The markets announce the victory of the tariff very soon

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It is a sign of how enthusiastic investors put an idea of ​​a trade war behind them that the markets increased last week on the news of the “deal” between the United States and China.

Do not care that it was a 90 -day stand at higher rates that may only bring temporary relief. Investors bought the story that Scott Bessin, the Minister of Cchaodel, to US President Donald Trump, has now been in the leadership seat, China Petter Navarro has been pushed to the vacuum cabinet somewhere in the back of the White House, and we can all return to “Liberation Day”.

I do not buy it.

I think we are still entering into many fluctuations-not only in the next three months, as the new usual of 10 percent of the American customs tariffs shake (this is the best scenario), but during the next few years, with long-term structural trends continuing towards the new global economic model.

Let’s start with urgent issues. While it is very early to see inflation in data (producers ’price index, a measure of wholesale prices, has decreased slightly in April), there are many stories signs of a stories about the price tariff prices on the horizon.

The profit margins have been pressed and even the largest retailers seem unwilling to achieve greater success. Walmart announced last week that it raises prices on goods such as electronics and games due to Chinese tariff rates, and warned that there is a rise in prices.

“Given the size of the definitions, even in reduced prices … we are not able to absorb all pressure,” said Doug McMelon, CEO of retail stores. If Walmart feels that she must raise prices, you can bet on others as well.

Jay Powell, head of the US Federal Reserve, stressed in a speech last week that “the highest real prices may reflect the possibility that inflation may be more volatile than it was in the crisis period in 2010. We may enter a more frequent, and perhaps more stable, shocks in the offer-a difficult challenge to the economy and the central individuals.”

The recession is of course the great danger here. “Even if the moderate recession controls, it seems that the high inflation results are guaranteed given the addition of customs duties to the budget deficit path larger than ever. Monetary policy alone cannot reversed the direction without shrinking the deficit.”

actually. The weak financial position in America is the elephant in the room. Even if it assumes that the United States can collect between 200 billion dollars and $ 250 billion of revenues from definitions, this does not compensate for a deficit of 1.8 trillion.

Add to that the new budget bill in front of the House of Representatives, which will add $ 3.3 trillion to debt over a period of 10 years, and 5.2 trillion dollars if it assumes that all the ends of the tricks have been permanently extended, according to the responsible federal budget, which is not profitable. A number of militant Republicans rejected the first draft late last week, but the negotiations are continuing, and the end result is unlikely to help the American financial image.

American debt issues are structural and long -term, and may lead to others. What happens if there is a slowdown or stagnation that causes a significant decrease in tax receipts even with the continued high interest rates?

While inflation can temporarily reduce the debt burden, it may make the practice of business in the United States more expensive. Blitz also notes: “One can actually imagine a scenario as the Federal Reserve helps the dollar to enhance it to verify the real interest rates necessary to maintain the necessary flows and all of this, in turn, overwhelms the definitions as a barrier to prevent companies from foreign capital sources and employment.”

Trump will undoubtedly try to press the companies that are witnessing – Watch it “Small problem with Tim Cook” Last week, after Apple announced plans for the source of iPhone devices from India. But the rest of the world does not stop fixed.

China and many other countries have built huge gold reserves in recent years, as they are expected to be separated and move away from the dollar. Although gold prices have decreased to some extent after the market increased, I will not be surprised if there is another rise at some point. Costco, the opponent retail seller, set new borders on the gold bar sales last week, allowing customers to buy only one, instead of two, at one time, because the demand cannot be paid.

One of the difficult things about the current moment is that you can imagine both the offer and the trauma of demand that occurs at the same time. The definitions may be disrupted at a time when the slowdown negatively affects the demand.

The last time was a shock in supply and demand during the First World War, according to Prinston’s Economist Historian Harold James, who recently made this topic at the Hoover Institute. The shocks of supply tend to increase globalization in their wake (which may support stock markets), while the demand shock does the opposite. When they meet, there is nothing that can happen. In both cases, James told me, such shocks, “I put a portion of government competence.”

I saw the UK, with the “moment of Liz Tusus”, what could happen when it lacks. The United States may date.

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