Chinese trade tariff tiff will melt in August heat

We are in the midst of summer doldrums. Markets reading tariff headlines and reacting to mounting trade war.

I prefer to call it a trade tariff tiff, since it’s all blather as no country will stop trading with the US. While the markets reeled over the newest $200B in tariff against China, this will not be enacted until mid-August, so there is plenty of wiggle room for it to work out prior to the deadline.

The markets seem to agree with this premise since on Thursday stocks are retracing back almost 90% of Wednesday’s loses.

Short post today as there is little else going on.

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It’s about time we have a president to take EU to task over NATO spending

I have to tell you again, that it is so refreshing to have a president go over to the EU and call them out for their hypocrisy.

Case in point: The US pays on average 67% of NATO’s defense spending and where is a majority of that spending still directed too? Defending the EU against Russian aggression.

In 2017, NATO countries contributed $917 billion for defense, the US portion of that bill was $618 billion. Only three EU members contributed the recommended level of 2% of GDP to the alliance. Greece, UK and Estonia along with the US, which chipped in the most with almost 3.6% of our GDP.

Germany’s Angela Merkel was in President Trump’s sights over their energy spending with Russia.

“Germany, as far as I’m concerned, is captive to Russia because it’s getting so much of its energy from Russia,” Trump said. Turning to Jens Stoltenberg, the NATO secretary-general, he said: “Explain that.”

“We’re supposed to be guarding against Russia and Germany goes out and pays billions and billions of dollars a year to Russia.”

If Germany wants to do an energy deal with Russia, then that’s probably a bigger deterrent to hostilities then lining up tanks on the Crimea border. But don’t thumb your nose at US energy companies and then expect Americans to pay for your ease of mind.

Listen allies are one thing and surely if any act of aggression took place on the continent the US would come to their defense. But NATO is a Cold War relic, designed to syphon money from the US to Europe in a 60-year extended Marshall Plan.

If the Europeans and Germans in particular, are so concerned for their safety, then why is Germany only spending 1.2% of its GDP on NATO defense. Because it’s a ruse, a relic and no longer needed in this day and age.

And it’s about time we have a president to hammer that home to Europe.

Deutsche Bank brings in Zames to help right the ship

Deutsche Bank — in a broadening effort to keep the lights on in its US operations — has agreed to work with NY-based private equity firm Cerberus Capital Management to explore options as a paid advisor.

Cerberus President Matt Zames — once considered by Deutsche to be on short list to replace ex-CEO Jon Cryon and is formerly a C-Suite executive from JPMorgan — is leading the project.

Cerberus holds roughly a 3% stake in Deutsche and a 5% stake in rival German bank Commerzbank. Talk was earlier this year that the two firms should form an alliance since their core businesses have differing strengths. DB on the corporate side and Commerzbank on the retail side in Germany.

New CEO Christian Sewing is struggling to find a palatable solution to the free fall stock price while not retreating from the US.

While neither party is talking merger at this time, Cerberus could push the boards together since PE firms usually have a shorter investment timeline to turn a profit. Shares of Deutsche are off 40% over the last 12 months and is trading at $11.54 here in the US.

 

The left’s protests are heating up and how Republicans should respond

As I wrote last week we are in dangerous times as liberal activists — feeling emboldened — continue to confront Republicans in public.

The continuation of public face offs will not end well for America. Escalation of the confrontations will take it to a threat level that will bring the country to a boil.

News coming out of Washington DC this month is said to be — by sources — earth-shattering to the status quo. So this animosity between the left and right — as a simplification of the participants — will only get more heated and perhaps violent.

While Republican Senate Majority Leader Mitch McConnell was confronted outside a restaurant over the weekend with just chants to abolish ICE in his home state of Kentucky, it is at least the second time he has been involved in a face-to-face showdown with activists.

One protestor shouted: “We know where you live, Mitch! We know where you live,” which should be a stern warning to McConnell’s protection detail and other Republicans that there are people out there who may wish to recreate the shooting of Republican lawmakers on the baseball field in Maryland.

The ultra left-wing of America feels like it has been losing every important battle since the 2016 presidential election and their blood is boiling. Contempt for President Trump and all things Republican is running so high that something big may happen to rock them to their core.

But before that happens, let’s hope the protestors keep to chanting and not take it to the next level. I believe releasing the unredacted Justice Department’s investigation into what the FBI’s actions were during and after the 2016 election would go a long way to showing the level of corruption from the left’s power center.

JPM’s Dimon eyeing Deutsche with Chinese cash

Is Jamie Dimon looking to goose-step into Frankfurt and take over troubled Deutsche Bank using Chinese money?

That appears to be to the story coming out of Germany as Deutsche’s stock spikes more than 6% in European trading on the news.

JPMorgan and Industrial and Commercial Bank of China are looking to take a stake — size unknown –to bolster the troubled bank, the report from the business weekly WirtschaftsWoche said.

WIWO also reported that German Chancellor Angela Merkel had met Axel Weber, the former Bundesbank head who is now chairman of Swiss bank UBS, to discuss his thoughts on Deutsche Bank.

Newly installed CEO Christian Sewing has not given the market any confidence in his ability to turn around the much maligned institution, which has paid nearly $500 billion in penalties and fines to global regulators for its bad banking actions over the last decade.

Sewing is also seen as an impediment to change since he made his bones at the bank during this troubling time as I have written before.

Before the summer ends something will happen with Deutsche Bank. Whether that’s a merger with fellow-troubled German firm Commerzbank or a bailout through cash injections from EU this bank right now is on the ropes and getting pummelled.