Looking Backwards
LB #1
It’s been a couple weeks since Donny T announced that the US was going to set the rules for world trade, the T standing for tariffs, of course. It is a risky maneuver. It reminds me of another risky maneuver. 38 years ago, a scrappy bunch of ballplayers on the shore of Lake Erie called the Cleveland Indians, this was before America went limp dick soft and forced them to change their names to something ridiculous, but they battled the New York Yankees to take the pennant. They were led by a has been Jake Taylor, a once great ball player at the end of his career. In the final game, Taylor, with a winning runner on second and running on contact, points out to center field seemingly calling his shot to hit a home run. The sheer arrogance was astounding, but it was also a ruse. He actually bunted. A bunt with two outs means that he has to reach first base safely or the inning is over, and the run doesn’t count even if he scores because the inning will be over. Old Taylor chugged his way down to first and Willie Mays Hays scores from second on a ball that never left the infield, and the Indians won the pennant. The surprise move still stands as one of the great moments in Indians baseball. It worked out, but life is not a movie, and risky maneuvers don’t always work.
Trump is bunting with two out and chugging his way down to first as we speak. Trump wants to bring back manufacturing and make America the great exporter of his youth. Well, we need to be a lot more serious about producing than pandering if that is the case. Let’s contrast two hurdles standing in his way that have nothing to do with Trump, but modern-day Americana.
Josie Cox wrote an essay for Bloomberg this weekend that encapsulated the problem. Josie tries to make the case that more men should take paternity leave as if the baby will a) remember them as babies that are two can’t remember anything much less 2 days old and b) suckle at their nipple during feeding time. Sorry, but I think the mother is a wee bit more important here. What if I purposefully knock a girl up so I can take a two-month holiday, and she decides to have an abortion. She has robbed me of two months of happiness, getting paid and not working is the American definition of happiness. Speaking of American, I am pretty sure the Constitution of the United States guarantees life, liberty, and the pursuit of happiness so an abortion in a system with paternity leave pretty much violates two out of three which constitutes a quorum. But I digress.
Josie continues, “Paternity leave has long been hailed as a progressive policy for leveling the parental playing field — one that can chip away at the gender pay gap and equalize labor force participation between men and women….” This first idea is the equivalent of saying this runner at the Olympics is too fast, let’s put some weight in their shoes to slow them down. Trying to close the pay gap between men and women by shaming men out of the workforce for weeks doesn’t make any sense. Let’s set aside concrete workers and welders building the factories and say that this is a sociologist’s dream office experiment though. In fact, I’m a sexist for suggesting that this isn’t a good idea. Paint me with that brush. I care about as much as that baby does about where the milk comes from.
This gets better, “When it comes to the expansion of paternity leave policies, there is some good news. France, where mothers are guaranteed 16 weeks of paid leave, recently doubled its paternity leave allowance to four weeks. In 2019, Canada updated its benefits so that parents who split leave can take 40 weeks total, up from 35. In Iceland, each parent gets six months of leave, with six weeks transferable between them. Sweden, which in 1974 became the first country to replace maternity leave with gender-agnostic parental leave, now offers 480 days, with each parent entitled to half…In addition to creating stronger bonds between babies and fathers, encouraging a more equitable division of household labor and combating the pernicious “motherhood penalty,” one 2019 study in Sweden found that mothers whose partners were given flexible paid leave a year after their child’s birth were less likely to need antibiotics and anti-anxiety medication.
A 2016 study of more than 1,500 US employers found that more than 80% of those offering paid family leave reported a positive impact on employee morale, and more than 70% reported an increase in employee productivity.”
First, those are all countries that suck at manufacturing. Second, who is performing these studies? This is like asking scientists whose grant money is dependent on global warming giving you a verdict that we have global warming. Mothers whose partners took partners took paternity leave were less likely to need antibiotics a year after the pregnancy. Has the word antibiotics changed? But let’s not talk medications, let’s talk dollars and cents shall we. If 70% of employers reported an increase in productivity by letting someone disappear from work for two months, why not let everyone disappear for two months. They don’t need to have babies, lest we discriminate against single people? Are you an artist, take two months off and connect with your passion by drawing bowls of fruit and when you come back after two months, we welcome your increased productivity and morale. ‘Merica.
Let’s contrast this versus China. China is the manufacturer of the world. They are productive, and that’s why we buy cheap things from them. If I want a t-shirt, I can buy a Chinese shirt at Wal-Mart for $7 or I can go to Paternity Papas and spend $32. Despite the productivity and morale of the latter, Americans prefer everyday low prices. How has China managed to do this? Rose Barker writes for NCESC, “While the official line dictates a 5-day workweek with 8-hour workdays, resulting in a 40-hour week, surveys and reports tell a different story. In November 2023, the average weekly working hours for surveyed employees in Chinese enterprises reached 48.9 hours. Furthermore, the existence of the controversial 996 work culture, where employees work from 9 am to 9 pm, six days a week (totaling 72 hours per week), adds another layer of complexity. While declared illegal, this practice still persists in some sectors, particularly in the tech industry and startups.”
I once worked with a couple from Eastern Europe, and they were working a lot of overtime, and I said it is nice to see people with a good work ethic and they said this is nothing. They told me their parents all worked this 996 method although I hadn’t heard it called that until this article. This is how most people around the world survive. Americans also did this until Henry Ford offered up the first 5-day workweek with the additional productivity of the assembly line. We are trying to compete with the modern 996 with automated factories and we have paternity leave? Papa’s bodies don’t have to deal, they didn’t undergo trauma. The people in America aren’t tough enough to handle being the workshop of the world again. This is why Trump’s bunt with two outs is so risky.
LB #2
That thing that you hear grinding to a halt with sand in its gears is the US economy. Famously, the US consumer is 70% of the economy and it isn’t getting what it wants, at all. This from Dearbail Jordan at the BBC News, “DHL Express is suspending deliveries to the US worth more than $800 (£603) because of a “significant increase” in red tape at customs following the introduction of Donald Trump’s new tariff regime.
The delivery giant said it will temporarily stop shipments from companies in all countries to American consumers on Monday “until further notice”. It added that business-to-business shipments will still go ahead, “though they may also face delays”.
Previously, packages worth up to $2,500 could enter the US with minimal paperwork but due to tighter customs checks that came into force alongside Trump’s tariffs earlier this month, the threshold has been lowered. DHL said that the change “has caused a surge in formal customs clearances, which we are handling around the clock.”
I thought Trump was pushing a system of lower regulation.
LB #3
The fallout from tariffs and the trade war will continue to be felt elsewhere. Chinese company Temu makes cheap goods that American consumers vacuum up with seemingly limitless demand. This from Meghan Hall at the Sourcing Journal. “Global trade tensions seem to be bringing change inside low-cost, China-founded e-commerce platforms, particularly Shein and Temu. That has seen the two companies reevaluating their strategies in several ways-one of which is, reportedly, decreasing their respective advertising spending in the U.S. market, and another of which is hatching plans to increase prices on goods sold on their respective sites and apps. Those decisions come against a tense trade war between the United States and China, which has seen triple-digit tariffs imposed both on goods entering China from the U.S. and on goods entering the U.S. from China.
In the days following Chinese President Xi Jinping and U.S. President Donald Trump’s tit-for-tat tariff schemes, Temu significantly decreased its ad spending; data from Tinuiti, a marketing firm, showed that Temu purchased one-fifth of all U.S. Google Shopping ad impressions on April 5. By April 12, Temu had decreased its spending to zero.”
Trisha Ostwal and Paul Hiebert write for Adweek, “Figures from Tubular Labs, a social video intelligence firm, show sponsored TikTok videos from Temu’s U.S. operations have fallen from two on April 1st to zero. This stands in contrast to the same time last year when Temu sponsored several videos on the platform each week of April.
According to a third data point from Mike Ryan, head of Ecommerce Insights at Smarter Ecommerce, who flagged the change in Temu’s ad strategy on LinkedIn, Temu’s impression share in early April hovered around 40%–50%—a fairly typical range. But between April 9 and 12, it abruptly dropped to zero.”
Google ad impressions just lost 20% of its business in one week. LinkedIn spend also drops to zero. This is what happens in a trade war. They will not be able to compete with prices for their goods being 125% higher so they won’t be able to advertise as much. This hurts advertising companies like Google and Facebook as their revenues are directly tied to getting in front of the consumer. These are two of the magnificent 7 stocks which make up about 35% of the S&P 500. Do you think the sell-off is over? Me, neither.
Looking Forwards…
LF#1
The Masters golf tournament is over and that can mean only one thing. Spring is here and that means planting season. For a farmer there are many things to consider so let us consider. This from Kevin Draper and Jack Nicas at The New York Times, “Consider the soybean.
A legume about a centimeter in size, it is eaten from the pod as edamame or processed into tofu, soy milk and other products. But that is not why it is one of the world’s most lucrative commodities. High in fat and protein, soybeans are what much of the world’s livestock eat.
And now the humble crop is at the center of the trade war between the United States and China.
The United States sells more soybeans to China, by value, than any other single product. Last year, that amounted to more than 27 million metric tons, worth $12.8 billion, or about 9 cents of every dollar of goods the United States sold to China. But with the enormous tariffs erected between the two countries over the past two weeks, those sales are likely to suffer soon. That is bad news for the American farmers who grow soybeans and the Chinese chicken and hog farmers who buy them — and potentially very good news for the nation ready to step in: Brazil…
The United States has gone down this path before. During his first administration, Mr. Trump initiated a trade war against China, and Brazilian soybean farmers were the beneficiaries. From 2017, just before that trade war, to last year, China increased its annual imports of Brazilian soybeans 35 percent to 72.5 million metric tons while cutting imports of U.S. soybeans 14 percent to 27 million metric tons, according to data from the two countries.
“This hasn’t reversed. It’s remained,” Mr. Nassar said. “If China maintains high tariffs on American commodities, the same will happen. There will be another substitution of American exports with Brazilian ones.”
What is different this time — aside from much higher tariffs — is that China has poured money into warehouses, railroads, ports and other infrastructure in Brazil over the past decade to get more of the country’s soybeans onto Chinese ships… The only thing that prevented ruin for American farmers during the last trade war was a $23 billion government bailout program. The Trump administration is again contemplating an agriculture bailout — a tacit acknowledgment that retaliatory tariffs will hurt farmers — but there is no guarantee it would make up for all losses.
“We were very grateful for the emergency assistance we received,” Ms. Feuerstein said, “but it did not make our farms whole, and it killed our largest export market.”
The promises to the farmers will be larger, the gain to South America will be larger, and the bailouts will be larger. I heard Trump say he was going to allow iPhones in, but I have yet to hear if China is going to let soybeans in. Remember that, when you hear we are winning a trade war against anyone. The deficit is going up to bailout farmers as we speak, the bills are being crafted already…
LF#2
Speaking of winning trade wars, China is winning. Let’s hear from Rebecca Robinson at the Express, “Rare earth metals are difficult to extract in a cost-effective and environmentally friendly way, and China currently holds a near monopoly on their processing.
China’s recent clampdown on rare earth mineral exports could spell disaster for the global automotive industry. There are fears that essential magnet reserves may deplete within months if Beijing tightens its grip further. China broadened its export curbs earlier this month to encompass seven key rare-earth elements and magnets crucial for producing electric vehicles, wind turbines, and military aircraft.
This was seen as a direct response to President Donald Trump’s hefty 145% tariffs imposed on Chinese goods. Government officials, market traders, and automotive leaders have voiced concerns that current stockpiles will run out in three to six months and prompt companies to scramble for additional resources to prevent significant setbacks. Jan Giese from Tradium, a Frankfurt-based metal trading firm, said many car manufacturers and their vendors only have two to three months’ worth of magnet supplies.
He told the Financial Times: “If we don’t see magnet deliveries to the EU or Japan in that time or at least close to that, then I think we will see genuine problems in the automotive supply chain.”
Let me get some science nerd to help translate how the ban on rare earth’s might affect the US. Nikk Ogasa, from Science News writes, “Rare earths fulfill thousands of different needs — cerium, for instance, is used as a catalyst to refine petroleum, and gadolinium captures neutrons in nuclear reactors. But these elements’ most outstanding capabilities lie in their luminescence and magnetism. We rely on rare earths to color our smartphone screens, fluoresce to signal authenticity in euro banknotes and relay signals through fiber-optic cables across the seafloor. They are also essential for building some of the world’s strongest and most reliable magnets. They generate sound waves in your headphones, boost digital information through space and shift the trajectories of heat-seeking missiles. Rare earths are also driving the growth of green technologies, such as wind energy and electric vehicles, and may even give rise to new components for quantum computers.
“The list just goes on and on,” says Stephen Boyd, a synthetic chemist and independent consultant. “They’re everywhere.”
We are awash in soybeans and they are awash in rare earths. No offense to the legume but this isn’t a pleasant perfume. This stinks.
LF#3
We’ve chronicled how foreign tourists are starting to abandon plans to visit the US in droves which might free up some formerly untouchable locations for the citizens here at home to finally afford. Hotels that used to charge foreigners top dollar will now have to schlep through the summer and earnings calls with decidedly lower rates. Nikki Ekstein wrote an article for Bloomberg this weekend about the comeback of the great American resort. She featured the hotel Del Coronado in San Diego. “That building you’re looking at right there? It’s the birthplace of the American beach vacation,” says Gina Petrone.
Petrone holds the unusual title of “heritage manager” at San Diego’s landmark Hotel del Coronado, and she and I are standing in the long driveway that leads up to the vast Queen Anne Victorian pile, whose distinctive ivory shingles and terracotta-red turrets captivate every arriving guest. A gilded plaque hints at the Del’s architectural significance, calling it “one of America’s largest wooden buildings” and among the “few seaside resort hotels of this style remaining in America.
But like any gilded plaque, it tells only a fraction of the story… When the Del opened with 450 rooms in 1888, it would take roughly five days to get there by train from New York City. It was nonetheless a popular spot for wealthy East Coasters, where Vanderbilts, Rockefellers and Carnegies hunkered down for three months at a time, to be entertained and wined and dined in the warmth of the Southern California coast. The all-inclusive rate was between $2.50 and $3.50 per night, with meals taken communally and served by tuxedoed waiters in a wood-paneled room with curvaceous walls and custom-made crown-shaped chandeliers. (The hotel became even more famous in 1959, when it starred alongside Marilyn Monroe in Some Like It Hot.)… To be sure, luxurious American resorts have been on the upswing for some time. Since 2019 the number of hotels charging more than $1,000 per night has grown by 475% in the US, more than anywhere else, according to data from real estate analytics company CoStar.
At the Del, that sub-$600-a-night rate can get you a small but beautiful room in the historic main building.”
Yes that gilded age, some might call it a bygone relic. Some might say that, yes. The age of the ultra-wealthy, when an all-inclusive averaged $3.00 per night for the Vanderbilts, Rockefellers, and Carnegies. $600 today, that’s about 19,900% inflation over 140 years or 142% a year. The room is about the same, only older, the service is hopefully the same, but probably poorer, but the damn dollar just doesn’t buy what is used to. In fact, it buys 10% less than it did two weeks ago.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 39,142.
The 10-year Treasury bond is at …4.33%
The price of Brent Crude is … at $67.96 per barrel .
The price of gold is … at $3,328/oz.
The price of silver is … at $32.47/oz.
I leave you with this from the information superhighway, What’s the difference between an oral thermometer and a rectal thermometer? The taste, mostly.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.