CPI data in a moment.  But first, some long-term economic context so this all falls into place.  The market was down again yesterday and one of the reasons is the Trump “hard ball on trade” ploy is (predictably) not working out well.  We can sense this in how the Chinese are playing their  long game.

You see, Trump, at one moment,  really had a lock-in on the 2020 election.  But that “lock” is slowly being broken.  In my sense, the Chinese (being a 2,500 year civilization as compared with our short 243-years worth) would have already come back to the trade table by now.  They haven’t, so we must inspect their reasoning.

Let’s look at US options versus the Chinese and I think you’ll see it.

Who has the strategic advantage?  U.S. attempts to improve our trade status could have been accomplished via  incrementalism rather than going for the (developer-mindset) “home run” Big Play.  It would have taken less time and would have put the world at less risk.  Trump’s ratings would not have frozen where they are.

China, in contrast, has a vast number of options to develop its supplier chain.  First, they are in the middle of building-out their Middle Class.,  Which is what all their “ghost cities” have been for.  Instant expansion and “back up” cities.  We have made no such strategic investments.

China also has overland neighbors with which it can develop a “farm team.”  The areas of Southeast Asia once at war with the US, are only development of transportation networks away from being the “industrial feeder systems” that will ensure China’s military invincibility into the future.

China’s rail network development in Africa will one-day provide feeder rail service from Africa and the Middle East.  Did you miss Nicholas Muller’s article in The Diplomat?  “The Chinese Railways Remolding East Africa: Chinese-financed transport infrastructure projects are fundamentally changing connectivity in East Africa….”  Assurance of rare earths, anyone?

When one looks historically at nations with global aspirations, all to date have suffered expansionist delusions.  Take Germany in either World War.  One sees that eventual defeat happened because of a lack of human and industrial capital.  Chinese strategy is not singularly dependent on the USA. We are useful trade tools, but that’s like being “useful idiots.”   Vietnam, Myanmar, why their list of “farm club” operations list is huge.

Even in what is at risk for nuclear war of the 100-million dead, regional class (India/Pakistan) the Chinese are investing in Pakistan both as a supply source as well as buffer zone, which will evolve to an eventual port of entry to the Middle East and Africa.  Siberia/Mongolia dictate their Russian cooperation.  Look at the map.  Again, transport links are necessary.  Food production, as well.

Strategically, the US has backed itself into a terrible corner.  To our north, Canada is a resource-rich land but wants its own autonomy, even though they are critical to our survival.  Hamstrung by a US Congress too dumb to propose something as elegant or evident as an inclusionary American Expansion, which would consolidate into a single language populations of both Canada and Mexico with ours, we instead have independent-minded peoples to our north and corrupt people to our south.

Were the Chinese in our position, they would be funding ESL and STEM programs in Mexico’s schools and functionally killing non-compliant extra-governmentalal opposition such as the cartels.

Payoffs, corruption, and a highly evolved caste system, funded in part by those cartels, make any negotiations with Mexico difficult to impossible for the US.  The Chinese, meanwhile, playing them like a fiddle, supply arms, drugs, and port development along the entire Pacific coast even south of Panama.

The Chinese have also permitted themselves what can be thought of as “useful racism.”  Although slavery (outside of the underworld of drugs) is practiced to an extent (prison factories),  the Chinese have always dominated their neighbors.  Ask Vietnamese about the great power of their resident Chinese merchant classes.

This global view weighs heavily, I’m sure, on the Chinese mind.  They are considered people, not prone to tweets, but rather taking Life more as a chess game.  One plays to win.

They no doubt look at Donald Trump as the Echo of Herbert Hoover, as we have long-held.

Hoover, one recalls, was deeply involved in what was nascent global trade in the mid to late 1920’s.  When Hoover came to office, he’d not learned the lessons of trade conflict.  The Depression would teach the whole world just that thing.

Has Trump?  Likely not.

Trump, as a developer of a global real estate empire, likely has a skewed view of trade because it’s one thing for a country, such as Dubai for example, to want a World Class Hotel showpiece on its shores, but it’s quite another to negotiate “booty-sharing” which is what the plunder of tariffs comes down to in functional terms.

A developer might see hotel towers – while local politicians, use these, in local politics, as visible symbols of growth and progress.  But, as John Fraim messaged several years back in his book Battle of Symbols: Emerging Global Dynamics, there is a huge difference between a symbol (or representation) of progress and the actualizing of the thing itself.

Trump is a symbolizer.  China has molded itself a nation of actualizers.  

The trade war is rippling-out as we speak: Europe Is Stuck in the Middle of the U.S.-China Trade War, reports Fortune.

What’s likely is that China, having realized this,  will simply pull a few levers, including I think, well-ahead of the election in 2020 in an “anyone but Trump” financial move.

The biggest lever of all?  Dialing-back their purchases of US Treasuries.  This, in turn. will cause a US financial panic, the earliest stages of which are already evident as we are in the ending phase of a 10+ year recovery from the 2009 post-Housing Crisis collapse, to accelerate.  In economic terms, since we have completed a Wave V up, we are now in only the first wave down.  Such declines run a minimum of three, but usually five waves, to conclusion.

Absent actualities, Trump’s symbology may fail him in 2020.  Sadly, few (if any) commentators will be able to accurately pinpoint and articulate the underlying reason for his failure.  Hence, this morning’s note about what to watch for when it arrives.

What we see ahead in the wake of the election, is more biased media yammering-on endlessly about political aspects which is idiocy  made fashionable by the shallow-thinkers who inhabit the mediasphere.

The bias is breathtaking.    Example du jour? Few people realize that former president Obama’s White House Counsel is presently on trial.  Had this been a Trump WH Counsel, the NY Times would have run a weeks-long lead-in, CNN would be doing live drop-in’s we’re sure.  But, since Obama is above criticism, stories like Josh Gerstein’s “Mueller ties on display at jury selection for Greg Craig trial” go virtually unreported in the left-wing partisan media playing so predictably into China’s agenda.

Just some things to keep in mind.  Chinese minds, looking at our farcical border, political runaway-feedback loops,  and noting a lack of bold, deft strokes of leadership toward tangible results such as updating infrastructure, see the difference between their president-for-life and National Strategy versus and our short-time developer who is hamstrung by political opposition locked not on a vision of progress, but on political and budget obstructionism.

Thus, unable to move, the Chinese are in a commanding position to “eat their lunch slowly.”  Absent a “moon landing” or “21st century infrastructure plan to put lambda’s of bandwidth in every home and business” the Chinese see us for what we’ve actualized, not what we falsely pretend to symbolize.

We are their lunch.  A fat, full-of-ourselves, self-cooking goose.

Which gets us framed (and indeed Fraim’ed) for this breaking bit of news about…..

Consumer Prices

From the Labor Department:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in July on a seasonally adjusted basis after rising 0.1 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment.
Increases in the indexes for gasoline and shelter were the major factors in the seasonally adjusted all items monthly increase. The energy index rose in July as the gasoline and electricity indexes increased, though the natural gas index declined. The index for food was unchanged for the second month in a row, as a decline in the food at home index was offset by an increase in the food away from home index.

Drilling down to the trend?

After “the number” Dow futures were down 80.  Turnaround Tuesday time?  Interesting bet…we’ll pass.

NFIB Index

Is also out this morning and it’s a positive:

“WASHINGTON, D.C. (August 13, 2019) — Optimism among small business owners bounced back in July as expectations for business conditions, real sales, and expansion made solid gains. The NFIB Small Business Optimism Index rose 1.4 points to 104.7, with seven of 10 components advancing, two falling, and one remaining unchanged. The Uncertainty Index fell 10 points, reversing a surge in June that reached the highest level since March 2017.

“While many are talking about a slowing economy and possible signs of a recession, the 3rd largest economy in the world continues to defy expectations, generating output, creating value, and expanding the economy,” said NFIB President and CEO Juanita D. Duggan. “Small business owners want to grow their operations, and the only thing stopping them is finding qualified workers.”

We expect, if there was a real shortage of workers, though, there’d be more recruiting of retired people, but you may have figured that one out without help.  Those of us who are retired have a lot to offer, were HR departments not discriminating at some level.

Useful News

We will skip (*as useless) the daily pant-load of Trump bashing and yellow journo headlines.  Yes, Epstein is still dead or in wit-sec.  Instead, to thoughtful folks, these stories likely matter more.

CoreLogic Reports U.S. Overall Delinquency Rate Remains Steady at 20-Year Low in May.

New Zealand Becomes 1st Country To Legalize Payment Of Salaries In Crypto.

Chart: Medical marijuana markets expanding at varying rates, with Oklahoma, Florida setting the pace.  Oklahoma?  Where’s my ViseGrips?

And the march of the Phone Police continues: Hands-free phone ban for drivers ‘should be considered’ in the UK.  Fool the kneelers and it will be here, next.

Around the Ranch

How’s this for an email?

For gluing up the  light helmet.  I didn’t see any pre-filled glue syringes that would join plastics…

One week past naval hernia surgery now…pain hasn’t been too bad.  The Big Obstacle is  me.  This not being able to lift more than 10-pounds for another week, or two, is going to drive me nuts.

Peoplenomics tomorrow…go make something of yourself and write when you get rich…

george@ure.net

What’s “Worth Buying?”
Market Monday: A Time to "Cat"