Month: July 2019

A new scientific study could bust wide open deeply flawed fundamental assumptions underlying controversial climate legislation and initiatives such as the Green New Deal, namely, the degree to which ‘climate change’ is driven by natural phenomena vs. man-made issues measured as carbon footprint. Scientists in Finland found “practically no anthropogenic [man-made] climate change” after a series of studies. 

“During the last hundred years the temperature increased about 0.1°C because of carbon dioxide. The human contribution was about 0.01°C”, the Finnish researchers bluntly state in one among a series of papers.

This has been collaborated by a team at Kobe University in Japan, which has furthered the Finnish researchers’ theory: “New evidence suggests that high-energy particles from space known as galactic cosmic rays affect the Earth’s climate by increasing cloud cover, causing an ‘umbrella effect’,” the just published study has found, a summary of which has been released in the journal Science Daily. The findings are hugely significant given this ‘umbrella effect’ — an entirely natural occurrence — could be the prime driver of climate warming, and not man-made factors. 

The scientists involved in the study are most concerned with the fact that current climate models driving the political side of debate, most notably the Intergovernmental Panel on Climate Change’s (IPCC) climate sensitivity scale, fail to incorporate this crucial and potentially central variable of increased cloud cover. 

“The Intergovernmental Panel on Climate Change (IPCC) has discussed the impact of cloud cover on climate in their evaluations, but this phenomenon has never been considered in climate predictions due to the insufficient physical understanding of it,” comments Professor Hyodo in Science Daily. “This study provides an opportunity to rethink the impact of clouds on climate. When galactic cosmic rays increase, so do low clouds, and when cosmic rays decrease clouds do as well, so climate warming may be caused by an opposite-umbrella effect.”

In their related paper, aptly titled, “No experimental evidence for the significant anthropogenic [man-made] climate change”, the Finnish scientists find that low cloud cover “practically” controls global temperatures but that “only a small part” of the increased carbon dioxide concentration is anthropogenic, or caused by human activity. 

The following is a key bombshell section in one of the studies conducted by Finland’s Turku University team: 

We have proven that the GCM-models used in IPCC report AR5 cannot compute correctly the natural component included in the observed global temperature. The reason is that the models fail to derive the influences of low cloud cover fraction on the global temperature. A too small natural component results in a too large portion for the contribution of the greenhouse gases like carbon dioxide. That is why 6 J. KAUPPINEN AND P. MALMI IPCC represents the climate sensitivity more than one order of magnitude larger than our sensitivity 0.24°C. Because the anthropogenic portion in the increased CO2 is less than 10 %, we have practically no anthropogenic climate change. The low clouds control mainly the global temperature.

This raises urgent questions and central contradictions regarding current models which politicians and environmental groups across the globe are using to push radical economic changes on their countries’ populations.

Conclusions from both the Japanese and Finnish studies strongly suggest, for example, that Rep. Alexandria Ocasio-Cortez’s “drastic measures to cut carbon emissions” which would ultimately require radical legislation changes to “remake the U.S. economy” would not only potentially bankrupt everyone but simply wouldn’t even work, at least according to the new Finnish research team findings. 

To put AOC’s “drastic measures” in perspective — based entirely on the fundamental assumption of the monumental and disastrous impact of human activity on the climate  — consider the following conclusions from the Finnish studies: 

“During the last hundred years the temperature increased about 0.1°C because of carbon dioxide. The human contribution was about 0.01°C.”

Which leads the scientists to state further:

“Because the anthropogenic portion in the increased carbon dioxide is less than 10 percent, we have practically no anthropogenic climate change,” the researchers concluded.

And the team in Japan has called for a total reevaluation of current climate models, which remain dangerously flawed for dismissing a crucial variable: 

This study provides an opportunity to rethink the impact of clouds on climate. When galactic cosmic rays increase, so do low clouds, and when cosmic rays decrease clouds do as well, so climate warming may be caused by an opposite-umbrella effect. The umbrella effect caused by galactic cosmic rays is important when thinking about current global warming as well as the warm period of the medieval era.

Failure to account for this results in the following, according to the one in the series of studies: “The IPCC climate sensitivity is about one order of magnitude too high, because a strong negative feedback of the clouds is missing in climate models.”

“If we pay attention to the fact that only a small part of the increased CO2 concentration is anthropogenic, we have to recognize that the anthropogenic climate change does not exist in practice,” the researchers conclude. 

Though we doubt the ideologues currently pushing to radically remake the American economy through what ends up being a $93 trillion proposal (according to one study) — including AOC’s call for a whopping 70% top tax rate — will carefully inquire of this new bombshell scientific confirmation presented in the new research, we at least hope the US scientific community takes heed before it’s too late in the cause of accurate and authentic science that would stave off irreparable economic disaster that would no doubt ripple across the globe, adding to both human and environmental misery.  

And “too late” that is, not for some mythical imminent or near-future “global warming Armageddon” as the currently in vogue highly politicized “science” of activists and congress members alike claims.  

via ZeroHedge News https://ift.tt/2JHcjOr Tyler Durden

Authored by Christian Schneider via The College Fix,

Congress continues to put pressure on websites that appear to aid in the solicitation of sex work

President Donald Trump’s administration is partly responsible for a new wave of college students seeking out “sugar daddies” to pay off their student loans, according to a web service dedicated to facilitating such relationships.

A recent statement by SeekingArrangement, a website which matches “sugar mommies” and “sugar daddies” with “sugar babies,” argues that U.S. Education Secretary Betsy DeVos* is “seemingly waging war against tens of thousands of student loan borrowers.”

“Rather than look to Washington for relief, more than two million students are turning to Sugar Daddies and Sugar Mommies,” the site claims.

The company’s announcement comes even as Congress continues to put pressure on websites that appear to aid in the solicitation of sex work.

SeekingArrangement pairs wealthy older men and women looking for “companionship” with younger adults who are willing to be paid for their services. Often times, these relationships are expected to be sexual, some of its users have said.

Data from the company show 30 percent of the money earned by sugar babies is spent on tuition and school-related expenses. The site claims 2.5 million of its 20 million users are American college students.

In March, the University of North Carolina student newspaper profiled “Anna,” an anonymous student who earned $12,000 a month from three sugar daddies. Every sugar baby interviewed by the paper said they regularly engage in sexual conduct with their sugar daddies, some being flown to New York to do so.

“Anna and many other sugar babies said sex is expected by a majority of men on the site,” according to the Daily Tar Heel article.

According to a poll conducted in England in 2017, one in three college students is willing to trade sexual favors for help paying for college. The poll found that 59 percent of students were either “a bit,” “mildly,” or “very” interested in becoming a sugar baby.

But according to SeekingArrangement, the Trump administration and the ones before it are all but forcing students into sex work.

“Over the past three administrations, the overall cost of attending college has more than doubled,” said Brandon Wade, the company’s founder, in a statement.

“Students are tired of hearing politicians campaign on the importance of education, job growth, and opportunity-just to leave promises on the convention floor,” he said.

SeekingArrangement declined multiple requests via email and phone to comment by The College Fix.

According to SeekingArrangement data, the average sugar daddy is 41 years old and has an annual income of $250,000. New York tops the list of “sugar dating” cities, followed by London, Toronto and Los Angeles.

“With an average monthly allowance of $3,000, student Sugar Babies can pay off tuition in about three months, leaving many with the ability to focus on achieving an education,” the site states.

The site specifically attempts to recruit college women, as students with an .edu e-mail address are allowed to join for free. The company also distributes literature promising “debt free” college or “free tuition.”

“Students registered on SeekingArrangement get help paying for tuition and even more benefits,” claims the company. “Finding the right Sugar Daddy can help students gain access to the right network and opportunities. College Sugar Babies can also get help paying for other college-related costs, such as books and housing.”

“Sugaring” also helps young women pay non-education-related expenses. One of the women interviewed by the Daily Tar Heel said working as a sugar baby allowed her to pay for necessary medicine.

The site classifies itself as a “venue,” therefore absolving itself of performing background checks on its users. Potential sugar daddies and mommies can pay $2,000 to join the site’s “Diamond Club,” which verifies the user’s income and conducts a background check.

For years, the site has faced accusations that it facilitates prostitution, taking advantage of young women in dire financial need. But the company has always maintained that it is simply a dating website where no specific offers of sex in exchange for money are made.

Nonetheless, Congress had continued to put pressure on websites that appear to aid in the solicitation of sex work. In mid-2018, President Trump signed both the Fight Online Sex Trafficking Act and the Stop Enabling Sex Traffickers Act, which were drafted to hold platforms and internet service providers responsible if users of the sites promote prostitution.

According to Eric Goldman, a Santa Clara University law professor who specializes in internet law, FOSTA raises “significant concerns” about the viability of the sugar daddy community.

Goldman told The College Fix that sugar daddy sites could find themselves in the crosshairs of a state or federal prosecutor “because of the fact that we all know what’s going on, even if nothing expressly condones prostitution in the marketing material.”

Goldman noted that the Fight Online Sex Trafficking Act added more crimes that could be pursued by either state or federal law enforcement officers. He suggested that “everyone is aware of this community,” but it is a “very complicated decision” for prosecutors to decide whether to pursue charges against a sugar daddy website.

“There are some participants in the sugar daddy community who don’t engage in commercial sex,” added Goldman, warning that it would be “unfortunate to foreclose that possibility in the effort to shut down the commercial sex.”

Following passage of the new federal law, websites like Backpage and Craigslist Casual Encounters went out of business, as both were accused of facilitating prostitution.

Attorney Justin Webb of Milwaukee-based law firm Godfrey & Kahn called SeekingArrangement’s presence on the internet “unchartered legal territory,” noting the laws “haven’t been enforced against anybody yet.”

“That’s both good and bad” for SeekingArrangement, said Webb, noting that “it’s good in that you’re going to have a lot of people who were originally against FOSTA and SESTA perhaps writing amicus briefs in a case once it gets to an appellate level, but it’s bad in that whatever court gets it can interpret it narrowly or broadly.”

Webb said there might be some state attorneys general “itching for a test case” to take SeekingArrangement to court, “especially those that find this kind of conduct abhorrent.”

But he also suggested a lawsuit could more likely come from the parents of someone who was hurt by the website or subjected to sex trafficking, who has deep pockets and feels “particularly aggrieved.”

After passage of the new federal anti-sex trafficking laws, Apple iOS removed the SeekingArrangement app from its app store. Soon, Brandon Wade issued a video responseto FOSTA, claiming prostitution was never welcome on his site and that SeekingArrangement would be closely monitored to purge known prostitutes and escorts from its users.

In the video, Wade says it was his mother that told him women, including many staunch feminists, “ultimately want a partner who is a good provider and has a kind, generous nature.”

“If my mom is right, then many, many women aspire to be sugar babies,” Wade said.

In recent months, several Democratic presidential candidates have released plans promising either free tuition, debt forgiveness, or both. According to one recent Harvard University poll, more than half of young people support making college tuition-free.

In December 2018, DeVos canceled nearly $150 million in student debt after a judge ordered immediate implementation of a rule enacted by the Obama administration. The Trump administration has also supported limiting the amount of student debt that can be accumulated by parents of undergraduate students and by graduate students.

via ZeroHedge News https://ift.tt/2Y6Z6Il Tyler Durden

It was a bad enough look for Deutsche Bank that the lender started one of the largest rounds of Wall Street firings since Lehman this week. But the revelation that two tailors visited DB’s London office on Monday to tailors custom $1,900 suits for some MDs while thousands of employees were being handed their walking papers heaped ridicule on the bank for the unforced PR blunder at an extremely sensitive time.

If only one of the tailors wasn’t carrying a ‘bitcoin’ branded garment bag – then he likely wouldn’t have been photographed by the press, which initially identified him as a just-fired DB employee, but soon corrected its mistake.

The banks comms department refused to acknowledge the story when it first surfaced, but as the headlines spread, it seems CEO Christian Sewing has decided to address the issue before things get even more out of hand.

According to Barrons, which cited reports in the German press, Sewing personally reprimanded the senior bankers for being inconsiderate enough to invite tailors to the office on the same day as the largest mass layoff in the bank’s recent history.

Christian Sewing, the bank’s chief executive, told Handelsblatt, the German newspaper: “This behavior is in no way in line with our values…I assume that the two colleagues will not forget my call.”

Of course, if we were them, we’d be updating our resumes and reaching out to LinkedIn contacts. Earning the enmity of your boss’s boss’s boss’s boss at a time of great structural upheaval within your organization certainly doesn’t bode well for their employment prospects.

via ZeroHedge News https://ift.tt/2XXjonw Tyler Durden

Authored by Mac Slavo via SHTFplan.com,

An influential survey of some of the world’s largest fund managers shows that the risk for a global financial downturn is the highest it has been in four years.  Investors are now preparing themselves for the next recession, which some say, will make the Great Recession look like a cakewalk.

According to investors surveyed by Absolute Strategy Research, as reported by theFinancial Times, investors are “buckling up” for the economic downturn they believe is imminent. ASR’s findings, which are based on a survey of more than 200 institutions controlling a combined $4 trillion of assets, suggest that the bond rally is not a blip.

Global bond markets have rallied in recent weeks as central banks have been responding to the numerous signs that major economies are looking increasingly weak. Investors have since ramped up purchases of government debt last week after Christine Lagarde’s nomination as the next European Central Bank (ECB) president.  It appears that investors are betting that the International Monetary Fund chief’s appointment would mean the era of ECB stimulus is set to continue.

The survey indicates that investors anticipate a 45 percent chance of a global recession in the coming 12 months, the highest since the survey began in 2014. Investors have also shifted their views on where bonds markets are headed next. The majority now expect short-term US bond yields to be lower in a year’s time – a reversal since March, when more than half were banking on higher yields. Expectations that longer-dated yields and record-low yields in Europe will rebound have all but disappeared. –Financial Times

According to David Bowers, the ASR head of research, the United States indices are yet to show some of the telltale signs of doom and gloom.

“If the bond market is really telling us something, at what point will the equity market wake up?” he said.

“The survey embodies a fundamental tension in markets,” he added. “With recession risks running so high, you would expect a worse outlook for earnings. But the implicit assumption is that earnings risks for equities are not that great.”

Fund managers are also more bearish on the dollar than at any point in the past five years, the survey showed according to the Financial Timesreport. A weaker United States dollar would be excellent news for precious metals, with nearly two-thirds of investors expecting gold prices to rise in the next year.

That makes now a great time to invest in gold or other precious metals.  Take the time to look around and get what you can afford.  Now isn’t the time to go into debt to but gold, but there are some less expensive options out there.  You could also grab some silver.  Some silver is better than none if the dollar crashes under the weight of endless money printing and government debt.

via ZeroHedge News https://ift.tt/32mtwFK Tyler Durden

Jeffrey Epstein’s attorneys have informed Judge Richard M. Berman that their client wants out of his 100 sqft holding cell at the Metropolitan Correctional Center (MCC) in lower Manhattan he’s been in since his arrest last Saturday at Teterboro airport. 

Instead, the registered sex-offender and self-admitted pedophile would agree to house arrest at his palacial 21,000 sqft, $77 million 1930s Manhattan mansion where investigators found a cache of child porn. 

Epstein will also agree to wear a GPS monitoring device, install surveillance cameras inside and out (as if he doesn’t have any?), and deregister his cars and aircraft if released on bail “in an amount set by the court after reviewing additional information regarding Mr. Epstein’s finances,” according to the Daily Mail. 

The mansion…

According to the New York Times,

“The seven-story residence at 9 East 71st Street, between Fifth and Madison Avenues, sprawls across 21,000 square feet and has five bathrooms, a two-story reception room and many bedrooms, including three three-room suites on the fourth floor.

It also has a heated sidewalk in front to melt the snow during the winter months. On the second floor is a mural that Mr. Epstein had commissioned in recent years: a photorealistic prison scene that included barbed wire, corrections officers and a guard station, with Mr. Epstein portrayed in the middle.

…
At the base of the stairwell, one of the visitors said, Mr. Epstein had placed a chess board with custom figurines, many dressed suggestively — each piece, he noted, was modeled after one of his staffers.

He decorated the home with other oddities, like a life-size female doll hanging from a chandelier, and had arranged a small dining room to resemble a beach scene.

…

“a main hallway that was covered with rows of artificial eyeballs from England that had been made for wounded soldiers.” 

Also noted in the filing: “Mr. Epstein stands ready and willing to pay for 24-hour armed guards should the Court deem it necessary or appropriate.”

Epstein would report daily to pretrial services on the phone, have a trustee or trustees move into his mansion to monitor him and deregister all vehicles and ground his jet.

Federal prosecutors will have a chance to respond to this filing on Friday, and in a previously filed bail memorandum asked that Epstein be kept behind bars ahead of his trial. –Daily Mail

Epstein’s lawyers argue that he’s protected under the terms of a 2008 immunity deal, writing “In essence, the government seeks to remand a self-made New York native and lifelong American resident based on dated allegations for which he was already convicted and punished – conduct the relitigation of which is barred by a prior federal nonprosecution agreement.” 

In response to the federal prosecutors warning that Epstein is a serious flight risk, his attorneys wrote: “The government makes this drastic demand even though Mr. Epstein has never once attempted to flee the United States – despite a Florida federal judge’s stated belief that he could void the NPA in appropriate circumstances, possibly threatening new charges there, and notwithstanding legally erroneous government assertions in ancillary litigation that Mr. Epstein was subject to potential prosecution in other federal judicial districts, including this one specifically.” 

Judge Berman will issue his ruling on Monday on whether pedo Jeff can return to his artificial eyeball wall. 

via ZeroHedge News https://ift.tt/2YOgfn9 Tyler Durden

Another day, another fiasco at the biggest US airline carrier, and this time it is oddly reminiscent of the conditions surrounding the melting ice-cube that is Tesla.

With Boeing’s workhorse and most popular airline – at least until recently when it was unveiled to be an occasional cost-cutting driven lead balloon – grounded indefinitely, moments after the close the company said that the head of its 737 program, Eric Lindblad, was unexpectedly retiring after just one year in the post, triggering a leadership shuffle for another high-profile project: a proposed midrange jetliner.

The 34-year Boeing executive took charge of the 737 program, and the manufacturing site in Renton, Washington, last year as the U.S. planemaker struggled with late deliveries of engines and other components. Previously, Lindblad overrsaw development of Boeing’s new 777X widebody in Everett. His predecessor, Scott Campbell, vice president and general manager of the 737 program and Renton site leader, retired at the end of the year after three decades at Boeing Commercial Airplanes.

According to the company, Lidnblad’s retirement isn’t related to the crisis at Boeing after two of its Max models crashed in October and March, triggering a global grounding.

Lindblad, 57, “shared with me his desire to retire last year, and we will now begin to embark on a thoughtful and seamless transition plan,” Kevin McAllister, who runs the planemaker’s $60 billion commercial division said in a message to employees Thursday.

In other words, just another guy who wanted to spend more time with his family.

In his stead, Boeing’s single-aisle program will be run by Mark Jenks, who previously headed all aspects of a proposed aircraft known within Boeing as NMA, for new midmarket airplane.

In separate news, Attorney General William Barr said he would recuse himself from the DOJ’s investigation into Boeing Co BA.N after two 737 MAX airplane crashes killed 346 people, a spokeswoman for Barr said Thursday. Bloomberg News reported on Thursday that Barr has recused himself because his former law firm is representing Boeing. Reuters and other outlets reported in March that federal prosecutors aided by the FBI were scrutinizing the development of the 737 MAX jetliners. Boeing did not immediately commen

via ZeroHedge News https://ift.tt/2Gb9tQX Tyler Durden

Once again, it appears Robert Lighthizer and the Trump Administration’s trade hawk faction have won over the more moderate advisors. Only a week ago, reports surfaced claiming the US might exempt China from Iran sanctions, for fear that the US would have no choice but to crack down otherwise (since Beijing has made clear exactly how it feels about Washington dictating which countries it can trade with).

Now, that idea, which was being pushed by senior State Department officials, has been abandoned, according to a Politico report. Instead, senior administration officials believe there’s no avoiding the fact that Beijing has repeatedly violated the ban on importing Iranian crude.

Because of this, a group of China hawks on the National Security Council are now pushing for the US to slap secondary sanctions on Chinese businesses. Aggressive tactics like this would almost certainly sink the recently revived and still extremely delicate ‘trade truce’ brokered between Trump and Xi in Osaka.

You might remember the exact violation in question. In June, a tanker carrying up to a million barrels of Iranian oil docked near the Chinese port city of Qingdao. Republican lawmakers complained, demanding that the Trump Administration pressure Beijing to stop these purchases. China later welcomed a second batch of Iranian oil since the waiver expired in May.

The problem is Beijing’s defiance is undermining the administration’s efforts to drive Iranian exports to zero, the explicit goal of National Security Advisor John Bolton and the other Iran hawks.

So here we are, with the Iran hawks and the trade hawks likely both in agreement, and President Trump likely resisting to avoid pissing off Xi and ending the talks. After all, Beijing is still waiting for concrete action from the US on Huawei.

The internal debate also comes at a precarious moment for Iran. The Islamic Republic was just accused of trying to seize a UK oil tanker in retribution for the seizure of two tankers carrying Iranian crude. And the Islamic Republic’s threats to enrich its growing uranium stockpile beyond the 20% threshold, taking it closer to weapons grade (though still far from the 90%+ needed to build a bomb), certainly aren’t helping.

US officials slammed Iran for “nuclear extortion” at a meeting of the IAEA on Wednesday. And later, Trump tweeted that “sanctions will soon be increased substantially.”

As far as the relationship with China goes, contact was made via phone between negotiating teams earlier this week, but the date of an in person meeting remains unclear, and some in the president’s orbit are already predicting that negotiations will drag on until next year at least.

That is, unless Trump does decide to try and punish Beijing over its Iranian crude imports.

But hey – at this point, trashing the trade deal might be the only way to ensure the Fed delivers a 50 bp rate cute this month. At this point, anybody who has been watching markets over the past few days probably understands that a rate cut has superseded the trade war as the only thing markets care about.

via ZeroHedge News https://ift.tt/2LPyJ2T Tyler Durden

Authored by Sven Henrich via NorthmanTrader.com,

$DJIA 27,000, $SPX 3,000, so the headlines and the president celebrate. Don’t let the headlines distract you, look under the hood. This rally is technically weak, it’s as weak as the reason for it: The Fed.

From my CNN Business article this morning:

“Lowering interest rates is rooted in desperation. Watch out, investors. While rate cuts, low interest rates and central bank intervention have been kind to asset prices over the past 10 years, a rate cut this month may eventually be bad news”…..The facts reveal an uncomfortable truth: Cheap money has not resulted in sustained new growth, but it has produced an unprecedented explosion in debt. And the Fed’s solution is now to offer more cheap money by cutting rates again.”

So while Powell once again pleased markets on the surface resulting in new highs headlines, the details beneath lay bare a rally that is weak, weak, weak.

Don’t take my word for it. Here are some sample data charts that make the point better than I ever could.

Nasdaq New High/New Lows:

The entire year has been pitiful on the strength front compared to 2019, but this latest run today is the weakest yet. There’s no notable expansion in strength. And note $NDX is inside another rising wedge yet again.

What about the cumulative advance/decline picture?

Weak, weak, weak. New highs on $NDX, but a lower high on the cumulative advance/decline mix, a negative divergence.

$BPNDX is actually red on today’s new highs and is also showing a negative divergence:

And that’s just the tech sector leading with weakness from within. Never mind the usual suspects.

Banks:

Small caps:

Transports:

But for now the headline indices keep chugging higher inside the Sell Zone. Just remember: Nobody will ring a bell. But these charts above tell a tale, a tale that says: Caution. Weak.

*  *  *

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

via ZeroHedge News https://ift.tt/2NQ8yvJ Tyler Durden

One of the biggest walls of worry facing the market, now that both the US-China “ceasefire” and the Fed’s imminent rate cut are in the rearview mirror, is just how bad the coming earnings season will be. As a reminder, last week we showed using Factset data, that the number of companies issuing negative guidance had risen to the second highest on record.

And if Monday’s draconian guidance cut from German chemical giant BASF which sent its stock tumbling…

… wasn’t enough, today’s dismal report by Fastenal suggest that the wall of worry can’t be high enough as the upcoming earnings season may be far worse than even the more pessimistic predictions.

Fastenal, one of the first industrial companies to report earnings and as Barron’s puts it, a “valuable source of insights about the health of US manufacturing”, not to mention the state of global manufacturing supply chains — reported far lower sales and earnings than Wall Street analysts were expecting.

The company earned 36 cents a share, less than half the 74 cent estimate. Revenue also missed, with the company reporting $1.37BN in Q2 sales, below the $1.38BN expected, sending the stock lower by as much as 6% to a low of $29.44, before it recouped some losses as the S&P 500 rose to a new all time high.

What was more concerning than the headline prints was that second-quarter sales growth at the company slowed to 8%, the first sub-10% growth in the past nine quarters. Fastenal highlighted double-digit percentage-point growth in its vending, On-Site and national account business, even as overall activity in its end markets slowed.

As if the data was not self-evident, the company also said it saw some slowing during the period compared to the first quarter.

As a result, profits were clearly squeezed as gross profit declined 1.8% Y/Y, and pretax earnings in the quarter as a percentage of sales dropped to 19.8% vs. 21% y/y

What was most informative about the company’s disappointing earnings report was the commentary, according to which “while we successfully raised prices as one element of our strategy to offset tariffs placed to date on products sourced from China, those increases were not sufficient to also counter general inflation in the marketplace,” the company said in its press release.

“We have taken additional actions in the third quarter of 2019 to counter the broader pressures we are experiencing on our costs as well as the additional tariffs that were levied on China-sourced products in May 2019″ the company previewed the current quarter, although it added gloomily that “the reality is, even in a 10% or 25% tariff environment, they often times are still the lowest cost producer of an item.”

Translation: profits are coming down. Fast.

As a result, FAST took additional actions in the third quarter to counter the broader pressures on costs, as well as the additional tariffs that were levied on China-sourced products in May. To be sure, while the increase in costs stemming from trade issues is a problem, analysts will likely focus more on the slowdown in sales growth.

As Barron’s adds, Fastenal’s results follow news of a poor quarterly performance from MSC Industrial Direct (MSM), another distributor of parts and other gear for manufacturing. MSC’s results missed Wall Street’s expectations and management issued a sales forecast for the current quarter that was below what analysts were predicting.

The question now is whether Fastenal is a gloomy harbinger of what to expect from other companies with Chinese exposure, and if so, just how big will the margin contraction be across the US manufacturing sector in particular, and the S&P in general.

via ZeroHedge News https://ift.tt/2XNffhS Tyler Durden