Month: April 2018

Is This Prom Dress an Act of Cultural Appropriation?

Few topics are more controversial than “cultural appropriation,” or using distinctive dress, music, food, or literature when the user doesn’t belong to the race and ethnicity (and sometimes the gender, or sexual orientation) that produced it. A watershed moment in the debate happened in 2016, when a black female student at San Francisco State threw punches at a white male student for wearing dreadlocks. Arguments about cultural appropriation have a long and often tendentious history and involve everything from minstrelsy to drag shows to yoga to tattoos.

Over the weekend, a white girl from Salt Lake City found herself at the center of a cultural-appropriation tempest when she tweeted pictures of herself and her girlfriends wearing dresses associated with Chinese and Chinese-American women. In one of the pictures, she and her friends are bowing and holding their hands in a traditional greeting or prayer, while their white dates make gang signs behind them:

The pictures led Chinese-American Jeremy Lam to tweet “my culture in NOT your goddamn prom dress” and post a twitterstorm about the history of the dress, also known as a cheongsam.

As of this morning, Lam’s original tweet had almost 40,000 retweets and nearly 170,000 likes. Keziah received thousands of responses but has stood firm in her resolve about the dress.

There was one more shoe to drop in all this. It turns out that Lam, whose Twitter bio reads, “almost as intolerant to lactose as i am to your bullshit ¯\_(ツ)_/¯,” could be hoist on his petard. Mike Headly, a YouTuber who talks about racial issues from an African-American perspective, waded through Lam’s past tweets and found at least a few in which the Asian American wrote such things as “I’m eating tamales with chopsticks. This is why America was founded” and “NIGGA DAYUM!” and laughed along with a story about someone using chopsticks to smoke a blunt (“What a fucking legend”).

Lam responded to criticism that he was guilty of cultural appropriation and insensitivity by laying out more of his thoughts and posing this:

There are at least several lessons to be drawn from this back and forth, but I’ll focus on just two.

First, it shows just how tendentious charges of appropriation often are. They rely of brutally static definitions of culture that are spectacularly at odds with the ways in which individuals use motifs and materials from outside their immediate experience to define themselves. People who cannot draw distinctions between, say, minstrel shows, which served to maintain racial separation and inequality, and the stilyagi, anti-Stalin protesters who dressed like ersatz jazz musicians to register dissent within the Soviet Union, are not working very hard. More important, as Reason contributor Cathy Young, who grew up in Moscow before moving to the United States in the final years of the Cold War, has written,

Peoples have borrowed, adopted, taken, infiltrated and reinvented from time immemorial. The medieval Japanese absorbed major elements of Chinese and Korean civilizations, while the cultural practices of modern-day Japan include such Western borrowings as a secularized and reinvented Christmas. Russian culture with its Slavic roots is also the product of Greek, Nordic, Tatar and Mongol influences—and the rapid Westernization of the elites in the 18th century. America is the ultimate blended culture.

Even displays that appear more offensive—such as David Bowie’s video for the song “China Girl,” which trades in chopsticks-style musical signatures and stereotypical images of submissive, “Oriental” women and features Bowie pulling his eyes back to simulate the epicanthic fold common in many Asians—are more complicated than they initially seem. That video notwithstanding, Bowie was nothing if not a patron of global musical and fashion styles, and it’s unquestionable that he helped to bring all sorts of racial, ethnic, and sexual subcultures into the mainstream through collaborations with figures as far-flung as Japanese musician Ryuichi Sakamoto, German performer Klaus Nomi, black American Tina Turner, and so many more. There’s a strong case to be made that figures such as Bowie, even while enacting stereotypes or ransacking “foreign” musical traditions, are celebrating and engaging them. Anyone who insists that only people from a particular culture or background can traffic in its traditions will soon find themselves presiding over a dead world.

Second, it’s remarkable and worth celebrating that Twitter created the space for an at times heated and ugly debate over cultural appropriation. As Lam wrote, “The past 48 hours of my tweet becoming viral have been incredibly eye opening, and educational.” That’s absolutely true and, in the main, it seems as if the conversation led at least the two people at the center of it to air their thinking and reach some level of comfort and resolution.

As the congressional hearings on Facebook suggest, we’re in the midst of a social panic over social media. Many Americans feel inundated by media and scared that platforms such as Twitter, Facebook, and YouTube are simultaneously overloading us with non-credible information and coarsening the culture. The Twitter spat over a white girl’s “Chinese” dress should be taken as a sign that the internet is actually pretty good at hosting meaningful public conversations.

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Democrats Are Now Dropping Millennial Supporters Nearly as Fast as Republicans Are: Reason Roundup

Huge poll of young U.S. voters shows support for Democrats slipping. The mood of the young electorate in America is growing ever more wary of all establishment parties and candidates. The latest evidence of this is a huge new national Reuters/Ipsos poll of young voters. The survey (like many others) shows that young Americans as a whole aren’t too keen on the Republican Party or Donald Trump. But they’re showing less and less love for the Democratic Party too, with the percentage expressing a preference for Democrats in Congress now falling below a majority.

Picking up the slack is a growing number of young people who are unsure how they feel about the major parties, plan to support third-party candidates, or intend to abstain from voting altogether.

  • Slightly more than a quarter (26 percent) of those surveyed this year did not lean toward either Democratic or Republican candidates—up from 18 percent in 2016.

Reuters/Ipsos surveyed 16,000 18-to-34-year-old registered voters in an online poll that ran from January to March. Pollsters offered the same survey to thousands of young U.S. voters during the first three months of 2016.

  • Since 2016, young voters’ stated preference for Democratic candidates fell 9 percentage points, to 46 percent overall.
  • Two years ago, 55 percent of those surveyed said they would vote Democrat and only 27 percent said they would vote Republican.

This year, the percentage of self-professed GOP voters held relatively steady, at 28 percent (in a poll with a margin of error of 1 percentage point). The defectors from the Democrats are now undecideds, independents, and electoral dropouts—a shift most pronounced among white millennials.

“Two years ago, young white people favored Democrats over Republicans for Congress by a margin of 47 to 33 percent,” reports Reuters, but “that gap vanished by this year, with 39 percent supporting each party.”

The outlier here is white male millennials, who do actually show a strong tilt rightward.

  • In 2016, young white men favored Democrats 48 percent to 36 percent
  • This year, they preferred Republican candidates to Democrats by 46 to 37 percent

All of this “presents a potential problem for Democrats who have come to count on millennials as a core constituency—and will need all the loyalty they can get to achieve a net gain of 23 seats to capture control of the U.S. House of Representatives in November,” Reuters notes.

Last November, an NBC News/GenForward poll found 71 percent of 18- to 34-year-olds surveyed said America needs more than two major political parties.

FREE MINDS

Censorship blowback in Russia. Thousands of Russians are reported to be protesting today over their government’s decision to block the encrypted messaging service Telegram, a dragnet that not only swept up that app but all sorts of other online services and content.

FREE MARKETS

AT&T/Time Warner merger in court. The fate of AT&T’s intended purchase of Time Warner could hang on today’s closing arguments in a trial that pits the telecommunications bohemoth—owner of DirecTV—against the U.S. Department of Justice (DOJ). The agency is challenging AT&T’s right to buy Time Warner under U.S. antitrust law, saying the purchase would throttle competition and raise prices for pay-TV customers. “The federal judge hearing the case is expected to take at least a month to reach a decision,” reports The New York Times.

How are AT&T’s chances? The DOJ case “has shown signs of strain after a grueling trial,” reports Brent Kendall at MarketWatch, “highlighting the difficulty of challenging a merger involving companies that aren’t direct competitors.” After five weeks of trial, little new has been revealed by the companies and the government’s witnesses haven’t seemed to impress the judge. Monday’s closing arguments “give the Justice Department a final chance to frame its arguments and AT&T…an opportunity to cement its gains,” Kendall writes, pointing out that the stakes here are significant:

Should the Justice Department lose, it could embolden companies, including in the media industry, to pursue more transformative deals. A government loss also could prompt it to shy away from future lawsuits against vertical mergers, which combine companies that operate at different rungs of the same industry ladder. Meanwhile, a win for the Justice Department would give antitrust enforcers additional momentum and new court precedent for pushing back against mergers at a time of continuing industry concentration. It could also become a defining legacy for antitrust chief Makan Delrahim, who made the decision to sue AT&T within weeks of taking office.

QUICK HITS

  • After a lot of melodramatic attention to a few hundred Central Americans trekking through Mexico with intent to seek asylum in the U.S., the migrant “caravan” arrived and was met by border security without incident. “After a final briefing from lawyers and minutes before they were to begin a short walk to the border crossing, U.S. Customs and Border Protection Commissioner Kevin McAleenan announced that the San Ysidro border crossing, the nation’s busiest, had ‘reached capacity’ for people without legal documents and that asylum-seekers may need to wait in Mexico temporarily,” CBS reports. “Asylum seekers didn’t appear to be thrown off the by the delay.”
  • Now out of jail, musician Meek Mill says he wants to take the activism that sprung up around his release and turn it toward broader criminal justice reform. “I’ve got a lot of important people depending on me, and not talking about the people, the public officials, I’m talking about the men that’s depending on me that are going through the same thing I’m going through,” Mill tells NBC News. “Let’s now retire #FreeMeekMill and make it #JusticeReform.”
  • A 16-year-old girl is suing the Los Angeles Police Department for alleged sexual harassment, negligence, infliction of emotional distress, and civil rights violations. The suit says former LAPD Officer Robert Cain, who retired in 2017 after 10 years with the department, sexually abused her while she was in the department’s cadet program and provided her with abortion-inducing drugs when she got pregnant. Cain is already in jail on other charges. “Cain’s arrest resulted after police uncovered a scandal in which cadets were joyriding in police cars, using stun guns and other equipment and impersonating officers,” the AP reported last fall. “The scandal came to light after cadets crashed two police cruisers during pursuits.”
  • “Silicon Valley’s recent acquiescence to political censorship contrasts with the early days of social media, when the platforms were expected to herald global freedom,” writes antitrust lawyer Mark Epstein in a new Wall Street Journal editorial.
  • “How the digital economy shapes American cities“: a new report from the National League of Cities and the Internet Association explores tech sectors outside traditional tech enclaves, including Columbus, Ohio; Kansas City, Missouri; and Pittsburgh, Pennsylvania.

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Syrian Army: “Enemy” Rockets Strike 2 Bases, 11 Iranians Killed

Following yesterday’s report that Israel fighter jets unleashed a new attack on Syrian territory, with the resulting explosions so strong they registered as an earthquake, the Syrian army said on Monday that “enemy” rockets struck Assad regime military bases. An official from a regional alliance including Iran, Hezbollah and Syria, said Monday that the strikes killed 16 people, among them 11 Iranians, according to the New York Times. The report said the bombardment also destroyed 200 missiles.

According to a report on a Syrian newspaper facebook page, the attack was attributed to the U.S. and Britain although numerous reports also accuse Israel of being the responsible party. So far nobody has claimed responsibility for the massive airstirkes. Media outlets affiliated with the Syrian opposition claim 38 government soldiers were killed in the strike in Hama, with an additional 57 wounded.

The Syrian newspaper Tishreen reported on its facebook page that the attack was carried out by nine ballistic missiles fired from U.S. and British military bases in northern Jordan. This has yet to be verified or confirmed by any other source at this time.

Reports say that dozens loyal to the Syrian regime were killed in the explosion. Contrary to recent attacks on the Assad regime, after which the Syrian army reported its defense systems shot down some of the missiles, no such claims were made after the strike.

According to the London-based war monitor, the Syrian Observatory for Human Rights, Sunday’s attack had targeted a warehouse for missiles and killed 26 people, mostly Iranians and Iraqis. However, Iran’s Tasnim News agency denied reports of rockets hitting an Iranian military base in Syria, killing Iranian advisers.

On Monday, Israel’s security cabinet convened following the airstrike. The session was unscheduled, and Ministers were told it would pertain to the Iran nuclear deal. Developments on the topic are reportedly being presented according to Haaretz.

* * *

Sources in Syria reported explosions in military bases near the districts of Hama and Aleppo on Sunday night. As noted above, numerous Syrian media outlets claimed Israel is responsible for the attack, although so far the IDF has remained silent.

The targeted bases were manned by the Syrian army as well as Iran’s Revolutionary Guard, and housed several missile warehouses, according to the Lebanese newspaper Al Akhbar. The report adds that several dozen were wounded and evacuated to nearby hospitals. According to the report, Bunker Buster bombs were used, which makes it likely the launch was airborne.

As the following map shows, in addition to the joint US strikes from early April, Israel has been busy pounding Syrian bases in recent months.

The targeted bases were manned by the Syrian army as well as Iran’s Revolutionary Guard, and housed several missile warehouses, according to the Lebanese newspaper Al Akhbar. The report adds that several dozen were wounded and evacuated to nearby hospitals. According to the report, Bunker Buster bombs were used, which makes it likely the launch was airborne.

The Iranian news agency Tasnim quoted the commander of the Iranian-backed Afghan militia Fatemiyoun as saying the the military base near the northwestern city of Aleppo is unharmed, as are his forces.

Syrian state TV says successive blasts were heard in the Hama province and authorities are investigating the response. Shortly after the explosions, the European-Mediterranean Seismological Centre said the blasts caused a 2.6 magnitude earthquake in the area.

The Britain-based Syrian Observatory for Human Rights said shelling targeted a Syrian army base, home to the 47th Brigade, near the city of Salhab, west of Hama, where Iranian forces are also stationed.

The monitor said rockets also hit Syrian government bases in the region surrounding Nairab military airport, which is close to Aleppo International Airport. It was not immediately clear who was responsible for the rocket fire, the Observatory said.

* * *

On Sunday, President Trump spoke with Prime Minister Benjamin Netanyahu, according to a White House readout. It said they “discussed the continuing threats and challenges facing the Middle East region, especially the problems posed by the Iranian regime’s destabilizing activities.” The call took place just hours before Netanyahu met for the first time with Trump’s new Secretary of State, Mike Pompeo, who is visiting the Middle East.

Earlier Sunday, Defense Minister Avigdor Lieberman said Israel will maintain freedom of operation in Syria.

“We have no intention to attack Russia or to interfere in domestic Syrian issues,” Lieberman said at the annual Jerusalem Post conference. “But if somebody thinks that it is possible to launch missiles or to attack Israel or even our aircraft, no doubt we will respond and we will respond very forcefully.”

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China Warns Ahead Of Trade-War Talks: “Don’t Expect A Comprehensive Deal Whatsoever”

It appears the US-China trade-war is nowhere near being over as NYTimes reports China will refuse to discuss President Trump’s two toughest trade demands when American negotiators arrive in Beijing this week.

Signalling ahead of the trade talks has been clear from Beijing. The New York Times reports that a half-dozen senior Chinese officials and two dozen influential advisers laid out the Chinese government’s position in detail during a three-day seminar that ended here late Monday morning. A handful of foreign writers were invited from around the world to make sure China’s stance would be known overseas. All of the officials and most of the advisers at the seminar insisted on anonymity because of diplomatic sensitivities.

The reason is simple: Beijing feels its economy has become big enough and resilient enough to stand up to the United States.

It is not clear what will happen when the two sides sit down this week or whether either will find a reason to waver. Still, as NYT points out, the Chinese and American positions are so far apart that China’s leaders are skeptical a deal will be possible at the end of this week. They are already raising the possibility that Chinese officials may fly to Washington a month from now for further talks.

“I don’t expect a comprehensive deal whatsoever,” said Ruan Zongze, the executive vice president of the China Institute of International Studies, which is the policy research arm of China’s Foreign Ministry. “I think there is a lot of game playing here.”

In some respects, the hard stance struck by Chinese officials reflects a hardening of public attitudes in China, as the Trump administration’s actions have sparked increased nationalism among the Chinese…

The ZTE case “has changed a lot of Chinese people’s opinion,” said Mr. Ruan, of the China Institute of International Studies. “In the past, people saw us as interdependent.”

The bottom line, as NYT notes, is that this position potentially forces Washington to escalate the dispute or back down… and given Trump’s history, the latter seems unlikely for now.

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“We Erred Bearishly Of Equities”: Gartman Turns Bullish

On April 18, Gartman shorted oil, then just hours later oil soared, stopping the “world-renowned commodity guru” literally minutes later.

Then, one week later, on April 26, Gartman announced he was shorting the Nasdaq. Just hours later, he was stopped out of his short  again, leading to major losses (if only in Gartman’s paper “retirement” account, and credibility of course).

So has the famous momentum chaser finally learned to stop chasing the market at a time when momentum-chasing has become the single worst trade? Why not at all, because just over a month after his “watershed” call that “equity markets have hit multi-year highs”, and after getting stopped out twice in one week on key shorts, Gartman has decided to turn bullish again, stating that what he so solemnly declared 6 weeks ago was the end of the bull market was really just… a correction.

No, this is not the onion, this is Gartman’s latest letter to investors.

THE S&P: Perhaps Three Month’s of Correction Was Enough?: We made no excuses for erring bearishly of equities for the past several months, but perhaps we’ve seen the correction having run its course? Certainly it would seem so.

Let’s be clear here this morning: For much of this year we’ve been generally bearish of equities and for much of this year… and certainly since late January…we’ve erred on the side of being short of equities when we’ve traded. Since January 29th, when our International Index peaked at 12,857 stocks have indeed been weaker. Since, peaking in January when it traded very near to 2,850 the S&P has been trending lower and closed Friday evening at 2,670. Since peaking last autumn… and then again in late January, the EURO STOXX 50 has fallen from 3,700 to its low just below 3,200 and finished last week at 3,450. The German DAX, having peaked January 23rd at 13,560 reached a low of 11,787 in late March and has since rallied to 12,580. Finally, since peaking on January 26th at or very near to 33,150, the Hang Seng index fell to 29,500 earlier this month before finding support.

The point here is that having erred bearishly of equities for most of this year that has been the proper course of action; but we shall change that this morning from “has been” to “was,” for it is now proper to err bullishly of shares generally. Further, we are to err most bullishly of shares in those countries where the monetary authorities are continuing their QE experiments and that shall include Europe, Japan and China. The Bank of Japan has made it clear that it has no intention at all of ending its QE “experiment.” The Peoples Bank of China has just cut reserve requirements… a move we have always considered to be perhaps the most expansionary of all monetary experiments and the ECB has said it shall only “consider” moving toward tighter policies at some point in the future but certainly not immediately. Only the US monetary authorities are on the path toward tighter policies:

So what is Gartman buying? Why the most opaque and un-analyzable company of all it appears: GE.

Turning then to our retirement account, on Friday we did what we had recommended all of our readers to do the day earlier: we got neutral of equities and we did so by buying in much of our derivatives short position and buy buying the shares in and old guard, industrial company (GE) at the same time.

…

Today we shall be in buying back more of our derivatives short position and at the same time we’ll be buying equities domestically and abroad.

Looks like David Tepper was right.

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Arbs Roiled As Sprint Plunges On Antitrust Fears

Sprint shares plunged 14% in pre-market trading this morning – roiling any anticipatory arb plays from Friday – on fears that the proposed $26.5 billion takeover by T-Mobile will get rejected by antitrust enforcers.

The deal – announced Sunday – seemingly concluded years of “on again, off again” speculation when T-Mobile and Sprint announced they finally consummated an all-stock merger at a fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share.

However, as the market’s reaction makes clear, combining two of the four biggest wireless carriers in the US sets the stage for an in-depth investigation by the Justice Department over whether the tie-up would harm competition in the industry, and as Bloomberg reports, some analysts are giving the transaction only 50-50 odds of passage.

Bloomberg notes that the challenge is convincing regulators that the world has changed since 2014, when a merger of the two companies was firmly rebuffed by the Justice Department. Winning them over this time won’t be easy, even with a new administration in power.

“I find it hard, given the history, to see the DOJ not challenge it,” said David Turetsky, a former deputy assistant attorney general with the antitrust division.

“It’s basically a four to three in the wireless industry. Even if they argue there are 10 players, they are still the top four.”

And as the ratio of Sprint to T-Mobile makes clear, the odds are fading fast…

There is some hope…

“The companies will argue that only together will they be able to make the requisite investments in 5G, and there’s probably a fair amount of truth to that,” said Craig Moffett, an analyst at MoffettNathanson LLC.

And for now there remains hope in the arbitrage…

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Trump Crowdsources Korean Summit Location Choice, Slams “Filthy” WHCD

President Trump’s showman instincts were on display once again Monday morning when he posed an unusual question to his 51 million Twitter followers.

While “numerous countries” are in the running to host the historic summit between the US and North Korea (Trump had said at a rally in Michigan over the weekend that the State Department and their North Korean colleagues had narrowed it down to two or three locations), wouldn’t it be “more Representative, Important and Lasting” to hold the talks at “Peace House/Freedom House”, a location along the Demilitarized Zone, the heavily fortified land border between the two countries?

The tweet comes after North Korean leader Kim Jong Un promised during a historic summit with South Korea late last week to close whatever is left of the country’s nuclear testing facility and put off all future tests as a gesture of good faith as the North prepares to hold direct talks between Trump and Kim.

Trump told the audience at his Michigan rally over the weekend that he believes Kim is serious about pursuing peace. Kim himself has questioned why he should “live in difficulty” with the US and the rest of the world if giving up his nuclear arsenal would bring peace and prosperity.

“If we would have said where we are today from three or four months ago, remember they were saying ‘he’s going to get us into nuclear war’,” Trump said. “Strength is going to keep us out of nuclear war; it’s not going to get us in.”

Trump also tweeted about the White House Correspondent’s Dinner, saying the event is now “DEAD as we know it”. Presumably referring to the performance by headliner Comedian Michelle Wolf, who has been criticized for heartlessly mocking Sarah Huckabee Sanders’ weight, Trump called the event an “embarrassment to our great Country and all that it stands for,” adding that “FAKE NEWS is alive and well and beautifully represented on Saturday night!”

Trump, who was famously mocked by then-President Barack Obama at the 2011 White House Correspondents’ Dinner, has refused to attend both of the dinners held since his inauguration, and is now presumably declaring that he won’t be attending the event at all during his presidency.

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US Savings Rate Slides As Spending Outpaces Income Growth For 26th Straight Month

For the 26th month in a row, US spending growth outpaced income growth with the latter rising just 3.7% YoY (the lowest since Oct 2017) and former rising 4.6% YoY (slightly faster than in Feb).

 

 

Which prompted a drop in the savings rate and a notable downward revision to the last two months (of notable conservatism) with Jan revised down from 3.2% to 3.0% and Feb down from 3.4% to 3.3% and now March at just 3.1%.

 

However, while income growth did disappoint (rising just 0.3% MoM vs 0.4% MoM expectations), wage growth was up a notable 4.4% YoY with private wages dominating government worker gains (+4.8% YoY vs +2.5% YoY).

 

Finally we note that Real Personal Spending rose a disappointing 0.4% MoM (versus 0.5% expectations)

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Key Events In The Coming Extremely Busy Week: Jobs, Fed, Earnings And Much More

It’s an extremely busy week of US data/earnings/events with plenty to keep US yields in the spotlight after a notable sell-off in the first half of the week followed by a notable rally over the last couple of days (US 10yr -2.4bp Friday to 2.958%, -7.5bps from intra week highs on Wednesday) as the focus will remain on the US. There are a number of important data releases in the US including payrolls and PCE. In addition, the Fed is expected to keep the target rate unchanged at the Wednesday FOMC meeting with no changes to the policy statement. At the Treasury quarterly refunding we look for a continued increase in auction sizes, concentrated at the front end.

As Deutsche’s Jim Reid writes, the week’s highlights are a Fed meeting (Wednesday), US Treasury quarterly refunding plan announcement (Wednesday), PCE inflation data (today) and the April employment report (Friday). Inflation data in Europe (Thursday) is also due out along with a first look at Q1 GDP (Wednesday), while the final PMI revisions are also due.

Earnings will also continue with 147 S&P 500 companies reporting and 55 Stoxx 600 companies. In the US, 268  companies in the S&P 500 have reported their 1Q results so far (54% of market cap). So far 78% of the companies have beat on EPS, which is the highest ratio since 2010, while the aggregate earnings beat (8.9%) is also more than double the historical average. Further, growth appears to be broad based with all sectors on track to post double digit EPS growth, led by Energy (91%), Technology (34%) and the Financials (28%). In aggregate, corporate earnings are on track to be up at least 24% yoy in the quarter.

As DB’s Craig Nicol adds, in terms of the Fed on Wednesday, the consensus is for no change in policy which is a view also shared by the market with futures pricing implying odds of just 5% for a hike. That said market pricing for 4 rate hikes this year (ie a further 3) have nudged up above 40% from a low of just 18% at the start of this month so it’ll be interesting to see how or if that changes post next week’s meeting. The meeting will not be accompanied by a press conference from Fed Chair Powell so it’ll be likely fairly limited in terms of new news for the market.

Away from the Fed, the week is bookended by two big data prints in the US. On Monday we’ll get the March PCE data with the consensus pegged at a +0.2% mom core reading and 0.0% deflator print. Base effects should help push the YoY core PCE reading to +2.0% yoy from +1.6%, a level we’ve not seen since April 2012. For payrolls on Friday, the consensus expect a 185k nonfarm reading following the 103k print in March. Average hourly earnings are also expected to have risen +0.2% mom while the unemployment rate is forecast to fall a tenth to 4.0%, and hours hold steady at 34.5 hours. The other notable data worth noting in the US next week is the April ISM manufacturing print on Tuesday which is expected to fall nearly a point to 58.5.

As well as the Fed and data releases next week, expect the bond market to also be fixated by Wednesday’s US Treasury quarterly refunding plan with the expectation for another across the board boost to auction sizes in light of the tax cut announcement and increased spending. As a reminder, the latest CBO budget outlook has the US deficit passing $1tn by 2020.

In Europe next week GDP and CPI data dominates the agenda. With regards to the former, on Wednesday we’ll get a first look at Q1 GDP for the Euro area with the consensus currently expecting +0.4% qoq growth. Our European economists believe that the flow of data released over the past few months suggest that the Euro area has lost some momentum in Q1 and on Wednesday revised down their forecast for the quarter to +0.4% qoq from +0.6%, although at the same expect some lost activity to be probably clawed back in subsequent quarters. As a reminder, the Euro area expanded by an average of almost +0.7% qoq through 2017. For CPI, we’ll get the April report for the Euro area on Thursday with the consensus expecting a +0.9% yoy print for the core, having held at +1.0% yoy for the last 3 months. Also worth highlighting in Europe next week are the final revisions to the April PMIs including a first look at the data for the non-core and UK. Away from the data in Europe expect Brexit headlines to come back to the fore with EU and UK negotiators undergoing another round of talks from Wednesday.

Over in Asia it’s a little quieter next week with the most notable data prints being the Caixin PMIs in China (manufacturing on Wednesday and services/ composite on Friday) and Nikkei PMIs in Japan (manufacturing Tuesday and services/composite Wednesday).

A visual summary of key events:

A breakdown of main events by day:

Monday: Inflation data should be the overwhelming focus for markets on Monday with preliminary April CPI reports due in Germany and Italy, and the March PCE core and deflator readings along with personal income and spending due in the US. Other data worth highlighting is the official April PMIs in China along with the April Chicago PMI, March pending home sales and April Dallas Fed PMI in the US. Earnings highlights on Monday include McDonalds and Allergan.

Tuesday: Overnight we’ll receive the final April manufacturing PMI in Japan. In Europe the focus is on the UK with March money and credit aggregates data, along with the April manufacturing PMI. In the US we’ll also receive the final April manufacturing PMI print along with the April ISM manufacturing, March construction spending and April vehicle sales data. The headline earnings release on Tuesday is Apple, while results from Pfizer, Merck and BP will also be closely watched.

Wednesday: A busy day headlined by the FOMC meeting outcome in the evening. Prior to that we’ll get the April ADP employment change print in the US, while in Europe a first look at Q1 GDP for the Euro area and Italy is due. The remaining April manufacturing PMIs will also be out in Europe while in China we’ll get the April Caixin manufacturing PMI. Japan will also release its April services and composite PMIs. The other big event on Wednesday is the US Treasury announcement of its debt issuance plans. EU and UK Brexit negotiators will also begin the next round of Brexit talks, continuing through to Friday. Kraft Heinz and Tesla results are due on Wednesday.

Thursday: Another busy day for data headlined by the April CPI report for the Euro area. March PPI data for the Euro area will also be out while the latest European Commission forecast updates will be released. The final April services and composite PMIs in the UK will also be out in the morning. In the US preliminary Q1 nonfarm productivity and unit labour costs data are due, along with the March trade balance print, April ISM non-manufacturing, weekly initial jobless claims, March factory orders and the final March durable and capital goods orders data. Away from the data, the ECB’s Constancio and Coeure are due to speak in Frankfurt.

Friday: The big highlight at the end of the week is in the US with the April employment report due to be released. In Europe the final April services and composite PMIs will be released, while France’s March trade balance and the Euro area’s March retail sales data will also be out. In China we’ll also get the remaining April Caixin PMIs (services and composite). The Fed’s Dudley is scheduled to speak in the early evening. Berkshire Hathaway, Alibaba, HSBC, BNP Paribas and Societe Generale are due to report earnings.

* * *

Focusing only on the US, the key economic releases for the coming week include the personal income and spending  report on Monday, ISM manufacturing on Tuesday, ISM nonmanufacturing on Thursday, and the employment report on Friday. The statement from the May FOMC meeting will be released on Wednesday. Additionally, there are a few scheduled speeches from Fed officials this week.

And here is Goldman with a detailed breakdown including Wall Street estimates

Monday, April 30

  • 8:30 AM Personal income, March (GS +0.4%, consensus +0.4%, last +0.4%); Personal spending, March (GS +0.6%, consensus +0.4%, last +0.2%); PCE price index, March (GS +0.01%, consensus flat, last +0.19%); Core PCE price index, March (GS +0.16%, consensus +0.2%, last +0.23%); PCE price index (yoy), March (GS +1.99%, consensus +2.0%, last +1.75%); Core PCE price index (yoy), March (GS +1.89%, consensus +1.9%, last +1.60%): Based on details in the PPI and CPI reports and last week’s GDP report, we forecast that the core PCE price index rose +0.16% month-over-month in March, or 1.89% from a year ago. Additionally, we expect that the headline PCE price index increased 0.01% in March, or 1.99% from a year earlier. We expect a 0.4% increase in March personal income and a 0.6% rise in personal spending.
  • 09:45 AM Chicago PMI, April (GS 57.9, consensus 58.0, last 57.4): Regional manufacturing surveys were mixed in April, and we estimate that the Chicago PMI increased 0.5pt to 57.9 following a sizeable 4.5pt drop in March.
  • 10:00 AM Pending home sales, March (GS +1.2%, consensus +0.5%, last +3.1%): Regional housing data released so far suggested the rebound in contract signings continued in March, and we estimate pending home sales rose 1.2%. If realized, this would suggest scope for existing homes sales to rise for a third month in April (pending home sales are a useful leading indicator of existing home sales with a one- to two-month lag).
  • 10:30 AM Dallas Fed manufacturing index, April (consensus 25.0, last 21.4)

 Tuesday, May 1

  • 09:45 AM Markit Flash US Manufacturing PMI, April final (consensus 56.5, last 56.5)
  • 10:00 AM ISM manufacturing, April (GS 58.3, consensus 58.5, last 59.3): We estimate a 1.0pt decline in the ISM manufacturing index to 58.3 in April. Our forecast reflects mixed reports from business activity surveys in April, as declines in the Richmond Fed and Empire State manufacturing indices offset strong readings from the Markit PMI, Kansas City Fed, and Philly Fed surveys. On net, our manufacturing survey tracker, which distills the signal from regional manufacturing reports and is scaled to the ISM index, edged down to 58.3. Still the survey is likely to remain at levels consistent with a solid pace of expansion in the manufacturing sector.
  • 10:00 AM Construction spending, March (GS +0.6%, consensus +0.5%, last +0.1%): We estimate construction spending increased +0.6% in March, following a slight increase in February that reflected relatively firm private single family and multifamily but weaker public residential construction.
  • 4:00 PM Total vehicle sales, April (GS 17.1mn, consensus 17.1mn, last 17.4mn); Domestic vehicle sales, April (GS 13.3mn, consensus 13.3mn, last 13.4mn); Our auto analysts expect total vehicle sales to increase on a year-over-year basis, reflecting higher fleet sales.

Wednesday, May 2

  • 08:15 AM ADP employment report, April (GS +185k, consensus +198k, last +241k); We estimate a 185k increase in ADP payroll employment in April, reflecting the drop in March payrolls growth and the pickup in jobless claims, two inputs utilized in the ADP model. While we believe the ADP employment report holds limited value for forecasting the BLS’s nonfarm payrolls report, we find that large ADP surprises vs. consensus forecasts are directionally correlated with nonfarm payroll surprises.
  • 02:00 PM FOMC statement, January 30-31 meeting; As discussed in our preview, the FOMC looks very likely to keep policy unchanged. The Committee will likely signal that it is firmly on track for a June hike given continued solid growth and firming inflation data. We look for an upgrade of the inflation description in the statement and expect the committee to signal that core inflation on a 12-month basis is now near the 2% target. We upgraded our own subjective probability of a hike at the June meeting to 90%.

 Thursday, May 3

  • 08:30 AM Initial jobless claims, week ended April 28 (GS 225k, consensus 224k, last 209k; Continuing jobless claims, week ended April 21 (consensus 1,838k, last 1,837k): We estimate initial jobless claims rebounded 16k to 225k in the week ending April 28. We note that the level of claims looks depressed in New York and New Jersey, possibly related to the timing of school holidays. Continuing claims—the number of persons receiving benefits through standard programs—have trended down in recent weeks, though they remain above the cycle low in late March.
  • 08:30 AM Nonfarm productivity (qoq saar), Q1 preliminary (GS +0.9%, consensus +1.0%, last flat); Unit labor costs, Q1 preliminary (GS +2.9%, consensus +3.0%, last +2.5%): We estimate non-farm productivity rose +0.9% in Q1, slightly above the +0.75% trend achieved on average during this expansion. We expect Q1 unit labor costs—compensation per hour divided by output per hour—to rise at a firm 2.9% pace (qoq saar).
  • 08:30 AM Trade balance, March (GS -$49.6bn, consensus -$50.0bn, last -$57.6bn): We estimate the trade deficit declined sharply in March. The Advance Economic Indicators report showed a larger-than-expected improvement in the goods deficit that we believe reflected the reversal of Chinese New Year effects. We note that the level of services imports also appeared elevated in February, and may normalize with this report.
  • 09:45 AM Markit services PMI (final), April (consensus 54.5, preliminary 54.4)
  • 10:00 AM ISM non-manufacturing, April (GS 57.5, consensus 58.1, last 58.8): We expect the ISM non-manufacturing index to move down 1.3pt to 57.5 in April following mostly weaker service sector surveys in April. On net, our nonmanufacturing survey tracker dropped by 2.2pt to 54.8, led by declines in the Richmond Fed and New York Fed service sector surveys. The survey is still likely to remain at levels consistent with a solid pace of growth.
  • 10:00 AM Factory orders, March (GS +1.4%, consensus +1.2%, last +1.2%); Durable goods orders, March final (last +2.6%); Durable goods orders ex-transportation, March final (last flat); Core capital goods orders, March final (last -0.1%); Core capital goods shipments, March final (last -0.7%): We estimate factory orders rose 1.4% in March following a 1.2% increase in February. Headline durable goods orders were strong in the March advance report, largely driven by a surge in non-defense aircraft orders. Core measures were weak, however, with decreases in both core capital goods orders and core capital goods shipments.

 
Friday, May 4

  • 8:30 AM Nonfarm payroll employment, April (GS +180k, consensus +195k, last +103k); Private payroll employment, April (GS +180k, consensus +194k, last +102k); Average hourly earnings (mom), April (GS +0.2%, consensus +0.2%, last +0.3%); Average hourly earnings (yoy), April (GS +2.6%, consensus +2.7%, last +2.7%); Unemployment rate, April (GS 4.0%, consensus 4.0%, last 4.1%): We estimate nonfarm payrolls increased 180k in April. Our forecast reflects a rebound in job growth following a weather-influenced slowdown in March (+103k). However, we note that labor market fundamentals may have softened at the margin. April snowstorms in the Midwest may also limit the extent of the reacceleration in payroll gains, in our view.
    • We estimate the unemployment rate declined by one tenth to 4.0% (from 4.07% previously), as continuing claims have continued to fall and the surge in labor force participation in February (+0.3pp) is typically associated with a decline in the jobless rate over the following three months. Finally, we expect average hourly earnings to increase 0.2% month over month with risks skewed to the downside (we forecast 2.6% year over year), reflecting somewhat unfavorable calendar effects.
  • 12:45 PM New York Fed President Dudley (FOMC voter) speaks; New York Federal Reserve President William Dudley will participate in a moderated conversation at an event, “Financial Tumult of Our Times and Challenges Ahead” in New York. Audience Q&A is expected.
  • 05:30 PM Vice Chairman for Supervision Quarles (FOMC voter) speaks: Federal Reserve Vice Chairman for Supervision Randal Quarles will give a speech on liquidity regulation and the Fed’s balance sheet at the Hoover Institution at Stanford University. Audience Q&A is expected.

Source: DB, BofA, Goldman

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The VA Is a Mess—But Not Because of Who’s In Charge: New at Reason

The Department of Veterans Affairs is really hard to staff.

Its Veterans Health Administration (VHA) has 30,000 vacant clinical positions. Eligibility-claims processers are in such short supply, there remains a waiting list 75,000 veterans long. Appeals of eligibility denials have a backlog of more than 300,000 and take an average of 2.5 years to resolve. The VA even lacks undersecretaries to supervise those areas.

To top it all off, President Trump ousted former Secretary David Shulkin over differences about whether to pay for veterans to receive care from private providers, and his pick to succeed Shulkin—Rear Adm. Ronny Jackson, M.D.—recently withdrew his name from consideration over allegations of on-duty drunkenness, harassing female coworkers, and such and such.

This ongoing soap opera, however, keeps anyone from asking the right questions or proposing the right reforms.

Shortages and waiting lists at the VA are hardly surprising. Its health care system, the VHA, is the United States’ version of the U.K.’s single-payer National Health Service. It is an entirely socialist enterprise, where the government owns the means of production (hospitals, clinics, CT scanners, bedpans), employs the workers, decides how much everyone gets paid, and generally chooses how to allocate all those capital and human resources.

In other words, it’s a system without true prices—and that’s why it doesn’t work.

View this article.

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