The Never-Ending Blip

On July 9, 2018, almost exactly a year ago, reader CoRev wrote:

Those of us arguing against the constant anti-tariff, anti-Trump dialogs have noted this will probably be a price blip lasting until US/Chinese negotiations end. We are on record saying the prices will be back approaching last year’s harvest season prices.

Yesterday, from Modern Farmer, “China Stops Buying US Agricultural Products Entirely: This is…very bad“:

The latest escalation of the Trump-China trade war has led to an iron door slamming shut.

On Tuesday, the Chinese Commerce Ministry announced that China will no longer be buying American agricultural products, a decision with huge, wide-ranging implications. Zippy Duvall, president of the normally conservative-leaning American Farm Bureau, called the decision a “body blow” to American agriculture.

September futures are 870 as of today (1:15pm). On 3/22/2018 (the announcement of the Section 301), the closing price was 1030.




30 thoughts on “The Never-Ending Blip

    1. pgl

      The weather has been BAD I’m telling you. Now what do I mean by BAD? I’ll leave that to the expert on everything – CoRev!

  1. pgl

    Checking with Census on what food products we export to China:

    Taking the codes starting with “0”, it seems we exported $18.3 billion in 2017 (MSNBC said $19.5 billion) but this total dropped to only $8.1 billion in 2018 (MMSNBC said $9.1 billion). Not sure where MSNBC got their numbers but it does seem we had a $10 billion reduction in total food exports to China from 2017 to 2018. Soybeans dominated 2017 exports and the drop in soybean exports was most of this decline.

    But Trevor Noah says worry not. Oprah is encouraging her viewers to eat lots of soybeans!

  2. pgl

    Trump presses Fed to weaken dollar

    ‘President Donald Trump on Thursday called on the Federal Reserve to take steps to weaken the U.S. dollar — a move that would make American exports more competitive in world markets while increasing prices on imported goods. “As your President, one would think that I would be thrilled with our very strong dollar. I am not!,” Trump wrote in a series of tweets. “The Fed’s high interest rate level, in comparison to other countries, is keeping the dollar high, making it more difficult for our great manufacturers like Caterpillar, Boeing … John Deere, our car companies, & others, to compete on a level playing field.” Trump’s comment break with a long tradition of presidents expressing public support for a strong dollar, which helps keep inflation low and has other advantages, even though it hurts exports. His comments also come just days after Treasury Secretary Steven Mnuchin formally declared China to be a “currency manipulator” under U.S. law because the People’s Bank of China let the yuan weaken beyond 7 to the dollar for the first time in over a decade. The Treasury Department said it was clear China had acted “to gain an unfair competitive advantage in international trade,” a charge that Beijing denied.’

    Of course the four former FED chairs argue the case for an independent FED:

  3. noneconomist

    Maybe the blip was actually a North Korean rocket accidentally fired after North Korea agreed to “denuclearize.”

  4. Lord

    Trump is just preparing them for climate change. Then it will be supply shortage instead of demand shortage.

  5. Moses Herzog

    Recently I’ve seen—what I would term a mild reaction from farmers (on the internet in the last 5 days or so)—but although a mild reaction, stronger than USA farmers have reacted up to this point. USA farmers must feel hellishly confident that they are going to get their socialist welfare checks from donald trump’s USDA. Now that USA farmers are proud socialists that get socialist welfare checks from MAGA central-planners, are we going to see them with Chairman Mao rear view mirror pendants in their tractors and machine harvesters??!!2041550471.jpg

    It appears that all it is missing, is the large gold leaf print acronym of MAGA right above Chairman Mao’s head.

    1. Moses Herzog

      The apparently inoperable link in the above comment is just a cute image to add a little window dressing to my cutesy comment. Not sure why the link didn’t seem to work—if you copy it and put it in a browser you can see the image—though most likely your life will go on not seeing it.

    1. pgl

      Lots of openings for the position of USDA economist – the Usual Suspects should send in their resume as I hear CoRev will be the new chief agricultural economist. Doesn’t every MAGA wearing “economist” want to work for CoRev?!

    1. pgl

      ‘In a May 2018 episode of a white nationalist podcast, Gebert, speaking under a pseudonym, called for white people to establish “a country of our own with nukes, and we will retake this thing lickety split,” according to the SPLC report. “We need a country founded for white people with a nuclear deterrent. And you watch how the world trembles”.’

      OK – he was using a pseudonym to obscure his advocacy and yet stay in the State Department. Now we know Stephen Miller likely wants people like this in the government but now that he has been outed, he has become useless to Team Trump.

    2. Willie

      The article says he was hired in 2013. Obama was still POTUS at the time. MAGA hadn’t been dreamed up yet. Just to be completely accurate here. There’s no need to embellish. It’s probably the change in political climate that let this slime slither out from under a rock and show his true colors in public. But, he’s not there as a result of Trump hiring policies or criteria unless I misread something.

      1. Moses Herzog

        @ Willie
        I wasn’t attempting to “embellish”. It was a failure in thorough reading on my part. Your overall point is valid, taken, and I am sorry for my mistake.

    3. Moses Herzog

      I should apologize for my error in fact here. It appears Gebert actually joined the U.S. State Department in 2013 before donald trump was in office. You’ll hopefully excuse me for assuming he came in under the donald trump administration. But we will try to stick to the FACTS here. I apologize for my sloppy and lazy error.

      1. pgl

        I doubt anyone in the Obama Administration knew about this fellow’s racist views. He was keeping them secret even after Trump became President. And it is a good thing he is gone.

  6. Willie

    Bill McBride is officially not on recession watch, but noted that the likelihood is higher now.

  7. Dwight L. Cramer

    well, we’ve got our trade war, I guess. Just the Phony War phase so far, of course. I’m sure it will heat up and the pain will be felt before it’s all over. And, for sure, these things are harder to end than they are to start.

    On a less philosophical and more legalistic note, I thought the Fed’s mandate was limited to: (a) fighting inflation, (b) promoting full employment and (c) regulating its member banks. What legal basis does it have to take actions in support the president’s trade policy?

    1. Moses Herzog

      I agree with your opinion, strongly implied by your ending question. I think Menzie believes Powell to be mostly trustworthy (making his decisions purely based on economic conditions). I pretty strongly disagree with this, and find Powell to be completely untrustworthy in those regards. It is STILL debatable though, and I go more by “gut” and using my own “perceptiveness” and Menzie goes more by empirical fact and a lot of numbers he understands on a much deeper level than me. I think as of now, the preponderance of evidence supports Menzie’s view more than mine. My problem is when you have GDP over 2%, rate cuts, and trade policy moves 24 hours after rate cuts, what is actually happening here?? Right now traders are betting very strongly there would be another rate cut in Mid-September, and I think that will indeed happen—without knowing real GDP and doing what?? Using “NOWcasts”?? On what are they going to base the next rate cut on?? Menzie says himself the Fed Funds futures market provides the best lens on rate moves.

      Everything about Powell screams “I take marching orders as to what society tells me my ‘duties’ are on my job”. Powell has no ability to look at the point in history he is at and that he is becoming a conduit for bad trade policy, easily manipulated by donald trump. So you can bet the bank donald trump is going to get his rate cut in September—which is the REAL reason he chose Jerome Powell, he surrounds himself with people who can be manipulated like small children.

      1. baffling

        there is a reason trump would never appoint a bernanke or yellen. he understands he cannot put an idiot into the chair position, but that doesn’t mean he can’t put somebody their who he is confident can be sweet talked/bullied into a particular action. that is powell. he is no dummy. but he does not have the spine to do the right thing and take the heat. trump will put others on the board who will help to push the chair into those positions. the trump fed is no longer a politically independent institution. powell may talk like he is independent, but his actions show otherwise. this spells trouble in the longer term.

      2. Barkley Rosser

        Powell does not control the FOMC. The key person to watch is Jim Bullard, St. Louis Fed prez, longtime swing vote on it and an d an important intellectual influence on it as well, and this matters. He has recently suggested possibly one more rate cut later this year depedning on the data. He is not Trump’s flunky.

        1. Moses Herzog

          @ Barkley Junior
          Bullard does seem to have an UNBELIEVABLE ability to sway the FOMC. /sarc Any Barkley Junior patented theories on how he does that??

          Wow, your special talent at reading the Fed seems to match your deep knowledge on the Chinese Government Politburo. Does this have any relation to the FBI coming after you, after you were caught sneaking in a Howard Johnson’s made breakfast into MLK at his Birmingham jail cell??

          1. Barkley Rosser

            That was June, MH. Now they have followed his call, but not Trump’s, who wanted a half point cut and a call for a whole bunch more cuts later this year. Look for maybe one more later this year as Bullard is calling for, but not more.

          2. Barkley Rosser

            BTW, Moses, I would suggest that you really need to check something out here. The number of people here who join you in your name calling and ongoing silly slams against me is a big fat zero. You are utterly alone in all this ranting and raving. The one exceptoin was when you falsely accused me of lying about that poll in Iowa, and CoRev cited you as supporting him because he was also falsely accusing me of lying, in that case about the role of my late father in the space program. So, the only time you had anybody here ever supporting you at all on anything against me was CoRev when both of you were falsely accusing me of lying, with you both sharing an inability to apologized for being so wrong, as well as so badly behaved.

            Again, I offer peace, but maybe somehow it is very important and meaningful for you to continue to make completely false statements about things like probability distributions in a continuing failed effort to show what a no good guy I am. Does this all this lying and name calling make you feel good when you look at yourself in the mirror, Moses? Really?

    2. Willie

      No basis. Which is why they should do nothing to support or otherwise affect the consequences of trade policy.

  8. ooe

    the economy will be in recession by fall. the ism manufacturing and the non-manufacturing numbers do not lie. Also, the Corporate press was denying the Dec 2007 for 8 months. The spin was the then-low dollar and the checks that Bush sent in the summer would save the U.S. economy from recession. The bond traders know the jig up. See the curve inversion.

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