While people push-back on Trump’s trade plans, watch rates if the 10-year hits 3% on on higher wages Friday; for whatever reason markets continue to ignore the Fed, monetary policy and even the market’s technical pattern, says Gene Inger of  The Inger Letter.

Whether China brokered this summit or not (and quid pro quo related to trade isn’t impossible), the trick will be whether Kim brings any sincerity to the gathering. Sure, President Trump will take credit if an accord actually happens; and he may deserve it.

As most commonly the case, the result (or policy) turns out to be the reverse of linear-thinking about Trump. Time will tell. 

Couldn’t achieve much without China's help on this (as North Korea is totally incapable of sustenance without them) but Trump and Xi have a relationship that no former leaders of China and the USA had. Whether Trump or Moon are being played is an open question.

However, my view is nope; Kim wants the U.S. off the peninsula and probably contemplates an easier task of penetrating and subverting (or taking over) the South without a war and without America's presence. China wants a reduced U.S. naval presence there too; so ironically interests are slightly aligned. 

Protecting and revitalizing American industry has not only been the topic du jour this week but a backbone of Trump’s entire legitimization, as related to his candidacy and even he knows it. The assault on once gullible manufacturers (or manipulated steadily even by a U.S. Chamber of foreign Commerce as I used to call it years ago) is being faded-out. It is not an easy task, given how many decades the erosion persisted. 

China claimed compliance but all they did was shift a promised 8 million metric tons cut in steel production, and the 10 million tons of iron ore, to export. Videos addressed it this week again; Reuters exposed firms doing this; with pollution on the rise again being a tip-off that restrictions weren't being followed. 

The steely charade-plot thickens

So China ordered an investigation (hah; they planned the transition) as a charade; although in a domestic sense for them, they had to allocate a chunk of production somewhere, or millions of steelworkers would lose their jobs. Hmmm... the USA never seemed to worry enough about steel workers here until now.

In fairness; the business was improving since a recalcitrant President Obama made an effort (262% tariff) on cold-rolled steel back in 2015. That’s the inflection point where China started heavy closeted efforts to shift production, not only abroad, but within China.

So now, a CNBC (World) reporter, visiting one such said steel-free town found workers saying how they moved production and so on. Not new of course, but that the TV crew was harassed, interrogated and then driven out of town. It is typical of heavy-handed Chinese responses to truth-telling.

chart 1

Back to the future of trade

As I mentioned earlier, US Steel (X) was the symbolism, by announcing the reopening of a plant that was long shutdown, as a community became a ghost town and its people turned to opioids. It’s my view that prosperity (or getting-by better) for average Americans isn’t just a migrant or safety-net issue but a way of fighting drug wars too.  

chart 2

So this move by the president may seem to be symbolic, and may not have a triggering mechanism as it was so hard to get our politicians to actually look-out for our workers, rather than pander to excess globalist themes; or accept guidance (or funds?) from foreign entities or their lobbyists.

The problem overall is displacement (jobs and factories); or shuffling our money and intellectual property abroad, in a very unfair manner. To a degree, it’s clear I blame Washington (as I have for 40 years) for these overly permissive trade policies and no backbone to do what needed to be done. Even now, you can see how tough it was to get anything done.

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I do wish they would clarify that Canada has a currency, not wage issue with us; and that the form of what may be agreed next is the substance of the situation, that results from acknowledged overcapacity (China and Canada); and as the president said, if needed reciprocal taxes.

chart 4

In-sum: it’s not just foreign entities that stole jobs and factories from us, but a totally misguided political malfeasance in not enforcing fair trade all these years.

At this point, there were fewer mechanisms (quotas being one) to really address the mixed-bag of alliances and interlopers with varies policies or even tricks (like trans-shipping) to increase their profits and bankrupt at least America’s workforce, if not companies. This must change now and in the long run is in everyone’s interest to preserve long-term growth.

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