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.

 

China Is Extremely Angry, And They Now Consider The United States To Be Enemy #1

Have relations between the United States and China finally reached the point of no return?  At this moment, it would be difficult to overstate how angry the Chinese are with the United States.  Chinese officials are firmly blaming the United States for the enormous political protests that we have witnessed in Hong Kong in recent weeks, and on Thursday President Trump slapped another round of tariffs on Chinese imports.  Sadly, most Americans aren’t even paying much attention to these developments, but over in China everyone is talking about these things.  And of course the truth is that they aren’t just talking – the Chinese are absolutely seething with anger toward the U.S., and they aren’t afraid to express it.

Let me give you a perfect example of what I am talking about.  One of the most highly respected news anchors in China, Kang Hui, actually used an expletive when referring to the United States during a news broadcast earlier this week.  Normally I would never have such language in one of my articles, but this comment made headlines all over the globe, and I think that it is very important for all of us to understand what the Chinese are saying about us.  So since this is a news item of critical importance, I have decided not to censor this quote at all.  The following comes from the New York Times

“They stir up more troubles and crave the whole world to be in chaos, acting like a shit-stirring stick,” Mr. Kang said on the usually stolid 7 p.m. national news program on CCTV, China’s state broadcaster. The expletive quickly became one of the most-searched-for phrases on Chinese social media.

In a follow-up video on a CCTV social media account, Mr. Kang boasted about how he had taunted the United States.

“If a handful of Americans always stir up troubles, then we are sorry,” he intoned. “No more do we talk about certain issues. We will also target you. We will bash you till your faces are covered with mud. We will bash you till you are left speechless.”

Could you imagine Anderson Cooper saying something similar about China on CNN?

And actually Mr. Kang likely has far more viewers than Anderson Cooper does.

Most Americans spend very little time thinking about relations with China, but over in China they are absolutely furious with us right now, and the developing situation in Hong Kong is one of the biggest reasons for that anger.  Millions of people have flooded the streets of Hong Kong in recent weeks, and it appears that the Chinese have decided that enough is enough.  According to Bloomberg, U.S. officials are closely watching “a congregation of Chinese forces on Hong Kong’s border”…

The White House is monitoring what a senior administration official called a congregation of Chinese forces on Hong Kong’s border.

Weeks of unrest in the Chinese territory have begun to overwhelm Hong Kong’s police, who have found themselves in violent clashes with protesters. China warned Monday that the civil disorder had gone “far beyond” peaceful protest after police deployed tear gas over the weekend.

Could it be possible that Chinese forces could soon storm across the border?

And there have also been other signs that China is about to do something drastic

And also on Wednesday, Chen Daoxiang, the commander of China’s military garrison in Hong Kong — which holds around 6,000 troops — said his forces were “determined to protect national sovereignty, security, stability and the prosperity of Hong Kong.” His remarks came as China released a new propaganda video which include armed forces practicing shooting at protestors, after which he underscored his support for the city’s chief executive for “rigorously enforcing the law.”

Yes, Hong Kong is now technically part of China.  But according to the agreement that was signed when the British handed over Hong Kong, the city is supposed to be allowed to govern itself to a large degree until 2047

After taking over Hong Kong in a war in the 1800s, Britain returned it to China in 1997 with an important stipulation: The city would partly govern itself for 50 years before fully falling under Beijing’s control. So until 2047, the expectation was that the city and the mainland would operate under the principle known as “one country, two systems.”

So if China ends up sending troops into Hong Kong to end the political protests, the Trump administration will be extremely upset, and tensions between our two nations will go up several more notches.

A new development in the trade war is the other reason why the Chinese are so angry with us right now.

After President Trump hit China with new tariffs on Thursday, China’s ambassador to the United Nations warned that the Chinese are prepared to implement “necessary countermeasures”

China’s new ambassador to the United Nations, Zhang Jun, said Beijing would take “necessary countermeasures” to protect its rights and bluntly described Trump’s move as “an irrational, irresponsible act.”

“China’s position is very clear that if U.S. wishes to talk, then we will talk, if they want to fight, then we will fight,” Zhang told reporters in New York, also signalling that trade tensions could hurt cooperation between the countries on dealing with North Korea.

In other words, the Chinese are not going to back down one bit, and they are going to hit us back hard.

And Chinese Foreign Ministry spokesperson Hua Chunying said similar things when she addressed reporters on Friday

“China will not accept any form of pressure, intimidation or deception,” Chinese Foreign Ministry spokesperson Hua Chunying said at a press conference Friday.

China‘s Ministry of Commerce released a statement that said Beijing would impose countermeasures.

“The U.S. has to bear all the consequences,” the statement said. “China believes there will be no winners of this trade war and does not want to fight. But we are not afraid to fight and will fight if necessary.”

In the end, it is very true that there “will be no winners” in this trade war.  The Chinese know where our pain points are, and they will not be afraid to fight dirty.

A rapidly deteriorating relationship with China is a big part of the scenario that we have been anticipating.  As I discussed yesterday, it is exceedingly unlikely that there will be a trade deal between the United States and China before the 2020 presidential election.  And to be honest, it is far more likely that our conflict with China will escalate well beyond just a “trade war” in the months ahead.

The two largest economic superpowers on the entire planet are now locked in a monumental struggle for dominance, and it is going to result in a tremendous amount of economic pain for the entire planet.

Unfortunately, most Americans are completely and utterly clueless about what is going on, and so most of them are still convinced that everything is going to be just fine.

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.

Trump Just Poked The Dragon In The Eye, And U.S.-China Relations Just Took An Ominous Turn For The Worse

After what President Trump just did, the odds of the U.S. and China being able to reach a trade agreement this year officially just went from slim to none.  For China, there is no issue more sensitive than the status of Taiwan.  For the Chinese, it is unthinkable for anyone to even suggest that Taiwan is not a part of China, and the Chinese are prepared to defend their “one China” policy to the death if necessary.  On the other hand, most Americans are entirely clueless about Taiwan.  In fact, if you gave them a blank map of the world the vast majority of Americans wouldn’t even be able to find Taiwan thanks to our exceedingly poor system of public education.  So for most Americans, a news story about how President Trump plans to sell 2 billion dollars worth of arms to Taiwan is completely and utterly meaningless.  But for the Chinese, such news is a deep national insult

The United States is pursuing the sale of more than $2 billion worth of tanks and weapons to Taiwan, four people familiar with the negotiations said, in a move likely to anger China as a trade war between the world’s two biggest economies escalates.

An informal notification of the proposed sale has been sent to the U.S. Congress, the four sources said on condition of anonymity because they were not authorized to speak about the possible deal.

This arms sale barely made a blip in the U.S. news cycle, but over in China they are officially freaking out about this.  According to one report, this deal would send “over 100 tanks and almost 2,000 missiles” to Taiwan…

The US, which is the main weapons dealer to Taiwan, would send over 100 tanks and almost 2,000 missiles to the island. There was outrage in China, who said they were seriously concerned after Taiwan’s defence ministry confirmed the sale. The move is believed to further heighten tensions between Beijing and Washington.

It comes days after Chinese defence minister Wei Fenghe said: “If anyone dares to split Taiwan from China, the Chinese military has no choice but to fight at all costs.”

You can do quite a bit of damage with 2,000 missiles.

Most Americans may not realize this, but the truth is that U.S.-China relations just took a really ominous turn for the worse.

And in addition to announcing this arms sale to Taiwan, President Trump also just threatened China with even more tariffs

DONALD Trump threatened to hit China with tariffs on “at least” another $300bn worth of goods today – as a Beijing propaganda campaign painted the US as evil bullies.

Tensions between the world’s two largest economies have soared sharply since talks aimed at ending a festering trade war broke down in early May.

But trust me, the announcement of the arms sale to Taiwan was far, far more insulting to China than the tariff threat was.

On the Chinese side, they have decided to hit the U.S. right in the farm belt by “putting purchases of U.S. soybeans on hold”

China is reportedly putting purchases of U.S. soybeans on hold amid the growing trade war with the U.S., according to a report from Bloomberg News. As the world’s largest soybean buyer, China’s move could ramp up the economic pressure on American farmers.

This has already been the worst year for U.S. farmers in decades, and this move by the Chinese is going to make things even worse.  For much more on this, please see an article that I posted earlier today entitled “U.S. Farms Are Facing Their Worst Crisis In A Generation – And Now Here Comes Another Monster Storm”.

Also, anti-American rhetoric in China has now reached a fever pitch.  According to CNN, the Chinese just issued an official alert warning Chinese travelers of “shooting, robbery and theft” in major U.S. cities…

On Tuesday, China’s Culture and Tourism Ministry warned its citizens of the risks of traveling to the US in an alert, citing frequent recent cases of “shooting, robbery and theft.”

On the same day, the country’s Foreign Ministry — along with China’s embassy and consulates in the US — issued a security alert for Chinese citizens, alleging “repeated harassment” of Chinese nationals in the US by local law enforcement officials.

Of course the Chinese are correct when they warn about the violence in our cities.  For example, more than 50 people were shot in the city of Chicago last weekend alone.

In addition to the travel warnings, Chinese state media is doing all that it can to put the U.S. in a bad light.  In fact, one major Chinese paper just called the United States the “enemy of the world”

The new travel advice did not come in isolation.

China’s ruling Communist Party has launched a trade war propaganda campaign, with recent efforts — delivered via state media — focusing on US “trade bullying” and “hegemony.” In one noteworthy article, published Tuesday in party mouthpiece the People’s Daily, the US was labeled the “enemy of the world.”

Does it sound to you like the Chinese are ready to surrender and head back to the negotiating table?

No, the truth is that they are just getting angrier with every week that goes by.  Most Americans don’t even know that we fought against the Chinese during the latter stages of the Korean War, but right now over in China those old battles against “the evil American invaders” are being publicly celebrated

President Xi Jinping’s state media has even begun to refer to a very bloody battle between America and Chinese forces during the Korean War.

The 1952 battle of Triangle Hill – or Shangganling in Chinese – has been glorified in China for decades as a turning point in the war.

School children are told how the sacrifice of Chinese soldiers eventually led to the “defeat of the evil American invaders”.

At this point, most Americans may be vaguely aware that some sort of a trade war is going on, but over in China they are taking this deadly seriously.  And without a doubt, the stage is being set for a full-fledged global showdown between the two superpowers.

This is not a game, and if things go badly we could potentially be facing apocalyptic consequences.

So hopefully Trump knows what he is doing, because right now things appear to be starting to spiral out of control very rapidly.

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.

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.

All Of The Economic Momentum Is Moving In Just One Direction Now

Earlier today, I was greeted by this jarring headline when I visited the Drudge Report: “BONDS FLASH RECESSION WARNING”.  These days, it seems like the “R word” is being thrown around constantly, but at this time last year everyone was celebrating how well the economy was doing.  Unfortunately, we have witnessed a dramatic shift in recent months, and we just got some more really bad economic numbers.  Thanks to those bad numbers and an increasing amount of anxiety about the trade war, the Dow Jones Industrial Average fell another 237 points on Monday.  That means that we are on pace to potentially see the Dow fall for a sixth week in a row, and that is something that hasn’t happened since the last recession.

But right now investors are far more spooked about what is going on in the bond market.  According to Mish Shedlock, we haven’t seen this many yield curve inversions “since the start of the Great Recession”…

On Friday, US Treasury yields plunged at the mid to long end of the curve providing the most inversions since the start of the Great Recession. This is the biggest recession warning since 2007.

In so many ways, what we are witnessing at this moment is very reminiscent of the conditions that prevailed just prior to the last financial crisis.

Back then, the economic numbers were definitely starting to slide, but most Americans didn’t think that we were heading toward big trouble.  But those that understood what was happening were sounding the alarm, and the same thing is happening today.  For example, the following comes from a CNBC article entitled “Morgan Stanley says economy is on ‘recession watch’ as bond market flashes warning”

“Recent data points suggest US earnings and economic risk is greater than most investors may think,” wrote Michael Wilson, the firm’s chief U.S. equity strategist.

Specifically, the stock strategist highlighted a recent survey from financial data firm IHS Markit that showed manufacturing activity fell to a nine-year low in May. That report also revealed a “notable slowdown” in the U.S. services sector, a key area for an American economy characterized by huge job gains in health care and business services.

In addition to disappointing manufacturing numbers, we also just learned that orders for capital goods were down significantly during the month of April…

The Commerce Department said on Friday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.9% last month as demand weakened almost across the board. Data for March was revised down to show these so-called core capital goods orders rising 0.3% instead of increasing 1.0% as previously reported.

Also, we just found out that U.S. home price gains have now fallen for 12 months in a row.

When you add those numbers to all of the other depressing economic numbers that have been rolling in lately, a very clear picture emerges.

The U.S. economy is heading in the wrong direction, and things are steadily getting worse.

A resolution to our trade war with China would be a huge economic boost in the short-term, but that is not likely to happen for the foreseeable future.  In fact, on Monday President Trump stated that he is “not ready” to make a deal with China

Bank shares fell broadly amid the lower interest rates. Goldman Sachs dropped 1.8% while Citigroup and J.P. Morgan Chase fell 0.9% and 1.1%, respectively. Morgan Stanley and Wells Fargo also slipped.

The drop in bank shares and rates come after President Donald Trump said on Monday the U.S. was “not ready” to make a deal with China, before adding he expected one in the future. Trump also said tariffs on Chinese imports could go up “substantially.”

And the Chinese are clearly digging in as well.  The chief editor of the Global Times, Hu Xijin, has a very close relationship with top Chinese officials, and he just warned that China “is seriously considering restricting rare earth exports” to the United States…

While the official at China’s national planning body did not directly answer whether Beijing would restrict rare earth exports to the United States, Global Times Editor-in-chief Hu Xijin wrote on Twitter: ‘Based on what I know, China is seriously considering restricting rare earth exports to the U.S. China may also take other countermeasures in the future.’

Although the tabloid Global Times is not one of China’s official media, it is widely read and is published by the ruling Communist Party’s People’s Party newspaper.

Just a few days ago I published an entire article about the impact that such a move would have on the U.S. economy, and I won’t reproduce all of that information here.

But the bottom line is this – the U.S. economy would be in a massive amount of trouble if that happened.

A deteriorating relationship with China is part of the scenario that we have been anticipating, and events are definitely starting to accelerate now.

For most Americans, however, there is no reason to be concerned.  Most of us simply trust that our leaders in Washington have things under control and that everything will work out just fine somehow.

But if we do plunge into another deep economic crisis, many Americans will be in enormous trouble right away.  According to one recent survey, 45 percent of us rate our financial situations as either “fair” or “poor”

Nearly 30% of respondents rate their financial situation as “only fair” and 15% say it’s “poor.” Meanwhile, 25% worry “all” or “most” of the time that their household income won’t be enough to cover their expenses.

Their biggest concerns: Saving enough for retirement and unplanned medical costs, with 54% and 51%, respectively, saying they’re “very” or “moderately” worried about each prospect.

In addition, another recent survey discovered that 59 percent of all Americans are currently living paycheck to paycheck.

Just like last time around, most Americans are living on the edge financially.

And just like last time around, millions of Americans will be completely blind-sided by an economic train wreck that they didn’t see coming.

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.

American Soil Is Being Globalized: Nearly 30 Million Acres Of U.S. Farmland Is Now Owned By Foreigners

All across America, U.S. farmland is being gobbled up by foreign interests.  So when we refer to “the heartland of America”, the truth is that vast stretches of that “heartland” is now owned by foreigners, and most Americans have no idea that this is happening.  These days, a lot of people are warning about the “globalization” of the world economy, but in reality our own soil is rapidly being “globalized”.  When farms are locally owned, the revenue that those farms take in tends to stay in local communities.  But with foreign-owned farms there is no guarantee that will happen.  And while there is plenty of food to go around this is not a major concern, but what happens when a food crisis erupts and these foreign-owned farms just keep sending their produce out of the country?  There are some very serious national security concerns here, and they really aren’t being addressed.  Instead, the amount of farmland owned by foreigners just continues to increase with each passing year.

Prior to seeing the headline to this article, how much U.S. farmland would you have guessed that foreigners now own?

Personally, I had no idea that foreigners now own nearly 30 million acres.  The following comes from NPR

American soil.

Those are two words that are commonly used to stir up patriotic feelings. They are also words that can’t be be taken for granted, because today nearly 30 million acres of U.S. farmland are held by foreign investors. That number has doubled in the past two decades, which is raising alarm bells in farming communities.

How did we allow this to happen?

And actually laws regarding land ownership vary greatly from state to state.  Some states have placed strict restrictions on foreign land ownership, while in other states it is “a free-for-all”

“Texas is kind of a free-for-all, so they don’t have a limit on how much land can be owned,” say’s Ohio Farm Bureau’s Ty Higgins, “You look at Iowa and they restrict it — no land in Iowa is owned by a foreign entity.”

Ohio, like Texas, also has no restrictions, and nearly half a million acres of prime farmland are held by foreign-owned entities. In the northwestern corner of the state, below Toledo, companies from the Netherlands alone have purchased 64,000 acres for wind farms.

But even in states where there are restrictions, foreign entities can get around that by simply buying large corporations that own land.

For example, when the Chinese purchased Smithfield Foods in 2013 they instantly gained control over 146,000 acres of prime farmland.  The following comes from Wikipedia

Smithfield Foods, Inc., is a meat-processing company based in Smithfield, Virginia, in the United States, and a wholly owned subsidiary of WH Group of China. Founded in 1936 as the Smithfield Packing Company by Joseph W. Luter and his son, the company is the largest pig and pork producer in the world.[4] In addition to owning over 500 farms in the US, Smithfield contracts with another 2,000 independent farms around the country to grow Smithfield’s pigs.[5] Outside the US, the company has facilities in Mexico, Poland, Romania, Germany, and the United Kingdom.[6] Globally the company employed 50,200 in 2016 and reported an annual revenue of $14 billion.[2] Its 973,000-square-foot meat-processing plant in Tar Heel, North Carolina, was said in 2000 to be the world’s largest, processing 32,000 pigs a day.[7]

Then known as Shuanghui Group, WH Group purchased Smithfield Foods in 2013 for $4.72 billion, more than its market value.[8][9] It was the largest Chinese acquisition of an American company to date.[10] The acquisition of Smithfield’s 146,000 acres of land made WH Group, headquartered in Luohe, Henan province, one of the largest overseas owners of American farmland.[a]

Of course this hasn’t happened by accident.

The communist Chinese government has actually made the purchase of foreign agricultural assets a top national priority in recent years, and this has been reflected in a series of key documents

The strategy is reflected in encouragements to invest abroad by various documents and articles issued by Chinese leaders. For example, a series of annual “Number one documents” from China’s communist party authorities stating rural policy have contained increasingly specific strategies for investment. A general exhortation to invest in agriculture overseas, issued in 2007, was followed by an initial surge in overseas farming ventures. In 2010, authorities called for supportive policies to encourage investment abroad.

The 2014 document included a more specific mandate to create large grain-trading conglomerates, designed to give Chinese companies greater control over oilseed and grain imports. That was the same year COFCO acquired Nidera and Noble Agri, making COFCO one of the largest trading companies in the world based on value of assets. The 2015 document specifically called for policies to support facilities, equipment, and inputs for agricultural production in foreign countries. The 2017 document broadened the encouragement to include all types of agricultural conglomerates. The 2018 document repeated the general endorsement of overseas investment and instructions to create multinational grain-trading and agricultural conglomerates.

In the end, how much Chinese ownership of our farmland would we be comfortable with?

If they owned 20 percent of our farmland, would we be okay with that?

Well, what if that figure surged to 30 or 40 percent?

Would that still be okay?

We need to start asking these sorts of questions, because foreigners are buying up more of our farmland with each passing day, and this is a very real national security threat.

And after this absolutely disastrous year, thousands more U.S. farmers will be forced out of business and it is anticipated that more U.S. farmland will be up for sale than ever before.

I extensively discussed the problems that farmers in the middle of the country are currently having yesterday, and today I would like to share with you a portion of an email that a friend in Missouri just sent me…

I work for a farmer in West-Central Missouri who raises corn, soybeans, and cattle and to say it’s been a challenging Spring would be the understatement of the year!!! We managed to get some corn planted in April but it started to rain and rain and rain and we still have more corn to plant. My boss doesn’t like to plant corn after May 15 and here it is May 27 and we still are not done planting corn. With each late day that passes by the yield goes down so what do you do??? Do we start planting soybeans if or when it dries up even though the price of soybeans is at a record low or do we plant corn that has risen in price but will have a reduced yield??? From April 28 through today (May 27) we have had 10 inches of rain. One day we had 4.5 inches with roads and basements flooded. Last week we had rain 4 out of those 7 days!!! It’s raining again today as I write this!!! We need warm, sunshine, dry, windy days and we get mostly cool, cloudy, rainy days. Next Thursdays low is supposed to be 57!!! If the weather pattern doesn’t change I don’t see how we can ever get the soybeans planted and we have 1,300 acres to plant. There are large farmers in my area that don’t have anything planted.

This truly is a “perfect storm” for U.S. farmers, and many believe that what we have witnessed so far is just the beginning.

Farm bankruptcies are already at the highest level that we have seen since the last recession, and do we really want foreigners gobbling up even more of our farmland from farmers that are incredibly desperate to sell?

Our founders never intended for America to be for sale to the highest bidder, and hopefully more states will start passing laws that will make sure that U.S. farms stay in the hands of U.S. farmers.

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.

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