Buying puts before 10 am tomorrow?

[RuleNumberOne]

There is never going to be a trade deal. Jim Cramer gets it. El-Erian gets it. Trump and Kudlow sense it.

 

China's clear message has been: if you don't like the current trade setup, we don't need your trade.

 

Trump needs to stop squealing and begging for a trade deal. Every time he has a trade tantrum, he is seen as weak, very weak. When he attacks the Fed, and gets angry at China, he reveals extreme weakness and desperation.

 

China has shown a lot of strength, unflinching, not a flicker of pain. If they have to do with less farm produce, so be it. They are a superpower and have the rest of the world to export to. Their population is 4 times larger than the US.

 

When China's #2 said the Tiananmen response was too harsh, he was put under house arrest for the rest of his life.

[DooDiligence]

There is never going to be a trade deal. Jim Cramer gets it. El-Erian gets it. Trump and Kudlow sense it.

 

China's clear message has been: if you don't like the current trade setup, we don't need your trade.

 

Trump needs to stop squealing and begging for a trade deal. Every time he has a trade tantrum, he is seen as weak, very weak. When he attacks the Fed, and gets angry at China, he reveals extreme weakness and desperation.

 

China has shown a lot of strength, unflinching, not a flicker of pain. If they have to do with less farm produce, so be it. They are a superpower and have the rest of the world to export to. Their population is 4 times larger than the US.

 

When China's #2 said the Tiananmen response was too harsh, he was put under house arrest for the rest of his life.

 

Our Cheeto in chief only wishes he had that kind of power.

[Cigarbutt]

Fair trade is the issue here. Not global trade. Once tariffs are maxed out next should be more limiting of companies able to do business ie Huawei. On top of that is reciprocal forced transfer of technology, mandatory partnerships or joint ventures etc, cyber theft etc.  What is good for the goose...

 

Anyone have any examples of fair trade with China where Trump is going wrong?

 

China has given the WTO and the world and big middle finger, everyone ok with that?

-Unidirectional 'unfair' trade policies are clearly part of the picture, but isn't most of the trade deficit due to economies of scale and cheaper labor?

-China response to WTO complaints has a relatively mixed record but it has overall followed the guidelines setup around their access to the WTO in 2001 so why not build alliances and negotiate to improve what is felt to be an insufficient market transition, why abandon that line of progress and even withdraw from the Trans-Pacific Agreement and lose valuable credibility and presence in Asia?

-Let's say that Apple redistributes its supply chain in the Pacific Rim (you don't expect to repatriate that part to the US, do you?), how is that going to change the net trade deficit?

-Do you realize that the most important component behind the drive to outsource manufacturing has come from multi-nationals, often based in the US?

[Cardboard]

"* This thread belongs in politics section long time ago."

 

When I read statements like these, I have to LMAO.

 

Seriously any smart investor has to know how politics could impact its investments. It could be regulation, trade, taxation, interest rates but, in any case the impacts could be tremendous.

 

So to ignore this altogether and saying this belong in the politics section so it could be hidden is absurd.

 

Cardboard

[Cardboard]

I continue to believe that the tarrifs approach is a huge failure. It is imposing higher costs to your citizenry and especially the poor. Punishing yourself to try to hurt your opponent is dumb.

 

My view remains that China or its regime does not care that much about its people during a period of duress and will sacrifice them if need be. That is what history has showed us multiple times and we may see another repeat soon in Hong Kong. Latest propaganda out of there that they have not talked with Trump and will not bend over, etc. is just another indication that we can't really do honest deals or business with them.

 

IMO, there are key buttons to push to try to get them to move to where you want to be without imposing a duty/tax on your citizens and slowing the global economy but, there is no certainty and still risk: South China Sea, East China Sea, Taiwan, Hong Kong, North Korea, arming Japan, India border, etc.

 

The less confrontational approach would be to implement a revised TPP agreement to trade more with friendly countries or introduce more alternatives to China. I believe that Japan gets it and that is why we see a warm relation. Unfortunately, Japan is high cost and not producing cheap items anymore. So we need other countries with large populace and low labour cost such as Malaysia, Indonesia and yes India.

 

Looking around the house, I am hard pressed to see anything: "made in India". How can that be? This is a huge population looking to develop itself with a lot of English speaking folks and democratic.

 

I mean, there is no need to impose tarrifs. Just tell companies to move out of China and into India and other places and implement solid trade agreements with them.

 

Cardboard

[Gregmal]

I continue to believe that the tarrifs approach is a huge failure. It is imposing higher costs to your citizenry and especially the poor. Punishing yourself to try to hurt your opponent is dumb.

 

My view remains that China or its regime does not care that much about its people during a period of duress and will sacrifice them if need be. That is what history has showed us multiple times and we may see another repeat soon in Hong Kong. Latest propaganda out of there that they have not talked with Trump and will not bend over, etc. is just another indication that we can't really do honest deals or business with them.

 

IMO, there are key buttons to push to try to get them to move to where you want to be without imposing a duty/tax on your citizens and slowing the global economy but, there is no certainty and still risk: South China Sea, East China Sea, Taiwan, Hong Kong, North Korea, arming Japan, India border, etc.

 

The less confrontational approach would be to implement a revised TPP agreement to trade more with friendly countries or introduce more alternatives to China. I believe that Japan gets it and that is why we see a warm relation. Unfortunately, Japan is high cost and not producing cheap items anymore. So we need other countries with large populace and low labour cost such as Malaysia, Indonesia and yes India.

 

Looking around the house, I am hard pressed to see anything: "made in India". How can that be? This is a huge population looking to develop itself with a lot of English speaking folks and democratic.

 

I mean, there is no need to impose tarrifs. Just tell companies to move out of China and into India and other places and implement solid trade agreements with them.

 

Cardboard

 

The failure here is in judgment. Yes this war is punitive on the people. But China and America are very different culturally. Americans have ZERO pride in their country compared to China. Chinese are also quite used to a much lower standard of living(and higher degree of "suffering"). So lets rework this.... Who do you think is better prepared to hold out in the name of patriotism? The average Joe from China, or the average Joe from America, who cries foul and has temper tantrums because they cant pee with the opposite sex or take a selfie when they want to?

 

And in terms of America, and the pain that must be endured to prevail here... does anyone really think it will be Trump himself who has to deal with any of this? Of course not. Other people will pay for his egotistic pissing match.

[RuleNumberOne]

How exactly do their people suffer? The rest of the world wants to continue buying from China.

 

The rest of the world are the continents of Asia, Europe, Australia, South America, countries of Canada, Mexico...

 

Just read in Forbes that even a 25% tariff is not enough to cause companies to move because China's infrastructure (rails, roads, power, ports) is so good.

 

China's position is much stronger than the US. Why should they listen to a guy who alternately insults China and begs China for a trade deal?

 

Friday Trump calls Xi an enemy, the very next day he calls him a brilliant man and a friend.

 

Friday he tweets the US would be better off without China, the very next day he grovels for a trade deal by making up stuff about phone calls and "losing three million Chinese jobs". China's workforce is 5 times larger than the US, they don't need Trump, they have the rest of the world.

 

Trump has three problems:

  - uncontrollable temper

  - uncontrollable stupidity causing miscalculations described above

  - uncontrollable need to tweet and broadcast his feelings all the time

 

 

One key point re: this trade war is that China has something like a dictatorship while we do not.  That gives their political leaders an upper hand in this game of chicken because they can in principle keep fighting (and let their people suffer) without worrying about being voted out of office. 

 

This is just ill conceived at so many levels. 

[DooDiligence]

How exactly do their people suffer? The rest of the world wants to continue buying from China.

 

The rest of the world are the continents of Asia, Europe, Australia, South America, countries of Canada, Mexico...

 

Just read in Forbes that even a 25% tariff is not enough to cause companies to move because China's infrastructure (rails, roads, power, ports) is so good.

 

China's position is much stronger than the US. Why should they listen to a guy who alternately insults China and begs China for a trade deal?

 

Friday Trump calls Xi an enemy, the very next day he calls him a brilliant man and a friend.

 

Friday he tweets the US would be better off without China, the very next day he grovels for a trade deal by making up stuff about phone calls and "losing three million Chinese jobs". China's workforce is 5 times larger than the US, they don't need Trump, they have the rest of the world.

 

Trump has three problems:

  - uncontrollable temper

  - uncontrollable stupidity causing miscalculations described above

  - uncontrollable need to tweet and broadcast his feelings all the time

 

 

One key point re: this trade war is that China has something like a dictatorship while we do not.  That gives their political leaders an upper hand in this game of chicken because they can in principle keep fighting (and let their people suffer) without worrying about being voted out of office. 

 

This is just ill conceived at so many levels. 

 

Need to add:

 

  - uncontrollable compulsion to lie about literally anything

[Spekulatius]

I continue to believe that the tarrifs approach is a huge failure. It is imposing higher costs to your citizenry and especially the poor. Punishing yourself to try to hurt your opponent is dumb.

 

My view remains that China or its regime does not care that much about its people during a period of duress and will sacrifice them if need be. That is what history has showed us multiple times and we may see another repeat soon in Hong Kong. Latest propaganda out of there that they have not talked with Trump and will not bend over, etc. is just another indication that we can't really do honest deals or business with them.

 

IMO, there are key buttons to push to try to get them to move to where you want to be without imposing a duty/tax on your citizens and slowing the global economy but, there is no certainty and still risk: South China Sea, East China Sea, Taiwan, Hong Kong, North Korea, arming Japan, India border, etc.

 

The less confrontational approach would be to implement a revised TPP agreement to trade more with friendly countries or introduce more alternatives to China. I believe that Japan gets it and that is why we see a warm relation. Unfortunately, Japan is high cost and not producing cheap items anymore. So we need other countries with large populace and low labour cost such as Malaysia, Indonesia and yes India.

 

Looking around the house, I am hard pressed to see anything: "made in India". How can that be? This is a huge population looking to develop itself with a lot of English speaking folks and democratic.

 

I mean, there is no need to impose tarrifs. Just tell companies to move out of China and into India and other places and implement solid trade agreements with them.

 

Cardboard

 

I believe they most Chinese believe that their government has done a good job. For once, the for average workers have increased tremendously, it’s not just the super rich, average Joe have seen double digit increases in buying power. They have slowed down, but they still far exceed what US or European worker bees get.

https://images.app.goo.gl/k4Ej4ZLE4U83uECt7

 

I think it gives them goodwill to fight for a while.

[meiroy]

This is how I'm looking at it now, perhaps more practical:

 

This is a market disruption, in the sense that Amazon disrupted retail.

 

It's not a trade war, it's the inevitable decoupling which will outlive Trump.

 

The US has a local market, it has Mexico and Canada, and Brazil and India if it wanted to. Big enough. More than enough.

 

American people will be better off. 

 

The only issue is the disruption process, some industries would have to pay.

 

I think this is an oversimplification.

 

It's a concept.

 

You want something more, go read a book.

 

Thanks for another oversimplification.

 

Here's another one for you:

 

The American economy is growing bigger and bigger, however as the global economy grows as well, the American slice in the pie is becoming smaller and smaller and will probably continue to shrink.  This means that the US is not willing to continue and bear most of the cost because the corresponding benefit is reduced as its share of the global economy shrinks.

 

Alas, there is no other country who can or is willing to take over.  It would take a global org to achieve that. These days, it seems highly unlikely to happen.

 

So, we will see the rise of nationalism, the breakdown of post-WWII order and the eventual endgame nuclear war.

 

The end.

 

You are welcome! xoxoxo

 

 

[RuleNumberOne]

When a US President gets down on his knees and begs a dictator for a trade deal, this is what it sounds like. The Chinese negotiators must be laughing their ass off with the "three million jobs" line.

 

There is zero probability they are going to give Trump a trade deal. Does Trump have the guts to stick shoppers with the 30% tariff this holiday season? What a "manufactured disaster"!

 

https://theweek.com/speedreads/861116/china-itching-trade-deal-because-cant-lose-3-million-jobs-trump-says

 

"President Trump has nothing but compliments for China's President Xi Jinping — at least today.

 

In a Monday press conference following the end of the G7 summit, Trump discussed his ongoing trade war with China, touching on the increased tariffs both countries levied on each other on Friday. After this many taxes, China "want to make a deal" and doesn't "have a choice," Trump said, because Xi "can't lose three million jobs in a short period of time."

 

Yet as The Washington Post's Aaron Blake notes, while three million jobs would be a huge hit for America's 160-million-person workforce, it's more of a blink for China's 750 million workers. Still, Trump remained convinced that a "brilliant leader" like Xi wouldn't let the continued conflict "break down the Chinese system of trade." Trump then pivoted to slam China for the apparent $500 billion trade deficit it has held over the U.S. for "many many years," which, as CNN's Daniel Dale points out, is not even close to a correct number.

 

Trump went on to pepper Xi with more compliments, calling him a "tough guy" who he respects. And when he was asked why he calls Xi a friend one day and an enemy the next, he quickly said "that's the way I negotiate. It's done very well for me over the years.""

[DooDiligence]

When a US President gets down on his knees and begs a dictator for a trade deal, this is what it sounds like. The Chinese negotiators must be laughing their ass off with the "three million jobs" line.

 

There is zero probability they are going to give Trump a trade deal. Does Trump have the guts to stick shoppers with the 30% tariff this holiday season? What a "manufactured disaster"!

 

https://theweek.com/speedreads/861116/china-itching-trade-deal-because-cant-lose-3-million-jobs-trump-says

 

"President Trump has nothing but compliments for China's President Xi Jinping — at least today.

 

In a Monday press conference following the end of the G7 summit, Trump discussed his ongoing trade war with China, touching on the increased tariffs both countries levied on each other on Friday. After this many taxes, China "want to make a deal" and doesn't "have a choice," Trump said, because Xi "can't lose three million jobs in a short period of time."

 

Yet as The Washington Post's Aaron Blake notes, while three million jobs would be a huge hit for America's 160-million-person workforce, it's more of a blink for China's 750 million workers. Still, Trump remained convinced that a "brilliant leader" like Xi wouldn't let the continued conflict "break down the Chinese system of trade." Trump then pivoted to slam China for the apparent $500 billion trade deficit it has held over the U.S. for "many many years," which, as CNN's Daniel Dale points out, is not even close to a correct number.

 

Trump went on to pepper Xi with more compliments, calling him a "tough guy" who he respects. And when he was asked why he calls Xi a friend one day and an enemy the next, he quickly said "that's the way I negotiate. It's done very well for me over the years.""

 

The guy's an ass clown.

[Spekulatius]

When a US President gets down on his knees and begs a dictator for a trade deal, this is what it sounds like. The Chinese negotiators must be laughing their ass off with the "three million jobs" line.

 

There is zero probability they are going to give Trump a trade deal. Does Trump have the guts to stick shoppers with the 30% tariff this holiday season? What a "manufactured disaster"!

 

https://theweek.com/speedreads/861116/china-itching-trade-deal-because-cant-lose-3-million-jobs-trump-says

 

"President Trump has nothing but compliments for China's President Xi Jinping — at least today.

 

In a Monday press conference following the end of the G7 summit, Trump discussed his ongoing trade war with China, touching on the increased tariffs both countries levied on each other on Friday. After this many taxes, China "want to make a deal" and doesn't "have a choice," Trump said, because Xi "can't lose three million jobs in a short period of time."

 

Yet as The Washington Post's Aaron Blake notes, while three million jobs would be a huge hit for America's 160-million-person workforce, it's more of a blink for China's 750 million workers. Still, Trump remained convinced that a "brilliant leader" like Xi wouldn't let the continued conflict "break down the Chinese system of trade." Trump then pivoted to slam China for the apparent $500 billion trade deficit it has held over the U.S. for "many many years," which, as CNN's Daniel Dale points out, is not even close to a correct number.

 

Trump went on to pepper Xi with more compliments, calling him a "tough guy" who he respects. And when he was asked why he calls Xi a friend one day and an enemy the next, he quickly said "that's the way I negotiate. It's done very well for me over the years.""

 

The guy's an ass clown.

 

China never confirmed that negotiation for a new trade deal have restarted after Trump tweeted that “China wants to do a trade deal badly”. I guess Trump probably just wanted the markets to stop tanking after he had been overzealous bashing China and ordering companies to stop doing business in China.

https://www.cbsnews.com/news/trump-china-trade-latest-trump-says-china-called-u-s-trade-team-twice-and-wants-to-make-a-deal-as-companies-are-leaving/

[DooDiligence]

When a US President gets down on his knees and begs a dictator for a trade deal, this is what it sounds like. The Chinese negotiators must be laughing their ass off with the "three million jobs" line.

 

There is zero probability they are going to give Trump a trade deal. Does Trump have the guts to stick shoppers with the 30% tariff this holiday season? What a "manufactured disaster"!

 

https://theweek.com/speedreads/861116/china-itching-trade-deal-because-cant-lose-3-million-jobs-trump-says

 

"President Trump has nothing but compliments for China's President Xi Jinping — at least today.

 

In a Monday press conference following the end of the G7 summit, Trump discussed his ongoing trade war with China, touching on the increased tariffs both countries levied on each other on Friday. After this many taxes, China "want to make a deal" and doesn't "have a choice," Trump said, because Xi "can't lose three million jobs in a short period of time."

 

Yet as The Washington Post's Aaron Blake notes, while three million jobs would be a huge hit for America's 160-million-person workforce, it's more of a blink for China's 750 million workers. Still, Trump remained convinced that a "brilliant leader" like Xi wouldn't let the continued conflict "break down the Chinese system of trade." Trump then pivoted to slam China for the apparent $500 billion trade deficit it has held over the U.S. for "many many years," which, as CNN's Daniel Dale points out, is not even close to a correct number.

 

Trump went on to pepper Xi with more compliments, calling him a "tough guy" who he respects. And when he was asked why he calls Xi a friend one day and an enemy the next, he quickly said "that's the way I negotiate. It's done very well for me over the years.""

 

The guy's an ass clown.

 

China never confirmed that negotiation for a new trade deal have restarted after Trump tweeted that “China wants to do a trade deal badly”. I guess Trump probably just wanted the markets to stop tanking after he had been overzealous bashing China and ordering companies to stop doing business in China.

https://www.cbsnews.com/news/trump-china-trade-latest-trump-says-china-called-u-s-trade-team-twice-and-wants-to-make-a-deal-as-companies-are-leaving/

 

He's a legend in his own mind.

[orthopa]

[orthopa]

Looking at the US economy as a whole GDP is ~20T right? So is 100-150B of tariffs really that big of a deal in the big picture? That's what, 1-2% of US GDP?

[LC]

GDP is only growing 1-3% year so it does drag.

[RuleNumberOne]

Corporate profits are only $2.1 trillion. $150 billion in tariffs is 7% of corporate profit.

 

It should be viewed as a %age of corporate profits because that is exactly where it is coming out of.

 

For example, AAPL could announce next week that it is going to eat the tariffs rather than pass it on. That is a transfer from AAPL's bottomline to the government.

 

Or AAPL could pass the tariffs to the consumer in which case fewer consumers upgrade to new iPhones/Macbooks.  This is a transfer from AAPL's topline to the government.

 

The tariffs are supposed to incentivize American companies to move by penalizing their profits. But where exactly are they supposed to move? Does anyone want to buy a $2000 iPhone? If they move to another cheap country, Trump may target the new country with tariffs.

 

Viewing it as a %age of GDP is Peter Navarro's line and doesn't make sense. We will find out over the next few quarters how much the impact on the topline and bottomline is going to be.

[RuleNumberOne]

Over the very long-term it should be modeled as a %age of GDP.

 

But right now, if the government doesn't spend the tariffs it collects and just reports a smaller budget deficit, it is a hit to GDP. (Since government debt doesn't get counted in GDP but government spending does.)

 

Right now, for investors it is best modeled as a hit to profits. Has AAPL given any tariff-related guidance yet?

[DooDiligence]

Haven't the corporate tax cuts been largely nullified by tariffs?

 

---

 

This guy is running the US just like he's handled all of his businesses.

I wouldn't be at all surprised if he started blowing hard about defaulting on US debt.

Wouldn't that be fun?

 

---

 

As to how the Chinese are handling taxation.

 

https://www.cnbc.com/2019/07/24/china-tax-cuts-may-offset-the-effects-of-trade-tariffs-economist.html

[Spekulatius]

Haven't the corporate tax cuts been largely nullified by tariffs?

 

---

 

This guy is running the US just like he's handled all of his businesses.

I wouldn't be at all surprised if he started blowing hard about defaulting on US debt.

Wouldn't that be fun?

 

---

 

As to how the Chinese are handling taxation.

 

https://www.cnbc.com/2019/07/24/china-tax-cuts-may-offset-the-effects-of-trade-tariffs-economist.html

 

You know what Venezuelans said about Chávez early on: “ He runs the country like his hacienda”.

 

The problem with the tariffs and the game of chicken that is played are the knock on effects on confidence. Now China is slowing down, Europe is slowing down and now the US is slowing down as well. How much of this is trade war and how much is just the long economic upturn petering out is hard to know. I don’t think that interest rates and rate cuts at this point are going to make much of a difference, rates are already too low to matter, imo.

[DooDiligence]

Haven't the corporate tax cuts been largely nullified by tariffs?

 

---

 

This guy is running the US just like he's handled all of his businesses.

I wouldn't be at all surprised if he started blowing hard about defaulting on US debt.

Wouldn't that be fun?

 

---

 

As to how the Chinese are handling taxation.

 

https://www.cnbc.com/2019/07/24/china-tax-cuts-may-offset-the-effects-of-trade-tariffs-economist.html

 

You know what Venezuelans said about Chávez early on: “ He runs the country like his hacienda”.

 

The problem with the tariffs and the game of chicken that is played are the knock on effects on confidence. Now China is slowing down, Europe is slowing down and now the US is slowing down as well. How much of this is trade war and how much is just the long economic upturn petering out is hard to know. I don’t think that interest rates and rate cuts at this point are going to make much of a difference, rates are already too low to matter, imo.

 

Our era will be henceforth be known as the Limbo rate years.

 

Trump may not be able to claim the largest real estate transaction ever with a Greenland

purchase but he's highly likely to go down as the man who filed the GOAT bankruptcy.

 

Just doing my part to stoke fear.

 

:o  (there's no goofy googley eyed emoji so this one will have to do...)

[Cigarbutt]

Haven't the corporate tax cuts been largely nullified by tariffs?

---

This guy is running the US just like he's handled all of his businesses.

I wouldn't be at all surprised if he started blowing hard about defaulting on US debt.

Wouldn't that be fun?

---

As to how the Chinese are handling taxation.

https://www.cnbc.com/2019/07/24/china-tax-cuts-may-offset-the-effects-of-trade-tariffs-economist.html

You know what Venezuelans said about Chávez early on: “ He runs the country like his hacienda”.

 

The problem with the tariffs and the game of chicken that is played are the knock on effects on confidence. Now China is slowing down, Europe is slowing down and now the US is slowing down as well. How much of this is trade war and how much is just the long economic upturn petering out is hard to know. I don’t think that interest rates and rate cuts at this point are going to make much of a difference, rates are already too low to matter, imo.

1-Our era will be henceforth be known as the Limbo rate years.

 

2-Trump may not be able to claim the largest real estate transaction ever with a Greenland

purchase but he's highly likely to go down as the man who filed the GOAT bankruptcy.

 

3-Just doing my part to stoke fear.

 

:o  (there's no goofy googley eyed emoji so this one will have to do...)

1-It's possible that a temporary truce can be reached with no material effect on the trade balance going forward so we may be in limbo for a while but the best limbo playing show that I've seen was in Hawai'i two years ago. It felt like the fire dancer was able to lower the ground. But it must have been an illusion.

 

2-Your previous reference to a default is interesting and, in 2016, this issue was 'discussed'. The USA defaulting on its debt sounds outrageous but the following reference originates from May 2016, at a time when negative interest rates were still not considered business as usual and when the left-leaning publication felt that the candidate did not stand a chance to win the contest.

https://www.npr.org/2016/05/09/477350889/donald-trumps-messy-ideas-for-handling-the-national-debt-explained

 

3-Yeah, perhaps the idea is to be able to smile whatever happens and one way for this to happen is to be ready for any eventuality and to remember what Ferris said: "Life moves pretty fast. If you don't stop and look around once in a while, you could miss it." On a more serious note (keeping in mind the long tariff thread), I continue to think that the outcome will be highly conditional on the direction of the global economy as tariffs may only be a side show and not necessarily a precipitating factor. To those who say that walking on the edge of the precipice is OK if you know what you're doing, I can't help thinking about the Smoot-Hawley Act and Mr. Smoot's reaction to the reactions: those who don't support tariffs are un-Americans and use fake-news to spread their weakness.

https://www.piie.com/blogs/trade-and-investment-policy-watch/trumps-2019-protection-could-push-china-back-smoot-hawley

 

Here's a reference from one of my favorite movies that I saw as a young adult and that offered one of the first glimpses into the American Psyche. So, can anyone explain what will happen in the event that the global economy really starts to lose steam. Anyone?

[RuleNumberOne]

The reported GDP is real GDP (2.0%). In the example below, nominal GDP would be 3.8%, not 2.0%.

 

Looking at the US economy as a whole GDP is ~20T right? So is 100-150B of tariffs really that big of a deal in the big picture? That's what, 1-2% of US GDP?

 

Q2 GDP was 2.0% annualized. Q2 inflation was 1.8% annualized. The economy is basically already flat in real economic terms and any additional pile on, or reduction in economic activity, will result in an economic contraction.

 

[RuleNumberOne]

Another unreported deflationary effect is Silicon Valley housing. Home prices in some areas have fallen 20% from the peak. I myself took a nearly 20% hit compared to the peak when I sold a house recently. This hasn't been accounted for in the tariffs line item.

 

Most engineers here are foreigners (eg. China/India) and Trump's administration has made it very painful to switch jobs and has been threatening to rescind the H4 work authorization (the threat is to rescind by the end of every month - i.e. the month never comes but the sword hangs above people's necks.)

 

Earlier it would take a visa holder a few days to switch jobs, whereas now it takes maybe 6 months or more. This removes job security. If an engineer runs into a crazy manager, he finds it will take him 6 months to move to a secure job at another company. If their spouse's H4 work authorization is rescinded, it halves their income.

 

Most people have just stopped buying homes over the past year. Some young Chinese engineers get their downpayment funded completely from their parents back in China, so the sentiment back home matters too. The green card for Indian engineers takes many decades now instead of years.

 

There is too much fear and uncertainty in Silicon Valley real estate because nobody can be sure what Trump may do next.