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Tariffic Friday – Trump Taxes Americans, Claims Victory

No deal!!! 

That's right, as we expected Team Trump has not been able to make a deal with China and, as of midnight, tariffs increased on $200Bn (not $250Bn) worth of Chinese goods from 10% to 25%, which isn't really that terrible ($30Bn) but President Crazy Train is also looking to add taxes to another $350Bn worth of goods but, to do that one (legally), the U.S. trade representative’s office would need to identify the goods, seek comments on its choices and hold hearings – so it's very possibly just an empty threat from the President and China knows it because they study US law a lot more closely than Trump and his advisers seem to.

So, in the grand scheme of things, $30Bn more tariffs isn't going to break anyone and the total revenues would be $50Bn (25% of $200Bn), not "over $100Bn" that Trump is fantasizing about and how pissed off do you think Puerto Rico is to have Trump BS'ing about sending humanitarian assistance to "poor and starving countries" when they've been waiting almost two years for something besides paper towels to clean up after their disastrous hurricane?

The Futures are down again today and we may revisit yesterday's lows but we went long on Dow (/YM) Futures at 25,600 in yesterday's Live Member Chat Rooom caught a ride back to 25,850 into the close, which gave us gains of $1,250 per contract while our bullish play on the S&P (/ES) Futures also gained $1,250 per contract on a 25-point move back to 2,875.  

Of course, those same levels will be in play again today but keep in mind we made the call at 11:58 for our Members – as the indexes were crossing back OVER the lines and momentum was on our side – don't try to be a hero and catch the index while it's moving against you – that can lead to big losses if your line doesn't hold.  

In fact, later in the afternoon we analyzed the index moves and determined they were only making bounces off the 5% drop lines according to our fabulous 5% Rule™, which is not TA – just math.  Failing the bounce lines means it's more likely we're consolidating for a move down (towards a 10% correction) than up and our bounce lines are:

  • Dow 25,200 is the 5% line and the bounce lines are 25,450 (weak) and 25,700 (strong)  
  • S&P 2,860 is the 5% line and the bounce lines are 2,875 (weak) and 2,890 (strong)
  • Nasdaq 7,475 is the 5% line and the bounce lines are 7,540 (weak) and 7,605 (strong) 
  • Russell 1,550 is the 5% line and the bounce lines are 1,565 (weak) and 1,580 (strong)

In order to get more bullish, we need to see all the strong bounce lines turn green and, if the weak bounce lines begin to fail, then we look for the first index to cross below the 5% line and look to place bearish bets on the laggars and it's the Dow that's lagging this morning at 25,700 – so it makes the best bearish bet of the group and you simply place a tight stop above 25,700 and then look to go long the laggars if the indexes start breaking up.  

There, you are now an expert at trading the Futures!  Of course we also watch the news and pay attention to companies and events that could drive the indexes but, other than a trade deal being announced (and we think there's no way this week), I think people will be bailing on the market into the weekend.  It's not about the $30Bn in new tariffis, it's about the general over-bought nature of the markets – this is just an excuse to sell for fund managers.

On the whole though, this is a nice, healthy sell-off and we're starting to recognize more and more market risks, which makes them less scary for long-term share holders so, if we manage to hold our highs despite all this nonsense – THAT will be impressive!  

Image result for china bond holdings usWe still have the weekend to get past though and China WILL retaliate and it seems they've already started as no one bought our bonds this week at the note auctions.  China is holding $1.1Tn of our Government's debt and they could begin selling it, which would quickly make it hard for us to get a good price at our own auctions and that would quickly drive up US interest rates but it would also devalue their remaining low-interest bonds – so it's a tricky move for them to make.  Simply stopping purchases would hurt us plenty.

China is also America's largest customer for Soy Beans and Soybean Futures have been collapsing, down 15% since April and, if you believe in a trade deal, you can make money playing SOYB bullishly.  Right above, our own President is telling the farmers not to worry because he will be happy to help them by buying Soybeans, etc. and handing them out to the poor and of course our President would never lie to farmers so I can't imagine why traders wouldn't jump on Soybean Futures – the September contracts are /ZSU19 at $825 and that gives Trump all summer to come through on his promises.  Any takers?

As to SOYB, it hasn't been this low since, well, ever – as the contract began in 2012 at $25 and never really went below $17.50 until the trade war began so $14.50 is quite a bargain and, as much as I hate to bet on Trump doing anything right, it's POSSIBLE we get a trade deal and that will hurt our hedges in the Short-Term Portfolio so, in order to hedge the hedges, a bullish bet on SOYB makes sense.  For the STP, we can:

  • Buy 50 Nov $14 calls for $1.10 ($5,500) 
  • Sell 50 Nov $15 puts for 0.95 ($4,750) 

That's net $750 and, if SOYB goes back to $16 on a trade deal, those options will be worth $1.50 each for $7,500 on 50 100-unit contracts, which would be a 900% gain of $6,750 – not bad for an offset and our worst case is owning SOYB at 7-year lows and we can then sell calls to reduce our net $15.15 entry.

Have a great weekend, 

- Phil


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  1. And Trump was saying that Biden was so naive about China! How about his base who believes that China is paying for these tariffs when they are being taxed more for each trip to Wal-Mart? Unbelievable.

  2. Accounting the Trump way:

    Donald Trump listed $1.2 billion of losses on his tax filings from 1985 to 1994, according to a blockbuster report released by the New York Times Tuesday. Those were high-flying years for Trump, then a young, brash businessman getting more headlines-per-square-foot than any other developer. In 1985, Trump appeared by himself on the Forbes 400 list of America’s richest people for the first time, after inventing a fake persona to lie about a transfer of wealth from his father.

    Forbes fell for that ruse—taking Fred Trump off the list and listing Donald alone. But five years later, we published an explosive story, uncovering the trouble brewing inside Trump's empire. Leaning on nonpublic documents, Forbes writers Richard L. Stern and John Connolly identified the same sort of profitability problems that are still making headlines 29 years later. Forbes took Donald Trump off its list for the first time that year, explaining that a “decline in Atlantic City gaming revenues, unmasking of misstated asset values, declining real estate values and massive debt may have put The Donald within hailing distance of zero.”

  3. The abilities you need to succeed financially:

    Very good list!

  4. Good Morning!

  5. Financial Superpowers – You'll be happier as well…. :)

  6. STJ – I was just talking to my sons about delayed gratification and staying within your means regardless of what others are doing….

  7. Good morning! 

    Big Chart – Very shaky ground, won't be pretty if we finish in the red again.  

    Paying/StJ – Cramer is saying China is paying the tariffs but then qualifies by saying (quietly) "some people may disagree" – gives me the impression that CNBC is telling their people to push that BS and Cramer is trying to give himself cover.  It's sickening how much propaganda has seeped into the US Media.  Somehow, Conservatives still act like the media is persecuting them but it's owned by the same guys who donate Billions to GOP candidates and the old 60 minutes we grew up with would be considered more radical than Vice these days for simply telling the truth.

  8. Powers / 1020, batman – Clearly the people who are ruling us could learn from that list as well!

  9. Propaganda / Phil – The conservative media is completely in the tank now! I guess they could say that the left leaning media was in the tank for Obama but they were not defending 1000's of lies. It's really hard to understand at this moment.

  10. "The Most Medicated Country In The World"

    Could this be the reason the Federal Government has not legalized Marijuana?$$$$$

  11. Here’s What an All-Out Trade War Looks Like in Global Markets

  12. si is down low

  13. Hi Phil, thoughts on INTC here around $45?

  14. /YM – trailing stop just took out my shorts. Any feelings about whether it’s feasible to try going long today, whether this bounce off 25500 might have legs? Is 25,600, if we get there, still a good place to give it a try?

  15. Trade’s Widening Battleground

  16. China’s Millennials Are Changing the World

  17. /SI/Tommy – But it's on a weak Dollar so we have to wait for the Dollar to bounce and see where /SI bottoms out.  Could get worse.

    Gold is holding up well though as Central Banks are hoarding it again.

    INTC/Mike – You would think $45.50 is cheap enough as that's just over $200Bn and they dropped $21Bn to the bottom line last year and this year is guided lower but only about 5% lower though now we're back to the 2018 avg price so maybe it's the mover to $59 that was silly, not the move back to $45.

    Year End 29th Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 52,708 55,870 55,355 59,387 62,761 70,848 70,843 68,660 71,693 +6.1%
    Operating Profit $m 12,291 15,347 14,002 13,133 18,050 23,316 23,020     +13.7%
    Net Profit $m 9,620 11,704 11,420 10,316 9,601 21,053 20,573 19,606 20,491 +17.0%
    EPS Reported $ 1.89 2.31 2.33 2.12 3.10 4.41 4.36     +18.5%
    EPS Normalised $ 1.92 2.36 2.39 2.40 3.16 4.40 4.35 4.29 4.58 +18.0%
    EPS Growth % -9.8 +22.6 +1.4 +0.4 +31.6 +39.2 +24.3 -2.43 +6.54  
    PE Ratio x           10.6 10.7 10.9 10.2  
    PEG x           n/a n/a 1.66 1.83

    INTC tends to grow in spurts and their guide-down was related to the retooling they are doing to launch 10nm chips in 2020 and 7nm chips in 2021 (with Xe graphics that are supposed to be amazing).  Coming out with 2 layers of massively better chips tends to depress current sales (companies put off buying now for better chips next year) 

    Also, keep in mind that this is a company spending $13Bn a year on R&D – if they ever need to hit their numbers, a very small R&D cutback would do the trick.  

    So, as  a long-term hold, INTC is great to have in the portfolio but, short-term, don't expect there to be much action.  As a warm-up, I'd certainly consider selling the 2021 $40 puts for $4 to be free money as the net $36 entry would be a gift for a company on track to make $6/share in 5 years.  In fact, we can sell 20 of those in the LTP for $8,000 and 10 in the OOP for $4,000.

    Now, if you don't want to wait to add a long spread, I'd go conservative with the 2021 $35 ($13)/45 ($7) bull call spread at net $6 on the $10 spread so all INTC has to do is not go lower and it makes 66% but paired with the short puts, it's net $2 on the $10 spread with an $8 (400%) upside potential if INTC simply stays flat from here.  

    Long/Dawg – Well Europe is closing soon so MAYBE they are putting on the selling pressure and I'd use 25,500 on /YM and 1,550 on /RTY as my long spots (tight stops below) and they are lined up with /ES 2,835 and /NQ 7,468 so if any of them fail – it's not worth staying long as there's no change in news and we still may get a retaliation announcement from China though they are sleeping now so more likely over the weekend or later tonight.

  18. Good instincts by the way, Dawg!  

  19. Uber opening down, was down 10%, now 4% – not inspiring much overall confidence. 

    LYFT continues to collapse:

    Might get my shot at $25 after all – not sure I want it now…

    • U.S. junk bond issuers rush to the market, pricing $3B in bonds on Thursday and bringing this week's total to $12B, the busiest week since September 2017, Bloomberg First Word reports.
    • Even with secondary market weakness, yesterday's issuances were oversubscribed. For example, Bausch Health's $1.5B 2-part notes priced at lower end of talks after getting orders exceeding $3B combined.
    • The high-yield index fell 0.22% in its fourth straight day of losses and the biggest drop since March 8.
    • Lipper reported high yield fund outflows of $212M.
    • Previously: Junk bonds YTD index returns gain across all ratings (March 29)
    • Beyond Meat (NASDAQ:BYND) finally cools off with a 6.0% decline today on heavy volume.
    • Is it a coincidence that some profit taking on the red-hot IPO stock arrives on the same day as the Uber public debut?
    • Beyond Meat is trading at $63.88 vs. the $25 IPO pricing level
    • Nomura updates on Wynn Resorts (WYNN -6.4%) after the casino operator's disappointing earnings report.
    • ANalyst Harry Curtis estimates Wynn lost ~50 bps of sequential gross gaming revenue share in the quarter. "The de-emphasis of second tier junkets at Wynn Macau (Peninsula), which really began in 4Q, was likely responsible for much of WYNN’s share loss in the quarter," he notes.
    • Wynn's EBITDA out of Las Vegas was impacted by a 2.1% decline in RevPAR and 25% decline in table drop, according to Curtis.
    • Nomura keeps a Buy rating on Wynn, but lowers 2019-2020 EBITDA estimates and takes its price target to $142 from $146.
    • Previously: Wynn Resorts beats by $0.03, misses on revenue (May 9)
    • Previously: Wynn -4% after operating revenue trails estimates (May 9)
    • Morgan Stanley's Adam Jonas crunches the numbers on Tesla (TSLA -1.3%) to estimate that there will be 860K of the company's vehicles (S/X/3) on the road globally by the end of 2019. The forecast assumes 879K cumulative units delivered and a 2% scrappage rate.
    • Jonas goes on to point out that while the extra cars on the road are a form of free advertising, the impact on the residual values of Tesla vehicles and the financial impact to Tesla and/or its customer base is unclear at this stage.
    • What is clear to Jonas is that China production and the Model Y are the underpinnings of the Tesla demand story, with a peak of 25% of Tesla's volume expected out of China by 2024.
    • "We see Tesla as shaping up to be an increasingly levered play on Chinese demand in 2020… a story that may carry heightened execution risk given the state of trade relations between the US and China. Over time, we believe investors will not pay a significant multiple on earnings derived by US auto firms from China," he writes.
    • Morgan Stanley has an Equal-weight rating on Tesla and price target of $230.
    • Gogo (NASDAQ:GOGO) is up 3.9% premarket after an upgrade to Outperform by William Blair coming out of the company's earnings report yesterday and news that Delta Air Lines would start testing free Wi-Fi on Gogo-equipped planes.
    • Delta is Gogo's biggest customer (30% of revenue), and the move is "a large vote of confidence not only for Gogo’s technology, but also for its newfound financial stability," Louie DiPalma writes. Other airlines could follow suit and boost average revenue per account, he says. (h/t Bloomberg)
    • Earnings call transcript
    • Same-store restaurant sales fell 0.4% in April as the later Easter holiday this year impacted the comparison to a year ago, according to tracking conducted by TDn2K.
    • Higher average spending per guest wasn't quite enough to offset a sharp 3.5% drop in same-store traffic.
    • Same-store traffic is down 3.05% on a rolling three-month basis.
    • TDn2K breakdown: "The industry was lapping over one of the strongest months in same-store sales growth last year. When taking in a longer-term view of sales, the two-year growth rate of 0.9 percent during April still reflects a growing industry. Furthermore, all months since October of 2018, with the exception of February which was plagued by extremely bad weather, have reported positive same-store sales growth when compared with the same month two years ago. The average for two-year sales growth during the previous twelve months was -1.6 percent."
    • Investors in the airline sector looking for unit revenue growth haven't seen as big as boost from fares as was expected heading into 2019.
    • Air fares trickled 0.1% lower in April on a month-to-month comparison, according to data compiled by the Bureau of Transportation Statistics. Fares have now been down two consecutive months, which wasn't wholly unexpected due to concerns in the industry of price gouging accusation amid lower supply from the Boeing 737 Max grounding and new competitions on certain routes.
    • Fares were up 3.5% in April compared to a year ago on an unadjusted basis.
    • The early read on May is that fares are on the way up after both American Airlines Group (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV) fired off $5 increases each way in moves that were then followed by Delta Air Lines (NYSE:DAL), United Continental (NASDAQ:UAL) and Alaska Air Group (NYSE:ALK).
    • BTS data
    • Related ETF: JETS
    • Related stocks: Allegiant Travel (NASDAQ:ALGT), Hawaiian Holdings (NASDAQ:HA), JetBlue (NASDAQ:JBLU), Spirit Airlines (NYSE:SAVE), Mesa Airlines (NASDAQ:MESA).
    • OPKO Health (NASDAQ:OPK) is up 4% premarket on light volume in apparent reaction to a round of insider buying, including CEO Philip Frost who purchased 285K shares yesterday.
    • JetBlue (NASDAQ:JBLUreports revenue passenger miles rose 6.6% to 4.59B in April.
    • Capacity expanded 7.4% to 5.39B available seat miles.
    • Passengers flown grew 1.8% to 3.67M.
    • April load factor fell 60 bps to 85.1%.
    • YTD load factor slipped 170 bps to 83.2%.
    • Q2 revenue per available seat mile is expected to range between 1% to 4%.
    • Bank of America Merrill Lynch upgrades Ford (NYSE:F) to a Buy rating from Neutral on its view the automaker is at an inflection point.
    • Ford is seen having a favorable product cadence in the all-important North America market and making gains with its restructuring efforts with the global redesign.
    • "In the face of a tough cycle/macro, we believe this self-help turnaround story will start to get more credit among the investment community, and that improved execution and communication may allow Ford’s multiple to recover over time," write the BAML analyst team.
    • Ford is tapped to hit "escape velocity" in the second half of the year.
    • BAML assigns a price objective of $14 to Ford.
    • Shares of Ford are up 1.67% premarket to $10.37.
    • Barclays (NYSE:BCS), Citigroup (NYSE:C), HSBC (NYSE:HSBC), JPMorgan (NYSE:JPM) and three other banks are set to be fined by EU antitrust regulators in coming weeks for rigging the multi-trillion dollar foreign exchange market, Reuters reports.
    • The other three lenders are Royal Bank of Scotland (NYSE:RBS), UBS (NYSE:UBS) and a small Japanese bank. The banks will see a 10% cut in their fines for admitting wrongdoing.
    • Barclays, BNP Paribas, Citigroup, JPMorgan, RBS and UBS have entered related guilty pleas in a U.S. case, and been collectively fined more than $2.8B.

  20. TOS Question--

    I swear I used to be able to write "notes" next to positions in the monitor/activity and positions tab — now I can't find any of my past notes nor do I see it as an option anywhere.  I think I used to 'right-click'.

    Is it just me?

  21. Well that was a nice bounce, don't be greedy if we fail our bounce lines. 

    • Dow 25,200 is the 5% line and the bounce lines are 25,450 (weak) and 25,700 (strong)  
    • S&P 2,860 is the 5% line and the bounce lines are 2,875 (weak) and 2,890 (strong)
    • Nasdaq 7,475 is the 5% line and the bounce lines are 7,540 (weak) and 7,605 (strong) 
    • Russell 1,550 is the 5% line and the bounce lines are 1,565 (weak) and 1,580 (strong)

    No changes from this morning's pre-market.

    Notes/Jeff – I use PowerOptions for notes, never knew TOS supported them. 

  22. Chesapeake Energy: Q1 2019 Setting The Stage For Prosperous Returns

    Tariffs could slash Apple EPS – Morgan Stanley

    • Conservatives on abortion: We want a ban!
    • Conservatives on gay marriage: We want a ban!
    • Conservatives on immigration: We want a ban!
    • Conservatives on Muslims: We want a ban!
    • Conservatives on trans military members: We want a ban!
    • Conservatives on guns: BANS DON'T WORK!!!


    WASHINGTON—The round of tariffs that went into effect at midnight will likely hit Americans in the pocketbook, making $40 billion of consumer goods on retailers’ shelves more expensive.

    Opponents of the tariffs, including in the retail industry, say the higher levies will drive up costs for consumers, reduce saving and dent economic growth.

    “We remain concerned that we’re shooting ourselves in the foot by imposing big new taxes on Americans,” said David French, senior vice president of government relations for the National Retail Federation. “To be clear, tariffs are taxes paid by businesses and consumers, not by China.”

    And that's the WSJ!

    A trade deficit is not a loss of money. If you buy from a supermarket or go to a movie, you have a trade deficit, but you have not lost money; you get stuff (groceries, entertainment, etc.) in exchange for your dollars.

    Trade talks between China and the U.S. ended without a deal, hours after President Trump renewed his trade war with China by raising tariffs

    It doesn't matter that that's what actually happened as long as Mnuchin says it was "constructive" – Crazy! 

  23. STJ, what do you typically do with your short VXX calls?  Do you take profits at say 50%, so you are ready to sell more on the next spike?  Or do you just hold them until expiration?

  24. Wow, we went green!   Not even a chance to stop out on our longs.

    What, us worry?    Fortunately the fund cashed in 1/3 of the VIX longs we had, which means the rest are now net free for the next pop.  Nothing is better than free insurance.  Great timing call by Doug yesterday.

    Time to give up I think:


  25. Based on what I know, Chinese side insists on a few core points: US side should remove all additional tariffs, amount of purchase the US requests should be in line with reality; the text of the agreement must respect sovereignty and dignity. I think the insistence is reasonable.

    In the OOP, let's DD (+50) on the TZA Jan $8 calls at $2.05 ($10,250).  That will give us another $20,000 in upside at $14.  

  26. RE: Save the Home Sapies:  Every once in a while someone proposes that people should have to get a license to have kids.  That clip is a strong arguement in support of that idea.  LOL

  27. Phil,

    Should we use the weakness lately in GOLD to roll down GOLD, or are we comfortable with our $10/$15 spread still?

  28. TOS Notes / Jeffl – Right click on your open position in the P&L section of the account statement and choose thinkLog Notes in the menu.

  29. VXX / Palotay – Last year, I held most of them to expiration although I closed some when they were less than $0.05 (free on TOS) but I had fewer positions. This year I have been closing them when they get around $0.20. But that might change… I am still experimenting to see what works best and adjusting based on margin. BTW, sold more calls yesterday – Dec 50 at $3.85. 

  30. So right now, all my June positions are closed, and I have open ones in September and December. 

  31. stjeanluc-


    thank you —- i swear i used to be able to do it on the other screen i mentioned.  maybe they changed it in an update.

  32. /YM – so far so good. Caught a nice ride down and then got paid again to cover the same ground on the way back up. Now, I know this is pushing my luck, but what do you guys think about trying to catch a Friday afternoon sell-off?

  33. Jeffl – You might be right. I know that I lost notes at one point and I can't recall why. Also, the problem with this system is that you lose notes at the end of the year when closed positions are removed from the list. It would be great to have more persistent notes associated with a ticker for example.

  34. My bad, you can add notes to a ticker in the top right menu (not very top one, the one for that ticker) in the Analyze tab.

  35. I'm not seeing anything in the news to justify this rapid drop in the VIX, and big rally.  Didn't tariffs go through?  But everything is fine?  I'm confused.

  36. platy – both true and Mnuchin said trade talks were constructive. I guess that’s when the ticker changed

  37. palatay – both  TRIUMP) and Mnuchin said trade talks were constructive. I guess that’s when the ticker changed

  38. GOLD/Martin – I want to see where things are next week – just in case we fall further though, from today's action, who knows?  

    26,000 on /YM, 2,900 on /ES, 7,630 on /NQ and 1,575 on RTY???  What a joke!  This is why I prefer to just ride these things out with a balanced portfolio – it's crazy to bet on one direction or another in this market.

    Sell-off/Dawg – Wow, you are nailing it today, just turned sharply lower.  

    Confused/Palotay – Trump said the talks were going great so we had a big rally because Donald Trump would never lie about a thing like that, right?

    And what Batman said!

  39. TOS VIX from 23.38 to 15.50 is about 1/3 down in 2 days – amazing!  

    Uber down 7% at the moment, worse than their last private round and they already went out at $45 vs $50 they had wanted to open at (now under $42). 

    Well, have a good weekend folks, I'll be getting mine off to a great start tonight:

    - Phil

  40. It's hilarious that they can say that, and the markets go up.  But what can you do (besides smile as the premium in your VXX calls drops like a rock)?

  41. You gotta love these VIX spikes! Are they going to use these trade talks rumors all year to manipulate the market though? I guess the answer is yes. But there is just so much room for corruption in that process – I imagine Trump phoning one of his buddies about shorting the market before he tweets about tariffs and then go long when he tweets that all is good. Rinse and repeat all year. 

  42. GBTC 8.50

  43. Just a note that you already had 10 of the INTC 2021 40 Puts in the LTP sold in January.  Does it make more sense to add the call spread now or double up on the puts.  Have a good weekend.

  44. New UN Report Says Nature Is in Worst Shape in Human History

  45. The Mighty U.S. Consumer Is Struggling

  46. Down about 1% so far.  

  47. Trade talks didn’t go well apparently! Of course, we are one tweet away from hearing the opposite of truth.

  48. Bitcoin Climbs Above $7,000 as Cryptocurrency Rally Extends

  49. US war against Iran is impossible, claims Iranian general

  50. An Imperial Presidency?

  51. Good morning!

    Well, I'm much happier when the market has a sensible reaction to events.  China hasn't even retaliated yet and we're down 300 points.  Shows that Friday was total BS.

    The recommendation went to China’s chief negotiator, Liu He, and ultimately to Mr. Xi. He decided to send the team even though Beijing was fully aware that the trip held little prospect of progress, given how quickly problems had arisen. “The goal was simply to keep the talks going,” said one of the Chinese officials with knowledge of the matter.

    By the end of the week, that was as much as both sides could cite for their efforts: the avoidance of a serious rupture that would doom any prospect of a future deal and a commitment to stay near the negotiating table.

    So far, the trade talks have provided little evidence that the two nations have found a formula for how to negotiate successfully since Messrs. Trump and Xi met in Buenos Aires Dec. 1, which paved the way to Washington last week.

    China didn’t immediately impose new strictures on U.S. businesses, as it has done when things weren’t going well in the past. Mr. Liu is expected to brief Mr. Xi on the discussions he had in Washington before Beijing decides on the next course of action, according to the officials familiar with the process.

    On Sunday, White House economics adviser Larry Kudlow said in an interview on “Fox News Sunday” that China has invited Messrs. Lighthizer and Mnuchin to Beijing to continue trade negotiations, but that there were “no concrete, definite plans yet.”

    Mr. Kudlow suggested one possible way out. He stressed twice during the Fox News interview that the American and Chinese presidents expect to meet again at the next G-20 in Japan at the end of June.

    End of June???  I told you Trump had no interest in lifting tariffs (ie. taxes against the poor and middle class).  What a scam!

    In early April, Mr. Mnuchin announced that negotiators had agreed on a mechanism for enforcing the terms of their potential trade deal, suggesting one of the key stumbling blocks toward an accord had been cleared, although Beijing never agreed that the issue had been settled.

    Then, before traveling to Beijing for another round of talks, Mr. Mnuchin said that the trade talks were “getting close to the final round of concluding issues.” After, as he and Mr. Lighthizer prepared to board the jet home, he tweeted on May 1 that the meetings had been “productive.” Mr. Lighthizer shared that assessment, even though he and Mr. Mnuchin have often held differing views on China, according to people tracking the talks.

    This is because there's no penalty for lying to the American people any more – it's just what this Administration does at every level.  

    To the Chinese, this was a matter of honor: The U.S. should trust Beijing to make the changes they said they would make, even if that meant changing regulations rather than laws. Besides, the U.S. was being unfair in refusing, upon the signing of a deal, to remove tariffs that had been assessed in the yearlong fight, the Chinese believed.


    “There is a real desire on our end to keep the tariffs on,” one White House official said. “That is a sticking point.”

    Shortly after Mr. Trump’s announcement of the tariff increase, Beijing’s trade negotiators, who had booked Air China tickets to Washington, received an urgent order: Stay put until further notice. “Looks like we’re not going,” one of them said early Monday morning.

    Up until that moment, China’s leadership had expected the trip to bring months of negotiations to a close, according to Chinese officials close to the negotiation process, given that Chinese diplomats were already in discussion with their American counterparts about a possible summit between Messrs. Xi and Trump to finalize a trade agreement.

    The U.S. side made some calls that turned off the Chinese, too. By insisting that it wouldn’t remove any tariffs upon closing a deal, the U.S. gave Beijing little incentive to accept tough conditions. The U.S. position remained firm: no tariff removal until Beijing showed it would carry through on the commitments it made under the deal. On top of that, the U.S. wanted China to pledge not to retaliate if the U.S. were to reimpose tariffs if it found China in violation of some provisions

    By then, though, the U.S. team went into the talks not expecting to do a deal, figuring they would have a “non-meeting,” according to one person briefed on the discussions. U.S. officials at least wanted to make sure they didn’t leave with a complete break. The goal of the meeting was to be able to say the U.S. negotiators were still trying, this person said.

    In a commentary Saturday, the official People’s Daily said the text of any trade agreement “must be balanced and expressed in a way that is acceptable to the Chinese people and does not undermine the country’s sovereignty and dignity.”

    With a deal now in limbo, with no formal plan to resume, the key to future developments may be in the hands of Mr. Trump and Mr. Xi. Each of the leaders has emphasized their personal rapport through the dispute. Mr. Xi sent Mr. Trump a letter as last week’s talks began, saying, according to Mr. Trump, “Let’s work together, let’s see if we can get something done.”

    Mr. Lighthizer released a statement saying that on Monday USTR would “begin the process of raising tariffs on essentially all remaining imports from China.”

    Oil back to $62.50 as two Saudi tankers were attacked in the Straight of Hormuz.  Not really clear what happened yet but reminds you how easily oil can jump.

    Saudi Oil Tankers Attacked Before Entering Persian Gulf

    Dollar still down at 97.