E Market Briefing For Monday, June 3

A 'disruption in the Force' expedited a fast-as-a-light-sabre S&P decline Friday; initially right to our 2750 target we've held for weeks. While we have expected the brief consolidation to give way to decline; the methodology of the President's efforts were challenged last night; and now we hear some of the White House advisors were opposed to using tariffs in this manner.  

For sure this is a mixed-metaphor application of tariffs; and reinforces much of the foreign assessments questioning the reliability of agreements with the present Administration. However, it's important that Mexico's President, this morning, indicated not just a soft stance, but similar opinions about all those migrants coming from Central America. The question is; can he stop it?

  Notable:

  • North America effectively 'is' an integrated economy these days; and although my sentiments for ('Made in the U.S.A.') resonated for more than a couple decades, the reality is we have an integrated economy;
  • My suspicion is (although I was initially more optimistic about a trade deal with China by now) that Mexico and the U.S. must cooperate on stemming the flow of Central American migrants (and accordingly the asylum process too);
  • The U.S. Chamber of Commerce threat to sue the White House over this resonates as well;recalling prior remarks that they represent 'large multinational business interests', more than domestic small business;
  • Nevertheless, the 'supply chain is so integrated', and after neglect by our politicians for so many years, it's harder to rearrange this aspect of supply chain flow (including agriculture) then even the China issue; so reluctantly we have to concur with the disruptions the tariffs would have right after the lifting of Steel & Aluminum tariffs; ahead of the 'vote';
  • Most of the reaction to this is properly dramatic, because the proposed tariffs are all-encompassing, which was not the case for China;
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Gary Anderson 2 months ago Contributor's comment

Very thoughtful article. Mexico wants a belt and road type project for central America. Trump rejects it. He loathes anything south of the USA border. But he wants Mexico to create a humanitarian crisis on its border. Trump would like everyone south of the border to starve and die. I am convinced of it. He is a freak. And the world will pay for this freak sooner than later.