Month: July 2022

One of the key housing markets that tore higher during the pandemic boom is now finally starting to cool off – likely a microcosm of what is already happening all of the U.S. as several key industries fall into recession. 

It may have been tough to guess that Boise, Id. would be the harbinger of the state of the U.S. housing market, but a new Wall Street Journal article makes the argument that this could actually be the case. 

The city saw a huge spike in population during the pandemic due to remote workers, but the boom has since cooled. 61% of listings in the area have seen a price cut, according to the report. This marks the highest rate of 97 metro areas surveyed. Just last year, home builders couldn’t keep up with demand, the report says. 

People were flocking to the area because of its affordability and its fewer pandemic restrictions, the report says. Now, with prices higher and the rest of the country finally coming to its senses about restrictions, its allure has worn off. 

Shauna Pendleton, a Boise real-estate agent for Redfin, commented that rising rates made it as if “somebody just turned the lights off” in the city. “The buyers just disappeared off the face of the earth,” Pendleton said. 

The article noted stunning inventory hitting the market in Boise, stating that “inventory of existing single-family homes for sale in Ada County, which includes Boise, surged 179% in June from a year earlier, according to Boise Regional Realtors.”

Nancy Vanden Houten, lead U.S. economist at Oxford Economics, commented: “Too many buyers cannot afford housing in this market. Some markets have become much more overheated than others, and I don’t think we can rule out price declines in some of those areas.”

In June, Boise was the “most overvalued housing market in the U.S.” according to an FAU analysis. Home values were 69% above where they should be relative to long-term trends, the study found. 

David Turnbull, who ran a building company, said he shut down for 8 months during the pandemic and when he re-opened, demand was through the roof. “When we opened them back up, we were just swamped. Anything you listed for sale sold within days. You had bidding wars. Boise had never seen that. I mean, this is California stuff.”

The demand drove median single family home prices up 79% from three years prior and 44% above the national average at the time. 

Meanwhile, sales of U.S. homes are lower for five straight months as consumers worry about rising rates at a time where stimulus money has run out and they are officially “tapped” out of cash to spend. 

The expectation is that Boise-area homes will fall “at least” 10% from their peak. Corey Barton, president of CBH Homes, the region’s biggest home builder, concluded: “It did go way too far. It’s slowly going back to the old Boise.”

You can read the WSJ’s full report on Boise here. 

Authored by Jonathan Turley,

The Hill was thrown into near chaos this week when Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV) unveiled the Inflation Reduction Act. 

Republicans charged that Manchin misled them into supporting a $280 billion chips and science bill – a bill they would have otherwise opposed. Others criticized the name of the bill, which contains a significant number of climate change items long sought by the Democrats.

Now, the respected Wharton School at the University of Pennsylvania has found that the Inflation Reduction Act would actually have no impact on inflation.

Manchin premised his change on the fact that the bill would reduce inflation despite raising taxes and expenditures. The Act would combat climate change, extend enhanced Obamacare subsidies, and reduce the budget deficit by roughly $300 billion.

Jon Huntley and John Ricco found that the bill “would reduce non-interest cumulative deficits by $248 billion over the budget window with no impact on GDP in 2031. The impact on inflation is statistically indistinguishable from zero.”

That is $52 billion less in deficit reduction than claimed by the Democrats and the review found the bill would actually “very slightly increase inflation until 2024 and decrease inflation thereafter.”

Wharton’s budget unit functions like an academic Congressional Budget Office in offering non-partisan budget analysis. At a time of growing orthodoxy and viewpoint intolerance, it remains an independent voice on budgetary issues.

For many, the Congress has become more bold in mislabeling legislation like an infrastructure bill that contained mainly non-infrastructure or “human infrastructure” provisions. Later a stripped down infrastructure bill was passed that was confined to actual infrastructure.

When one looks at New York City’s recovery from the pandemic lockdowns, it’s hard to make the case that things are going swimmingly. The city is re-opening at a snail’s pace, with some blocks (like the recently profiled block near the 59th St. subway) still “frozen” in peak-pandemic time.

And one of the key factors preventing the city from re-opening in a timely fashion has been the crime and the environment of criminal activity that has lingered since the days of the pandemic lockdowns and “peaceful protests”, where many U.S. cities were nearly burned to the ground. 

As outlined in a new profile of the city by Bloomberg, violent incidents in New York have been in focus, emboldened by the hands-off law enforcement policies of Bill de Blasio and his administration over the last half decade. 

Police in many major cities feel like they can’t do their jobs with Democratic leadership in place and citizens of said cities are continuing the exodus to the suburbs that started at the beginning of the pandemic. 

While Bloomberg is quick to spin that “incidents of violent crime remain at historic lows in New York City”, they also point out that numerous “high-profile incidents in subway stations and tourist hubs” have left a bad taste in people’s mouths when it comes to public safety. Young New Yorkers are seeing crime rise, instead of fall, for the first time in their lives, the report notes. 

And there’s no doubt crime is in focus among those who live in New York, so something must be compelling citizens to take the issue far more seriously than they did several years ago.

In fact, about 75% of citizens said crime was a “very serious” problem in a February Quinnipiac University poll, marking the highest number since 1999. 

Crime in many major U.S. cities started to pick up as a result of the economic consequences of locking down, mixed with the riots and “protests” that took place after the George Floyd incident. 

“Washington D.C., Los Angeles, Chicago and other US cities saw murder rates climb to the highest point in over a decade, driven by gun violence,” Bloomberg reported. It has caused many businesses – like Ken Griffin’s Citadel – to abandon these cities and move to states like Florida and Texas. 

Crime has gotten so bad, it has also become a political talking point. Newly elected New York City Eric Adams was widely supported for his background in law enforcement and his willingness to give ground on reforming how policing is handled in the city. 

Lisa Miller, a political science professor at Rutgers University, commented: “We didn’t see people using crime [politically] at the local level a whole lot over the past 10 to 15 years because crime levels were historically low. What politicians do and whether they’re successful at it depends on how much people are generally frightened about walking around their communities.”

The article then goes on to question whether perception truly is reality, pointing out how media coverage surrounding crimes has changed and asking whether or not giving a bigger megaphone to the issue has created more of a problem than it is solving. 

The fact remains, however, that many younger generations in New York are seeing crime rise for the first time in their lifetimes. And the election of Eric Adams speaks to what is likely going to become a trend around the country: voters in cities are telling politicians that they demand law and order. 

But John Gramlich, who studies crime statistics at the Pew Research Center, concluded that it was all about perception: “If somebody feels unsafe, they’re probably not going to be comforted by the fact that overall crime in New York is lower today than it was 20 years ago. The feelings are important because it can translate into how people ultimately choose their leaders or vote on policies.”

By Clarisssas Hawes of FreightWaves

Hundreds of small-business truckers who use CoreFund Capital to factor their accounts receivable are struggling to stay afloat after the Weatherford, Texas-based company abruptly closed its doors 10 days ago and fired its entire staff over a legal spat between two brothers.

However, late Thursday, Parker County, Texas, District Judge Graham Quisenberry appointed a receiver on behalf of CoreFund, which may help truckers gain access to funds more quickly.

Attorneys, rival factoring companies and brokerages have received numerous calls from some of CoreFund’s approximately 350 trucking clients, including many owner-operators, who are desperate for answers and may be forced to close their doors if they can’t pay their drivers or purchase fuel.

Tony Ginevra, director of operations for Florida-based John J. Jerue Truck Broker, works with a network of 50,000 trucking companies, including 140 carriers in his database that factor their receivables through CoreFund Capital. He’s concerned about not being able to pay these carriers since he’s had no communication with any of CoreFund’s executives.

“I had a carrier trying to get us to pay him directly — he’s called me a dozen times today — but there’s nothing we can do until we have a notice of assignment from CoreFund that this trucking company has gone to them for funding and CoreFund sends us an invoice, which we will pay the same day,” Ginevra told FreightWaves. “I feel for these guys because many are living load to load right now, but we legally can’t pay the carriers directly because we have to pay CoreFund first.”

Brokerages and factoring companies say they are powerless to help the truckers until CoreFund releases the UCC-1 (Uniform Commercial Code) liens filed by the factoring company against carriers’ assets. Also needed is a revocation of a notice of assignment that is sent to the truckers’ customers instructing them to make a payment to CoreFund, which in turn pays them.

Receiver to the rescue?

Some brokerages and other factoring companies say the newly appointed receiver may be crucial.

“I spoke to a carrier yesterday out of New York that submitted three invoices to CoreFund last week and no one responded to her so she’s stuck in limbo,” Ashley Dellinger, vice president of sales and marketing of Utah-based Express Freight Finance, told FreightWaves. “We’re hoping the receiver that’s appointed will be able to get them released from CoreFund because until then, we can’t help them.”

Late Thursday, Jason Medley, partner with law firm Spencer Fane in its Houston office, notified some of the affected trucking companies and factoring companies that the judge appointing a receiver is a positive step.

“This means that the receiver is able to act on behalf of CoreFund to release the UCC1s and notices of assignment and make payout arrangements,” Medley said via email. “While the effect is not immediate — the receiver still needs to officially step into the process by paying a bond, etc. — the court’s order moves us much closer to addressing the needs of CoreFund’s factoring customers.”

The International Factoring Association is one of Medley’s clients. He currently represents about 50 trucking companies and said the number is “climbing every minute.”

Prior to the judge appointing a receiver, Medley had a chance to speak at Wednesday’s hearing regarding a civil lawsuit filed by CoreFund Capital, which seeks a restraining order and temporary injunction, as well as application for appointment of an attorney for trust beneficiaries against Frost Bank, TBK Bank, Chris Wakefield and Meir “Shim” Sacks.

“I told the judge that when elephants fight, the whole world shakes,” Medley told FreightWaves. “Whatever prompted this lawsuit led to a shutdown of their operations so CoreFund can’t get money from its lenders and it can’t lend money to its truckers. These truckers need to leave CoreFund now.”

In the meantime, Medley said his firm was working to contact the receiver to “expedite the process as much as possible.”

What we know about the Sacks brothers’ feud

According to court documents, Meir “Shim” Sacks founded CoreFund Capital in 2014. CoreFund is a wholly owned subsidiary of GMA Fund LLC, the holding company for the Shim Sacks Family Legacy Trust, which he created in October 2014.

As part of the original trust, Shim Sacks granted special power of appointment to his brother, Yaakov “Jacob” Sacks.

According to court filings, Jacob Sacks “exercised this special power of appointment he holds” under the original trust and transferred the trust’s assets, including the holding company that owns CoreFund, to a new trust he created, the Sacks Family Grandchildren’s Trust, on July 12. 

While the old trust only named Shim Sacks’ children as beneficiaries, the new trust lists both brothers’ children as beneficiaries. It also names CoreFund’s longtime president, Bonnie Castillo, as the sole manager of CoreFund.

It’s unclear why Jacob Sacks created the new trust. The law firm representing him and CoreFund, Warren Fonville of Fort Worth, Texas, did not respond to FreightWaves’ request seeking comment.

As of publication, FreightWaves’ calls to Jacob Sacks, Shim Sacks and Chris Wakefield, listed as the chief of staff of CoreFund, also had not been returned. 

CoreFund executives have not issued a statement about the factoring company’s future. However, former employees with access to CoreFund’s Facebook account have been posting updates to its panicking trucking customers since no one has responded to their calls or emails.

Todd Waller, former business development officer at CoreFund Capital, was among those fired. He issued the following statement about the factoring company’s ongoing lawsuit on LinkedIn. 

“Our staff is hurting and struggling with this as we were completely blindsided,” Waller wrote. “Additionally, we are saddened and sickened by how this is impacting our clients who we consider family and we are legally unable to do anything to help as they struggle to stay in business.”

The budding army of amateur flight-trackings sleuths on twitter was proven correct again when less than a day after a barrage of unconfirmed reports that the world’s greatest investor, Nancy Pelosi, was on her way to Asia – where he supposedly is planning to visit Taiwan, a move which some say could spark World War 3 – on Sunday morning her office confirmed that the House Speaker has begun her anticipated trip to Asia, with her office naming four destinations but making no mention of Taiwan.

The official release of her itinerary comes amid more warnings from Beijing over her possible visit to the island.

Pelosi, the third in line of US presidential succession, is leading a six-member congressional delegation to Singapore, Malaysia, South Korea and Japan, according to a statement released by her office early on Sunday which however skipped any mention of Taiwan, after days of intense speculation about a likely stop there fuelled tensions, with Beijing calling it a “provocation” and warning Washington against “playing with fire”.

But the careful wording of the statement did not rule out the possibility of a visit either.

“In Singapore, Malaysia, South Korea and Japan, our delegation will hold high-level meetings to discuss how we can further advance our shared interests and values, including peace and security, economic growth and trade, the Covid-19 pandemic, the climate crisis, human rights and democratic governance,” the statement said.

“America is firmly committed to smart, strategic engagement in the region, understanding that a free and flourishing Indo-Pacific is crucial to prosperity in our nation and around the globe.”

Singapore’s foreign ministry confirmed on Sunday that Pelosi would be visiting for two days starting on Monday.

The delegation led by Pelosi includes Gregory Meeks, chairman of the US House foreign affairs committee, Mark Takano, chairman of the veterans’ affairs committee, and Suzan DelBene, vice chairwoman of the ways and means committee. Two other Democratic congressmen, Raja Krishnamoorthi and Andy Kim, are also travelling with her.

To be sure, Beijing will be following every move of the delegation extremely closely as it regards Taiwan as a breakaway province, to be reunited by force if necessary, and has repeatedly warned against any official exchanges with the self-governed island, going so far as hinting it would shoot down her plan and start a war if Pelosi were to visit the island.

It earlier described the possible trip to Taiwan as a move to support “Taiwan independence”, in violation of the one-China policy.

Meanwhile, the possibility for a stopover in Taiwan has not been ruled out completely.

“The statement is very carefully written. It only says that Pelosi is going for a trip to the Indo-Pacific region, including four nations while making no mention of Taiwan. So, in the case of Pelosi making a surprise visit to Taiwan, the press release still holds as she has never formally acknowledged or denied that Taiwan is a stop in her trip,” said Wu Junfei, a researcher at the Hong Kong-China Economic and Cultural Development Association think tank.

“For now, Pelosi still has ample room to manoeuvre. The final result will still depend on how China and the US continue with the negotiations.”

In recent day, China doubled down on its warning rhetoric to the US. On Saturday the state broadcaster CCTV published for the first time a video showing the launch of DF-17 hypersonic missile – a clip that was later deleted. The move has been widely seen as a clear warning, even though the video, which was subtitled “the target: win”, was ostensibly celebrating the anniversary of the founding of the army.

Also on Friday, in another signal of Beijing’s displeasure with Pelosi’s trip, the Chinese military started a series of exercises, including live-fire drills in the waters off Fujian, the province adjacent to Taiwan Island. Air force spokesman Shen Jinke said on Sunday: “The air force has a strong will, full confidence and sufficient capability to defend the national sovereignty and territorial integrity.”

Xiaoyu Pu, associate professor of political science at the University of Nevada in Reno, said one possibility was that Pelosi could touch down on Taiwan “just for a short while” before proceeding to Japan and South Korea. If that happens, he predicted a strong military response from Beijing but not to the point of no return.

“You have to bear in mind that while China is putting tremendous pressure on the Biden administration to stop the trip, it is also hard for her to back down from this trip after the hype. There will be lots of domestic political pressures if the trip is cancelled, given the current anti-China atmosphere in the US,” Pu said.

“Xi [Jinping] and [Joe] Biden had certainly spoken on this issue on their recent call. Both sides must have talked about potential responses and consequences … Both sides shall leave some rooms for the preparation of their face-to-face meeting in November.”

In other words…

On Saturday, we reported that online flight trackers showed that a plane believed to be carrying Pelosi’s party had landed in Hawaii in the early hours of Saturday and stayed there for 16 hours. The plane then took off at 7pm local time (5am on Sunday GMT) heading towards Asia, about an hour before Pelosi’s statement was released.

Pelosi said they had a fuel stop in Hawaii where they also had a briefing from US Indo-Pacific Command leadership, as well as a visit to the Pearl Harbor Memorial and the USS Arizona.

Hu Xijin, former editor-in-chief of state-owned tabloid Global Times, posted on Weibo that Pelosi’s latest statement may have been an attempt to “reduce the provocative meaning of her visit to Taiwan”, but “as long as she lands in Taiwan, the Chinese side will not accept it”.  He added: “Now we must not be careless, and must continue to warn her loudly: do not go to Taiwan, there will be serious consequences.”

Biden last week said the Pentagon believes it is “not a good idea” for Pelosi to visit Taiwan at the moment.

In response to the latest developments, the South China Morning Post, Hong Kong’s newspaper of record since British colonial rule and currently controlled by Alibaba published an op-ed slamming Taiwan president Tsai Ing-wen, titled “Cowardly silence in Taipei as Pelosi plans trip“, in which the author slams the president writing that “aAt a moment of real danger, by staying quiet and letting Washington decide whether the US House speaker should visit as if the island has no say in the matter, President Tsai Ing-wen is turning Taiwan into America’s 51st state.”

“For Beijing, it’s sheer provocation. For Washington, it’s showing support to a friend. Of course, both countries have agendas quite at odds with the best interests of the Taiwanese.”

Still, when all is said and done, we still remain confident that World War 3 will not begin over the itinerary of the most infamous Congressional insider-trader. Still, US Congress is best known for its unfathomable stupidity and hubris, so keep a close eye on the plane’s current flight path which is available below:

Two years since the apocalyptic explosion seen around the world, Beirut’s grain silos – that were massively damaged in 2020 – have suddenly collapsed this morning, sparking a huge cloud of smoke and debris.

Everyone remembers the shocking images from August 5th 2020 as a massive blast, caused by an estimated 2,750 tons of ammonium nitrate stored in a warehouse at the port unsecured for years, killed over 200 individuals and injured more than 6000.

The devastation was almost total but several of the massive grain silos were left partially standing…

But, as of today, they are no longer standing.

Just In: #Beirut
A part of the Beirut port silos has collapse in the Beirut port, as seen in many videos recorded from the area.

Source {Salman Andary} pic.twitter.com/8LSUfvqHl9

— RawNews1st🎥📰 (@Raw_News1st) July 31, 2022

After reportedly burning for more than three weeks, part of Beirut port’s grain silos has collapsed.

The fires were caused by grain fermentation.

Firefighters and Lebanese Military troopers had been unable to extinguish the fire, which had been releasing odors into close by cities. Officials last week issued directives to residents living close to the port to remain indoors in well-ventilated areas.

🚨#BREAKING: Part of #Beirut port silos collapse, big cloud of smoke and dust seen in the area. pic.twitter.com/1ToQ1tvzsD

— Breaking News 24/7 (@Worldsource24) July 31, 2022

As of yet there are no reports that anybody was injured.

Developing…

Authored by Charles Hugh Smith via OfTwoMinds blog,

The problem for global corporations feasting on “Inflation” profiteering is that the vast majority of consumers can’t afford another lavish vacation, overpriced vehicle or specious subscription.

A funny thing seems to be happening within “Inflation”: companies are using “inflation” as cover for outrageous price increases that have little to do with actual inflation. Consider a water or electric utility that is directly impacted by rising costs of natural gas / oil. To stay solvent, the utility must pass along their higher energy costs to consumers. OK, we get it: higher input costs such as energy and shipping are passed along to the consumer.

But what about auto and property insurance? Exactly what input costs justify jacking up auto insurance by 14% or property insurance by 20%? Does insurance consume huge quantities of energy and is therefore exposed to higher fuel costs and container rates from Asia? No. Did higher energy costs trigger massive increases in auto or property claims? No.

Readers report getting huge increases in insurance coverage that are quickly rescinded once the reader called their agent and said they’re dropping the policies due to the crazy price increases: voila, the increases go away.

In other words, “Inflation” is an ideal cover for corporations, landlords, vendors, etc. to jack up prices and see if they stick. If unwary consumers just pay the new price, yowzah–instant increase in pure profit. Dropping the jacked-up prices when a few frugal customers complain is a small price to pay for the gravy train generated by consumers who passively accept every increase as “inflation” they can’t do anything about.

I’m also hearing of short-term vacation rentals doubling their daily fee overnight, resorts jacking up daily rates by 50% or more and other egregious examples of jacking up prices and seeing what sticks.

Maybe real input costs have risen 10% due to energy, healthcare, wages, etc., but this provides an excuse for raising prices 20% or more. “Inflation” is a great cover for rapacious profiteering.

The post-lockdown spending-spree of consumers going wild offered a golden opportunity for seeing what other skims and scams will stick. In what qualifies as a parody come to life, a luxury automaker is trying to turn seat-warmers into a monthly subscription.

If that sticks, why not make the engine a subscription, too? Did global corporations finally catch on to Big Tech’s gravy train of turning ownership into subscriptions?

The problem for global corporations feasting on “Inflation” profiteering is that the vast majority of consumers can’t afford another lavish vacation, overpriced vehicle or specious subscription. Their desperate desire to splurge has emptied their coffers, and so once the current splurge fades, there won’t be a secondary wave of splurging that will buy regardless of price.

Frugality will transition from an option to a necessity. And as that transition is reflected in plummeting demand, consumer “Inflation” will drop as tapped-out buyers go on strike–voluntarily or involuntarily.

*  *  *

My new book is now available at a 10% discount this month: When You Can’t Go On: Burnout, Reckoning and Renewal. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Stunning videos of a massive Chinese rocket that tumbled uncontrollably back to Earth were posted on social media late Saturday. 

On July 24, China’s Long March 5B rocket delivered the Wentian laboratory module to the new space station. The rocket’s 23-ton main stage had since been in an uncontrolled descent and reentered the Earth’s atmosphere over the Indian Ocean at around 2445 ET, the U.S. Space Command tweeted.

#USSPACECOM can confirm the People’s Republic of China (PRC) Long March 5B (CZ-5B) re-entered over the Indian Ocean at approx 10:45 am MDT on 7/30. We refer you to the #PRC for further details on the reentry’s technical aspects such as potential debris dispersal+ impact location.

— U.S. Space Command (@US_SpaceCom) July 30, 2022

“No other country leaves these 20-ton things in orbit to reenter in an uncontrolled way,” Jonathan McDowell, an astrophysicist at the Harvard-Smithsonian Center for Astrophysics, told CNN before the rocket burned up in the atmosphere. 

China’s handling of the botched re-entry drew criticism from NASA head Bill Nelson. 

“The People’s Republic of China did not share specific trajectory information as their Long March 5B rocket fell back to Earth. All spacefaring nations should follow established best practices, and do their part to share this type of information in advance to allow,” Nelson tweeted. 

The People’s Republic of China did not share specific trajectory information as their Long March 5B rocket fell back to Earth.

All spacefaring nations should follow established best practices, and do their part to share this type of information in advance to allow…

— Bill Nelson (@SenBillNelson) July 30, 2022

This is the third Long March 5B launch (we noted the other two here) where the core rocket has tumbled uncontrollably back to Earth. The first was in May 2020, when a Long March 5B deorbited and crashed into an African village. 

Reports of a 12-m-long object crashing into the village of Mahounou in Cote d’Ivoire. It’s directly on the CZ-5B reentry track, 2100 km downrange from the Space-Track reentry location. Possible that part of the stage could have sliced through the atmo that far (photo: Aminata24) pic.twitter.com/yMuyMFLfsv

— Jonathan McDowell (@planet4589) May 12, 2020

The second was one year later, in May 2021, when the rocket splashed down in the Indian Ocean. 

And now, rocket debris plunged into the Sulu Sea near the Philippines, according to Chinese spaceflight program via a notice on Chinese social media platform Weibo.

Here’s video of the rocket’s re-entry. 

Debris from #China‘s CZ-5B reentry spotted in Kuching, Malaysia. pic.twitter.com/loO5K3TQXm

— Doge (@IntelDoge) July 30, 2022

A video from Kuching of the #CZ5B core stage re-entry.pic.twitter.com/yXjINOiNyr

— ∆V (@DELTA_V) July 30, 2022

Location: #Kuching, #sarawak #Malaysia @ 12:50 AM. #CZ5B #LongMarch5B #LongMarch5BRocketBooster

🎥: Credit to respective owners pic.twitter.com/EQ8LuLZzOr

— Rahimanm (@rahimanm) July 31, 2022

“What we really want to know is did any pieces actually end up sitting on the ground,” McDowell said. “That may take a little while longer for the reports to filter back.”

One would think the Chinese would perfect an orderly re-entry of the rocket for the third time, but that doesn’t appear to be the case. Another Long March is scheduled for launch in a few months. So the world will go through another guessing game about where the rocket will land. 

By Jeffrey Jones of Gallup

President Joe Biden’s job approval rating has fallen below 40% for the first time and now sits at a personal low of 38%.

Between September and June, the president’s rating had ranged narrowly between 40% and 43%. Before that, Biden mostly received majority approval ratings.

A year ago, Biden’s honeymoon period came to an end when his approval rating dropped to 50% amid a surge in U.S. coronavirus cases. Since then, his public support has eroded after the chaotic U.S. withdrawal from Afghanistan, the highest inflation in four decades, record-high gas prices and continuing supply chain issues.

The July 5-26 Gallup survey finds 59% of Americans disapproving of the job Biden is doing, the highest for him to date. A follow-up question finds 45% of Americans strongly disapproving of Biden’s performance, compared with 13% who strongly approve.

Biden Sixth-Quarter Average Is Lowest for an Elected President

Biden’s sixth quarter in office, spanning April 20 through July 19, recently ended. During this time, an average of 40% of Americans approved of the job he was doing as president. No president elected to his first term has had a lower sixth-quarter average than Biden, although Jimmy Carter’s and Donald Trump’s ratings were only slightly better, at 42%. Barack Obama, Bill Clinton and Ronald Reagan also averaged below majority approval.

Like nearly every president since Dwight Eisenhower, Biden saw his job approval rating decline between his fifth (41%) and sixth quarters. Trump is one of the exceptions, as his sixth-quarter average of 42% was better than the 39% during his fifth quarter. As a result of these changes, the sixth quarter marks the first time Biden’s quarterly average has been lower than Trump’s was in the same quarter.

History suggests it would be unlikely for Biden’s approval rating to improve during his seventh quarter. To date, only one elected president — George H.W. Bush — has seen meaningful improvement in his seventh quarter. The increase reflected a rally in support for Bush after he condemned Iraq’s invasion of Kuwait, which eventually led to the U.S. and allies fighting the Gulf War against Iraq in early 1991.

Biden Support Among Democrats, Independents at Low Points

While Biden retains the support of the vast majority of Democrats, his 78% approval rating among his fellow partisans ties as the lowest for him to date, having previously descended to that level in December.

The 31% of independents approving of Biden is a new low for him, while Republican approval continues to be scarce.

Like his immediate predecessors, Trump and Obama, Biden is governing in an era of extreme political partisanship. In recent years, presidents have maintained relatively high approval throughout their terms from supporters of their own party while receiving minimal approval — usually in the single digits or teens — from those who identify with the opposition party.

Biden’s 78% job approval among Democrats nearly matches the low point for Trump among Republicans, 77% in December 2017. Obama’s low point among Democrats was 72% in October 2011.

Much of the variation in job approval for recent presidents has been tied to changes in independents’ evaluations of the chief executive. Biden’s 31% approval among independents matches the low for Obama, registered in December 2013 and March 2014. Trump’s support among independents fell to as low as 29%, in August 2017.

Vast Majority of Republicans Strongly Disapprove of Biden

For the first time in Biden’s presidency, Gallup asked Americans about the intensity of their views toward him. Republicans are most likely to hold strong opinions about Biden — nine in 10 do — and since most disapprove of the job he is doing, the result is 87% strong disapproval of Biden among Republicans.

In contrast to Republicans, 36% of Democrats have strong opinions about Biden. Thus, Democrats are much less likely to strongly approve of the job he is doing (30%) than to moderately approve (48%).

Slightly more than half of independents have strong opinions about how Biden is doing his job, with far more of these independents disapproving than approving. Consequently, the largest number of independents, 43%, strongly disapprove of the way Biden is doing his job.

Gallup has only periodically asked about intensity of job approval and disapproval, so it is unclear if a party group has ever held more strongly negative opinions of a president than Republicans now do of Biden. However, at least based on its limited measures, Gallup has never found a higher percentage than 87% of a party group strongly disapproving of a president.

In the six times Gallup asked about intensity of evaluations of Trump, between 75% and 83% of Democrats strongly disapproved. A high of 75% of Republicans strongly disapproved of Obama in the four times Gallup asked the question during his term. Eighty-one percent of Democrats strongly disapproved of George W. Bush in a November 2007 survey, the highest among 11 measures during his presidency.

Bottom Line

Biden has faced a number of challenges as president, and Americans have generally graded his work poorly for the past year, with his average approval rating as president now at 46%. Currently, his public support is the lowest it has been to date.

Democrats were already facing a tough environment in this fall’s midterms as they seek to retain their narrow majorities in the U.S. House of Representatives and Senate. Biden’s now weaker approval makes their odds of doing so even steeper. Democrats are hoping that backlash against the Supreme Court’s recent conservative rulings on abortion, gun control and environmental protection may neutralize some of the advantages GOP candidates could get from Democrats holding power at a time when Americans are dissatisfied with the direction of the country.

It was one of the most dramatic weeks ever for Italian politics, with Mario Draghi resigning after The League, Forza Italia (FI) and the Five Star Movement (M5S) made it clear that they did not want to continue supporting the government coalition. President Mattarella dissolved the parliament and the next elections are set for 25 September, in just over two months’ time.

What happens next?

Well, as Mish Shedlock writes, Italian polls are often unreliable, but the results shown below are unusually clear and stable.

Political Parties

September Election Triggered

The September election was triggered when the Five-Star Movement (M5S) refused to support Prime Minister Mario Draghi, in Parliament. Draghi is a compromise technocrat rather than an elected leader. 

Italy’s president, Sergio Mattarella, asked Draghi to reconsider his resignation, but Draghi refused, triggering elections.  The Italian president is largely a political figurehead except in matters like these.

Insurmountable Lead

A 46.2 to 34.3 lead is insurmountable by Italian election rules. Bloomberg reports Italy’s Right Has an Orban-Style Super Majority Within Reach

An alliance led by Giorgia Meloni’s far-right Brothers of Italy, which includes Matteo Salvini’s League and Silvio Berlusconi’s Forza Italia, has a wide lead in opinion polls ahead of the September 25 general election. If other forces are divided, this might lead close to a two-thirds majority in both houses of parliament, according to an analysis by Youtrend/CattaneoZanetto & Co.

This result would see the right score similarly to Hungarian leader Viktor Orban, who won a large majority in 2010. But reaching a two-third majority would be difficult for the coalition and the study’s main scenario is for a right-wing coalition falling short of the two-thirds threshold.

Achieving a broad majority large enough to change the constitution would be unprecedented in Italy’s recent history and could have a profound impact on the country’s political system.

All three leaders of the right-wing alliance have called in the past for the president to be directly elected by Italian voters, instead of by lawmakers and regional representatives as is currently the case. This would require changing the constitution.

The right-wing bloc could get as many as 271 seats out of 400 in the lower house, and 131 out of 200 in the Senate. That’s in a scenario in which the center-left Democratic Party doesn’t ally with the populist Five Star Movement, or with groups such as Matteo Renzi’s Italy Alive. This scenario doesn’t take into account six senators appointed for life.

The survey maps a recent Quorum/YouTrend poll to recently-redrawn electoral districts. It highlights up to 67 swing seats in the lower house and Senate, which could prove decisive in turning a right-wing majority at the ballot box into a landslide victory in parliament.

Supermajority Math is Close

• 271 / 400 = 67.75 Percent 
• 131 / 200 = 65.55 Percent

These numbers are close enough to make a super-majority very plausible. 

Populists at the Gate

ForeignPolicy Magazine reports Populists at the Gates.

With Mario Draghi on his way out, Europe braces for the most radical right-wing government in Italy’s republican history.

Polls suggest that the post-fascist Brothers of Italy party has a good chance to come out on top in a general election slated for the end of September, with its leader, Giorgia Meloni, close to becoming Italy’s first far-right (and first female) leader since the end of World War II.

And she’s not alone. Meloni is running as part of an alliance with Matteo Salvini, the leader of the far-right League, and Silvio Berlusconi, the former prime minister and head of the conservative Forza Italia; the combined right-wing front is expected to snag about 45 percent of the vote—enough to secure a comfortable majority of seats in Parliament.

The prospect of a hard-right government in Rome with strong populist and Euroskeptic undertones comes as EU leaders seek to maintain cohesion of the 27-nation bloc, coordinate their response to the ongoing Russian invasion of Ukraine, deal with a looming energy crisis caused by Moscow, and tackle skyrocketing inflation.

The uncertainty over how exactly Italy’s right-wing coalition would position itself on all those issues has many in Brussels worried, said Arturo Varvelli of the European Council on Foreign Relations (ECFR). “There is great sorrow over the loss of Mario Draghi,” he said.

Brussels has already been dealing with right-wing governments in Budapest and Warsaw that have challenged the bloc’s legitimacy and sparked increasingly bitter showdowns over the judiciary, rights, and democracy. Meloni, while rejecting the far-right label, seems birds of a feather with the Hungarian and Polish leaders. Her party has strong links with Italy’s post-fascist tradition, and her views include securing borders against “mass immigration,” defending Europe’s “Christian roots,” and battling the “LGBT lobby.” Meloni also wants the EU to stop interfering with the “sovereignty of the peoples” and has sided with Poland and Hungary in their ongoing row with Brussels over their democratic backsliding. Salvini has long railed against “Brussels bureaucrats,” while Berlusconi famously shocked the European Parliament when, in the middle of a plenary, he suggested that its future president, Martin Schulz, was fit for a movie role as a Nazi death camp guard.

Forza Italia has pledged to raise pensions, while the League has promised an early retirement scheme and a wide tax amnesty.

Huge Political and Economic Considerations

This setup has huge political and economic potential consequences.

With a super-majority the upcoming government could change the constitution. This could also mean a change towards how the president is picked or even leaving the Eurozone. A Eurozone breakup would be catastrophic for the Euro and even worse for the Italian Lira fallback.

Alternatively, threats from Italy could push Germany into supporting debt comingling. But that would require a change in the German Constitution. At a minimum, a government led by Giorgia Meloni will be another big thorn in the side of the EU.

At the expected percentages, this government rates to be very stable, an unusual setup for Italy.

Draghi 2012 Flashback

Mario Draghi’s famous speech as prior head of the ECB is back in play.

“Within our mandate, the ECB is ready do whatever it takes to preserve the Euro. And believe me it will be enough,” said Draghi as ECB head.

Q: What did he do?
A: Nothing

The statement alone was all it took to end the peripheral eurozone bond crisis. Bond yields in Greece, Italy, Portugal, and Spain crashed.

“Super Draghi”, as he was soon called, is super no more.

Statements alone will not work this time. Greece and Italy are orders of magnitude different in importance. So, what will ECB president Christine Lagarde do for an encore?

Market reaction

For a look at how markets could react we go to a note from SocGen’s Jorge Garayo titled appropriately “‘La dolce vita’ was good while it lasted”, in which he writes that “for outsiders like us, Italian politics never fail to surprise. M5S is probably the least prepared for the upcoming election, with lots of internal divisions and its lowest vote intention figures on record. Salvini’s League has also been on a downward trend and is far from the popularity it enjoyed in late 2019. By contrast, the opposition BoI (Brothers of Italy, led by Meloni) has had a meteoric rise and is neck and neck with Letta’s PD (Democratic Party) at the top of voting intention polls. Two months can be a long time in Italian politics, but current polls point to victory for the right-wing bloc (BoI, League and FI) with  45% of the votes and BoI holding the largest portion of that.

Markets do not like BoI’s historical position on public deficits and immigration policy, nor its clashes with the EU on the supremacy of Italian law over EU law. The League has also historically been critical of the EU, although it recently relaxed its rhetoric and even set aside its historical pro-Russian stance. Unless there is a softening of BoI’s stance, markets will be worried at the prospects of an ‘Italy first’ attitude from the new government, especially if it means higher deficits and listening less to the reform agenda proposed by the EU.”

Any model for BTP-Bund spreads should incorporate a dummy variable for ‘political stress’; otherwise, it is impossible to explain widening episodes like in 2018 or 2016. But even without politics, BTP-Bund spreads should be wider than today’s levels. The ECB intends to push rates decisively higher, and the outlook for global credit spreads is quickly deteriorating. In our models, these inputs justify 10y BTP-Bund in the 270-300bp range by the end of the year. Add political stress and a worsening of the Russian gas situation (which accounts for 12% of Italy’s total energy consumption) and we could go to much wider spreads. A collapse in growth at a time of rising interest rates will bring the spectre of debt sustainability to the fore, with debt levels likely to rise. A fiscal response to such a crisis would likely mean higher deficits, and any perception that Italy might find it difficult to get NGEU disbursements could add to this pressure (even if funding needs this year are lower than we initially projected).

Given the proximity of new elections, we could see a quicker widening of BTP spreads and more risk aversion from non-domestics in the summer months. BTPs have enjoyed ‘la dolce vita’ since the summer of 2020, with low yields and low spread vol. The arrival of NGEU and the arrival of Mario Draghi were certainly important, but implementing reforms was never going to be easy. The uncertainty of the election outcome makes things more difficult and could keep investors at bay. Admittedly, the ECB could fight against a rapid widening of spreads. While PEPP reinvestments may find their way to BTP purchases as a first line of defence, we don’t think they will be enough to contain spreads at current levels.

The possibility of activating the newly minted ‘TPI’ does not appear to be imminent (did anybody really buy into the ECB being prepared to deploy this?), so we are happy to recommend shorts in 10y BTP-Bund with the spread below 260-270bp (at 227bp currently).