Trade + Tariffs, Mexico, Brexit, McDonald's, Blue Origin, IKEA

MRD July.png

Trade + Tariffs, Mexico, Brexit, McDonald's, Blue Origin, IKEA

Marc Ross Daily
June 26, 2018
Curation and commentary from Marc A. Ross

Reporting from Alexandria, Virginia

Marc Ross Daily  = Business News at the Intersection of Global Politics + Policy + Profits

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TOP FIVE

✔️ Good politics rarely makes good economics

✔️ Trade War Hits Emerging Markets

✔️ Mexico’s president-elect has much in common with Trump

✔️ Car factories slash investment amid Brexit fears

✔️ McDonald's Seinfeld strategy

ROSS RANT

US voters split on whether tariffs are good for America

When it comes to tariffs and trade - a few campaign rules apply:

1) Where you sit is where you stand

2) Good politics rarely makes good economics

3) China, Brazil, France, Germany, Canada et al. don't have a vote in US elections

4) House elections are more parochial and micro, while Senate elections are broad-minded and macro

Earlier this week, Morning Consult reported thirty-eight percent of registered voters surveyed in the poll said tariffs on Chinese imports would help the US economy, compared to 42 percent who think they’ll hurt the economy. 

In a change of Republican ideology, Republican voters now are more likely to say the tariffs are good for the economy, with 59 percent saying they think they help the United States compared to 36 percent of independents and 21 percent of Democrats.

Regardless of what happens in the coming weeks, trade and tariffs will be an issue on the campaign trail in 2018 and 2020.

The battle between helping some against maximizing for all is the friction point.

Berlin and Beijing know this Amerian political struggle. No doubt teams of political scientists around the world are reading Politico, The Hill, and the Cook Report to determine where tit for tat tariffs will inflict the most pain at the ballot box for Republicans and Trump.

Jamian Ronca Spadavecchia, managing director at the consulting firm Oxbow Advisory and an adjunct professor at Middlebury College, said that the political risks for the administration are likely to be higher if US tariffs contribute to widespread inflation of consumer prices. “The strategy from the other side, whether it’s China or another country, to focus on congressional districts or agricultural products — I don’t know if that’s going to be that effective,” Spadavecchia said in an interview on Tuesday. “China is a big market, but it’s not our only market.”

Sure the tariffs provide a feel-good and sterling campaign trail talking point, but what is the end game?

It is to change business behavior and global commerce imbalances, or is politics for the sake of politics? 

“This is not about a policy,” said Mickey Kantor, the former commerce secretary and a chief trade negotiator for the Clinton administration, in a New York Times article. “This is not about asserting US leadership. It’s about the president having an impulse that if he does this, he will strengthen his base, send a signal to China, and be able to say  he’s been strong and tough.”

The expansion of tit for tat tariffs and reduced international commerce will stunt economic growth. Industries that require global supply chains and cross-border intercompany assembly will be profoundly affected, and pain could be substantial. 

Economists say the tariffs will drive up prices for American consumers purchasing products at retail stores as well as for businesses that depend on China for parts used to make other goods in the United States.

This increase in costs and losing markets is generating local headlines, but the feel-good, standing strong policy (personality) of Team Trump will keep trade and tariffs on the campaign trail in 2018 and 2020.

Plan accordingly.

GEOECONOMICS

Markets fall on tariff spat: Stocks fell the most since early April as Trump's protectionism prompted vows of retaliation from China and Europe, which warned of a global recession. The S&P 500 dropped below its 50-day moving average while the Nasdaq tumbled more than 2 percent on reports the Treasury Department plans to release new rules on Chinese investment in tech companies.

WSJ email alert: Stocks fall as trade-war fears rattle markets: U.S. stocks pared some of their steep early-session declines as a senior trade adviser to President Donald Trump said on CNBC there are “no plans to impose investment restrictions on any countries that are interfering in any way” with the US.

Bloomberg: Goldman, Citi hunker down as trade war hits emerging markets

Pentagon chief to visit China amid South China Sea tensions: AP reports, US Defense Secretary Jim Mattis, who has accused China of “intimidation and coercion” in the South China Sea, visits Beijing this week as the countries increasingly spar over U.S. arms sales to Taiwan and Beijing’s expanding military presence overseas. 

Australia buys giant drones to spy on China: The Times reports, Australia is spending £4.7 billion on massive drones that can fly for up to 30 hours to spy on Beijing’s expansion in the South China Sea.

OTD: 1959 the Queen and Dwight D Eisenhower, the US president, opened the St Lawrence Seaway, linking the Atlantic Ocean with the Great Lakes of North America.

The Times: Car factories slash investment amid Brexit fears

Heathrow expansion
: British parliamentarians have backed plans to build a third runway at London Heathrow airport.

Mexico’s president-elect has much in common with Trump: FT reports, a potentially explosive relationship could well develop into mutual admiration.

AMERICAN POLITICS

US divisions over China trade strategy resurface: FT reports, divisions within the Trump administration over how to prosecute its trade war with China burst into the open again on Monday as plans for new restrictions on Chinese investments in strategic sectors prompted an unusual public disagreement. 

CNBC: Trade advisor Navarro says no plans for investment restrictions on China, other countries

Reuters: Trump officials send mixed signals on China investment curbs, markets sink

WSJ: Trade rift within White House breaks into the open

WP - Robert Samuelson: We’re going to lose this trade war


"Whatever Congress and Trump do won’t be effective unless it’s matched by other major trading countries. Trump either doesn’t realize this or doesn’t care. He’s infuriating the very countries whose support he desperately needs. His policies are more than misguided; they’re backward."

WSJ - Editorial: Trump rides a Harley—to Europe: Trump’s trade war has been an abstraction for most Americans so far, but the retaliation has now begun in earnest and the casualties are starting to mount. The President’s beloved stock market took another header Monday on news of more restrictions on investment into the U.S., and the Dow Jones Industrial Average is now down for 2018. But the biggest losers Monday were the American workers who make Harley-Davidson motorcycles whose jobs will soon be headed overseas thanks to the Trump tariffs. 

"Good luck to Republicans running on the Trump tariffs in November."

The great soybean conspiracy: Paul Krugman writes in the NYT, the Trump administration appears to be headed for a trade war on three fronts. As far as anyone can tell, it is simultaneously going to take on China, the European Union and our partners in the North American Free Trade Agreement. The economic fallout will be ugly.

Soybeans now below $900 per bushel.

Today: The White House is hosting a STEM Education Summit for state and federal leaders

California is spending $100 million upfront and $20 million a year on a new statewide online community college.

Election 2018: Colorado, Maryland, New York, Oklahoma, and Utah will hold primary elections today, while South Carolina and Mississippi will hold primary runoffs.

NYT: Sean Spicer is testing out a new job: TV talk show host

"Think 'Washington Week' meets Jerry Seinfeld's 'Comedians in Cars Getting Coffee'" 

ENTERPRISE

Blue Origin to start selling private space flights in 2019.

Today: Walgreens officially replaces GE in the Dow

Barton 1792 Distillery is in crisis after one of its Kentucky warehouses collapsed, containing 20k barrels of bourbon.

Lime introduced its electric scooters in Paris. 

YouTube hires Derek Blasberg to lead new fashion and beauty partnerships division.

Don't leave home without it: The Supreme Court ruled that government antitrust enforcers have not proven that American Express’s card rules for merchants are anticompetitive, a major victory for the company that puts its business model on solid legal ground.

Instagram is estimated to be worth more than $100 billion.

Whole Foods will offer a 10% discount for Amazon Prime members at its nearly 500 stores. Prime members will be able to use the discount at checkout either through the Whole Foods app or by providing their phone number.

IKEA's first store in India will open next month with a 1,000-seat restaurant, but the menu won't include the retailer's iconic Swedish meatballs. Instead, the on-site eatery will cater to local tastes with chicken and vegetarian meatballs, samosas and traditional Indian dishes such as dal makhani.

Inside Ford’s plan to remake Detroit–and itselfhttp://bit.ly/2tAOekD

McDonald's Seinfeld strategy: in the Baltimore area, McDonald’s tried offering coffee cake and 160-calorie blueberry muffin tops. Selling only the upper part of the muffin was an idea hatched by Elaine Benes, the hapless “Seinfeld” character played by Julia Louis-Dreyfus. 

prah gains 1,400% in stock bet: The media mogul’s shares in Weight Watchers have risen from $7 to $101 per share.

TRENDS

Aspen Ideas Festival runs all week in Colorado.

CEO pay: The median pay for CEOs in the media and telecoms industry last year was $28.7 million, more than double the median pay of chief execs of the S&P 500

The most expensive cities for expats: Hong Kong, Tokyo, Zurich, Singapore, and Seoul

CULTURE

330 = The number of certified Parmigiano cheese makers in Italy

20 Ski towns that are just as spectacular in the summerhttp://bit.ly/2tBzSQU

SOTD

Mondo Cozmo - Plastic Soul https://goo.gl/6MMwC7

SPORT

OTD: In 1906 the first motor-racing grand prix took place at Le Mans, France

HBD: Greg LeMond, the three-time winner of the Tour de France (1986, 1989, 1990), 57

FT: Argentina’s ‘worst team in history’ looks for the real Messi

World Cup matches today:

Matchday 3 of 3

Australia v Peru @ 10:00 am ET

Denmark v France @ 10:00 am ET

Nigeria v Argentina @ 2:00 pm ET

Iceland v Croatia @ 2:00 pm ET


World Cup teams qualified for the knockout stage (Sweet Sixteen) so far:

Russia
Uruguay
France
Croatia
England
Belgium
Spain
Portugal


World Cup teams that will not advance to the knockout stage so far:

Egypt
Saudi Arabia
Morocco
Peru
Costa Rica
Tunisia
Panama
Poland
Iran


World Cup 2018, leading goal scorers:

Harry Kane: 5
Cristiano Ronaldo: 4
Romelu Lukaku: 4
Denis Cheryshev: 3
Diego Costa: 3
Ahmed Musa: 2
Artem Dzyuba: 2
Mile Jedinak: 2
Luka Modric: 2
Eden Hazard: 2
Philippe Coutinho: 2
John Stones: 2