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Friday, February 5, 2010

History class: China puts anti-dumping tariffs on U.S. chicken imports & Smoot-Hawley Tariff Act of 1930

"The Smoot-Hawley Tariff Act of 1930 (P.L. 71-361, sometimes known as the Hawley-Smoot Tariff Act; officially the Tariff Act of 1930)[1] was an act signed into law on June 17, 1930, that raised U.S. tariffs on over 20,000 imported goods to record levels. The ensuing retaliatory tariffs by U.S. trading partners reduced American exports and imports by more than half and according to some views may have contributed to the severity of the Great Depression." read more at Wikipedia

The stock market broke sharply on the day that Hoover agreed to sign the Smoot–Hawley Bill. This bill gave the signal for protectionism to proliferate all over the world. Markets, and the international division of labor, were hampered, and American consumers were further burdened, and farm as well as other export industries were hindered by the ensuing decline of international trade."

That was then and recently....

The latest in a string of trade battles over subjects ranging from steel to patents to poultry between the United States, the world’s biggest importer, and China, the top exporter. 


Washington delayed Beijing’s request for the establishment of an investigative panel, but cannot do so again under W.T.O. rules.
The panel will be asked to evaluate whether the American tariffs violate rules governing trade among the W.T.O.’s 153 members. Trade cases often take years to resolve, but can result in the W.T.O. authorizing retaliatory sanctions.
President Obama ordered the higher tire tariffs for three years, including a 35 percent additional charge in the first year. It comes on top of a regular 4 percent tariff.

The United States imported about 46 million tires from China in 2008, three times as many as in 2004. In that time, China’s share of the American market went to almost 17 percent from less than 5 percent.

The two countries are also squabbling over American imports of Chinese steel pipes. Last month, Washington imposed new duties on pipes mainly used in the oil and gas industries, affecting about $2.8 billion worth of Chinese exports.


Today :


China puts anti-dumping tariffs on U.S. chicken imports

By Associated Press 

February 05, 2010, 1:12AM

BEIJING, China -- China announced anti-dumping duties of up to 105.4 percent Friday on imports of U.S. chicken products, adding to trade strains with Washington.
The case comes amid mutual accusations of protectionism by Beijing and Washington, which both say will hurt efforts to end the global economic downturn.


2 charts to think about !!! History class

Like 1930, unexpected protectionism could kill global trade and the global reflationary effort. The reflation trade has been ON FIRE since the beginning of the year. Will the reflation trade overshoot relative to underlying demand or is this global bull for real.  At some point everything with a price seems like a short (no recommendation) but without a catalyst the Dow could hit 30,000 (J.Rogers).

initiating position in SRS @$8.35.

initiating position in SRS @$8.35.

ProShares UltraShort Real Estate seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Real Estate IndexSM

what next ???



Stocks plunged around the globe, with the MSCI World Index dropping the most in four months, and commodities tumbled on concern an unexpected increase in US jobless claims and growing sovereign debt will derail the economic recovery.  


Maybe .......
Negative comments from China’s Banking Regulatory Commission stating that Chinese non-performing loans could triple. This will probably dampen the “China bid story.”

8.4 million jobs have been vaporized since the recession began

The Labor Department revised its previous estimates for the number of jobs that have been lost over the past 25 months. What they found wasn't pretty.
 
Since the recession began in December 2007, the economy has lost 1.4 million more jobs than previously believed. The adjustments also showed losses for 2009 alone came to 4.8 million jobs, greater than 600,000 more than previously estimated.
"We're coming out of a very, very steep downturn," said Dean Baker, co-director of the Center for Economic and Policy Research. "The revisions show that we have a really big hole to come out of."



In terms of job losses, this has been the worst recession since the end of the World War II more than 60 years ago.

Sovereign Debt Concern

Sovereign Debt Concern 
It is not just the small emerging economies. What about the US....

Moody’s Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tacklethe country’s budget deficit.
In a move that follows intensifying concern among investors over the US deficit, Moody’s said the country faced a trajectory of debt growth that was “clearly continuously upward”.

3 charts to watch !!!

Adjustable Rate Mortgage resets. What do you think ???