For several months all was working well. Or so it seemed. Slowly ratcheting up trade tariffs on China gave President Trump several talking (and tweeting) points with minimal economic blowback. US growth slowed, but only modestly and in any case it wasn’t obvious that the trade war was to blame. But the game may have changed on Monday, when China let its currency fall below rise above a psychologically key red line: 7 to the US dollar, marking the lowest point in more than a decade for the yuan.

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US Treasury labels China as “currency manipulator”: WSJ
Currency-war risk is rising: CNBC
China acts to limit weakness in yuan: Bloomberg
N. Korea launches missiles into sea for 4th time within 2 weeks: Reuters
Former Fed governors warn that central bank should remain independent: CNN
German factory orders rebounded in June: Bloomberg
Global output edged up to three-month high in July: IHS Markit
Services PMI for US ticked up in July to four-month high: IHS Markit
US services growth (ISM Non-MFg Index) fell to three-year low in July: CNBC
10-year Treasury yield drops to 1.75%–lowest since 2016:

Real estate investment trusts (REITs) led the major asset classes last week as investors dumped stocks, based on a set of exchange-traded funds. Equities in emerging markets took the biggest hit as escalating tensions in the US-China trade war triggered a rise into safe-haven assets.

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Back-to-back shootings stun America over the weekend: NY Times
Hong Kong protests pushing city to “extremely dangerous situation”: Reuters
India revokes special status for Kashmir, risking new outbreak of violence: BBC
Iran says it seized another oil tanker in Persian Gulf: CNN
China moves to suspend imports of US agricultural products: Bloomberg
Trump overruled advisors in approving new sanctions on China: WSJ
China’s services sector expanded at slowest pace in 7 months in July: Reuters
Final Eurozone Composite PMI for July shows nearly stagnant output: IHS Markit
US payrolls rose moderately in July: CNBC
US consumer sentiment held near post-recession high in July: MW
Factory orders in US rose less than expected in June: Reuters
China allows yuan to fall to 7 against US dollar in trade-war escalation: Bloomberg

● We’re Still Here: Pain and Politics in the Heart of America
By Jennifer M. Silva
Summary via publisher (Oxford U. Press)
The economy has been brutal to American workers for several decades. The chance to give one’s children a better life than one’s own — the promise at the heart of the American Dream — is withering away. While onlookers assume those suffering in marginalized working-class communities will instinctively rise up, the 2016 election threw into sharp relief how little we know about how the working-class translate their grievances into politics. In We’re Still Here, Jennifer M. Silva tells a deep, multi-generational story of pain, place, and politics that will endure long after the Trump administration. Drawing on over 100 interviews with black, white, and Latino working-class residents of a declining coal town in Pennsylvania, Silva reveals how the decline of the American Dream is lived and felt.
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US companies added 148,000 workers to payrolls in July (on a seasonally adjusted basis), the Labor Department reports. The gain is below June’s increase, but the one-year trend for private payrolls was steady, as expected, at a respectable +1.7%.
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The Global Market Index’s risk premium is expected to earn an annualized 4.8%, based on revised data through July. Today’s update is unchanged from last month’s analysis. GMI is an unmanaged market-value-weighted portfolio that holds all the major asset classes (except cash). The performance forecast for this passive benchmark represents the ex ante premium over the projected “risk-free” rate for the long term.

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China vows to respond to Trump’s new trade tariffs: CNBC
US pulls out of Cold War-era nuclear treaty with Russia: BBC
Japan expands trade restrictions on South Korea: NY Times
Eurozone retail spending rebounded in June: Reuters
Global mfg activity contracted for third month in July: IHS Markit
ISM Mfg Index for US fell to 51.2, lowest print since Aug 2016: CNBC
US Mfg PMI in July dropped to lowest level since Sep 2009: IHS Markit
Construction spending in US fell 1.3% in June vs. year-earlier level: HW
US jobless claims rose moderately last week, but labor mkt still tight: CNBC
US job cuts slowed in July, falling 7.5% vs. previous month: CG&C
Today’s July US private employment data set to hold at +1.7% annual rate:

US equities continued to lead the major asset classes in July. For a second straight month, the Russell 3000 Index posted the highest monthly return, closely followed by US real estate investment trusts (REITs).

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Highlights from last night’s Democratic debate: The Hill
Fed cuts interest rate by 1/4 point in ‘midcycle adjustment’: CNBC
US imposes sanctions on Iran’s forign minister: CNN
China’s factory activity contracted in July: CNBC
Eurozone mfg activity contracts sharply in July: IHS Markit
Brexit worries weight on UK mfg in July: Reuters
US labor costs rose at slowest pace in 1-1/2 years in Q2: Reuters
1yr trend for US private employment slips to +1.7%, a 20-month low: ADP