We got up before dawn this morning. We’re taking a cluster of our grapes over to the neighbouring ranch, Tacuil.
There, Raul — the winemaker — will tell us if the sugar content is high enough to pick them.
Don Bill and Don Jéjé inspecting sugar levels
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An update from Bill: Grape sugar level is ideal. Let the harvest begin!
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Poor Raul has even more trouble with his originarios (vaguely indigenous people who are claiming land rights they lost in the 16th century) than we have.
We think we have a plan for winning our war with the originarios. Stay tuned…
‘Stocks drop most in six weeks on trade war tension’
‘The S&P 500 Index sank 2.5 percent, the biggest one-day drop in six weeks, and the Dow Jones Industrial Average lost more than 700 points. As investors dumped stocks, they rushed to the safety of Treasury bonds, where yields fell back toward 2.8 percent, and the yen, which rallied the most in three weeks.
‘“Tariffs mean a trade war and the news has the world’s investors running for the exits,” Chris Rupkey, chief financial economist at MUFG Union Bank. “Those are storm clouds out there, that’s what the stock market is saying and that’s why investors are running for the exits.”’
Investors, economists, cab drivers, and even members of Congress know that tariffs are bad for business. They raise costs, reduce demand, and stifle investment and innovation.
But they are also a time-tested way of rewarding crony industries.
‘What the tax cut giveth, the trade protections taketh away,’ sayeth one commentator.
Americans buy goods from China. Now, they will pay more for them, equivalent to a $50 billion tax increase.
But wait. The tax cut was not really a tax cut…it was just a tax time bomb. Government spending went up. Debt went up. When the bomb goes off someone, somewhere, sometime, must pay the cost…somehow.
The $50 billion tariff, on the other hand, is real…and it is now. Tariffs on steel and aluminium are coming online, too, beginning today.
The tariffs target foreign producers. But reports from the heartland tell us that domestic producers are using Trump’s attack on their competitors to raise their own prices. The Wall Street Journal reports:
‘On Monday, the Metalworking Group of Cincinnati received notice of a 35% increase for American-made cold-rolled carbon steel. Owner Mike Schmitt sent up an SOS on Twitter: “This is a shock. It is unnecessary to be punished by our own government. @realDonaldTrump @senrobportman @RepBradWenstrup. And, yes, this is USA steel not subject to the tariffs.”’
Biggest stock market bubble ever
Everybody knows tariffs are bad news. Everybody knows, too, that budget deficits are asking for trouble.
One Dear Reader gave us his own estimate of how deep in debt the U.S. will be by 2028. Instead of our $40 trillion estimate, he calculates that the total might be closer to $54 trillion:
‘If you calculate the compound annual interest that would have taken the deficit from $250 billion in 1971 to its current $21 trillion, 47 years later, the calculated rate of compound interest is 9.9%. If you extend that same rate of compounding another 10 years into the future, you get a federal debt of $54 trillion.’
Everybody knows that this is now the second-longest stock market boom in history…and the second-longest economic expansion.
Everybody also knows that all expansions come to an end and bull markets always turn into bear markets.
What everybody doesn’t know is when the turnaround will come…or who to point the finger at when it does.
The Fed, with its quantitative tightening program? Or the Blond Bombshell in the White House, with his tariffs and deficits? Or something else entirely beyond our ken?
According to Joe Lavorgna, chief economist for the Americas at investment bank Natixis:
‘In all, total net worth of $98.75 trillion is now 6.79 times the $14.55 trillion in disposable income for households as of the fourth quarter…That’s up from 6.71 times in the third quarter.
‘The previous tops came in the first quarter of 2006, with 6.51, and the first quarter of 2000, 6.12. Those two levels cast ominous signals over the U.S. economy.’
In other words, this market is the biggest bubble ever. Like a hot air balloon, it floats through the air…right into a thunderstorm.
Everybody knows that lightning will strike it sooner or later. Everybody waits to find out when.