Countdown to Liberation Day 2.0

Countdown to Liberation Day 2.0

Three down, 54 to go. And only six days remaining.

As you’ll recall, Donald Trump announced a series of sweeping tariffs on “Liberation Day,” April 2. They included what he called “reciprocal tariffs” against 57 countries.

"Whatever they tariff us, other countries, we will tariff them,” is how he explained it in March. “That's reciprocal - back and forth. Whatever they tax us, we will tax them.”

After the bond market freaked out in reaction to the announcement, Trump declared a 90-day pause to the reciprocal tariffs on April 9.

The plan was to launch negotiations with each of those 57 countries, with an eye toward reaching new comprehensive trade deals by the end of that 90-day window.

That 90-day window closes next Wednesday, July 9. To date, the Trump administration has come to terms with exactly… three countries.

An agreement with the United Kingdom was reached in May. An agreement with Vietnam was reached just yesterday — perhaps one reason the S&P 500 rallied to a record close.

There’s also a kinda-sorta deal with China — but it’s only a tentative agreement while the details are hammered out ahead of a separate 90-day deadline on Aug. 11.

Really, that total of three countries is just two.

What will Trump do next week? In the estimation of Paradigm’s macroeconomics maven Jim Rickards, Trump is about to “go nuclear.”

[Readers of Jim’s premium advisory The Situation Report are already up to speed on this developing story the mainstream doesn’t see coming. If you’re not among them, please heed Jim’s urgent warning at this link.]

So what is it that’s been taking so long?

The answer, perhaps, lies with the country that many experts thought would be the one most eager to sign a deal — Japan.

After all, Japan is a close U.S. ally. Exports are a cornerstone of Japan’s economy — especially cars. A deal would be an early win for Prime Minister Shigeru Ishiba, in office less than a year.

At the start it looked promising. Japanese officials were among the first to pay a call on the White House only days after Trump announced the 90-day pause.

But something went off the rails — quickly.

We still don’t know what exactly — but Bloomberg News gave us hints a few days after the meeting when it reported that “Japan intends to push back against any U.S. effort to bring it into an economic bloc aligned against China because of the importance of Tokyo’s trade ties with Beijing, according to current and former Japanese government officials.”

In early May, Japan’s chief negotiator Ryosei Akazawa dug in his heels: “We have been telling them that the entire series of tariffs are regrettable and have strongly insisted they be revised. Unless this demand is acknowledged in an ultimate package, there is no way we can agree to a deal.”

By early June, Prime Minister Ishiba himself was saying his government was in no mood to compromise. Yesterday, he reinforced that stance: "Japan is different from other countries as we are the largest investor in the United States, creating jobs.”

And if the lack of a deal means fewer exports of Japanese autos to America, Ishiba says Japan will get by: "If auto sales to the U.S. are bound to drop, we will boost domestic demand and diversify export destinations to protect Japanese industries.”

If Team Trump can’t reach a deal with Japan, how likely is it they’ll come to terms with the other 53 remaining countries before next Wednesday?

Liberation Day 2.0, anyone?

That’s why Jim Rickards thinks the trade war is on the verge of “going nuclear.”

“Trump’s great ‘Tariff Reckoning’ has begun,” he says.

“The ones who see it coming have the chance to reap a fortune. The ones who don’t could be in for a lifetime of financial ruin. I don’t want you to get left behind.”

Jim recorded an urgent message from Pentagon City to help you be among the prepared. Click here to watch it now. This is information the mainstream still hasn’t figured out — and won’t figure out until it’s too late.

How Strong Is the Job Market, Really?

What’s all the excitement about with the job numbers?

OK, so yes, the wonks at the Bureau of Labor Statistics conjured 147,000 new jobs for June. And yes, that’s more than the typical Wall Street economist’s expectation for 110,000.

But so what? As we’ve been saying for several months now, it takes a bare minimum of 150,000 new jobs each month just to keep up with population growth. And the monthly average going back a year now is 149,000. Hardly a “robust” job market.

The official unemployment rate ticked down to 4.1%. The last time it was under 4% was April of last year.

➢ For the record: Since January, the total number of federal government job losses is 69,000 — about 2.8% of the federal workforce. It does seem as if DOGE is having a measurable impact on the federal payroll, even if its impact on federal spending is nil.

As always, Mr. Market views these numbers not through the prism of “Is it good for American prosperity?” — but rather “What does it mean for Fed rate cuts?”

It’s not just Donald Trump who wants lower interest rates; so does Wall Street. Easy money is the lubricant that’s kept financial markets humming ever since the 2008 bank bailouts.

Today’s jobs report will be the last one before the Federal Reserve holds its next policy-setting meeting at the end of this month. On the theory that there’s no big, sudden deterioration in the labor market, futures traders now assess a less than 5% probability the Fed will cut interest rates on July 30.

U.S. markets closed at 1:00 p.m. today ahead of the Independence Day holiday tomorrow. The biggest reaction to the job numbers showed up in the bond market.

Bonds sold off big, pushing yields higher. The yield on a 10-year Treasury note jumped to 4.34%, the highest in nearly two weeks. The thinking is that if the Fed won’t be lowering short-term rates soon, then long-term rates won’t be coming down either.

The stock market shook off any no-rate-cut concerns: The S&P 500 jumped over three quarters of a percent to close at 6,279, another record. The Nasdaq also closed at a record high; the Dow will have to wait till next week.

Gold sold off modestly to $3,332 while silver rallied to $36.83. Crude slipped back below $67. Bitcoin has pushed back $109,000.

Meanwhile in Washington, the House is debating the 887-page Senate version of the “Big Beautiful Bill.” Well, they would be debating it were it not for House Minority Leader Hakeem Jeffries (D-New York).

“In any sane era, this bill would be laughed out of Congress,” colleague Sean Ring writes in today’s Rude Awakening. “But this is not a sane era. This is the age of Elastic Money and Infinite Excuses. The MAGA crowd used to chant ‘Drain the Swamp.’ Now they’re filling it back up with tax credits, unfunded mandates and Musk’s salty tears.”

The whole thing is filled with pithy lines I wish I’d written myself — go read.

Tesla: The Technology vs. the Stock

For all of Tesla’s many woes this year, Paradigm trading pro Enrique Abeyta says the company has achieved real breakthroughs with self-driving vehicles: “It changed my life.”

The company announced more bad news just yesterday: Global vehicle sales in the second quarter were down 13.5% from a year earlier.

Enrique would have added to the sales total this spring — but after shopping around he opted for a used 2024 Model Y.

Still, he was blown away. “I started using it on real roads, during real commutes, with my kids in the back seat. That’s when it sank in that self-driving cars aren’t some faraway technology. It’s here, it’s real, and it’s going to change your life soon — if it hasn’t already.”

Enrique published a groundbreaking report on “autonomous” vehicles more than five years ago. For him, the proverbial rubber just hit the road.

He started out with an easy 15-minute trip to the gym, driving solo as he put the FSD “full self-driving” feature to use.

The first big test came when he took his 8-year-old daughter to New Jersey for a meeting, and then a Yankees game.

“Driving down there can be brutal, so I was interested to see how FSD would handle it. We got in the car, set the destination in northern New Jersey and let it go.

“I only touched the steering wheel twice during the entire 2½-hour drive, so we could get some water and go to the bathroom.

“Sure, you still need to pay attention to the road in the Tesla (it is ‘supervised’ self-driving). You can’t be on your phone or anything. But the stress levels were a fraction of what they normally would have been.

“Over the next 18 months, millions of people will go through the same shift I just did.

And when they do, everything about how we move, commute and think about cars will start to change forever.”

To be clear, Enrique’s enthusiasm for his Tesla vehicle does not necessarily translate to enthusiasm for TSLA shares. “I would wait for the earnings forecasts to stabilize,” he said yesterday during the Paradigm editorial team’s monthly Zoom call. “Until then, I’d stay away.”

Comic Relief

We haven’t had much to say in this space about the mayor’s race in New York — but your editor did get a chuckle when encountering the following today.

Mailbag: AI and Electricity

“Data Centers and Crypto Mining” says the subject line of a reader’s email reacting to portions of Monday’s and Tuesday’s editions.

“If the data centers and crypto miners want more power, let them buy land from willing sellers at the current market prices. Make sure they buy enough land to put up wind generator towers and let them produce their own power, rather than put additional strains on the current power grid.”

Dave responds: Hear, hear.

At first, it seemed Elon Musk’s xAI venture took this message to heart — installing nearly three dozen dedicated natural gas turbines to power its huge data center in Memphis.

But last month, the Memphis Chamber of Commerce issued a statement saying an undisclosed number of those turbines have been taken offline. And the rest will be used only for backup power now that xAI has been able to hook up to a new substation operated by Memphis Light, Gas and Water.

Then there’s the newest announcement from OpenAI on Tuesday — agreeing to lease 4.5 gigawatts of computing power from Oracle for $30 billion a year. Supposedly it’s the next phase in the much-ballyhooed “Stargate” project between OpenAI, Oracle and Japan’s SoftBank Group.

For the record, 4.5 gigawatts equals about one-quarter of all the juice currently consumed by data centers in this country.

“Potential locations for new data center sites include Texas, Michigan, Wisconsin, Wyoming, New Mexico, Georgia, Ohio and Pennsylvania,” says the Financial Times. “Oracle will also expand a 1.2 GW Stargate facility in Abilene, Texas, which is being developed and financed by data center start-up Crusoe.”

The deal sent ORCL’s share price to a record. But there’s absolutely nothing in the FT’s story that says where the electricity for these projects is supposed to come from.

Which only reinforces our skepticism that Stargate will ever come to fruition — at least in the form touted at the White House the day after Trump’s inauguration.

Thanks for keeping the conversation going. There will be new investment possibilities emerging from the AI-and-electricity story — in all likelihood before Donald Trump’s scheduled “AI Action Plan” on July 23. Stay tuned…

Happy Independence Day,

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets