Month: September 2024

Submitted by QTR’s Fringe Finance

What an interesting way to end the third quarter of 2024.

The yen carry trade chaos looked like it was going to break markets permanently a couple of weeks ago, and now here we are, back near highs with “the world‘s most important stock” (and my top contender for a black swan) Nvidia, once again beating earnings expectations yesterday and giving a positive outlook for 2025.

We are also one market review further into 5.5% interest rates, and despite assurances that we will see a rate cut in the coming month, a lot of questions remain up in the air about whether or not it will have an impact. I wanted to offer my updated thoughts on the market on my blog commented on some of the 27 individual stocks that I’ve been watching throughout the year.

For now, let’s stick to overall feel of markets. As a gold and gold miner investor, I’m extremely encouraged by the fact that we are heading into Fed rate cuts with gold at all-time highs. There aren’t too many historical precedents for what I believe will take place at that point.

I think the Fed is going to try to start cutting 25 basis points at a time and be measured. Despite Powell confirming the pivot at Jackson Hole, commentary from several Fed governors over the last week, including Raphael Bostic last Wednesday, indicates that they are still in no rush to cut and are interested in incoming data—but I think this will be short-lived.

*FED’S BOSTIC: STILL AWAITING DATA TO BE SURE IT’S TIME TO CUT

*BOSTIC PREFERS WAITING LONGER, EVEN IF IT MEANS BEING CAUTIOUS

A 25 basis point cut has been priced in now for over six months. This market is trading as though significantly lower rates, like those in the 2% or 1% range, are imminent. They’re not.

No one is going to get cash from home equity re-fis changing their mortgage rate from 7% to 6.75%. No one is going to see their credit cards lower interest rates. A 25 basis point cut is going to do precisely nothing to unjam the gears of the economy. As I have been saying for a while now, I would not be surprised to see a major market crash after the first rate cut takes place. It could wind up being the ultimate “sell the news” event, the first rate cut.

 

And it seems to me the market’s mood since Jackson Hole last Friday has been indicating that this news could already be priced in. The market was up after Powell’s speech, but not significantly, and it looked tired.

 

Similarly, yesterday, the market had a lot of trouble keeping a bid under Nvidia which puked to session lows quickly with about 2 hours left in trading, despite the fact that the company beat its earnings report. It bought back some of those gains on Friday.  

All over social media and trading desks that I follow, people were talking about the fact that the company didn’t beat the whisper numbers. This means that market expectations are so high for the company that everybody expects a beat, and the stock really only “beats” when it beats the number above the expected beat number.

To quote Dark Helmet: “Everybody got that?”

Putting aside short-term skews, overall, the market simply feels extremely exhausted to me. And make no doubt about it, we cannot go on for an infinite number of days, weeks, and months with interest rates where they are right now and not suffer consequences. I have been late, for sure, in my prognostication that these high rates would eventually crash the market. However, if rates stay here, I know for sure I won’t be proven wrong—just wrong on timing.

Last week’s revision in the jobs numbers was just one of multiple indicators that prove this economy isn’t nearly as healthy as it seems. Job growth in the United States over much of the past year was considerably weaker than initially reported. The Bureau of Labor Statistics’ preliminary annual benchmark revision indicated that there were 818,000 fewer jobs in March than originally estimated. This preliminary revision represents the largest downward adjustment since 2009.

Even when we gear the CPI number with hedonic adjustments and pump the jobs number with government jobs while overpaying for stocks using leverage and paying off household expenses using credit cards, there is only so much runway left for the American economy, the American consumer and the psychology of the American investor. As I said at the beginning of the year, I continue to believe that staple stocks, utilities, miners, commodities, and energy are all going to be safe havens to play in when it comes to buying dips and owning stocks for the time being.

The market is extremely overvalued no matter how you slice it. I still believe my prediction from 2022 will hold true and that we will eventually see massive outsized moves in gold when the Fed fully lets off the quantitative tightening gas and reverts back to the inevitable quantitative easing. Gold was $1,820/oz. when I first wrote that and now sits comfortably over $2,500/oz — $200 oz. higher than my last market review just 2 months ago.

In addition to monetary mayhem, we have numerous additional catalysts coming up with an election where one candidate seems hell-bent on trying to ruin the economy and drive as much money out of the stock market and the country as possible. Oh and then there’s still that pesky fiscal situation in the U.S. that is completely untenable (listen to this interview with James Lavish and read this report from Mark Spiegel to understand).

On top of the election itself and the communist policies that I believe would be extraordinarily dangerous coming from Kamala Harris, the world remains up in arms with each other. The Ukraine-Russia conflict has not ended yet, the conflict in the Middle East continues to boil, and China continues to conduct defense drills around Taiwan. Put simply, the Biden administration has done nothing to quell geopolitical tensions, and we likely won’t see any profound shift until after the election.

If it’s not the yen carry trade blowing up or geopolitics that sets off alarms, it’s going to be commercial real estate, retail bowing out, or massive fraud or unreported liabilities popping up at a company that nobody expects. There are a number of black swan catalysts that could set off selling in addition to good old-fashioned lack of liquidity and a significant change in sentiment—both of which I think are coming. 

This time isn’t different. For the individual stocks I like and more detail, read my full September 2024 portfolio review here. 

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author. This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

 

By Peter Tchir of Academy Securities

I could be extremely lazy this weekend and just repost (with an updated chart) the Heads I’m Smart, Tails I’m Stupid report as the market continued to flip-flop around. On Friday alone, the Nasdaq 100 rose 1.2%, gave it all back, and then ended up 1.2% (with a good chunk of the gain coming in the last 10 minutes of trading). And that was somewhat “mellow” compared to the price action after some earnings reports. I continue to remain concerned that liquidity is abysmal, though maybe that will improve as we enter September.

But I won’t be totally lazy, though we will try to keep this weekend’s note short.

My First Wargame

Two weeks ago, I had the pleasure of attending and speaking at the Naval War College. I learned a lot about wargames, both from a historical perspective and regarding their current application. I did not know that Fleet Admiral Nimitz credited much of the success in the Pacific to the time they had spent wargaming (and that the main thing they had not prepared for was Kamikaze pilots).

Our wargame was centered on a theoretical blockade of Taiwan by China in 2027. It was very interesting to watch how the teams responded and how easy it was for miscommunication to occur, even in a small room, with no separation in time zones. I was part of the China team (almost as though the organizer had read a lot of T-Reports and felt that was fitting). Despite what seemed like efforts to deescalate, it was eye-opening to see how easy it was to slip into escalation as one nation’s “deterrence” was another’s “provocation.” The organizers of the wargame did admit that earlier in the month they had run the same wargame, mostly with economists, and it very rapidly descended into calling in aircraft carriers (the one I participated in had a mix of people, including many veterans).

There were a few recurring themes, none of which were a major surprise, but still warrant just a couple of moments:

• Military competition with China. From ships, where China is rapidly outbuilding the U.S., to “efficient systems” (expensive missiles vs. drones), to technologies that we’ve “shelved” (like hypersonic weapons to some extent), adversaries have advanced significantly, and there were a lot of warnings. Not necessarily alarming, but certainly a potential “wakeup call” if we continue on the current path of increased competition.
• Chips. The importance of chips and manufacturing technology came up over and over again, and it was touched on during every part of the symposium. The most informative part of the symposium (for me) was that one of the heads of the “foundry” effort for a major U.S. chip company spoke. The scale and size of what “we” need to do is enormous – the CHIPS Act is just a starting point in terms of funding. It is encouraging that there is support from D.C. for the chip industry that seems highly likely to remain in place regardless of who wins the election. On a personal note, I did get some confirmation of Academy’s theory that the “traditional industrial areas” of the U.S. will benefit as we get more serious about reshoring manufacturing.
• Water. The availability of water for any type of manufacturing activity is likely to be key, and much of the traditional manufacturing base has an abundance of water (as well as students graduating from technical programs). Companies need to be thinking about the possibility that at least some portion of the demographic shift that we’ve seen over the last decade will slow (if not reverse) as we re-industrialize the nation. Maybe the rising inventory in homes for sale in Floria and Texas is a sign that this “pet theory” is starting to occur?

Whether we need a “Man on the Moon” or “Manhattan Project” type of moment to rapidly grow our capabilities remains unclear. That sort of “national agenda” might not be necessary, but it would go a long way and seems to create a lot of potential for the next president to act.

The Fog of War and the Economy

The “Fog of War” describes uncertainty (and to some extent confusion) in military planning and decision making. It seems to apply incredibly well to the economy (and markets) at the moment.

• Inflation. We are done arguing that inflation is coming down and that the spike in the first quarter was a statistical anomaly. We continue to stick to our simple “COVID Bump” model where goods had a sharp spike that has largely declined already, and that the services sector took longer to ramp up to “peak” inflation, but is also coming down. The real question now (since so many seem to finally have given up on inflation resurgence fears) is what is the floor on inflation? We have argued that Geopolitical Inflation will provide a floor on how low inflation can go. The process of “securing” supply chains, in a variety of forms, will be inflationary. The geopolitical risks to commodities will provide a floor to inflation. I’m starting to question that assumption, as the efforts so far to reshore, reindustrialize, and expand both traditional and nontraditional energy sources have been slower than I’ve expected. While I’m not there yet, I’m starting to think that the 2.5% crowd (which I’ve been in) might be too high and that we could see further reductions in inflation as more products become deflationary.
• The Consumer. The consumer will have a great say in the inflation story, but it is incredibly difficult to figure out where the consumer stands. For every good data point on the consumer, I’m pretty sure that we can come up with a weak data point. The data has been mixed. The consumer credit side of things seems the weakest. The current spending seems the strongest. I’m still leaning towards a slowdown in consumer spending, largely based on the view that the recent sales pulled forward demand and this caused the strong spending so far this summer, which will slow as we enter the autumn.
• Jobs. What to do with Friday’s NFP? One of the favorite activities of the T-Report (and hopefully a useful one) is examining the data for consistency. Are headline numbers consistent with the internal details? What things (like birth/death) seem off?
  

  57% of all YTD jobs are statistical fakes, thanks only to the Birth/Death adjustment pic.twitter.com/utYosI0k7S

  — zerohedge (@zerohedge) August 2, 2024

  Are we seeing consistencies between a variety of metrics, all purporting to measure the same thing, like JOLTS, AFP, and the Household and Establishment surveys (let alone the “employment components” of various other surveys)? The market is going to have to digest the preponderance of evidence on jobs this week! Will the market still react to the headline NFP data on Friday? Sure (and I will be on Yahoo Finance with a longtime friend and excellent economist to give our instant reaction), but for how long? Not only has the bias been towards downward revisions on a monthly basis, but also the annual revisions were quite high. The estimates (on Bloomberg) ran from a high of 208k to a low of 100k (ignoring 2 “outliers” the low is 125k). The average is 162k, with a median of 165k. But how do we react to a number when the “doubters” (I won’t call us conspiracy theorists) turned out to have a valid case? My order of importance on jobs this month will be:

  • Unemployment Rate. While this number is fraught with so many issues, it will likely be the biggest driver. If it improves, does that take the Fed off the table, and maybe reduce the flood of “Sahm Rule” hot takes? If it gets worse, but only due to an increase in labor participation, is it that bad? Not my favorite metric by any stretch of the imagination, but probably the most important.
  • JOLTS Quit and Hires rate. To some extent, I view this as “crowdsourcing” the labor market. People have a good sense of how easy it is to find a job and how likely their company is to let them go (long before the company lets them go). So given all of the uncertainty, I will overweight the importance of this data in my analysis on jobs.
  • ADP. I often wonder, given their dominance in the payroll business, why their data isn’t the “gold standard,” but it just isn’t (or hasn’t been). The fact that they didn’t publish for a period of time while changing their methodology isn’t particularly helpful either. But, I will spend more time than usual on ADP and suspect that the market will react more than usual as well (jobs are clearly the main Fed concern) and with the big revisions to NFP, more people will look to this data than usual.
• Don’t chart any economic data from January 2020 until September 2023. That is probably a bit extreme, but I find ignoring economic data from January 2020 until at least December 2022 is quite useful. We had a reasonably “normal” economy in 2018 and 2019. I want data that goes back at least a year (hence September 2023, though we could go back as far as January 2023). This analysis gives me a better comparison between “steady states” and is more helpful than including data that includes COVID and all the COVID responses/repercussions. It also makes smaller moves in the current data stand out more, as they aren’t dwarfed by the moves in 2020.

Understanding the current state of the economy is difficult enough with the data we have, let alone when we really start to question the accuracy and timeliness of the data.

Given all the uncertainties, I’m still in the “bumpy” landing camp. Not a hard landing, but an economy where the data, over time, shows that both the job market and the consumer are slowing. Not necessarily to recession levels, but to levels that make current valuations questionable.

Bottom Line

8 rate cuts in 8 meetings is too aggressive, unless the data slips to worse than “bumpy.”

• “Normal Yield” curves. I have to assume that every major news outlet has their finger hovering above the send button on a story about how the yield curve is no longer inverted, and I expect they will get to use that soon. 2s vs 10s closed at -2 bps on Friday, and I think that should drift towards 20 as we near the election (if not sooner). The 10-year yield has remained stubbornly below 4%, but the fact that we sold off on Friday, despite good inflation data and the normal “month-end extension” that typically helps bonds, means we can see that get back above 4%.

“Rotation” trades should continue in the equity space. The setup seems similar to last November where we developed consistent outperformance rather than the “crazy” moves we had for a couple of days last month.

Credit. I remain comfortable with credit as my concerns are far more about “valuations” than they are about any deep cuts to earnings and growth (bumpy isn’t the same as recession).

Liquidity remains my number one fear and I think it continues to create asymmetric risk, where moves to the upside are bigger than normal, and moves to the downside will be bigger than normal on steroids!

Normally, we’d be welcoming everyone back to “normality” after a “slow summer,” but this summer was anything but slow.

Trust but verify might be the best motto for all data in the coming weeks!

Former President Donald Trump says he supports a public ban on smoking marijuana, but that people shouldn’t be criminalized for carrying “small amounts” of weed.

“In Florida, like so many other States that have already given their approval, personal amounts of marijuana will be legalized for adults with Amendment 3,” Trump wrote Saturday on Truth Social. “Whether people like it or not, this will happen through the approval of the Voters, so it should be done correctly.”

Florida’s Amendment 3, titled Recreational Marijuana, would allow adults who are at least 21 years of age have up to 3 ounces of marijuana (a ‘small amount’?) and up to 5 grams of marijuana concentrate. At present, the state only allows medical patients with qualifying conditions to legally buy and possess cannabis.

If the measure passes, Florida would become the 25th state in the US to legalize weed for personal use.

That’s cool with Trump, as long as the state prohibits public use “so we do not smell marijuana everywhere we go.”

“At the same time, someone should not be a criminal in Florida, when this is legal in so many other States,” Trump continued. “We do not need to ruin lives & waste Taxpayer Dollars arresting adults with personal amounts of it on them, and no one should grieve a loved one because they died from fentanyl laced marijuana.”

As the Epoch Times notes further, Florida state Sen. Joe Gruters, a former state Republican Party chairman, cheered Trump’s stance on Amendment 3.

“I am incredibly proud to have President Trump stand alongside us in our effort to end needless arrests and incarcerations of adults for simple possession of marijuana and to give Floridians the same individual freedom to choose safe, tested products that more than half the country already enjoys,” Gruters wrote on X.

Gruters has pledged to push legislation to make sure public spaces remain smoke-free if voters approve the ballot measure in November, a proposal that now has Trump’s backing.

“President Trump’s call for smart implementation is exactly why I filed a bill to prevent smoking in public,” the Gruters said. “Marijuana should be consumed at home, and I will work alongside my colleagues in the legislature to ensure Florida does this right.”

The ballot measure faces opposition from Gov. Ron DeSantis, other state Republican leaders, and police groups including the Florida Sheriffs Association. Critics of Amendment 3 say it will go beyond decriminalizing personal use of marijuana and lower the Sunshine State’s overall quality of life.

“It’s basically a license to have it anywhere you want,” the governor said in April at a press conference. “So no time, place, and manner restrictions. This state will start to smell like marijuana in our cities and towns.”

The Florida Sheriffs Association issued more severe warnings, arguing that the legalization would increase criminal activity, illegal use among adolescents, traffic accidents, homelessness, and hospitalizations.
“Marijuana legalization advocates have argued that legalization will reduce overall crime, but in ‘legal’ states, marijuana crime rates have risen at a faster rate than other states across the country,” the group stated in a resolution opposing Amendment 3.

To help defeat Amendment 3, DeSantis has launched Florida Freedom Fund, a political spending committee chaired by James Uthmeier, his chief of staff who served as his campaign manager during the unsuccessful bid to win Republican nomination for White House. The group is also devoted to stopping Amendment 4, which would establish a constitutional right to abortion before fetal viability.

The measures need approval from at least 60 percent of voters to become part of the state’s governing document.

Authored by Chase Spears via RealClearDefense,

There is a saying among veterans that we’re hard on one another, but that we’ll circle the wagons when civilian outsiders attack. Perhaps in another time that was truly the rule. If so, such a tradition expired long before my enlistment in the fall of 2003. Regardless, one rule remains intact for generations of veterans: lie about your military service record at your own risk. Governor of Minnesota and vice-presidential candidate Tim Walz is learning that lesson. It’s one he should have known long ago as a retired senior noncommissioned officer.

In the Army, the noncommissioned officer (NCO) leads troops directly. Officers command, plan, and make policy. NCOs make it happen. Good NCOs are the repository of common sense in the ranks, the ones who know their troops well. Having worn the rank of Sergeant, and then becoming an officer myself, I often spoke of the importance of officers having NCO supervision. There’s a reason most U.S. Army officers have an enlisted counterpart, wisdom that was baked into the system long ago. They are integral to a healthy balance of leadership in the military setting.

It is against this backdrop that Tim Walz’s behavior stands out in such stark relief to the Creed of the Noncommissioned Officer, which states, “I will not use my grade or position to attain pleasure, profit, or personal safety.”

The problem is not Master Sergeant Walz moving on to a political career as a civilian. He is following in the wake of many who have come before him—all the way back to the nation’s early years. In the U.S., doing time in the military is frequently a catalyst for one’s political ambitions given the favorable view the public has toward the troops. Consider John Glenn: he was recruited to run for senate specifically for being a Marine and an astronaut. The same can be said of Senator Mark Kelly. Though Americans do not often elect veterans as presidents, they routinely elect them to Congress.

Had Walz retired, gone back to civilian life, and been honest about his military record, this discussion would not be happening. Had he spoken of himself as a “retired Master Sergeant, and former Command Sergeant Major of the 1st Battalion, 125th Field Artillery,” that would have been fine. I retired last year having been selected for promotion to Lieutenant Colonel. But I chose to depart as a Major rather than waiting months for the date of promotion and completing an additional three years to maintain the higher rank in retirement. Walz himself made a deliberate choice not to complete the requirements to remain a Command Sergeant Major and was returned to the rank of Master Sergeant in retirement.

Everyone in the military leaves eventually, one way or another. Originally planning for a 30-year career, I chose to leave at 20 years for reasons of conscience and a desire to be more present with my family, after having served tours in combat zones. It seems Walz timed his retirement out of a desire to avoid combat deployment altogether, despite claims of reenlisting specifically to fight in the Global War on Terrorism. There were plenty of reasons why one would dislike the idea of deploying to Iraq, a war the Bush Administration never should have started. Having completed the initial requirements that he signed up for, Walz had every legal right to drop out of the Sergeant Majors academy and retire, instead of continuing to lead his battalion. It is fair to debate the associated honor or dishonor of Walz stepping away as a senior leader when his unit needed him and going behind the back of his immediate supervisors to do so. But the fact remains, it was his choice to make as a free citizen. Many others have made the same choice.

But choosing to step down and then create a false war hero identity for political benefit is deserving of the loudest contempt. Walz attempted to cast himself in the likeness of Rambo, but proves to be more of an emasculated, dancing retired Master Sergeant on the political stage.

Once freed of the shackles associated with his military status, Walz falsely branded himself a combat veteran, a claim debunked by the same left-leaning press that’s doing all it can to ensure he and Harris win in November. Every bit as lacking in ethical prowess, the acolytes running Walz’s public relations effort claim that he merely “misspoke.” That is a lie. Veterans know if they served in a designated combat theater and if they carried a weapon in a war zone. These are not distinctions taken lightly. Suggestions otherwise spit in the faces of those who have been on the ground in dangerous places, putting their lives on the line in America’s defense.

One can criticize Walz for his myriad of insane policy choices, a short list of which includes: tampons in boys’ bathrooms, setting up COVID snitch hotlines, letting Minneapolis burn in 2020, joining Minnesota to a list of states that aim to disregard the electoral college, enthusiastic homosexual grooming of children in public schools, and signing legislation that stripped the rights of children who survive an abortion attempt. He deserves condemnation for playing the “military defender of the nation” card while also saying that there is no right to free speech in that pesky Constitution he pledged allegiance to as a soldier. Walz’s record as an elected official is reprehensible. Even without bringing his time in the National Guard into the conversation, he is unqualified for leadership at any level. But since he lied about his military service for personal gain repeatedly over the years, it is right to add that to Walz’s long list of actions that render him unfit for political office.

Chase Spears served as a U.S. Army public affairs officer for 20 years, retiring as a Major-Promotable in 2023. Among other pursuits, he enjoys writing about courage, civil-military relations, communication ethics, and policy. Chase holds a Ph.D. in leadership communication from Kansas State University, where his research focused on the political realities of military norms and actions. He can be found on X, LinkedIn, YouTube, and Substack at @drchasespears.

Former President Donald Trump said on Friday that he would vote no on a Florida amendment that would guarantee the right to abortion before viability – which is typically around 24 weeks of pregnancy, and potentially up until birth.

According to Trump, a six-week ban is too short, and a low allowing a nine-month abortion is too radical. The amendment, the “Amendment to Limit Government Interference with Abortion,” will be on the ballot in November, and seeks to overturn the state’s six-week abortion ban and bar future legislation limiting access to abortion.

During a Thursday interview with NBC News, Trump was asked how he’d vote on the measure – replying that the current six-week ban is ‘too short.”

After the MSM went nuts over his answer, his campaign clarified his stance.

“He simply reiterated that he believes six weeks is too short,” said national press secretary Karoline Keavitt in a statement.

Elaborating further on Fox News Friday, Trump said that he would vote against the measure “because it’s radical.”

“And when you talk about radical … doing an abortion in the ninth month is unacceptable to anybody,” he said. “There’s something in between, but the six [weeks] is too short, it’s just too short a period, and the nine months is unacceptable.

“But for that reason, for the radicalization on the Democrat side, we’re voting no,” Trump continued.

As the Epoch Times notes further, the proposed amendment states that “no law shall prohibit, penalize, delay, or restrict abortion before viability or when necessary to protect the patient’s health, as determined by the patient’s healthcare provider.”

The amendment would not “change the Legislature’s constitutional authority to require notification to a parent or guardian before a minor has an abortion.”

Trump also declined to commit to vetoing a federal abortion ban if elected, saying that states are handling it effectively.

“Well, what’s happening is you’re never going to have to do it because it’s being done by the states,” Trump said. “The states are voting, and the people are now getting a chance to vote, and this is the way everybody wanted it.”

On Thursday, Trump took credit for the U.S. Supreme Court’s 2022 decision that returned power to make abortion laws to the states, having appointed three of the five justices who voted for it.

“If you go back 10 years, 15 years, all they wanted to do is they wanted it back in the states,” he said. “They didn’t want it to be in the federal government. I was able to do that.”

Reproductive issues, including IVF and abortion, have been a key issue of both party’s platforms during this election cycle.

Trump has promised to offer free in vitro fertilization (IVF) to women in the United States, with details to be announced in the next couple of weeks.

He said Thursday that his administration plans to fund or require insurance companies to cover IVF, making it more accessible to Americans. While the plan’s specifics, including coverage for same-sex couples, are still under consideration, Trump emphasized his support for IVF, citing its benefits for families.

“We’re doing this because we just think it’s great,” he said Thursday. “And we need great children, beautiful children, in our country. We actually need them.”

The issue gained attention after Alabama’s Supreme Court ruled that embryos are legally children, leading to a temporary halt in IVF services in the state.

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

The IRS has made little progress in complying with a Treasury Department directive that asked the agency not to target people earning less than $400,000 a year with higher audit rates, according to a recent report by the Treasury Inspector General for Tax Administration (TIGTA).

In August 2022, the Inflation Reduction Act (IRA) granted the IRS almost $80 billion in funding for a 10-year period, an amount that was eventually reduced to $57.8 billion. Out of this, $24 billion is set aside for enforcement activities. The same month, the Treasury secretary issued a directive to the IRS commissioner asking the tax agency not to use the additional IRA funding to boost audits on small businesses or households making less than $400,000 a year.

The Aug. 26 TIGTA report found that the IRS has made only “limited progress” in developing a methodology to comply with the Treasury directive, citing “planning and implementation challenges.”

To comply with the 2022 Treasury directive, the IRS must first establish a historical “base year” audit rate for taxpayers with incomes less than $400,000 with which to compare future compliance.

Both the IRS and the Treasury have selected tax year (TY) 2018 as the base year. However, as of May 2024, the two agencies “have not finalized the methodology to calculate the TY 2018 audit coverage rate for tax returns with TPI [total positive income] under $400,000,” the report notes.

The primary reason that the 2018 audit rate has not been calculated is that both the IRS and the Treasury have been exploring alternatives to the current methodologies for such calculations, the report notes.

The IRS already calculates audit rates based on income categories every year. For instance, for TY 2018, the audit rate for TPI between $200,000 and $500,000 was 0.3 percent.

Officials from the IRS told the TIGTA that the agency is not considering this standard approach for determining audit rates to meet the 2022 directive because it wants the flexibility to audit taxpayers who may purposefully underreport their TPI below $400,000 given that the agency intends to boost audit rates above this level.

Not an ‘Urgent Matter’

In addition, the IRS does not view the issue as an “urgent matter” since the agency believes it has enough time to develop the methodology, the report states.

The 2022 directive will look at audit rates beginning with tax year 2023, which will only be examined in fiscal year [FY] 2025, beginning in October this year.

“The IRS believes it has more time to work with the Treasury Department to finalize the audit coverage rate,” the report states. “However, given the complexity of developing the methodology and that FY 2025 is only a few months away, we believe the IRS needs to expedite the finalization of its plan to comply with the Treasury Secretary’s Directive.

“The IRS was unable to provide TIGTA with a timetable or milestone dates to ensure that it is progressing toward completion. The absence of timetables and milestones increases the risk that the methodology may not be developed in time to ensure compliance with the 2022 Treasury Directive.”

After a draft of the report was submitted to the IRS, the tax agency’s deputy commissioner, Douglas W. O’Donnell, said the IRS remains committed to administering the tax code in line with the Treasury directive.

This commitment is “reflected in the enforcement efforts” undertaken by the agency since the IRA was implemented in 2022, the deputy commissioner said. For instance, the IRS has taken steps to “shift more tax compliance attention to high-income earners, partnerships, large corporations, and abusive promoters,” he stated.

Auditing Below-$400,000 Earnings

In the IRS’s response to the draft TIGTA report, O’Donnell said that the agency “will not increase audit rates relative to historical levels for small businesses and households making under $400,000 per year.” Jonathan Curry, a media relations officer from the IRS, confirmed this stance in an emailed statement to The Epoch Times.

In September last year, the agency said it was shifting attention to “wealthy from working-class taxpayers.”

However, during an October 2023 hearing at Capitol Hill, IRS Commissioner Danny Werfel hinted that audits could rise for this demographic.

During the hearing, Rep. Virginia Foxx (R-N.C.) asked the commissioner whether he was “guaranteeing” that he would “not increase the number of audits of people making less than $400,000 a year.”

Werfel indicated in his reply that while this was his “marching order” to the tax agency, the IRS may not be able to fulfill its promise.

“If we fall short of that, I will be held accountable for it,” he said.

In a November post, Sen. Mike Crapo (R-Idaho) criticized the “ambiguous” stance on the matter. Crapo claimed that the $400,000 level is applicable to total positive income, which includes all incomes earned during a year without accounting for losses.

“This could impact many taxpayers who in reality make far less than $400,000. How would this affect an Idaho small-business owner whose gross sales generate more than $400,000, but after expenses and losses, takes home much less?” he asked.

“The directive also appears to include a marriage penalty, as the $400,000 threshold applies to a single individual, while couples must share it.”

This issue was mentioned in the recent TIGTA report. Couples who make $400,000 in combined income are seen as exceeding the $400,000 threshold for higher audit rates, even though they may each make less than this amount.

“When asked if this would be unfair to those married taxpayers, the IRS stated that the 2022 Treasury Directive made no distinction between married filing jointly and single households, so neither will the IRS,” the report states.

“Further, the IRS mentioned that it would be best to keep the threshold at $400,000 regardless of filing status to make it easier for the IRS to monitor progress moving forward.”

Authored by Ben Bartree via Armageddon Prose,

Berkeley Law School Dean Erwin Chemerinsky, promoting his very patriotic book “No Democracy Lasts Forever: How the Constitution Threatens the United States,” recently penned an op-ed and appeared on MSNBC to float the idea that we need to toss out the United States Constitution — arguably the most eloquent and functional if imperfect governing document ever written, which every Western nation has modeled their own on — and replace it with something a little more Democratic™.

Here the psychopathic cross-eyed nerd — who would be the first to go in the kind of French Revolution-style chaos he’s fomenting, like Piggy in Lord of the Flies — explains.

Via Los Angeles Times (emphasis added):

“No matter the outcome of the November elections, it is urgent that there be a widespread recognition that American democracy is in danger and that reforms are essential. No form of government lasts forever, and it would be foolhardy to believe that the United States cannot fall prey to the forces that have ended democracies in many other countries.

Although the causes are complex, many of today’s problems can be traced back to choices made in drafting the Constitution, choices that are increasingly haunting us. After 200 years, it is time to begin thinking of drafting a new Constitution to create a more effective, more democratic government.

Signs abound that American democracy is in serious trouble. Confidence in the institutions of American government is at an all-time low. The Pew Research Center has been tracking public trust in government since 1958. It has gone from a high-water mark of 77% in 1964 to our contemporary 20%.* A poll in September 2023 indicated that only 4% of U.S. adults said the American political system worked “extremely or very well.” A recent Gallup poll had only 16% of Americans expressing approval for how Congress is performing its job.

Especially individuals in their 20s and 30s are losing faith in democracy. A Brookings Institution study found that 29% of “young Americans say that democracy is not always preferable to other political forms.””

First of all, “democracy” is a broad term that means different things in different contexts. When it’s used generally, it just means rule by the people, and in that sense is the antithesis of authoritarianism of various stripes.

But when it’s used as a specific governing model, direct democracy, of “pure democracy,” is a euphemism for mob rule. This is not what the Founders intended, because anyone who has read Lord of the Flies understands enough about human nature to foresee the outcome.

Second, the reason no one trusts the government is because it’s run by crooked totalitarian bastards — not because of academic concerns over the nuances of the Constitution.

But they’d rather not talk about any of that on MSNBC or any corporate state media, because they are functionally the state.

Continuing:

“There is an alternative to a spate of separate amendments: starting fresh by passing a new Constitution. It does not take much reflection to see the absurdity of using a document written for a small, poor and relatively inconsequential nation in the late 18th century to govern a large country of immense wealth in the technological world of the 21st century.

It may seem strange and frightening to suggest thinking of a new Constitution at a time of great partisan division. But that existed in 1787; in many of the states, the Constitution was just barely ratified.”

Ben Bartee is an independent Bangkok-based American journalist with opposable thumbs.

Follow his stuff via Substack. Also, keep tabs via Twitter.

For hip Armageddon Prose t-shirts, hats, etc., peruse the merch store.

Two Georgia election workers who won a $146 million defamation judgement against Rudy Giuliani have asked a federal judge to grant them control over the former NYC Mayor’s assets.

In a Friday filing in the Southern District of New York, mother and daughter Ruby Freeman and Wandrea Moss asked for control of Giuliani’s Florida condo, New York apartment, and various other assets – including his Mercedes SL500 and numerous watches.

“Now that Mr. Giuliani’s bankruptcy case has been dismissed, Plaintiffs are finally in a position to receive a measure of compensation by enforcing their judgment,” reads the filing.

“In this motion, Plaintiffs seek two remedies to which they are entitled under New York law: an order requiring Mr. Giuliani to turn over personal property in his possession in satisfaction of the judgment, and an order appointing Plaintiffs as receivers with the power to take possession of, and sell, both real and personal property that Mr. Giuliani does not turn over.”

In addition to the above, the mother-daughter pair are demanding sports memorabilia (a signed Yankee Stadium picture, Joe DiMaggio shirt, and Reggie Jackson’s picture), three Yankee World Series Rings, and another diamond ring. In total, the two women are looking to collect around $10 million in assets – a fraction of what a Washington jury awarded him.

As the Epoch Times notes further, Giuliani accused the women of mishandling ballots after a video clip surfaced of them pulling ballots out of large containers from under the tables after observers had gone. An investigation by the Georgia Elections Board cleared Freeman and Moss of wrongdoing, but mother and daughter said the damage had been done.

Prior Legal Battles

Giuliani spokesperson Ted Goodman criticized the filing as a step “designed to harass and intimidate the mayor” while he’s appealing the “objectively unreasonable” judgment.

“This lawsuit has always been designed to censor and bully the mayor and to deter others from exercising their right to speak up and to speak out,” Goodman said. He contends that “the justice system has been weaponized” against Giuliani “and so many others for strictly partisan political purposes.”

The initial verdict was for $148 million but lowered slightly in a subsequent judgment by a judge in Washington. Judge Beryl A. Howell rejected his attempt to dismiss the judgment.

Shortly after the verdict, Giuliani filed for bankruptcy. Troubled by Giuliani’s repeated “uncooperative conduct,” U.S. Bankruptcy Judge Sean Lane decided in July to dismiss the case. Lane labeled Giuliani a “recalcitrant debtor” and said he had thumbed his nose at the bankruptcy process while seeking to shield himself from the defamation judgment and other debts.

According to the filing, Giuliani disclosed that his New York apartment was valued at $5.6 million, while his Florida condo was valued at $3.5 million. The former Trump adviser also testified that the Trump 2020 campaign and Republican National Committee owed him “about $2 million.”

The Aug. 30 filing repeatedly noted Giuliani’s refusal to cooperate with court orders.

In his most recent financial filings, Giuliani said he had about $94,000 cash in hand at the end of May, while his company, Giuliani Communications, had about $237,000 in the bank. A main source of income for the 80-year-old former mayor has been a retirement account with a balance of just over $1 million in May, down from nearly $2.5 million in 2022.

A New York court disbarred Giuliani in July over his statements about the 2020 election.

The Associated Press and Catherine Yang contributed to this report.

Authored by Jeremy Portnoy via RealClearInvestigations,

Topline: Between 2013 and 2022, 15 nonprofits each received over $1 billion from the federal government for foreign, nonmilitary projects, according to a new report from the Congressional Research Service.

Key facts: Six thousand non-governmental organizations, or NGOS, received grants and contracts from the U.S. Agency for International Development, but 20% of the money went to just 10 groups. Four of them are for-profit enterprises.

Almost $7 billion went to two particularly unworthy organizations.

Non-profit research group RTI International accepted $2.3 billion for humanitarian projects around the world, even though past reports have warned of issues with RTI’s spending.

Various audits from 2006 to 2014 claimed that RTI invented “fictional beneficiaries” to make an anti-malaria campaign seem more effective than it really was. They also sent computers to a Nicaraguan school that didn’t have electricity and billed the federal government for teacher salaries in Senegal that had already been paid, according to the audits.

Catholic Relief Services was the top recipient of federal money — $4.6 billion — singlehandedly accounting for more than half of the funds sent to faith-based organizations.

Six of their former board members were named by a Pennsylvania grand jury in 2019 for allowing sex abuse in the Catholic Church. Catholic Relief Services was also found guilty in 2022 of discriminating against a gay employee.

The federal government also sent $50 billion in foreign aid to groups whose names are redacted from public databases, according to the report. In total, Congress gave $66 billion in foreign assistance in FY2023.

Background: A significant portion of USAID’s funds go toward the Middle East, amounting to almost $21 billion from 2021 to 2023, according to OpenTheBooks.

That included $1.4 billion in cash transfers to Jordan, more than any other foreign nation received. The Congressional Research Service quantified over $5 billion in budget assistance to Jordan from 2013 to 2022; no other country received more than $2 billion.

OpenTheBooks also identified some odd initiatives funded in the Middle East. The U.S. spent $3.3 million on “women entrepreneurship development” in Gaza and $339,000 to convince Saudi Arabians to stop keeping cheetahs as pets.

Summary: It’s vital for the U.S. to help its allies, but spending should be limited to legitimate entities with proven records of being good stewards of taxpayer money.

 The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com

Authored by Mark Gilman via The Epoch Times (emphasis ours),

Lackluster consumer confidence is negatively affecting discount retailers such as Dollar General and Big Lots. Dollar General’s shares dropped 32 percent on Aug. 29 after the company admitted in its earnings report that lower-income customers are still struggling, while Big Lots’s fortunes are in a tailspin.

Middle-scale retailer Abercrombie & Fitch, which made a significant comeback in 2024, saw its stock drop 15 percent this week, while drugstore chain Rite Aid has emptied up to 500 stores amid its bankruptcy filing.

National Retail Federation (NRF) chief economist Jack Kleinhenz wrote in its August monthly review that while the U.S. economy appears healthy, consumers are skeptical. “While the overall economy continued to display remarkable strength in the first half of 2024, consumer confidence remains weak,” he said.

That sentiment was bolstered by the latest University of Michigan’s monthly survey in July, which fell for the fourth month in a row. Dr. Joanne Hsu, who authored the report, wrote: “Sentiment has lifted 33 percent above the June 2022 historical low, but it remains guarded as high prices continue to drag down attitudes, particularly for those with lower incomes.”

In Dollar General’s case, the discount store reported it expects fiscal 2024 same-store sales to be up 1.0–1.6 percent, lower than its prior outlook for a 2.0–2.7 percent increase, with earnings per share for the year expected to be in the range of just $5.50–6.20. That prediction was below its original forecast of $6.80–7.55 per share. Dollar General’s core consumer base comprises households earning less than $35,000 annually, contributing to 60 percent of overall sales.

On the company’s post-earnings call, Dollar General CEO Todd Vasos said, “While middle and higher-income households are seeking value as well, they don’t claim to feel the same level of pressure as low-income households, as customers have felt more pressure on their spending.” He added that what he is seeing in the numbers “would indicate that this is a cash-strapped consumer, even more than we saw in the first quarter.”

Meanwhile, another discount retailer, Big Lots, is struggling in this economy. In its June filing with the U.S. Securities and Exchange Commission, Big Lots reported that 244 of its 1,392 stores are underperforming and planned to close 35 to 40 of them. Its net sales ended in May this year dropped 10 percent year over year ($415 million), to a little over $1 billion. The company also announced it owed another $72.2 million in debt, accounting for a total of $573.8 million.

In a press release, Big Lots President and CEO Bruce Thorn wrote: “While we made substantial progress on improving our business operations in the first quarter, we missed our sales goals due largely to a continued pullback in consumer spending by our core customers, particularly in high-ticket discretionary items. We remain focused on managing through the current economic cycle by controlling the controllables.  As we move forward, we’re taking aggressive actions to drive positive comp sales growth in the latter part of the year and into 2025 and to maintain year-over-year gross margin rate improvements, all driven by progress on our five key actions.”  The company’s second-quarter results will be announced on Sept. 6.

Neil Saunders, the managing director of GlobalData Retail, told Modern Retail, “It doesn’t look as if they are going to be able to stop the bleeding anytime soon. The financials are going in the wrong direction. This is a business that has suffered sales declines for a reasonable period of time, and what you come to expect is that, as you go forward, those declines start to moderate a bit and then you start to go back into growth, but Big Lots shows no signs of that happening.”

Comeback darling Abercrombie & Fitch saw its stock rise 21 percent in the second quarter this year, but immediately drop 15 percent after CEO Fran Horowitz used the word “uncertain” in his earnings analysis. “We delivered a strong first half of the year, and we are increasing our full-year outlook. Although we continue to operate in an increasingly uncertain environment, we remain steadfast in executing our global playbook and maintaining discipline over inventory and expenses,” he said.

In the University of Michigan report, Dr. Hsu said one of the worries consumers now have is stagnant wage growth. “While consumers exhibited confidence that inflation will continue to soften, many expressed concerns about the effect of high prices and weakening incomes on their personal finances, she wrote.

According to the Bureau of Labor Statistics’ latest Job Openings and Labor Turnover Survey, the three-month average for payroll gains slowed to 177,000 in June, down from 267,000 in March. As of June 30, the bureau reported the number of job openings was unchanged at 8.2 million, but compared negatively by nearly one million (941,000) compared to June 2023. Hiring also fell from 5.7 million jobs in May this year to 5.3 million in June.

But she added that even though inflation has slowed, higher prices continue to make an impact on consumer sentiment. “Over the past two years, our surveys clearly reveal that consumers distinguish between their experiences with high price levels and their views of overall inflation rates,” she writes. “On one hand, they recognize that inflation has softened substantially and expect that trend to continue. On the other hand, slowing inflation does not generally lead to reductions in overall price levels; the persistence of high prices continues to exert pain on household budgets.”

Another retail casualty this year has been the sudden bankruptcy of Rite Aid, leaving hundreds of stores empty in states such as Michigan and Ohio after closing up to 500 stores nationally. In its filing, the company said it expected its losses would increase significantly in the past quarter, following a loss of $750 million between March 2022 and March 2023 and another $307 million in the second quarter this year. The last quarterly report filed by Rite Aid was in June, when they had only $135.5 million of cash to work with, combined with $3.3 billion in long-term debt.

According to the NRF monthly review, though overall consumer spending is still inching upward, it’s going to non-retail areas of the economy. “Overall consumer spending continues to be dominated by travel, entertainment and “experiences,” the NRF wrote in its report.