijin, China “may stop purchasing US agricultural products” entirely, and the Chinese are also examining “the possibility of dumping US Treasuries”…

China may stop purchasing US agricultural products and energy, reduce Boeing orders and restrict US service trade with China. Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically.

As I mentioned yesterday, China literally has hundreds of different ways that they can hurt us.

So the truth is that those that are suggesting that the U.S. will not be hurt by this trade war are just being delusional.

In an article that was posted on Monday, CNBC referred to dumping Treasuries as “China’s nuclear option”…

Consider it China’s nuclear option in the trade war with the U.S. — the ability to start dumping its massive pile of Treasury bonds that could trigger a surge in interest rates and substantially damage the American economy.

As the two sides engage in a tit-for-tat tariff exchange, the possibility that China might raise the stakes and stop being the world’s biggest consumer of U.S. debt again reared its imposing head Monday.

The longer this trade war lasts, the angrier the Chinese will become, and the more damage they will inflict upon our economy.

And without a doubt, this trade war could be more than enough to push us into a new recession.  On Monday, Michael Wilson of banking giant Morgan Stanley authored this ominous forecast

“Given other cost pressures and stubbornly low inflation, we are unconvinced that companies will generally be able to fully offset tariff costs through raising prices or through cost efficiencies elsewhere, meaning tariffs will press on margins,” Wilson wrote. “In the case of 25% tariffs on all of China’s exports to the US, we are inclined to think this has the potential to tip the US economy into recession given the cost issues companies are already dealing with.”

Before I end this article, there are two more points that I would like to make.  Firstly, the price of soybeans is absolutely tanking right now, and this is going to be absolutely catastrophic for soybean farmers

With the most recent news of the intensifying tensions between the U.S. and China, the price of soybeans has dropped below $8 a bushel for the first time since 2008, which comes as many Midwest farmers are facing rampant flooding on their land during the planting season.

At this point in the year, around 60 to 70 percent of crops should be planted, John Newton, the chief economist of the Farm Bureau, said. Most expect the USDA to soon announce that, because of flooding and other difficulties, American farmers are only 35 percent planted so far.

I put that last paragraph in bold for a reason.  It is the middle of May, and U.S. farmers have only planted about half the crops that they would normally have planted by this time of the year.

That is a national crisis, and it also means that U.S. food production is going to be way down this year.

This is a theme that I have been hammering on over and over again, and hopefully people are getting prepared for much, much higher prices at the grocery store.

Secondly, financial markets got a boost on Monday evening when President Trump indicated that the next “three or four weeks” will determine the success of trade talks with China…

Speaking at a White House event on Monday evening, U.S. President Donald Trump offered a projection about how much longer Washington and Beijing could be locked in heated trade negotiations.

“We’ll let you know in three or four weeks if it’s successful,” he said, according to NBC News.

Trump is expected to meet with the Chinese president some time in June, and the hope that they will be able to work out a deal will probably keep global financial markets from completely tanking in the next few weeks.

Of course there is still likely to be quite a bit of volatility for global stocks in the short-term, but if there is no trade agreement by the end of next month, July could potentially be an absolutely pivotal month for global financial markets.

So stay tuned, because it looks like things could soon be getting very, very interesting…

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Trump Spooks Global Markets: China “Broke The Deal. They Can’t Do That, So They’ll Be Paying.”

It sure looks like nothing can stop the trade war now, and that could potentially be absolutely disastrous for the global economy.  The last major trade war began in 1930, and it turned an economic downturn into the Great Depression of the 1930s.  But without a doubt something needed to be done about China.  They have been lying, cheating and stealing our technology for a very long time, and previous administrations simply allowed them to walk all over us.  President Trump had hoped that a new trade agreement would put trade between our two nations on a fair and equitable course from now on, but at this point it appears that isn’t going to happen.

On Wednesday evening, Trump commented on negotiations during a rally in northern Florida, and he greatly shook up global markets by stating that the Chinese “broke the deal” and that “they’ll be paying”

Speaking at a rally in Florida, the president attributed his recent threat of increased tariffs to Beijing’s negotiating position.

“By the way, you see the tariffs we’re doing? Because they broke the deal. They broke the deal,” Trump said. “So they’re flying in, the vice premier tomorrow is flying in — good man — but they broke the deal. They can’t do that, so they’ll be paying.”

In other words, Trump fully believes that the tariffs that he threatened China with on Sunday are going to go into effect on Friday.

All over the world stocks immediately began to fall following these comments, and one economist interviewed by CNBC said that Trump “is sure scaring the daylights out of the financial markets”…

Chris Rupkey, managing director and chief financial economist at global financial group MUFG, wrote in a note responding to Trump’s Wednesday evening speech that markets may continue to be roiled by that sort of rhetoric: “We are not sure who the president is addressing tonight in a campaign rally, but he is sure scaring the daylights out of the financial markets.”

For most of the year, global markets had been lifted by hopes of a trade deal, and now that it appears to be dead nobody is quite sure what is going to happen next.

Earlier on Wednesday, in a two part tweet Trump accused China of trying to drag out negotiations until after the 2020 election…

The reason for the China pullback & attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to “negotiate” with Joe Biden or one of the very weak Democrats, and thereby continue to ripoff the United States (($500 Billion a year)) for years to come….

….Guess what, that’s not going to happen! China has just informed us that they (Vice-Premier) are now coming to the U.S. to make a deal. We’ll see, but I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers…great for U.S., not good for China!

Trump definitely nailed this one.

As I detailed on Monday and Tuesday, the Chinese had been hoping to run out the clock on the Trump administration and deal with whoever follows Trump in the White House.  The mainstream media was absolutely shocked that Trump would say such a thing, but it is the truth.

U.S. negotiators truly believed that they were getting close to a deal in recent weeks, but a diplomatic cable which arrived from China late last Friday changed all that.  The following comes from Reuters

The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks.

The document was riddled with reversals by China that undermined core U.S. demands, the sources told Reuters.

In essence, the Chinese had totally gutted the deal that the Trump administration had been working so hard on.

So now we know that Trump’s angry tweets on Sunday didn’t just come out of nowhere.  He was greatly upset because “China got greedy”

One private-sector source briefed on the talks said the last round of negotiations had gone very poorly because “China got greedy.”

“China reneged on a dozen things, if not more … The talks were so bad that the real surprise is that it took Trump until Sunday to blow up,” the source said.

“After 20 years of having their way with the U.S., China still appears to be miscalculating with this administration.”

The only way that a trade deal will be possible now is if somebody backs way down, and that does not seem likely to happen.

In fact, the Chinese are already threatening to implement “necessary countermeasures” once Trump hits them with tariffs on Sunday…

China’s Commerce Ministry said Wednesday that Beijing will retaliate if U.S. tariffs on $200 billion of Chinese goods are hiked to 25% from 10% as threatened by President Donald Trump on Sunday.

“The escalation of trade friction is not in the interests of the people of the two countries and the people of the world,” the ministry said. “The Chinese side deeply regrets that if the US tariff measures are implemented, China will have to take necessary countermeasures.”

And even if by some miracle a trade agreement happens, the truth is that relations between the U.S. and China have already deteriorated so dramatically that there is no way we will be returning to “business as usual”.  The following comes from a Bloomberg opinion piece

U.S. Secretary of State Mike Pompeo has been traveling the world warning allies that getting too close to China will harm relations with Washington. Buying telecom equipment from Huawei Technologies Co. would compel the U.S. to curtail intelligence-sharing, Pompeo has said, while participating in Beijing’s Belt and Road infrastructure bonanza was sanctioning “debt traps” and predatory business practices.

Add in fresh curbs on U.S. visas for Chinese scholars and heightened rhetoric over Beijing’s disputed territorial claims in the South China Sea, and the points of conflict now run well beyond tariffs and soybeans.

No matter what happens over the next few days, relations with China are going to get worse.

A lot worse.

Even though most Americans don’t realize it, this is a major turning point.

Begun, the trade war has, and the pain will ultimately be felt by every man, woman and child on the entire planet.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

If The Stock Market Is Falling This Much Already, What Is Going To Happen If There Is No Trade Deal With China By Friday?

If negotiations between the Trump administration and the Chinese government do not produce a trade deal by Friday, it is going to be absolutely catastrophic for Wall Street.  On Tuesday, trade fears pushed the Dow Jones Industrial Average down 473 points.  It was the second-worst trading day of 2019 so far, and at one point during the trading session the Dow had fallen as much as 648 points.  But most of the experts are assuring investors that a trade deal with China will be finalized before Trump’s new tariffs go into effect on Friday.  We are being told that the Chinese will almost certainly cave in on some of their most important demands and that Trump will get the favorable trade deal with China that he has been seeking.

But what if it doesn’t happen after all?

If the Chinese give in now, they will look exceedingly weak, and any trade deal will be hailed as a great victory for the Trump administration.

To me, it seems exceedingly unlikely that the Chinese would want to make any sort of a deal under such circumstances.

The Trump administration has essentially pointed a loaded gun at their heads and has told them that they better agree to a trade deal by Friday or else.

There are some countries with which such an approach would work, but China is definitely not one of them.

And I may not have as much “foreign policy experience” as John Bolton, but even I know that if you want to make a deal with China it is probably not a good idea to antagonize them with warships in the South China Sea at the same time you are trying to negotiate with them.

Perhaps I will be proven wrong, but it seems to me that trying to bully China could backfire spectacularly.

And at this point, the Trump administration better deliver a trade deal with China by Friday, because if they don’t there are going to be very serious consequences.

First of all, once investors realize that a trade deal with China is dead we are going to see a violent downturn in the stock market.  According to one expert quoted by USA Today, “the market could go down another 10% plus”…

“The biggest threat to this market is the U.S.-China trade issues,” Ives said. “If China and the U.S. dig in on trade, it’s time to put on the hard hat because the market could go down another 10% plus.”

And in a CNBC article entitled “WORST CASE SCENARIO: Here’s what it looks like if Trump starts a trade war with China”, a figure of “10%” was also thrown around…

The worst-case outcome there, say experts, is a fight that sends the S&P 500 into a correction — which would be 10% off that key indicator. The companies likely to be hardest hit, say the experts, are likely Boeing, Apple and Caterpillar. They are all down about 5% this week already.

Then the pain ripples into the metals, mining and automobiles sectors.

Unfortunately, a decline of 10 percent is definitely not the “worst case scenario” that we could be facing.

As I have explained repeatedly, stock prices would need to decline by 40 or 50 percent just to get key valuation ratios back to their long-term averages.

And valuation ratios always return to their long-term averages eventually.

At this moment, we are still in the greatest stock market bubble of all time.  Companies that have been losing mountains of money for years are supposedly worth billions of dollars, and it is just a matter of time before this giant charade ends.

Just consider the case of a company called Beyond Meat.  The following comes from Wolf Richter

Just how silly this market has gotten is exemplified by Beyond Meat, a 10-year old company whose fake burgers – combining the worst of terrible burgers and unrecognizable industrially processed plant substances – have been sold for years, and whose shares following the IPO have skyrocketed to give the company a market capitalization of $4.6 billion though it has persistently lost money on its fake burgers and had sales in 2018 of only $56 million.

It’s apparently easier to sell stocks in this environment than it is to sell fake burgers. So the company is now valued at 83 times revenues. This is nuts.

We are so ripe for a major stock market crash, and a full-blown trade war with China could potentially be the trigger.

In addition, a full-blown trade war with China would be absolutely crippling for companies all across America.  Here is just one example

Phil Page, the CEO of Missouri-based Cap America, estimates that his company has more than $1 million worth of baseball hats already ordered that will now be hit with the higher tariff.

“It’s very difficult to understand what the President is going to do by a business perspective. To spring it on us all at once like this is a very poor judgment on his part,” Page said.

“I thought this thing was going to be worked out this week,” he added.

Overall, one survey found that approximately 75 percent of all good-producing companies in the entire country would be negatively impacted by tariffs

About 75% of good-producing firms recently surveyed by the National Association for Business Economics said the tariffs have had a negative impact on their business.

Yes, China has been taking unfair advantage of us for a very long time, and this is something that I have written about extensively.

But these things must be handled with great diplomacy.

If there is no trade deal, this could be the moment when our relations with the Chinese enter a tailspin from which they never recover.  A trade war would be extremely destructive for the U.S. economy, and history has shown us that trade wars have a tendency to eventually turn into shooting wars.

We will see what happens the rest of the week.

This is a critical turning point, and the Trump administration cannot afford to fail.

In closing, let me share with you this quote which I found earlier today in a CNBC article

“To paraphrase Lenin: there are decades where nothing happens and there are weeks when decades happen…and then there is a single week in the Trump Presidency. What a time to be alive.”

This is a make or break moment for the Trump administration, and it is a make or break moment for the entire U.S. economy.

By Friday, we shall know the outcome.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

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