| Rodney Johnson | August 06, 2019 | I'm in the Colorado mountains this week, yet must note the significance of reports this morning that Chinese companies have put a stop to purchases of U.S. agriculture products, moving the lengthy trade war into new territory. I'll turn the rest of today's column to my colleague Chris Scott, an expert on international economics, particularly with regard to China, and will rejoin the conversation when I'm back at my desk on Thursday. – Rodney The U.S.-China Trade War Will Hit Home | Markets attempted on Tuesday to scrape back some of this year's gains, which have been nearly cut in half since last week, when trade talks with China fell apart. But the modest dead-cat bounce – buoyed by signals that China would support the yuan at its current level of 7 to the dollar – has proved just that. And there's every reason to believe that this standoff will continue to weigh on investor confidence – at least until the Federal Reserve swoops in with another save. China's decision to let its currency cross the psychologically important line of 7 on Sunday was a carefully calculated signal that Beijing officials have given up on a trade deal coming together some time soon. That was made all the more apparent Tuesday via official announcement that Chinese companies will halt purchases from U.S. farmers. China had previously agreed to restart importing U.S. agriculture products when President Trump met with Chinese President Xi Jinping earlier this summer and the two decided to restart negotiations. In response, Trump suggested in a tweet on Tuesday that he is prepared to bail out American farmers with more subsidies. But those farmers remain the soft underbelly of the trade war, and have little cause for hope in the near term. The Chinese side is now prepared to wait on the outcome of the 2020 presidential election. This is understandable; Democratic frontrunner Joe Biden, who currently polls well against Trump, has signaled anything but a hard line against the country. Simplistic, perhaps, but that's the 6,900 mile viewpoint from Beijing. Judging from Trump's threat of additional tariffs just last week – the catalyst for this new escalation – the president has calculated that the political benefits of beating up on the far east powerhouse outweighs the standoff's domestic casualties. So what will the Fed do? Some went so far as to speculate that Trump short-circuited trade talks because of disappointment in Fed Chair Jerome Powell's suggestion last week that the rate cut was just a "mid-cycle adjustment" and didn't necessarily portend aggressive easing. For now, the prospect that the Fed will come to the rescue in the face of more trade uncertainty offers little comfort. If it does (and it probably will), it will come on the heels of more market turmoil or signs that consequences of the trade war are showing up in economic data. The U.S. has weathered the trade conflict while maintaining a strong economy. But cracks might start to show if Trump follows through on the threat of new tariffs, which will be the first to really ensnare consumer goods. VISIT ECONOMY & MARKETS » Trending Stories... When I last met with Richard Mogey years ago, past director of The Foundation for the Study of Cycles, the topic of sunspot cycles came up. Mogey was the first person who totally got it. He had been following these cycles for a long time and understood their impact on the business cycle and agriculture.... All the focus this week, after the Fed rate cut on Wednesday, was on the Democratic debates, and I gotta tell ya… they have been on the disappointing side. One clear trend is that Elizabeth Warren is steadily rising in popularity. Another is that Independents are more powerful than most realize. So today let's talk... At the end of July, Harley-Davidson reported second-quarter results, and it was a bloodbath. Sales slid and profits suffered a 20% drop. None of this is surprising to Harry and me. In fact, we knew well before 2006 that the company would fall from grace because we knew its target audience and what they would... It's been too long since we've shared our Q&As with our readers. So, today we remedy that. Here's what readers have been asking Rodney and me… and how we answered them. Remember, if you have any questions we don't answer below, write to us at economyandmarkets@dentresearch.com. Karen S. Emailed The Following… I have been an... I know it's in vain, but I keep Location Services turned off on my phone when I'm not using Uber or some other mapping app. In my head, this reduces the number of apps that can track my movements, and thereby removes just a bit more of my personal information from the amorphous cloud. Sadly,... | 
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