So....if Trump closes a deal with China?

So what is this news? I see Trump blabbing on as he always does, or if he has that moron Kudlow or someone else pumping his beloved market with unconfirmed guesses and lies.

Show me the ink, not what barf Trump wants to blab on about without recourse. Someone should shut down his media rights, he is so fixated on the market that he will say anything to get the machines to buy.

Had a busy day today out holiday shopping for gifts. Saw the markets soring on my ticker app all day. I am watching the CNBC evening shows now. They are convinced this deal is happening. Pre-markets are moving higher in the green so this could be the real deal. 

Here is my question though? Honestly, how much further can this market run now? I'm not greedy but I am pinching myself a little bit. Isn't this deal supposed to be priced in? The markets are now exceeding 25% for the year. There will be a price to pay for all of this exuberance. I am mentally prepared to give back a chunk and ride the waves for the long run.

So I wonder?

Did the lost decade position us for this epic decade plus rise? Remember....prior to the 2008-2009 crisis, the markets had been on a decade run of being absolute dead money. Investors in the decade had lost money based on inflation. 

So now the markets are rewarding long term investors for staying the course. How much higher we go is anyone's guess.

I would agree, Wall.. My earlier post from yesterday characterized this as all "talk."   Nothing is firm until there is pen to paper..

So, the details of this "Phase 1" seem pretty convoluted. Here's my brief understanding..

- No planned new tariffs on Dec. 15th

- Rollback of existing tariffs around $130B,  from 15% to 7.5%

- A remainder amount of existing tariffs will remain in effect

- A resumption of Ag purchases (soybean, corn, etc.) from China

The "structural" changes that China needs to make (elimination of forced technology transfers, China stopping its subsidies of Chinese companies, etc.) ... will be dealt with in Phase 2 or Phase 3. 

As mentioned earlier, IMHO good luck in getting China changing their cheating economic ways.  It's all part in parcel of their "Capitalism with Chinese Characteristics" economic model.

Yeah....seems like the same old, same old and probably another fake out. I will give Trump credit for going to bat for this country on trade. In the end Trump will make some headway if he gets his 4 more years. 

Hey Gamble, no doubt about it he is going to bat for the U.S. when no one else would.  Initially,  I wasn't too crazy about the tentative phase 1 deal, but I think it's good there's still plenty of tariffs still applied to use as leverage in Phase 2 or 3.  China will go down kicking and screaming,  but this is the right way to play it. 

Ha! Kicking and screaming for sure! James Cramer, the Mad Money guy, alluded to the possibility that China would pull back from this tentative agreement on his show this week (Friday or Thursday?...can't recall). He was actually pointing out that delaying the deal even further would be a positive for the stock market. 

Another GO FIGURE? 

Meanwhile, the money continues to roll in. 

So how is he going to bat exactly? He is playing favorites to the detriment of the American consumer. So explain how this is going to bat exactly? With every action he takes or does not take there are winners and losers period. Its obvious the market gets it because the market has shrugged this crap off and does not care that much outside buffering in for the unknown..it has not impacted stocks at all and if you think about it the premise of the whole scam should if it were legit.

Raising costs of imported goods and especially imported raw materials SHOULD have an impact across the board from consumers to producers of products, and it really does but the market knows this is about picking winners and losers and in the end the consumer is the loser. Trump's focus is on the stock market and corporate profits, he doesnt give a crap about the little guy or about the small to mid size business because those groups are getting the beat down and the beneficiaries are the larger corps...thus the reason why the markets are not down on this nonsense.

Tariffs are a direct tax on the smallest consumer because they are the ones who are most impacted. If we tariff raw materials or finished goods most of that is absorbed and passed on via higher costs, the consumer pays that tax and implied tax, the corps are not impacted especially the larger multi national ones who can steer around these sham tariffs by having items delivered through countries who are not part of the tariff even if the producer IS from China.

The farmer is getting raked but then the farmer is getting repeated bailouts and those are paid for by the taxpayer so the smallest pays that bill too and the smallest pay for the increase in costs for imported finished goods.

Can some of you Trump fans tell me exactly how he is going to bat for the US? China is a communist country and economy not capitalism so if we are mad that the differences in economies then our government would need to massively subsidize to match what they do.

The goal is to open up China to free trade and fair trade and to put a stop to IT theft from the USA. It sounds like you are opposed to these ideals, which makes no sense at all (but I am assuming you are an American). Tariffs are the hammer that Trump is using to get China moving towards the negotiating table with the goal of moving towards FAIR trade. Tariffs are not the solution and no one with a brain thinks they are. Tariffs are a tool and that's all. 

As for inflation, current estimates stand at roughly 1.5% this year and 1.9% forecasted for 2020.....certainly not as horrible for the "small consumer" as you make it out to be. Also, as far as that "smallest consumer" is concerned, the truly "smallest consumer" is being subsidized by tax payers via food stamps and other handouts, while contributing the smallest amount to the USA government in taxes collected. Most in this group pay virtually zero in taxes and cruise through life, via their own choices, on the backs of the US government handout system.

Wall Street? Why not get on board and reap the benefits in our stock markets? You seem so opposed to our stock markets, yet the markets are a proven way to generate wealth and has been doing so for generation after generation. You can remain a skeptic and hope that the entire thing folds over and collapses on our entire nation, but that's a horribly pessimistic viewpoint and one that I certainly can't share with you.

"Gamble, you are a great guy,...  I couldn't have said it in any better myself.. 

Wall, seriously, you are a smart guy, and please for one second, take off the "partisan goggles."   What most people don't understand (or choose to omit) is that China agreed to be a member of the WTO in 2001.... and with that comes rules they must follow to open their markets to foreign competition. 

Have they done that ????  Of course not.  You now see in clarity the reason why Trump has made such a serious effort to have them stop in their cheating ways !!! 

What I find quite ironic is how I see in the media how Trump is being played by the Chinese (which I is quite the opposite).

Let's do a brief review of where we stand at this point... from a "net effect point of view."   In other words where have we gone in these trade discussions in a year a half ???

Let's assume Ag purchases are net neutral...   Trump still has tariffs applied to China, while they work on a Phase 2 or 3 to work on the Real meat & potatoes of the trade deal (i.e. forced technology transfer, IP protections, putting a stop to state subsidies) .

For all the joking and ridicule we hear of Trump... It is China that  has got to be thinking they got "played" at this point.    They must now change their "cheating ways" to get these remaining tariffs eliminated...

Should we be surprised North Korea fired a few missiles over the weekend ?   Of course not.  They are puppet master to the Chinese... Lol..   China is pissed off.... and I wouldn't be surprised if this "Phase 1" never gets signed..  

Well played Trump..

I guess you are in the not understand camp too...China is a communist government and economy so them being in the WTO does not change that nor does it mean that they are going to be a capitalism economy. Tariffs are punitive to the smallest player, that is how capitalism works..companies pass on price increases to the consumer and a tariff is a price increase since it is a tax on either finished goods or raw goods, whatever.

I asked the question and nobody can answer it, I find that curious..just replies of partisan this and Trump taking it to China that...neither of you said exactly what that meant. You are not going to turn China into the USA by tariffs, you are not going to stop the agenda of the Chinese government and thus their economy with tariffs, you are not going to stop the government subsidizing the industries they want to develop with tariffs, you are not going to dramatically increase their cost structure or improve their working wage or safety issues with tariffs. 

So what exactly is Trump doing with this? He is trying to act tough and bully and play favorites because the targets are specific and there are loopholes and exclusions there are many ways around the tariffs and it does not seem to be impacting the Chinese at all. I still ask the same question, how is he taking it to the Chinese and what is this accomplishing? An equal playing field? Are you guys lacking fundamental economic understanding to say such a stupid thing?

There cannot be a level playing field when the governments and economies and cultures are not the same, it is impossible...you need a new generic uneducated reply because that one is like the worst.

The level playing field comes when the country evolves as a population and they as citizens demand change and force the government and corporations to properly pay them, protect them and respect them as workers...then their costs go up and thus the cost of finished goods go up even with subsidies.

Tariffs are really a zero nothing burger, they are blabbing noise doing little...but that is also the persona of Trump so it is quite fitting. I notice that unlike Obama and other politicians the reasoning for this isnt about human rights or human interests, just price and cost...and thus it really does not mean anything.

If China wants to continue to undercut the US in industries they will just ramp up subsidies...it isnt like that does not happen here, we see it all the time that there are loss leaders meant to monopolize business, if you have deep enough pockets you can loss leader your competitors to death and that is what China has done, its what Walmart did in the 80's and 90's and its a common practice. There are lots of ways to monopolize and a tariff wont change that in the slightest. The Chinese loss leadered many US and Euro solar companies out of business and lots of tech as well, tariff or not.

Once again I agree with a lot of what you are saying Wall. However, tariffs are a tool. They are a tool that is causing manufacturing companies to leave China and relocate in other countries that do not have similar tariffs in force. This is actually occurring now and it will continue to happen as this trade war drags on. China definitely does not want this continued exodus of business. 

It is the ONLY reason that they are pretending to negotiate with us as it currently stands. 

I dont think the Chinese care about tariffs, they care about access...they have deep enough reserves and cash to subsidize a large number of our industries into the ground with or without tariffs. I think they are worried about denial of access to our markets and the reality is they are dragging their feet because they know they can play this game a long long time, but they do not want to escalate things to the point where they are blocked to entry for us as a trade partner, in both directions. THAT is the tool...tariffs are moronic and only hurt the US consumer, they are not harming China. The exodus of business in reality is not important to the Chinese because when industry IS important the government will and does backstop that industry indefinitely.

If fat boy wants to get something done then he would threaten to block access and deny them full trading partner rights.

Wall, China IS a Communist Government (correct) ; however, it was not to remain a Communist Economy under the WTO.   That was the whole point !!  

Under WTO, the expectation from other WTO member countries is that they WOULD change their economic model to a capitalist one..And OPEN their markets to foreign competition.  Otherwise, why would they have been given access to the WTO ??   That was whole point, they WOULD change their economic model, and in exchange, given access to foreign companies.

Other member countries in 2001 HOPED that China would change their economic model.    That hasn't happened, so what are our options ??

* Kick China out of the WTO (not a realistic option)

* Get China to agree to the terms of the WTO

Since the WTO isn't doing their job, should we ask China "nicely" to stop cheating.  lol.   Or should we work to force them to change their behavior via other means (tariffs).

Regarding the argument about tariffs,....... of course they are harmful to either U.S. business and/or U.S. consumers.. Whoever is absorbing the additional cost is getting hurt.  That's not hard to understand , Wall, and I don't think either "Gamble or myself made the point that they are not harmful... They are also harmful to China if you've been paying attention to the data coming out of the country..

It's helpful to look at this whole thing in a "big picture" perspective..  Tarriffs are nothing more than a negotiating tool to get China to change their behavior .  Trump is willing to sacrifice short term pain (tariffs) for long term gain (a more competitive Chinese market that follows terms of the WTO).

Great discussion guys! All opinions are welcome! This is an investment forum, so my focus is investments....not necessarily the diversion of classes that politics can create. Wall...I get your points on that!

Meanwhile, the markets are off and running again like a freight train. I'd be dammed if I would stand in front of these markets like a bear with his "shorts" down on the table. 

Rush,

You really have to be joking about the government/economy comment...you really cant say that with a straight face right? You cant have capitalism with a communist government it is impossible.

That is something the light brain Trump would think because he does not really understand the correlation between government and economy.

China has more currency reserves and control than any level of tariff, the tariff constraint is one we are faced with but not China...they can subsidize any tariff 10x over and will do so for those parts of industry they feel are needing to be protected. Other areas that are not as critical they are not going to protect as much...as you are seeing with their pork problem. The government easily could enter the market and purchase from somewhere else but they do not think it is critical to the point of large intervention.

If Trump keeps playing the weak tariff game the US will never win. China is not some small weight real estate developer in New jersey who is afraid of the loud mouth, China will not bow to twitter tariff rhetoric. The market also knows that tariffs are chump change, meaningless chump change. The only thing that moves the market is the larger threat and that is not tariff talk.

That is a question that the member states of WTO should have asked themselves . 

I think your response shows a basic lack of understanding  of what the WTO actually entailed.. and what it's expectations of China were. 

I am far from an expert on world trade, but when China initially joined the WTO they did follow through on tariff reductions . Ironically, it is China that is appealing to the WTO for a 2.4b judgement stemming from Obama Administration tariffs on solar panels and wind energy. 

It seems that this "trade war" will be never ending. The problems stemming from China joining the WTO are more about the participating nations not asking enough of China. The WTO was soft on China. The China deal with the WTO was akin to inviting "Tom Thumb" to a limbo competition. 

Trump is trying his best to toughen up on world trade. Let's give him a chance.

Haha....good joke. Yeah I lack understanding of what the WTO entailed...actually the opposite. The WTO expected something from a source that is incapable and it is an impossible expectation. How can anyone....you, me, the WTO, Trump, Cramer whomever think that you can have a free market (in theory) economy when the government controls the economy? That is the exact opposite of capitalism. So how can anyone with an even basic level of economic understanding contemplate or suggest that this is possible? Its lunacy...just stupid.

So you Trump fans, can someone lay out for me what the phrase "Make a level playing field" could mean? Its what you guys think and what the big enchilada thinks, so can someone spell out using big adult economic terms how it is possible to make an level playing field when we are a quasi free market economy and China is a communist economy?

Level means equal and similar, to get even within sniffing grounds of equality we would either have to step in and take over industries here, or in China they would have to release control and have the private sector own and dictate supply and allow consumers choice to make demand decisions and thus find equilibrium. 

If the goal of tariffs per the big basher is to make a level/even playing field how is that even possible in ANY circumstance or scenario? If the WTO is filled with a bunch of morons who think that a communist government is going to just lay down and release control in even a small degree then what good are those people agreeing to such terms? China wants what it can get...if that means playing the WTO and Trump as morons I guess thats what they will do.

Notice that the ONLY time the markets got really spooked outside of a few minutes to the downside was when the rumor was tossed around about not allowing China and citizens and businesses access to our financial markets, owning our assets and property. THAT is real, THAT is a threat...tariffs are a joke and the market knows it. 

Corps are 5 steps ahead of how to do the reach around and not be impacted, you wonder why profits to the market traded stocks are not all that impacted? Its because tariffs are a sham.

It's sad that Democrats have wasted so much taxpayer money trying to tear Trump down. Today is the day the Democrats fail miserably again at politics but at a great cost to America. The bogus Mueller investigation cost taxpayers over 30 million. How much has this impeachment circus cost us? Why can't the Democrats sit back and let the Republican party TRY to help move this country forward? 

What about healthcare?

What about infrastructure?

What about Medicare? 

There are so many important issues that Democrats and Republicans should be working to solve, but the Democrats have exactly ONE priority. 

I know this is off topic, but all of this is distracting our President from doing his job to the fullest....including trade with China.