*Investors Blog*

[Zee09]

Looks like people are still panic selling.

Yesterday some were panic buying

 

[Mechanician]

Well if tariff revenue was applied directly to deficit paydown would not that impact the deficit?

I believe they're referring to a different deficit. Trade deficit, not Federal deficit.

 

[JavierH19]

Guess the old adage being first move is the wrong move stands true. Felt that yesterday was not the day to buy. Gotta let the rocking boat settle down some.

 

[zzyzzx]

Capitalism and competition, exactly. The drive to lower prodution costs of goods/services moved manufacturing offshore/elsewhere, to repatriate factories back can only cause costs to skyrocket. Question is will the consumer want to pay for this?

Why should I believe that prices will be higher at the consumer level if manufacturing is returned to the US when prices weren't lowered at the consumer level when production moved to Mexico, China, India, etc.?

 

[Vil_Riker]

Well, now China has retaliated with its own 34% tariffs on American goods.

Interesting times...

 

[cptbarkey]

Well if tariff revenue was applied directly to deficit paydown would not that impact the deficit?

Do you think US citizens have 36 trillion dollars sitting around to pay the deficit via tarrifs?

 

[supton]

Why should I believe that prices will be higher at the consumer level if manufacturing is returned to the US when prices weren't lowered at the consumer level when production moved to Mexico, China, India, etc.?

How much of the out shoring was to control costs? If the costs of materials rise, but you combat that with cheaper labor, then you could wind up with net sum zero. In the case of many things (cellphones and certainly automobiles) the R&D cost to make the next better model has likely gone way up.

I'm not sure what would happen with in-shoring. Robots aren't cheap but unless if wages drop then I'd think companies would rely heavily on automation to control costs wherever possible (albeit they likely already do, but perhaps at a yet higher level). They might also quit with the constant revision cycle... if you make the same part long enough, it gets cheaper. Use the same part across multiple models.

 

[Zee09]

Do you think US citizens have 36 trillion dollars sitting around to pay the deficit via tarrifs?

Pablo does

 

[Vil_Riker]

How much of the out shoring was to control costs? If the costs of materials rise, but you combat that with cheaper labor, then you could wind up with net sum zero. In the case of many things (cellphones and certainly automobiles) the R&D cost to make the next better model has likely gone way up.

I'm not sure what would happen with in-shoring. Robots aren't cheap but unless if wages drop then I'd think companies would rely heavily on automation to control costs wherever possible (albeit they likely already do, but perhaps at a yet higher level). They might also quit with the constant revision cycle... if you make the same part long enough, it gets cheaper. Use the same part across multiple models.

I know of one factory, formerly located in rural Midwest, that moved its production to China. There were a number of reasons.

1. The cost of the inputs were rising. The raw materials had to be imported from China or Korea because the American sourced materials were too expensive.
2. Labor was becoming unavailable - it was becoming difficult to have productive labor who were willing to not be chemically dependent. Even higher wages did not attract people who were willing to work.

These two combined would either force the factory to shut down or move overseas. They chose to move.

 

[scoot]

I know of one factory, formerly located in rural Midwest, that moved its production to China. There were a number of reasons.

1. The cost of the inputs were rising. The raw materials had to be imported from China or Korea because the American sourced materials were too expensive.
2. Labor was becoming unavailable - it was becoming difficult to have productive labor who were willing to not be chemically dependent. Even higher wages did not attract people who were willing to work.

These two combined would either force the factory to shut down or move overseas. They chose to move.

A friend of mine has a small manufacturing facility , 15 people on the floor . He told me the other day he needs 30 people on the floor , can't find anybody willing to work, I asked him what his people were making per hour I couldn't believe it , it's just too easy for people to sit on their bums and live off the government these days . I'm sure the same thing is happening all over this country . It adds up . By the way his wages included full medical dental matching retirement savings . What's happening to this countries workforce ?

 

[rijndael]

What's happening to this countries workforce ?

The dole is what's happening.

 

[Vil_Riker]

What's happening to this countries workforce ?

Poor education system and drugs. I think we have a highly fragmented country, large metropolitan areas attract the talent while the rest of the country is stuck with the rest.

 

[Zee09]

CV19 didn't help...

 

[BMWTurboDzl]

Well if tariff revenue was applied directly to deficit paydown would not that impact the deficit?

We're talking about the trade deficit rather than the budget deficit.

 

[supton]

A friend of mine has a small manufacturing facility , 15 people on the floor . He told me the other day he needs 30 people on the floor , can't find anybody willing to work, I asked him what his people were making per hour I couldn't believe it , it's just too easy for people to sit on their bums and live off the government these days . I'm sure the same thing is happening all over this country . It adds up . By the way his wages included full medical dental matching retirement savings . What's happening to this countries workforce ?

What are the numbers? I mean, what is that person offering, and what is the gov handing out today?

It sounds decent, usually benefits track pay. However, is he just advertising on LinkedIn, or does he have a recruiter working on this? Sometimes the issue lies with advertising, if you look in the wrong place you will only find wrong answers.

 

[SC Maintenance]

There's plenty of papers out there on how tariffs will have no impact on the deficit.

Trade deficit - not fiscal deficit.

Every year Americans send almost $1 trillion of there wealth overseas that never comes back.

The other deficit is self inflicted. We run twin deficits.

 

[BMWTurboDzl]

Why should I believe that prices will be higher at the consumer level if manufacturing is returned to the US when prices weren't lowered at the consumer level when production moved to Mexico, China, India, etc.?

If a good cannot be sold for a profit it won't be manufactured. Shareholders want a return on their investment.

 

[PWMDMD]

How can the wealthiest country in the world which also the third largest country in the world NOT have a significant trade deficit? We have more money and/or people to buy stuff. In those situations where we do not have more people (China and India), we have a ton more money to spend. Per capital income in China is $12K vs $43K in the US. Now, I agree we could diplomatically sure up some trade deals but the idea that we're going to get rid of the trade deficit is crazy, unless we all lose all our wealth, and we have no money to spend.

 

[Mechanician]

Can anyone clarify why gold, and silver took a hit yesterday?
Usually precious metals move differently than the market.

 

[cptbarkey]

How can the wealthiest country in the world which also the third largest country in the world NOT have a significant trade deficit? We have more money and/or people to buy stuff. In those situations where we do not have more people (China and India), we have a ton more money to spend. Per capital income in China is $12K vs $43K in the US. Now, I agree we could diplomatically sure up some trade deals but the idea that we're going to get rid of the trade deficit is crazy, unless we all lose all our wealth, and we have no money to spend.

I would triple down on that folks think somehow manufacturing in the US solves all problems only fixates on the who and why, and willfully ignores the how. Why are we instituting tarrifs, and not FDR style spending on the interior simultaneously?