Submitted by Rabobank's Michael Every

Impeaches en Regalia

True story: when I was a young man and living abroad for extended periods, I would sometimes get pretty homesick. In order to cheer myself up I used to go to record shops and flick through Frank Zappa’s collected works; his album and track titles (Weasels Ripped My Flesh; Hot Rats; Sleep Dirt; Imaginary Diseases) always cheered me up. In what was for me a surreal environment like small-town Japan, their surrealism was extremely real and grounding. It still is to me today as things grow increasingly surreal around me again.

After all, we are just six trading days, including today, from the December 15 tariff deadline for a phase one trade deal. And yet nobody is worried because this morning it is the Wall Street Journal’s turn to tell us Chinese officials claim a trade deal remains on track. Of course, read the full text of the article and you see the Commerce Ministry also made 100% clear that US tariffs have to go DOWN, not just delayed, and that all the same sticking points are still there: the US won’t do that, and China won’t commit to huge agri purchases. (“Conceptual Continuity” as one Zappa album says, but “Jazz From Hell” to me.)

Which is also true in the case of the US Ukraine-gate scandal, where the Democrats are now writing up articles of impeachment. Of course this was always going to be an impeachment, and always on straight on party lines, and always going to a Senate trial – which will then clear Trump on the same party lines. And then there will be much further wailing and gnashing of teeth about democracy. On which note, anti-Trump Joe Biden appears to be trying to ape Trump’s 2016 electoral formula given how he responded to a question from the audience in Iowa that probed him about his son and his age: “You’re a damn liar, man. That’s not true….get your words straight. I’m not sedentary. You want to check my shape, man, let’s do pushups together here, man. Let’s run. Let’s do whatever you want to do. Let’s take an IQ test. OK?”, before apparently calling the man “fat” - though his team say “fact”. (“You Can’t Do That on Stage Anymore”: Zappa.)

As some might say, how pleasant it will when the Trump era is finally over and US presidential discourse can return to the hifalutin Greco-Roman rhetorical standards it used to enjoy: “They misunderestimated me”; “I think we agree, the past is over.” George W Bush. (and “Return of the Son of Shut UP ‘n Play Yer Guitar”: Zappa).

Also seeming to ‘speak Trump’ is China’s Foreign Ministry spokesperson (@MFA_China on Twitter - the same Twitter banned in China) who just tweeted: “#China has become powerful with US money? LOL! #US investment accounts for only 4.06% of all foreign investment to China since 1987, but China’s vast market feeds & fattens up numerous US enterprises.”

#China has become powerful with US money? LOL! #US investment accounts for only 4.06% of all foreign investment to China since 1987, but China's vast market feeds & fattens up numerous US enterprises. pic.twitter.com/DoWhrPpO8X — Spokesperson发言人办公室 (@MFA_China) December 4, 2019

Want more? Try “Chinese companies’ involvement in any part of 5G networks a threat? Security CHECK or TRAP? Sounds overboard but absurd. Be careful! Chinese-made clothes and shoes could also be threat.” (That’s in response to suggestions the UK and the EU are now leaning against Huawei for 5G).

Chinese companies' involvement in any part of future 5G networks a threat? Security CHECK or TRAP? Sounds aboveboard but absurd. Be careful! Chinese-made clothes and shoes could also be threat. 🤫 @StateDept https://t.co/xcuMH5X0Rx pic.twitter.com/BHhi6eYYP6 — Spokesperson发言人办公室 (@MFA_China) December 5, 2019

Can you imagine the MFA training school for the poor bureaucrats being trained in ‘Trump’? “Good try, Mr Wang, but end your tweet with an extra ‘SAD!!!!!’” (“You Are What You Is”: Zappa)

The serious point here – a further coarsening of dialogue between the US and China, speaking to polarization, not agreement; indeed, the US is now pushing for the World Bank to reel in its lending to China given it is no longer a low-income country – more friendly, bridge-building (literally!) gestures. Meanwhile, China’s ambassador to Sweden (who had recently stated China has good wine for its friends, and shotguns for its enemies) has announced that Beijing will “impose restrictions in the cultural field, and limit exchange within the economy and trade” due to Sweden’s recent human-rights actions. Will we see the one-for-all, all-for-one EU spirit recently pledged at NATO’s 70th anniversary in response, even if Sweden isn’t in NATO, or the kind of “I never met him” that Trump just reeled out for Prince Andrew? The answer will tell us a lot about what EU-China trade will look like under geopolitical strain, and then what US-EU trade will look like under the same strain. If the EU doesn’t stand up to China, it surely raises the likelihood of the US standing up to the EU. (“Them Or Us”: Zappa)

Meanwhile, it remains a truism that our zeitgeist is captured not just by what tweets and headlines we get offered (and Zappa albums) but by the ones we don’t. Largely off the front pages, France is experiencing the largest general strike in years over proposed pension reform, which has paralyzed it. OK, France is synonymous with strikes, but a general strike is a big deal. So is an unpopular French president capable of provoking one when his electoral rival is going to be from the far right; and so is a French president pushing for major reforms of critical global and EU architecture when he can’t even get his own reform agenda implemented with popular consent. (“The Man From Utopia”: Zappa)

By contrast, Brexit Britain is still relatively becalmed in the final few days of the UK election campaign, and GBP continues to trade as if BoJo is a shoe-in for PM. The polarization in the press is clear with the final Friday pre-election headlines: “Utterly damning”: Jeremy Corbyn running ‘institutionally anti-Semitic’ Labour Party, says dossier – The Telegraph; BBC’s Andrew Neil lays down gauntlet to Boris Johnson over interview – The Guardian; BBC’s Andrew Neil absolutely savages Boris Johnson on live TV for chickening out of his interview in a bombshell ‘empty chair’ moment – The Mirror. (“Ship Arriving Too Late to Save a Drowning Witch”: Zappa)

Data-wise, Japan today showed us labour cash earnings up 0.5% y/y vs. 0.2% expected, and real cash earnings up 0.1% y/y vs. -0.3% expected. However, household spending y/y collapsed -5.1%, worse than the -3.2% expected. It’s a good job a huge new fiscal stimulus package was agreed to compensate for the major 3ppt hike in sales tax to 10% that was just introduced, isn’t it? So less household and more public spending: those riverbeds aren’t going to put fresh layers of concrete on themselves, now are they? (“We’re Only In It For The Money”: Zappa)