Cash-strapped Illinois is one step closer to passing a new income tax with the potential to seriously accelerate the exodus of high-earning taxpayers from the most financially dysfunctional state in America.
Lawmakers in the Illinois House of Representatives on Monday approved a constitutional amendment aiming to get rid of the state’s flat income tax, clearingthe way for the amendment to be included on the November 2020 ballot for ratification by the voters. Governor JB Pritzker is widely expected to sign it the amendment, which has already been passed by the State Senate.
According to the Democrats who backed it, the tax will help fix the state’s recurring deficits by creating a sorely needed new revenue source: The higher taxes on those earning more than $250,000 would raise more than $3 billion annually while leaving taxes on 97% of the state’s residents unchanged.
There’s no question that more revenue (or, perhaps, less spending) is badly needed. Chronic budget shortfalls, drastically underfunded pensions (to the tune of $134 billion) and $7 billion in unpaid bills have left Illinois’ finances in terrible shape. Illinois’ credit rating being pushed to one level above junk, the lowest in the country, Bloomberg reports.
Pritzker, who took over from unpopular Republican Gov. Bruce Rauner in January, has tried to spin the tax as a “fair tax”, while ignoring the state’s Republicans, who have accused Democrats of refusing to accept responsibility for the state’s dire fiscal situation, and instead seeking to tax their way out of the problem.
But anybody who thinks the new tax will make a meaningful difference in the state’s finances is sadly mistaken.
As Mark Glennon of WirePoints explained in a post published last month, the $3.4 billion in revenues expected to be raised by the new tax will cover barely one-third of the “hole” in the state’s pension obligations.
Here’s the central message now being blasted across the state by proponents of a $3.4 billion state income tax increase on high earners: “Illinois is in a $3.2 billion financial hole. A Fair Tax could fix that and reverse the damage.” That’s an epic lie. The “hole” isn’t $3.2 billion. It’s roughly a quarter of total revenue according to this work, which is consistent with our own numbers – about $10 billion – and that’s just at the state level. The new $3.4 billion will go down a nearly bottomless pit.
The follow chart shows just how dire Illinois’ pension situation truly is.
And while the new taxes might make up for some of this shortfall, at least in the short term, once the new taxes start to bite, those wealthy residents saddled with the new tax will almost inevitably start looking for greener pastures – and sun-belt states like Arizona and Florida offer several advantages over chilly Illinois.
via ZeroHedge News http://bit.ly/2XbI5sF Tyler Durden
If you want to identify tomorrow’s superpowers, overlay maps of fresh water, energy, grain/cereal surpluses and arable land.
The status quo measures wealth with “money,” but “money” is not what’s valuable. “Money” (in quotes because the global economy operates on intrinsically valueless fiat currencies being “money”) is wealth only if it can purchase what’s actually valuable.
As the world slides into an era of scarcities, what will matter more than “money” are the essentials of survival: fresh water, energy, soil and the output of those three, food. The ability to secure these resources will separate nations that fail and those that survive.
In a world of abundance, it’s assumed every essential resource can be bought on the open market. Surpluses are placed on the market and anyone with “money” can buy the surplus.
Things work differently in scarcity: “money” buys zip, zero, nada because nobody with what’s scarce can afford to give it away for “money” which can no longer secure what’s scarce.
Parachute into a desert with gold, dollars, euros, yen and yuan, and since there’s nothing to buy, all your money is worthless. Once you’re thirsting to death, you’d give all your money away for a liter of fresh water. But why would anyone who needs that liter for their on survival trade it for useless “money”?
Imagine the longevity of a regime which sold the nation’s food while its populace went hungry. Not very long once the truth comes out.
Having resources is only one component: consumption is the other half of the picture. Having 4 million barrels a day of oil (MBPD) is nice if you’re only using 3 MBPD, but if you’re consuming 8 MBPD, you still need to import 4 MBPD.
Water and soil are not tradable commodities. Nations which share water resources (rivers and watersheds) have to negotiate (or fight wars over) the division of that scarce resource, but as a generality, fresh water and fertile soil can’t be bought and sold like grain and oil.
The number of nations with surplus energy and food to export is small. As I noted in Superbugs and the Ultimate Economic Weapon: Food, there are contingencies in food production which could quickly erase surpluses and exports and trigger widespread shortages that have the potential to unleash social unrest.
Energy exports are also a natural economic weapon with which to reward needy friends or punish desperate enemies (no oil or natural gas for you!).
But energy exports are also contingent: natural gas and oil pipelines can be blown up by non-state players, shipping chokepoints can be closed or mined, regimes can change overnight and so on.
The value of a nation’s currency can be understood as a reflection of its essential resources, what I have called the FEW resources (food, energy, water) which I would now amend to FEWS (food, energy, water, soil).
Nations which are frugal about creating currency (either via printing/issuance or borrowing it into existence) while prudently managing their fresh water, energy, soil and food will in effect be “backing” their currency with their surpluses of what will be increasingly scarce.
Nations which borrow into existence or emit currency profligately while having scarce FEWS resources and enormous needs for imported food and energy will find their currency rapidly loses value.
When there’s not enough energy and food to go around, who will trade what’s scarce and valuable for what’s abundant and worthless (“money”)? The answer is no one.
If you want to identify tomorrow’s superpowers, overlay maps of fresh water, energy, grain/cereal surpluses and arable land: those nations with abundances that can yield sustainable surpluses in food and energy while taking care of domestic needs will have wealth and power.
Those with diminishing resources that are inadequate to meet domestic demand will have very little wealth, no matter how much “money” they print or borrow into existence or how much consumerist “stuff” they produce.
There are two other attributes that matter: being able to defend your FEWS resources from would-be thieves and a widely shared national sense of purpose that enables shared sacrifice for the common good. Without that shared source of unity, the elites with wealth and power will grab more and more, bringing down the house around them with their limitless greed.
Sacrifice either starts at the top or it means nothing. Forcing commoners to suck up sacrifices only exacerbates disunity and national dissolution.
There are no guarantees that any nation will be able to assemble all that it will take to survive an era of scarcity. But some have better odds than others. Place your bets accordingly.
I’m reprinting these charts to emphasize how few nations have geopolitically meaningful surpluses of food.
Corn is often the primary food for livestock. No corn, not much meat.
The exportable surpluses of wheat are concentrated in a few hands.
The same is true of soybeans, a source of protein in Asia and livestock feed everywhere. This chart shows the top producers and the top consumers.
As the market rolls over to the growing consensus that neither the Fed Put nor the Powell Put will kick in any time soon – if BTFDers always emerge just as Trump may consider resuming negotiations – something we warned about last week when discussing why the trade war will last far longer than expected…
Ironically, all that needs to happen for the trade war to end is for the S&P to drop back to 2,300… but market won’t let that happen as it is convinced Fed or Trump put will kick in first.
… and which Bloomberg picked up on yesterday, here is some additional gloom from former Lehman macro trader and current Bloomberg markets commentator, Mark Cudmore, who recently turned fully bearish for the first time in five years, and who explains why “equity investors are acting like frogs in boiled water.”
From Mark Cudmore’s Macro View
U.S. equity investors have become inured to trade war news and risk being blind-sided as stocks likely trade much lower in the months ahead.
The relationship between the world’s two largest economies has deteriorated significantly in the past month. The negative ramifications for global growth and company earnings will be immense, and yet the S&P 500 Index has slipped just 4% from its record high. This isn’t proof of resilience — it’s evidence of misplaced complacency. Stocks were already looking overvalued four weeks ago, before the trade war re-ignited.
There’s a lingering belief the U.S. and China will work things out, even though there’s little evidence to support it. A senior Chinese government researcher said last week the countries may be stuck in a cycle of “fighting and talking” until 2035.
Many financial commentators have argued that a deal would be mutually beneficial, whereas the current path just leads to mutual economic harm. That’s entirely rational but also completely irrelevant to analyzing the reality of what’s happening. In theory, a deal could be agreed later this year, but the signs aren’t pointing there yet. And even if some agreement is eventually reached, it will be many months down the line, after much economic damage is done. Damage that’s barely reflected in today’s elevated U.S. stock prices.
The SPDR S&P 500 ETF Trust shows short interest rising to a multi-year high, so why is the equity market not slumping? Mainly because passive investment — funded by retail money — is showing little desire to pull out en masse.
Combine that with trend-followers and a hedge fund industry still stuck on buying the dips, and this market appears way too reactive rather than proactive.
Bullish investors are like frogs in a pot of water slowly coming to a boil. The trade war has been going on so long they haven’t noticed how much things have heated up. They could still get out of the stock market now without getting harmed, but most won’t. They are hoping the chefs will turn off the heat and all will be okay.
Each day until the trade war ends, the environment for equity investors will get a little worse. That may only register when the pot boils over and investors get burnt by the losses that look almost certain to come.
via ZeroHedge News http://bit.ly/2QDsxeV Tyler Durden
Chinese markets were rescued by a mysterious beneficiary who panic-bid stocks back into the green on the day…
EU markets extended yesterday’s late-day weakness but managed to now ubiquitous bounce – though still ending lower, led by Italy to the downside…
As German bund yields collapsed to within 3bps of record lows…
And US markets followed the overnight excitement, opening higher and accelerating at the cash market open once again. But that did not last… the afternoon was brutal…
And US markets ended much worse than China and Europe…
This despite proclamations that month-end pension rebalancing would spark buying in stocks this week.
S&P closed just above the critical 2800 level…
Semis suffered again with the lowest close since Feb 5th (back below its 200DMA)…
Financials are notably outperforming the market and hugely divergent from the collapsing yield curve…
Credit markets are blowing out notably while VIX is holding in for now…
HY Spreads are at their widest since Jan…
And the VIX term structure re-inverted today…
Treasury yields collapsed today on growth fears and a very aggressive 2Y auction…
Pushing to fresh cycle lows…
Collapsing the yield curve (3m10Y to -9bps) to its flattest since August 2007…
The yield curve is inverted to around 15 years…
And Breakevens collapsed further to critical support…
Before we leave bondland, we note that the probability of a rate cut by end Dec is now 82%
With the market expecting almost 2 full rate cuts now…
The dollar rallied on the day, erasing over half of the Thurs/Fri losses…
Yuan continued to sink despite another attempt by Guo to threaten shorts today…
Cryptos held on to their significant gains over the weekend…
With Bitcoin hovering around $8800…
After a few days of outperformance, Silver was slapped lower today as WTI managed gains (despite a strong dollar) early on but faded into the close…
It seems like 14.50 was the buy/sell trigger for silver…
WTI Crude hovered around $59 all day…
Finally, this won’t end well for one completely-convinced cohort of group-thinkers…
And the only support for this is leaving the building…
In this article I am going to share with you a perfect example of why so many people believe that there is so little hope for the future of America. The young adults of today are going to be the leaders of tomorrow, and generally speaking the young adults of today are not in good shape. Survey after survey has shown that Millennials reject traditional American values more than any other generation that has come before them by a very wide margin. They are selfish, rude, arrogant, boastful, proud, disrespectful, ungrateful, undisciplined, slothful and completely obsessed with themselves. In fact, one study found that they are the most narcissistic generation in American history. They feel entitled to everything, but they don’t want to work for it. They want to be treated like kings and queens, but they don’t see a problem with treating others like dirt. Of course there are plenty of young adults that are shining exceptions, but in general young adults under the age of 30 in America today are a complete mess.
Earlier today, I came across a story that illustrates this perfectly. Michael Boldea took his family to a local eating establishment to celebrate Memorial Day on Monday, and he encountered a young couple that could be the poster children for the entire Millennial generation. The following is an extended excerpt from the Facebook post where Michael Boldea told this story…
Neither of them could have been more than thirty, but both were well into adulthood. She was wearing pajamas and carrying a pillow, he had on a pair of shorts that had seen better days, and a shirt he must have been wearing for about a week given all the food stains down the front of it.
They were seated at a booth next to ours, and the first of many complaints was that the booth was too tight. I’m a hefty fellow, and I was seated in an identical booth with room to spare. For a good three minutes, the pajama laden woman who also happened to be a good hundred pounds over the threshold of obesity berated the waitress for the booth being snug, while the waitress apologetically explained that she hadn’t built the booth, but would pass it along to management.
This was only the first volley of what would be a good thirty minutes of macabre drama from which I couldn’t look away. A drama replete with demands for a free meal, asking for another omelet even though over three-quarters of the omelet that was deemed inedible had already been eaten, and a request for the manager to complain about the rudeness of the waitress.
I was there. I heard every word, and the waitress had not been rude. Had it been me, they would have been asked to leave five minutes in, but I have a low threshold for entitlement and rudeness.
They finished their meal, left without tipping, and made sure they were loud enough in their adamant insistence that they would never return to this dump as they walked out.
I’d never seen anything like this in my life, but upon talking to the waitress afterward, apparently, it’s happening more and more in recent years.
Even if they are not running things themselves in the future, these are the people that will be choosing who runs our country.
Either way, we are in big, big trouble.
Once again I should note that there are definitely exceptions to what I am talking about. I personally know some wonderful young adults, but the problem is that there is not nearly enough of them.
Most of our young adults are the product of a deeply flawed education system, have had thousands of hours of “garbage entertainment” poured into the minds, and have been systematically trained to reject the values that this country was founded upon.
Let me give you another example. Not too long ago, a 27-year-old woman literally tried to drown her newborn baby in a McDonald’s toilet…
A California woman who tried to drown her newborn in a McDonald’s toilet received no jail time during sentencing this month.
Sarah Jane Lockner, 27, escaped jail time and was, instead, sentenced to four years of supervised probation on May 3 in the courtroom of San Mateo County Superior Court Judge Stephanie Garratt. Lockner will also be required to attend parenting classes, according to Fox 13.
Lockner was arrested in January on a charge of attempted murder but later pleaded guilty to the lesser charge of child endangerment.
What kind of legal system gives a woman that tried to drown her newborn baby in a toilet no jail time at all?
Of course this is California we are talking about, and without a doubt the legal system in the state is absolutely insane.
But the truth is that we are seeing legal rulings like this all over the country, and it is because our nation is in a greatly advanced state of decline.
When I went to law school a couple decades ago, I sat next to people that were just like the couple that Michael Boldea encountered in the diner. I was horrified that law students would show up to class in shorts and flip-flops like they were ready for a day at the beach. But that is where our entire society is heading these days. At this point, most Americans don’t show much respect for anyone or anything.
And a great place to see everything that I have talked about in this article in action is on social media. For some reason, social media seems to bring out the best in people, but it also brings out the worst in people. If you spend much time on social media, you know exactly what I am talking about.
Perhaps the reason why social media platforms such as Facebook are such a problem is because they are so addictive. In a recent editorial, U.S. Senator Josh Hawley referred to Facebook as “a digital drug”…
Let’s be clear. This is a digital drug. And the addiction is the point. Addiction is what Mark Zuckerberg is selling.
Like other drugs, this one hurts its users. Attention spans dull. Tempers quicken. Relationships fray.
And those are the benign effects. The Journal of Pediatrics recently noted a surge in attempted suicide: more than double the attempts over the last decade for those under 19, with a tripling among girls and young women 10 to 24. The study’s authors can’t prove social media is to blame, but they strongly suspect it plays a critical role. Congress has a duty to investigate that potential link further.
Look, I know that I have been very rough on Millennials in this article, but let me end on a hopeful note.
Millennials could still become the greatest generation that we have ever seen in all of American history, but they will never get there if they stay on the path that they are currently on.
In the end, life is all about choices, and as a nation we have been making the wrong choices for a very long time. The young adults of today could choose to be the generation that starts making better choices, and let us hope that a great awakening is just around the corner.
via ZeroHedge News http://bit.ly/2YRhbqn Tyler Durden
Venezuelan President Nicolas Maduro has pointed the finger at the United States and allies in “imperial aggression” for waging a “sabotage” campaign against vital fuel shipments as well as humanitarian aid being sent to the country after multiple tankers and shipments were reportedly damaged.
Maduro is reported to have told a meeting with the political leadership of the United Socialist Party of Venezuela (PSUV) in Caracas this week that vessels carrying food “were sabotaged and did not leave the ports where they were going to leave.”
“Last week, sabotage was committed against ten tankers [with gasoline] to prevent them from reaching the Venezuelan coast. In any case, this problem is being dealt with and we are stabilizing the situation,” Maduro said late on Monday.
Image via the WSJ
He also called the alleged acts of sabotage “torture to the economic body of the country” – however, didn’t offer proof, and said further that problems with the fuel and food ships are “in the process of being resolved”. He described that the US and allied nations currently imposing aggressive sanctions on Venezuela were trying to prevent aid from reaching their destination.
“During the last 5 months of imperial aggression, we have endured financial persecutions, sabotage and coup skirmishes,” Maduro had tweeted Monday from his English-language account.
During the last 5 months of imperial aggression, we have endured financial persecutions, sabotage and coup skirmishes. However, we managed to strengthen the Civic-Military union and maintain the call to dialogue, with extremist opposition and with […] https://t.co/1s0rpjbrNh
According to shipping news monitoring site Maritime Herald, the allegations followed in the wake of US envoy for Venezuela Elliot Abrams’ prior indication that the US would soon sanction Venezuelan leaders accused of profiting off inbound food and fuel shipments subsidized by a government program.
The head of state also revealed the sabotage to the boats that brought food for the program of products with subsidized prices, known as CLAP (acronym of Local Committees for Supply and Production). “The boats brought by the CLAP were sabotaged and did not leave the ports where they were going to leave,” he said.
Last Thursday, the Bolivarian leader guaranteed to the population of the South American country the continuity of CLAP, despite US threats to sanction the officials involved in the plan.
The report further cited Maduro as saying, “Do whatever you want to do, Venezuela will continue with the CLAP, which stings and extends from the hand of the people, from the national production.”
Last week Russian and Venezuelan officials announced plans for Moscow to ramp up humanitarian aid as well as military supplies to the Maduro government, also citing continuing “coup attempts” on the part of Washington after a failed Guaido opposition led uprising at the end of April.
via ZeroHedge News http://bit.ly/2Wb6Et3 Tyler Durden
A friend of mine who is – I’ll just say it – a devoted Trump-hater recently was talking about President Trump’s obstruction and asked what I thought.
After listening to his views, I told him there’s plenty about which to criticize the president, as is true of any political leader. But the obstruction charge doesn’t make logical sense. I used an analogy to explain why. When I finished, this friend still hated Trump — but surprised me by saying, “Nobody’s ever explained it that way. That makes sense. You should write about it.”
Obviously, I don’t kid myself that this analogy will “make sense” to everyone. But after listening to both sides and looking at the publicly available evidence, here’s how I see it:
If you were a person of some authority and murdered someone, and prosecutors set out to investigate, and if you spoke publicly against the investigation, proclaiming your innocence and calling the probe a “witch hunt,” and if you worked behind the scenes to use your influence to fire the lead investigator on the murder case – that would seem to be a pretty clear case of obstruction of justice. You, as a guilty man, would be trying to stop authorities from finding out the truth.
But imagine, on the other hand, that you are innocent – accused of a murder you didn’t commit. Not only that, imagine you knew there was no murder to begin with because you saw the victim walking around after the supposed murder. Then, imagine you found yourself the target of the murder investigation by a team that included people who had declared you to be their sworn enemy and expressed strong desires to take you out. Then, imagine this team that included biased investigators began leaking false information to the national media to implicate you in this crime that you knew you didn’t commit.
Imagine that this cloud of the murder you knew was never committed hangs over you, month after month, until it drags on for years. It’s distracting you from your ability and authority to do the job in the public’s interests. But every time you speak publicly to defend yourself and proclaim your innocence, the media and your political enemies declare you to be a liar and say you are obstructing the investigation.
It begins to look like the fix is in.
Under these circumstances, you wouldn’t be human if you didn’t possess a desire to stop a potentially conflicted investigation by your political enemies into a crime that was never committed – least of all by you. Since you are innocent, your attempts to stop an unfair investigation could be fairly seen as an attempt to see justice done, not to obstruct it.
If special counsel Robert Mueller is correct and there was no coordinationof any kind between any American and Russia, then the latter analogy seems more applicable to President Trump than the former.
If Mueller is right, then Trump knew from the start that he didn’t conspire with Russian President Vladimir Putin. Nonetheless, he became the target of a supposedly independent investigation which, it turned out, included top team members who expressed personal disgust and hatred for him as well as a desire to take him out.
Extensive information about the probe, some of it false, was leaked to and reported by an unquestioning national press. Every time Trump spoke up for himself and — according to Mueller, in the end — rightly declared his innocence, his enemies accused him of being a liar and cited nonexistent, secret evidence.
This cloud of supposed collusion, a crime that never happened, hung over Trump month after month until it dragged on for years. For someone who’s innocent, it would obviously begin to look like the fix was in.
Trump’s alleged conversations about trying to switch out Mueller, as documented in interviews with the special counsel, could fairly be interpreted as attempts to seek justice, not to obstruct it.
The story would be entirely different, of course, if Trump had turned out to be Putin’s agent — and for two years, I and many others fully suspected that could be the outcome of the Mueller probe, based on all the leaks and reporting. But it wasn’t the case.
Those who think Trump is unfit for office, or who otherwise oppose him, might carry more weight if they publicly acknowledge that they chased their tails for two years and, when they finally snagged it, realized they hadn’t captured the enemy. Then, they could more credibly move forward to another focus, such as targeting the Trump policies they find objectionable.
In the end, Trump wasn’t the liar on this major point; instead, his critics were the ones who were sorely mistaken. They accused the president of the worst sort of treachery but, according to Mueller, Trump was telling the truth all along when he said there was no collusion with Russia.
I’m no political expert but, to me as an Average Joe, the continued focus on supposed obstruction of a crime that wasn’t committed simply smacks of desperation.
via ZeroHedge News http://bit.ly/2X9IQSU Tyler Durden
Weeks after it was announced that Huawei will develop its own alternative to Android OS after being banned by Google from using it, ZDnet reports that the Chinese militarywill drop an alternative to Microsoft Windows.
While the decision hasn’t been made official, it was reported earlier this month by Canadian military magazine Kanwa Asian Defense, which noted that Beijing won’t just jump over to Linux – and will instead develop their own over fears of US surveillance (and of course, in retaliation for Huawei’s blacklisting).
Thanks to the Snowden, Shadow Brokers, and Vault7 leaks, Beijing officials are well aware of the US’ hefty arsenal of hacking tools, available for anything from smart TVs to Linux servers, and from routers to common desktop operating systems, such as Windows and Mac.
Since these leaks have revealed that the US can hack into almost anything, the Chinese government’s plan is to adopt a “security by obscurity” approach and run a custom operating system that will make it harder for foreign threat actors — mainly the US — to spy on Chinese military operations. –ZDnet
The new OS will be developed by a newly established “Internet Security Information Leadership Group” as reported by the Epoch Times, citing Kanwa.
The group does not trust the “UNIX” multi-user, multi-stroke operating system either, which is used in some of the servers within the People’s Liberation Army (PLA), Kanwa reported. Therefore, Chinese authorities ordered to develop an operating system dedicated to the Chinese military.
The group also believes that the German-developed programmable logic controller (PLC), used in 70 percent of China’s industrial control system today, poses huge risks to China’s national security. In its opinion, China is not a “network superpower,” but merely a “network giant,” Kanwa reported. Therefore, Chinese authorities have laid out plans to upgrade China’s network—to become more advanced in cyber technology. –Epoch Times
Huawei, meanwhile, is dropping Android OS for its own operating system, code-named HongMeng. It should be ready to launch in late 2019 domestically, and sometime in 2020 for international markets, according to TechRadar.
Google announced on May 20 that it would partially cut off Huawei devices from using the Android operating system, however the Mountain View – based company was given an extension until August 19 by the White House. Other tech companies which have blacklisted Huawei include Qualcomm, ARM, Micron and several tech industry standards organizations such as Bluetooth, SD and WiFi alliances.
“Huawei knew this was coming and was preparing. The OS was ready in January 2018 and this was our ‘Plan B’. We did not want to bring the OS to the market as we had a strong relationship with Google and others and did not want to ruin the relationship. Now, we are rolling it out next month,” said Huawei’s Managing Director and VP of the Middle East Enterprise Business Group.
The OS, which could be called Ark OS when launched, is expected to be compatible with mobile phones, computers, tablets, TVs, connected cars, smartwatch, smart wearables and others.
All applications that work with Android are expected to work with this new OS without any need for further customization, Elshimy claims, adding that users will be able to download apps from the Huawei AppGallery. –TechRadar
It is unknown whether apps available via Google’s Play Store will be carried in Huawei’s store.
via ZeroHedge News http://bit.ly/30Mietq Tyler Durden
Treasury yields have plunged at the mid to long end of the yield curve producing biggest recession warning yet.
On Friday, US Treasury yields plunged at the mid to long end of the curve providing the most inversions since the start of the Great Recession. This is the biggest recession warning since 2007.
Yield Curve
Major portions of the yield curve are inverted for nearly 15 years.
Let’s take a look at what others are saying.
Core Capital Goods
Durable goods orders April 2019 “Shipments of core capital goods were unchanged last month after a downwardly revised 0.6% decline in the prior month. They were previously reported to have slipped 0.1% in March.” Look out below on Q2 GDP estimates. https://t.co/yJr9EFC1JJ
— Danielle DiMartino (@DiMartinoBooth) May 24, 2019
Core capital goods are a measure of future business expansion. The March revision to the downside was massive, from +1.3% to +0.3%. April was -0.9%. Economists expected +0.1%. Oops.
Strong Economy Not
“There are still several economic data points that suggest the economy is strong…But we’ve seen enough in the way of negative layoff headlines and slowing manufacturing to indicate claims are the outlier…” @QuillIintel @YahooFinance — https://t.co/aFXtPyXb51
— Danielle DiMartino (@DiMartinoBooth) May 24, 2019
Very dismal durable goods orders today. Capex about to join housing in recession. High-tech in the eye of the trade storm — order books down 0.4% in April and contracting in 4 of the past 5 months.
What’s left in the toolbox: how can #ECB combat econ downturn? In order to buy more bonds, ECB would need to raise the limit on how much sovereign debt it can hold from a single issuer, given it was already approaching the current 33% limit when QE ended. https://t.co/1LG3Vg5lmppic.twitter.com/tHxPcj98qZ
— Holger Zschaepitz (@Schuldensuehner) May 23, 2019
Spotlight Trade War
“We saw a U.S. Chamber of Commerce report today that American companies that are based in China are being slowing down. They are creating red tape. Every step we take they take another step. This is a trade war.”@DiMartinoBooth@Quillintel — https://t.co/2zLjb0v1hE
— Danielle DiMartino (@DiMartinoBooth) May 23, 2019
What About Systemic Risks?
Dear Mr. Powell- Can you please tell us why a series of downgrades of BBB companies does not pose the potential for systematic risks.
Look at this chart of major appliance shipments – collapsing 17% YoY in April – and tell me we aren’t heading into a recession. pic.twitter.com/dwKzt7u8SX
US recession probably started in current quarter, Gary Shilling says, as Q1 real GDP growth, 3.2% at ann rates, was temporarily inflated by jump in inventories, which contributed 0.65ppts to growth. This was no doubt unintended & undesired as jumps in inventory-sales ratios show. pic.twitter.com/nUDC9WdBoE
— Holger Zschaepitz (@Schuldensuehner) May 22, 2019
via ZeroHedge News http://bit.ly/2YUi7KK Tyler Durden
What happens when a formerly “growth company” transitions into a state of not so growth? Well, it will desperately do anything to restore its growth by attracting attention to itself in any way possible, or failing that, it will engage in some ideological virtue signaling, and while alienating one half of its possible clients, it will double down on the other half.
Netflix, whose US growth has now plateaued, has done something that falls in-between these two options, because as Bloomberg reports, the video streaming company – which is about to be existentially challenged by such bigger peers as Disney – plans to reconsider its “entire investment” in Georgia if a law restricting abortions takes effect in the state, where it films shows such as “Stranger Things” and “Ozark.”
In early May, Georgia became the fourth U.S. state this year to outlaw abortion after a doctor can detect a fetal heartbeat, although anti-abortion rights groups vowed to challenge the bill. The new law is set to be enacted in 2020 if it survives legal challenges; It has predictably triggered the liberal bastion of Hollywood, where several filmmakers have said they would refuse to work in the state, but so far large companies have remained silent.
This is where Netflix has taken virtue signaling to a whole new level.
But what does a money-losing video streaming service have to do with state abortion rights? Well, according to Reid Hastings, everything.
“We have many women working on productions in Georgia, whose rights, along with millions of others, will be severely restricted by this law,” Chief Content Officer Ted Sarandos said in a statement.
“It’s why we will work with the ACLU and others to fight it in court. Given the legislation has not yet been implemented, we’ll continue to film there, while also supporting partners and artists who choose not to. Should it ever come into effect, we’d rethink our entire investment in Georgia.”
But will Netflix, which is desperate for the cheapest possible content creation really pull out, pun probably not intended, of Georgia? Somehow we doubt it.
As Bloomberg notes, Georgia has some of the most generous film and TV subsidies in the country, and it’s become a popular hub for production. AMC Networks Inc.’s “The Walking Dead” is filmed there, along with several of Walt Disney Co.’s recent hits, including “Captain America: Civil War,” “Ant-Man” and “Black Panther.”
Others virtue signalling amateurs, such as J.J. Abrams Jordan Peele, the director of “Get Out,” said they will still be shooting their show “Lovecraft Country” in the state, although they’ll donate their fees for this season to the ACLU of Georgia and Fair Fight Georgia.
But if Netflix follows through with its threat to boycott Georgia, what will it do with all the other states that plan to follow in Georgia’s footsteps. In addition to Kentucky, Mississippi and Ohio which have all enacted heartbeat laws since mid-March, and Iowa passed one last year, and Alabama which passed a bill that would ban all abortions unless the mother’s life is threatened, a total of 15 states have introduced measures to ban abortions as early as six weeks into a pregnancy.
Will Netflix soon be stuck with only filming its money losing movies in only the most expensive of liberal states? Once again, we doubt it, but then again nothing is as money-losing as virtue signaling for the sake of, well, virtue.
Meanwhile, the Motion Picture Association of America has noted that similar legislation has been challenged in other states. “The outcome in Georgia will also be determined through the legal process,” the organization said. “We will continue to monitor developments.”
via ZeroHedge News http://bit.ly/2WtiT3I Tyler Durden
