President Trump's European Wrecking-Ball Tour

* See UPDATES below...

THE FALLOUT

One month after sabotaging the G7 meeting with his refusal to endorse the Joint Statement that was released (with which he originally agreed), President Trump met with NATO allies last week and, subsequently, British Prime Minister May, and criticized all of those world leaders in one way or another (he also rudely kept 92-year old Queen Elizabeth waiting in the heat for her meeting with him), he then met with Russian President Putin, long considered a foe of the U.S., and publicly failed to hold him accountable for meddling in the 2016 election. Instead he praised him at a press conference immediately following their meeting yesterday...as illustrated in the following video.

Furthermore, he played a victim (in front of his adversary) with his denials and accusations surrounding his election, which made him appear as a weak and pathetic whiner...rather than as a commander-in-chief of the most powerful country in the world. Hillary Clinton continues to play a victim, but she lost her presidential bid...Trump did not, but acts as though he did.

Even long-time Trump ally, former Republican Speaker of the House, Newt Gingrich, was critical of his performance...

For an interesting take on that press conference, check out this article by former Chief Assistant U.S. Attorney, Andrew McCarthy.

President Trump's damage-control statement that he made today failed to believably rectify his many blunders, nor did it assuage the gravity of his entire fawning posture on full display towards Mr. Putin at this press conference. Today's explanation (where he changed one word, "would" to "wouldn't"), unequivocally, did not fit the context in which his original statement was delivered (it's clear from his statements made just prior to and after the word, "would," that what he originally said at the press conference was what he did, in fact, intend to say)...nor did it excuse the entirety of his self-damaging remarks he made yesterday.

Muted U.S. Market Reaction Post-U.S./NOKO Summit

* See UPDATE below...

U.S./NOKO SUMMIT

Further to my article of June 3 (and my many follow-up comments/updates), I'm left wondering what planet I'm living on after witnessing a get-together with President Trump and Chairman Kim in Singapore last night.

At the conclusion of their meeting they signed a rather sketchy Joint Statement, which can be read in full here (part of it is shown below). Apparently it's not even as strong as past statements signed by previous U.S. Presidents and NOKO leaders.

We'll see where things develop in the future.

Excerpt from the Trump-Kim Singapore Summit Joint Statement

During brief comments to the press in several breaks throughout the summit and at his subsequent press conference, Mr. Trump was full of flattering remarks about Mr. Kim, while in the same breath, he continued to disparage his allies, especially PM Trudeau...his 'punching bag du jour.' He shouldn't be surprised that America's trading partners would retaliate with their own tariffs in response to his...he knows full well that they have their own countries' interests to protect and will do so, regardless of his personal opinions about them.

I got a kick out of this analysis of his post-summit remarks by CNN. World-wide responses to the summit and agreement are mixed.

Really???...NOT if he treats them like he did Otto Warmbier

(whose parents are suing NOKO for torturing and murdering their son)!

President Trump ends military drills with South Korea, calling them "provocative war games"...a description normally used in propaganda by your opponents.

Seriously?...He continued with his erratic and odd behaviour as he delivered threats to punish Canadians for PM Trudeau's retaliatory tariffs through snarling teeth and with scolding finger-wagging gestures...this came only hours after publicly scoring his relationship with Trudeau as a 'ten' in his press conference that immediately followed the G7 summit. So far, Mr. Trudeau has taken the high road and has refrained from engaging in such pejorative attacks, with the full backing of Canadians...I wonder if Mr. Trump has the full backing of Americans.

And, does this now mean that he will 'feel foolish' again if he's compelled to use tough rhetoric in the future on Kim...or, now that he's exposed this character weakness for Kim and the world to witness, will he continue with his over-the-top flattery of him no matter what?

Who can now take him seriously when he lashes out and uses harsh language with anyone?

MUTED U.S. MARKET REACTION

Meanwhile, U.S. futures markets were muted overnight in their reaction to this news and are slightly up as of 12:00 noon ET today.

If President Trump continues with his steel and aluminum tariffs, and implements additional ones as he's already threatened to do, we'll see how a world-wide trade war impacts inflation and how quickly Central Bankers then raise interest rates (or dispatch further monetary QE measures) to combat that effect.

That may have more effect on markets than future talks with NOKO.

FINAL THOUGHTS

So, will common sense prevail when it comes to President Trump, allies, and trade wars? Do actual (correct and proportional) facts matter to Mr. Trump? We'll see...for the time being he's cozying up to NOKO, China (ZTE) and Russia (inviting them back to rejoin the G7, which was NOT supported by G6 leaders).

* UPDATE June 13...

A slightly more hawkish tone was present in today's FOMC press release regarding future U.S. interest rate increases, including two more for this year...(click here for Fed meeting calendars, statements and minutes). Of note in Chairman Powell's press conference was his announcement that he will hold a press briefing after every Fed meeting beginning in January of next year.

How U.S. Major Indices closed today...

President Trump: Not A Proven Win-Win International Political Deal Maker

* See UPDATES below...

A NO-WIN FOREIGN POLICY

It's clear that President Trump's "America First" policy does not produce a "win-win" outcome for it and other world trading partners...at least, it has not been proven, yet.

So far, he's only been successful in tearing up prior agreements related to the Trans Pacific Partnership, the Paris Climate Agreement, the Iran JCPOA, and has threatened to tear up the NAFTA with Canada and Mexico (see this Global News article: "Reality check: No, the U.S. doesn't have a $17B trade deficit with Canada"..."So the real trade balance with Canada is positive in the U.S.'s favour"...to the tune of "around US$12 billion") as reported by both Statistics Canada and the Office of the United States Trade Representative.

Although he is in current trade talks with China, he has not been successful in negotiating a new trade agreement with Canada and Mexico, nor has he been successful in negotiating any other bi-lateral or multi-lateral agreement that I'm aware of, including a peace agreement between Israel and the Palestinians.

In fact, he has exacerbated tensions in current NAFTA negotiations by slapping hefty and punitive steel and aluminum tariffs on these two closest trading allies, as well as on the European Union...under the guise of "national security" concerns.

He has also increased tensions with these and other countries by tearing up the above-mentioned agreements without replacing them with new agreements.

Inasmuch as the economy of the U.S. is in far better shape than its counterparts, with improved GDP, lower unemployment, rising wage growth, job growth, low inflation, lowered income taxes, reduced business and banking regulations, a comparatively lower dollar (although it has strengthened a bit this year), high business and consumer confidence, increased business capital spending, along with continued growth in its stock markets (likely due to his domestic agenda, much of which he has already implemented), it's inconceivable that Mr. Trump would want to risk all of those gains by taking a hard-line, "winner-takes-all" foreign policy approach by starting trade wars with countries that don't even pose a national security risk and which would create widening and unsustainable imbalances.

THE EVIDENCE

Just look at the evidence as reflected in these world markets and currencies.

U.S. DEBT CEILING: Biden Had 100 Days To Negotiate But Rebuffed Republicans

N.B. Inflation was 1.4%
when Trump left office
on Jan. 20, 2021

* See UPDATE below...

Insofar as the proverbial "buck stops at the top" saying dictates, this would then apply to U.S. President Joe Biden, who, for 100 days, refused to negotiate with Republican House Speaker Kevin McCarthy regarding the upcoming expiration of the infamous Debt Ceiling and its extension with respect to his proposed multi-trillion dollar budget.

So, here we are, with the presumed expiry date of June 1st fast approaching and no deal has been reached.

The ball is in Joe Biden's court, inasmuch as a majority of the House approved the Republican's bill which raises the debt ceiling (albeit much less than what Biden wanted), with alterations to his budget.

Democrats have not prepared a counter-plan of their own, and neither has President Biden.

So far, Biden has refused to budge on their offer, and talks have now broken down today...with no deal reached...and the President is nowhere in sight, but chose, instead to attend a G7 meeting in Japan.

The following article provides further details on today's failed negotiations and walk-out.

Source: ZeroHedge

As you can see from the following graphic, the rise of America's Debt Ceiling has become parabolic and cannot be sustained, especially with President Biden's budget proposal to raise it by another $5.8 Trillion this year!

And, with a possible recession looming in the midst of, still, high inflation (in spite of higher interest rates, courtesy of the Fed), and bankruptcies already on the rise (stressing banks), it behoves Biden to justify (to the American public) exploding the debt even higher.

Reckless Federal Reserve monetary policies, as well as the Biden Administration's out-of-control fiscal spending and radical energy policies, have led to high inflation (9.06% in June 2022) and higher U.S. debt. 

N.B. Inflation was 1.4% when President Trump left office on January 20, 2021.

Source: RateInflation

Where we go from here is anybody's guess...market players are currently undecided, as well, inasmuch as the SPX is still stuck in its large sideways "Chaos Zone," that I described in my post of March 31, after briefly piercing above its upper edge.

At the moment, price is currently sitting just beneath its channel median, as shown on the following monthly chart.

Failure of the SPX to break and hold above this median and its upper "Chaos Zone," around 4200, could send it back to its lower edge at 3750, or lower to retest 3500, or even 3000.

So, I'll leave you with this little gem...the sum total of Joe's presidency...in his own words...

Seriously, it's no joke! 😕

* UPDATE May 23...

It appears as though President Biden does not take the debt ceiling negotiations seriously and is being seen as negotiating in bad faith...suggesting that there may be some question about the actual default date that has, up to now, been proclaimed as fact by his Treasury Secretary, as described in the following report.

Markets have been fairly subdued and directionless of late, as described above, but just how long investors' patience with this political charade will last is anybody's guess. 

The longer this drags on, there is a greater chance we'll see markets drift lower, until they reach a critical velocity that produces a plunge below major support (3750 on the SPX).

Source: ZeroHedge