Month: July 2024

Authored by Mike McDaniel via American Thinker,

Until 1996, one of the primary tactics of anti-liberty/gun cracktivists was to treat criminal misuse of guns, as well as accidents and suicides as public health matters. There was, of course, no disease vector, no virus, bacteria or parasite. There could be no vaccine, no medication, no treatment. None of that was the point. If they couldn’t disarm law-abiding Americans any other way, they’d try to do it under the “public health” banner.

Fortunately for free Americans, in 1996 this language was inserted into a budget bill:

“None of the funds made available for injury prevention and control at the Centers for Disease Control and Prevention may be used to advocate or promote gun control.”

That simple sentence, that law, drove supposed medical scientists obsessed with gun control underground. They still did anti-gun advocacy and “research” with public funds, they were just quiet about it, funneling money and “research” through NGOs and anti-gun groups.

Take the link to see an NPR article about how, for more than a quarter century, they’ve done all they can to circumvent the law. And now, the Surgeon General, in what may be the dying days of the Mummified Meat Puppet Administration, is saying the quiet part out loud. Dr. Vivek Murthy, on June 25, released a report titled “U.S. Surgeon General Issues Advisory on the Public Health Crisis of Firearm Violence in the United States.”  

Today, United States Surgeon General Dr. Vivek Murthy released a landmark Surgeon General’s Advisory on Firearm Violence, declaring firearm violence in America a public health crisis. Firearm violence is pervasive, with more than half (54 percent) of U.S. adults or their family members having experienced a firearm-related incident in their lives. Over the last decade, the number of people who have died from firearm-related injuries, including suicides, homicides, and accidental deaths, has been rising, and firearm violence is now the leading cause of death among children and adolescents.  

That 54% figure was derived from a telephone poll of 1271 English speakers and 73 Spanish speakers. Those doing the polling claim it is a “nationally representative sample,” but they publish nothing on the geographical distribution of the poll. Obviously, any poll that focused on blue state urban areas would produce different results than more broadly based polling. Oddly, the document is labeled “KFF Health Tracking Poll/ KFF Covid-19 Vaccine Monitor.” What that might have to do with gun issues is anyone’s guess.

The assertion “firearm violence is now the leading cause of death among children and adolescents” is likewise misleading. This is an old trick of anti-liberty/gun cracktivists. That assertion is only potentially accurate if one includes people 18+, suicides, accidents and gangs shooting each other. One would think, considering how the federal public health bureaucracy threw away its credibility over fraudulent Covid huckstering, they’d go overboard to be accurate and truthful, but they’ve obviously learned nothing.

Murthy’s report notes the “Black community endured the highest firearm homicide rates in every age group,” but doesn’t mention this is because Black criminals commit all manner of violent crimes in numbers far outstripping their numbers in the population. Nor does Murthy mention Democrats have done all they can to help those criminals, releasing them without bail, refusing to prosecute, decriminalizing crime in general, and in the rare cases where violent felons are prosecuted, imposing ridiculously light sentences.

As one might imagine, Murthy’s recommendations conform exactly to Joe Biden’s handler’s anti-liberty, unconstitutional, demands:

3. Firearm risk reduction strategies, such as:

a. Requiring safe and secure firearm storage, including child access prevention laws;

b. Implementing universal background checks and expanding purchaser licensing laws;

c. Banning assault weapons and large capacity magazines for civilian use;

d. Treating firearms like other consumer products, including requiring safety testing or safety features;

e. Implementing effective firearm removal policies when individuals are a danger to themselves or others; and

f. Creating safer conditions in public places related to firearm use and carry.

Every one of these anti-gun wish list fever dreams would violate the Bruen decision.  For example “d” is an attempt to violate The Protection of Lawful Commerce in Arms Act. And “f” is a stealth for establishing “gun free” zones that would encompass entire cities, even entire states. All are an attempt to directly infringe on the Second Amendment rights of law-abiding Americans. Criminals—surprise!—don’t obey  gun laws.

It should be no surprise the Surgeon General of a lawless administration should himself violate federal law. It reminds us of this quote attributed to Thomas Jefferson: “eternal vigilance is the price of liberty.”

We thought we had to keep a close eye on the health establishment over Covid and actual diseases. Now we have to keep an eye on them as they try to treat an unalienable, fundament right as a disease, and Americans exercising it, as a disease vector to be eradicated.

Mike McDaniel is a USAF veteran, classically trained musician, Japanese and European fencer, life-long athlete, firearm instructor, retired police officer and high school and college English teacher. He is a published author and blogger. His home blog is Stately McDaniel Manor. 

Authored by Richard Porter via RealClearPolitics,

Joe Biden’s debate performance is not, and should not be seen as, a personal failure, but as another example of the systemic institutional breakdown that drives the populist revolt across the globe.  

By vigorously denying the president’s obvious decline, liberals in the legacy media tried to make us believe something that obviously was untrue. The people who claim to want to protect Americans from disinformation and American institutions from being destroyed actively worked in direct opposition to the truth and, in doing so, undermined faith in one of the nation’s most iconic institutions — the office of the president of the United States. 

Most people engage with reality pragmatically, not politically. We focus on solving the challenges of day-to-day life functionally, not as an ideological construct. We don’t make believe, we make do. We exist in a real world filled with actual challenges to be overcome, and we use our talents and willpower to make our lives better and achieve our personal dreams. 

Sometimes, we need experts to study, media to report, and government to address systemic problems we encounter. Increasingly, however, Western intellectuals, senior business executives, government officials, and media thought leaders are divorced from the pragmatic reality in which “make-do” people live. 

Elites are increasingly ideological and inventive. They seem to believe that their role is to make us believe what they imagine about us and the world around us instead of helping us deal with the actual reality in which we live. 

Rather than making our lives better, elites are absorbed with making us better instead.

Consider what elites want to make us believe:

Unregulated immigration and open borders are not a problem. If you disagree, you’re  jingoistic or nativist or “Christian nationalist” or some other pejorative term.

Police are bad and arresting criminals is white supremacy because criminals are disproportionately black – so “defund the police.” If you point out that fewer criminals in jail mean more crime in our neighborhood – racist!

Climate change threatens the very existence of human life on earth and is the number one issue facing humanity – more important than crime, drugs, hunger, housing, China, immigration, or anything else in your silly, miserable little mind.  Anyone pointing out that it was warmer in the United States 90 years ago, or that in the 35 years during which this idea has captured elite imagination none of the apocalyptic forecasts has proven to be true, is a “denier” – as if disputing a flawed computer model’s projections for 90 years in the future is somehow akin to denying the appalling reality of the Holocaust 90 years in the past. 

Sexual identity is a “cultural construct,” but gender is indelible – so a man can be a woman, and vice versa. Anyone who doesn’t accept this at face value is a hateful “transphobe” – or something.

Western culture is institutionally racist. If you dare ask – which institution is racist? – you’ve merely confirmed your own bias. Everyone must be trained in the new racism – and so every institution of any size must train employees in DEI ideology to learn that getting ahead on merit is a myth and they are inherently “privileged” and therefore undeserving of the fruits of their labor.

Hamas terrorists and their supporters in Gaza are the real victims, while the Israeli civilians they attacked, raped, and mutilated are inhumane.

The litany goes on, seemingly forever, but COVID and the elites’ authoritarian response laid bare for many the extent to which institutions fail to serve but instead seek to make us believe things that are often observably untrue. Consider all the make-believe aspects of the pandemic: The new virus came from a market, not the laboratory in the same city where the U.S. funded Chinese research into enhancing similar viruses. It was a pandemic “of the unvaccinated.” If everyone wears a cloth or paper mask, it will stop the spread; standing six feet apart will also stop the spread; cannabis dispensaries are essential, but attending church is not; and Anthony Fauci is science.

The divide between make-do and make-believe leadership does not correspond exactly to the partisan split between right and left. Across the ocean, Tories were crushed and Labour romped precisely because Tory leadership has been of the elite, make-believe variety – on immigration and COVID.  

Ironically, Britain will veer deeper into make-believe with Labour, as the rest of the West experiences a course correction, thanks to the political engagement and revolt of those making do. A single election is not enough for Western institutions to return to reality, but it reflects at least a partial awakening.

Events such as the conceptually absurd pro-Hamas protests in Western capitals and at leading Western educational institutions have had the effect of shocking go-along-to-get-along pragmatists within our elites into observing that Western culture has developed a reality problem.

Ultimately, our culture needs courageous pragmatists among the elites to push back against their imaginative and ideological make-believe colleagues with resolution, reasoning, and ridicule.

Here’s a way to start: Be gentle to those who imagine things that are not true, but don’t play along just to get along or to avoid being called names; question narratives, don’t parrot them; and only vote for those focused on making it easier for you to make do and achieve your own goals.

Richard Porter is a lawyer in Chicago and National Committeeman to the RNC from Illinois.

While the U.S. has no mandatory retirement age and forcing older workers to retire is, in fact, illegal according to the Age Discrimination in Employment Act, the OECD’s Pensions at a Glance report suggests an effective labor market exit age of 65.2 for men and 65.3 for women in the United States in 2022.

One possible reason for the U.S. ranking 13th out of 39 OECD countries regarding the highest retirement age is pensions without additional private savings not being sufficient to sustain an adequate standard of living.

When choosing how to best save up for old age, there is a clear generational divide in the country.

Statista’s Florian Zandt highlights a Consumer Insight survey from 2022 which shows that, on average, a savings book or deposit is still the most suitable method for many respondents, ranking particularly high among Baby Boomers (28 percent) and Gen Z (22 percent).

The former group also heavily relies on overnight deposits, with 29 percent of survey participants investing in these specific types of deposits lasting from one day to the next.

You will find more infographics at Statista

Interestingly, real estate ranks highest in the age cluster of survey respondents aged 18 to 29. 24 percent of said respondents see it as best suited for retirement savings, even though median house sale prices increased by almost 30 percent between the first quarters of 2020 and 2024.

Another popular retirement scheme in this group is company pension plans. The only cluster of respondents with a popularity share below 20 percent consisted of those born between 1965 and 1979.

Trust in government pensions is low across the board, trailed only by investing in commodities like precious metals. As with savings books and company pensions, the former is seen as especially suitable by both the youngest and the oldest participants in the survey.

Authored by Jonathan Turley,

One of the least discussed aspects of the interview with President Joe Biden last night was his declaration that two of the nine justices are not long for the Court. The question is which two are facing retirement or the reaper.

In arguing for his remaining as the nominee despite record low polling, the President told ABC’s George Stephanopoulos with certainty that the next president “in going to appoint at least two new appointees.”

That must be uneasy news for the relatively small court that almost of a third will soon pass . . . one way or another.

Liberals have been pushing Sonia Sotomayor to retire, but she has clearly rejected those calls.

On CNN, journalist Josh Barro bluntly wondered why Sotomayor remains on the bench when younger jurists could be brought on to guarantee a liberal vote for years to come. He indicated that many liberals are frustrated with her for not stepping down: “I find it a little bit surprising, given what Justice Sotomayor describes there about the stakes of what is happening before the Supreme Court, that she’s not retired. She’s 69 years old, she’s been on the court for 15 years.”

At 70, Sotomayor shows no signs of mental decline. She has been a highly effective justice, stepping into the vacuum created by the death in 2020 of Justice Ruth Bader Ginsburg. Of course, few ever questioned the “Notorious RBG” in her decision to stay on the Court, despite her much older age and longer tenure. While some of us noted that Ginsburg was taking a huge risk in not allowing then-President Barack Obama to pick a successor, she remained on the Court in spite of medical problems and ultimately was replaced by Justice Amy Coney Barrett.

Ginsburg, however, was almost 20 years older than Sotomayor.

There is no concern for deterioration or death on the bench in Sotomayor’s case. It is simply a matter of swapping out justices like light bulbs before they burn out.

All of the justices are younger than Ginsburg when she passed (and considerably younger than President Biden who is running for a second four-year term).

• Justice Thomas, 76.

• Justice Alito, 74.

• Justice Sotomayor, 70.

• Chief Justice Roberts, 69.

• Justice Kagan, 64.

• Justice Kavanaugh, 59.

• Justice Gorsuch, 56.

• Justice Jackson, 53.

• Justice Barrett, 52.

Justice Clarence Thomas is the oldest, but has not indicated that he is ready to retire. He would likely want to wait for a Republican president.

If history is a measure, he has time. Oliver Wendell Holmes retired at 90.

A recent analysis of the court’s projected composition suggested the next time the majority of justices will be appointed by a Democrat is likely to be around 2065.

I did not find that analysis particularly compelling.

However, I also fail to see how Biden can be certain that 2 of the 9 justices will die or retire. After all, even Thomas is six years younger than Biden.

If he is predicting the death or retirement of Thomas within four years, he would presumably predict his own passing or retirement years ago.

Running on the pledge to replace two departing justices could prove awkward if the justices are reluctant to be replaced or dispatched.

This is not the first time that such premature claims led to the inconvenient lingering of the subjects:

White House physician Dr. Kevin O’Connor – who for years has been giving President Biden a clean bill of health despite obvious signs of cognitive and physical decline – has some ‘splainin’ to do.

On Sunday, House Oversight Committee Chairman James Comer demanded to interview O’Connor, and has suggested that the doctor’s involvement in a Biden family business dealing “may have” influenced his medical assessments of the president – who was found to be too cognitively impaired to prosecute for mishandling classified documents. 

Specifically, O’Connor counseled James Biden in connection with alleged work he was performing for Americore Health, LLC – which paid James Biden $200,000 the same day James turned around and wrote Joe a check for $200,000 for an undocumented “loan repayment.”

“Recently, it was reported that you have ‘never recommended that [President] Biden take a cognitive test,” Comer wrote O’Connor. “In February of this year, the Committee conducted a transcribed interview with James Biden. During the interview, James Biden confirmed that you provided him counsel in connection with the alleged work he was performing for Americore.“

Comer has requested all documents and communications related to Americore, and wants him to sit for a transcribed interview.

“To understand the extent of your involvement in the Biden family’s financial activity, we request that you produce all documents and communications in your possession regarding Americore and James Biden. Additionally, the Committee requests you make yourself available for a transcribed interview with Committee counsel. Please contact staff by July 14, 2024, to schedule the interview,” reads the letter reported by Just the News.

Perhaps Comer will ask him about that Parkinson’s specialist who visited the White House at least 9 times in the past year.

By Peter Tchir of Academy Securities

A month ago we published our Updated Rate Outlook. As we start turning our attention to the Fed announcement on July 31st, we wanted to reiterate our view (I still think that there will be 2 to 3 cuts this year, for a total of 75 bps), and update some other thoughts given recent events. 2s and 10s are more in our year-end range than our end of summer range, and other yields are a touch lower than expected (but given recent volatility, that could change in a day).

Using the Bloomberg WIRP (World Interest Rate Probability) function, we see the market has moved a touch in our direction on Fed probabilities.

Basically, 75 bps by the end of January 2025, which I expect to be pulled forward.

No Cut in July?

We have argued, quite aggressively, that the Fed should make their first cut in July. Partly, because the economic data supports it (more on that in a minute), but it also takes the spotlight off of the Fed in the heat of the election.

Regardless of whatever else we have learned about this election in the past few weeks, it has confirmed our view that much of it will be fought on social media. We’ve also learned or confirmed (depending on your starting point) that there are very few topics that are “off-limits” in our current election cycle.

I physically wince at the thought of the first cut in September, stocks soaring 5%, and literally all hell breaking loose on social media as it is portrayed as helping the incumbents. It does not matter if that is true or not, social media is far more about “creating a good narrative and running with it” than with the truth. While I cannot confirm that there are more senior politicians discussing the Fed and talking about their mandate, or it is just a function of today’s media, but it seems like it.

The data could easily justify a July cut, and from a political standpoint, it makes sense, but there does seem to be a risk that after getting “transitory” quite wrong, they are going to be overly cautious on cutting.

The Data and the Trend in Data

On a standalone basis, the jobs report would not signal the need for a rate cut. Academy’s NFP Instant Reaction – Goldilocks or Not? highlighted many of the reasons why this report was even better for bonds than the headline suggested.

From a jobs standpoint, there is clear evidence that:

• The job market, particularly the private sector, is hiring.
• Increasingly, there is a belief that much of the “good” data has been overstated and will be revised down going forward.
• Finally, it seems like this time last year, we were getting headline after headline of union negotiations resulting in record-breaking deals. That does not seem to be the case anymore. It is now possible to enter local establishments and not see “Help Wanted” signs plastered over the doors and walls.

Since we are trying to develop better, faster, more reliable sources of data, we had to spend a few minutes looking at the online data. We are in the process of building a framework to track this more closely, but here are a few “interesting” anecdotes:

• The Conference Board published their June HWOL Report (Help Wanted Online) and concluded that as of the end of May, there had been a 10% decline in job postings.
• From May, the BBC’s Job Boards are still Rife with ‘Ghost Jobs’ is an interesting read and certainly fits my confirmation bias that many jobs listings are just fishing expeditions for good candidates (you never know who might apply), or are just easier to keep posted.
• I was somewhat surprised when ChatGPT returned with:
  • “There are indeed more job postings on Indeed.com now compared to last year. The hiring market has shown significant growth, with companies adapting to new hiring practices post-pandemic, such as remote work, flexible schedules, and virtual interviews. This shift has allowed businesses to attract a more diverse talent pool and meet the increased demand for new employees. Employers have added hundreds of thousands of jobs early in the year, reflecting a positive trend in job availability and market growth (Indeed).”
• I was surprised enough by that answer, that of course I clicked the link, only to find ChatGPT referenced a report from October 2021 (probably user error on my part).

We are also starting to hear more about the Sahm Rule Recession Indicator. For long time T-Report readers, you know that I hate the use of “rules” around things that are conjectures, interesting theories, etc., but this “rule” will garner some discussion. The “rule” is that when the 3-month moving average for unemployment rises 0.5% above the minimum 3-month average in the past year, we are about to enter a recession.

One year ago, the 3-month moving average was 3.6% and today it is 4% (this month was 4.1%). The good news is that the moving average from a year ago continues to rise, giving some buffer, but clearly, we are in the “zone” for people to notice this risk. Since the chart above is from the St. Louis Fed it seems reasonable to believe that it comes up as a discussion topic. While a year ago, when inflation seemed rampant and there was a lot of confusion about the effectiveness of Fed policy (supply chain issues, etc.), it may have made sense to force the country into a recession to fight inflation. That would seem very much like “cutting off the nose to spite the face” at this point in time.

Speaking of Rules…

Ok, I’ve already admitted that I don’t like the term “rules” as they are applied in economics, but the devil can quote scripture for his own purpose, so let’s look at the Taylor Rule.

The Atlanta Fed Taylor Rule Calculator lets you estimate the Taylor “Rule” rate. Using three pre-filled scenarios, the calculation came up with estimates of 4.61%, 3.91%, and 3.79%. All of which are below today’s rate of 5.375%.

Again, definitely not a “rule” (and looking at some historic charts, I’m not sure why it maintains that label as the deviations between the so-called “rule” and actual policy are often quite large), but it likely comes up in the conversation about appropriate monetary policy.

Using ChatGPT I got the answer to the question of “using only the Taylor Rule, what should the fed funds rate be?”

“According to the Taylor Rule, the federal funds rate should be approximately -1.165%. This negative rate indicates that the current economic conditions might call for an expansionary monetary policy, but in practice, rates are usually adjusted to be positive.”

I can only assume that it meant to say it is 1.165% lower than the current fed funds rate, but who knows.

Inflation – Saving the Best for Last

Before diving into inflation, which warrants being the final section, at least in terms of how we are framing the argument, we want to touch on a few more “fringe” views

Financial conditions. The Chicago Fed’s National Financial Conditions Index continues to show “easy” financial conditions (I am not sure why negative numbers are easy financial conditions and vice versa, but that is how this index is calculated). The “easy” financial conditions could give the Fed the excuse to keep their current rate policy.

The arguments for lowering rates despite easy financial conditions would include:

• We live in a world where we have forward guidance, dot plots, etc. Back in the Greenspan era, market participants literally watched to see which hand he was using to carry his briefcase for signals. We have come a long way and maybe so much more is priced into markets ahead of time that the financial conditions’ indices need to be updated (or ignored). Credit is a key reason why financial conditions are so good. That is a good thing as banks (and private credit) are competing to lend. It is a good thing because so many companies (and individuals) used the era of ZIRP to lock in low yields, so they are better creditors. All that is somewhat inflationary, but I cannot help but wonder if lower rates might discourage lenders? Banks, in particular, are able to access cheap funds from their deposit base, so they benefit from higher fed funds when they lend. The potential that lower yields could be disinflationary is a subject we will revisit in a moment.
• To the extent that stock markets are impacting financial conditions, it seems like a good time to mention that the equal weighted indices, such as value and small caps (the Russell 2000 is down year-to-date), have not kept pace. While we can all question breadth or lack of breadth, the companies driving the growth are more about being at the cutting edge of a revolutionary new technology, than merely sopping up excess liquidity.

Over time inflation gravitates towards the fed fund rate. This is a little “out there” and a decade or so ago it would have been anathema just to mention. But more and more people seem to be willing to at least discuss this possibility.

The theory is that changes to fed funds, at least initially, act as expected on inflation. When you cut rates, you get growth and inflation, and vice versa. But, as rates stabilize for extended periods, they can become a “magnet” for inflation. During the years of ZIRP following the financial crisis, rates were low, but inflation also remained stubbornly low. Some (including me) argued that if you make the hurdle rate equal to 0%, then people and companies will produce if they can earn just above 0%. Businesses that might otherwise not be viable will be able to survive. That keeps supply high and prices lower. It seemed to create a lot of “zombie” companies. From a “behavioral” standpoint, it makes a lot of sense. Once 0% is established as the cost of doing business, it doesn’t take much to stay in business. Conversely (and even less well tested) is that if you keep rates at 5%, you set a hurdle rate of 5%, forcing inflation. People and companies only stay in business if they can beat 5%. It is not uncommon in other fields to have initial reactions change over time. Basically almost any drug fits this analogy, so why should it not be plausible in economics?

There have been some good reports about how Net Interest Expense for Corporate America is actually Net Interest Income right now. Yes, there are a few companies with massive amounts of cash relative to their debt, but this is the first extended period (in at least 25 years) where the average coupon in the corporate bond index is significantly lower than fed funds. If the Fed was to cut a few times, the income generated on cash would drop immediately, but the average coupon wouldn’t budge. Is it not possible that a rate cut would slow spending and be deflationary?

According to the SEC, money market funds had $6.4 trillion in AUM at the end of March. If you are not aware, Academy Securities offers several Academy Share Classes in the money market space – please contact your coverage officer about accessing these funds which are available on many large platforms. Using 5% and $6 trillion (to keep the math simple) that is $25 billion being pumped into the economy each and every month by money market funds alone. Maybe cutting that back would slow spending?

I am doubtful that the Fed will consider either of these arguments, but I suspect that if they get the inflation story wrong, and inflation reignites, it will have more to do with pumping too much money into the system via high yields, and forcing businesses to raise prices to maintain profits in an overly high interest rate environment, than for any other reason (except for Geopolitical Inflation, which is a persistent threat).

Inflation

We get CPI on Tuesday morning, where Academy will get to perform its recurring role of doing a live breakdown on Yahoo Finance as the numbers hit the tape.

Yes, inflation remains too high, but it has been coming down. It is 100% clear to anyone that housing inflation, which has been propping up overall inflation, merely reflects stale data. That is one reason why the Fed looks to PCE more than to CPI.

In any given month, CPI might be doing anything, but generally, I’ve been very comfortable with the direction, and barring a commodity spike linked to some geopolitical action (that risk has been increasing), that trend should continue.

While simplistic (and the chart is admittedly elementary) the Covid “Bump” theory seems to be a great way to think about inflation and has been playing out in real-time.

Goods had a much larger jump in inflation, and it started sooner as Americans were flush with cash and had immense built-up demand for goods, especially for those who were experiencing lifestyle changes enabled by work from home. The Manheim Used Vehicle index is a good one to watch on this.

Services took longer to start and were slower to ramp up. Not only were there rules, which varied by state, but individuals also differed on when they were comfortable doing things post-COVID. So, the services bump took longer to generate, and we continue to view Summer 2023 as the Summer of Vacations, representing peak services demand (relative to availability). As that normalizes, we should see less and less inflation pressure on the services side (as mentioned Friday, the ISM services employment index has been below 50 (and shrinking) for the last 5 months in a row).

Maybe this chart is far too simple? Possibly, but I think that it has captured the gist of inflation and is the basis for me remaining comfortable that the worst is behind us.

Bottom Line

We didn’t even touch on lag effects (even Powell seemed to admit that because of this they should start sooner rather than later).

Continue to look for 75 bps of cuts this year (with 2 or 3 cuts). I don’t see July as likely, though I think it would be prudent to start then.

Less inverted curves.

-50 seems to be a level of support. 0 would be the next target, which would be 33 bps from here. “Less inversion” is why we think the 10s are still generally rangebound between 4.3% and 4.5% (with occasional breaks above and below).

Credit. All good. We should see new multi-year tights on spreads by the end of the summer.

Equities. Momentum and AI are ruling the day, and it is unclear what stops them. At least the CNN Fear & Greed Index climbed to Neutral. I’m really not sure that we’ve seen a situation where major indices are hitting new highs, and this index is mired in “Fear” territory.

Hope you have had a great 4th of July extra-long weekend (and enjoyed what seemed like 2 Fridays in one week), but now back to the grind!

After years of feigned outrage every time conservative media mentioned Biden’s obvious mental decline, the Democratic party is in complete disarray just four months before the election following last month’s disastrous debate against an uncharacteristically quiet Donald Trump.

On one hand, the Bidens now say it will take an ‘act of God‘ (so, the CIA) to remove him from the race.

On the other hand, seven major news organizations have staged a mockingbirdian PR coup against the man for whom they’ve spent five years running cover.

The list, per Just the News, includes:

• The New York Times
• The Atlanta Journal-Constitution 
• The New Yorker
• The Chicago Tribune
• The Wall Street Journal
• The Boston Globe.
• The Economist

Of course, if they really want to twist the knife…

Dear liberal media, we know you are suddenly desperate to get rid of ole Joe. So there is this thing called Ashley Biden’s diary, you may finally want to look into that

— zerohedge (@zerohedge) July 6, 2024

According to Axios, “outside Biden’s protective bubble, a fast-growing number of Democrats are praying for —and plotting — a more earthly intervention. They want everyone from the Obamas to congressional leaders to beg Biden to drop out by this Friday.“

Really hard to put that “Democracy is on the ballot” talking point out there when the guy saying it is also saying that only God can remove him from office. https://t.co/okLTyNhLHm

— Stephen L. Miller (@redsteeze) July 7, 2024

As Just the News further notes, five Democratic Reps. have publicly called for Biden to step aside.

• Minnesota Rep. Angie Craig: “This is not a decision I’ve come to lightly, but there is simply too much at stake to risk a second Donald Trump presidency. That’s why I respectfully call on President Biden to step aside as the Democratic nominee for a second term as President and allow for a new generation of leaders to step forward.” 

• Texas Rep. Lloyd Doggett: “I am hopeful that he will make the painful and difficult decision to withdraw. I respectfully call on him to do so.” 

• Arizona Rep. Raúl Grijalva: “What he needs to do is shoulder the responsibility for keeping that seat — and part of that responsibility is to get out of this race.” Per an aide in the congressman’s office who spoke on the condition of anonymity who wasn’t authorized to speak publicly. 

• Massachusetts Rep. Seth Moulton: “President Biden has done enormous service to our country, but now is the time for him to follow in one of our founding father, George Washington’s footsteps and step aside to let new leaders rise up and run against Donald Trump.” 

• Illinois Rep. Mike Quigley: “Mr. President, your legacy is set. We owe you the greatest debt of gratitude. The only thing that you can do now to cement that for all time and prevent utter catastrophe is to step down and let someone else do this.” 

“The sh*t is going to hit the fan on Monday, when Congress returns,” one House Democrat told Axios. “People are scared about their own races. But they’re also worried about the country, and about democracy.”

That said, Biden still has strong support from several prominent Democrats, including:

• Vice President Kamala Harris
• Gov. Gavin Newsom
• Gov. Kathy Hochul
• Gov. Gretchen Whitmer
• Gov. Tim Walz
• Gov. Wes Moore
• Sen. John Fetterman
• Sen. Chris Coons
• Former Speaker Nancy Pelosi
• Rep. Sheila Jackson Lee
• Rep. Haley Stevens
• Rep. Jasmine Crockett
• Rep. John Garamendi

Meanwhile…

Well, no one saw that coming…

The last-minute-arranged broad left-wing coalition known as The New Popular Front (NFP), was leading a tight French legislative election Sunday, ahead of both President Emmanuel Macron’s centrists and Le Pen’s rightists, projections showed.

Provisional estimates from four pollsters suggest the following seat projections:

• Left Alliance Set for 170-215 Seats

• Macron’s Group Set for 150-182 Seats

• Le Pen’s Group Set for 110-158 Seats

It looks like the anti-National Rally front worked better than anyone expected, catching the polling companies by surprise.

The projected results suggest that the co-ordinated anti-RN strategy, under which the left and center tactically withdrew their candidates from run-offs, had paid off.

If confirmed in final voting tallies, the projections suggest that none of the three main blocs will be able easily to command a governing majority, potentially leaving France in a period of political gridlock.

There are some big barriers to that given that Macron himself has called France Unbowed – a big part of the left’s New Popular Front – an extremist party and some of his supports have called against voting for its candidates.

AP reports that the French leftist leader,Jean-Luc Melenchon says elections are an “immense relief for a majority of people,” demands prime minister resign.

Melenchon says the New Popular Front government would apply its program and nothing but the program as he refuses any negotiation with Macron’s party or any combination. As Bloomberg reports, that theoretically would mean some disruptive changes of economic policy, and by decree according to Melenchon:

• Undoing the pension reform;

• raising the minimum wage;

• a 90% top marginal tax rate;

• and freezing prices of some consumer staples.

Not a pretty picture for French bonds either way.

Presumably all the globalist fear mongering over the so-called ‘Hitler-ite’ Le Pen pushed the French people back into the immigrant-loving arms of the Left? Or something else went down?

Authored by Matt McGregor via The Epoch Times (emphasis ours),

A district judge has granted Texas and Montana’s request for a preliminary injunction against the federal government’s attempt “to impose a sweeping new social policy” that allows for Title IX coverage for gender identity.

The ruling follows others in which federal judges have brought Title IX revisions to a halt.

In this most recent decision, Texas District Judge Jeremy Kernodle ruled that the Department of Health and Human Services (HHS) can’t force state health care providers to fund gender-affirming care by threatening them with the loss of federal funding.

In May 2024, HHS issued a press release on its Final Rule, which expanded the definition of Title IX protections in 2016 to include “discrimination based on the basis of gender identity” to fit in with Section 1557 of the Affordable Care Act (ACA). Title IX was initially established in 1972 to protect women from discrimination in public education.

“When Congress enacted the ACA in 2010, no agency—or court—had ever interpreted ‘on the basis of sex’ to mean ‘on the basis of gender identity,’” Judge Kernodle wrote. “But in 2016, HHS began to do so, issuing a rule purporting to implement Section 1557 and prohibiting discrimination on the basis of ‘gender identity.’”

Texas and Montana, two states that exclude gender-affirming care procedures from their Medicaid programs and prohibit doctors from performing them on minors, sued HHS, arguing that the federal health department has no authority to mandate that the states adhere to these revisions.

HHS said in its press release that the regulations were updated to prevent “dehumanizing beliefs” surrounding medical treatments and conditions such as gender dysphoria.

“The Department will approach gender dysphoria as it would any other disorder or condition,” HHS said in its Final Rule. “If a disorder or condition affects one or more body systems, it may be considered a physical or mental impairment.”

HHS Secretary Xavier Becerra said the Final Rule’s intent is to “strengthen protections” and ensure “equal access to this nation’s health care system and its social service programs for people with disabilities and their families.”

“It is comprehensive in scope, advancing justice for people with disabilities and helping to ensure they are not discriminated against under any program or activity receiving funding from HHS just because they have a disability,” Mr. Becerra said.

Judge Kernodle wrote in his order that the Final Rule proposes an “absurd” policy in that health care entities are prohibited from limiting services exclusive to one sex, such as providing a prostate exam.

The Final Rule would also allow men who identify as females to be allowed in “female-exclusive facilities, including shared hospital rooms.”

The Final Rule also affects health insurance coverage like Medicaid and the Children’s Health Insurance Program, Judge Kernodle wrote.

“As applied to state-sponsored insurance plans like Medicaid and CHIP [Children’s Health Insurance Program], the Final Rule has the effect of requiring states to pay for ‘transition’ and other ‘gender-affirming’ procedures,” he said.

As in other rulings on this issue, the primary reason for Judge Kernodle’s decision was that the states demonstrated that they would face irreparable financial harm by failing to comply with HHS’s rule.

Both states receive billions in federal funding, he wrote, which would “likely be withheld for violating the Final Rule,” he wrote.

“The loss of such funding for Medicaid and CHIP would devastate these programs and their beneficiaries,” he said.

Other Rulings

On July 3, Mississippi District Judge Louis Guirola also ruled that HHS couldn’t enforce its reinterpretation of Title IX protections to include gender identity.

Plaintiffs in up to 15 states, including Tennessee, Alabama, Georgia, Indiana, Louisiana, and Mississippi, filed the complaint in the U.S. District Court in the Southern District of Mississippi.

Judge Gurioloa said the plaintiffs have proven that they would “incur substantial costs” if they didn’t comply with the Final Rule by losing federal funding, which was the deciding factor in his order.

“As a result, the Court finds that Plaintiffs have established all four elements for imposing a preliminary injunction and stay,” he wrote.

Other rulings include Kansas v. U.S. Department of Education, in which a federal judge ruled the Department of Education couldn’t impose its redefinition of sex to include gender identity and sexual orientation.

The Human Rights Campaign (HRC)—an LGBT advocacy organization—issued a press release criticizing the ruling.

“This ruling is not only morally wrong, it’s also bad policy,“ HRC Director Kelly Robinson said.

“Everyone deserves access to the medical care they need to be healthy and thrive.”

“This isn’t over,” she added. “All LGBTQ+ people should receive the health care they deserve and be able to make informed decisions about our own bodies.”

The Epoch Times contacted the HRC and HHS for comment on this new ruling.

Nvidia’s price surge over the past 18 months mirrors the exuberance of the ‘Roaring Twenties,’ particularly the bull market of the late 1920s, and is reminiscent of Radio Corporation of America’s meteoric rise following the emergence of the radio industry. 

According to a recent note from Bryan Taylor, the chief economist at Global Financial Data, RCA shares soared 200-fold in the 1920s. By the late 1929s, RCA shares peaked then crashed 98% through early 1932.

These days, the resilient economy (however, the labor market is slowing) and the AI-fueled bubble (it only took 23 days for Nvidia to add a trillion dollars in market cap) have Goldman’s chief equity strategist David Kostin telling clients that quarter two earnings season will be a massively high bar to beat—and this could be a day of reckoning for investors. 

New Street Research analyst Pierre Ferragu apparently has gotten the memo that the AI party isn’t some linear fashion, and last Friday, he downgraded Nvidia from a “buy” to “neutral.” 

Ferragu told clients in an industry report that he was conducting a “health check” on AI stocks, indicating that shares of the AI chip leader are “getting fully valued for the base case” after soaring 154% this year, on top of 240% gains in 2023. 

Many analysts have questioned whether Nvidia’s $3 trillion market cap can be maintained.

Further upside “will only materialize in a bull case, in which the outlook beyond 2025 increases materially, and we do not have the conviction on this scenario playing out yet,” Ferragu said. 

While the “quality of the franchise is nevertheless intact,” there is, “if anything, a risk of derating” should the outlook remain unchanged, he added.

Ferragu noted, “Although Nvidia remains the strongest franchise for AI data centers, near-term expectations and valuation justify a more prudent view on the stock.” 

He reiterated continued bullishness for Taiwan Semiconductor Manufacturing and Advanced Micro Devices, indicating both stocks have “upside in both in our base and high scenarios.” 

New Street set a one-year price target of $135 for Nvidia, compared with Friday’s $125.83 close. 

Data from Bloomberg shows that seven of the 72 analysts tracked have a neutral rating on Nvidia or about 9.7%. There are currently 64 buys and one sell

Ferragu said, “This doesn’t mean the end of the trend – we still see very strong growth ahead and upside potential in most names we cover,” adding, “It nevertheless means investors must now be more careful and selective in their exposure to the trend.”