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Tracy Alloway at Bloomberg tweeted this yesterday, I couldnt agree more.

Donny’s gonna lose this war… The DC swap being very much still alive (more than ever!) special interests and lobbyists will indeed pressure the GOP and Donny to give in...They don’t like this trade war, they want business as usual. The stock market is getting hit and this is just the beginning, he’ll be forced to cave in…The Dems are cheering him on, but when they sense GOP turning on Donny they won’t be there to help him.

Donny’s big mistake was pissing off our allies in the EU, NAFTA, Japan, etc. with tariffs and dumping on NATO...It broke the united front against China. They don’t like business as usual in China and were very happy to let Donny be the bad guy. Now… not so much now… if anything some of our old friends seem to be drifting into Russian/Chinese orbit, especially in the EU… you can see Donny senses this mistake by just announcing this morning a delay on auto tariff hikes. Too little, too late. He broke the West, now we’re on our own.

Xi, on the other hand, can wait Donny out...he’s basically president for life now. There have been rumors of discontent within the elite, so far that doesn't seem to be boiling over. China is ordering the “home team” to buy stocks and he’s opening the fiscal taps to support the market. And let’s face it, fiscal spending is a LOT more effective than QE when it comes to CapEx spending and wage growth. Sure China’s got a massive debt problem, but that’s not "a problem" for them yet.

Donny can’t stimulate like China; he wants the Fed to cut rates, that won’t happen immediately...he needs the stock market to drop back a good 20% for them to start seriously considering it but inflation is FINE and we’re at record low unemployment. Donny can’t open the fiscal taps cuz he’s already done that with the tax cuts and it’s doubtful the GOP will allow any further widening of the deficit (Mulvaney just recently killed talk of an infrastructure deal)

The more the macro wobbles the less the GOP will have the appetite to resist Dem attacks and subpoenas etc, Donny does not have time on his side but he needs to win fast, unfortunately global risk appetite is slipping faster…

Donny going down, son.



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