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“We Understand The Chinese Government Has Halted Purchases Of US Treasuries”: SGH [1]
Summary Report
On Friday [6th Apr], we reported that among the five “nuclear” options available to Beijing to retaliate against Trump’s latest $100BN in proposed import tariffs, was the choice whether to sell US Treasuries.
But what if Beijing did not want to unleash a full-blown market nuke, and instead was hoping for a targeted, EMP hit?
Then it would simply stop buying US paper, instead of dumping it outright; in the process it wouldn’t hurt the US too much – avoiding a furious tit-for-tat response – but would still send a clear signal to the White House, whose fiscal spending plan will more than double net Treasury issuance this year from under $500BN to over $1 trillion, and which needs every possible marginal buyer of US paper, both domestic and foreign.
Which is precisely what a new report by SGH Macro Advisors claims.
According to the consultancy, a long-time favorite of macro hedge funds, Beijing has twice threatened deliberately targeted tit-for-tat punitive measures against the US to date: “first, in response to the Trump Administration’s threat of steel and aluminum tariffs, and second, in response to broader measures aimed at $50 billion of products that lie directly at the heart of Chinese technology transfers, intellectual property violations, and strategic, “Made in China 2025” plan.”
But even as US cabinet officials lined up yesterday to calm jittery equity markets, SGH says in a note released over the weekend that “China had already signaled an aggressive and potentially more ominous escalation in the developing trade wars to the White House”:
From what we understand, the Chinese government has halted its purchases of US Treasuries. Despite the direct encouragement, according to Chinese sources, by US Treasury Secretary Steve Mnuchin for China to “stay put,” Beijing has apparently discontinued purchases of US Treasuries “for the past few weeks.
The measures announced on Wednesday by China in response to the formal release by the White House of US Trade Representative Robert Lighthizer’s list of potential targets subject to an additional tariff was a direct tit for tat in magnitude, as well as in timing, of the threat of 25% tariffs covering $50 billion worth of exports from China.
It was, furthermore, intended as a “precision blow,” targeted at the heart of President Trump’s political base.
In an executive meeting chaired by Premier Li Keqiang on Wednesday morning, Beijing time, China’s State Council decided to threaten actions with China’s own list of 106 products in 14 categories of American products worth $50 billion, including automobiles, aircraft, chemical products, soybean, corn, sorghum, and cotton.
At the meeting, and in subsequent statements to the public, participants stressed that the aim of the trade retaliation was to make Trump feel real political pain, and to warn him against launching a head-on “trade war” with China. And, as we had expected, the main targets of trade retaliation were, by design, geographically aimed at the Rust Belt and agricultural states that strongly supported Trump in the 2016 elections.
Premier Li, from what we understand, is said to have characterized these measures as “a precision blow” to punish Trump, but he furthermore went on to add that the objective is not to engage in a trade war with the US, but rather to force the Trump Administration to conduct “equal-footing consultations and negotiations” with China on bilateral trade disputes.
Beijing’s Eye on November, and 2020
Beijing has studied closely the US political landscape and aimed its latest measures directly at American farmers and workers who they believe, correctly or not, are Trump’s main source of support.
It has not gone unnoticed in Beijing that the American farm and agricultural sector and workers are already feeling the heat, and running advertisements on TV in opposition of a “trade war.”
The Rust Belt vote could swing either way, but without the support of the farm and agricultural demographic, Chinese sources believe, Trump would struggle to win the 2020 presidential elections. At least that is the desired effect – if all goes wrong for China.
Full report
[1] https://www.zerohedge.com/news/2018-04-09/we-understand-chinese-government-has-halted-purchases-us-treasuries-sghIf voting results are ignored, do not bother with petitions. The only thing that signing a petition will do will be signing you own future arrest warrant.
Voting doesn’t send a message when you are one of the 49% whose rights are being trampled by the 51%.
Recent voting trends has sent the right message from the people to the establishments. The problem is the response by the establishments. Brexit, the election of President Trump, the current election treads in Hungary and other places, has made it clear the peoples of the world want freedom.
The response by the establishment across the globe is the establish has not be brutal enough towards the peoples of the world and the people need to be completely disarmed and stripped of their freedom.
First example, California state government is now working towards open censorship: http://www.thegatewaypundit.com/2018/04/it-begins-california-senator-introduces-bill-to-kill-free-speech-requires-state-sanctioned-fact-checkers-to-approve-online-content/
Since the anti-gun movement go into gear a few months ago, the response has been record gun sales: http://www.thegatewaypundit.com/2018/04/gun-sales-soar-in-march-as-top-democrats-continue-push-to-end-second-amendment-rights/
The world is heading towards multiple rebellions due to those in power refusing to listen to the people and instead abuse the people for the people daring to want a better future for themselves.
James Woods is correct on liberals:
The progressives, SJWs, liberals, globalists, establishment have lost the debate, they have no defense for their beliefs, and in response they are full fascist on the peoples of the world.
http://www.leavemeansleave.eu
Well Trump said he would attack after these latest chemical false flags blamed on Assad.
http://www.leavemeansleave.eu
Anonymous
Anonymous“Update: confusion, of course. According to Syria’s TV channels, there has been an “aggression on T4 airfield with several strikes, likely to be by the US”. Meanwhile Pentagon officials deny any US involvement.
SENIOR U.S OFFICIAL SAYS NO TRUTH TO REPORTS OF ANY U.S. STRIKES AGAINST ASSAD BASES IN SYRIA
BREAKING: U.S. officials: The United States is not carrying out airstrikes in Syria— The Associated Press (@AP) April 9, 2018
Which suggests that Israel (and/or France) may have taken the initiative to bomb Syria on its (their) own, although it is unclear if with or without Trump’s blessing:”The World is about to be set on fire. My money is on israel doing it. Btw, whatever happened to proof and evidence prior to execution?
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