Submitted by Michael Every of Rabobank

One of my favourite cartoons as a kid was ‘Battle of the Planets’, where the super-teenagers from G-Force would ‘transmute’ into heroes to save Earth from the spectacular evil techno-animal forces of Spectra. I didn’t know it back then, but while it sounded very American it was actually a very Japanese production. Forty years later, today and tomorrow the whole world will be watching the G-Force at work in Japan and wondering if it will “Five acting as one”…or instead a ‘Battle of the Planet’.

Indeed, there isn’t much more to say than that. Markets are all going to be held hostage to a series of crucial meetings between world leaders to deal with the global economy, Iran, and US-China trade tensions (if that is what we are still referring to them as). As a sub-set we have tensions between the US and Japan; and the US and India; and the US and the EU; and basically the US and everyone. If only we had Spectra to unite us as a common foe! Or perhaps we do in the form of climate change and plastic pollution: isn’t that the real ‘Battle of the Planet’?

In terms of the US and China, the market is still hoping for the best, yet our base-case scenario is for a can-kicking exercise at best. Beijing is apparently still insisting that Huawei is part of any trade agreement, which looks highly unlikely given the mood of Congress in the US, and that US tariffs are removed, and that Chinese purchases of US goods are “realistic” – which given the economy is underperforming does not suggest means a large increase. Worse, even Larry Kudlow came out to say that the US might instead raise tariffs further. When you’ve lost Kudlow…

As such, probably the most optimistic outcome this weekend is a renewal of trade talks based on those starting positions – which at least delays the hike in tariffs, even if it solves nothing longer term. Indeed, consider that the New York Times today has an article titled “US vs. China: A New Era of Great Power Competition, but Without Boundaries.” Indeed. We have been talking about Great Power struggles for over a year and trying to draw the conclusions from past episodes – and all of them point to trading and investing in your opponent as a fast-forward route to defeat. Not that autarchy or mercantilism automatically mean victory, but running large trade deficits with ‘the other side’ is very poor long-term strategy, or so both logic and the actual heuristic run.

Meanwhile, with so many pieces all in play in the UK we have the “Tory-graph” arguing that a PM Boris would be able to persuade Germany he is serious about severing ties with the EU if they won’t budge, de facto making the UK the 51st US state, and leaving Europe with less scale and adrift geopolitically, vulnerable to the predations of China and the US. That, they argue, might be the existential angst required for a Brexit deal to be done on the UK’s terms rather than Hard alternative. Of course, if that view is wrong then it’s the UK (and the EU?) who are going to be on the wrong end of geopolitics and geo-economics. Certainly, many reading the opinion piece will see their hair stand up like Boris (or 7-Zark-7’s antennae, for those who recall).

Within the US itself the second Democratic party presidential nominee debate is getting underway. There was no clear winner from the first round of 10, according to pundits, though Tulsi Gabbard saw searches for her name soar country-wide, and several--though by no means all--of the candidates named “China” as the largest geopolitical threat the US faces.

So what of the next set of 10 candidates so far? One sci-fi fan on Twitter noted he’d vote for the first candidate who answers a question in Klingon: well, we already got a USD27 trillion spending plan from Bernie Saunders, which to some voters will sound like just what the US needs, and to others like pure science-fiction. Andrew Yang, has repeated a line I have heard so very often: that US blue-collar job losses are all to do with automation, not China. In which case, as someone has just asked him on Twitter, why are all the robots choosing to live in China and not the US?

Another candidate, Andrew Yang, has repeated a line I have heard so very often: that US blue-collar job losses are all to do with automation, not China. In which case, as someone has just asked him on Twitter, why are all the robots choosing to live in China and not the US?

At this point publication deadlines mean we have to leave our live coverage, but the trend is clear – Trumpian consensus-busting populism is alive and kicking at both ends of the political spectrum.