Elizabeth Warren Hates Your Cheap Foreign-Made Electric Guitar

The cheapest new Stratocaster guitar you can buy from Fender’s home factory in Corona, California, costs $1,099. The cheapest Stratocaster you can buy made in Fender’s plant in Ensenada, Mexico costs $499. Too much? The cheapest Stratocaster you can buy from Fender’s Squier factory in Indonesia costs $349.99, and the cheapest one you can buy from Fender’s Squier Affinity factory in China is $199. There are differences across the range in the woodwork, the electronics, and the metal parts, but the consensus among even the snobbiest gear nerds is that Fender guitars of every price can play remarkably well out of the box.

I thought about the Ensenada factory last night while listening to Sen. Elizabeth Warren (D–Mass.) decry Mexican factories during the Democratic primary debate in Detroit. 

“You know, for decades, we have had a trade policy that has been written by giant multinational corporations to help giant multinational corporations,” she said. “They have no loyalty to America. They have no patriotism. If they can save a nickel by moving a job to Mexico, they’ll do it in a heartbeat. If they can continue a polluting plant by moving it to Vietnam, they’ll do it in a heartbeat….I have put out a new comprehensive plan that says we’re not going to do it that way.”

While Fender is an iconic American company whose instruments played a major role in developing some of America’s most iconic musicians—Jimi Hendrix, Dick Dale, Chrissie Hynde, Eddie Hazel, Stevie Ray Vaughan, Merle Haggard, Albert Collins, Bonnie Raitt—it is, in fact, exactly the kind of company Warren decried as having no loyalty and no patriotism because it is a “multinational corporation” that uses foreign factory labor to make money. And thank God for that, because if making guitars outside America was not a profitable venture for Fender, their guitars would not be affordable to the vast majority of Americans who play. 

No mass-market American guitar company exclusively sells American-made guitars because American musicians can’t and won’t pay for them. “Regulations and the general cost of doing business make it nearly impossible to do an affordable ‘working man’s’ guitar” in California, Schecter Guitar Research President Michael Ciravolo said in a 2017 interview. While Schecter does manufacture higher-end guitars in California, “95 percent of our artists play our Korean-built Diamond Series guitars. These are guitars that most players can afford and walk into any store around the world and get the EXACT guitar or bass that Syn Gates or Nikki Sixx play.”

Gibson, America’s other iconic electric guitar powerhouse and the biggest American market share owner after Fender, makes its Epiphone guitars in Qingdao, China. The same foreign factory model is used by the other guitar brands Fender owns, and all of America’s smaller mass-market electric guitar companies. From PRS to Ernie Ball Music Man, to G&L, Schecter, and ESP. Every last one uses overseas factories to offer tiered pricing and “save a nickel,” as Warren would say. As a result, the parents of a teenage St. Vincent fan who can’t afford her American-made signature model from Ernie Ball Music Man, which retails for $2,249, might be able to swing the $539 St. Vincent model expertly crafted in Indonesia by the company’s Sterling subsidiary. Still too much? The used market for instruments made overseas is a buyer’s market, which means American musicians who can’t afford a brand new $539 Sterling St. Vincent can find it used for a hundred (or more!) less. 

Consider, again, that $1,099 is the price of Fender’s cheapest American Strat, and that’s before sales tax. If the company were to shift all of its production capacity back to the U.S., it would likely employ many fewer people than it does now, because labor and regulatory compliance cost more in American than they do in Mexico, China, and Indonesia. This is why Fender’s current American guitars cost the most, and why the cheapest Fender guitar in an “America only” scenario would likely cost more than $1,099, assuming Fender could survive the transition. Imagine being 13 and watching John Frusciante or Bilinda Butcher on YouTube and not being able to find a cheapie Squier Strat or Jazzmaster on Craigslist. “American only” means fewer players, which means less music, which would suck. 

We should instead be celebrating the business model used by guitar companies. Having played guitars from all three of Fender’s factories, as well as foreign-made guitars from Yamaha, Epiphone, and PRS, I am happy to report that the men and women of Mexico, Korea, Vietnam, Indonesia, and China produce guitars that rival those made in America and Japan, once the only two countries considered capable of consistently producing quality electric guitars at mass-market scale. Again, there are real differences, and American and Japenese instruments are generally the nicest of the bunch. But those differences are impressively and delightfully inconsequential to all but the most discerning players, and many foreign-made guitar shortcomings can be addressed with a little elbow grease (and, to be quite honest, a little practice on the instrument). I love the heck out of my Ensenada guitar, and I have deep respect and gratitude for the people who work in that plant. They are skilled and prodigious and I’m sorry that one of my country’s presidential candidates suggested that they should be out of work simply because their bosses are American and they are not.

More sales of overseas guitars mean more guitar lessons and more guitar repairs. It also means more guitar music. Those opportunities do not exist at today’s scale in a world where “multinational corporations” are forced to build all their guitars in America. 

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Elizabeth Warren Hates Your Cheap Foreign-Made Electric Guitar

The cheapest new Stratocaster guitar you can buy from Fender’s home factory in Corona, California, costs $1,099. The cheapest Stratocaster you can buy made in Fender’s plant in Ensenada, Mexico costs $499. Too much? The cheapest Stratocaster you can buy from Fender’s Squier factory in Indonesia costs $349.99, and the cheapest one you can buy from Fender’s Squier Affinity factory in China is $199. There are differences across the range in the woodwork, the electronics, and the metal parts, but the consensus among even the snobbiest gear nerds is that Fender guitars of every price can play remarkably well out of the box.

I thought about the Ensenada factory last night while listening to Sen. Elizabeth Warren (D–Mass.) decry Mexican factories during the Democratic primary debate in Detroit. 

“You know, for decades, we have had a trade policy that has been written by giant multinational corporations to help giant multinational corporations,” she said. “They have no loyalty to America. They have no patriotism. If they can save a nickel by moving a job to Mexico, they’ll do it in a heartbeat. If they can continue a polluting plant by moving it to Vietnam, they’ll do it in a heartbeat….I have put out a new comprehensive plan that says we’re not going to do it that way.”

While Fender is an iconic American company whose instruments played a major role in developing some of America’s most iconic musicians—Jimi Hendrix, Dick Dale, Chrissie Hynde, Eddie Hazel, Stevie Ray Vaughan, Merle Haggard, Albert Collins, Bonnie Raitt—it is, in fact, exactly the kind of company Warren decried as having no loyalty and no patriotism because it is a “multinational corporation” that uses foreign factory labor to make money. And thank God for that, because if making guitars outside America was not a profitable venture for Fender, their guitars would not be affordable to the vast majority of Americans who play. 

No mass-market American guitar company exclusively sells American-made guitars because American musicians can’t and won’t pay for them. “Regulations and the general cost of doing business make it nearly impossible to do an affordable ‘working man’s’ guitar” in California, Schecter Guitar Research President Michael Ciravolo said in a 2017 interview. While Schecter does manufacture higher-end guitars in California, “95 percent of our artists play our Korean-built Diamond Series guitars. These are guitars that most players can afford and walk into any store around the world and get the EXACT guitar or bass that Syn Gates or Nikki Sixx play.”

Gibson, America’s other iconic electric guitar powerhouse and the biggest American market share owner after Fender, makes its Epiphone guitars in Qingdao, China. The same foreign factory model is used by the other guitar brands Fender owns, and all of America’s smaller mass-market electric guitar companies. From PRS to Ernie Ball Music Man, to G&L, Schecter, and ESP. Every last one uses overseas factories to offer tiered pricing and “save a nickel,” as Warren would say. As a result, the parents of a teenage St. Vincent fan who can’t afford her American-made signature model from Ernie Ball Music Man, which retails for $2,249, might be able to swing the $539 St. Vincent model expertly crafted in Indonesia by the company’s Sterling subsidiary. Still too much? The used market for instruments made overseas is a buyer’s market, which means American musicians who can’t afford a brand new $539 Sterling St. Vincent can find it used for a hundred (or more!) less. 

Consider, again, that $1,099 is the price of Fender’s cheapest American Strat, and that’s before sales tax. If the company were to shift all of its production capacity back to the U.S., it would likely employ many fewer people than it does now, because labor and regulatory compliance cost more in American than they do in Mexico, China, and Indonesia. This is why Fender’s current American guitars cost the most, and why the cheapest Fender guitar in an “America only” scenario would likely cost more than $1,099, assuming Fender could survive the transition. Imagine being 13 and watching John Frusciante or Bilinda Butcher on YouTube and not being able to find a cheapie Squier Strat or Jazzmaster on Craigslist. “American only” means fewer players, which means less music, which would suck. 

We should instead be celebrating the business model used by guitar companies. Having played guitars from all three of Fender’s factories, as well as foreign-made guitars from Yamaha, Epiphone, and PRS, I am happy to report that the men and women of Mexico, Korea, Vietnam, Indonesia, and China produce guitars that rival those made in America and Japan, once the only two countries considered capable of consistently producing quality electric guitars at mass-market scale. Again, there are real differences, and American and Japenese instruments are generally the nicest of the bunch. But those differences are impressively and delightfully inconsequential to all but the most discerning players, and many foreign-made guitar shortcomings can be addressed with a little elbow grease (and, to be quite honest, a little practice on the instrument). I love the heck out of my Ensenada guitar, and I have deep respect and gratitude for the people who work in that plant. They are skilled and prodigious and I’m sorry that one of my country’s presidential candidates suggested that they should be out of work simply because their bosses are American and they are not.

More sales of overseas guitars mean more guitar lessons and more guitar repairs. It also means more guitar music. Those opportunities do not exist at today’s scale in a world where “multinational corporations” are forced to build all their guitars in America. 

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A Dodgeball Game in Michigan Ends in Assault Charges for 10-Year-Old

An accidental schoolyard injury has resulted in criminal charges against a 10-year-old child in Michigan.

Detroit’s WXYZ reports that on April 29, a student at Ruth Eriksson Elementary in Canton was hit in the face with a ball during a game similar to dodgeball—in this game, students throw a ball in the air and catch it when it falls back down. The injured student’s mother hit said her child has a medical condition that could be worsened by a head injury, and that her child sustained a black eye, a bruised nose, and a concussion from the ball hit. 

A black student who was playing in the game was accused of intentionally hitting the other student, who is white, in the face. The black student received a one-day suspension. His mother, Cameishi Lindley, hoped that would settle the incident.

But the injured student’s mother filed a police report in April, and last week, Lindley received a call from the Wayne County Juvenile Court informing her that her son, who is slated to start fifth grade this year, is being charged with aggravated assault in the Third Circuit Juvenile Court in Detroit. Lindley told WXYZ that she “couldn’t believe it.” A Facebook fundraiser created by Lindley for legal expenses also indicated that her son was the only student to be punished earlier in the year, despite playing the game with a group of students.

The injured student’s mother, who is reportedly a teacher, told WXYZ that her son had been “targeted” twice before, both times in games where contact was to be expected. Lindley told WXYZ that she was sorry “that her child got hurt,” but was also “unaware” of any prior incidents.

Lindley’s 10-year-old son is set to appear in court on Thursday for a pre-trial conference.

A 2016 report by Reason‘s C.J. Ciaramella found that the Wayne County criminal justice system has a history of treating minors much more harshly than other counties around the country.

At the time of Ciaramella’s report, about 150 juveniles were serving life without the possibility of parole in Wayne County, the highest number in the country. This accounted for 40 percent of the state’s juvenile life without the possibility of parole sentences despite making up just 18 percent of the population. The sentences were also found to have disproportionately affected young black Americans.

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Why The Fed Is Compelled To Cut Rates – Housing, Housing, Housing!

Authored by Charis Hamilton via Econimica blog,

  • The Annual Growth Of Potential Home Buyers Is Decelerating To Near Zero And Will Remain There For The Next Decade.

  • The Annual Growth of Potential Sellers is Surging and Will Continue To Do So Over The Next Decade.

  • A Surplus of Homes Are Being Built Versus The Minimal Growth In Buyers.

  • The Fed Will Cut Rates In Pursuit Of Prolonging The Housing Bubble.

US Births, Fertility – 1950 to Present

From 2008 through 2018, there were 4.4 million fewer births in the US than the US Census estimated there would be in its 2008 projection.  2018 US births were over 500 thousand fewer than those seen in 2007.  The sharp and ongoing 12% decline in births since 2007 is entirely contrary to the sharp increases in asset prices and economic activity…and the Census and Federal Reserve expectations.  The chart below details annual births (blue columns) and the fertility rate (black line).  During each previous economic upturn and financial bubble, the gains were widespread enough to incent a higher fertility rate and higher quantity of births…until the opposite result has been observed for over a decade in the current cycle.  Whatever policies are in place are not translating to economic and financial well being among the child bearing population…and fertility and births reflect this.

Below, births (blue columns) versus the population segments.  The dark blue line representing the 0-14yr/old population versus the 45+yr/old population (red line) is so telling.  Since 1962, the 0-14yr/old population is essentially unchanged while the 45+yr/old population has more than doubled…rising by +76 million.  Meanwhile, the minor increases in the 15-45yr/old childbearing population (yellow line) continue to be overridden by falling fertility rates.  Thus a childbearing population that is nearly double the size it was in 1957 is having 12% fewer total births…and births continue falling fast.

Ok, you get the idea.  Total births in 2018 were 12% below the 2007 and 1957 double birth peaks and 17% below what was projected by the Census just a decade earlier.  The vast majority of population growth is now among the 65+ year old population…in particular, the fastest growing segment by percentage and also in total numbers is the 75+ year olds.

Home Buying Population, Housing Permits, Interest/Mortgage Rates

So, what does this mean for housing?  On a net basis, nearly all housing is purchased by the 20 to 64yr/old population segment…so, the chart below shows their annual change (blue columns), housing permits (black columns), Federal Funds rate (yellow dashed line), and the 30 year mortgage (red dashed line).  The 20 to 64yr/old population saw twin annual growth peaks in 1981 and 1998, adding in excess of 2.2 and 2.4 million during those two years.  As for housing permits, they vacillated from 1 to 2.2 million annually from 1965 to 2005. 

But the core population and housing permits essentially haphazardly mirrored one another from ’65 through ’05.  However, since ’05 permits tanked unlike anything seen since 1950 while growth among potential buyers has fallen to levels unseen since prior to 1950.  Of course, the adoption of ZIRP by the Fed and record low 30 year mortgages have spurred home builders…in conjunction with investors looking for a cash flow vehicle and foreigners looking for a safe place to park excess cash.  However, now all three sources of buying have their own problems…population growth among buyers is falling away, foreigners have been spooked by currency and administration actions, and investors facing rent-to-property valuation ceilings.

And everything, save for one, is about to get worse aside from the Federal Funds rate (and resultant mortgage rates) going down.  While valuations are through the roof, annual growth of potential buyers is a fraction of that seen in ’98 or ’05, foreigners have net ceased their purchasing partly due to relative dollar strength, and whether foreign or domestic, investing at these valuations with flattening rents simply no longer pencils.

As the blue columns in the chart above from 2019 through 2030 show, the annual growth of buyers will be at a level unseen since before WWII.  By 2021, 20 to 64 year old growth is projected to be just 200 thousand annually (and this is entirely dependent on immigration, otherwise declines will rule).  On a monthly basis, this means less than 20 thousand new potential employees, less than 20 thousand new potential homebuyers, car buyers, etc. per month.  So, the next decade is one of essentially little to no growth among buyers (blue columns below) while potential sellers (65+ year olds, red columns) surge.  The case for full employment and minimal further working age population growth (and thus, minimal further jobs growth) is made HERE.

Anyone unsure of the Fed’s motives in cutting interest rates need only look at the primary pillar of the US economy, the housing market, the decline of potential buyers versus surge in sellers. 

The only remaining tool the Fed has is ZIRP and more likely NIRP to hammer mortgage rates to new record lows in an attempt to continue blowing the housing bubble and save the banks from their fate, otherwise.

Birth data is via the CDC, population data via the UN report, World Population Prospects 2019.

via ZeroHedge News https://ift.tt/2K9d4QA Tyler Durden

Chicago PMI Crashes Near Post-Crisis Lows

Despite some rebounds in regional Fed surveys, Chicago PMI has fallen for five of the seven months so far in 2019, collapsing in July to 44.4 – the second weakest since the financial crisis.

This is the worst drop since the financial crisis.

This was dramatically below the 49.5 lowest analyst estimate.

Only 2 components rose month-over-month and New orders, Employment, Production and Order Backlogs all contracting

  • Business barometer fell at a faster pace, signaling contraction

  • Prices paid rose at a slower pace, signaling expansion

  • New orders fell at a faster pace, signaling contraction

  • Employment fell and the direction reversed, signaling contraction

  • Inventories rose at a slower pace, signaling expansion

  • Supplier deliveries rose at a faster pace, signaling expansion

  • Production fell and the direction reversed, signaling contraction

  • Order backlogs fell at a slower pace, signaling contraction

This is the worst start to a year for Chicago PMI in at least 30 years…

Time to cut rates!!

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A Dodgeball Game in Michigan Ends in Assault Charges for 10-Year-Old

An accidental schoolyard injury has resulted in criminal charges against a 10-year-old child in Michigan.

Detroit’s WXYZ reports that on April 29, a student at Ruth Eriksson Elementary in Canton was hit in the face with a ball during a game similar to dodgeball—in this game, students throw a ball in the air and catch it when it falls back down. The injured student’s mother hit said her child has a medical condition that could be worsened by a head injury, and that her child sustained a black eye, a bruised nose, and a concussion from the ball hit. 

A black student who was playing in the game was accused of intentionally hitting the other student, who is white, in the face. The black student received a one-day suspension. His mother, Cameishi Lindley, hoped that would settle the incident.

But the injured student’s mother filed a police report in April, and last week, Lindley received a call from the Wayne County Juvenile Court informing her that her son, who is slated to start fifth grade this year, is being charged with aggravated assault in the Third Circuit Juvenile Court in Detroit. Lindley told WXYZ that she “couldn’t believe it.” A Facebook fundraiser created by Lindley for legal expenses also indicated that her son was the only student to be punished earlier in the year, despite playing the game with a group of students.

The injured student’s mother, who is reportedly a teacher, told WXYZ that her son had been “targeted” twice before, both times in games where contact was to be expected. Lindley told WXYZ that she was sorry “that her child got hurt,” but was also “unaware” of any prior incidents.

Lindley’s 10-year-old son is set to appear in court on Thursday for a pre-trial conference.

A 2016 report by Reason‘s C.J. Ciaramella found that the Wayne County criminal justice system has a history of treating minors much more harshly than other counties around the country.

At the time of Ciaramella’s report, about 150 juveniles were serving life without the possibility of parole in Wayne County, the highest number in the country. This accounted for 40 percent of the state’s juvenile life without the possibility of parole sentences despite making up just 18 percent of the population. The sentences were also found to have disproportionately affected young black Americans.

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Marianne Williamson Rises from the Memes and Enters America’s Dreams

She resolutely refuses to talk policy specifics. Her voice sounds like a “televangelist crossed with a glass of Chardonnay,” to borrow a phrase from Robby Soave. She says things like “dark psychic force” and “emotional turbulence” when discussing politics. And she was the breakout star of Tuesday night’s Democratic presidential debate in Detroit.

Before yesterday, Marianne Williamson’s candidacy existed mostly as a meme. She seemed interesting and weird and destined to drop out of the polls and then the race. But a funny thing happened on her way to the remainder bin: Not only did the quirky and possibly insane self-help author make it back for round two of the #DemDebates, she also stole the show.

As candidates like Sens. Bernie Sanders (D–Vt.) and Elizabeth Warren (D–Mass.) huffed and puffed about the putrid centrism of fellow candidates, and the purported centrists griped and swiped at their more radical counterparts, Williamson beamed with calm, sturdy energy and fired off quietly devastating barbs.

“I look at some of you and I almost wonder why you’re Democrats—you almost think something is wrong with using the instruments of government to help people,” she chastised colleagues at one point. Later, she ripped into “politicians, including my fellow candidates,” for taking “tens of thousands—and in some cases, hundreds of thousands—of dollars from… corporate donors” while acting like they “now have the moral authority to say we’re going to take them on.”

Questioned about the environmental crisis in Flint, Michigan, she turned it into a referendum on Donald Trump’s aura:

The racism, the bigotry, and the entire conversation that we’re having here tonight—if you think any of this wonkiness is going to deal with this dark psychic force of the collectivized hatred that this president is bringing up in this country, then I’m afraid that the Democrats are going to see some very dark days.

America, apparently, ate it up. Williamson was the most-searched candidate on Google last night in every state except Montana (where their own governor and debate-stage newbie Steve Bullock got the most Google queries). CNN hosts fawned over her in the post-debate analysis. Even the antagonize-everyone teens behind Mike Gravel’s candidacy were digging Williamson’s vibes.

Political reporters and pundits on the left, right, and posts further afield had positive things to say about Williamson’s performance, if not necessarily her ideas or ability to win. Yet even those estimations seemed to rise last night for some.

As Rep. Thomas Massie (R–Ky.) pointed out during the last election, Americans love “the craziest son of a bitch in the race.” Among Democrats this year, that’s Williamson. Her Big “Santa Fe Aunt Energy” is a refreshing change of pace compared to the other career politicians on stage. Her New Age-ness makes her relatable to some, and an easy target for low-stakes ribbing for many of us. Her long-shot candidacy makes it feel harmless to ironically cheer her on.

But are we failing to take Williamson seriously at our own peril? Not everyone seems to think that elevating her is harmless fun.

Not only does Williamson buy into the litany of bad, big-government proposals that most of the Democratic candidates do, she has also written a host of bizarre (and some say dangerous) things about both mental and physical health (among other things).

For more on Williamson overall, see Jesse Walker’s excellent profile of Williamson from earlier this month. For more on her debate performance last night, check out these write-ups from The Spectator and from Buzzfeed.

As for how Williamson herself thought the debate went, she told reporter Sarah Mucha last night: “I’ll tell you later when I see the memes.”

FREE MINDS

Latino voters split on whether President Donald Trump is racist:

FREE MARKETS

Buttigieg would destroy independent contractors. South Bend Mayor and Democratic presidential candidate Pete Buttigieg wants to unionize “gig economy” workers, he told debate watchers last night. He has proposed similarly before. “But in order to successfully execute that plan, the presidential hopeful would need to ensure those workers are reclassified as fully-fledged employees, as opposed to independent contractors,” points out Billy Binion.

That may be a tough sell: The National Labor Relations Board (NLRB) already ruled that Uber drivers cannot unionize because they are independent contractors, and the Department of Labor similarly declined to classify gig economy participants as employees. Both agencies said that those individuals are free to work when they please, can set their own hours when it best suits them, and are permitted to work for competing companies. Those criteria, and several others, make them contractors.

And this change could be devastating to not just employers that rely on them and those who use the services they provide but to the workers themselves.

QUICK HITS

  • “Tony Timpa wailed and pleaded for help more than 30 times as Dallas police officers pinned his shoulders, knees and neck to the ground. ‘You’re gonna kill me! You’re gonna kill me! You’re gonna kill me!'” he shouted. Police laughed as they did.
  • During health care discussions in last night’s Democratic debate, “neither Sanders nor Warren even acknowledged the possibility that Medicare for All could affect providers adversely. Instead, they kept returning to the profits of drugmakers and insurance companies, as if that were the entire problem.”

  • “Conspiracy theories about social media are undermining American institutions,” warns the R Street Institute’s Jeffrey Wesling.
  • Pete Buttigieg held up alcohol Prohibition as evidence that we could abolish the Second Amendment.

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Secret McCabe Texts With MI-5 Counterpart Emerge, Spotlighting UK’s Early Role In ‘Russiagate’

Newly surfaced text messages between Former FBI Deputy Director Andrew McCabe and his counterpart at MI-5, the UK’s domestic security service, have cast new light on Britain’s role in the FBI’s 2016 ‘Russiagate’ investigation, according to The Guardian. 

Two of the most senior intelligence officials in the US and UK privately shared concerns about “our strange situation” as the FBI launched its 2016 investigation into whether Donald Trump’s campaign was colluding with Russia, the Guardian has learned.

Text messages between Andrew McCabe, the deputy director of the FBI at the time, and Jeremy Fleming, his then counterpart at MI5, now the head of GCHQ, also reveal their mutual surprise at the result of the EU referendum, which some US officials regarded as a “wake-up call”, according to a person familiar with the matter. –The Guardian

McCabe and Flemming’s texts were “infrequent and cryptic,” but “occurred with some regularity” after the June 2016 Brexit referendum. 

In his text message about the August 2016 meeting, Fleming appeared to be making a reference to Peter Strzok, a senior FBI official who travelled to London that month to meet the Australian diplomat Alexander Downer. Downer had agreed to speak with the FBI about a Trump campaign adviser, George Papadopoulos, who had told him that Russia had dirt on Hillary Clinton, the Democratic nominee in the race. –The Guardian

In 2017, The Guardian reported that Britain’s spy agencies had played a key role in alerting their American counterparts of communications between members of the Trump campaign and “suspected Russian agents,” which was passed along to the US in what was characterized as a “routine exchange of information.” 

UK begged Trump not to declassify

In May, President Trump issued a sweeping declassification order on materials related to the DOJ/FBI Russia investigation – leaving it in the hands of Attorney General William Barr to determine exactly what happened to Trump and his campaign before and after the 2016 US election. 

“For over a year, people have asked me to declassify. What I’ve done is declassified everything,” said Trump, adding “He can look and I hope he looks at the UK and I hope he looks at Australia and I hope he looks at Ukraine.” 

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Marianne Williamson Rises from the Memes and Enters America’s Dreams

She resolutely refuses to talk policy specifics. Her voice sounds like a “televangelist crossed with a glass of Chardonnay,” to borrow a phrase from Robby Soave. She says things like “dark psychic force” and “emotional turbulence” when discussing politics. And she was the breakout star of Tuesday night’s Democratic presidential debate in Detroit.

Before yesterday, Marianne Williamson’s candidacy existed mostly as a meme. She seemed interesting and weird and destined to drop out of the polls and then the race. But a funny thing happened on her way to the remainder bin: Not only did the quirky and possibly insane self-help author make it back for round two of the #DemDebates, she also stole the show.

As candidates like Sens. Bernie Sanders (D–Vt.) and Elizabeth Warren (D–Mass.) huffed and puffed about the putrid centrism of fellow candidates, and the purported centrists griped and swiped at their more radical counterparts, Williamson beamed with calm, sturdy energy and fired off quietly devastating barbs.

“I look at some of you and I almost wonder why you’re Democrats—you almost think something is wrong with using the instruments of government to help people,” she chastised colleagues at one point. Later, she ripped into “politicians, including my fellow candidates,” for taking “tens of thousands—and in some cases, hundreds of thousands—of dollars from… corporate donors” while acting like they “now have the moral authority to say we’re going to take them on.”

Questioned about the environmental crisis in Flint, Michigan, she turned it into a referendum on Donald Trump’s aura:

The racism, the bigotry, and the entire conversation that we’re having here tonight—if you think any of this wonkiness is going to deal with this dark psychic force of the collectivized hatred that this president is bringing up in this country, then I’m afraid that the Democrats are going to see some very dark days.

America, apparently, ate it up. Williamson was the most-searched candidate on Google last night in every state except Montana (where their own governor and debate-stage newbie Steve Bullock got the most Google queries). CNN hosts fawned over her in the post-debate analysis. Even the antagonize-everyone teens behind Mike Gravel’s candidacy were digging Williamson’s vibes.

Political reporters and pundits on the left, right, and posts further afield had positive things to say about Williamson’s performance, if not necessarily her ideas or ability to win. Yet even those estimations seemed to rise last night for some.

As Rep. Thomas Massie (R–Ky.) pointed out during the last election, Americans love “the craziest son of a bitch in the race.” Among Democrats this year, that’s Williamson. Her Big “Santa Fe Aunt Energy” is a refreshing change of pace compared to the other career politicians on stage. Her New Age-ness makes her relatable to some, and an easy target for low-stakes ribbing for many of us. Her long-shot candidacy makes it feel harmless to ironically cheer her on.

But are we failing to take Williamson seriously at our own peril? Not everyone seems to think that elevating her is harmless fun.

Not only does Williamson buy into the litany of bad, big-government proposals that most of the Democratic candidates do, she has also written a host of bizarre (and some say dangerous) things about both mental and physical health (among other things).

For more on Williamson overall, see Jesse Walker’s excellent profile of Williamson from earlier this month. For more on her debate performance last night, check out these write-ups from The Spectator and from Buzzfeed.

As for how Williamson herself thought the debate went, she told reporter Sarah Mucha last night: “I’ll tell you later when I see the memes.”

FREE MINDS

Latino voters split on whether President Donald Trump is racist:

FREE MARKETS

Buttigieg would destroy independent contractors. South Bend Mayor and Democratic presidential candidate Pete Buttigieg wants to unionize “gig economy” workers, he told debate watchers last night. He has proposed similarly before. “But in order to successfully execute that plan, the presidential hopeful would need to ensure those workers are reclassified as fully-fledged employees, as opposed to independent contractors,” points out Billy Binion.

That may be a tough sell: The National Labor Relations Board (NLRB) already ruled that Uber drivers cannot unionize because they are independent contractors, and the Department of Labor similarly declined to classify gig economy participants as employees. Both agencies said that those individuals are free to work when they please, can set their own hours when it best suits them, and are permitted to work for competing companies. Those criteria, and several others, make them contractors.

And this change could be devastating to not just employers that rely on them and those who use the services they provide but to the workers themselves.

QUICK HITS

  • “Tony Timpa wailed and pleaded for help more than 30 times as Dallas police officers pinned his shoulders, knees and neck to the ground. ‘You’re gonna kill me! You’re gonna kill me! You’re gonna kill me!'” he shouted. Police laughed as they did.
  • During health care discussions in last night’s Democratic debate, “neither Sanders nor Warren even acknowledged the possibility that Medicare for All could affect providers adversely. Instead, they kept returning to the profits of drugmakers and insurance companies, as if that were the entire problem.”

  • “Conspiracy theories about social media are undermining American institutions,” warns the R Street Institute’s Jeffrey Wesling.
  • Pete Buttigieg held up alcohol Prohibition as evidence that we could abolish the Second Amendment.

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Blain: “Trump Is Acting Like He Holds All The Cards. He Doesn’t”

Blain’s morning porridge, submitted by Bill Blain of Shard Capital

“Weebles Wobble but they don’t fall down..” 

I oft get accused of being too bearish, too miserable, and too gloomy.  That’s not true!  I’m a very happy, smiley, even jovial chap.  I’ve learnt it’s better to look at the facts, assume the worst and not be surprised. 30 plus years in markets also teaches me no matter how awful it looks, it’s never as bad as it might be, and it always gets better.  So being aware of just how bad it might get, rather than fooling ourselves how good we hope it might be, seems the best plan.

And, on the subject of self-delusional behaviour, from today “Blain’s Brexit-Watch” will be a regular part of the daily porridge – at the bottom, after the Fun-Stuff.

The Fun Stuff today will be the Fed decision.  Just how will the Fed frame a 25 basis point ease? Regular readers will know my view is a Fed ease is a pointless sop. The Feb will ease because they expect a now pretty-much unavoidable trade war and global slowdown, and really ought to be seen to be prepared for it.

The real issue isn’t even why we’re heading for global slowdown.  These include Donald Trump’s tweets y’day accusing the Chinese of reneging on their “agreement” to buy more US agricultural products – effectively scuppering the resumed trade talks before they started.  (Serious question to my US Republican friends: are you even remotely concerned about Donald’s increasing randomness?)

The real threat is China’s response.  Thus far they have avoided saying anything that might overtly damage the current meetings, but equally they made clear they are not going to respond to threats. Yesterday’s responses were coded, but re Trade they effectively asked what “agreement to buy US agricultural products” is Trump talking about?  At the Osaka G20 Trump demanded China bought more from US Farms, but they simply agreed to enter into a new round of talks.  While Trump accuses the world’s second largest and fastest growing economy of lying, Xi is talking about how China must now rely on domestic demand to manage current “risks and challenges”.  Xi is making clear he has no intention of pandering to Trump, and sending a clear signal Beijing is prepared for trade war if Trump presses the button.

Or does China now take the initiative? They are sounding increasingly confident. Yesterday they accused the US of provocation in “creating” the Hong Kong protests. This gets dangerous. Tensions are building over Hong Kong – which I warned could become a flashpoint. Bloomberg reported The White House monitoring a “congregation of Chinese forces” (Military or Armed Police) on the Hong Kong Border. Speaking to a former colleague yesterday, he confirmed a very nervous mood and a general exodus of risk capital to Singapore.  If China intervenes, they are betting Trump the Bully will stomp and shout, but stop short of a meaningful response.

With the election coming up, the risk is Trump feels he can’t afford to not to act.  Then it potentially gets very messy.

Trump is acting like he holds all the cards.  He doesn’t.  He needs to understand who does.  Watch Hong Kong

Interesting results from Apple y’day as they beat expectations.  They are managing the process of switching revenues from the increasingly commoditised mobile phone space into services rather well. They are retaining the allure of the Apple ecosystem, which ensures customer loyalty.  The prices of cheaper models may fall, but they will retain the must have buyers who will pay premium new model prices, and continue to attract wearables and services. It’s interesting Cook declined to say much of commoditising Apple services or wearables by making them more compatible with other operating services.  Disclosure: I am an Appleholic.  I can’t resist.  

Blain’s Brexit Watch

As the Sterling Time Bomb ticked down to $1.22, yesterday’s Brexit highlights included the threat of insurrection in the Valleys if the Welsh find it difficult to export Lamb to Europe. “Come home to a real fire… buy a cottage in Wales!”  Folk are getting nervous about weakening sterling, hence the BBC interviews with pensioners in France complaining they can’t go on holiday on their state pension because everything is so expensive.  Wait till import inflation really hits…

Today, Boris is in Norn Iron and about as welcome as a Lannister in Winterfell.

More hopeful were Boris’ comments about staying in the customs union for a time if a Brexit Deal can be struck. It’s a clear signal to Europe. He’s confirming his position clearly – give me some compromise and a deal Parliament can accept, and we can agree a Brexit agreement that benefits everyone.

But yesterday showed Europe aint for turning…

The secret of good comedy is timing..  I was talking to a client about Sterling weakness. We were wondering if Sterling weakness was overplayed, and my chap asked what would be the most obvious buy-signal? I suggested Boris Johnston’s refusal to pick up the phone to Leo Varadkar, the Irish Taoiseach, was telling – I opined the moment to buy Sterling would be Varadkar calling him, a clear sign Ireland, and therefore the EU, understood the dangers of No-Deal and would be willing to compromise on the backstop.

Little did we know that Boris has already called Leo, and the two of them were having a “frank exchange”. Boris politely asked for a renegotiation. Leo said no (actually I suspect it was blunter than that). “Uncompromising” was the official view.

A No Deal causes massive problems if the border is “closed/slowed” for customs. The political dimensions for the UK are enormous; risking the Good Friday peace agreement, encouraging Sinn Fien and its associated Thugocracy to reopen “operations” against the crown, and general distraction.  Nasty, but containable.

For Ireland a No-Deal is a nightmare.  Aside from the freight going across the Norn Iron border, the real issue is 88% of Ireland’s freight goes from Dublin to Hollyhead in Wales then onto Europe. (2017 numbers).  The ports with direct links to the continent are too small to handle Ireland’s trade with the EU – and take double the time of direct UK access to Europe, which is critical for agricultural exports.  There are solutions.  New ships would take time to arrange.  Logistical solutions are possible, such as “Authorised Economic Operators” to allow closed truck access through the UK – it works for Switzerland.  But will an angry UK let them work for Ireland, when Europe won’t let work for the UK?

A deal is much better than no deal.. what’s the current betting Boris can get a deal? 20/1 on a No Deal at the bookies does not equate to the 1 million to one Boris thinks likely….

Oh, what fun…

via ZeroHedge News https://ift.tt/2Yvk13D Tyler Durden