In addition to Eric Peters earlier take on why the "long season of central bankers has ended", here is some additional free-form stream of consciousness from the One River CIO on the current state of the global trade war, and what may happen next.
A Game of Cards
“From now on, we expect trading relationships to be fair and to be reciprocal,” announced President Trump, smiling, a slight blush. In his hand, a Royal Flush, his life history a gambler’s bluff.
“These tariffs are an affront to the longstanding security partnership between Canada and the US and to the thousands of Canadians who fought and died alongside their American brothers,” said young Justin Trudeau, announcing reciprocal tariffs, three Queens in his hand. And Trump reflected on his early property developments, bluffing his way into the big game. “That was hard. This is not,” whispered The Donald.
“Mexico’s position regarding cooperation with the US on trade, migration or security will not vary because of offensive rhetoric or unilateral and unjustified measures of this kind,” said Foreign Minister Videgaray, a pair of Jacks.
“The US now leaves us with no choice but to proceed with a WTO dispute settlement case and the imposition of additional duties on a number of imports,” said EU Commission President Juncker, a Full House. But of course, the Europeans are hopeless at poker; 28 people cannot play a single hand, each attempt sparks endless argument.
“No leader on earth could play their way out of a hand with four bankruptcies. Stormy. Hollywood Access. The Paris Accord. North Korea. Or Iran’s nuclear deal,” thought Trump, enjoying the high roller table immensely.
“When it comes to the problems in Chinese-US trade and business both sides should take a sincere attitude in the spirit of equality and mutual respect to use dialogue and consultations to seek a mutually beneficial win-win solution,” said China’s foreign minister, in his hand a Full House, strong but a loser.
You see, America has the world’s biggest trade deficit, debt, central bank, economy, reserve currency, global payment system (SWIFT), military. “I got all the cards. I win, they all lose.”
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He browsed the White House website, bored. And found a May 29th factsheet titled: President Trump is Confronting China’s Unfair Trade Policies. He read these headlines: (1) YEARS OF UNFAIR TRADE PRACTICES: China has consistently taken advantage of the American economy with practices that undermine fair and reciprocal trade. (2) UNDERMINING AMERICAN INNOVATION AND JOBS: China has aggressively sought to obtain technology from American companies and undermine American innovation and creativity.
The headlines continued. (3) STANDING UP TO CHINA’S UNFAIR TRADE PRACTICES: President Trump has taken long overdue action to finally address the source of the problem, China’s unfair trade practices that hurt America’s workers and our innovative industries. (4) PROTECTING AMERICAN INNOVATION AND CREATIVITY: President Trump...