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 Dr. Rasmus looks at the effects of steadily rising US interest rates, and the US dollar, on key South American economies—Argentina, Brazil, Venezuela—as well as other important emerging market economies like Turkey. How policies of business elites governing Argentina and Brazil wrecking their economies are about to worsen further, due to US monetary and Dollar policies. Argentina and Brazil currencies are now in freefall, provoking capital flight, domestic inflation, and the latest ‘Made in USA’ recession.  Meanwhile, Japan now enters another recession with GDP contracting -0.6% in first quarter and Europe-Germany now slowing dramatically as well (mere 0.3% growth rates latest quarter), as rising oil prices will push the US economy further toward recession in 2019 (as they did in 2008). Rasmus reviews the latest in US trade events re. China, NAFTA, Europe. How US bankers have taken control US trade negotiations with China, not Trump. Why NAFTA deal will be another Korean-like ‘softball’ deal. And how the US may ‘redefine away’ the trade deficit to make it appear something has changed with US trade deficit, when it hasn’t.

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The show leads with updates on latest evidence of stock buybacks in the US, which will exceed $800b in 2018, with another $500b in dividend payouts. Discussion then follows on the growing share of junk and near junk (triple BBB rated) US corporate bonds issued in the US. How BBB bonds may play a role in the collapse of retail stores like Sears, JC Penneys, etc. in the next recession (in 2019).  Rasmus then discusses the latest on the state of US trade negotiations with NAFTA and China. (Read Dr. Rasmus’ latest article, ‘Is the US-China Trade War for Real?’, on his blog, or PRN website, Counterpunch, Znet, Global Research and other public blogs for the real reasons behind the US-China trade conflict).  What’s happening in Argentina and EM economies in general is the focus of the rest of the show.  How US interest rate hikes and a rising US dollar are now precipitating another crisis in Argentina and emerging market economies in general. How Argentina’s current descent into deep recession, following Brazil’s, is the direct consequence of US interest rate and US dollar policies and the runup in dollarized debt issued by those economies in recent years. How the three largest economies of South America—Brazil, Argentina, Venezuela—are being wrecked by US policies, causing the collapse of their domestic currencies, capital flight, rate hikes, import inflation, and rapid contraction of their domestic economies.

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Jack Rasmus comments on today’s Jobs Report, explaining why little wage growth is occurring, and on the Federal Reserve Bank’s plans for interest rate hikes in 2018-19. The Fed is raising rates not because of a 2% inflation target, but to finance $1 trillion annual budget deficits for the next decade and a total Federal debt of more than $33 trillion by 2027 due largely to Trump’s $5t tax cuts. Early evidence of where the tax windfall for business and investors is going is discussed: stock buybacks-dividend payouts now exceeding last year’s $1 total by as much as 50% for 2018. Apple’s record $100 billion buyback plan. Also, tax windfall funneling into Mergers & Acquisitions activity, now running at $1.7 trillion and double the pace of 2016-17. Third, US investors’ tax windfall being diverted to Japan and Europe stock markets, projected at $1.2 trillion now compared to $350 billion a year earlier. Another report discussed is Deutsche Bank’s warning that US government debt levels have doubled the probability of a US debt crisis. And a final report that foreign investors are slowing new purchases of their US Treasury $6.3 trillion debt significantly: Foreign held US debt has fallen from 55% in 2008 to 43% in 2017, and foreign buyers of current accelerating Fed auctions of Treasuries now constitute only 16% to the total.

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The show debunks 1st quarter US GDP and official forecasts the US GDP will accelerate in rest of 2018. Rasmus explains how 1Q2018 capital spending is really flat, consumer spending is growing at a mere 1.1%, how autos and housing will continue to weaken in 2018, as will consumer spending in general as oil prices, healthcare costs, and rent inflation take an ever-bigger bite out of real consumption throughout 2018. Rasmus then critiques central banks—US, UK, and Europe—current interest rate policies: US Fed rate hikes aren’t justified by US core PCE inflation rate of 1.5%. Thus the Fed’s 2% price target is phony and rate hikes are driven by the Fed’s need to finance annual $1 trillion US deficits and debt due to Trump tax cuts and defense spending acceleration. The UK and EU economies are now slowing rapidly, and their banks will not hike rates. Rasmus explains how US rates and dollar will soon lead to a new crisis in emerging market economies as well, especially Latin America. The show concludes with the latest on the Trump phony ‘dual track’ trade war with allies, and a prediction of a settlement in the current US-China trade dispute before it becomes real ‘trade war’. How US domestic politics are what’s really behind the US-China trade skirmish. (For a detailed analysis of the US-China trade dispute, check out Rasmus’s blog posting, on April 29, of his soon to be published in Beijing article, “Trump’s DejaVu China Trade War”. Go to jackrasmus.com).

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Dr. Rasmus discusses emerging evidence of how the Trump tax cuts are being spent by investors and businesses. As predicted, the 10%-31% bottom line profits windfall from the tax cuts are going to stock buybacks, dividend payouts and mergers & acquisitions. Buybacks and dividends are projected to reach $1.3 trillion in 2018, higher than the previous 7 yr. average of $1 trillion a year. M&A activity will increase from $1.2 trillion in 2017 to $2.0 trillion. Evidence that the much-hyped global synchronous recovery last year is also now dissipating is discussed. Forecasts by JPM and Citi banks are a slowing growth in the global economy in 2018 compared to 2017. Europe, Asian, and commodities data confirm. Weak spots in US economy—retail sales, auto sales, jobs, Fed rate hikes, yield curve, and US household debt ($2.5 trillion rise in 3 yrs) and wages—are considered as well. The IMF recent report that the global economy debt pile is $164 trillion, and 225% of global GDP, now concentrated in nonfinancial corporations and governments. Rasmus explains how the ‘dual track’ Trump trade war (real for China and phony for US allies) will further impact US deficits, debt, and the economy.

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Dr. Rasmus discusses House Speaker, Paul Ryan’s, announcement this past week to resign and what’s behind it. It’s not about spending more time with his kids or giving up on Trump. What it means for conservative plans to attach social security, medicare, education and other social programs to pay for the annual $1 trillion budget deficits for the next ten years that are baked into the US budget now due to $5 trillion tax cuts and $100 billion a year increases in US war spending.  What’s behind Trump’s retreats this past week on trade: signaling US intent to rejoin the TPP (Trans Pacific Partnership free trade treaty), going slow on NAFTA revisions, and raising the stakes with China.  Trump’s phony trade war with everyone except China. Why tariffs and goods trade deficit is not the US real objective in a trade war with China. The domestic politics basis of Trump’s phony trade war is discussed

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Dr. Rasmus assesses the past week’s Trump trade offensive, showing its ‘dual track’ focus: go soft on trade and tariffs for US allies (example the recent Korean trade deal and exemptions on steel-aluminum tariffs) while playing ‘hardball’ with China trade. The steel and Korean deals are summarized. Rasmus argues this phony trade ‘track’ is for domestic political consumption for Trump’s base as November elections in the US approach and as Trump prepares to fire investigator Mueller. Trump is using trade to agitate and mobilize his domestic base on nationalist appeals once again. Rasmus argues the second, ‘hard’ track of China trade is about stemming US technology transfer to China that is militarily sensitive, especially AI, G5, and cyber security tech. That’s Trump’s No. 1 objective, for which he’ll trade tariffs on other China imports to the US. The Trump trade offensive is then discussed in historical perspective, comparing it to Nixon’s 1971-73 attack on Europe corporate competitors and Reagan’s 1985 attack on Japan. Why the US periodically engages in rewriting the trade ‘rules of the game’ to ensure US business interests are protected. The Trump trade offensive in relation to recent Trump taxes, deficits, and central bank interest rate hiking underway. Trade as the third policy initiative of Trump’s effort to re-establish a neoliberalism 2.0 policy regime.

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Dr. Rasmus looks at the forces pumping up US stocks, especially Tech stocks and S&P500, and the emerging counter forces that may soon prevail to send US stock markets into another major correction. Forces driving the bubble are continuing record stock buybacks and dividend payouts, and now record levels of merger & acquisitions (up 67% in 2018 and $1.2 trillion) and the Trump tax cuts boosting profits 10%-31% and their distribution into buybacks, dividends, and M&A activity. Forces growing that may reverse the trend and bubbles include: tech stocks peaking and attacks on Tech companies by politicians, Federal Reserve continued interest rate hikes, derivatives exposures to ETFs, cryptos, VIX, a renewed slowing of global economies and trade, China stock market contraction, European non-performing bank loans, and the Bank of Japan’s destruction of corporate bond markets with its QE purchases.  Rasmus concludes with the talk of ‘Trade War’ under Trump as a factor threatening stocks. The trade war is phony, and really a ‘war’ targeting China while exempting US allies except for token changes, as evidenced by the just concluded US-South Korean agreement. Trump’s ‘trade war’ with China is discussed in historical context with Reagan’s ‘trade war’ on Japan in 1985 and Nixon’s targeting Europe in 1971. Rasmus concludes Trump vs. China will prove less successful than Reagan-Japan and Nixon-Europe.

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US Economy’s ‘Triple Witching’ Hour: Budget bill, Fed Rate Hikes, China Trade War

Dr. Rasmus looks at three major economic events of the past week: the Trump $1.3 trillion budget bill, the Fed’s latest rate hike (with 6 more coming 2018-19), and the Trade War he launched last week which (as I predicted on this show last week) was really an opening salvo in trade negotiations with China (not Europe,  Mexico-Canada, Latin America, rest of Asia). On the trade war, Trump is already exempting the rest and targeting China. But even the China ‘war’ is hardly that. Trump’s opening ‘attack’ amounts to 12% tariffs on $50 billion of more than $700 billion China goods only exports to the US. Rasmus explains how this is all in the long tradition of US restructuring of trade relations with its capitalist competitors. (Nixon did it in 1971-73 and Reagan in 1986). Rasmus deconstructs the budget bill $1.3 trillion, as just the first in a series of war spending hikes totaling more than $1T a year. Along with $3T net tax cuts, it will mean $1T annual budget deficits for the next decade. The opening attack on social security, medicare, food stamps, education and other cuts to pay for it has already begun. Rasmus concludes with his analysis of the Power Fed’s latest rate hikes, and predicts when and at what level further hikes will precipitate another liquidity crisis and recession, as in 2008. (Read his blog, jackrasmus.com, for further written analyses of Fed, Budget, and Trade policies under Trump. Or join his twitter feed @drjackrasmus).

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Dr. Rasmus identifies weakening retail sales and business inventories as sources of US GDP sharply slowing later this year. Trump’s tariffs as only opening skirmish in US trade war---with China not the rest of the world. Half of US $810 billion trade deficit in goods is with China. Watch next week Trump actions targeting China trade. Why China will not respond cooperatively.  Rasmus puts Trump’s ‘Déjà vu’ trade war in historical perspective, showing how US corporations and politicians have always periodically attacked their foreign capitalist competitors to improve US share of world trade profits, by manipulating US currency and forcing trade treaties. Nixon in 1971-73 (Smithsonian Agreement) and Reagan in 1985-86 (Plaza and Louvre Accords), targeting Europe and Japan, respectively. Trump will target China. The show also addresses the escalating US total debt, from $50 trillion in i2007 to $70 trillion today and what it means, the 10 year anniversary of the Bear-Stearns Investment bank crash of March 2008, the accelerating banking deregulation by Congress underway, and the appointment of economic lightweight Larry Kudlow to Trump’s Economic Council and his support for absurd ‘supply side’ economic ideology.

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