🚨BREAKING: JD Vance says the US is DONE funding the Ukrainian war ..

Which means US has been funding the Ukrainian war .. of course everyone know that except his boss ..!

India & Pakistan - phase 2

Earlier this year, when India strike Pakistan, some of the astrologers predicted that its not done yet and there will be another part of the same, and I used to wonder as to what would cause a second strike ... and now it seems clear ...

US taking a position that it caused the ceasefire

US imposing tariffs on India with penalty

US favoring Pakistan and since then 

INDIA canceling US arms deal and going with Russia 

India needs to settle the matter of ceasefire with US by attacking Pakistan..

Now whether it starts the 3rd WW .. that's another angle as US may come to support Pakistan and Russia joins India  ... JBN ..!

what does tariff war mean ..?

Let's review what's going on in recent history ... worldwide int. rates have been low in last 20 years .. countries worldwide are incurring huge debt while spending more & selling goods to each other more than ever

both China and India have shown enormous growth is last decade or so .. with access to easy capital and advancement of technology, each country in the world is in mode of forever growth ... there hasn't been a recession since 2008 besides Corona which was overcome by huge introduction of capital & ended with more consumption .. but this growth can't last forever.. and we are at a point, when the world is producing so much that the consumption is not matching ...like the roaring 1920s ..isn't it funny that we are in 2020s - just 100 years later ..!

 

a key difference is that the Tariff Act of 1930 which was enacted to protect US industries end up elongating the depression, but this time it will become the cause .. 

 

hence the reasoning behind tariffs and protection  ... US is producing so much of oil and agriculture products that they need consumers .. while China & India - the biggest consumers are becoming more self-reliant & coming closer to US GDP every day - which US doesn't like  .. Trump wants to bring production to US, but to whom he would sell the products .. China and India... really ?

and that's the crux of the problem. 

so what's the outcome/effect ... & these are applicable for each and every country in the world  .. not just US, India or China ...

The world wide production as well as consumption must go down ... & will go down .. which is starting with tariff war and its impact will show in India, China & every other country ... and this time it will he hard to find new funding as the rates will go up .. not only the old debt needs to be retired at higher rates .. the new one will be hard as other countries will stop funding even increasing US debt ... which is 120% of GDP at present

 

as a result USD has gone down about 10% YTD, at the same time INR is going down in ref of USD  - a cascading effect ..! 

 

this is proven by the latest news, last week US had two treasury auctions - 10 years and 30 years.. neither went well .. Trump signing an EO to allow Private equity in 401K ac ie. credit credit & more credit since US debt is not enough ..!

 

so be prepared to tighten your belts ... the road ahead is curvy and there is a downgrade .. more to come ..!

post tariff US in second half ...

first, the US consumption will drop .. & the job situation will worsen causing recession ... but instead of prices going down in a recession, they will rise because foreign manuf. are not going to provide the rescue, USD going down will make US imports expensive ...

from there, it will be a downward cycle & Fed may have to raise rates or at least not dropping them ..

so all : prices, inflation, rates and unemployment will go up in US ..

ultimately, both USD as US in a decline .. but it will fulfill DJT's life long dream to run US on tariffs ..!

God bless USA ..!

a solution for India/Modi to respond to Trump's double down approach ...

for Modi to bring BRICS together as they control 40% of the World Economy and announce reciprocal tariffs on Trump (not same as US!) and that would make Trump to chicken out ..! 

Effect of tariffs on consumer Behavior ...

first, Trump & Dems (aka Kamala as in Dems manifesto in last election) & JP (Fed chief in the middle) are all wrong .. what a start ..!

although, each one of them is partly right & there is a missing point, which i will add ..! 

each one of them is looking the situation from there own lens / ideology - also known as political economy, although there is no such thing, its a subject created by crooked politicians in their own interest, rather its economy, stupid .. which is consumer behavior ..!

Trump may bully with 100% tariff or some non-sense number ... & you know how markets reacted in Apr - esp the Bonds market-  so he learned his lesson; but tariffs are based on product sales price aka revenue .. IF US govt. start making 100% of all the goods imported in US then it would be the largest revenue generating organization in the World with no tax liability .. which is theoretically impossible as it will collapse by its own weight .. typically an S&P500 company makes 10% net inc. & here we are talking 100% of revenue & that too on all the products consumed .. so total non-sense .. & calm minds prevail as he is settling around 10-15%

Dems are also wrong as the tariffs will cause serious inflation, which hasn't occurred ..YET ..!  this is partly because folks pre-ordered things; & second, the volume of good transported has come down. especially big & non-essential items; which means no. of ships going between china and US have come down, which means crude prices are under control; hence shipping costs have come down, which is compensating for the tariffs charged.

JP is simply confused If he should align w/ Dems (expected inflation) or Republicans (lower rates will help Trump) as he could be sacked big time .. so he has no idea .. IF i were him, i would resign now and not wait for my term to end as Trump is looking for a cause and JP could be his first victim .. so get out of his line-of-sight, aka legal troubles .. let me correct here that the first victim is BLM chief ... just fired. 

JP, as advised by so called smartest & brightest, but overpaid minds working at Fed, is right that if there are tariffs someone must pay, & there is no mention of such in text books so h/Feds have no use case to refer to in recent history - so he is still looking everywhere, but no where to find inflation; moreover since economy is doing well NOW (4.2% UnEmpl), he can't lower the rates .. but the revised NFP numbers changed the perspective on this Friday (Aug 1st)

as what all of them are missing is the change in consumer Behavior and here is how it will play out ..!

That the US consumer consumption will go down and it will bring down the world-wide economy .. which in today's context is not a bad thing in my opinion  .. as due to extreme low interest rates in last twenty years the world-wide economy has grown so much. ..!

so, instead of buying two shirts, you will by one .. or instead of buying a pair of Nike shoes each year, you will buy one pair every couple of years ... & what difference does it make .. given i know the US consumer ... probably nothing .. except that there will be more room in your garage and closet  ..!

how does this scenario satisfies everyone .. who are partiality right ..?

1. Dems are right that price will go up, but slightly; however, given that you are buying one shirt instead of two; your net expense will come down, so you can afford it & it's better for you, environmentally ..! 

2. Trump is happy that he got his tariffs; generates revenue for US  .. trade deficit comes down first - but will also bring down US exports, as the other countries are now making less .. aha .. so they will look for cheaper options like India buying crude from Russia and Iran or buy less US goods.

3. JP has to go .. he has lost his own identity, as on one hand he is a Trump appointee, but as the political climate changed .. he switched to Dems - not a good character .. because once the Consumer Behavior changes .. it will bring down the economy and Trump will be right saying " I told you so" & will have a perfect escape goat to blame JP .. even though it's caused by Trump!

now in this equation - someone has to give;  it's the world-wide economy, esp the US consumption - US consumer can buy lots of stuff today because it's cheap & it's cheap because of strong dollar & low tariffs, but when the tariff rise, it will change consumer behavior ... less number of shoes purchased in US means Nike earnings will go down .. worldwide transportation will come down ... less crude will be consumed .. Chinese and Vietnamese companies will make less shoes & hence less money but low demand of crude will bring crude prices down and hence lower the prices of local goods ... so it will affect the world-wide consumer behavior ...  iti siddham ..!

 

 

 

NFP 73K; Unemp 4.2%

 in addition the revised numbers for prior months are much lower; which means it's time to cut the rates