Hope For A U.S.-China Trade Deal Is Completely Dead, And Wall Street Is Starting To Panic

The reality of what we are now facing is starting to sink in for Wall Street investors, and they are starting to panic.  Hope that the U.S. and China would be able to agree to a trade deal had fueled a tremendous stock market rally over the last couple of months, but of course it just turned out to be a cruel mirage.  There isn’t going to be a trade deal prior to the 2020 presidential election, and at this point even President Trump is telling us not to expect one before November 2020.  Just check out what he told the press on Tuesday

“In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right,” Trump told reporters earlier on Tuesday.

When asked if he had a deal deadline, he added: “I have no deadline, no … In some ways, I think it is better to wait until after the election if you want to know the truth.”

President Trump is attempting to spin things to make it sound like it is his decision to hold off on a trade deal, and that may be a politically savvy thing to do.

But the truth is that the Chinese never wanted to do a comprehensive trade deal with Trump.  They have been stringing him along all this time, because they wanted to delay Trump’s tariffs for as long as possible.  But their original intention was to wait until a Democrat was in the White House to cut a deal.

Of course at this point the Chinese have soured on the Democrats as well.  The Chinese government views the pro-democracy protesters in Hong Kong the way that we view ISIS and al-Qaeda, and from the very beginning they have accused the United States of starting those protests.  And now that President Trump has signed the “Hong Kong Human Rights and Democracy Act of 2019” after it was overwhelmingly passed by both the House and the Senate, the Chinese are beyond angry.  At this point our relationship with China has been completely destroyed, and from now on we are going to have a deeply adversarial relationship with them no matter who is in the White House.

President Trump has threatened to go ahead with more tariffs on China on December 15th, and since there is zero chance of a trade deal by then, that is exactly what we should expect.

And if that happens, Wharton Business School Professor of Finance Jeremy Siegel is warning that chaos could be unleashed on Wall Street

If Trump doesn’t reach a trade deal with China and “the tariffs get put on on Dec. 15 … I don’t know if I want to be around equities then,” Siegel said on CNBC’s Closing Bell on Tuesday.

Unfortunately, Siegel is precisely correct.  In fact, stock prices have already fallen for three days in a row, and the downturn really started to accelerate on Tuesday

The Dow Jones Industrial Average fell 280.23 points, or 1% to 27,502.81. The 30-stock average was led lower by trade-vulnerable Apple, Caterpillar and Boeing. The S&P 500 slid 0.7% to 3,093.20 amid losses in chip stocks like Nvidia, Micron and Advanced Micro Devices. The Nasdaq Composite lost about 0.6% to end the day at 8,520.64.

At its lows of the day, the Dow was down 457.91 points, or 1.7%. The S&P 500 dropped as much as 1.7% while the Nasdaq traded lower by as much as 1.6%.

Hopefully things will settle down for the rest of this week, but if December 15th comes and the tariffs are fully implemented, many analysts are warning that there could be panic.  Here is one example

And while the US may (or may not) end up victorious in such a showdown, it will give Wall Street strategists – who have all flipped a U-turn and reversed from extremely optimistic to suddenly pessimistic – copious opportunities to impress their clients with superlatives such as this one from Manulife managing director Sue Trinh, who said that “if tariffs scheduled for Dec. 15 are implemented it would be a huge shock to the market consensus,” adding that “Trump would be the Grinch that stole Christmas” if the December 15 tariffs go through.

Even though there isn’t going to be any sort of an agreement with China, it would be helpful for the U.S. economy if Trump decided to delay the December 15th tariffs.

I don’t think that is going to happen though.

Meanwhile, the Trump administration is also looking at raising tariffs on goods from France, Brazil and Argentina

Heightened trade fears come a day after Trump threatened new tariffs on several more countries. On Monday, the president said he would raise tariffs on steel and aluminum imports from Brazil and Argentina. He also proposed slapping tariffs on France’s exports.

As I recently discussed, global trade has now fallen for four months in a row, and it certainly appears that things could get even worse in the months ahead.

And that means that it is more likely than ever that the U.S. economy as a whole will plunge into a deep recession.  In fact, Legg Mason is warning their clients that “the probability of a recession over the next 12 months is 50%”

Legg Mason, a diversified global asset management firm, said the probability of a recession over the next 12 months is 50%.

According to the variables the firm looks at to determine the health of the economy, recession risk is rising, said Jeff Schulze, the investment strategist for ClearBridge Investments, at Legg Mason’s market outlook for 2020 last Monday in New York.

Of course in the long-term what we are facing is going to be far worse than just another recession.

The “bubble to end all bubbles” is starting to look exceedingly vulnerable, and it isn’t going to take very much at all to push us into a new financial crisis.

Investing is all about hope.  People put their money into stocks and bonds because they anticipate a positive future in which the value of their investments goes up.

If you take that hope away, the entire foundation crumbles.  And now that the relationship between the United States and China has been destroyed, the future is looking a whole lot more bleak for investors than it was just a few weeks ago.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

Global Collapse Incoming? The Total Breakdown Of Relations With China Could Throw Our Planet Into Utter Turmoil

We just witnessed one of the most monumental events of the entire decade, and yet most Americans still don’t understand what has happened.  In recent months, the global economy and stock markets around the world have been buoyed by the hope that the U.S. and China would soon sign a new trade agreement.  Unfortunately, there is no way that is going to happen now.  On Tuesday, the Senate unanimously passed the “Hong Kong Human Rights and Democracy Act of 2019”, and the House of Representatives passed the same bill by a 417 to 1 vote on Wednesday.  Needless to say, the Chinese are beyond angry that Congress has done this.  In part one of this article, I showed that China is warning the U.S. to “rein in the horse at the edge of the precipice” and that there will be “revenge” if this bill is allowed to become law.  And it looks like this bill will actually become law, because Bloomberg is reporting that President Trump is fully expected to sign it…

President Donald Trump is expected to sign legislation passed by Congress supporting Hong Kong protesters, setting up a confrontation with China that could imperil a long-awaited trade deal between the world’s two largest economies.

Before I go any further, there is something that I want to address.  Earlier today, one of my readers emailed me and accused me of siding with China because I am warning about what will happen if trade negotiations fail.  Of course that is not true at all.  I have been writing about the horrific human rights abuses in China for many years, and they are one of the most tyrannical regimes on the entire planet today.  But our two economies have become deeply intertwined over the past two decades, and there are going to be very serious consequences now that we are rapidly becoming bitter enemies.  Anyone that doesn’t see this is simply not being rational.

As I have detailed repeatedly in recent months, the global economy has already entered a very serious slowdown.  One of the only things that could reverse our economic momentum in the short-term would be a comprehensive trade agreement between the United States and China.  But now that our relationship with China has been destroyed, there isn’t going to be a deal.

Some mainstream news sources are reporting that all of this rancor about Hong Kong could delay a trade deal, but that is just more wishful thinking.

Over in China, they are being much more realistic.  In fact, the editor of the Global Times, Hu Xijin, just said that the Chinese are “prepared for the worst-case scenario

Few Chinese believe that China and the US can reach a deal soon. Given current poor China policy of the US, people tend to believe the significance of a trade deal, if reached, will be limited. China wants a deal but is prepared for the worst-case scenario, a prolonged trade war.

And he followed that up with another tweet that openly taunted U.S. farmers

So a friendly reminder to American farmers: Don’t rush to buy more land or get bigger tractors. Wait until a China-US trade deal is truly signed and still valid six months after. It’s safer by then.

As the two largest economies on the entire planet decouple from one another, it is going to cause global economic activity as a whole to dramatically slow down.  Corporate revenues will fall, credit markets will start to tighten, and fear will increasingly creep into global financial markets.

I have repeatedly warned that conditions are ideal for our first major crisis since 2008, and this conflict with China could be more than enough to push us over the edge.

And already we are getting more bad economic news day after day.  For example, we just learned that U.S. rail traffic this month is way down compared to last year

Nowhere is the slowdown in the U.S. economy more obvious than in places like Class 8 Heavy Duty Truck orders and rail traffic. We already wrote about how Class 8 orders continued to fall in October and new data the American Association of Railroads (AAR) now shows that last week’s rail traffic and intermodal container usage both plunged.

The AAR reported total carloads for the week ended Nov. 9 came in at 248,905, down 5.1% compared with the same week in 2018. U.S. weekly intermodal volume was 266,364 containers and trailers, down 6.7% compared to 2018, according to Railway Age.

Unless a miracle happens with China, the economic numbers are going to continue to get worse.

Sadly, a miracle seems exceedingly unlikely now.  As I pointed out in part one, the only way that our relationship with China can be fixed is if Congress repeals the bill that it just passed, and there is no way that is going to happen.

And we better hope that our trade war with China doesn’t escalate into a real war at some point.

According to a report that was released earlier this year, we are very ill-prepared to fight any sort of a conventional war with China in the Western Pacific…

The University of Sydney’s United States Studies Centre’s new report Averting Crisis, said: ‘China’s growing arsenal of accurate long-range missiles poses a major threat to almost all American, allied and partner bases, airstrips, ports and military installations in the Western Pacific.

‘As these facilities could be rendered useless by precision strikes in the opening hours of a conflict, the PLA missile threat challenges America’s ability to freely operate its forces from forward locations throughout the region.’

In addition, U.S. military officials are deeply concerned by how rapidly China has been upgrading their strategic nuclear arsenal.  For example, they now possess a “submarine-launched missile capable of obliterating San Francisco”

China has tested a new submarine-launched missile capable of obliterating San Francisco, an insider has revealed, in a massive boost to the country’s ‘deterrent’.

The Chinese navy tested its state-of-the-art JL-3 missile in Bohai Bay in the Yellow Sea last month, sources said.

The nuclear-capable missile has a 5,600 mile range, significantly longer than its predecessor the JL-2, which could strike targets 4,350 miles away.

We certainly aren’t at that point yet, but without a doubt the Chinese now consider us to be their primary global enemy.

For the moment, it is just a “cold war” that we are facing, and the Chinese are quite adept at playing global chess.  They have lots of ways that they can hurt us, and most Americans don’t realize this.

But in the end nobody is going to “win” this conflict, and the entire planet is going to suffer.

Collectively, the economies of the United States and China account for approximately 40 percent of the GDP of the entire world.

As we cause chaos for one another, everyone else is going to experience tremendous pain as well.

The stage is set for a global nightmare, and at this point it doesn’t appear that there is a way that we will be able to escape it.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

U.S. Relations With China Were Just Destroyed, And Nothing Will Ever Be The Same Again

Our relationship with China just went from bad to worse, and most Americans don’t even realize that we just witnessed one of the most critical foreign policy decisions of this century. The U.S. Senate just unanimously passed the “Hong Kong Human Rights and Democracy Act of 2019”, and the Chinese are absolutely seething with anger.  Violent protests have been rocking Hong Kong for months, and the Chinese have repeatedly accused the United States of being behind the protests.  Whether that is true or not, the U.S. Senate has openly sided with the protesters by passing this bill, and there is no turning back now.

The protesters in Hong Kong have been waving American flags, singing our national anthem and they have made it exceedingly clear that they want independence from China.  And all of us should certainly be able to understand why they would want that, because China is a deeply tyrannical regime.  But to the Chinese government, this move by the U.S. Senate is essentially an assault on China itself.  They are going to argue that the U.S. is inciting a revolution in Hong Kong, and after what the Senate has just done it will be very difficult to claim that is not true.

The Chinese take matters of internal security very seriously, and the status of Hong Kong is one of those issues that they are super sensitive about.  China will never, ever compromise when it comes to Hong Kong, and if the U.S. keeps pushing this issue it could literally take us to the brink of a military conflict.

And you can forget about a comprehensive trade agreement ever happening.  Even if a Democrat is elected in 2020, that Democrat is going to back what the Senate just did.  That is why it was such a major deal that this bill passed by unanimous consent.  It sent a message to the Chinese that Republicans and Democrats are united on this issue and that the next election is not going to change anything.

And the trade deal that President Trump was trying to put together was already on exceedingly shaky ground.  “Phase one” was extremely limited, nothing was ever put in writing, and nothing was ever signed.  And in recent days it became quite clear that both sides couldn’t even agree about what “phase one” was supposed to cover

A spokesperson for China’s Commerce Ministry said earlier this month that both countries had agreed to cancel some existing tariffs simultaneously. Trump later said that he had not agreed to scrap the tariffs, lowering hopes for a deal.

“They’d like to have a rollback. I haven’t agreed to anything,” the president said.

On Tuesday, Trump was visibly frustrated by how things are going with China, and he publicly warned the Chinese that he could soon “raise the tariffs even higher”

President Donald Trump threatened higher tariffs on Chinese goods if that country does not make a deal on trade.

The comments came during a meeting with the president’s Cabinet on Tuesday. The U.S. and China, the world’s two largest economies, have been locked in an apparent stalemate in trade negotiations that have lasted nearly two years.

“If we don’t make a deal with China, I’ll just raise the tariffs even higher,” Trump said in the meeting.

Unfortunately, raising tariffs isn’t going to fix anything at this point.

In fact, Trump can raise tariffs until the cows come home but it isn’t going to cause the Chinese to budge.

That is because on Tuesday evening everything changed.

When they passed the “Hong Kong Human Rights and Democracy Act of 2019” by unanimous consent, the U.S. Senate essentially doused our relationship with China with kerosene and set it on fire.  The following comes from Zero Hedge

In a widely anticipated move, just after 6pm ET on Tuesday, the Senate unanimously passed a bipartisan bill, S.1838,  showing support for pro-democracy protesters in Hong Kong by requiring an annual review of whether the city is sufficiently autonomous from Beijing to justify its special trading status. In doing so, the Senate has delivered a warning to China against a violent suppression of the demonstrations, a stark contrast to President Donald Trump’s near-silence on the issue, the result of a behind the scenes agreement whereby China would allow the S&P to rise indefinitely as long as Trump kept his mouth shut.

As we reported last week, the vote marks the most aggressively diplomatic challenge to the government in Beijing just as the US and China seek to close the “Phase 1” of their agreement to end their trade war. The Senate measure would require annual reviews of Hong Kong’s special status under U.S. law to assess the extent to which China has chipped away the city’s autonomy; in light of recent events, Hong Kong would not pass. It’s unclear what would happen next.

I am finding it difficult to find the words to describe what this means to the Chinese.

We have deeply insulted their national honor, and our relationship with them will never be the same again.

Many will debate whether standing up to China on this issue was the right thing to do, but in this article I am trying to get you to understand that there will be severe consequences for what the U.S. Senate just did.

There isn’t going to be a comprehensive trade deal, the global economy is going to suffer greatly, and the Chinese now consider us to be their primary global adversary.

Shortly after the Senate passed the bill, a strongly worded statement was released by the Chinese government.  The following excerpt comes from the first two paragraphs of that statement

On November 19th, the US Senate passed the “Hong Kong Bill of Rights on Human Rights and Democracy.” The bill disregards the facts, confuses right and wrong, violates the axioms, plays with double standards, openly intervenes in Hong Kong affairs, interferes in China’s internal affairs, and seriously violates the basic norms of international law and international relations. The Chinese side strongly condemns and resolutely opposes this.

In the past five months, the persistent violent criminal acts in Hong Kong have seriously jeopardized the safety of the public’s life and property, seriously trampled on the rule of law and social order, seriously undermined Hong Kong’s prosperity and stability, and seriously challenged the bottom line of the “one country, two systems” principle. At present, what Hong Kong faces is not the so-called human rights and democracy issues, but the issue of ending the storms, maintaining the rule of law and restoring order as soon as possible. The Chinese central government will continue to firmly support the Hong Kong SAR Government in its administration of the law, firmly support the Hong Kong police in law enforcement, and firmly support the Hong Kong Judiciary in punishing violent criminals in accordance with the law, protecting the lives and property of Hong Kong residents and maintaining Hong Kong’s prosperity and stability.

For a long time I have been warning that U.S. relations with China would greatly deteriorate, and this is the biggest blow that we have seen yet.

The U.S. and China are now enemies, and ultimately that is going to result in a tremendous amount of pain for the entire planet.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

The Shocking Truth About Trump’s “Trade Deal” With China

We have a trade deal with China!  Well, except that nothing has actually been written down, nothing has actually been signed, the potential deal won’t really require any major concessions from China, but it did allow the Chinese to achieve a couple of key goals that they really wanted.  But other than that, the good news is that the Trump administration now has a “trade deal with China” to tout as a “major accomplishment” to voters.  And without a doubt, in the short-term this will calm the financial markets and ease some of the pressures on the global economy.  Certainly it appears that there should be no further escalations in our trade war with China over the next few months, and that is definitely a bit of good news worth celebrating.  Following the announcement of this potential deal, stock prices started surging, and the Dow Jones Industrial Average ended the day up more than 300 points.  We haven’t seen this much optimism on Wall Street in some time, and things certainly seem brighter for investors in the short-term.

But let there be no doubt – this is not even remotely in the neighborhood of being the sort of “comprehensive trade deal” that the Trump administration originally wanted.

Instead, it is a very, very limited potential deal that is still being worked on

President Donald Trump announced a trade deal, in principle, on Friday afternoon with Chinese Vice Premier Liu He the U.S. says will be rolled out in two or three parts.

The agreement postpones a tariff increase scheduled for Oct. 15 and could halt additional penalties scheduled to go into effect just before Christmas.

‘We’ve come to a deal, pretty much. Subject to getting it written,’ said Trump in the Oval Office of what he described as phase one.

Oh, it isn’t actually “written” yet.

Apparently, phase one of this “trade deal” will be written over the next three weeks.

But most Americans don’t pay attention to the details, and all they will hear is that we have a “trade deal with China”, and that will certainly help Donald Trump politically.

So when phase one is eventually put down on paper, what will it actually do?

Well, the truth is that it won’t actually do very much

The initial deal, which Mr. Trump said had been reached “in principle” would involve China buying $40 billion to $50 billion worth of American agricultural products, along with agreeing to guidelines on how it manages its currency. The agreement also includes some provisions on intellectual property, including forced technology transfer and would give American financial services firms more access to China’s market, the president said.

In exchange, the United States will not go ahead with plans to raise tariffs on $250 billion worth of Chinese goods to 30 percent next week.

We’ll see what the “provisions on intellectual property” ultimately look like, and I have to say that I am skeptical, but if China agreed to some substantial changes in this area that could potentially be a positive thing for U.S. companies.

But other than that, this “deal” seems very tilted toward the Chinese.

For China, one of the main goals in these negotiations was to get the Trump administration to roll back the tariffs that were about to be implemented and to get the Trump administration to agree not to impose any additional tariffs.  These tariffs are very damaging for the Chinese economy and are the primary instrument of leverage that the Trump administration possesses in this trade war.

So for China to be able to essentially get a freeze on tariffs was a big win for them.

Without the threat of more tariffs, the Chinese can continue to run out the clock on the Trump administration and wait for a Democrat to be elected in 2020.  The Chinese will continue to do a lot of “talking” and “negotiating”, but they won’t agree to any sort of a comprehensive trade agreement until they can get someone that they consider to be more “reasonable” in the White House.

Oh, but we really stuck it to them by forcing them to purchase “$40 billion to $50 billion worth of American agricultural products”, didn’t we?

Well, no, we didn’t.

Let me tell you a secret.

The Chinese actually want to buy our agricultural products.  In fact, since millions upon millions of their pigs have been dying from African Swine Fever, the truth is that they desperately need U.S. pork products.

So this is essentially a case of throwing the Chinese into “the briar patch”.  The Chinese knew that our farmers desperately need to sell our agricultural products to them, and so they quit buying them temporarily in order to get leverage on the Trump administration.  But this is something that the Chinese were always going to compromise on, because they have a great need for what our farmers are producing.

In the short-term, this is a big win for the Chinese, it is a win for U.S. farmers, and it is a win for the Trump administration because they now have their “trade deal with China” and the stock market is soaring once again

Stocks ended higher Friday after President Donald Trump said China and the U.S. reached the first phase of a substantial trade deal that delays tariff hikes that were set to kick in next week.

The Dow closed 319 points higher, while the S&P 500 rose 1.1% and the Nasdaq gained 1.3%. The gains helped the Dow and S&P 500 snap a three-week losing streak. The Dow and S&P 500 gained 0.9% and 0.6%, respectively, for the week. The Nasdaq ended the week up 0.9%.

But it appears that this trade deal doesn’t really do much of anything to address our long-term problems with China, and we are being told that “expectations for a major breakthrough” are “still low”

Beijing’s vice premier is in Washington leading the 13th round of negotiations with Mnuchin and U.S. Trade Representative Robert Lighthizer. Expectations for a major breakthrough in the 15-month standoff are still low.

The two sides are deadlocked primarily over the Trump administration’s assertions that China steals technology and pressures foreign companies to hand over trade secrets as part of a sharp-elbowed drive to become the global leader in robotics, self-driving cars and other advanced technology.

In the end, this very limited “deal” gives the Chinese what they want in the short-term and it allows them to continue to delay any sort of resolution on the most important trade issues.

The Chinese got just what they wanted, but here in the United States it will be spun as a big win for Trump by the White House.

And Trump certainly needs some good news right now, and so it is hard to blame him for grabbing this deal.

But let’s not lose sight of what is really going on here.  The coming tariffs have been put on hold, and meanwhile no “agreement” has even been drafted yet.  I think that the current state of affairs was summarized very well by Sven Henrich

We have no agreement.
We have nothing in writing.
We have agreed to discuss a process on how to consult during which we will discuss what to agree upon.

Now get ready for phase 2 and meeting #14.

Trade wars are easy, didn’t I tell you?

And nothing that happened this week has changed the long-term outlook (#ad) even one bit.

The global economy is still slowing down, and our financial system is still the most vulnerable that it has been since the crisis of 2008.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep.  I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters.  (#CommissionsEarned)  By purchasing those books you help to support my work.  I always freely and happily allow others to republish my articles in written form on their own websites as long as this “About the Author” section is included.  In order to comply with government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished.  This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate.  You can follow me on social media on Facebook and Twitter.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of this website.

 

As China Settles In For A Long Trade War, Economic Pressure On Trump Continues To Grow

The trade war between the United States and China is increasingly weighing on the global economy, but unfortunately it does not appear that it will end any time soon.  Many pundits in the U.S. originally believed that the trade war would be short because the economic pain would be too much for the Chinese to handle.  But the truth is that the Chinese are not nearly as motivated by short-term concerns as we are.  They have always been long-term planners, and they are not afraid to set goals that may take multiple generations to achieve.  So they are not going to allow an angry American president that may be voted out of office by the end of next year to greatly alter their long-term economic strategies.

If an acceptable agreement could have been reached with Trump, the Chinese would have jumped at that opportunity.  But right now the two sides are so far apart that they are basically not even on the same playing field, and any additional “negotiations” are not going to change that.  However, the Chinese are likely to try to keep talks with the Trump administration alive in an attempt to prevent the trade war from escalating even more.  In essence, the Chinese are trying to minimize the damage while running out the clock on the Trump presidency.

So for China, this trade war has become an exercise in endurance, and this is something that a Fox Business article recently discussed…

Researchers from Deutsche Bank wrote a note over the weekend, explaining how they believe China appears to have shifted its strategy from a focus on “resolution to one of endurance.”

“We think China is neither aiming to quickly reach a trade deal, nor trying to hit back at the U.S. as hard as it can,” Deutsche Bank China Economist Yi Xiong wrote in a report. “Rather, China seems to have internalized the trade war as a given fact, and is trying to preserve China’s economic resilience under rising tariffs.”

Here in the U.S., we have become quite accustomed to sacrificing our long-term prosperity in order to avoid short-term pain, but the Chinese are simply not going to do that in this case.

Instead, they are going to work extremely hard to do what they can to bolster the Chinese economy internally while they wait for a more “reasonable” U.S. president to get elected.  The following comes from the South China Morning Post

China will “enhance countercyclical measures in macroeconomic policies … to ensure sufficient liquidity and reasonable growth in credit,” according to a statement by the government’s Financial Stability and Development Commission on Sunday. The wording marked a subtle change from previous policy statements that called only for “appropriate” fine-tuning of monetary policy.

The statement did not mention the trade war with the US, but included specific guidelines on what China should do to manage its economy in the coming months. It urged financial institutions to help sell local government special bonds, with proceeds to be used for government-backed investment projects, while it also told local authorities to “fully tap investment potential”.

Unlike Chinese officials, President Trump has an upcoming election that he must deal with, and the longer this trade war persists the worse his re-election chances are going to become.

As I detailed yesterday, signs of economic trouble are erupting all around us, and the pain from this trade war is only going to become more intense as each new month passes.

So Trump is going to become increasingly desperate to get China to come to an agreement, and that may lead to some very rash decisions.  For example, it is being reported that he “wanted to double tariff rates on Chinese goods” after the Chinese responded to recent U.S. tariffs by imposing some of their own…

President Donald Trump wanted to double tariff rates on Chinese goods last month after Beijing’s latest retaliation in a boiling trade war before settling on a smaller increase, three sources told CNBC.

The president was outraged after he learned Aug. 23 that China had formalized plans to slap duties on $75 billion in U.S. products in response to new tariffs from Washington on Sept. 1. His initial reaction, communicated to aides on a White House trade call held that day, was to suggest doubling existing tariffs, according to three people briefed on the matter.

Unfortunately for Trump, no amount of pressure is going to get the Chinese to budge.

Yes, the Chinese will “talk” to U.S. officials as a delaying tactic, but they have already decided that they will never accept the sort of deal that Trump wants.

Meanwhile, our economic numbers just continue to deteriorate.  On Tuesday, we learned that a key measure of U.S. manufacturing just fell to the lowest level in three years

A key U.S. factory gauge unexpectedly contracted for the first time since 2016, sending stocks and bond yields lower and boosting expectations for interest-rate cuts as global manufacturing woes deepen.

The Institute for Supply Management’s purchasing managers index fell to 49.1 in August, weaker than all forecasts in a Bloomberg survey of economists, data released Tuesday showed. Figures below 50 indicate the manufacturing economy is generally shrinking. The group’s gauge of new orders dropped to a more than seven-year low, while the production index hit the lowest since late 2015.

In response to that number and more troubling news about the trade war, U.S. stocks were sharply down

Stocks fell on Tuesday, the first trading day of a historically tough month, after the world’s two largest economies began imposing new tariffs on each other’s goods. Weak manufacturing data also dented investor sentiment.

The Dow Jones Industrial Average closed 285.26 points lower, or 1.1%, at 26,118.02. The S&P 500 lost 0.7% to end the day at 2,906.27 while the Nasdaq Composite pulled back 1.1% to 7,874.16.

We have reached an absolutely critical moment in modern American history.  The largest financial bubble in our entire history is on the verge of bursting, and many believe that we could be on the precipice of an economic downturn even worse than what we experienced in 2008 and 2009.

A trade deal with China would greatly help the short-term outlook, but the Chinese are not willing to give Trump what he desires.  So the only way one will happen is if President Trump completely caves in, but I don’t see that happening.

That means that a tremendous amount of pain is ahead, and the American people are completely unprepared for that.

About 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.

We Are Being Warned That The Last Week Of August “Could Be Highly Volatile” For Global Financial Markets

Are things about to break loose in a major way?  At the end of last week, the trade war between the United States and China escalated dramatically, and investors all over the globe really started freaking out.  Unfortunately, developments over the weekend have only made things worse, and that means that this could be a very “interesting” week for global financial markets.  As I write this article, stock prices around the world are plunging, the price of gold is spiking and the Chinese yuan is crashing.  There is clearly a lot of fear out there right now, and at this point even CNBC is warning that the last week of this month “could be highly volatile”…

The final week of August — the bittersweet end of summer for many— could be highly volatile, as markets fret over the economy and the latest developments in trade wars.

Of course things can swing rapidly from moment to moment in this environment.  President Trump could say something in a few hours that temporarily gives investors some hope, and that could cause markets to swing wildly upward for a little while.  Everyone is on edge right now, and every piece of significant news is likely to cause gyrations in the marketplace.

But overall the trend is clearly down.  U.S. stocks have now fallen for four weeks in a row, and many are becoming deeply concerned about what September will bring.

And for many U.S. businesses, this trade war has turned into a complete nightmare.  Executives crave predictability, but now everywhere we look there is chaos, and this is causing a lot of headaches for business leaders

Businesses crave predictability so they can make informed decisions and plan for the future. Many companies that depend on Chinese manufacturers and consumers have already shifted supply chains out of the country and taken other steps to reduce their exposure to China. And while Mr. Trump’s tweets are unlikely to trigger immediate changes, more uncertainty is unwelcome.

“Continued escalation and rhetoric are harmful to American businesses, workers and farmers,” said Tom Linebarger, chief executive of Cummins Inc., which makes diesel engines. Cummins pays a tariff on components it imports from its own plants in China for engines assembled at U.S. factories by American workers. The tariffs amount to a tax paid by Cummins’ customers, he said.

Unfortunately, nobody can no longer deny that global economic activity is really starting to slow down.  We just learned that global trade was down 1.4 percent in June from a year earlier, and that represented the largest decline that we have seen since the last financial crisis

World trade volume – a measure of imports and exports of merchandise across the globe – declined in its zigzag manner in June to the lowest level since October 2017, according to the Merchandise World Trade Monitor by CPB Netherlands Bureau for Economic Policy Analysis. The index was down 1.4% from June 2018. This small year-over-year decline is the biggest year-over-year decline since the Financial Crisis, and it’s a reversal from the heady growth in 2017 and 2018 that had topped out at 6.7%.

I have been using phrases like “since the last financial crisis” and “since the last recession” in almost every article recently.  We are seeing so many things happen that we haven’t seen for a decade or longer, and yet most Americans still don’t seem to understand that we have a real crisis on our hands.

If the U.S. and China were to mend their relationship and agree to a comprehensive trade deal, that would certainly help things.

Unfortunately, that isn’t going to happen.

In fact, both sides appear to be digging in even more.  For example, the White House just told us that President Trump “regrets not raising the tariffs higher”

When asked if Trump had second thoughts about Friday’s move to escalate the trade war with China, Trump said “Yup.” “I have second thoughts about everything,” he added.

Hours later, the White House issued a statement saying that Trump meant to say that he wished he had raised tariffs on Beijing even higher.

“His answer has been greatly misinterpreted. President Trump responded in the affirmative – because he regrets not raising the tariffs higher,” White House spokeswoman Stephanie Grisham wrote in a statement.

And the Chinese are warning that we should not “underestimate the determination” of the Chinese people and that they will be the ones to “have the last laugh”

On Saturday, China’s commerce ministry issued a statement calling on Washington not to “misjudge the situation and underestimate the determination of Chinese people” after US President Donald Trump announced new tariffs on Chinese imports.

“The US should immediately stop its wrong action, or it will have to bear all consequences,” the statement said.

At the same time, a sharply worded commentary in the official party mouthpiece, People’s Daily, said China had the strength to continue the dispute and accused Washington of sacrificing the interests of its own people. Published under the pseudonym “Wuyuehe”, the piece described the latest tariff measures by the US as “barbaric”. The op-ed said China’s own tariffs on $75 billion worth of American products, announced late on Friday, were a response to America’s unilateral escalation of the trade conflict, and vowed that China was determined to fight back “until the end”.

“China’s will to defend the core interests of the country and the fundamental interests of the people is indestructible, and will not fear any challenge,” the author wrote, promising that “history will prove that the side on the path of fairness and justice will have the last laugh.”

As I have repeatedly warned, there isn’t going to be a trade deal before the 2020 presidential election.

So that means that things are going to get progressively worse, and we need to be prepared for a lot of economic pain.

At this point, even U.S. Senator Lindsey Graham is telling us that the American people are just going to have to “accept the pain that comes with standing up to China”

Sen. Lindsey Graham, R-S.C., said on Sunday that Democrats should not criticize President Trump for taking on China over trade as they have complained for years about Beijing’s policies but done nothing.

“Every Democrat and every Republican of note has said China cheats,” Graham said on CBS News’ “Face the Nation.” “The Democrats for years have been claiming that China should be stood up to, now Trump is and we’ve just got to accept the pain that comes with standing up to China.”

Sadly, the truth is that the American people are not well equipped to deal with pain.  We have been spoiled by decades of debt-fueled “prosperity”, and even a relatively minor economic downturn would result in a massive national temper tantrum.

Right now our nation is a seething cauldron of anger and frustration, and the mainstream media is stirring the pot on a daily basis.  It isn’t going to take much to spark an explosion, and this will especially be true the closer we get to the next presidential election.

The season of “the perfect storm” is upon us, and what is coming next is going to be one of the most chaotic chapters in modern American history.

About 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.

“Worst Year Ever”: The Chinese Ban On U.S. Agricultural Products Will Be A Death Blow For Countless U.S. Farms

U.S. farmers have never experienced a year quite like this.  During the first half of 2019, endless rain and unprecedented flooding were the major problems.  As a result of the incredibly wet conditions, millions of acres of prime farmland didn’t get planted at all, and tens of millions of other acres are going to yield a lot less than usual.  Even without anything else happening, we were going to see farm bankruptcies soar to absolutely crazy levels, but now the Chinese government is essentially cutting off U.S. agricultural imports.  This will greatly depress the prices that U.S. farmers get for their crops, and so many farmers that were still hoping to squeeze out a profit for this year will be hit with a loss instead.  Ultimately, the truth is that 2019 is going to be a death blow for countless U.S. farmers that were barely hanging on financially after a string of really tough years.  Many will leave the industry entirely and never go back to farming again, and our nation will be worse off because of it.

When the Chinese announced that they were going to completely stop buying U.S. agricultural products, it sent shockwaves across the middle portion of the country.  According to the executive vice president of the American Farm Bureau, our farmers and ranchers will now be facing “just a really tough, tough time”

“This is a body blow to farmers and ranchers all across the country,” Dale Moore, executive vice president of the American Farm Bureau, told FOX Business. “That’s one of the things that we are feeling the effects of, and this is on top of a year when mother nature has been a terrible business partner in many parts of the country. It’s just a really tough, tough time for farmers and ranchers in this country.”

Shares of industrial, farming, oil and transportation companies have plummeted, a direct result of the increased tensions between the world’s two largest economies.

Of course President Trump is trying to be upbeat and he is promising that the Chinese will not be able to hurt our farmers, but the truth is that they already have.

Chinese imports of U.S. agricultural products fell by more than half from 2017 to 2018, and now they are going to zero.  The following comes from Fox Business

Despite Trump’s tweet, American farmers now stand to lose all of what was a $9.1 billion market in 2018, which was down sharply from the $19.5 billion U.S. farmers exported to China in 2017.

Unfortunately for U.S. farmers, they are caught right in the middle of a tug of war between the Chinese government and President Trump, and China specifically went after U.S. farmers in order to hurt Trump politically

China’s new agricultural ban has an additional benefit to the Chinese of maximizing negative political impact to Trump.

Important presidential election swing states in the Midwest grain belt such as Iowa and Wisconsin were vital to his 2016 election victory. Cutting this particular area of bilateral trade at a time when American farmers are recovering from the after-effects of this year’s floods is a potent way for Beijing to punch back against President Trump’s new tariffs.

If the presidential election was held this November, it would be really difficult for Trump to win in Iowa in Wisconsin.  Of course much can change between now and November 2020, but right now Trump is definitely losing support in the middle of the country.

Speaking of Wisconsin, it just happens to be one of the states that currently has the highest number of farm bankruptcy filings

Since last June, there have been a staggering 535 Chapter 12 bankruptcy filings, a 13 percent increase. Kansas, Minnesota and Wisconsin had the highest number of filings.

As a result, Congress passed the Family Farmer Relief Act to update the eligibility requirements for Chapter 12 bankruptcy, raising the debt limit from $4.1 million to $10 million — giving more farmers the chance to declare bankruptcy, thereby offering their producers and creditors a better chance to recognize and avoid mass liquidation.

President Trump will try to keep as many farms going as possible with his massive aid packages, but the truth is that even with those aid packages it is inevitable that farm bankruptcies will continue to surge.

In fact, they are already at the highest level that we have seen since the last recession.

What U.S. farmers really need is an end to the trade war and for the Chinese to start buying from them again.

Sadly, that is just not going to happen.  At this point, even Goldman Sachs is admitting that there will not be a trade deal with China before the 2020 presidential election…

Analysts at Goldman Sachs no longer think the U.S. and China will manage to negotiate a trade deal ahead of the 2020 presidential election — which is more than 15 months away.

“We had expected a final round of tariffs targeting remaining Chinese imports at a 10 percent rate,” the analysts, led by chief U.S. economist Jan Hatzius, wrote in a note to clients. “But news since President Trump’s tariff announcement last Thursday indicates that U.S. and Chinese policymakers are taking a harder line, and we no longer expect a trade deal before the 2020 election.”

This means that things will continue to go from bad to worse for U.S. farmers, and this will take a major toll on the U.S. economy as a whole.

We have entered the time of “the perfect storm”, and things are definitely not going to get any easier in the months ahead.

I wish that I had better news for you, but I don’t.  Global events are starting to greatly accelerate, and so many of the things that we have been warned about are starting to happen right in front of our eyes.

About 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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