Trump's trade agenda on the verge of imploding

[FreeinChrist]

So the 2 year yield curve inverted. That is bad.

Recession Warnings Grow As Stocks Slide Following Weak Economic Data From China, Germany | HuffPost

Volatility has returned to the markets in August amid rising tensions in the trade dispute between the U.S. and China. The S&P 500 is down more than 4% as investors fear a prolonged trade dispute could further weaken the global economy.

Traders tend to plow money into ultra-safe U.S. government bonds when they’re fearful of an economic slowdown, and that sends yields lower. When long-term yields fall enough, market watchers see it as a prediction that a recession could be on the way in a year or two. The yield on the 10-year Treasury has dropped from 2.02% on July 31 to below 1.60%. The 30-year Treasury yield also hit a record low Wednesday.


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[mark46]

Oops!

Trump probably won't be able to walk back the recession anymore. His tariffs on many countries, and specifically his trade war with China have been instrumental in slowing down the world economy. Germany is moving into recession. China has lost lots of jobs. The US has lost lots of jobs, especially export jobs. The prices of many products in the US are much higher because of tariffs. And now Trump has said that he wants to avoid potential further price increases before Christmas, finally publicly admitting the link between the tariffs and prices. No, China is not paying for the tariffs.

Perhaps the Fed can delay the recession by a couple of quarters. That won't help Trump politically. We are now very likely to be in a recession on Election Day, even if Trump prevents his Labor department from sharing all of the news during the month before the election.

So the 2 year yield curve inverted. That is bad.

Recession Warnings Grow As Stocks Slide Following Weak Economic Data From China, Germany | HuffPost

Volatility has returned to the markets in August amid rising tensions in the trade dispute between the U.S. and China. The S&P 500 is down more than 4% as investors fear a prolonged trade dispute could further weaken the global economy.

Traders tend to plow money into ultra-safe U.S. government bonds when they’re fearful of an economic slowdown, and that sends yields lower. When long-term yields fall enough, market watchers see it as a prediction that a recession could be on the way in a year or two. The yield on the 10-year Treasury has dropped from 2.02% on July 31 to below 1.60%. The 30-year Treasury yield also hit a record low Wednesday.


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[iluvatar5150]

So the 2 year yield curve inverted. That is bad.

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It's only bad if it stays there for some length of time. The predictor of a recession is the yield curve being inverted for a full quarter, not for a day.

 

[FreeinChrist]

Considering how the market is so oversold, the tremendous amount of corporate debt, zombie companies, etc., I still think we are headed for a recession. Maybe not right away.

 

[Nithavela]

Considering how the market is so oversold, the tremendous amount of corporate debt, zombie companies, etc., I still think we are headed for a recession. Maybe not right away.

Only after the next election.

 

[essentialsaltes]

Despite Trump's postponement of some of his additional tariffs to make the holidays happier, China doesn't care.

“The move by the U.S. seriously violated the consensus reached between the two heads of state in Argentina and Osaka, and deviates from the right track of resolving differences through consultation,” the Customs Tariff Commission of the State Council said in a statement. “China will have to take necessary countermeasures.”

Markets around the world slumped after China’s announcement.

 

[Fantine]

I am retired. We are partially dependent on income from our IRA's to live. Nevertheless, if a recession is what it takes to save this country and my descendants from the ever mounting disasters--environmental, political, diplomatic, economic, and societal--of the Trump administration--I am willing to bear the pain for their sake.

I get angry at the Americans who have seen this nightmare scenario unfold before their very eyes without realizing the peril they are subjecting us all to, but I realize all we need is 77,000 votes in the right places, and certainly 77,000 times seven must have seen the light at this point.

May the reign of racism and greed end on January 20, 2021.

 

[High Fidelity]

That's why you shouldn't pay much attention to the DJIA or the S&P 500. You do realize that the DJIA is 30 stocks, and the S&P is 500. How many stocks are listed on the Dow Jones or the NASDAQ?

Besides, all I can go by are my own investments. I don't do much on indexes. But a 10% increase per year is very good. Even 8% is good. I'm just trying to get my portfolio to recover from 8 stagnant years of Obama's economy, where I didn't even cover inflation.

If you haven't managed to get 8% year on year then you need new funds!

I've had over 8% for years, including during Obama.

Best year was 24%, during Obama. That doesn't mean he was better for the economy, it means my investments did.

 

[FreeinChrist]

Our investments weren't stagnant under Obama at all. They got hit initially because of the great recession that started before he was in office, but later, as the market went up, we recovered and gained.
This time we are more prepared.

 

[FreeinChrist]

It's only bad if it stays there for some length of time. The predictor of a recession is the yield curve being inverted for a full quarter, not for a day.

I have heard varying opinions. The fact that the 30 year yield curve dipped below 2% when it hadn't in .....how long? It is the combination that concerns me. We have been on a sugar high - like when folks get a new credit card and aren't worrying as they charge - then it hits the max. The last dip in taxes that was voted for just resulted in companies buying back their own stock, artificially making the companies look better. We pay for advice from a few sources (my husband day trades) and they are figuring we have his the top of the bull market

 

[SimplyMe]

Motorola, Apple, NCR and GE, to name four.
11 American Companies That Brought Jobs Back Home

You should really check your sources more carefully -- as this one completely undermines your argument. If you had looked, you'd notice that article is dated, "05/31/2013" -- just a few months after the end of Obama's first term. So, not only did Trump not bring the jobs back from those companies you listed but it also destroys your narrative about Obama killing manufacturing in the US and shows, instead, that iluvatar5150 is correct when he states that Obama was bringing back manufacturing jobs.

In fact, it is interesting to note that Motorola was sold to the Chinese company Lenovo in 2014. I think they still might have that plant in Texas, I can't recall for sure, but I do know that many of the other (non-manufacturing) jobs were lost when Lenovo took over.

 

[iluvatar5150]

I have heard varying opinions. The fact that the 30 year yield curve dipped below 2% when it hadn't in .....how long? It is the combination that concerns me. We have been on a sugar high - like when folks get a new credit card and aren't worrying as they charge - then it hits the max. The last dip in taxes that was voted for just resulted in companies buying back their own stock, artificially making the companies look better. We pay for advice from a few sources (my husband day trades) and they are figuring we have his the top of the bull market

To clarify - the original paper that analyzed the association between the yield curve and recessions looked at yield curves that were inverted for a full quarter, not inversions that only lasted a short amount of time. Whether or not those short-term inversions predict anything, is AFAIK, not as well understood. There's also some question as to whether the awareness of this correlation will empower the Fed et al to stave off a recession this time - sort of like Y2K, if you know it's coming, you can prevent it.

If you're interested, the guys on the Planet Money Indicator podcast have been going on about the yield curve so frequently and for so long that I had to stop listening to it.

 

[FreeinChrist]

It is simply an indicator. Looking at the 30 yr. yield curve and the 2 year yield curve, the increasing personal and corporate debt, etc. it is a concern.

 

[mark46]

Yes, it is a concern. But let's be clear. Inversion has happened before every recession.

In any case, the real issue affecting the market is the Trump's trade war on many, many countries. This is already affecting our economy and the economies of others. Trump believes that a weak Chinese economy is good for us. He is incorrect. China now buys much less from us. On the other hand, we continue to increase the amounts we buy from China. Even if this number decreases, the tariff tax will have a negative effect. [Of course, we would likely replace Chinese products with those from other Asian countries]

It is simply an indicator. Looking at the 30 yr. yield curve and the 2 year yield curve, the increasing personal and corporate debt, etc. it is a concern.

 

[mark46]

As we have the academic fight over the predictability of the yield curve, increased tariffs will continue to negatively affect the world economy.

To clarify - the original paper that analyzed the association between the yield curve and recessions looked at yield curves that were inverted for a full quarter, not inversions that only lasted a short amount of time. Whether or not those short-term inversions predict anything, is AFAIK, not as well understood. There's also some question as to whether the awareness of this correlation will empower the Fed et al to stave off a recession this time - sort of like Y2K, if you know it's coming, you can prevent it.

If you're interested, the guys on the Planet Money Indicator podcast have been going on about the yield curve so frequently and for so long that I had to stop listening to it.

 

[FreeinChrist]

To clarify - the original paper that analyzed the association between the yield curve and recessions looked at yield curves that were inverted for a full quarter, not inversions that only lasted a short amount of time. Whether or not those short-term inversions predict anything, is AFAIK, not as well understood. There's also some question as to whether the awareness of this correlation will empower the Fed et al to stave off a recession this time - sort of like Y2K, if you know it's coming, you can prevent it.

If you're interested, the guys on the Planet Money Indicator podcast have been going on about the yield curve so frequently and for so long that I had to stop listening to it.

Ever read anything from Stansbury or Dr. Eifrig? Dr. Eifrig put out an article about corporate dept which is a record $9 trillion, and how they spent their money in the tax break on buybacks to artificially elevate their stock. They didn't build factories.

 

[essentialsaltes]

In another tit-for-tat response, China has formally announced additional tariffs on US products.

U.S. stock futures nose-dived Friday after China announced retaliatory tariffs on $75 billion in U.S. goods and reinstated levies on American auto products.

The levies range from 5 to 10 percent and take effect Sept. 1 and Dec. 15 — the same dates President Trump’s latest tariffs on $300 billion in Chinese goods are slated to kick in — the Chinese finance ministry said in a statement.

“China’s imposition of tariffs is a forced response to the unilateralism and trade protectionism of the United States,” said the Communist Party-run Global Times. The outlet said it hoped the trade conflict would be resolved “on the premise of mutual respect and equality and trustworthiness in words and deeds.”

Since it doesn't look like we're close to a deal, it's time to make it into a 2020 slogan "Trump 2020: Only I can fix the China trade war."

 

[essentialsaltes]

In a series of tweets, [Trump] expresses frustration with China, and says, “Our great American companies are hereby ordered to immediately start looking for an alternative to China.”

Sounds like he's got everything under control.

 

[LoAmmi]

In a series of tweets, [Trump] expresses frustration with China, and says, “Our great American companies are hereby ordered to immediately start looking for an alternative to China.”

Sounds like he's got everything under control.

Does he think he can order American companies to do things?

 

[Nithavela]

In a series of tweets, [Trump] expresses frustration with China, and says, “Our great American companies are hereby ordered to immediately start looking for an alternative to China.”

Sounds like he's got everything under control.

I wasn't aware that the president of the USA can order companies on such things.