Latest news with #Nixonian
Sydney Morning Herald
a day ago
- Business
- Sydney Morning Herald
Trump's war on the world is starting to unleash pain
Mary Daly, the San Francisco Fed chief, hinted strongly on Wednesday that there could be three cuts this northern autumn. 'We know that once the labour market stumbles, it tends to fall quickly and hard,' she said. For now, it is a story of 'low hiring'. It becomes dangerous if companies start firing as well. That can turn into a self-feeding downward spiral of mass layoffs that slips control, forcing the Fed to slash rates to the bone. The US property market is already crying out for relief. Mortgage applications have collapsed to the levels of the mid-1990s. The Freddie Mac house price index has fallen for the past five months in a row. Property owners in south-west Florida are slashing prices at the fastest rate since the subprime bust in 2007-08. Wall Street has shrugged off the slowdown, but that is because traders are betting on the 'Fed put' – Vickie Chang, from Goldman Sachs, says markets have priced in both a 'negative US growth shock' and a 'doveish policy shock' at the same time. The two more or less offset each other. In other words, the Fed will ensure that the Schiller price-to-earnings ratio on Wall Street remains near the peak of the dotcom bubble at over 38, and junk bond spreads remain as compressed as they were at the peak of the Lehman credit bubble. Uncle Jerome will keep investors fat and happy. Loading The Fed will undoubtedly cut rates, but it is an invidious position. The next shocker may well be the core inflation figures out next week. The delayed effects of the tariffs are about to feed through with malicious and unstoppable force. Welcome to 1970s Nixonian stagflation. Donald Trump will doubtless declare that the index has been manipulated by Marxist fifth columnists. Good luck with that. The US is unable to substitute 90 per cent of its current imports with local production. Trump's trade taxes will be paid by US consumers via higher prices, and by US companies with plants abroad or reliance on foreign inputs via lower profit margins. Caterpillar has already warned that the Trump levy will cost it up to $US1.5 billion ($2.3 billion) a year. Brewer Molson Coors expects earnings to fall by 7 to 10 per cent because Trump's 50 per cent tariffs on aluminium have pushed metal can costs through the roof. We know from early warning signals – both the ISM's service price paid index and S&P Global's composite PMI output prices – that price impulse is filtering through with the usual multi-month lag, and that headline inflation will approach an annualised rate near 5 per cent over the next three months. Durable goods prices are already rising at the fastest rate since the early 1990s. The Yale Budget Lab expects food and apparel prices to rise by almost 40 per cent. The Fed will undoubtedly cut rates, but it is an invidious position. Britain and Europe are in a different position. They are absorbing the brunt of China's galactic overcapacity, and absorbing some of its deflation too as a wave of cheap Chinese exports are diverted from the US and into their markets. They are not committing further economic self-harm by raising inflationary trade taxes themselves. I can understand the reasons for the hawkish tone of the Bank of England's rate cut on Thursday, but lingering worries of UK inflation may soon be washed away by larger global forces. 'The Bank will be compelled to cut faster in 2026,' said Mathieu Savary, of BCA Research, who thinks that deflation is the greater danger stalking Europe. The eurozone's rebound has stalled. The growth spurt earlier this year was an illusion of 'tariff front-running'. German industrial output fell 1.9 per cent in June. It is down 4 per cent from a year ago, and 10 per cent below its pre-pandemic level. 'It's a cold shower for our long-held view of a cyclical rebound in German industry,' said Carsten Brzeski, of ING. Brzeski said Germany's Mittelstand family firms cannot blunt the impact of the tariffs by relocating production to the US. These firms have always formed the backbone of the Wirtschaftswunder (or economic miracle). They are being hammered on a second front by China, which has moved up the technology ladder and is now competing toe to toe in third markets, with the help of a suppressed exchange rate. Keynesian rearmament and a blitz of infrastructure spending will eventually lift Germany out of the doldrums. The Merz government is swinging from a primary budget surplus of 2 per cent of GDP to a primary deficit of 2 per cent by 2028. That is a big secular shift in macroeconomic policy, but it remains far away and, in the meantime, France and Italy face fiscal retrenchment. The eurozone has seen a long series of false dawns over recent years. It risks happening again if the European Central Bank continues to sit on its hands as the Wicksellian 'natural' rate of interest plummets. Trump's tariffs on Europe will now ratchet up to 15 per cent. The trade shock amounts to 25 per cent this year when you add in euro appreciation against the dollar, or a de facto 60 per cent shock on metal products. Trump has yet to drop his full pharma bomb. He is talking of 100 per cent tariffs on semiconductors. The market narrative that the worst is over and that stability will come will surely become a collectors' item for historians and students of the capitalist psyche. Nothing is ever stable with Trump. Loading He has just inflicted the biggest trade shock in peacetime since the origins of the modern economy in the 17th Century. He has killed Pax Americana stone dead, destroyed NATO credibility, carpet-bombed the West and smashed the rules-based order to smithereens on every level. Yet asset markets remain insouciantly priced for perfection. What can possibly go wrong?
The Age
a day ago
- Business
- The Age
Trump's war on the world is starting to unleash pain
Mary Daly, the San Francisco Fed chief, hinted strongly on Wednesday that there could be three cuts this northern autumn. 'We know that once the labour market stumbles, it tends to fall quickly and hard,' she said. For now, it is a story of 'low hiring'. It becomes dangerous if companies start firing as well. That can turn into a self-feeding downward spiral of mass layoffs that slips control, forcing the Fed to slash rates to the bone. The US property market is already crying out for relief. Mortgage applications have collapsed to the levels of the mid-1990s. The Freddie Mac house price index has fallen for the past five months in a row. Property owners in south-west Florida are slashing prices at the fastest rate since the subprime bust in 2007-08. Wall Street has shrugged off the slowdown, but that is because traders are betting on the 'Fed put' – Vickie Chang, from Goldman Sachs, says markets have priced in both a 'negative US growth shock' and a 'doveish policy shock' at the same time. The two more or less offset each other. In other words, the Fed will ensure that the Schiller price-to-earnings ratio on Wall Street remains near the peak of the dotcom bubble at over 38, and junk bond spreads remain as compressed as they were at the peak of the Lehman credit bubble. Uncle Jerome will keep investors fat and happy. Loading The Fed will undoubtedly cut rates, but it is an invidious position. The next shocker may well be the core inflation figures out next week. The delayed effects of the tariffs are about to feed through with malicious and unstoppable force. Welcome to 1970s Nixonian stagflation. Donald Trump will doubtless declare that the index has been manipulated by Marxist fifth columnists. Good luck with that. The US is unable to substitute 90 per cent of its current imports with local production. Trump's trade taxes will be paid by US consumers via higher prices, and by US companies with plants abroad or reliance on foreign inputs via lower profit margins. Caterpillar has already warned that the Trump levy will cost it up to $US1.5 billion ($2.3 billion) a year. Brewer Molson Coors expects earnings to fall by 7 to 10 per cent because Trump's 50 per cent tariffs on aluminium have pushed metal can costs through the roof. We know from early warning signals – both the ISM's service price paid index and S&P Global's composite PMI output prices – that price impulse is filtering through with the usual multi-month lag, and that headline inflation will approach an annualised rate near 5 per cent over the next three months. Durable goods prices are already rising at the fastest rate since the early 1990s. The Yale Budget Lab expects food and apparel prices to rise by almost 40 per cent. The Fed will undoubtedly cut rates, but it is an invidious position. Britain and Europe are in a different position. They are absorbing the brunt of China's galactic overcapacity, and absorbing some of its deflation too as a wave of cheap Chinese exports are diverted from the US and into their markets. They are not committing further economic self-harm by raising inflationary trade taxes themselves. I can understand the reasons for the hawkish tone of the Bank of England's rate cut on Thursday, but lingering worries of UK inflation may soon be washed away by larger global forces. 'The Bank will be compelled to cut faster in 2026,' said Mathieu Savary, of BCA Research, who thinks that deflation is the greater danger stalking Europe. The eurozone's rebound has stalled. The growth spurt earlier this year was an illusion of 'tariff front-running'. German industrial output fell 1.9 per cent in June. It is down 4 per cent from a year ago, and 10 per cent below its pre-pandemic level. 'It's a cold shower for our long-held view of a cyclical rebound in German industry,' said Carsten Brzeski, of ING. Brzeski said Germany's Mittelstand family firms cannot blunt the impact of the tariffs by relocating production to the US. These firms have always formed the backbone of the Wirtschaftswunder (or economic miracle). They are being hammered on a second front by China, which has moved up the technology ladder and is now competing toe to toe in third markets, with the help of a suppressed exchange rate. Keynesian rearmament and a blitz of infrastructure spending will eventually lift Germany out of the doldrums. The Merz government is swinging from a primary budget surplus of 2 per cent of GDP to a primary deficit of 2 per cent by 2028. That is a big secular shift in macroeconomic policy, but it remains far away and, in the meantime, France and Italy face fiscal retrenchment. The eurozone has seen a long series of false dawns over recent years. It risks happening again if the European Central Bank continues to sit on its hands as the Wicksellian 'natural' rate of interest plummets. Trump's tariffs on Europe will now ratchet up to 15 per cent. The trade shock amounts to 25 per cent this year when you add in euro appreciation against the dollar, or a de facto 60 per cent shock on metal products. Trump has yet to drop his full pharma bomb. He is talking of 100 per cent tariffs on semiconductors. The market narrative that the worst is over and that stability will come will surely become a collectors' item for historians and students of the capitalist psyche. Nothing is ever stable with Trump. Loading He has just inflicted the biggest trade shock in peacetime since the origins of the modern economy in the 17th Century. He has killed Pax Americana stone dead, destroyed NATO credibility, carpet-bombed the West and smashed the rules-based order to smithereens on every level. Yet asset markets remain insouciantly priced for perfection. What can possibly go wrong?
New Indian Express
2 days ago
- Politics
- New Indian Express
Mind the Trump Gap: Thank you for your attention
The world's oldest democracy has an emblematic motto inscribed on the 'great seal'. Adopted in 1782, it reads 'E pluribus unum'—Latin for 'out of many, one'—symbolising the social compact recognising the rights of the governed. In 2025, under Donald J Trump, the predominance of 'one' over the 'many' is stark and striking. Each of DJT's 200 days in power is a whirlwind of what's next. The atmospherics are somewhat reminiscent of Louis XIV, who declared, "L'état, c'est moi" (The state is me). He too imposed tariffs and partnered with financiers to bolster the French economy. Trump has adopted the Nixonian line on presidential powers. And like Andrew Jackson, Trump leans on the advice of the kitchen cabinet to subjugate the system. In one week, he sacked the Bureau of Labor Statistics chief claiming data was rigged, shunted the chief of the Internal Revenue Service and has wanted to sack Jerome Powell for months. Notice that Trumpian expressions and idiom are tailored for his base—he said the Bank of America CEO Brian Moynihan 'was kissing my ass', nicknamed the US Fed chief Jerome 'too late' Powell, dubbed a Sydney Sweeny ad as the 'hottest' and Taylor Swift 'no longer hot'. The coarseness of language harks to Henry VIII, who infamously called his ex-wife a 'Flanders mare'. As in royal courts, the unprecedented meets with the unexpected and is wrapped in intrigue. Whether you like him or hate him, Trump theatre is here! Here are a few observations on minding the gaps in his gab. And, as Trump says, 'Thank you for your attention to this matter.' By design, Trump occupies headlines with panache for utterances that challenge credulity. His whims and rants trigger sharp views on his cognitive conduct. Following the feud with Canada, Ontario Premier Doug Ford pointedly said, 'I think the cheese slips off the cracker with this guy. He wakes up and even people around him are not sure what he's going to do, or say.'
The National
6 days ago
- Business
- The National
Echoes of Nixon as Trump wages war against reality
It came after the agency revised employment numbers down significantly, reflecting the increasingly weak employment situation in the US. Trump alleged the data was being 'rigged', and said that he wanted a more 'compliant' commissioner. READ MORE: Peer urged UK ministers to crack down on Palestine Action at request of US arms firm Was the data rigged? No. This is absolute rubbish. The BLS's 2000 professional economists swear an oath to the constitution. The agency publishes data on the US economy without political slant or bias. Their work is essential to business planning and investment. For without clarity and credible economic data, CEOs and firms cannot easily plan, grow their businesses and invest for the future. The employment revisions, although large, were not surprising. After all, the massive, globe-spanning, chaotic tariff increases that the White House announced replaced economic strength and calm with widespread worry and indecision. Trump has long had an aversion to facts when they embarrass him. This attack is straight out of the authoritarian's playbook. We have seen this elsewhere before. Do not like the youth unemployment numbers? Stop reporting them (as in China). Do not want people to know the real deaths in a war? Do not report it and deny external reports (as in Russia). Unfortunately, the US also has its own direct alarming antecedent when president Richard Nixon attacked the BLS in 1971, after the staff downplayed a drop in unemployment, ascribing it – correctly – to a statistical quirk. Nixon was infuriated. We can hear his angry reaction on the Nixon tapes. Targeting a particular economist, he raged: 'He's got to be fired ... I gave the order ... it was clear. Didn't I?' Nixon alleged there was a Jewish conspiracy, tasking his chief of staff, Bob Haldeman, and special assistant Fred Malek to identify the offending Jews in the BLS. Nixon targeted the deputy commissioner, assistant commissioner, the chief statistician and the chief economist. The White House fired and reassigned them. Today, Trump is Nixonian in his raging against experts, facts and reality. He wants to bend data to his will, where necessary, change them, or hide them. The president cannot easily silence an entire core statistical agency in its duty to report how the US economy is performing. But this attack shows what to expect as prices rise, the economy slows and tariff-constrained businesses and consumers react. Soon, further upsetting – but real – negative economic data may result in more firings and attacks on experts, agencies and the truth. Sadly, Trump spokespeople, such as Kevin Hassett, chair of the president's National Economic Council, are doing what lackeys and toadies do. Betraying their professional credibility and profession by backing the president's attacks on those simply reporting the data. For shame. Other, more principled American economists are demanding a congressional investigation of this unjust firing. They are right to do so. But a supine Congress will not deliver, despite having confirmed the BLS commissioner overwhelmingly in 2024. READ MORE: It's Scots who should be telling the stories of our country's culture and traditions America is staggering further into authoritarianism. George Orwell would recognise what is happening. Friends and colleagues in Britain should be warned. What happens here can happen to you too. Would prime minister Nigel Farage attack the Office for Budget Responsibility in similar circumstances? Would he fire the leadership? I suspect he would try. Given this danger, the Starmer government should preemptively review and strengthen the independence of key data agencies. Doing so could help buttress the UK's civic state against upcoming onslaughts when they occur. Stuart PM Mackintosh is an economist and writer based in Washington DC
Wall Street Journal
6 days ago
- Business
- Wall Street Journal
Trump's Trade Revolution
While campaigning last year, Donald Trump proposed a 10% universal import tax. Tongue in cheek, I said it was his Nixonian bid to save the global trading order that was already unraveling for reasons larger than Mr. Trump. Instead we're getting 15% and the world hasn't ended. The expected $350 billion revenue take by the government is perhaps half the cost, the other half flowing to the bottom lines of domestic manufacturers that compete with imports. The hit isn't huge when all levels of government already account for $11 trillion, or 37%, of national spending, on top of which are regulations, mandates and tax preferences that mean government ultimately directly or indirectly controls perhaps 50% of spending.
