Stocks Spike, Loonie Leaps As Trump Starts “Negotiable” Trade War

“Indefinite exemptions” – sounds a lot like…

“you get an exemption,  you get an exemption,  everyone gets an exemption”

Markets were spooked early on by chatter than Peter Navarro was hoping to get Cohn’s job, but that all reversed when headlines proclaimed indefinite exemptions for Canada and Mexico from Trump’s tariffs…

FANG stocks fell for the first time 5 days.

The S&P stalled at its 50DMA today…

 

VIX dropped to a 16 handle (because why wouldn’t you sell vol as Trump starts an incredibly uncertain trade war)…

 

Treasury yields were lower on the day though they rose after tariff exemption headlines hit…

 

FX markets were the most volatile today with the Loonie and the Peso surging after headlines proclaimed indefinite exemptions

 

The Dollar Index ramped back into a congested resistance area and rolled over…

 

Cryptos had another bad day…

 

With Bitcoin battered back below $10k…

 

Nasdaq and Bitcoin have decoupled once again…

 

Copper and Crude crumbled as the dollar jumped with PMs modestly lower also…

NOTE the plunge in WTI each of the last 3 days has started at the same time of day.

 

Finally, as a reminder, the economic data is not as rosy as you’re being told (but of course tomorrow’s payrolls print is all that really matters)…

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Concerns Over Historic Sidewalks, Endangered Garter Snakes Hold Up Construction of San Francisco Home

Building a code-compliant, owner-occupied home on a vacant lot should be a pretty easy affair. In most of America, it is. In San Francisco, it can be a nightmare.

Ask Troy Kashanipour. He’s been trying to build a home since 2015.

Despite working closely with city planning staff to design a structure that meets the onerous requirements of San Francisco’s zoning code and design guidelines, Kashanipour has been stalled by recalcitrant neighbors claiming injury over everything from excessive shadow to the possible presence of a historic pathway.

Thanks to the labyrinthine nature of San Francisco’s permitting process, these complaints have added years to a project that city staff say would otherwise be getting a rubber stamp.

Ever since Kashanipour first acquired the small lot on Diamond Street, he says, his intention was to buy it and build a home for his family. The lot in question had sat empty for many years, save for a small, overgrown community garden planted in the 1990s. Its unusually small size and triangular shape make it a difficult place to build. For Kashanipour, an architect by trade, those features made it an interesting challenge.

“Building on a small lot takes more creativity,” he tells Reason. “Understanding that you can build rooms that don’t have to be square or rectangular to be functional is an important part of understanding what you can do with a small parcel.”

Kashanipour spent a good deal of time designing a home that would conform to the parcel’s geometry. He also spent time ensuring the structure would conform with San Francisco’s codes. Before even purchasing the lot, Kashanipour worked with officials at the city’s Planning Department to understand what exactly could be done with the property, to ensure he was interpreting the code correctly, and to change his design where needed.

In fall of 2015, confident in the legality of his design, he purchased the property with the expectation that he would have an easy journey through the planning process. That was before his future neighbors got wind of his plan.

San Francisco law requires that any sponsors of new construction projects hold a pre-application meeting to give adjoining property owners and neighborhood groups “the opportunity to express concerns about a project” and “identify issues” early on.

In December 2015, some 40 people attended the pre-application meeting Kashanipour held at the Glenn Park Public Library. The results were explosive.

Even before the meeting, flyers had gone up around the neighborhood claiming Kashanipour planned to build a “monster house” and calling on neighbors to show up and tell him “no you won’t!!!” This passion carried over to the pre-application meeting.

Said Dr. Michelle Birch—an attendee who supported Kashanipour’s development—at a March public hearing, “I was quite appalled when I attended the meeting.”

“The level of aggression toward Mr. Kashanipour at the community meeting was exceptional,” Birch said. “It seemed to me there were no substantive complaints about the building.”

Project opponents don’t deny the meeting became heated, instead arguing that their rage was justified. “People started shouting not because they are rude, but because [Kashanipour] refused to listen,” said one opponent.

Not everyone at the meeting was opposed to the project, with many of the attendees merely expressing curiosity. He also went to great efforts to reach out his soon-to-be neighbors, handing out his contact information and offering to meet with anyone on an individual basis to address concerns.

Opposition to his project continued however. A sign posted on the lot notifying residents of planned public hearings was defaced with graffiti reading “no McMansions here” and simply just “no, no, no.”

Neighbors also sought to use the process against Kashanipour. In October 2016, Jeff Cerf, the owner of the property next door, filed for a Discretionary Review of the project—essentially a request to have the city’s Planning Commission mandate changes or impose conditions that are not otherwise required by the city’s zoning codes. Discretionary Reviews can add months if not years to a project’s timetable. The added time and expense can be used as a cudgel to extract concessions from project sponsors or even stop projects entirely.

This was certainly the expressed hope of some Glenn Park neighbors, who at a March 2017 Planning Commission hearing urged commissioners to approve the Discretionary Review on the grounds that it would allow enough time for the city to stop development by purchasing the property from Kashanipour, using eminent domain if need be.

The same March hearing saw all sorts of complaints levied at Kashanipour’s planned home. A woman who owned a nearby property said she felt Kashanipour’s four-story house would be an undue invasion on her privacy, telling Commissioners that she was an expectant mother looking forward to “lots of summer days in the yard with the baby. I don’t think the occupants of the new building should have such a direct view of our family.”

One claimed that the land was inhabited by endangered garter snakes. Another argued that the roof deck in Kashanipour’s design was “not part of the character of this working-class neighborhood.” Others said that replacing the lot’s current community garden with the home would “take away valuable joy” from passersby. Another neighbor, in emailed comments sent a few days prior, claimed that Kashanipour’s proposed “‘piece of pie’ shaped home, nestled inappropriately where it clearly does not belong,” would be a draw for tourists, worsening traffic congestions.

Supportive neighbors were present as well, arguing that the city needed more housing, that Kashanipour’s design was creative and interesting, and the relocation of his family to Glenn Park would add to the vibrancy of the community.

The city’s Planning Department—which is overseen by the seven-member Planning Commission—likewise recommended that the Discretionary Review be denied and that Kashanipour be allowed to build his home with no additional alternations. This did not sit right with some of the planning commissioners, including Dennis Richards, who said Kashanipour’s design “reminds me of Tokyo.” This was not a compliment, as his elaboration made clear.

“I walked on a street, there’s a footpath, then there’s this gargantuan building with all these rooftop apartments on it. And I just go holy cow, it’s slapping me in the face,” said Richards.

He and the three other commissioners present that day imposed seven conditions on Kashanipour’s project, including requirements to install a lightwell around his neighbor’s windows, reduce the house from four floors to three, change the façade, redesign the windows, and shrink the roof deck.

Says Kashanipour of the Commission’s decision: “I think as a group, they make fair decisions. I think sometimes when all the commissioners are not present, the views get a little skewed toward individual idiosyncrasies.”

Kashanipour appealed that decision to San Francisco Board of Appeals, agreeing to four of the seven conditions but asking that he be allowed to expand his roof deck, ditch the lightwells, and keep the fourth floor.

This appeal sparked another round of backlash from Glenn Park residents, with Cerf demanding that even more conditions be put on Kashanipour’s permits as a punitive measure, saying in a letter to the Board of Appeals that more restrictions “would put future sponsors on notice that appealing their own permit carries significant risk they may want to avoid.”

Others made the case before the Board of Appeals that Kashanipour’s empty lot was deserving of landmark status because a path that exists on it now—which Kashanipour’s planned construction would not touch—was possibly part of the historic El Camino Real, a trail that connected the early Spanish missions in the area.

On February 28, 2018, the Board of Appeals threw out some of the conditions imposed on Kashanipour’s property but kept the prohibition on building a fourth floor.

Both Kashanipour and Cerf have until March 12 to re-appeal this decision. As of March 8, neither has done so.

Should both parties let the decision stand, Kashanipour will have to present new plans to Board of Appeals staff, who would then send them off to the Planning and Building Inspection Departments for another round of approvals, after which he would be allowed to build his home.

A Board of Appeals staffer told Reason there is no set time for how long that can take.

Kashanipour’s planned home did not require any code variances. It will not displace any tenants. It is even exempt from California’s environmental review process. Nevertheless, neighborhood opponents were able to delay the project, dragging it through review by two separate government bodies whose members arbitrarily piled condition after condition onto the permits.

This is how you create a housing shortage.

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Here Are The Full Details Of The Tariffs Trump Will Enact

While much of what Trump is announcing today has already been leaked, here are the details of the import tariffs Donald Trump formally adopted on steel and aluminium imports which allow US allies to apply for exemptions, a sign of the growing concern that the president was alienating America’s closest international partners.

The tariffs will come into force within 15 days and are expected to draw retaliation from the EU and other steel producers and heighten fears of a descent into a trade war.

Here are the highlights from Reuters:

  • TRUMP TO ANNOUNCE ON THURSDAY IMPORT TARIFFS OF 25 PCT ON STEEL, 10 PCT ON ALUMINUM STARTING IN 15 DAYS -SENIOR ADMINISTRATION OFFICIAL
  • U.S. OFFICIAL SAYS CANADA AND MEXICO TO BE EXEMPTED FROM TARIFFS FOR UNDETERMINED PERIOD; CONTINUATION OF EXEMPTION DEPENDS IN PART ON PROGRESS IN NAFTA TALKS
  • TRUMP’S TARIFF PROCLAMATIONS TO INCLUDE PROVISION TO CONSIDER ‘ALTERNATIVE WAYS’ TO ADDRESS THREAT TO U.S. NATIONAL SECURITY CAUSED BY OTHER NATIONS’ STEEL, ALUMINUM EXPORTS -OFFICIAL –
  • U.S. TRADE REPRESENTATIVE LIGHTHIZER TO HANDLE DISCUSSIONS WITH OTHER COUNTRIES ON ALTERNATIVE REMEDIES TO ‘FLEXIBLY MODIFY’ TARIFF PROCLAMATIONS -OFFICIAL
  • MAY HAVE TO RAISE TARIFFS ON OTHER COUNTRIES IF CANADA, MEXICO EXCLUDED; CAPACITY USE TARGETS MUST BE MAINTAINED -OFFICIAL
  • TRUMP OFFICIAL DECLINED TO SPECIFY ALTERNATIVES THAT OTHER COUNTRIES COULD SEEK TO AVOID STEEL, ALUMINUM TARIFFS  

And the details, from Bloomberg:

Steel tariff to be set at 25%, aluminum at 10%

  • Beyond that, proclamations almost identical
  • To take effect in 15 days
  • Official says may have to raise tariffs modestly on everyone else if Canada, Mexico excluded long-term; adds document flexible enough to allow that

On exclusions:

  • Canada, Mexico will be specifically exempted from both tariffs initially
    • Trump has linked the exemptions to Nafta talks ongoing; exemption isn’t open-ended, official says
  • For other countries, will have ability to modify order owing to national security
    • European countries and others could be able to request exclusion

On economic impact:

  • White House official says there will be no significant downstream price effects, and thus no significant downstream job effects
    • Expectation counters multiple statements and prognostications from several companies and industry groups that use steel and aluminum, as well as lawmakers representing them, who have warned the tariffs will harm their businesses or industries
  • Only job effects White House sees are positive ones in U.S. steel, aluminum industries: official
  • Says process extremely, carefully well vetted

In short, tariffs but with notable exemptions, which begs the question: why did Gary Cohn quit again?

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Tracking Down the Elusive Left-Wing Authoritarian

PoliticallyCorrectIconThemoderncanvasDreamstimeIn The Authoritarian Specter, the Harvard social scientist Robert Altemeyer asked, “Is the ‘authoritarian on the left’ like the Loch Ness Monster: an occasional shadow, but no monster?”

Altemeyer is the man who in 1981 devised the Right-Wing Authoritarianism (RWA) scale, a test widely used to measure this personality and ideological variable. Social scientists generally report that right-wing authoritarians are conformists who obey established authorities, adhere to conventional social norms, and are hostile to people who flout both. Using such tests, they have argued that conservatives have a higher need for structure, lower attributional complexity, lower openness to experience, and higher perceptions of threat than do liberals—basically, that conservatives are mentally and socially rigid.

Now a new study in the journal Political Psychology claims that left-wing authoritarianism is no mere shadow. “I became interested in left-wing authoritarianism in particular because some people have said it isn’t a very real or likely phenomenon—and yet I know people I would describe as left-wing authoritarians,” the study’s lead author, University of Montana social psychologist Lucian Conway, tells PsyPost. “So I was curious to figure that out.” The researchers set out to test the authoritarianism symmetry hypothesis, which “suggests that the same processes that create authoritarianism in right-wing persons also operate in left-wing persons in essentially equal degrees.”

Conway and his colleagues created a Left-Wing Authoritarianism (LWA) scale by rewriting the RWA to be targeted toward acceptance of liberal authoritarian leaders. For example, an item from the standard RWA scale reads: “It’s always better to trust the judgment of the proper authorities in government and religion than to listen to the noisy rabble-rousers in our society who are trying to create doubts in people’s minds.” In the LWA scale, this was adapted to read: “It’s always better to trust the judgment of the proper authorities in science with respect to issues like global warming and evolution than to listen to the noisy rabble-rousers in our society who are trying to create doubts in people’s minds.”

The researchers then administered their new LWA scale to several hundred college students and to several hundred other people recruited via Mechanical Turk. Participants filled out questionnaires on their political and ideological predilections, measuring among other things their prejudices about religious and racial minorities, their tendency toward dogmatism, and the strength of their convictions.

Once all of the numbers were crunched, the researchers’ results were consistent with the authoritarianism symmetry hypothesis. In fact, after sorting participants into conservatives and liberals based on whether they scored in the top or bottom half of a 10-point conservatism scale, the researchers found that “the highest score for authoritarianism was for liberals on LWA.”

“Our data suggest that average Americans on the political left are just as likely to be dogmatic authoritarians as those on the political right. And those left-wing authoritarians can be just as prejudiced, dogmatic, and extremist as right-wing authoritarians,” Conway tells PsyPost.

What is surprising is that these results are apparently so surprising to many social scientists. After all, what is political correctness other than conforming to established authorities and adhering to conventional social norms with respect to issues like racial, gender, and income inequality, environmental problems, abortion, hate speech, and gun rights, while exhibiting hostility to folks who flout them?

For more background for Conway’s earlier research, see my article, “Liberals Are Simple-Minded.”

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Nordic ‘Glass Ceiling’ Shows How Gender Equity Suffers From Government Overreach

Nordic countries beat the United States at a host of measures related to gender equality. But while this is widely believed to be an effect of their social welfare policies, ample data suggest that women in these countries thrive in spite of heavy-handed government policies, not because of them.

“While Nordic societies are indeed role models when it comes to gender equality, this equality stretches back centuries before the modern welfare state and reflects traditional Nordic culture,” writes Nima Sanandaji in the intro to a new look at the “glass ceiling” in Nordic countries.

In analyzing the effects of corporate gender quotas and other popular Nordic policies, Sanandaji—a Kurdish-Swedish policy analyst and the president of the European Centre for Entrepreneurship and Policy Reform—observes what a good deal of recent scholarship has been showing: that “the rise of the Nordic welfare state has been a double-edged sword” for feminism, “creating some benefits for women’s careers, but also creating barriers to women’s professional progress.”

Nordic countries can trace some of their workforce quirks to their large public sector, which “has been both positive and negative for women,” writes Sanandaji:

It played an important historical role in women’s entry into the labor market because many women entered through the expanding public sector. Public-sector services also facilitated the combination of work and the fulfilment of family responsibilities. The expansion of the public sector partly explains why Nordic nations reached a high employment rate among women earlier than other Western countries and stayed that way. The provision of public daycare was particularly important in this regard.

But labor-force participation is only one measure of female professional success. Another measure is female business ownership. Anita Lignell Du Rietz studied women’s business ownership in Sweden and found that many businesses, including taverns, tailor shops, breweries, and stores were run by women entrepreneurs during the 19th century. Over time, women dominated businesses such as schools and pharmacies.

However, government monopolies crowded out private enterprise as the Swedish welfare state grew during the 20th century. Meanwhile, male-dominated sectors, including manufacturing, mining, and forestry, remained under private control. The transition toward welfare-state monopolies meant that women’s business ownership suffered.

Government monopolies have combined with a strong influence of union wage-setting to undermine incentives for work: wages in the female-dominated public sectors in Nordic countries are flat, and rise based on seniority rather than achievement. Although there are public-sector managerial positions, the opportunities for individualized careers and business ownership are comparatively limited.

Women in Nordic countries are less likely to hold management positions as their U.S. counterparts, according to data from the International Labour Organization, from 15 percent less in Denmark to three percent less in Iceland.

Sanandaji finds that high taxes, mandated paid-leave policies, and the high cost of paid services also impede Nordic women’s professional advancement. Overall, he concludes, “Nordic public-sector monopolies, tax policies, and welfare and family policies, along with ineffective gender quotas, combine to create the Nordic glass ceiling.” (Read the whole paper here.)

In a recent Bloomberg column, Megan McArdle pinpointed another factor that taxes women in certain Nordic countries (who still, like their American counterparts, wind up doing an uneven share of domestic labor and child care): “High Danish wages translate into sky-high costs, especially for services. At a McDonald’s in downtown Copenhagen, a Big Mac meal set me back more than $10.”

McArdle came away from her trip to Denmark noting that Danes’ complaints about their countries are generally, “on the scale of things, reasonably minor problems. They can be fixed. Moreover, there’s some chance that they will be fixed because Denmark’s political culture is remarkably effective at tackling problems that have stymied the rest of the world.” But we can’t import their policy and wind up with the same sense of well-being, suggests McArdle, because much of this comes from Danish social cohesion and “a consensus-based culture founded on trust.”

Again, there are good and bad sides to this. While “Danish social cohesion works great for Danes,” it’s not so great for absorbing outsiders:

In the U.S., the unemployment rate of foreign-born workers is almost a percentage point lower than that of native-born citizens. In Denmark, it’s almost 6 percentage points higher, more than double the native-born rate. And many first-generation immigrants also seem to be having difficulty integrating themselves into the Danish economy.

A combination of factors—including discrimination but also a fetishization of training and education—make it hard for immigrants to get ahead in the Danish economy. As with policies to encourage gender parity, Nordic-style heavyhandedness in employment (and sex) can come with unintended consequences that hit the most vulnerable the hardest.

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Watch Live: President Trump Unveils “Fair & Flexible” Trade Tariffs

Will he ‘carve-out’ or won’t he?

“Fair and flexible” sounds reasonable but it would appear it all hinges on NAFTA. As President Trump said earlier, “we’re sticking with 10/25 tariffs,” adding that “if a [NAFTA] deal is reached, tariffs could change later.”

But, the latest headlines from AP suggest that the Trump tariffs will take effect in 15 days and more importantly Canada and Mexico will be “exempted indefinitely.”

Which as we detailed earlier, makes little sense, since while the decision to exempt Mexico and Canada may be strategic, perhaps meant to streamline Nafta negotiations, the reality is that it will thoroughly water down the impact of Trump’s tariffs in the first place, because as Harbor Intelligence wrote overnight, if Trump exempts Canada from proposed aluminum tariffs, “it would impair the ability of U.S. smelters to restart capacity and defeat the purpose of the import duties.”

As Harbor managing director Jorge Vazquez adds, “excluding the biggest aluminum shipper into the U.S. from the tariffs could also encourage other U.S. allies to ask for exemptions, thereby driving down the cost of delivering metal to the Midwest and making imported metal more affordable for users.

Ultimately, if exemptions are limited to Canada it could mean a windfall of as much as $300 million for Canadian producers given the Midwest premium would still reflect the tariff, Vazquez said adding that “This shows that the entire section 232 is a mistake.”

He is right, after all last month, Commerce Secretary Wilbur Ross said the aim of his duty recommendations to the president was to boost domestic aluminum capacity utilization to 80 percent. If Canada is exempt it would achieve none of that stated goal.

NBC reports that Trump may sign some kind of legal paper that is lower than an executive order. It could be some kind of paper outlining his objectives and some timelines without real specifics.

Watch President Trump live (expected to begin at 330pm ET… but who knows)…

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CNBC Reporter “Harassed” By Police After Exposing China’s “Dirty” Steel Secret

While the whole world is up in arms over Trump’s trade tariffs, virtually nobody wants, or dares to, point out that Trump is actually spot on when slamming China’s trade practices. And for confirmation, look no further than China’s own behavior when caught in the act.

As a reminder, it all started in December 23, 2015 – which we said at the time was “the date the global trade wars officially began” because that’s when president Obama imposed a 266% tariff on Chinese cold-rolled steel imports which Beijing had been quietly dumping around the world, a consequence of China’s attempt to overstimulate its economy (capex, capex, capex) starting in 2014.

To be sure, with Chinese mills, smelters and refiners all producing far more than can be purchased domestically amid slowing domestic demand, as well as the government’s anti-pollution crackdown, China’s decision to ship the excess overseas, and the dump it at far below prevailing prices, was understandable.

As was the collective global response: it wasn’t just the US that slapped China with tariffs: so did the EU, which as we reported two days ago, just extended its Chinese steel pipe tariffs of 72% for another 5 years.

What China did in response was, well, lie.

Beijing government swore that it would cut production and slash capacity in response to the global trade war-esque retaliation. It did not, as we first reported one year ago in “Iron Ore Tumbles As China Steel-Producing Hub Found Lying About Production Cuts.” Some more details:

In 2016, China’s state council set out plans to eliminate 100 -150 million tonnes of steel capacity in a bid to restructure the economy from one driven by government-led infrastructure investment and exports to a more consumption and services-oriented model. Last January, the hub of China’s steel production –  the northern province of Hebei – announced it would cut output to ease pollution and help curb oversupply. Hebei said it planned to reduce steel output by 8 million metric tons in 2016, its Governor Zhang told local lawmakers, while Iron ore production would be cut by 10 million tons.

More than one year later, it appears that Governor Zhang lied about Hebei’s intentions, and according to a provincial notice by the Chinese province, it has emerged that China’s compliance with its own mandatory production cuts has been “problematic.”

Subsequent reporting by Reuters  found that the same Hebei province, China’s biggest steel-producing area, launched a probe into steel overproduction in the city of Tangshan “amid concerns that firms have continued to raise output despite mandatory capacity cuts.”

Tangshan is the heartland of Chinese steel production. The city is home to the headquarters of the state-owned Tangsteel Group, which in 2006 merged with other companies to form Hebei Steel Group, the second-largest steel producer in the world. Located around 100 miles east of the capital Beijing, Tangshan is on the frontline of the country’s “war on pollution”, and was seventh on the list of China’s ten smoggiest cities in the first two months of this year.

Having been exposed to the entire world for lying about its production cuts, China’s central government then “ordered” the investigation of firms in Tangshan that have “restricted but not cut production, restricted production but not actually cut emissions, and cut capacity but actually increased output.  Investigate and punish, that is.

Or at least that was the not so sophisticated charade staged by Beijing, because despite having been caught lying once already, China continued the theater. It had no choice: for one thing it had to allocate its trillion dollar stimulus somewhere, even if it meant keeping its zombie steel mills alive, and more importantly, China had to avoid the middle-class revolt that would follow if millions of steelworkers were suddenly laid off.

What’s far worse: all of China’s trading partners knew all about it.

* * *

Fast forward to today when CNBC’s China reporter Eunice Yoon decided to check if Beijing had kept its promises that it was slashing steel production and excess capacity, by visiting a town that was reportedly “steel free.”

What happened next, as Yoon reports, is that just as soon as she discovered a steel plant in a town that was supposed to be “steel-free”, and that, drumroll, Beijing had lied once again, she was promptly escorted away by Chinese police as the local government had no interest in divulging to the world that as China was closing steel mills in one part of the country, it was quietly opening new plants in other parts of the country, or as she said: “Beijing may be reducing capacity here, but it’s moving it elsewhere.”

Yoon then adds: “the issue of closing steel mills is highly sensitive in China, and as evidence of this we were taken away by the police, we were harassed when we were reporting, and a lot of that is despite the fact that the authorities there were very proud of the fact that this was a “steel-free” town, they still took us to the police station, acknowledged that we were allowed to be there, and then escorted us all the way out of town.”

Meanwhile, by literally shifting around production, China was keeping the same total excess steel production, which in turn leads to more dumping, and more foreign steelworkers losing their jobs, just so China can pad its goalseeked GDP and keep its own steelworkers happy, preventing a worker uprising.

Watch her report below:

CNBC reporter escorted out of ‘steel-free’ town in China from CNBC.

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Canada, Mexico To Be “Exempted Indefinitely” From Tariffs; Peso, Loonie Soar

With just minutes to go until Trump’s 3:30 pm press conference, the big leaks have started hitting the tape, and according to the AP, while the Trump tariffs will take effect in 15 days, more importantly Canada and Mexico will be “exempted indefinitely.”

  • TRUMP METAL TARIFFS ARE SAID TO TAKE EFFECT IN 15 DAYS: AP
  • MEXICO, CANADA EXEMPTED INDEFINITELY FROM TARIFFS, AP REPORTS

Of course, the market’s attention is drawn much closer to the latest flip-flopping by the admin which as recently as a few hours ago had decided against exemptions, only to change its mind again in the last minute.

And while the decision to exempt Mexico and Canada may be strategic, perhaps meant to streamline Nafta negotiations, the reality is that it will thoroughly water down the impact of Trump’s tariffs in the first place, because as Harbor Intelligence wrote overnight, if Trump exempts Canada from proposed aluminum tariffs, “it would impair the ability of U.S. smelters to restart capacity and defeat the purpose of the import duties.”

As Harbor managing director Jorge Vazquez adds, “excluding the biggest aluminum shipper into the U.S. from the tariffs could also encourage other U.S. allies to ask for exemptions, thereby driving down the cost of delivering metal to the Midwest and making imported metal more affordable for users.

Ultimately, if exemptions are limited to Canada it could mean a windfall of as much as $300 million for Canadian producers given the Midwest premium would still reflect the tariff, Vazquez said adding that “This shows that the entire section 232 is a mistake.”

He is right, after all last month, Commerce Secretary Wilbur Ross said the aim of his duty recommendations to the president was to boost domestic aluminum capacity utilization to 80 percent. If Canada is exempt it would achieve none of that stated goal.

Whatever the thinking behind the last minute change, both the loonie and the peso love it, and have soared near session highs in kneejerk response.

 

And of course, stocks are kneejerking higher, seemingly not caring that the tariffs will remain for China and thus our biggest trading partner?

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Hope Hicks Tells House Intel Committee That Her Emails Were Hacked

More details about (soon-to-be-former) White House Communications Director Hope Hicks’ private testimony before the House Intelligence Committee last week are leaking. Last week, shortly before she surprised Washington by announcing her resignation, reports emerged claiming Hicks told the committee that she had, on occasion, told “white lies” to the press to help defend her boss.

Now, NBC News is reporting Hicks told the committee that she no longer has access to two of her email accounts because they have been hacked.

Hope

Hicks indicated that she could no longer access two of her email accounts: One of the accounts she used in her professional capacity as a member of President Donald Trump’s campaign team, while the other was a personal account.

However, NBC’s anonymous sources failed to ascertain which of these two accounts had been hacked. Hackers reportedly targeted only one of the accounts, according to Hicks.

As NBC News pointed out, Hicks’ hacking claim raises questions about who hacked the account and why. But the committee wasn’t able to pursue those questions because Hicks, like many other members of the White House staff who have appeared before the House Intel Committee, has refused to answer questions about her time at the White House or her experiences during the transition – and also because she was appearing voluntarily and not under a subpoena for her testimony.

It is standard practice for lawmakers to ask witnesses about phone numbers and email accounts. However, it is uncommon, according to people familiar with the committee process, for a witness to tell lawmakers that he or she no longer has access to past accounts.

Special Counsel Robert Mueller has famously been pursuing the emails of Trump associates and other records from the campaign period, transition and the Trump administration.

Mueller recently sent a subpoena to former Trump aide Sam Nunberg ordering Nunberg to turn over documents relating in any way to 10 current and former Trump associates, including Hicks.

As NBC points out, Corey Lewandowski, Trump’s first campaign manager (who reportedly dated Hicks during the campaign while he was married to another woman), is slated to testify before the committee on Thursday.

We’re keeping our eyes out for another report confirming that Hick’s account had been hacked (by shadowy Russia-affiliated hackers, no doubt).

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“A Hard Left Turn Looms” – Wealth Inequality In The United States

Via Global Macro Monitor,

This is not a chart that generates confidence in future political and social stability. 

 It looks like the jaws of a Great White ready to bite someone in the arse.

Hat Tip: Real-World Economics Review Blog

Clearly a contributing factor in the rise of populism and anti-elitism, and 2016’s political Black Swan.   

It will only get worse during the Trump administration and then we suspect the country will soon make a hard left turn.   


Stay tuned.

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