It's another flat day in another flat week for the Dow Jones Industrial Average and the S&P 500 as concern about the future of the global trading system weighs on investors. 

U.S. equity holders declined to make big bets following a week in which the U.S. President said he admired the strength of the North Korean dictator shortly after describing the Canadian Prime Minister as weak. It was an odd spectacle, coming on the heels of the President's recommendation that the G-7 group of major industrial democracies readmit Russia, which is neither a major industrial power nor a democracy.

Even a statement from the Federal Reserve that central bank officials are growing increasingly confident in the health of the U.S. economy didn't spark gains in stocks outside of the tech and entertainment sectors. The Federal Open Market Committee, in raising benchmark interest rates by a quarter of a percentage point, upgraded its assessment of economic growth to "solid" from "moderate," while omitting a phrase included in recent statements that interest rates would remain low "for some time."

"Really, the decision you see today is another sign that the U.S. economy is in great shape," Fed Chair Jerome Powell said. "For many years we had interest rates held low to support economic activity, and it's been clear that as we get closer to our statutory goals, we should normalize policy."

Things may be normal up in the office of Chairman Powell, who has been conducting himself in the sober manner of a serious central banker, but they seemed pretty nuts last weekend in Quebec at the G-7. The U.S. President arrived late, and in a bad mood, amid signs that his fellow democratic leaders weren't keen on his recent trade threats. Said threats now include not only tariffs on foreign steel and aluminum, but also may shortly extend to automobiles whose makers are domiciled in Germany but many of whose plants are located in the U.S.

Joe Quinlan, Head of Market & Thematic Strategy at U.S. Trust, Bank of America, pointed out in a report this week that BMW's South Carolina plant churned out about 371,000 autos last year. In Alabama, Mercedes-Benz's plant has produced more than three million vehicles throughout its 20 years in business. In all, Quinlan said, foreign manufacturers accounted for 58% of total U.S. vehicle production last year, underscoring just how globalized the American automotive industry has become over the past few decades.

And it's not just cars, it's jobs.

"At last count, U.S. affiliates of foreign auto companies employed 411,000 manufacturing workers and accounted for 4% and 3%, respectively, of total U.S. goods imports and exports," Quinlan wrote. "Other economic benefits include solid incomes for U.S. workers, tax receipts for communities, indirect employment gains, job training and related spinoffs."

Since the U.S. doesn't seem inclined at the moment to seek a peaceful resolution of its trade disputes, economic pain may be unavoidable and the global economy put at risk, Director-General of the World Trade Organization Roberto Azevedo said in an interview Wednesday.

"If the trade dispute escalates, there's the risk of a global downturn and we're already seeing signs that this downward process has already started," Azevedo told Handelsblatt, a German business newspaper, as reported by Reuters.

Next on the chopping block may be the North American Free Trade Agreement, the future of which seems more tenuous after the Quebec debacle and signs that Mexico is preparing to elect a less pro-American president. One problem is that the U.S. President isn't adept at sharing credit or the spotlight, said Rich Sega, chief investment officer at Conning, an investment firm based in Hartford, Connecticut.

"Time is getting short for a Nafta solution," said Sega, 67, in an interview with TheStreet. "I thought the chances were good in beginning of June that we would extend the current agreement. But Trump thinks he is better at one on one, and he tends to shy away from big things that other people control big parts of."

So now it's almost halfway through the year, and the Dow closed 25,175.31 on Thursday, down 120 points from where it stood on Friday, January 5. It's a fair bet that global trade worries are what's deterring U.S. equity investors, because otherwise things should be looking pretty good, as far as corporate profits and stock prices are concerned, Sega said.

"Trade is the big question we have been facing because other things are benign or pro-growth," he said. "The big hurt is reducing trade volumes."

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