The Market, Energy, And Political Page, T+21 -- May 31, 2018

EU, Mexico, and Canada: anyone paying attention knows that these three are not in great position to take on Trump mana a mano.

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Did Ford Make The Correct Strategic Decision?

Gloating, and re-posting:

American auto industry: looks like Chrysler will be history by the end of the week. Parent company likely to "retire" the brand.

It will hardly be missed; Chrysler namesake is now on only two vehicles, the "ancient" 300 (a car my dad had many, many years ago) and the Pacifica. I've had three Chrysler minivans, loved them all, still driving two of them. Or at least my wife is.

Ford will be down to two automobile models (one of them the Ford Mustang, which is clearly a niche offer) and then the rest of the Ford stable: SUVs, cross-over SUVs, and pick-up trucks.

I saw a lot of nice Chevy automobiles on my recent cross-country trip. Something tells me GM may fill this US automotive niche quite nicely. I loved the Chevy Sonic I had rented from Enterprise, but still -- I found it amazing the dash on my 2012 Honda Civic was so much more modern than that of the Sonic. In addition, the switchology on the Honda Civic was so much better. Chevy was handicapped by the fact that it could not integrate its entertainment system with the car's dash data (fuel, range, etc). Tesla, however, does that very, very well.

I posted that note this morning, before the market opened. So, what did GM do today. Remember, the Dow dropped over 251 points again today. GM? Jumps almost $5, up almost 13%, now trading near $43, trending toward 52-week high. Why? Softbank’s Vision Fund is investing $2.25 billion in General Motors’ driverless car unit. GM will also put $1.1 billion into the unit, assuring funding through the planned beginning of commercialization in 2019.

By the way, GM rose almost 13% -- the very day that Trump slaps aluminum / steel tariffs on Canada. Wow. 

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GDP Now

Does anyone really believe the Atlanta Fed any more? 2Q18 GDP -- Latest forecast: 4.7 percent — May 31, 2018.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.7 percent on May 31, up from 4.0 percent on May 25.

The nowcast of second-quarter real consumer spending growth increased from 3.2 percent to 3.4 percent after this morning's personal income and outlays release from the U.S. Bureau of Economic Analysis (BEA).

The nowcasts of the contributions of net exports and inventory investment to second-quarter real GDP growth increased from 0.17 percentage points and 0.76 percentage points, respectively, to 0.43 percentage points and 1.00 percentage points, respectively, after yesterday's Advance Economic Indicators release from the U.S. Census Bureau and the BEA's updates of first-quarter GDP and the National Income and Product Accounts tables released yesterday and today.

Mexico: in deep, deep trouble --

• Trump triggers tariffs on EU, Mexico & Canada 
• oil sector appears to be ready to implode
• but most concerning for Mexicans: a far-leftist -- think Bernie Sanders on steroids
• Mexico's response to Trump's tariffs: will impose tariffs on table lamps, cranberries, cheese, and pork. I can't make this stuff up.

So, that I don't forget:

• Trump tax cut stimulus: + $800 billion (CNBC analyst, May 31, 2018)
• EU retaliation on tariffs: - $1 billion (CNBC analyst, May 31, 2018)
• Canadian retaliation on tariffs: maybe -$5 billion 
• Mexico retaliation on tariffs: similar to Canada
• in other words, retaliation tariffs pale in comparison to Trump tax cut stimulus (CNBC analyst, May 31, 2018) 
• [just between you and me, an estimate of $800 billion rounds to $1 trillion -- just saying -- yeah, as an investor, like I'm really worried about retaliatory tariffs; please don't share this comment with anyone else -- it's just between you and me; and, definitely don't take it out of context]

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ObamaCare Re-Surfaces In New Jersey

Link here. Whatever.

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Feelings

I have no idea how things are going with the North Koreans or what is being discussed, but there are days (like today -- May 31, 2018 -- Trump's tariffs) that I think our "enemies" like North Korea are more accommodating than our "allies" like Canada, Mexico, and the EU. Just saying. And I'm probably wrong. I'm just saying that some days I have those feelings.