Politics

[Brent in Az]

The long-term goal is often not achieved overnight. And there's no one that can argue that.

Rumor is he is potentially agreeing to a 90-day pause on all countries besides China (which I agree is fair, they are not our friends).

We live in an age where everyone expects instant gratification. No patience.
Of course the media is going to fear monger, and push the narrative that the world is burning, and everyone needs to abandon ship. Only weak minded fools pay attention to that spew, without looking at the bigger picture....
Wall Street panics when the wind changes direction.

 

[Brent in Az]

You’re likely right. A BA in economics and two law degrees (one a Masters) isn’t enough education to grasp the simple concept you’re selling.

My misfortune.

So... Based on your worldly wisdom, we should leave everything "As is", and continue into the economic abyss and death spiral of debt?

 

[HookMeUpII]

We live in an age where everyone expects instant gratification. No patience.
Of course the media is going to fear monger, and push the narrative that the world is burning, and everyone needs to abandon ship. Only weak minded fools pay attention to that spew, without looking at the bigger picture....
Wall Street panics when the wind changes direction.

We erased trillions of gains from last year in a matter of 4 days...not fear mongering my friend. News stories can say this, or that, numbers don't lie.

 

[mdwest]

I’m sorry, but I don’t understand this comment.

Tariffs are paid by the person or entity bringing the product into the country, right? I mean, the US government can’t impose the charge on the Chinese manufacturer?

So in the case of Walmart, it’s Walmart that pays for the product in China, and brings it into the US, or orders it from the Chinese vendor. So either way, Walmart pays the tariff, right?

The only way the tariff can be paid by the Chinese vendor is if the vendor reduce its price by the amount of the tariff, so that Walmart ends up paying less for the goods they import to sell, right? If the Chinese manufacturer refuses to do that, isn’t Walmart’s only option to stop buying from the Chinese manufacturer?

And isn’t the result in that case empty shelves at Walmart?

How have I got this wrong?

Look at how Wal-mart managed through both the biden and last trump era tariffs on China..

They pushed the Chinese vendors to eat the cost of the tariffs and refused to purchase goods at increased rates..

In a nutshell, if a Chinese manufacturer (or any company selling Chinese goods) wanted to continue to sell to Wal-Mart (the biggest retailer on the planet), they took direct cuts to their bottom line to compensate for increased costs and did not pass those costs on to Wal-mart... so, for the sake of argument, your Chinese made water hose that currently sells for $19.99 at wal-mart, continues to sell for $19.99.. the manufacturer, the importer, etc.. navigate a way to absorb the tariff costs by having each company in the supply chain take a hit to their pricing, so that by the time the product gets to wal-marts shelves, there is no difference in price to the consumer..

The trouble with this model is.. it works for Wal-mart... it might even work for a Home Depot or a Lowes.. companies big enough to leverage their buying power to force the issue... But it doesn't work for the remaining 99% of the businesses facing the same problem..

For the consumer, it drives a larger share of them to Wal-mart (desire to spend less) and away from say Ace Hardware... Which just gives Wal-mart an even larger market share.. but potentially runs Ace Hardware out of business..

 

[Tanks]

...

Hopefully Walmart sticks to their guns and refuses to absorb the tariff cost. Leaving those additional costs with China.

Or pass it on to the customers. Again, tariffs add to the cost of the product, no business is going to make it up on value by selling products below cost.

 

[mdwest]

And yes, Elon does seem to be breaking with his BFF just a bit over the markets and protectionism. He just posted this on X. Now, should Trump's avowed goal to make revenue off of tariffs be a lie, and what he really wants is free open markets, then I am sure they will be fine.

https://twitter.com/x/status/1909169096391811304

that pencil is a brilliant example of how the overwhelming majority of things work in this world..

doesn't matter if you're buying farm raised tilapia out of china or potashe out of Canada.. there are thousands upon thousands of people involved in one way or another by the time the final product makes it into the end users hands..

 

[mdwest]

Or pass it on to the customers. Again, tariffs add to the cost of the product, no business is going to make it up on value by selling products below cost.

we were likely typing at the same time.. .look at the above post..

walmart has avoided passing the increased costs on to consumers with both biden and trump 45 tariffs on china in the past.. there are so many companies between the producer and the end user with most products, they simply push every company along the supply chain to take a bite of the pain while leaving themselves free of the requirement.. they have the purchasing power to make that happen... and have stated they intend on doing the same thing this time around...

whether or not they will be successful, who knows..

but.. successful or not.. someone ultimately pays the price.. if not walmart and the walmart customer, then its Ace Hardware and the Ace customer, etc..etc..

 

[Kevin Peacocke]

Bloody hell at this rate Green Land will be buying the USA…..wonder what they will rename the gulf? The Denmark straight

 

[Tanks]

we were likely typing at the same time.. .look at the above post..

walmart has avoided passing the increased costs on to consumers with both biden and trump 45 tariffs on china in the past.. there are so many companies between the producer and the end user with most products, they simply push every company along the supply chain to take a bite of the pain while leaving themselves free of the requirement.. they have the purchasing power to make that happen... and have stated they intend on doing the same thing this time around...

whether or not they will be successful, who knows..

but.. successful or not.. someone ultimately pays the price.. if not walmart and the walmart customer, then its Ace Hardware and the Ace customer, etc..etc..

One thing, the tariffs on China are 54%+. The Chinese were already sharpening their pencils due to competition from Vietnam, India etc., I doubt they can absorb a 54% tariff.

In reality most Chinese stuff is so much cheaper anyway, you could increase pricing by 54% and still be an order of magnitude cheaper than US made products.

We will hurt on electronics though more than clothing, widgets, screws and bolts.

 

[wesheltonj]

You’re likely right. A BA in economics and two law degrees (one a Masters) isn’t enough education to grasp the simple concept you’re selling.

My misfortune.

That depends on what your LLM is in.

 

[WAB]

I know this is of little interest to those who believe in Trump, but with today's open of 37,550, the DOW has lost $1.3 -1.7 trillion in value - across all investments the number is likely $5+ trillion.

A few days ago I called the combined actions reckless. I’m not sure reckless is strong enough. Short term pain to achieve an objective is one thing, but this has the potential to do long term damage to not just the US, but the global economy. Business cannot adjust fast enough to compensate for these dramatic moves. Moving production, finding alternate supply, etc., is not as simple as flipping a light switch. It will take months if not years.

 

[Tundra Tiger]

A few days ago I called the combined actions reckless. I’m not sure reckless is strong enough. Short term pain to achieve an objective is one thing, but this has the potential to do long term damage to not just the US, but the global economy. Business cannot adjust fast enough to compensate for these dramatic moves. Moving production, finding alternate supply, etc., is not as simple as flipping a light switch. It will take months if not years.

But... but... it's the orange god orchestrating the moves. Surely that counts for something?

Everyone: Rome wasn't built in a day.

Trump: Hold my beer. And Italy will pay for it. It'll be the best Rome ever.

 

[Red Leg]

A few days ago I called the combined actions reckless. I’m not sure reckless is strong enough. Short term pain to achieve an objective is one thing, but this has the potential to do long term damage to not just the US, but the global economy. Business cannot adjust fast enough to compensate for these dramatic moves. Moving production, finding alternate supply, etc., is not as simple as flipping a light switch. It will take months if not years.

Moreover, the only way all these corporations are going to invest "trillions" is if those trillions exist to be invested. I can not conceive of a more effective way of drying up that investment potential than crashing stock values by 15-30%. The strategy being employed is rather elusive for me.

Let me break this down for the Panicans:

America may be the richest country in the world, but every other country has been living high off the hog on our trade deficits for decades

To make things worse, we’ve protected them with our military, a very expensive service provided free of charge

This slowly started to infect us with financial sepsis and now our diagnostics are flashing red & beeping

When we import more than we export, factories close, middle class wealth drops, social problems like drug addiction and crime skyrocket, families break apart, and our national debt grows out of control

Sound familiar?

If we stayed on this path, our country would implode

Trump is fixing America before it’s too late

A little short term pain in exchange for the long term Golden Era

You will be proven wrong just like you were in Covid when you called for lockdowns that killed small businesses

I appreciate you forming more than two sentences. Still, neither you nor any other of the faithful, have answered my question of how tanking the markets equates to "fixing America" or is in either this country's or party's interest.

I think everyone agrees that the previous model was no longer sustainable. Sadly, I see very little in this chaotic and even self-conflicting process, that is doing anything but engender concern and skepticism among the people the party will most need a little over a year from now.

 

[LivingTheDream]

When thinking about the tariff discussion, I am reminded of a saying, "For every beautiful woman, there is a man out there who is sick of her shit".

I can't decide if USA and companies like Walmart are the beautiful woman or the man in this scenario.

 

[mdwest]

A few days ago I called the combined actions reckless. I’m not sure reckless is strong enough. Short term pain to achieve an objective is one thing, but this has the potential to do long term damage to not just the US, but the global economy. Business cannot adjust fast enough to compensate for these dramatic moves. Moving production, finding alternate supply, etc., is not as simple as flipping a light switch. It will take months if not years.

Concur...

While the DOW is down 1.43% this morning (at the time of this post... the Canadian markets are down 1.58 and 1.68.. Chile is down 2.47... Mexico down 1.63... Australia down 4.37.. China down 9.66.. India down 2.95... France down 4.78.. Germany down 4.13.. UK down 4.38.. Italy down 5.18..

Global markets are all taking a massive beating..

I think the question is... who is going to blink first? and who has the ability to weather the storm best?

All the currency manipulation in the world isn't going to correct a single day dive of 9.66 in China.. especially when the US market (where China is heavily invested) is also taking a huge dive...

This isn't the sort of thing that can go on for even 3-4 weeks without there being set backs that take decades to fix.. the markets are going to have to find a way to flatten out and stabilize.. or countries are going to have to start making serious concessions (the US included).. or a recession might be the best end result we could hope for...

Assume China loses 9% a day just for 5 days over the next 2 weeks.. what does almost a 50% loss in its markets do to multi billion dollar firms that China counts on for tax revenue?

Assume the US loses a total of just 15% of the S&P... how does that impact our 500 largest and most profitable companies? how does that impact not just pricing to the American consumer, but also tax revenue to the US govt?

Hopefully there's a team of people much smarter than I am out there managing all of this.. but its certainly not looking great at the moment..

 

[Tundra Tiger]

"I appreciate you forming more than two sentences."

Thank you for the laugh good sir. I am sitting in a hotel eating breakfast. I spit my coffee when I read that.

 

[rigbymauser]

So... Based on your worldly wisdom, we should leave everything "As is", and continue into the economic abyss and death spiral of debt?

You might be right, but please don`t believe the "death spiral" is because the "the whole world is freeloading". Your country has been ruined by greedy corporate hedgefonds, wall street speculants, greedy banks whos only mission is to drain honest peoples hard earned money etc etc. They not only drain your money but place money in "taxheavens" and avoid the revenue that should have been placed in america. But hey Joe...its blessed and accepted because its all about the Benjamins and that speaks directly into "the american dream" Get rich regardsless of the cost!!.Then the war on terror with 20 years in the middle-east looking for weapons-of-mas-destruction which was not in a NATO regi but many contributed anyway without asking questions. The your war on drugs. Why is it the US is the worlds largest importer of cocain(and other drugs)?. Then the fentanyl crisis(read Purdue). World record in Highschool shootouts.

As I see it there are things in your "set-up" as a society that does a pretty dang good job in making life misrable for many americans. We europeans only sells you nice cars, nice rifles, good watches, hunting optics, make techstuff for your F35, sciencerockets etc. Please don`t blame us for a financial "death spiral".

 

[Brent in Az]

You might be right, but please don`t believe the "death spiral" is because the "the whole world is freeloading". Your country has been ruined by greedy corporate hedgefonds, wall street speculants, greedy banks whos only mission is to drain honest peoples hard earned money etc etc. They not only drain your money but place money in "taxheavens" and avoid the revenue that should have been placed in america. But hey Joe...its blessed and accepted because its all about the Benjamins and that speaks directly into "the american dream" Get rich regardsless of the cost!!.Then the war on terror with 20 years in the middle-east looking for weapons-of-mas-destruction which was not in a NATO regi but many contributed anyway without asking questions. The your war on drugs. Why is it the US is the worlds largest importer of cocain(and other drugs)?. Then the fentanyl crisis(read Purdue). World record in Highschool shootouts.

As I see it there are things in your "set-up" as a society that does a pretty dang good job in making life misrable for many americans. We europeans only sells you nice cars, nice rifles, good watches, hunting optics, make techstuff for your F35, sciencerockets etc. Please don`t blame us for a financial "death spiral".

I don't blame anybody but my own country, and the stupid politicians that have created this dumpster fire.

 

[LivingTheDream]

how tanking the markets equates to "fixing America" or is in either this country's or party's interest.

In short, it doesn't. And if I am being honest, I don't think the administration considered this level of correction.

I think what you have is a bit of conflicting data points messaging as well as timing concerns. I will try to articulate this as best as possible while typing on my phone during my lunch break. From a timing perspective, P/E ratios were out of whack and were largely inflated based on expected growth, and with Trump winning we assumed deregulation would be progrowth. I dont think the market took him serious on Tariffs (remember how many people said you can't take Trump literally, opps). So you had an inflated market without the earnings to truly back those prices up, so when a shock to the growth narrative happen, you get what we have had the last couple of weeks. But I believe we were due from some sort of pullback. Now Trump caused the pullback due to the fact he doesn't have time, no one knows how the mid terms will go and he is a lame duck. Not an ideal way for this to play out.

I also think that they are focused on the 10yr and interest rates, so get both of those down you have to have an economic slowdown, so I do believe that they are trying to drive those down to encourage longer term investing (this is base on Bessent and Lutnick in the cabinet). Which I do think are worthy goals.

So I do think there is a plan. But to quote Mike Tyson, "everyone has a plan till they get punched in the mouth".

 

[HookMeUpII]

Concur...

While the DOW is down 1.43% this morning (at the time of this post... the Canadian markets are down 1.58 and 1.68.. Chile is down 2.47... Mexico down 1.63... Australia down 4.37.. China down 9.66.. India down 2.95... France down 4.78.. Germany down 4.13.. UK down 4.38.. Italy down 5.18..

Global markets are all taking a massive beating..

I think the question is... who is going to blink first? and who has the ability to weather the storm best?

All the currency manipulation in the world isn't going to correct a single day dive of 9.66 in China.. especially when the US market (where China is heavily invested) is also taking a huge dive...

This isn't the sort of thing that can go on for even 3-4 weeks without there being set backs that take decades to fix.. the markets are going to have to find a way to flatten out and stabilize.. or countries are going to have to start making serious concessions (the US included).. or a recession might be the best end result we could hope for...

Assume China loses 9% a day just for 5 days over the next 2 weeks.. what does almost a 50% loss in its markets do to multi billion dollar firms that China counts on for tax revenue?

Assume the US loses a total of just 15% of the S&P... how does that impact our 500 largest and most profitable companies? how does that impact not just pricing to the American consumer, but also tax revenue to the US govt?

Hopefully there's a team of people much smarter than I am out there managing all of this.. but its certainly not looking great at the moment..

The end game here was to break the concrete block in one shot with a 16 lb sledge hammer vs. a normal carpenter hammer and chisel. Which is more spectacular, more at risk of failure, and more likely to injure yourself? The 16 lb sledge. I rest my case.

Some countries are beginning to negotiate. I assume as news of that continues to break, the market will respond. China is going to do what China does. Fight tooth and nail. They hate us.

This is just his style. It's not my favorite. I think overall we are materially better than we were the last 4 years for sure. With that being said, not the way I wanted to see this handled. This didn't have to go this way.

The other side of it, to be fair, is we've been living with a trade imbalance heavily skewed against us for the last 4 decades, and likely, more. But once again, it wasn't something you were going to fix overnight.