Tumbling Tuesday – Trade War Heats Up Again as US Blacklists China
More Trade War!
Yesterday, the Trump Administration added 28 Chinese companies and organizations to a "Blacklist" that blocks them from buying American products – ostensibly over a sudden concern about human rights violations but this is just Trump's usual BS because he thinks it gives him leverage in the upcoming trade negotiations while what it actually does is piss China off.
Among the alleged "Human Right Violators" just so happens to be Hikvision and Dahua Technology, two of the world’s largest manufacturers of video surveillance products. It also hits China’s well-funded, newly emerging class of artificial-intelligence start-ups. Together, the companies’ products are central to China’s ambitions to be the top global exporter of surveillance technology.
The list also includes companies that specialize in artificial intelligence, voice recognition and data as well as provincial and local security bureaus that have helped construct what amounts to a police state in Xinjiang. These entities have been involved “in the implementation of China’s campaign of repression, mass arbitrary detention and high-technology surveillance,” the filing said.
While it may seem sort of reasonable to go after the "enablers", if Hitler used an IPhone we wouldn't ban Apple, would we? In fact, what we're banning is the ability of these companies to by the American parts that are enabling their technology in the first place. Will it stop them from getting the parts? Of course not – they'll just buy it from someone else.
“The U.S. government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China,” Commerce Secretary Wilbur Ross said as he oversaw a Trump operation to get rid of the brown people. In fact, China has been calling for the UN to act on the US's human rights violations for 2 years now and the Chinese Government said they will immeditately retaliate against these new sanctions.
Of course the Blacklist is not absolute, US companies can still apply for licenses to supply products to organizations that have been placed on the Commerce Department entity list, but the government may deny the applications – giving Trump a new level of power over major US Tech Companies he has been pressuring to "be more fair" to Right Wing points of view and conspiracy theories.
Dictators don't take power all at once, they take it inch by inch…
Speaking of human rights and pretending to care about them, the UN has said that they situation in Syria is currently the largest human rights crisis on the planet yet Trump is withdrawing our troops and rolling out the red carpet for Turkey to attack the Kurdish forces who were, until yesterday, our strong allies. When your foriegn policy is to stab your friends in the back – don't be surprised when it happens to you down the road!
There are 2M Syrians in the zone Trump just "gave" to Turkey and those people are now refugees who, of course, we do not allow in this country – making it everybody else's problem (the one that we caused). Yet another big foriegn policy victory for Vladimir Putin!
So, does the market like this? No, it does not. This does not improve trade yet it also doesn't make Fed easing more likely so it's a net negative and the Futures are down 200 points at 8:15 yet that, of course, can change in a flash. We don't care because we cashed out 3 weeks ago (at the highs – you're welcome!), so we're just haging out and watching all the fun for now.
The World Bank is warning that there will be a downward revision to their 2.6% Global Growth Forecast from June, which was already revised down from 3.2% to the worst level since 2009. “Global growth is slowing, hurt by Brexit, Europe’s recession and trade uncertainty,” said WB President, David Malpass. Malpass repeated his criticism of the roughly $15Tn of bonds with zero or negative yields, describing it as “frozen capital” that’s diverting resources from growth and benefiting bondholders and issuers of the debt.
Team Trump, meanhwhile, is not content to sit back and see the Global Economy slow to 2.6% – not when they can make it zero! Trump signed an executive order on Thursday with sweeping implications for how Medicare is priced and, by extension, how much the government winds up spending annually on Medicare. HHS Secretary Alex Azar is to submit a report within 180 days “that identifies approaches to modify Medicare Fee-For-Service (FFS) payments to more closely reflect the prices paid for services in MA and the commercial insurance market.” Taken literally, that’s a huge price increase – and could easily bankrupt the Medicare Trust Funds (yes, there’s more than one) in a matter of months.
Why, you may wonder, would the Putin-puppet do this to us? Is it a last-minute cash grab from Health Care lobbyists to shore up Trump's legal defense fund? Trump may be planning to resign fast enough to get a pardon from President Pence so stuffing away a few Billion in bribes ought to see him through to retirement but does he have to doom America to do it?
Despite paying out an average of $13,257 for each of the 60M enrolled recipients ($795Bn), Medicare actually finished 2018 with $15Bn MORE than it had in 2017 so we're at a very delicate balance but that $15Bn more is just $300Bn and Trump's proposed change would drain out that money by the first quarter of 2020. Since it's just one of the many completely insane things Trump did last week – no one is paying much attention to it but maybe that's the plan – there is literally so much crap going on that people can't put out all the fires and, if you want to burn down America – that's a good way to go about it…
Be careful out there!