WASHINGTON, March 12, 2018: Friday was such a fun day for traders and investors that a Blue Monday on Wall Street seemed inevitable. It was. After a brief flurry of bullishness, the Dow quickly plunged nearly 150 points straight down. The cause of this negative party time is exemplified by CNBC. That #NeverTrump business network is back with its wild speculation today. According to this NBC subsidiary, the absolutely-for-certain Trump Trade War fabrication returned to bite the bulls again today:
“The Dow Jones industrial average fell on Monday, erasing earlier gains, as investors worried a trade war could develop after President Donald Trump implemented tariffs on steel and aluminum imports…
“‘It’s a growing concern that a mistake in trade policy could be as big as a mistake in monetary policy,’ said Art Hogan, chief market strategist at B. Riley FBR.”
After opening higher, the Dow dropped precipitously, slipping about 150 points to the downside. Then, the major stock average attempted to recover during the day, regaining much of its loss. But, almost, precisely at the closing bell, the Dow got hit with a suspiciously sharp wave of selling. That final frenzy took the widely followed average back down 157+ points.
The S&P 500 wobbled on the downside as well, but the tech-heavy NASDAQ closed up 27.51 points.
The Trump Trade War: Has it even happened?
The media – which includes the financial media – remains obsessed with The Big Story that has yet to happen. We’re talking about that mythical Trump Trade War we have yet to see. Yet we’re continually assured by the media blow-dries that it’s already a given.
Ever since Donald Trump announced his candidacy in his legendary escalator proclamation, the media has been routinely trashing him. At first they thought his candidacy was a joke. Then, when it proved to be anything but a joke, they went on attack in their shamelessly partisan effort to elect The Smartest Woman in the World as U.S. President.
Much to the establishment’s media’s astonishment, Trump won. After he clinched his electoral victory, the MSM and its Deep State enablers shifted to plan. Wielding elements of the fake Trump dossier, the media and its Democrat pals next tried to terminate Trump’s presidency. That effort continues.
The media’s time, however, would have been better spent examining what makes the Trump presidency tick. And it ticks rather well at that, presuming you have some tolerance for creative destruction.
But the media does not.
Hence, the legendary (and fictional) Trump Trade War. We hear about it every day on CNBC and nearly every other financial outlet including the usually sane Wall Street Journal. We hear about it because a Trump Trade War “could happen,” to use that all time media favorite Trump era construction.
The Trump Trade War is fake news. At least for the moment
But, we constantly ask, “Will that Trump Trade War really happen?” The right answer is, “It’s dubious at best.” That’s because the media and their left-wing masters always assume the worst possible outcome when their guy (or gal) isn’t firmly ensconced in the White House.
Ditto the still substantial number of RINO and #NeverTrump Republicans who continue to rail against their unconventional President. In fact, the GOP’s Idiotarian-in-Chief, Flakey Jeff, not only opposes the President’s selective tariffs. He’s making veiled threats to run against Trump in the 2020 GOP primaries. Good luck, Flakey Jeff. (And good riddance.)
All this pseudo-economic flapdoodle is premised on one massive fallacy. Trump’s opponents think he’s eagerly imposing “protectionist” measures to protect certain critical American industries.
No he’s not.
The opening bid
The misunderstanding? Although Trump is steadily learning how to play Washington politics, he’s still not really a politician. He is, at heart, a prime building contractor and commercial real estate tycoon.. He’s a businessman who knows he needs to drive hard bargains to arrive, at the very least, at win-win outcomes. His opening negotiating gambits are always outrageous, as they should be.
Without opening negotiations with unreasonable demands, a negotiator is going to get stuck in the give and take. By opening with a “reasonable” position, he’ll soon be forced to settle for a “reasonable” deal that falls far short of his goals. And Trump, sensibly, hates to lose.
Trump, in short, doesn’t want a trade war at all. He thinks that much of the so-called free world (along with much of the un-free world) has been freeloading off the U.S. for decades, particularly when it comes to the West’s pitifully small militaries. Even more outrageous have been the thicket of protectionist tariff barriers the rest of the world has imposed on U.S. goods for decades as well. I.e., what about the anti-U.S. “trade war” much of the world has been waging on America for years and years? Why aren’t those longstanding tariffs risking a “trade war”?
The Art of the Deal
Trump is playing hardball now to get better deals together. Most importantly, he’s putting our neighbors to the North and South on notice. If Canada and Mexico don’t get serious soon about fixing those parts of NAFTA that seriously discriminate against the U.S., Trump will impose those tariffs. Intransigence works both ways. There’s simply no point to placing all the blame on Trump and that mythical Trump Trade War those nasty tariffs could cause.
At least one saner soul interviewed by CNBC this morning had a more rational opinion on the current Trump Trade War nonsense. The interview in question carried the following delightful headline:
The S&P 500 is going to take the scenic route to all-time highs this year: Wells Fargo
“The S&P 500 Index will end the year higher, but it’s going to take the winding road to get there, says one market strategist.
“That’s because volatility returned to the market in recent weeks after abnormally low levels through last year. It should continue in the coming months.
“‘The volatility that we saw was elevated,’ Christopher Harvey, head of equity strategy at Wells Fargo, told CNBC’s “Futures Now” last week. ‘We don’t think we’re going to stay at that high a level, but there is a bid to volatility at this point in time.’
In other words, it’s still mostly the volatility that’s messing with the market. Given Harvey’s S&P 500 projection, it’s clear he’s not incorporating any Trump Trade War scenario into his longer-term scenario.
Is Trump really a protectionist president?
Should Trump actually start imposing steel and aluminum tariffs on one or more nations, there could be some short term market hiccups. And they’re likely to be unpleasant.
But the President’s longer-term objective is not protectionism. It’s not a Trump Trade War. It’s actually his desire for truly free trade. But we don’t currently have free trade due to trade restrictions imposed on U.S. goods by everybody else.
Trump wants this to stop. To borrow a catch-phrase from Harry Truman, Trump is looking for a “Fair Deal” for American workers and consumers alike. It’s the kind of international Fair Deal we haven’t seen for a long time. Trump is threatening steel and aluminum tariffs to focus our unfair trading partners’ thoughts on their lopsided trading relationships with the U.S. What a concept.
Logically, genuine free trade would help this country’s long-chronic and massive trade imbalances. That’s what Trump wants. Unfortunately, you’d never know this from the media’s ruthless, relentless and remorseless #NeverTrump litany of fake financial news. It’s time for these brain-dead idiots to get something right for a change.
*Cartoon by Branco. Reproduced with permission and by arrangement with Legal Insurrection.