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Just ahead of his meeting with top eurocrat Jean-Claude Juncker set for Wednesday where the European Commission President hopes to calm the escalating trans-Atlantic trade fight, Donald Trump tweeted out “Tariffs are the greatest!” 

In reference to what promises to be a contentious meeting with Washington’s “foe” – as Trump called the EU in a recent interview, Trump greeted Tuesday morning with a key theme of his presidency: “Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs… Remember, we are the “piggy bank” that’s being robbed…” and also “Countries that have treated us unfairly on trade for years are all coming to Washington to negotiate.”

Juncker told reporters last week he is “upbeat and relaxed”; however, we don’t need a crystal ball to know that things are likely not going to go well at the meeting, as Bloomberg reports that the European Commission President “won’t be coming to the White House with a ‘great deal’ on trade to counter Donald Trump’s recent criticism of the European Union and his claims it runs a $150b surplus with the U.S.,” according to an unnamed European official. 

The last time the two met face to face, at the recent G7 summit in Quebec, the EU’s most senior official told fellow European leaders that Trump had called him a “brutal killer” — though possibly in the spirit of jesting, over what Trump identified as unfair EU trade policies and fines on American tech companies.

Last week Cecilia Malmstrom, the European Union trade commissioner who is accompanying Juncker on his trip, indicated he would attempt to persuade Trump against his threat of raising tariffs on European car imports, possibly wrecking a $1 trillion trade relationship which the EU says will be disastrous for both sides of the Atlantic, with 15 million jobs on the line. 

Ahead of Wednesday’s meeting a European Commission spokesperson said, “It is an opportunity to de-dramatize any potential tensions on trade and to engage into an open, constructive dialogue with our American partners” — however drama is what we fully expect, as when Trump initially announced tariffs in March, Juncker vowed EU retaliation by declaring “we can also do stupid”.

Since June, US-European tensions have reached a boiling point after Trump continued imposing tariffs on steel and aluminium imports into the US. As Juncker himself again vowed in a speech last week, saying “We will continue to respond toe-to-toe to provocations,” and “All efforts to divide Europeans are in vain” — the EU in response imposed retaliatory trade taxes in early summer on a number of the country’s most famous brands, including Levi jeans, Harley Davidson motorcycles, and bourbon whiskey. As we reported earlier, companies like Harley Davidson are already reeling as profitability will take a huge hit according to the company’s latest forecast after being thrust into the middle of the trade war.

Among the many other potential issues Trump could bring up, which has European officials bracing for the worst, includes berating Europe’s ongoing attempts to salvage the 2015 Iran nuclear deal, from which the US formally withdrew in May, making the issue likely high on his mind after an epic all caps tweet threatening Iran on Monday. He’s also complained about inadequate defense spending among a most European allies, which has threatened NATO unity, and recently railed against the planned Russia-to-Germany Nord Stream 2 natural-gas pipeline while face to face with NATO leaders at the July summit in Brussels. 

Trump has more recently complained of currency manipulation to boot, accusing “China, the European Union and others” of “manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day – taking away our big competitive edge” in a tweet last Friday.

And then there’s Trump’s threat of targeting the European automotive industry with even more tariffs, saying in a June tweet, that he would slap 20 percent tariffs on European car makers, insisting American manufacturers should “build them here” in accordance with this ‘America First’ doctrine. 

Junker said during the recent G7 meeting in Canada that “he would seek again to explain to Trump that the European Commission coordinates trade policy for the 28-country European Union and that the United States could therefore not forge a trade deal with just one of its members,” according to a summary of his words by Reuters.

“When it comes to trade, the European Union, its internal market, its single market, form an indivisible unity and it’s the Commission that is in charge of articulating trade policy,” Juncker said.

As Mr. Juncker goes to Washington we fully expect trans-Atlantic trade relations to further slide towards crisis mode. 

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Authored by Patrick Buchanan via Buchanan.org,

“History repeats itself, first as tragedy, then as farce,” a saying attributed to Karl Marx, comes to mind in this time of Trump.

To those of us raised in the Truman era, when the Red Army was imposing its bloody Bolshevik rule on half of Europe, and NATO was needed to keep Stalin’s armies from the Channel, the threat seemed infinitely more serious. And so it was.

There were real traitors in that time.

Alger Hiss, a top State Department aide, at FDR’s side at Yalta, was exposed as a Stalinist spy by Congressman Richard Nixon. Harry Dexter White, No. 2 at Treasury, Laurence Duggan at State, and White House aide Lauchlin Currie were all exposed as spies. Then there was the Rosenberg spy ring that gave Stalin the secrets of the atom bomb.

Who do we have today to match Hiss and the Rosenbergs?

A 29-year-old redheaded Russian Annie Oakley named Maria Butina, accused of infiltrating the National Rifle Association and the National Prayer Breakfast.

Is Putin’s Russia really a reincarnation of Stalin’s Soviet Union? Is Russia a threat of similar magnitude?

Russia is “our No. 1 geopolitical foe,” thundered Mitt Romney in 2012, now cited as a sage by liberals who used to castigate Republicans for any skepticism of detente during the Cold War.

Perhaps it is time to contrast the USSR of Stalin, Khrushchev and Brezhnev with the Russia of Vladimir Putin.

By the beginning of Reagan’s tenure in 1981, 400,000 Red Army troops were in Central Europe, occupying the eastern bank of the Elbe.

West Berlin was surrounded by Russian troops. East Germany, Poland, Czechoslovakia, Hungary, Romania, Bulgaria were all ruled by Moscow’s puppets. All belonged to a Warsaw Pact created to fight NATO. Lithuania, Latvia, Estonia, Georgia, Ukraine were inside the USSR.

By the end of the Jimmy Carter era, Moscow had driven into Ethiopia, Mozambique and Angola in Africa, Cuba in the Caribbean, and Nicaragua in Central America, in the greatest challenge ever to the Monroe Doctrine.

The Soviets had invaded and occupied Afghanistan. The Soviet navy, built up over 25 years by Adm. Sergey Gorshkov, was a global rival of a U.S. Navy that had sunk to 300 ships.

And today? The Soviet Empire is history. The Soviet Union is history, having splintered into 15 nations. Russia is smaller than it was in the 19th century. Russia is gone from Cuba, Grenada, Central America, Ethiopia, Angola and Mozambique.

The Warsaw Pact is history. The Red Army is gone from Eastern Europe. The former Warsaw Pact nations of Poland, Czechoslovakia, Hungary, Romania and Bulgaria all belong to NATO, as do the former Soviet “republics” of Estonia, Lithuania and Latvia.

When the flagship of Russia’s navy, the aircraft carrier Admiral Kuznetsov, sailed from Murmansk to Syria, it had to pass through the North Sea, the Channel, the east Atlantic, the Straits of Gibraltar, and then sail the length of the Med to anchor off Latakia.

Coming and going, the Kuznetsov was within range of anti-ship missiles, aircraft, submarines and surface ships of 20 NATO nations, among them Norway, Britain, Germany, France, Spain and Portugal, and many U.S. bases and warships.

Entering the Med, the Kuznetsov had to travel, without a naval base to refuel, within range of the missiles, planes and ships of Spain, France, Italy and Greece. Along the banks of the Adriatic and Aegean there are only NATO nations, except for Kosovo, which is home to the largest U.S. base in the Balkans, Camp Bondsteel.

To sail from St. Petersburg through the Baltic Sea to the Atlantic, Russian warships must pass within range of 11 NATO nations — the three Baltic republics, Poland, Germany, Denmark, Norway, Holland, Belgium, Britain and France.

The Black Sea’s western and southern shores are now controlled entirely by NATO: Romania, Bulgaria, Turkey. Russia’s lone land passage to its naval base in Crimea is a narrow bridge from the Kerch Peninsula.

With the breakup of the USSR, Russia has been reduced to two-thirds of the territory and half the population of the Soviet Union.

Its former republics and now neighbors Georgia and Ukraine are hostile. Its space launches are now done from a foreign land, Kazakhstan. Its economy has shrunk to the size of Italy’s.

It has one-tenth the population and one-fifth the economy of its looming neighbor, China, and, except for territory, is even more dwarfed by the United States with a GDP of $20 trillion, and troops, bases and allies all over the world.

Most critically, Russia’s regime is no longer Communist. The ideology that drove its imperialism is dead. There are parties, demonstrations and dissidents in Russia, and an Orthodox faith that is alive and promoted by Putin.

Where, today, is there a vital U.S. interest imperiled by Putin?

Better to jaw-jaw, than war-war, said Churchill. He was right, as is President Trump to keep talking to Putin – right through the Russophobia rampant in this city.

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Facing the brunt of President Trump’s trade war with China, which threatens some $34 billion of US products and agriculture with duties, the White House has announced a $12 billion “short-term” stimulus plan to help US farmers hurt by China’s “illegal” retaliatory tariffs. 

The package, as expected, will consist of direct payments and food purchases – while further details on the program will come by Labor Day. 

Earlier in the day, Trump told a Veteran’s group: “This country is doing better than it’s ever done before, economically…It’s all working out. Just remember: what you’re seeing and what you’re reading is not what’s happening.” 

Pres. Trump says “this is the time” for tariffs: “This country is doing better than it’s ever done before, economically…It’s all working out. Just remember: what you’re seeing and what you’re reading is not what’s happening.” https://t.co/RHXmN2iULc pic.twitter.com/DAcUlBvEaW

— ABC News (@ABC) July 24, 2018

As we reported earlier, China’s retaliation against Trump’s tariffs was a lefy on 545 categories of US products, ranging from soybeans, pork, chicken and seafood to sport-utility vehicles and electric vehicles, and as a result of plunging commodity prices, one group emerged as especially hard hit by the administration’s tariffs: farmers.

Iowa Senator Joni Ernst appeared on CBS’ “Face The Nation” warning that: “farmer ranchers are “always the first to be retaliated against” in these types of “trade negotiations,” adding that farmers have been put in “very vulnerable position.”

Meanwhile, Iowa Secretary of Agriculture Mike Naig said that “there are real issues in our trade relationship with China that need to be addressed, but Iowa agriculture cannot continue to bear the brunt of the retaliation from our trading partners.”

In short, America’s farmers were getting ever more angry with Trump’s policies.

“Soybeans are the top agriculture export for the United States, and China is the top market for purchasing those exports, The math is simple. You tax soybean exports at 25 percent, and you have serious damage to U.S. farmers.”

Cheese producers were also hard hit, forced to discount their products to keep customers, with many putting orders put on hold and resulting in the biggest cheese inventory in US history.

“We have seen large drops in our dairy product sales prices at all levels,” said Catherine de Ronde, economist for the Agri-Mark Inc. dairy cooperative. “It will create a significant backup of dairy products.”

Not everyone is happy with Trump’s emergency aid. Responding to earlier reports of Trump’s $12 billion stimulus plan, Senator Bob Sasse (R-NE) said that the Trump administration was “going to make it 1929 again.” 

The Nebraska senator said that Trump’s trade war is “cutting the legs out from under farmers,” and that the White House will now “spend $12 billion on gold crutches.” 

“America’s farmers don’t want to be paid to lose – they want to win by feeding the world,” Sasse said in a statement. “This administration’s tariffs and bailouts aren’t going to make America great again, they’re just going to make it 1929 again.”

***

As we noted earlier, under the White House plan, the money will be disbursed in at least three ways, coming through direct assistance, a food purchase and distribution program, and a trade promotion program.

The plan, which has been in the works for months, seeks to ensure U.S. farmers and ranchers — a key constituency for President Donald Trump and Republicans — don’t bear the brunt of an escalating trade fight with China, the European Union and other major economies.

Trump, back in April, directed Agriculture Secretary Sonny Perdue to devise a plan to mitigate any financial damage to U.S. agricultural producers’ bottom lines that could result from the ongoing trade battles. But the administration has so far offered few details on the amount of aid that would be provided and how it would be distributed.

And since subsidies are merely another facet of trade warfare, expect China – which has also revealed similar subsidies to its own exporters – and especially Europe, to respond in kind shortly, as the tit-for-tat global trade war continues.

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Oksana Shachko, one of three co-founders of the FEMEN movement, has committed suicide in her Paris apartment, after two previous attempts. 

Founded in 2008 and headquartered in Paris, FEMEN gained international fame for its topless protests against sexism, prostitution, political corruption, religious institutions, homophobia and other social issues. After fleeing Ukraine in 2013, the organization has since branched out to several other countries. 

Shachko, 31, was one of the group’s most famous faces among the group – which call their form of protest “sextremism”; listed on the FEMEN website as “female sexuality rebelling against patriarchy and embodied in the extremal political direct action events.” 

At the beginning, the members of the group used bikinis or covered their nipples with adhesive tape. It was precisely Oksana Shachko, in August 2009, who first discarded the bra during a demonstration in Kiev. In October 2010, Shachko showed her buttocks in front of a public toilet to protest the shortcomings and shortages of this service. “It was just an experiment, but later we understood how powerful it was,” she said in 2015. –El Mundo

A statement on the FEMEN website reads: “Yesterday, July 23, they found Oksana’s body in her apartment in Paris, according to her friends, she left a suicide note. Rest in peace the bravest and most vulnerable, Oksana Shachko has left us… We mourn together with their family and friends and await the official version of the police.”

During Schachko’s first major rally, FEMEN used the slogan “Ukraine is not a brothel,“ in protest of the country’s sex industry. 

In 2013, FEMEN protester Alexandra Shevchenko stripped to the waist to protest an amused Vladimir Putin who was touring a trade fair in Hanover alongside German chancellor Angela Merkel. Putin took the whole thing in stride, while Merkel appeared a bit shocked. 

In March, FEMEN protesters ambushed former Italian PM Silvio Berlusconi at a polling station as he voted in the Italian elections.

Other politicians FEMEN have protested include Czech President Milos Zeman, France’s Marine Le Pen and in one case – Donald Trump, when one of the group’s members dressed up as the president outside the US embassy in Kiev.

The activist organization has repeatedly attempted to kidnap Baby Jesus from the nativity scene at St. Peter’s Square in Vatican City during Christmas. 

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Authored by Tom Luongo,

Donald Trump is the most divisive American political figure of my lifetime.

Even Ronald Reagan wasn’t treated like this.  Back then the real powers in the U.S. used their full control over the narrative to keep Reagan on a short leash.

Reagan, like Trump, was a Master of Media.  They both are what Scott Adams calls Master Persuaders.

Their power to communicate transcends words.  It breaks through control systems.

They are divisive because they can’t be controlled.

The so-called “Resistance” can’t see the man, only his words.  His words create negative feelings. They believe their feelings are your responsibility.

This is why Whoopi Goldberg said she can’t “figure out how to fix this,” just before losing her mind last week.

Whoopi doesn’t accept that her feelings are her responsibility and they have consequences.

The problem isn’t her, it’s always those ‘Deplorables’ and “Alt-Right Nazis” who duped good people into voting for an evil man.

She has to accept that Trump is a sleeper agent, straight out of some John LeCarre spy novel, or otherwise admit she’s wrong.  She has to believe the Deep State isn’t real.

How did otherwise rational people fall for such a patent lie?

Let’s go through the Four Stages of Trump to find out.

Stage 1 – Joker

When Donald Trump entered the GOP circus ring everyone snickered.  When Ann Coulter told Bill Maher’s audience he would win, they laughed out loud.

To them Trump was a joke.

This was the start of New America. Their values won.

Smug liberalism would triumph completely with Hillary Clinton’s coronation as the first woman president.

Trump was like stink bomb exploding in their yurt while they chanted about “The Legacy of Obama.”

The seeds of Trump’s illegitimacy were sown in July 2015.  Every official opinion-maker misread the country.

They thought Ron Paul’s populist rebellion of 2012 was over.

They were wrong.

Stage 2 – Hitler

As Trump knocked off GOP sacrificial offerings to Hillary things turned serious.  Trump’s bluntness on immigration and border security became the true third rail of American politics.

The acme of toxic masculinity to them, Trump would never be president.  Not in 2016!

They invoked the spectre of Roe v. Wade to frighten women into insanity.

Social media algorithms multiplied the mania.

Invoking Hitler is always the end game of this phase of the psy-op.

Saddam Hussein, Milosevic, Qaddafi, Putin.

Trump.

“How could these people vote for a man who is ‘literally Hitler?’”

The joke was that’s how much we hated their New America we were willing to vote for DONALD TRUMP.

And they stopped laughing.

Stage 3: Burglar

That disbelief turned to denial.

“Trump’s dirty.” They’ll bring him to heel.

“He’s a boor!”  Look at that hair!

“He’s backed by Nazis!”  Invoke Putin to create an “Other” to hate.

“We’re the good guys?!” While cosplaying a vagina and normalizing pedophilia

“She couldn’t possibly have lost.”  Putin’s Puppet

“What’s wrong with America!?”  Now it’s war!!

We rejected Hillary’s obvious evil for Trump’s potential evil.

As my wife put it, “I’ve waited 25 years to vote against that bitch.”

They willingly convinced themselves that Trump was an evil Nazi.

A puppet of Vladimir Putin for daring to say we should get along with Russia.

To do otherwise, despite mounting evidence of a frame-up to steal the Presidency back from him, would mean examining themselves. And that doesn’t happen inside the Cult.

When your only god is power, all theft is justifiable.

Stage 4: Spy

And that’s why it’s so easy now, post-Helsinki, for the Deep State to openly declare war on the President, branding him a traitor.

I told you they would before it happened.

They have a large swath of Americans convinced of this.

It is leading directly to Civil War.

And it’s a shame.  Those convinced of Trump’s guilt have the same concerns over abuse of power and the rise of what Sam Francis calls ‘Anarcho-Tyranny’ that we do.

Unlimited Power for me (the government) but not for thee (the people).

And, for all of his faults, Donald Trump threatens that arrangement.  The Left are now the CIA’s Brownshirts.

They have become all that they say they hate.  They always do.

Trump has destroyed the media. 

Social media companies, revealed as an Orwellian Panopticon, have destroyed their credibility through blatant censorship.

The Democrats are in open insurrection.

The GOP leadership exposed as their rearguard.

Containment has been breached.

Trump is leading a center-right movement up the Nolan Chart towards the America we hold in our heads, not the one we live in.

Conclusion

We have entered a dangerous phase of the lifecycle of any society.  Titanic shifts in geopolitics will reverberate around the world and across your investment portfolio.  We’re seeing the beginnings of that now.

1. China’s Yuan is under intense pressure

2. The Bank of Japan just announced unlimited QE with NO BUYERS of the bonds!)

3. Emerging Markets are teetering as the flow of dollars dries up thanks to the Fed’s tightening

4. Europe is a political basket case with the EU fracturing

5. Russia openly defying the U.S. on sanctions and leading the world away from the dollar.

6. Cryptocurrencies are building a foundation of a new monetary system which takes power back from the banking cartel.

*  *  *

Find out how these trends will unfold and what you can do to survive, if not thrive, during this period by subscribing to the Gold Goats ‘n Guns Investment Newsletter and joining my growing list of Patrons who believe I can help you navigate a world going slowly mad.

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As previewed earlier, this week we will see a massive amount of short-term bond issuance, with the amount of 2, 5 and 7Y auctions rising to the highest amount since 2013. And moments ago, we were off when the Treasury sold $35BN in 2Y bonds, $1BN more than last month, at a yield of 2.657%, above last month’s 2.538% and the highest going back a decade to July 2008, and a 0.1 basis point tail to the 2.656% When Issued.

The internals were surprisingly strong, with the Bid to Cover rising to 2.92, above the 2.73 in June, and higher than the 6 auction average of 2.85. The indirect take down increased, with Indirects taking down 45.0%, above the 42.3% last month, and in line with the 6 month average of 45.4%. Direct bidders took down 14.29%, a drop from the 15.40% last month, leaving Dealers with 40.7% of the auction.

Overall, a solid auction despite the modest tail, even as rates on the short end continue rise significantly, putting further pressure on the yield curve, which sharp steepening over the past 2 days may now be over, and flattening is back on deck.

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Last week we documented several instances of China’s most recent monetary easing, from the expanded usage of the Medium-Term Lending Facility to purchase China’s equivalent ot junk bonds, to the barely noticed 103bps cut in China’s 3-Month Treasury rate, even as the PBOC had cut the RRR three times already, most recently at the end of June.

However, judging by the ongoing slide in the Chinese stock market, it was not enough; meanwhile in a curious development, last week we also reported that in a very rare public “war of words” between the PBOC and the Ministry of Finance, the PBOC accused the MOF of not doing enough to stimulate the country and that the country’s fiscal policy wasn’t “proactive.” That, as we said at the time, was a clear signal that fiscal policy easing may be imminent.

And, as we learned overnight, it was because on Monday the State Council held a meeting in which it discussed economic policies, and decided to make the fiscal policy more “proactive” (a word we had heard just a few days earlier), and to keep liquidity conditions “reasonably adequate”. To temper expectations, the government also reiterated that they intend to avoid aggressive loosening like the “4 trillion” stimulus China rolled out in 2008/09.

Commenting on the announcement, Deutsche Bank writes that “the statement is a confirmation of policy stance changing from tightening toward loosening.”

Indeed, as noted here over the past month, the change of monetary stance has already happened in Q2 with the RRR cut and injection of liquidity through MLF. The new message from the meeting today is that fiscal policy will become incrementally more expansionary.

Specifically the government will:

1. allow all firms to deduct 75% of their R&D expenses from tax, which they estimate can save firms RMB 65bn for the full year;
2. speed up the disbursement of tax rebate for some industries by end of September; and
3. accelerate the issuance and disbursement of RMB 1.35trn local government bonds, to help ongoing infrastructure projects.

Indeed, as the PBOC researcher publicly decried, fiscal policy has been less supportive so far this year compared to 2017, as infrastructure investment grew at 7.3% yoy in H1 compared to 19.0% in 2017.

With the message from the State Council on Monday, Deutsche Bank now expects growth of infrastructure investment to rebound in H2 to 10%.

One question is whether the central government will loosen control over local government financing vehicles and the property market as these issues were not mentioned in the State Council statement today.

We think the government may be reluctant to do so at this stage, as the economy is still stable and the trade war has not affected exports significantly. If growth slows below 6.5% in H2, we may see further loosening on those issues.

Meanwhile, the German bank maintains its forecast of GDP growth at 6.5% in Q3 and Q4 and 6.3% in 2019, and as a result of the change in poliy posture, it now sees the risks to its growth outlook in H2 shifted from downside to balanced.

The main upside risk comes from policy easing and potentially another round of property boom, particularly in tier 2 cities. The main downside risk remains to be the trade war. The other downside risk in H1, policy tightening and deleveraging, has become less alarming. We continue to expect RMB to depreciate to 6.8 and 7.2 against the US dollar in 2018 and 2019.

Finally, commenting on the move, Gluskin Sheff economist David Rosenberg said that “Beijing must really be worried about the macro backdrop to have engaged in this double-barreled fiscal and monetary policy easing. Best to fade the rally because fighting a deleveraging cycle ain’t easy.”

Beijing must really be worried about the macro backdrop to have engaged in this double-barreled fiscal and monetary policy easing. Best to fade the rally because fighting a deleveraging cycle ain’t easy.

— David Rosenberg (@EconguyRosie) July 24, 2018

For now, the market is doing precisely the opposite, with the S&P rapidly approaching its January all time high now that the threat of an imminent Chinese hard landing appears to have been removed once more.

Rosenberg’s trade advice aside, the real question is how Trump will respond when he learns that China is now easing not only on the monetary side – pushing the Yuan to fresh one year lows – but also fiscally?

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