Still watching the clock tick by as I wait for what I’ll eventually call “The Great Trump Economic Implosion,” while feeling grateful that 1) the US system does not yet include a tradition of hereditary monarchy and that 2) I will never in my life participate in the mixed martial art sport of shaking hands with the President. As for the implosion part, my bet is still on the possibility of a trade war with some important historic ally of the US whose leadership did not have the foresight to grant a building concession to the Trump organization for a golf resort. A whiff of that possibility came up again this week, as the President resurfaced his idea to enforce quotas and tariffs on steel imports. As we pointed out in mid-June, the five largest exporters of steel to the US are: Canada, Brazil, Mexico, South Korea, and Turkey. Turkey, barely a US ally, does have at least one Trump-branded property, so I guess the greatest burden from steel tariffs will fall on the other four countries. NAFTA renegotiation should be fun.

Here is a curated list of important stories outside the main headlines that caught our attention this week.

Kroger Sues German Supermarket Chain Lidl Right After It Opened Its First U.S. Stores (Fortune). We have done a lot of work on the grocery business, including analyses of Whole Foods Markets WFM and Kroger KR. Framework members who have kept up with this research know that the US is in the midst of a major shift in the grocery landscape. Kroger, the largest US grocer is very much feeling the heat, both domestically from Amazon especially, and from overseas, where strong discount competitors like Aldi and Lidl are trying to gain a North American foothold. Kroger fought back against one of them – Lidl – filing a lawsuit against the company as soon as the German firm announced its first store opening. The lawsuit involves the claim that Lidl’s store brand’s name is confusingly similar to Kroger’s own store brand’s name. Which side will likely win? Of course, the lawyers’ side.

Red flags from the US car industry — in charts (Financial Times). The automotive business has been slowing down and this has been showing up in the data. At the end of May, we highlighted a story about the build-up of non-performing loans in the sub-prime auto market, and here is the half of the story we didn’t touch on much: auto inventories are climbing while sales are slowing down. The article has some good graphs and other datapoints related to sales, inventories, and auto employment. One that particularly stood out to me was one quoted from a Brookings report: “The car sector is of vital importance to US manufacturing, accounting for 80 per cent of overall employment growth since the end of 2015…”

US global leadership is missing in action (Financial Times). I’ve been reading more and more about the degree to which morale within the State Department has been falling since the start of the Trump administration. Secretary of State, Rex Tillerson, reportedly lost his temper with some White House officials when they put the kibosh on his proposal to hire an undersecretary who, while a lifelong Republican, had signed a “Never Trump” letter during the campaign (It’s not enough to proclaim an oath to the US Constitution these days, the required oath is reportedly more personal). Very few appointed positions at the State Department even have nominees, and many experienced diplomats are choosing to call it quits and retire rather that work for an administration that doesn’t seem to value their efforts.

Two things are worth noting: 1) Secretary of Defense Mattis has recommended increased troop levels in Afghanistan, yet the US has no ambassador to that country after President Obama’s ambassadorial staff was fired in January, 2) Mattis reportedly said that every dollar saved from the State Department budget would need to be used to buy bullets for his Defense Department. Regarding the former point, without diplomatic agreement to a troop build-up, Mattis’ plan sounds rather more like an invasion. There is some good news, though, regarding the latter point: the increase in President Trump’s proposed budget for the Department of Defense – $52.7 billion – is a little less than twice the entire proposed budget for the State Department. Mattis will be swimming in bullets!

Which Party Was More Secretive in Working on Its Health Care Plan? (NY Times). I won’t beat a dead horse, but this Healthcare plan? Geesh! According to polls I’ve seen, the majority of Americans strongly oppose the current Senate plan, yet Mitch McConnell has been meeting in secret for weeks trying to distribute enough pork to his Senatorial colleagues to scrape together 50 votes. One complaint about Obamacare among Republicans was that the Democrats pushed through the ACA in the dead of night without any discussion. This article makes a quantitative comparison between the two legislative efforts. The Economist has a nice analysis of this “Third time’s the charm” legislation.

Wanna buy some cash? It will cost you (The Economist). I got a kick out of this article in the Economist as it highlights some of the crazy things that go on in the country I once called home – Japan. Low income workers, pressed for cash at the end of each month (Japanese salaries are traditionally paid monthly), have been buying cash using credit cards. (You read that right…) In Japan, credit cards are not as widely used as here in the States, and some businesses only accept cash, so if you are in a tight spot and need some green, just buy some cash with your credit card. The only catch is that you end up paying $130 for $100 in cash. Eventually, this usurious process ran afoul of the authorities, who shut these arrangements down. However, you can’t legislate demand, so Japanese loan sharks now market the cash they sell as “high quality portraits of [George Washington’s Japanese equivalent]” or offer cash refunds when you buy hugely overpriced water bottles and are dissatisfied with the purchase.

Toshiba Resumes Talks Over Contention Sale of Microchip Unit (NY Times). Life comes at you fast when part of your business is nuclear power plant construction. To save itself from a morass of problems acquired in the purchase of a Louisiana nuclear power plant construction contractor (Bloomberg has the whole story here), an otherwise bankrupt Toshiba is being forced to sell off its crown jewel: its NAND flash memory business. The problem is that Toshiba’s flash memory business developed in conjunction with the US-Israeli firm SanDisk, now owned by Western Digital WD. SanDisk’s founder is the inventor of flash memory, but needed a partner to be able to construct the chips; Toshiba was that partner. The atomic-level manufacture of memory chips is a feat of modern engineering that requires both a good theoretical design as well as engineering innovation to be able to put the chips into production. As such SanDisk and Toshiba share many patents and have invested in joint venture LLCs whose sole purpose is to produce those chips using SanDisk’s design know-how and Toshiba’s manufacturing know-how. The relationship is so tight that Western Digital argues that Toshiba should not be able to sell that division without Western Digital’s say-so. Lawsuits have been filed on both sides and no matter who comes out on top, it’s certainly the lawyers that will win.

Ageing bull run will need both earnings and Fed cheer (Financial Times). As another earnings season starts, the Financial Times looks at the earnings expectations and monetary policy expectations embraced by market participants. The article suggests that the biggest boost to S&P 500 earnings is likely to be from the Energy sector due to a very easy comparison to last year’s earnings. Other than that? Probably low- to mid-single digit percentage growth in the remaining sectors. On the monetary policy side, the market was cheered by FOMC Chair, Yellen’s, relatively dovish (or non-hawkish) tone during her Congressional testimony. That said, while Yellen plans to continue to keep short-term rates low, we highlighted a story last week about the Fed’s plans to withdraw its bond purchase stimulus. Many speakers at this spring’s Grant’s Conference were convinced that this withdrawal was going to prove more disruptive and painful than Fed officials have so far admitted.