Yeah.  Trade War.  Supposed to be the “end of the world” and would collapse consumerism as we knew it.  But, that’s  not what the data says.

Let’s start, though, with this morning’s federal jobs report.

“Total nonfarm payroll employment rose by 266,000 in November, and the unemployment rate was little changed at 3.5 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in health care and in professional and technical services. Employment rose in  manufacturing, reflecting the return of workers from a strike. ”

Our key data points:

  • Total number of people employed was +83,000
  • Employment/Population ratio held stable at 61%
  • Working part time for economic reasons dropped 116,000
  • While hourly wages were stable, 48,000 jobs were added under “Goods Producing”
  • All great?  Well….not so fast.
  • The CES Birth-Death Model over here reveals that all of the new jobs, and then some, 274,000 were “estimated” into existence.  That should concern you.
  • Biggest estimated gains were professional and business services (+95,000) and Ediucation and Health (+65,000).  If you work in those fields, a cubicle count is in order?

Just ahead of the report, this crossed on Business Wire: “Small Businesses Are Adding Staff, Showing Signs of Optimism Heading Into Holiday Shopping Season.”

How Trade War is Helping Trump

Going beyond the jobs report, though, other data makes us wonder  where are the impacts from what was going to be a “terrible trade war?”

  • In “January 22 2018: Trump announced tariffs on solar panels and washing machines.[80] About 8% of American solar panel imports in 2017 came from China.[81] Imports of residential washing machines from China totaled about $1.1 billion in 2015.” says  Wikipedia.  And yet, solar panel prices at large national outlets like have remained  about the same on a “cost per watt” basis.
  •  In April of last year, the Ministryy of Commerce of China responded by imposing tariffs on 128 products it imports from America, including aluminum, airplanes, cars, pork, and soybeans (which have a 25% tariff), as well as fruit, nuts, and steel piping (15%)  U.S. commerce secretary Wilbur Ross said that the planned Chinese tariffs only reflected 0.3% of U.S. gross domestic product, and Press Secretary Sarah Huckabee Sanders stated that the moves would have “short-term pain” but bring “long-term success”   It would be hard to argue the point.  While there are been some problem areas like airplane exports, that likely has more to do with the Boeing Max series grounding than direct impacts of the trade war.

August of this year was a biggie, too:

  • August 5: The central bank of China (PBOC) let the Renminbi fall over 2% in three days to the lowest point since 2008 as it was hit by strong sales due to the threat of tariffs.[152]
  • August 5: The U.S. Department of Treasury officially declared China as a Currency Manipulator, reportedly under personal pressure from Trump.[153] In July 2019 the IMF found the yuan to be correctly valued, while the dollar was overvalued, and some analysts found that market forces, rather than Chinese intervention, had recently caused the yuan to lose value.[152][154] China denied manipulating its currency, citing currency market reaction to Trump’s announcement of tariff increases days earlier.[155]
  • August 5: China ordered state-owned enterprises to stop buying US agricultural products,[156] totaling $20 billion per year before the trade war.

While it has been tough on farmers, we have seen some unexpected economic problems arise in China.  For example, just in the past week, the South China Post reported “Missed bond payment by China’s state-owned Peking University Founder Group shocks investors — Peking University Founder Group, controlled by China’s top university, misses payment on a 2 billion yuan (US$283 million) onshore bond, citing liquidity crunch/

Two facts are, we think, becoming undeniably clear.

  • First is the stock market is on a roll.  Using our proprietary Aggregate Index, since the 2018 trade skirmishing began, our Aggregate has soared from 23,823 on Jan 22, 2019 to a projected price for this morning’s open of 26,448.  If you are “math challenged” that’s an 11% gain over the last two years, call it about 5-1/2% per year.  Not bad for a “going to collapse trade” narrative, huh?
  • Another place we see no sign of impacts is in Retail Sales where, once again, almost shockingly, there has not been a single year-over-year decline since “trade warfare” broke out!   Here’s the data, right off the Census website:

The  point?  Idiots of both political parties are after Trump and continue to press forward with impeachment.  Some cite Ukraine, but occasionally there’s a subtext from a few about “trade concerns.”

Yet, here’s the data:  Retail is up, inflation is tame, and the stock market is averaging 5-1/2% annual index gains.

I’ve known a lot of people who have been narcissistic, and even arrogant.  Turns out, those really just have extreme self-confidence and mistakenly display it in front of weak people.  Those who have made tons of money have confidence.  Trump just might be one of those people.  Not as much as claimed, maybe, but he can afford to buy me lunch, for sure.

We find it interesting that as House democrats keep impeaching, the data keeps piling up.

What’s REALLY Going On?

I don’t think the Trump Gambit on Trade would have paid off in a “normal” economy.  But, what’s going on, in  my view, is very similar to what happened in America in the late 1920’s leading into the Crash of 1929.  Think of it as Ure’s Discontinuity (it’s well-described somewhere in the Peoplenomics archives) and it goes like this:

In “normal” times when interest rates decrease, consumption is encouraged.  However, just above the “zero lower bound” an interesting  reversal of control authority takes place.

As the Discontinuity begins, the appreciation of bonds begins to falter.  That’s because the USFed has made it abundantly clear we will not go to zero (or negative) interest rates.  Thing is, the  potential appreciation for bonds then halts.  What happens (as a result) is lots of former bond money goes looking for greater returns.  The only place where there’s much left is stock price appreciation, particularly when stock prices seem on a reliable trajectory and there are still some stocks paying modest  dividends to boot.

Since the Bond Market is larger than the Stock Market, the month migration continues.  With the markets around record highs, we can make a case (and do on the subscriber side) that a further 10-20% upside is possible, even from these lofty levels.  That’s because there is so much money on the sidelines.

We live in a time of digital tulips, as well.  As my  consigliere noted on his recent visit, the average person doesn’t realize that the main driver for Bitcoin and the 2,000-odd wannabes and clones (remember, no barriers to entry in digital tulips!) all arose because the US demanded, and got, the Swiss to rat our “Secret Accounts.”   Which, if you’ve got enough coffee load to follow, simply means the Secret Swiss Bank Accounts (discrete and dirty money deals that people don’t want reported) has been succeeded by digital secrecy.

It’s an article of faith that at some point, USGov will do the same thing China’s doing – cracking down on digital money to reduce corruption and drug dealing, human trafficking, and other high-payoff, but not particularly moral, operations.

Just in the past week, if you’ve been paying attention to  Bloomberg, “China’s Crackdown on Cryptocurrencies Claims First Victims.”

If you want a good “thinking model” consider that the “flight controls of the economy are stuck in  Ure’s Discontinuity.”  While, at the same time, various “capital camps” are at war over how to conduct their illicit businesses while governments  are trying to crack down on corruption and impose taxes, as applicable.  With this in mind, the report this morning about Jeffrey Epstein supposedly blackmailing high profile people is hardly surprising.  Importantly, we have to wonder if “foundations” and “donations” was being used in lieu of digital tulips, in a major way, since “donations” can be wrapped up in flags, while cartel ledger transfers are a little harder to salute.

With almost everyone in Washington having “skeletons in their closet” (copies of which make it into Intel agency “control files”) you’ll have to pardon our skepticism of things like the Impeachment Hoax and wonder what the ultimate number of “wicked witches” in the democrat party will rise to?  We’re starting to lose count…

Three Takeaways from this jumbled, though factual) ramble:

  • Trade War is Helping Trump (data sez, not me)
  • Cryptos exploded because Swiss Bank secrecy was busted
  • Foundations are an alternative funds movement channel for routing crooked money by wrapping it up in flags.  Many members of congress have “foundations.”
  • If you want to bring up quid pro quo’s, we’d direct you to the Washington Examiner story “Tax records show the Clinton Foundation lost $16.8 million in 2018.”  Nothing to pro quo for, perhaps?  We can’t be sure.  But could Hil run to bail out the Foundation?

Congratulations!  You no “get” more than 99.95% of your fellow countrymen.  We now return you to the Daily Distraction Digest..3D.

Viewing Askance

As you know, we’ve been following the rocky relations between India and Pakistan expecting a flash any old time.  Just this morning, a report from the  Brookings Institution lays out “India and the Mistrust Economy.”  Read and think:  When government control falters, what’s the usual prescription?  (Start a war!)

Good read in  the  Marijuana Business Daily, too: Marijuana has its ‘fingers in everything’: Q&A with cannabis investor and ‘Big Short’ subject Danny Moses.

Holding nearer the  middle of the road can be costly.  Our latest example is Immigration rights groups call on Buttigieg to return donations. A dandy exercise in playing “follow the money…” an d “How long are the strings on contributions?”

Another useful CBS report isMike Bloomberg denies “buying” the 2020 Democratic primary.”  OK, what do you call it?  “Better Marketing?” Bwaa-ha-ha-ha…hell yeah, you bet. Sure…uh-huh. (Stockyard stench running high, today!)

Naval Gazing: Singapore Arrests Sanctioned Russian Vessel.

Well, there you go – half my wit and wisdom in one column.  Moron the morrow on the grown-up’s side ( and a piece here Sunday for the great unsubscribed.  Keep your eyes out for Earthquakes. and…

Write when you get rich,