The Dow Flipped To Red As Trump Tweets About “Enemies” Powell and Xi

Donald Trump’s fantasy explanation of how tariffs work might rouse the base to yet another cheer, which is what it was designed for, but now that pipe dream is going up in smoke as the reality of world economics hits home hard. Friday morning China announced it’s own imposition of tariffs of between 5% and 10% on $75Billion in U.S. goods. That announcement sent ripples through Wall Street, where the Dow Futures was glowing green, and then immediately flipped to red. Apparently, that threw Trump over the edge, because he immediately went for Jerome Powell’s jugular.

….My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?

— Donald J. Trump (@realDonaldTrump) August 23, 2019

Then the Toddler in Chief really threw a tantrum. We don’t need China at all, so there. Yeah, great idea. Let’s stop dealing altogether with the world’s second largest economy. Shrewd thinking.

….better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..

— Donald J. Trump (@realDonaldTrump) August 23, 2019

Now American companies are ordered to find an “alternative to China.” Great. Is anybody in contact with economic powers on other worlds, Mars maybe? Because Donald Trump seems to have exhausted all the possibilities on this globe and so now he’s ordering companies to find markets elsewhere. And then there’s this tag along notion to the post office.

….all deliveries of Fentanyl from China (or anywhere else!). Fentanyl kills 100,000 Americans a year. President Xi said this would stop – it didn’t. Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way!

— Donald J. Trump (@realDonaldTrump) August 23, 2019

We are “MUCH larger” than China. Not if we keep taking this pounding. And China timed this announcement perfectly. Jerome Powell was due to speak from Jackson Hole today and the announcement preempted his speech. Trump is also set to fly to the G7 summit later today and this was done to rattle him — which clearly worked. The man has the brains and instincts of a fruit fly. He reacts impulsively and immediately, without talking to anybody or getting a grasp on the issues. And this is his mind set flying off to an international summit?

And things are a lot worse than you think. Mike Pompeo was making a lot of noise a few weeks ago and intimating possible military action against China. For some reason that didn’t get the press coverage it should have. Axios:

When Secretary of State Mike Pompeo and Defense Secretary Mark Esper visited Australia earlier this month, they delivered an unequivocal message to senior Australian officials: The U.S. plans to forcefully push back against China’s destabilizing behavior in the Asia-Pacific.

• Some left those meetings with the impression that the U.S. was serious about confronting China militarily.
• Between the lines: This visit was important for the signals Pompeo and Esper sent, but didn’t get as much U.S. press attention as it deserved. (See Bloomberg’s Aug. 4 story here.)

The bottom line: So if not a China trade deal, what then is left to juice Trump’s economy and stave off recession?

• Tax cuts? Not going to happen.
• Infrastructure? Not going to happen.
• Federal Reserve rate cuts? Probably. But how much will these expected cuts actually achieve?

Trump’s house of cards is collapsing. He’s going to have to get a tutorial in how economics actually works and then he’s going to have to dial down the rhetoric and stop lying — and what are the chances of that? The reality TV actor isn’t going to be able to improvise his way out of this one. But the good news is, that he might finally have enough rope to hang himself, and that is so devoutly to be wished.