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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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Dr. Rasmus takes up the key economic news of the past week that Trump is launching a trade war by raising tariffs on steel and aluminum imports. Contrary to press and media, it’s not a general ‘trade war’ but another example of US capitalists—the national ‘America First’ wing allied with Trump in the current case—signaling they intend to renegotiate trade agreements with US trading partners. After announcing, Trump immediately exempted NAFTA partners, Canada and Mexico, the US main steel importers. Trump further announced more exemptions coming for Europe and elsewhere. SO the main target is…China, even though China is responsible for less than 1% of steel imports to US.  Rasmus explains how historically the US has always turned aggressive on trade when the global trade pie, or its share of it, was threatened: Reagan did it in 1985, Nixon in 1971, and Hoover in 1930. Further explained is how the Fed rate hike policy underway will raise the US dollar and make US exports less competitive, so the trade renegotiations are anticipating this by making US trade partners pay for the rate-dollar hikes coming. How US trade policy is a response to US monetary policy which, in turn, is a response to Trump tax cuts, defense spending, and $trillion annual deficits and $10 trillion US debt. It’s all US Capital on the offensive in a new Trump aggressive ‘Neoliberalism 2.0’ taking form.

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 Today’s show focuses on the pending US Supreme Court decision, Janus vs. AFSCME, which represents an escalation of the billionaire-corporate-right wing attack on unions. Dr. Rasmus welcomes guest, Joe Bryan, Vice President of Service Employees International Union (SEIU) local 1021 in California. The billionaires behind the case—from the State Policy Network to ALEC to the Koch Brothers, Bradley Foundation, Donors Trust Fund and others are noted. How the Janus case seeks to gut union representation by bankrupting the union.  Rasmus provides an overview of anti-union tactics and strategies of the past 40 years, that have already devastated union membership in the private sector, now down to only 6.5% organized. Now the attack moves to destroy them in the public sector as well, in the Janus and other pending cases.  VP Bryan explains responses being planned by his union when the Janus decision comes down, likely against the unions. Rasmus and Bryan discuss possible further direct action responses by public unions, perhaps in unity with other social movements now arising—like #MeToo, Black Lives Matter, Fight for $15, DACA and immigrant rights, and Florida students against the NRA.  Why the public unions’ response must be more than just legal or even electoral. What might be done. (For more information on Janus and union response, go to SEIU 1021’s website at SEIU1021.org)

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