{"id":1540927,"date":"2025-06-10T14:45:00","date_gmt":"2025-06-10T18:45:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1540927"},"modified":"2025-06-10T14:45:00","modified_gmt":"2025-06-10T18:45:00","slug":"taco-tuesday-again","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/taco-tuesday-again\/1540927\/","title":{"rendered":"TACO Tuesday Again"},"content":{"rendered":"

TACO Tuesday Again<\/span><\/p>\n

\n

By Michael Every of Rabobank<\/em><\/p>\n

Expect much self-serving market chuckling about \u2018TACO Tuesday\u2019 again as Monday\u2019s US-China trade talks in London extend into today and headlines are that the US may loosen its export controls <\/strong>on some goods if China releases its on rare earths.<\/p>\n

Is that really a TACO though? These were unilateral US moves against China taken after the recent Geneva agreement, so dropping them this only takes us back to where we were weeks ago, and presumably for the clear deliverable of getting rare earths flowing again as the US had expected<\/strong>\u2026. until the US has them flowing from elsewhere<\/strong>, that is. A true TACO —Truly Appalling \u2018Clever\u2019 Option<\/strong>\u2019– would be the White House not doing the latter because economists tell them that \u201cbecause markets\u201d local rare earth processing is more expensive.<\/p>\n

As evidence of a distinct lack of poultry, which coincidentally came up in a conversation yesterday, in WW1, the British found they were reliant on Germany for optical glass needed for binoculars, while Germany was short of the rubber it had sourced from the British Empire. Both decided to swap these strategic goods with each other via Switzerland<\/a> (though this is disputed by some).<\/p>\n

Interestingly, the Chinese press report of these talks state \u201cThe US…trade deficit in goods with China is not only the inevitable result of the structural problems of the US economy but also determined by the comparative advantages of the two countries<\/em>.” Who knew neo-mercantilist Chinese economists were the same Ricardian neoliberals as at western universities and institutions? Of course, they aren\u2019t – but they know writing it wins over those who dine on TACOs.<\/p>\n

And chew on May\u2019s Chinese trade data: exports to the US -34.5%; to the EU +12%; to Germany +21.5%; to France +24.1%; and to Netherlands +7.1%. <\/strong>This isn\u2019t a US-China problem and those that taco that approach will deindustrialise.<\/p>\n

<\/a><\/p>\n

Meanwhile, it\u2019s unclear how much chickening out there is in geopolitics. Ukrainian drones just hit another<\/em> Russian military target, destroying two fighter jets, as Germany\u2019s outgoing spy boss and NATO chief Rutte both warned Russia could launch an attack against it within five years. \u201cLet\u2019s not kid ourselves, we are all on the eastern flank. There is no east or west, there is just NATO<\/em>,\u201d Mr Rutte said, and the danger \u201cwill not disappear when the war in Ukraine ends<\/em>.\u201d<\/p>\n

Rutte specifically told the UK: \u201cSpend more or learn to speak Russian.<\/em>\u201d To help Brits appalled at the idea of learning a foreign language, and those who believe it might be better than vast state spending when fiscal deficits and public debt are sky high: \u201c\u041a\u043e\u0433\u0434\u0430 \u043c\u043d\u0435 \u0441\u043d\u0438\u0437\u044f\u0442 \u0446\u0435\u043d\u0442\u0440\u0430\u043b\u044c\u043d\u0443\u044e \u0431\u0430\u043d\u043a\u043e\u0432\u0441\u043a\u0443\u044e \u043f\u0440\u043e\u0446\u0435\u043d\u0442\u043d\u0443\u044e \u0441\u0442\u0430\u0432\u043a\u0443?\u201d (\u2018When do I get my rate cut?\u2019 \u2013 that\u2019s all that matters, right?)<\/p>\n

Even Canada is moving its Coast Guard to national defence and PM Carney will announce defence spending will be NATO\u2019s 2% of GDP target this fiscal year – just in time for it to rise to 5% at its upcoming summit.<\/p>\n

Of course, Europe is just one front. Iran will reportedly reject the proposed US nuclear deal and offer its own that allows it nuclear enrichment and demands the \u201cforced\u201d destruction of Israel\u2019s nuclear arsenal, according to the New York Times. Israeli PM Netanyahu rushed from a court appearance to speak to Trump about it, where he was told the US sees Iran and Gaza as linked and wants deals \u201cso there\u2019s no destruction and death.\u201d Expect more US-Iran talks this weekend. However, that\u2019s as Iran’s top security body says the intel it just obtained about Israel\u2019s nuclear facilities mean it could launch counterattacks should Israel strike its.<\/p>\n

And if that isn\u2019t enough, India is ready to strike \u2018deep into Pakistan\u2019 if provoked, New Delhi just warned.<\/p>\n

Meanwhile, President Trump sent 700 marines to LA on top of the National Guard to try to restore order following riots at the enforcement of the deportation of illegal immigrants, upping the political ante, as Governor Newsom sued to have this reversed. As the New York Times claims \u2018The US is no longer a stable country\u2019, recall this is the same US that has seen past presidential assassinations, with two attempts against Trump in 2024<\/strong>; this long list<\/a> of riots; that past White Houses have sent in federal forces to restore order at the state level; and, for \u2018doomers\u2019, that the refusal of states to accede to federal authority was related to the US Civil War.<\/strong><\/p>\n

This matters for markets, and not just because the US is already hardly looking the safe-haven it once did. Logically, if Trump\u2019s LA action fails, a template may be set that while the US border is now closed, mass deportations de facto cannot happen, implying the current default for labor markets. However, if Trump succeeds, it suggests he may be able to press ahead like past presidents (Reagan removed 8 million people, and Clinton and George W. Bush 10 million each), with very different labor market implications. <\/strong>Moreover, success would boost Trump\u2019s standing; and failure would both weaken it and<\/em> imply a de facto one-way turnstile border with longer-term socio-economic implications and politically polarizing effects. Similar issues are of course being seen in many western democracies at the moment.<\/p>\n

On which note, French President Macron refused to rule out new legislative elections as soon as next month, <\/strong>though his last try at that backfired on him, seeing gains for the far right and left vs. his centrists.<\/p>\n

Very much in the 2025 spirit, a report also claims the Pentagon has been faking UFO sightings to keep people unaware of their own breakthroughs. I have a friend who would immediately respond: \u201cThat\u2019s what they want you to think.\u201d Yet at the same time, Axios says the \u2018scariest reality\u2019 is that the firms eagerly building AI don\u2019t know how or why it works but are sitting back and watching it let rip. I would say that as new graduates already find entry-level jobs are being replaced by AI that potential mass unemployment ahead is a pretty scary thought too.<\/strong><\/p>\n

Lastly, in markets, China is to deepen its use of a $1.5 trillion state housing fund to offer cheaper mortgages than its state-owned banks can. <\/strong>That\u2019s certainly a new wrinkle on \u2018what is GDP for?\u2019 and does suggest some fine-tuning of the economy.<\/p>\n

You put all this together and it\u2019s really hard to make a convincing case that we are seeing any real \u2018chickening out\u2019. Chicken Littles or headless chickens, possibly. Truly Appalling \u2018Clever\u2019 Options, certainly.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nTue, 06\/10\/2025 – 10:45<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/taco-tuesday-again<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

TACO Tuesday Again By Michael Every of Rabobank Expect much self-serving market chuckling about \u2018TACO Tuesday\u2019 again as Monday\u2019s US-China trade talks in London extend…<\/p>\n","protected":false},"author":0,"featured_media":1540928,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1540927","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1540927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1540927"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1540927\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1540928"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1540927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1540927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1540927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}