Looking Backwards …
LB #1
So I set out today with a goal of making the baseball hall of fame as a .333 hitter. If you get a hit on 1 of 3 at bats in the major leagues you will be a hall of famer. Let’s shoot for the hall of fame today shall we? I originally set out to talk no politics, no profanity, no problem. That didn’t work out at all so I am going for no problem on me not using profanity. No working blue.
We talked about Christia Freeland and how she was trying to organize a bloc of countries to discuss how to deal with Trump’s treaties. She also has an interesting point that I want to discuss further from Randy Thanthong-Knight’s article, “Freeland is also pushing Canada to “immediately publish” a detailed list of U.S. products that will be targeted in retaliation to Trump’s threatened tariffs. The northern nation is preparing a range of retaliatory levies, but it hasn’t issued a detailed list to the public.”
If this idea takes off either with or without her, the US could be very vulnerable here. We have already talked about the numerous items that America is dependent on imports for. All of Wal-Mart seemingly, prescription drugs, penicillin, and rare earth minerals for high tech military uses are all imports and very important. There are plenty more, but don’t think that Americans won’t be hurt in a trade war. Tariffs are a tax after all, and Americans will probably pay some or all of it. It sounds better than telling America I’m raising your taxes though doesn’t it. When Trump says “I love tariffs, I hear “you love spending money and need more to spend.”
LB #2
This is what he is doing in Panama as well. He is just negotiating how much American ships are being charged to use this thing. Panama said they would give us a discount which is just what he wanted. Here is a better viewpoint of it.
Roberto Eisenmann, the 88-year-old founder of Panama’s independent newspaper La Prensa, said that Panamanian leaders are not feigning their bafflement at Trump’s complaints…”“I have a New Yorker friend,” Eisenmann said, “and he says to me, ‘Bobby this is typical New Yorker bullshit when you want to get a discount.”
That was a quote, that isn’t on me. He is absolutely accurate though. Trump is using these tariffs as a club, but he isn’t accomplishing much. If he wants to replace the IRS, the threat needs to be carried out. If he is using them as a means to get Canada and Mexico to shore up their borders, it seems like overkill. It is working in theory so if you have to use a bazooka to kill a mosquito Don, go ahead.
LB #3
Now Trump is asking for more than just a discount of usage, as he is asking for the Panamanians to cut some ties with Chinese interests in the area.
This from ZeroHedge, “Days after US Secretary of State Marco Rubio blasted the Panamanian government for allowing Chinese “influence and control” over the Panama Canal and called for “immediate changes,” a new report suggests that discussions are underway with President José Raúl Mulino’s administration to end Chinese-backed port deals.
Bloomberg reports that the Mulino administration is considering canceling critical port contracts held by Hong Kong-based Hutchison Ports PPC, a subsidiary of CK Hutchison Holdings Ltd. The report cites sources familiar with the discussions
If the deals are canceled, the move by Panama could serve as a major concession to ease President Donald Trump’s concerns over China’s influence at strategic ports near the canal—an issue he has called a national security threat.”
In addition, they were asking Panama to back out of its Belt and Road initiatives that they have with China. If Trump thinks that China is going to walk away from billions of dollars of capital expenditures without retaliation I think he would be mistaken.
Looking Forwards…
LF#1
Well that didn’t last long… It was about that long and China has responded with very targeted threats in response to Trump’s tariffs. Remember Trump kept the 10% tariffs on China, and China responded with some targeted 15% tariffs.
This from Annie Lee at Bloomberg, “The phone has been ringing off the hook for Lewis Black after China imposed export controls on tungsten, a niche metal mined by his firm that’s crucial to weapons manufacturing.
The chief executive officer of North America’s Almonty Industries Inc. said his customers are in a “state of disbelief” following Beijing’s move on Tuesday, one of a suite of measures announced as a riposte to tariffs placed on Chinese goods by the Trump administration.
China accounts for about 80% of the world’s tungsten output, and there are concerns the government could add measures around tungsten scrap that would further constrict its availability. Almonty’s stock in Toronto has soared 41% over the last two days as investors price in scarcer supply of the super-dense material used in armor-piercing munitions, as well for engine parts and chip making.”
China is the workshop of the world, and we are just the consumer. They get our paper and we get their stuff. The stuff is hard to produce, the dollar printing is easier. We shall see if this escalates.
LF#2
One of the other most influential issues in the markets these days are the implementation of AI, and more importantly the monetization. I keep getting copilot pop ups when I type this out and I keep turning them off. I assume I am the only one, but that doesn’t seem to be the case. This from ZeroHedge, “On Friday, Goldman’s David Kostin, Ben Snider, and others pointed out, “Some clients believe the cost efficiency of the DeepSeek model bodes poorly for the likely returns of US tech investment spending,” adding, “This in turn could jeopardize the exceptionalism of US growth.”
“Increased AI adoption leading to productivity gains should also be a positive for US corporate earnings,” Kostin said.
Given the growing uncertainty surrounding Mag7’s AI CapEx forecasts following the DeepSeek shock, Kostin found that two years after OpenAI’s ChatGPT was released in November 2022, only 6% of us companies currently use AI, while just 10% of those firms plan to adopt it within the next six months.”
There are tens and hundreds of billions of dollars going into this AI capex cycle for these tech businesses. At what point are they going to have to show results? Remember when Zuckerberg was building out the metaverse and his stock was getting crushed? Finally, he said he was going to cut some spending and cut some other operational costs and now people forget he is still wasting billions on that. This is what could happen with AI. It doesn’t mean it won’t be great down the road, maybe, maybe not, but the companies might have to take a big stock hit because it isn’t great now.
LF#3
On thing Trump wants is lower energy prices. He said he was going to tell everyone to drill baby drill and by everyone I assume America and the Saudis. He has threatened tariffs on our imported oil partners and BRICS nations as well. Tariffs are not inflationary but they can often lead to higher prices which is an input to how they measure inflation. By they, I mean the BLS and CPI. Here is a conundrum with regard to oil in particular, we are slowing down production. Lucia Kassia writes this for Bloomberg, “US crude-production growth plunged 70% last year to 279,000 barrels a day. Output in 2025 is expected to tick slightly upward before dropping precipitously next year to just 78,000, according to the Energy Information Administration.” Now this is growth, and we are still pumping plenty, but fracking isn’t very long lasting so they have to keep drilling and finding new wells. That exhaustion of current supply was also the easiest wells to frack. It will only get more difficult. That must be why Trump wants to open up new areas to drill. They had better get at it. If Trump wants any chance of keeping a lid on inflation and the economy not going into recession then he needs cheap energy desperately. This is why I don’t understand why he is wanting to tariff our trading partners and cancel Venezuela. I have given up taking him at his word and we are three weeks in. Let’s see what he does instead. That remains to be seen.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 44,303.
The 10-year Treasury bond is at …4.495%
The price of Brent Crude is … at $ 74.66 per barrel.
The price of gold is … at $2,886 /oz.
The price of silver is … at $32.18/oz.
I leave you with this from the information superhighway, will the new glass coffins be a success, remains to be seen.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.