The shills over at the Minnesota based hedge fund, Pine River, are making the media rounds these evening, after issuing a letter featuring a Hong Kong Professor named James Wang who said China would defeat the United States in a trade war. The entire article is suspect and wreaks of enemy propaganda.
Have a look, penned by <<<Bei Hu>>> (hmm).
This is what Wang had to say about a prospective trade war with the US, which includes Trump slapping the shit out of China with 45% tariffs.
“By design, decision-makers in a democracy face difficulties coordinating a relief effort and must eventually face a political backlash from impacted domestic producers,” Wang wrote. “On this basis, the Chinese may have more runway to play the long game in a trade war.”
“The balance of power worldwide is much more diffuse compared to the early 20th century, and players like China and India have emerged to create new political centers of gravity,” Wang wrote. “However, as economic and political paralyses spread across the developed world, the most likely outcome is a trade war.”
In other words, Pine Capital believes America is finished and the balance of power now lies in Beijing.
The math, however, tells a different story, as China enjoys nearly a $300 billion per annum trade surplus with the United States, wholly dependent on the US consumer to keep their bedraggled populace at bay, saddled with incredibly high levels of debt (250%+) and soaring NPLs.
Goldman analyst, Kinger Lau, believes punitive tariffs will clown-rape China’s GDP by 3% in 2017. Kevin Lau from Daiwa Capital isn’t as optimistic as Goldman. He thinks an American-Sino trade war will result in an 87% drop in Chinese exports to the US — a drop of $420 billion. That would equate to a 4.85% blow to the Chinese parasitical ‘economy.’
Even in a Trump light environment of just 15% tariffs, Chinese GDP stands to drop by 1.8%, according to Daiwa.
China’s protest would involve selling US treasuries, which have proven to be meaningless with QE programs and they might give Boeing, Ford and GM the boot. They might shut down a few disgusting KFC restaurants too.
Bottom line: Investors freak the fuck out when China misses by one tenth of one percent. Can you imagine if Chinese exports dropped by $420 billion or 87%?
Pain.
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Let the games begin!
Hedgeye had a good point today regarding real impact of higher rates on US manufacturing. And another on retail history. Worth a look.
For a good time, check out the playlist
Crouching Tiger: Episodes From the Documentary Film
https://www.youtube.com/playlist?list=PLkc6CtJh2qx2AiyUGcAEeso8pWOTWJ9tc
by Peter Navarro, the new Big Swinging Peter in the Trump Administration (director of the National Trade Council). Oh and watch “Death by China”, also by Peter the Great, if you are slothful and haven’t managed to click on it yet. The next year augurs the increasing probability that China will auger in.
QE would not be successful without the participation of foreign government, ie. China. You don’t want to start a trade war against the lowest cost supplier of just about everything your country uses. The end result would be runaway inflation.
Disagree. QE never makes it into the general economy, just super elite.
What about working man pension funds?
QE and loss of dollar purchasing power have made it into the world of ordinary citizens in a different way, compared to the elite.
A box of Ritz crackers is shrinking to about the length and width of an iPad.
“Same great price” of over $3
Ritz is gamely marketing an even smaller size box of crackers. It features pictures of meat mini-sandwiches in a way suggesting Ritz is fully engaged in misleading and manipulating consumers.
Interesting times for grocery stores. They need less front of store shelf space because package sizes are smaller. Newly available space could be used for higher margin prepared foods and aspirational products for their suffering customers to splurge on. Or they could seek lower real estate cost by reducing store size and focusing on more just in time delivery. Expect fewer big box retail profiles in shopping centers. Will this space go to residential rentals?
In my area, Kroger is building monster stores where you can’t
find ANYTHING. They sell mattresses, clothes, lawn care stuff,
shoes, etc. They are good at the GROCERY business but their
selfish management wants higher profits (bigger bonuses).
The reason for package downsizing – not necessarily Kroger’s
fault – is to increase dollar volume by making the customer buy
more UNITS. It probably costs a dime a box more to make a
27 ounce box of Cheerios compared to 9 ounce box. But then
the manufacturers and sellers would lose 2/3 their unit volume.
Shop carefully, my friends.
It looks like the “reply” box on Fly should
be more narrow, so that the final written
product does not look like a piece of shit.
China would certainly win in a trade war. We need China more than China needs us, no question.
Whatever you say, Xiangping.
Why is everyone so hell bent on bringing these shitty jobs back to America? Tariffs will not help the situation. These jobs are for unskilled workers and thus belong in China, Taiwan, Indonesia, etc. US will never be able to compete, and we shouldn’t try. Our goal here should be to create more skilled labor in emerging industries, which hopefully our president elect can improve by lowering regulations and encouraging innovation. Tariffs only prolong the inevitable.
“Why is everyone so hell bent on bringing these shitty jobs back to America?”
Because claiming you are going to do so, wins elections.