US stocks had another solid session overnight, pushing the S&P 500 to another all time high. The catalyst for the latest surge was the signing of a new trade agreement between the US and Mexico.
This sees Trump deliver on a key 2016 election promise to re-work trade deals that are more favourable to the US. Here are the key points of this one, courtesy of The Financial Review:
‘The most striking feature is that it would rework a key chapter of NAFTA by ensuring more cars are built within the trading block using locally-produced raw materials and at a wage rate that doesn’t undercut US workers.
‘New terms mean 75 per cent of an automobile’s value would need to be manufactured in North America, up from NAFTA’s current level of 62.5 per cent, and would require 40 per cent to 45 per cent of the car to be made by workers earning at least $US16 an hour, Reuters reported. There are also provisions on the quantity of American steel and aluminium that must be used.’
The signing of the deal now puts pressure on Canada, formerly part of the NAFTA trade agreement between the three countries.
In short, the deal is a win for the US. And as mentioned above, the market certainly liked it. The S&P is at new highs (see chart below), as is the NASDAQ. However the other major index, the Dow Jones Industrials, hasn’t come along for the ride. It’s still languishing below its all-time highs reached in January.
So keep your eye on the Dow and see if it can follow the leaders…
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Is Hilary Clinton framing Trump?
With the US economy humming and stocks trading at or near all-time highs, why is Trump still such a maligned figure?
As I pointed out last week, in order to understand the media’s treatment of Trump, you have to see it through the lens of what he campaigned on. Then it all becomes clear. If you haven’t already seen it, watch this video.
This is Trump taking it to the establishment. And now they are fighting back.
Let me explain…
Remember a few weeks ago I told you the US political scene is heating up? It’s all related to the US mid-term elections coming up in November. The Democrats ARE the establishment. They’re led by Hillary Clinton. They want to get the numbers and impeach Trump.
And they’re doing this with the media’s help. For a long time now, there has been an ongoing investigation into Trump’s alleged collusion with Russia to rig the US election in 2016.
The only problem is, there is no evidence to support this claim. When you go down the rabbit hole, the evidence increasingly supports a concerted effort to frame Trump, which is shocking.
For example, the ‘Steele Dossier’ (that supposedly proves Trump’s collusion with the Russians) was put together by Fusion GPS, a research firm hired by Clinton to ‘investigate’ Trump’s dealings with Russia. It has holes all through it. And they know it.
So now they’re getting desperate. Last week, Trump’s associates Paul Manafort and Michael Cohen were in the headlines. Manafort was charged with tax fraud from years ago and Cohen took a plea deal to wriggle out of his tax issues and implicate Trump in a campaign finance issue. This article has more details if you’re interested.
Following this ‘news’, the calls to impeach Trump grew louder. The Dems want him out.
Why would Hilary Clinton frame Trump?
Why? Because Trump represents the biggest threat to the establishment in history. Or at least since JFK…
He is an existential threat to the current corrupt political structure in the US.
But the impeachment calls died down pretty quickly. There really wasn’t a case.
Now, here’s where it gets interesting. Who did Cohen hire to represent him? Lanny Davis, a long time Clinton lawyer! In late July, CNN reported that Cohen had heard Donald Trump Jr tell Donald Sr about an offer to meet with a group of Russians who had dirt on Hillary Clinton.
Evidence of collusion, it would seem…
But wait. Last week, Lanny Davis said that Cohen had no information about the meeting, and that the previous statements were false. He also said the information contained in the Steele Dossier about Cohen was false!
Why would he say that?
Perhaps he knows that under investigation it won’t stand up. And the real motive is to inject a narrative into the mainstream media (the initial story) that paints Trump as the bad guy — all for the purpose of swaying the election result in November.
If so, this is extraordinary. But judging by the market’s reaction, the Dem’s plan is failing. Stocks are at all time highs. If there were genuine concern about an impeachment, you’d see stocks trading far more cautiously.
Why is this important for Australia? Because where US stocks go, Aussie stocks generally follow. And increased US political instability would not be good for the market.
But don’t expect the establishment to give up without an ongoing fight. The attacks on Trump will continue right up until the mid-term elections. It’s the last chance they have to stop Trump ‘draining the swamp’.
Having said that, there is no doubt Trump’s team has plenty of ammunition to fight with too. It’s a war, and it’s going to get ugly.
Remember, the first casualty of war is the truth. Keep this in mind when reading the mainstream media…that’s if you still bother with it.
The important thing to do is view the war through the correct framework. And that framework is that Trump is trying to bring an end to the systemic corruption that exists in Washington DC, and stop its tentacles spreading even further across the US.
Editor, Crisis & Opportunity
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