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The Street expects 1.4 million nonfarm payrolls to be added to the US economy in August, which would be the weakest pace of payroll additions since the -20.8 million reading in April; according to NewsSquawk, that might signal that labor market progress is stalling.

The government payrolls metric will also matter because as noted previously it will be buoyed by the ramp-up in Census hiring. Both initial jobless claims and continuing claims continue to edge lower, although disappointed expectations in the payroll survey period, albeit the former might be a function of the reinstating of some enhanced jobless benefits, while the latter may have been restricted by the bi-weekly nature of claims being filed in certain states. ADP payrolls gauge also disappointed, and while some point out the weak link between ADP and BLS data, the gap has been narrowing in recent months; the report did show that most of the gains were concentrated in minimum wage sectors, and that might weigh on the AHE metrics in August. Survey data, meanwhile, shows that while the labor market is making progress, it is slow, and not keeping up with the pace of other activity indices.

At the same time, Goldman notes that the resurgence of the coronavirus did not produce a meaningful increase in layoffs in the Sun Belt based on jobless claims data, and high-frequency surveys replicating the BLS approach indicate robust August job gains. Additionally, because of measurement issues with the BLS birth-death model, the establishment survey will better capture business reopenings and gross hiring than the mid-summer business closures resulting from the virus.

Finally, yesterday BMO said that it expects “the August data to be more market moving than the last few releases” in keeping with Powell’s comments on ‘the passage of time’ creating more economic clarity. The reason: the US economy is now far enough into the pandemic and expectations for the coming quarters are sufficiently refined that it follows intuitively that the pace of job creation (revival) seeing during Aug-Nov will level-set forecasts going into the final months of the year.

Below is a summary of expectations, courtesy of NewsSqawk:

EXPECTATIONS:

• Nonfarm Payrolls exp. 1.4mln (range -100k to +2.38mln, prev. +1.76mln);
  • Private payrolls exp. +1.25mln (prev. 1.46mln);
  • Manufacturing payrolls exp. +50k (prev. +26k);
  • Government payrolls (prev. +301k);
• U3 Unemployment rate exp. 9.8% (range: 8.5-11.0%, prev. 10.2% (Fed sees the unemployment rate at 9.3% by end-2020); U6 unemployment (prev. 16.5%); Participation (prev. 61.4%);
• Average earnings m/m exp. 0.0% (prev. +0.2%); Average earnings y/y exp. +4.5% (prev. +4.8%); 
• Average workweek hours exp. 34.5hrs (prev. 34.5hrs).

WEEKLY CLAIMS:  The initial jobless claims data that coincides with the August jobs report disappointed expectations (it printed 1.1mln vs the consensus view for a fall to 925k). Some analysts argued that it may show that the recent fall in claims could have been underpinned by the expiry of enhanced jobless benefits, which rolled off at the end of July, and the tick-up in claims might have therefore been more to do with the partial restoration of those benefits (note: seven states approved additional benefits, retroactive to the 1st August). Continuing claims for the BLS jobs report survey week fell to 14.535mln from 14.758mln, not quite to the 14.45mln level that the Street was modelling. Analysts said the decline was restricted by the nature of bi-weekly filings in some key states (California, Pennsylvania and Texas), with the data coinciding with the ‘off’ week’ some estimates suggest that the rate of continuing claims decay is currently running at around -575k per week, slower than the – 800k approximate weekly pace seen in the early part of July.

ADP:  The ADP reported 428k nonfarm payrolls were added in August, missing the consensus of +950k; the prior, however, was revised up from 167k to 212k. The accompanying commentary from the ADP was glum, with the payroll processor stating that job gains were minimal, and businesses across all sizes and sectors have yet to come close to their pre-COVID-19 employment levels. From a traders point of view, Pantheon Macroeconomics notes that it was the fourth straight month where the ADP print was very close to the number implied by the Homebase employment data, while the ADP gauge has fallen short of the official BLS nonfarm payrolls number, although the magnitude has narrowed in June and July. Pantheon says that assuming a further narrowing of the gap in August, it looks for the BLS data to show around +750k jobs were added (currently, the consensus looks for +1.4mln). With regards to wage growth, some analysts noted that most of the employment gains in the ADP data were within minimum wage categories – if we see this dynamic in the BLS data, it may result in wage growth falling; recall, the spike in wage growth in the BLS metrics since the pandemic began were more a function of low wage workers losing their jobs, and accordingly, falling out of the wage data sample; were minimum wage jobs to return, some suggest the average wage metrics may also edge lower. Elsewhere, and looking ahead, Pantheon says that the outright decline in small business employment in the Homebase data points to a dip in the September ADP report, and perhaps even the official BLS data too. “Even if the August pace of ADP job growth is sustained, it would take more than two years for the level of ADP employment to return to the pre-COVID peak.”

MANUFACTURING ISM:  The manufacturing ISM report was generally quite solid, however, analysts did highlight that the pace of gains in the employment sub-index was lagging versus other activity subindices. The employment index itself rose by 2.1 points to 46.4 in August, the first full month of operations after supply chains restarted and adjustments were made for employees to return to work. Additionally, it remains under 50.0, and accordingly, manufacturing employment saw the thirteenth consecutive month of employment contraction, although it is worth noting that the index has improved for four straight months. Long-term  labour market growth remains uncertain, but strong new-order levels and an expanding backlog signify potential strength for the rest of Q3, ISM said; respondent comments indicated that more companies were hiring, or attempting to hire, compared to actively and passively reducing their labour forces.

NON-MANUFACTURING ISM: There was a larger jump in the non-manufacturing ISM’s employment sub-index, which moved from 42.1 to 47.9, though like its manufacturing counterpart, remains under the 50.0 mark. That means the service sector employment has been contracting for six months on the trot. Respondents noted that “attrition has taken employees; hiring is authorized, but slow to materialize” and “the need for employees is greater, but we are having a difficult time filling open positions.”

GOVERNMENT PAYROLLS: Analysts will be keeping an eye on government payrolls, which are expected to pick up due to the hiring of employees to conduct the US Census; Oxford Economics explains that during Census survey years, federal employment has traditionally risen sharply in May, reflecting the hiring of temporary field staff. However, this year, the pandemic has resulted in the suspension of all field operations, but as the economy begins reopening, hiring is ramping up. The Census Bureau has said that 288k workers were paid during the August BLS survey period vs 50k during the July survey period, implying Census related hiring picked up by some 238k in the month. “This should be partly offset by weaker employment at the state and local level as governments budgets remain squeezed,” OxEco writes, “with revenues plummeting and spending increasing to cope with massive rises in unemployment and a public health emergency, state and local governments were likely forced to cut their workforce significantly to balance their budgets.”

JOB CUTS: Data from Challenger showed announced job cuts rose to just under 116k in August (+116% y/y, although -56% m/m), for the highest total August reading since 2002. YTD, employers have announced just under 2mln job cuts (+231% vs the same period in 2019), with around half of those cuts being attributed to COVID. In August, transport sectors saw the biggest job cuts, followed by entertainment/leisure companies. Challenger said that market conditions caused around 45k of the announced cuts in August, around 30k was due to the demand downturn, and around 23k due to costcutting. COVID-19 is the reason cited for 1,083,394 cuts so far this year. Challenger said that the employment landscape was dealing with a host of burdens that reach beyond job cuts; COVID and the recession continue to cause volatile conditions in many industries. It also said that both companies and workers were grappling with increasing uncertainty due to stalled economic relief, the approaching election, and child care and education concerns. “Many employees hesitate to return to the job force out of fear of exposure to COVID,” it wrote. “parents are trying to determine if they can safely send their children back to school or daycare, or if they need to facilitate remote learning. In some cases, working parents do not have a choice.”

Arguing for a better-than-expected report (via Goldman):

• Big Data. High frequency data on the labor market were mixed in August (seen Exhibit 2), however all six measures we track indicated continued job gains.Furthermore, we note that the weakest two measures (Google, ADP) do not directly track the discrete impact of workers returning to their previous employers (the establishment survey counts an individual as employed provided that they work atleast 1 hour during the reference period).
• 
• Jobless claims. While still elevated, initial jobless claims declined significantly during the August payroll month (averaging 1.2mn per week vs. 1.4mn in July). Additionally, continuing claims declined by 2.3mn from survey week to survey week(after adjusting for biweekly filing schedules in Florida and California). Notably, both measures also declined on net in the Sun Belt states most affected by the second wave of coronavirus infection (see Exhibit 2).
• 
• Census hiring. Census temporary workers are set to boost nonfarm job growth byn255k in August, as additional field staff were hired to conduct interviews.
• Employer surveys. Business activity surveys improved on net in August, as did the employment components of our survey trackers (non-manufacturing +3.0pt to 46.3;manufacturing +2.6pt to 51.4).
• Job cuts. Announced layoffs reported by Challenger, Gray & Christmas fell 65% in August to 116k after rising 68% in July and falling 43% in June (mom, sa by GS).They remain 114% above their August 2019 levels.

Arguing for a weaker-than-expected report:

• Second Wave. The US experienced a dramatic resurgence of coronavirus during the second half of June—particularly in the Sun Belt states—and by the July Fourth holiday, nearly two-thirds of the country had paused or reversed their reopening plans. However, job growth remained firm in the July payroll report despite a pause in the Sun Belt leisure and hospitality recovery (+37k in July after +813k in June). Given the further decline in jobless claims in this region (and nationally), and the fact that the establishment survey measures reopenings and expansions more accurately than business closures, we do not expect the second wave to prevent a sizeable gain in August payrolls in tomorrow’s report.
• Seasonality. Payrolls have exhibited a tendency toward weak August first prints, which may reflect a recurring seasonal bias in the first vintages of the data. August job growth has missed consensus in 7 of the last 10 years, and on average the first vintage is 41k below the final. While a negative factor, the unprecedented scale of labor market changes from the coronacrisis renders residual seasonality a relatively marginal factor in tomorrow’s report.
• ADP. Private sector employment in the ADP report rose by 428k in August, well below consensus. We view the ADP miss as incrementally negative information;however, major differences between ADP and BLS nonfarm payrolls in terms of methodology and source data suggest scope for another divergence this month.
• Job availability. The Conference Board labor differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get—fell into contractionary territory (-3.7 in August from +2.2 in July and -2.8 in June).

 

We never thought the day would come: millennials are finally starting to move out of mom and dad’s basement and are now actually powering the unexpected rebound in the housing market. Well, OK, millennials and the Fed, who is providing them with their down payments in the form of PPP loans.

Regardless, housing demand from millennials made up 38% of home buyers for the year ending June 2019. This is up from 32% in 2015, according to the Wall Street Journal and the National Association of Realtors. They also accounted for more than half of all new home loans early last year and they “consistently held above that level in the first months of this year.”

Millennials also passed baby boomers as the biggest living adult generation in the U.S. last year. Soon, a majority of those millennials, born in the 90s, will enter into their 30s. Odeta Kushi, deputy chief economist at First American Financial Corp., said: “We anticipate as they turn 31 and 32, we’ll just see homebuying demand grow.” 

The data flies in the face of assumptions that millennials would forever be renters. However, it may not be the beacon of economic good news that many believe. The WSJ makes it seem as though millennials are no longer hampered by student debt and broke – but the assumption they have built nest eggs somehow likely belies the real mechanics of millennials becoming home owners: free government money and rigged 0% interest rates. 

For example, 32 year old Sandra Martinez-Gonzalez told the WSJ that “when she started looking for a new place to rent at the beginning of the year, she realized buying would be cheaper than renting in her neighborhood”. 

Of course, the entire generation moving closer to home-buying age also helps. Rick Arvielo, chief executive of mortgage lender New American Funding asserts: “Millennials, they’re roaring into homebuying age. What the industry’s been talking about for a decade is whether they’re going to follow their predecessor generations in terms of their desire to own homes. Yeah, they do—they have the same desires.”

Sales of previously owned homes were up almost 25% in July – the highest SAAR since December 2006. Additionally, first time buyers made up 34% of all sales in July. This is up from 32% a year prior.

Home buying is also being attributed to many of the younger generation moving out of cities – as a product of not only the coronavirus pandemic, but now the growing unrest in major cities across the nation. But while housing prices soar and demand is steady, a reality check may still loom as a result of the collapsing underlying economy. 

But, for now at least, it is once again Fed-induced sunshine and rainbows. Martinez-Gonzalez concluded: “It feels amazing. Now that we have a home it kind of feels like: Why didn’t we do this sooner?”

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

“The Kremlin” poisoned their “fierce rival” Navalny with the infamous deadly agent novichok.

That is the headline.

Only, the German accusation in that direction doesn’t say novichok, its says a “cholinesterase inhibitor”, of which novichok is just one example, was used. The news outlets must be thinking that at least after the Skripal case, enough people will recognize the term, and let’s not confuse them.

The Germans claim they have “unequivocal proof” (eindeutiger Beweis) for this.

While the Russian doctors who initially treated Navalny after he fell ill on a flight from Tomsk to Omsk (or was that the other way around?!) said he showed zero signs of poisoning. But yeah, they’re Russians, so they can’t be trusted, right? They all squander their Hippocratic oaths at the feet of the great malevolent dictator Trump Putin. You’re familiar with the parable about “all Cretans lie”?

“Merkel spokesman Seibert said the German government will inform its partners in the European Union and NATO about the test results..”

NATO? What do they have to do with anything? How does the alleged poisoning of a two-bit (2% in the polls) Russian “politician” link to NATO? Is Navalny himself linked to NATO? Where does NATO come in to the conversation? How much does the CIA pay Navalny anyway?

The thing, the problem, is that it makes no difference anymore even if this particular instance has a kernel of truth in it.

Because there have been so many of them, and they’re all “based” on non-evidence, circumstantial “evidence”, stuff that you wouldn’t get a conviction on in any western court. For good reason.

In the Skripal case, a pair of vague Russians were presented in the UK media who supposedly had been in the area where the alleged poisoning took place, where the head of all UK nurses “just happened” to deliver first aid, but the story still never made sense. Now I read in a Dutch news outlet that the two Skripals were moved to New Zealand to start a new life, but the fact remains that no-one has heard from them since that alleged incident. Almost as if someone doesn’t want to provide any proof, just the narrative.

In the MH17 case, another RussiaRussia story, they threw all credibility out from the start by appointing main victim the Netherlands (2/3 of deaths) the main prosecutor, but even more by allowing one of the main potential perpetrators, Ukraine, not just a role in the investigation, but handing them a veto right over whatever info could be shared with the outside world. I think we call that lock stock and barrel.

It is of vital importance for two parties -which might as well be one- in the west to keep accusing Russia of all manner of issues, while knowing full well they will never answer (though, remember Concord Asset Management, Robert Mueller III?), which means you can say whatever you want. It’s a free for all. The two parties are intelligence and NATO.

Western nations, and that means all of them, all the self-congratulating “democracies”, are being blackmailed by their own -secret- intelligence services, which most often pose as “national security services”, and they find they have no way out. In most countries, the best before date of a politician, even the political system itself, is way shorter than that of an intelligence agency’s agenda. The only thing a newly elected politician can do is accept a secret service’s word at face value, and define policy accordingly.

Be it domestic, bi-lateral vs particular countries, or global. The policies have already been defined years ago, and they have been defined by unelected “spooks”, not elected representatives of the people. This is incredibly (and I don’t use that word lightly) damaging to all of our societies, and we need to call a halt to it. But how do you do that? When they are the ones making policy, and not the people we vote into office to do that for us? It’s certainly not an easy task, but we can’t let them continue either. That would only mean assured destruction, economic depression and, ultimately, war.

That’s how and why we get the Navalny and Skripal stories. This goes back to at least WWII. US intelligence and the Wolfowitz/Brzezinski/Leo Strauss/Kissinger neocon cabal have severely compromised US national security for decades, only to funnel trillions towards US arms manufacturers, who today produce second rate weapons to boot. It is high time to stop this. Security is much better served by dialogue. Or should I say ”arguably?”

What the Navalny story, lacking evidence as much as so many other narratives, should tell us is that we are sort of hostages to a Ghost of Christmas past. We are being blackmailed as we speak by secret agents in cohort with the very military industrial complex that Eisenhower warned about, because they all need to keep a long lost dream alive in order to still appear relevant and chuck trillions out of our pockets.

It’s a scam, it’s blackmail. Russia is not about to attack you. They may have much better weaponry by now than we do (they do, check hypersonic), but they still won’t attack you, because A) they don’t want to, and B) they don’t have the numbers. They don’t have the manpower, they don’t have the money, they just want to be left alone, and we won’t leave them alone.

Our spooks invent Skripal and MH17 and Navalny and Russia collusion and prostitutes peeing on beds in Moscow. Because that’s how they justify -literally- endless streams of money towards their operations, and those of their Siamese twin NATO. All that money goes towards the 1950’s though, we’re paying through the nose for a long discredited notion and a long passed… past.

But as soon as anyone mentions Russia, you know there’s never going to be any checks and balances, as long as there are still enough people who buy into the Putin=”Bogeyman who eats little children” thing, in the same way that they believe Putin controls Donald Trump’s mind and policies. It’s a numbers thing: as long as enough people buy it, the narrative will continue to be sold.

You’re essentially stuck in your grandparents’ mindframe. No kidding. As we go through our 2020 crisis, which seems real enough, we spend extraordinary amounts of money on long outdates ideas maintained only to maintain the CIA and the army. Say what you will, but there’s nothing smart about that. It’s only very stupid.

Because, for one thing, suppose there are real threats lurking today, how can we face those while we’re still focusing on things that ceased being threats decades ago? Shouldn’t we perhaps replace our “intelligence” with something more intelligent? And fit not for the 1950’s but for the 2020’s?

Our “security services”, and NATO very much as well, make us less secure, safe, not more, because that’s the only way they know to justify their continued existence. Yes, there’s a paradox hidden in there somewhere. They don’t serve us, they only serve themselves.

*  *  *

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Australia is officially in recession, the first time in 30 years, as it suffers from a disastrous economic fallout of the virus pandemic.

Tony Abbott, the former Australian prime minister, warned Tuesday, in a speech to the UK think tank Policy Exchange, that virus “hysteria” and draconian lockdowns are perpetuating the economic slowdown and have created a “something for nothing mindset” among younger generations living on furlough. 

He said, “much of the media has indulged virus-hysteria with the occasional virus-linked death of a younger person highlighted to show that deadly threat isn’t confined to the very old or the already-very-sick or those exposed to massive viral loads.” 

Abbott accused Victorian Premier Daniel Andrews of being a ‘health dictator’ by placing five million Melburnians under “house arrest.” He said politicians need to stop acting like “trauma doctors” and start adopting the mindset of “health economists” – as reckless money printing to sustain the country’s economy during lockdowns isn’t sustainable

“From a health perspective, this pandemic has been serious. From an economic perspective, it’s been disastrous,” Abbott said. “But I suspect that it’s from an overall wellbeing perspective that it will turn out worst of all.”

“At some point, we just have to learn to live with this virus in ways that can be kept up more or less indefinitely,” Abbott said.

He called for an end to “magic pudding economics” – the endless money-printing that has allowed governments to pay the wages of shut-down businesses, freeze rents and mortgages, and keep up unemployment payments without running out of funds.

This “something for nothing mindset,” he argued, risks congealing into a “new normal” – during a “people once sturdily self-reliant” into giving up personal responsibility in return for being taken care of by Big Brother.

– RT News 

The former PM blamed local governments for panicking into “crisis mode,” now trapped in an emergency as the “crisis adds to their authority or boosts their standing.” 

Abbott said curfews in Victoria and travel bans of more than 3 miles were the most severe in the world outside of Wuhan, China, the alleged epicenter of the virus pandemic. 

He said, “the fear of falling sick is stopping us from being fully alive.” In other words, virus hysteria has prolonged the downturn and produced deep economic scarring. 

Authored by Monica Showalter via AmericanThinker.com,

Just when the Democrats thought it was safe to go back into the leftist Latinx narrative, out comes the Goya CEO, Bob Unamue, and he’s warning that “hatred and destruction” from the riotous destruction of small businesses are driving Latino voters to President Trump. He has that way of reading the reality.

Unamue spoke with JustTheNews’s John Solomon, and painted Democrats an ugly, if real picture:

The rise in support for Trump is due to “fatigue over all the destruction and hatred, tearing down businesses, by people — a lot of people that are from outside the community — because if you’re within the community, you’re building it, you don’t want to tear down what you just built,” Robert Unanue, President and CEO, Goya Foods, told Just the News in a video interview. 

“And this is organized. People coming in from the outside to destroy. And so you know, we have two paths to take: Love and build, hate and destroy. We need to take the path of loving and building. And that’s why we’re looking at prosperity. How do we get our country back on our feet, and prosper in all aspects. So let’s love. Let’s build.”

That “outside the community” dynamic is very well known in much of the Latino community, with Cubans, Venezuelans and Nicaraguans familiar with politically organized “turba” repudiation mobs, sent in by communist rulers from outside the community to attack dissidents in their homes, as well as foreign “Sandalista” influences on domestic communist regimes. That would be the same Sandalistas so beloved of Bernie Sanders and Bill de Blasio, with the latter having actual experience as a bona fide Sandalista supporting the oppressive communist regime in Nicaragua in the 1980s and 1990s. To Latinos who have fled such hellholes, and who are now overrepresented in the entrepreneurial and startup communities here, this is a familiar memory, this is something that truly disgusts them. Goya itself was the target of this vile leftist mob, vowing to boycott the entire brand based on Unamue’s kind words to President Trump at a White House event in July, a courtesy he also extended to President Obama earlier. Unamue refused to back down and the boycott bombed, with boycott loudmouth celebrity Chrissie Teigen last seen using Goya products anyway. Boycott for thee but not for me.

And Unamue’s completely right that these voters are moving to Trump. Solomon cites a two-point rise in pan-Latino favorability to 32%, according to a new Hill-HarrisX poll, a steady rise from far lower numbers in the past, particularly with past Republican leaders and presidential candidates. The trend keeps rising.

And even a Latinx-type polling activist group shows very poor numbers for Joe Biden to start with – take a look at this meager offering from UnidosUS for Joe here.

It’s more than just riots driving Latinos to Trump. The stellar Trump economy, with its tax cuts and deregulation led to record-low Latino unemployment which has to be a plus.

Here’s another thing: The Latino community was hit harder than others by the COVID shutdowns, with huge job losses. Who’s trying to open the economy and who’s trying to obey “science” and “the experts.” More points for Trump.

Here’s a third thing: President Trump has made life either difficult or else hellish for Marxist forces in Latin America, where many Latinos still have ties.

Venezuelan-American voters, known as “MAGAzolanos” in Miami and Doral, Florida are speaking out and making ads. Cuban-Americans are very strong Trump supporters. Puerto Ricans on the mainland have reason to like President Trump too, given his criticism of their corrupt and incompetent socialists back on the island. And Colombian-American voters have been gratified to have seen Vice President Mike Pence and other administration officials speak out against the travesty of FARC Marxist narcoterrorists walking around free under the travesty “peace” deal, while the great liberator of their country, former President Alvaro Uribe, languishes under house arrest. It’s sickening and little known to the press coverage here, it’s been noted with favorability in the Colombian-American community.

With factors like these, and with Democrats still strongly allied with Sandalistas such as Sanders and De Blasio who have praised Latin American hellhole regimes and their filthy corrupt Marxist dictators, how can the numbers not rise?

The Goya CEO knew firsthand that the boycott against his company was going to be a dud, and now he’s saying Latinos are moving favorably toward Trump. He didn’t build his tiny kitchen-table business into a global behemoth by being stupid, woke, and naive. He knows the score. And he’s just handed the Democrats some very sour news compared to their ‘take-’em-for-granted’ expectations.

Ever since the early stages of the US-China trade/tech/virus/cold war four years ago, there were frequent rumors – which eventually gave way to increasingly legitimate chatter – that China was looking to go full “nuclear option” by selling some or all of its $1+ trillion of US Treasury securities, which incidentally has not been too far off the mark: as the chart below shows, after peaking in 2013, Chinese holdings of US debt have been steadily declining (and not so steadily in the aftermath of the Chinese devaluation), and are currently near the lowest level in 8 years. 

In any case, while Beijing has been gradually reducing its Treasury holdings it has never shocked the market with a major liquidation; and yet this ultimate threat has now found its way into China’s premier state-run English language news source Global Times.

And while not official policy, the fact that GT on Thursday has made a US Treasury dump front page news, citing top “state-linked experts”, is cause for concern (and certainly suggests that the Fed may soon have to step in with another massive QE to purchase whatever China has to sell).

The Beijing-backed publication writes today that “China may gradually reduce its holdings of US Treasury bonds to about $800 billion from the current level of more than $1 trillion, as the ballooning US federal deficit increases default risks and the Trump administration continues its blistering attack on China” citing unnamed experts.

The facts are familiar to anyone who has been following the Sino-US trade war amid the US descent into fiscal hell, which as we noted earlier this week will result in the US budget deficit hitting a record $3.3 trillion and a record 107% debt/GDP in just 2-3 years: as the Global Times reviews, in the first six months of this year alone the world’s second-largest holder of US debts dumped some $106 billion worth of US Treasury bonds (annualized), and is looking to continue trimming its holdings “systematically” – the publication states.

A key reason stated for the liquidation is that China is anxious over risks associated with the surging debt level in the US, which is expected to actually exceed the size of the economy in 2021, which would be a first since the end of World War II. What’s worse is that as the CBO has shown, what happens over the next 3 decades is even more insane.

One expert cited in the GT report, professor at the Shanghai University of Finance and Economics Xi Junyang, emphasized that “China will gradually decrease its holdings of US debt to about $800 billion under normal circumstances.”

He added in what appears the most interesting and “dire scenario” quote in the article (or we’re perhaps meant to take it as a veiled threat under the guise of a mere aside):

“But of course, China might sell all of its US bonds in an extreme case, like a military conflict.”

But as we detailed previously, such a “nuclear option” may not be that nuclear after all, since the Fed has monetized three times as much debt as China holds in the past 3 months without a glitch – meanwhile, even though dumping its US paper would result in some brief dramatic headlines, not only would it not affect the US, but would prove too self-destructive for Beijing to pursue outright (which currently calibrates and fine-tunes its exchange ratio with the help of its trillions in US reserves). Still, the fact that Beijing views such as an option as an alternative if not bargaining chip, enough to mention it again in the state-owned media, suggests that the possibility of a full-blown capital war is now at hand.

Should China proceed with this highly symbolic if largely innocuous escalation, one can only imagine what the US retaliation would be.

Authored by Ryan McMaken via The Mises Institute,

It’s now become fashionable on the Left to defend looting as a means of redistributing wealth from allegedly unworthy business owners to the more-deserving looters themselves.

“It’s just property!” is the refrain, with the implication being that property owners should not defend their property with coercive means – such as calling in the police or using privately-owned weapons against looters.1

This is the philosophy behind a recent declaration from a Black Lives Matter organizer. As the New York Post reported on August 11 :

“I don’t care if somebody decides to loot a Gucci’s or a Macy’s or a Nike because that makes sure that that person eats. That makes sure that that person has clothes,” [BLM organizer] Ariel Atkins said at a rally outside the South Loop police station Monday, local outlets reported. …“That’s a reparation,” Atkins said.

A more full apologia for looting now comes in the form of a new book titled In Defense of Looting by Vicky Osterweil, who identifies herself as “a writer, editor, and agitator based in Philadelphia.”

In an interview with National Public Radio, Osterweil states :

When I use the word looting, I mean the mass expropriation of property, mass shoplifting during a moment of upheaval or riot …

…It tends to be an attack on a business, a commercial space, maybe a government building—taking those things that would otherwise be commodified and controlled and sharing them for free.

Osterweil then goes on to assert that looting is basically a poverty relief program, and it liberates the looters from having to work for a living:

It gets people what they need for free immediately, which means that they are capable of living and reproducing their lives without having to rely on jobs or a wage…

And most fundamentally of all, looting is an attack on private property itself. If only there were more looting, we could all “have things for free”:

[Looting] attacks the idea of property, and it attacks the idea that in order for someone to have a roof over their head or have a meal ticket, they have to work for a boss, in order to buy things that people just like them somewhere else in the world had to make under the same conditions. It points to the way in which that’s unjust. And the reason that the world is organized that way, obviously, is for the profit of the people who own the stores and the factories. So you get to the heart of that property relation, and demonstrate that without police and without state oppression, we can have things for free…

This sort of thing may seem convincing to those who prefer to live in the realm of pure theory. Big words like “commodify” and “oppression” might strike beginner-level dissidents as impressive. But once we start to look at the real-world details of how looting works, we quickly find that looting your local auto parts store or Nike outlet isn’t going to bring down Wall Street hedge funders any time soon. What it will do is hurt ordinary people who own businesses and work in shops that are targeted by looters. Moreover, once the smoke has cleared, we’ll find that low-income neighborhoods will suffer the most.

Specifically, there are three reasons why looting will only serve to hurt exactly the ordinary people for whom pro-looting advocates pretend to be champions.

One: Regular People Work at Looted Businesses

Retail stores provide jobs to ordinary working people, including those who lack formal education. What’s more, these jobs are often desirable jobs, offering a workplace that’s air conditioned, clean, and far safer that more dangerous jobs like driving a bus or working construction. This is especially true of high-end retail shops. But selling handbags and gadgets to rich clients doesn’t make the salesperson wealthy, even if it can provide a decent living.

When looters destroy these stores and remove their merchandise, among those most impacted are the ordinary staff members. Without any merchandise there’s nothing to sell. And with nothing to sell there’s no revenue that can be used to support a wage for the sales staff.

Looters may pat themselves on the back for “liberating” these workers from their “wage slavery,” but it’s unlikely the newly unemployed workers see things this way when they show up in the morning and find their place of employment torched and ransacked.

Two: Looting Victimizes Immigrant Families and Others Who Aren’t Exactly Members of the Ruling Class

Although many news stories about looting in recent weeks have focused on looting of high-end retail outlets in places like Chicago’s Magnificent Mile, the fact is looting more often occurs in neighborhoods where residents are working class or low-income.

And in these neighborhoods, the owners of the local shops and small businesses tend to be immigrant families and other ordinary small-time entrepreneurs who are hardly members of the Wall Street elite. According to a report on entrepreneurship in low-income areas by the Small Business Administration, self-employed workers in low-income areas are “less likely to be U.S. citizens and English speakers” relative to other areas, and have less formal education. Higher proportions of the self-employed are black and Hispanic relative to other areas, as well. Moreover, “The vast majority of self-employed workers in low-income areas operate a business in their area of residence.”2 These business owners tend to face hardship themselves. Part of the reason they live and work in a low-income neighborhood is because they have relatively less access to working capital and business loans than people in higher-income neighborhoods.

Lower-income neighborhoods are not entirely without advantages. Competition is often less robust in lower-income neighborhoods, as many larger firms prefer to not take on the added risk of placing their offices and stores in these areas. This leaves more room for smaller independent firms where owners are more willing to take on the risk in exchange for lower rents, and lower up-front operating costs. The downside comes from the higher potential for crime, including robberies, looting, and vandalism. But because they have few other choices, many entrepreneurs in these areas choose to take their chances. When they are successful, they bring to their neighborhoods more employment, and greater access to goods and services for residents.

But it is precisely these immigrant-owned, minority-owned and family businesses that tend to be most victimized by looters.

Three: Looting Hurts Low-Income Neighborhoods the Most

Naturally, at the level of the independent business, looting can be disastrous for a business owners. The notion that looting is “no big deal” because businesses often have insurance is tone deaf to the point of being laughable. Most businesses in lower-income areas can barely afford the premiums necessary to cover the replacement value of their businesses — if they can afford it at all. Many businesses are under-insured. Nor is the recovery process effortless. Months after businesses were torched in Minneapolis’ riots, “Just 20% of all riot-related insurance claims have been paid so far.” Moreover, insurance premiums are higher in areas where there is high risk of crime and looting. Now, premiums will be even higher following the latest round of riots and looting.

This, is why businesses often tend to shut down and leave riot-affected neighborhoods after being looted. Insurance doesn’t just make a business owner’s problems go away. Looting and rioting also signals to other businesses to stay away.

Over time, this means fewer businesses, fewer employers, and more urban blight. It’s why after the 1977 blackout and looting in New York City countless businesses packed up shop and never returned. These areas remained economically depressed for decades afterward.

Put another way, looting and riots lead to “divestment” in lower-income neighborhoods.

Needless to say, looting doesn’t help the situation. And it only makes poverty worse for those who think they’re liberating themselves and others by ripping off iPhones and athletic shoes.

This goes beyond just the neighborhood level as well. The recent looting in Chicago—even the looting in posh business districts—only serves to cut city-wide tax revenues:

“This downtown base of residents and business generates almost $2 billion for the City of Chicago,” [Magnificent Mile Association spokesman Adam] Skaf said. “If those types of retailers leave in the future, that leaves a huge hole in our tax base downtown and that affects the whole city.”

Those business don’t need to have locations in Chicago. There are plenty of other markets in America where looting is much more rare or even non-existent. So, many business may simply leave, and this means less tax revenue for spending on infrastructure, public transportation, and social services. In other words, it means less spending on just the sorts of programs and amenities that defenders of looting tend to want.

No, looting stores is not something about which we just shrug our shoulders and say “golly gee, it’s just property. No one got hurt. Lighten up!” Looting hurts lots of people: especially the poor, and especially those who do the most to bring capital, employment, and prosperity to lower-income neighborhoods.

After Dr. Fauci poured cold water on President Trump’s hopes for a COVID-19 vaccine “October surprise”, the White House vaccine czar in an interview with National Public Radio, joined the pile on.

Head of the White House’s vaccine program Moncef Slaoui, the chief adviser for the White House vaccine program, said Thursday that it was “extremely unlikely but not impossible” that a vaccine could be available by All Saint’s Day.

We have every reason to take Slaoui’s view seriously. After all, he’s not just the coordinator of the White House Program: He is (was?) also a Moderna shareholder.

While Slaoui, who is in charge of “Operation Warp Speed” the collaboration between the White House and the top private vaccine groups, said the administration’s guidance to states to prepare to distribute vaccine courses by early November was  “the right thing to do” in case a vaccine was ready by that time, there’s a “very, very low chance.”

“It would be irresponsible not to be ready if that was the case,” he said.

As the NYT pointed out, Slaoui’s assertions “ran counter to the optimistic assertions in recent days from the White House that a vaccine could be ready for distribution before Election Day in November.”

During his nomination speech at the RNC, President Trump said a vaccine could be ready “before the end of the year or maybe even sooner.” And he and others have tried to project confidence in a quick victory.

Slaoui, meanwhile, confirmed that the two main candidates in “OWS” – referred to as Vaccine A and Vaccine B – are the candidates being developed by Pfizer and Moderna. Defending FDA chief Dr. Stephen Hahn’s claim that the FDA would be open to approve a vaccine for emergency use before all the Phase 3 trial data were in, Slaoui said there was “no intent” to introduce a vaccine before clinical trials were completed, and that an independent safety board would need to sign off on before any approvals, even emergency approvals, are given.

Pressed about claims that the quest for a vaccine had become “politicized”, Dr. Slaoui responded that “for us there is absolutely nothing to do with politics…Many of us may or may not be supportive of this administration. It’s irrelevant, frankly.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By Jose Martinez of TheCity.nyc

As riders slowly return to the subway, they may notice more missing from station platforms and passageways than swarms of straphangers.

Many of the retail spaces scattered about hundreds of stations — from a music store famed for its Latin music collection to a tiny storefront where you could buy a pair of cheap sunglasses before walking to the beach — have closed since the onset of the pandemic in March, according to the MTA.

“I just couldn’t see hanging on,” said Lou Moskowitz, 53, whose Record Mart in the Times Square-42nd Street complex shuttered for good in June.

The MTA said that 35 of the 215 retail spaces in the subway — more than 16% of all storefronts in the system — have gone out of business in the last five-plus months. The exodus has further wrecked the finances of a transit agency suffering from a massive pandemic-driven collapse in revenue from fares, tolls and subsidies.

The demise of Record Mart marked the end of a business that billed itself as “the oldest record store in Manhattan” and whose subway roots dated to 1958, when Jesse Moskowitz and Bob Stack established the shop inside the 14th Street-Union Square station.

“We were holding on, and I was planning on going as long as I could,” said Lou Moskowitz, the son of Record Mart’s co-founder. “But with this pandemic, I knew we had no chance.”

It’s been a similar refrain among shopkeepers throughout the subway system. Shops have closed at the Fordham Road stop along the No. 4 line in The Bronx, at the Delancey Street/Essex Street complex on Manhattan’s Lower East Side and at Jay Street-MetroTech in Downtown Brooklyn.

At Brooklyn’s Stillwell Avenue terminal, which is set to undergo an extensive retail makeover, the Coney Island Beach Shop — which sold T-shirts, sunglasses and suntan lotion — was among those that closed.

MTA Offers REnt Breaks

Andrei Berman, an MTA spokesperson, said the agency has implemented a rent-deferral program for tenants during the “immensely challenging” coronavirus crisis.

“In the months ahead, we will work to advance a wide range of policies aimed at bringing back tenants to some of the locations in question,” he said. “[We] expect that vacancy rates will decline as customers continue to return to the system in greater numbers.”

The increase in subway storefront closures followed recent efforts by the MTA to modernize retail in the transit system in the face of declining demand for everything from newspapers to candy bars.

Berman said the push to bring in new tenants has been complicated by a pandemic that, at one point, sunk subway ridership in April by more than 93% from that month the previous year.

The latest MTA weekday ridership figures, from Aug. 31, show that just over 1.4 million people rode the subway that day — down nearly 75% from 2019.

Retail revenue amounts to a fraction of income for the MTA, which is now seeking $12 billion in emergency federal aid. Without another influx of funds from Washington, officials have warned, they will be forced into 40% cuts to bus and subway service, layoffs and postponements to needed capital upgrades.

“What they make from retail is really nothing when you look at it,” Moskowitz said. “But still, it’s something.”

At the sprawling complex that was traditionally the system’s busiest busiest — Times Square-42nd Street/Port Authority Bus Terminal logged more than 65 million riders last year — Record Mart’s seven employees watched as the ranks of straphangers dwindled.

“By May, I knew we couldn’t reopen,” Moskowitz said. “We really had no choice, because we really had no traffic.”

‘A Good Run’

Moskowitz, who declined to reveal how much he paid for Record Mart’s month-to-month lease, said MTA officials tried to get him to stay. But he couldn’t be convinced.

“I know my dad, he would have been, ‘Just shut it down,’” he said of his father, who died in 2012. “As much as it’s a legacy, I do feel bad about it. But we had a good run.”

Record Mart reopened in 2007 after closing in 1999 for a renovation of the Times Square subway complex. The shop remained popular with fans of Latin music and vinyl, though Moskowitz said business had been shrinking for years.

In 2019, he started Record Mart Hi-Fi, an online offshoot specializing in high-end audio devices. A letter thanking customers “for the privilege of serving our fellow New Yorkers” is posted in the window of the now-vacant Times Square shop.

Moskowitz said he stopped by the storefront a few weeks ago and “saw maybe 40, 50 people” passing on the way to and from the 42nd Street Shuttle at about 1 p.m.

“It’s eerie,” he said. “You realize how fragile things are.”

The world’s biggest auto market looks as though it is finally on the mends. Or, at least, that’s what the numbers say.

China posted a sharp rebound in both total vehicles and heavy duty vehicles for August after sales were mired throughout the end of Q1 and the beginning of Q2 due to the coronavirus pandemic. Shockwaves from the pandemic continued throughout the global market, where sales fell off sharply in almost every major market. 

If China is truly the leading indicator, a V-shaped recovery could be in store for the rest of the world in coming months. China’s vehicle sales rose to 2.18 million units in August, according to preliminary data released by the China Association of Automobile Manufacturers and Bloomberg.

This marks a 11.3% year over year gain and follows a 16.4% rise for auto sales in July. Still, passenger vehicles are down 9.7% for the year to 14.5 million units. 

And it looks as though the recovery may not be over just yet: the CAAM has said it “expects auto sales to rebound in Sept. as boosted by Beijing International Automotive Exhibition to be held late Sept.”

Sales of heavy duty cars were also up 75% year over year in August to 128,000 units. This puts 2020’s sales at 1.1 million units which is – unbelievably – higher than the same period for any year in the past. 

Of course, this shouldn’t be too big of a surprise. China has been literally using heavy machinery since the beginning of its quarantine to physically wall in its citizens and take measures like filling tunnels in and out of Wuhan with dirt. 

Regardless, the news caused a sharp rise in many China-based vehicle and machinery names overnight. Jefferies analysts had raised their price target on Sinotruk by 11% on Tuesday following the company’s earnings report, citing not only its good quarter, but a tailwind from the country’s continued infrastructure investments. 

Here are some of the other names in China that popped last night, according to figures from Bloomberg:

• Dongfeng Motor rises as much as 1.5% in Hong Kong
• Sany Heavy +5.1% in Shanghai to all-time high
• Sinotruk gains as much as 8.9% in Hong Kong
• Liugong Machinery +1.6% in Shenzhen
• Weichai Power +2.2% in Shenzhen and +1.5% in Hong Kong
• Zoomlion-A +4.5% in Shenzhen and H shares +3.3%