Month: July 2024

Authored by Salena Zito via RealClearPolitics,

ERIE, Pennsylvania — Despite 40,000 people leaving this city since 1970 (10,000 of them between 2000 and 2016) and having the unfortunate distinction of being the home of the poorest zip code in the state – “ride or die” Erie residents, especially young people who have left for better opportunities only to come back to raise their families here, are a real thing.

They are reshaping the way the city moves and shakes as well as its politics, in what is perhaps not just the most important county in Pennsylvania in determining who will be the next president – but arguably the most important county in the country.

It is a city and county in economic flux, situated halfway between New York City and Chicago along one of the Great Lakes. It has two major interstates, a massive port, and access to robust freight and passenger railroad service. Once a powerhouse of heavy industry, Erie is in the process of remaking itself as the center of “Eds and Meds” (universities and world-renowned hospitals), light manufacturing, and tourism.

Yet the collective memory of what they used to do here is a palpable undercurrent – especially among union workers who, for generations, called Erie’s sprawling 340-acre General Electric locomotive plant their second home. The slow erosion of the good-paying jobs that employed 25,000 in the 60s and dwindled to the current 3,000 has taken its toll emotionally as well as politically.

Still, the people here have been in Erie for generations – often living in close proximity to parents and grandparents, aunts and uncles, cousins, and childhood friends who they believe make their lives richer because of that multi-generational influence.

Erie, which will surprise everyone who has never been here, is the home of one of the most beautiful beaches in the country, located along the shores of popular Presque Isle State Park. The city is lined with 13 miles of bike trails and seven miles of sandy beaches and boasts the state’s only seashore.

For blue-collar residents of western Pennsylvania, eastern Ohio, and the panhandle of West Virginia, Erie is their “Jersey Shore,” complete with the same amenities of camping, seashore cabins, an amusement park along the beaches, and of course, dozens of diners.

The voters here are important. Very important, as Sen. John Fetterman told me in an interview. Every statewide election in Pennsylvania comes down to what Erie voters decide to do.

Once a solid county for Democrats in statewide gubernatorial elections as well as federal elections for president, U.S. Senate, and Congress, Erie shocked the world when the county went from supporting President Obama by a whopping 16 percentage points in 2012 to supporting Donald Trump in 2016 by 40,000 votes.

Four years later, Biden would win the county by roughly the same amount; in between, Democrats Josh Shapiro and John Fetterman would also win the county for governor and U.S. Senate, and a Republican won the county executive’s race for the first time in decades.

In short – win Erie, you win the state. The question is, going into the presidential election, who is winning the hearts and minds of Erie’s swing voters? Because where they go and what is on their minds heading into the election will tell us not just how Pennsylvania is doing, but also how states like Michigan, Wisconsin, Nevada, and Arizona might go, states that are a little less Democratic than the Keystone State.

At Gordon’s butcher shop, owner Kyle Bohrer is sitting with several swing voters who have voted for Trump, Biden, and third-party candidates, and who, with the exception of one voter – his own father – are all fatigued with both Biden and Trump.

Bohrer, 43, is a diamond in the rough – and the kind of outside-the-box thinker that cities like Erie need by the thousands. A fourth-generation Erie resident, he has owned one of Unishippers franchises, a logistics company that, as he says, keeps the family’s lights on.

In 2019, he decided to purchase a meat market called Gordon’s Butcher and Market, a 2,000-square-foot iconic local store that had been in business for 50 years, but was in decline. He bought it, he says, purely on sentiment.

Bohrer went all in, and today the business rivals the top-of-the-line meat markets seen across the country. There is also a spectacular restaurant called Firestone, a bar, a six-pack section stacked with craft beer, and an upscale wine store – all located in one high-end building.

A true homer, Bohrer never left Erie despite the city’s decay, instead throwing his energy into creating a cultural touchstone. The father of three loves bringing people together at his restaurant, even those who hold wildly different political viewpoints.

“I think it is important to be able to have discussions like this, and I think perhaps places like New York or D.C. or Los Angeles think we cannot because they cannot, but look at us here, we all come at this from different political views and we can discuss it, laugh at it and move on,” he said.

Bohrer is center-right; his worldview is moderate and pragmatic, but because he owns a business, he declines to voice whom he supports. Scott Carnes, seated to his left – physically and politically – is more than happy to.

The civil engineer, also 43, is married and the father of two young daughters ages 2 and 5; Carnes grew up in Erie, left for western New York for 10 years, then lived in Pittsburgh for 12 years until he and his wife and family moved back here last year.

“My wife got a job at Erie Insurance and I was able to work remote, which gave us the ability to move, so we came back,” explained Carnes. He says he has voted Democrat all of his life, “The most important issue to me is the economy, an issue ironically that puts me more in line with the Republicans,” he said. But the Biden-Trump debate took its toll.

“I am hoping Biden drops out. I think he’s absolutely going to lose if he stays in. He’s clearly too old to be running the country in my opinion,” he said. Yet if Biden stays in, he would still vote for him: “That is how much I despise Trump.”

Jacqueline Williams is a CPA and small business owner, born and raised in Erie. Williams left here to attend college and then moved to Pittsburgh to start her career before returning with her husband Adam, who is sitting beside her, to raise their family.

The striking mother of a teenager and a 7-year-old said she and her husband run a tax strategy business. “We try to help small business owners save as much as possible on their taxes, legally. And so, the way that the future government goes about changing what was enacted is important to me,” she explained.

One of her biggest concerns heading into the election is Biden’s insistence that he will end the Trump tax breaks for family incomes above $400,000. “So that is definitely going to have an impact on small business owners. The tax brackets are shrinking. They were wider before. Right now, we’re in lower marginal tax brackets, so we’re going to be going into higher ones more quickly, with that change,” she told me.

Williams says if the Trump tax breaks end, then bonus depreciation, which she said is already declining, goes away.

“Which is an incentive to invest in your business,” injects Adam, an attorney.

William says we’re working through a time where we want small business owners to create more opportunities, “And when you take away the tax breaks, that’s harder for them to do,” she explains, adding that it can lead to a snowball effect with small businesses either closing, not investing in their businesses, laying workers off, or not hiring at all.

“It becomes an overall negative, not just for our clients but for my entire community,” she said.  

Williams, 40, has always been a Republican. She voted for Trump in 2016 and voted third party in 2020, and even though she thinks both Trump and Biden are too old, because of the tax implications, she says she will vote for Trump.

Her husband says he will not.

Like Kyle Bohrer, Adam says he and his wife came home to make a difference. “We wanted to have an impact. My belief was, you would be able to look back on the timeline of Erie, and see what we’ve done, and say, ‘We are in the position that we’re in, partially because of the work that those people did.’”

He added, laughing, “So, yeah, that’s a little meta.”

Adam explains that what he loves best about Erie depends on the day. “The name of our law firm is Rust Belt Business Law. We changed the name a few years ago. And the whole idea is, if I wanted my life to be easy, I would go and start a business law firm in Miami, or Silicon Valley, or New York, or Chicago, or you name it,” he said, naming big cities with people with more money to spend.

“The thought was, there are values that this region holds that aren’t held in other places. And you talked about it with understanding. But I think it’s work ethic … I think it’s culture. And our clients are business owners that reflect the values and culture of where they were raised, and how they were raised and we really buy into those values … We believe that all else being equal, hard work will prevail over waiting for something to happen,” he said.

As for this election, he’s leaning toward one of the independent candidates. “Because I am not inspired,” he said. “I’m voting for what I believe in. So many people treat politics like sports, and they’ve got to be part of the winning team. Well, for me, it’s more about what really matters to me. And I believe I would be out of integrity with myself if I voted for either of the two front runners.”

Joe Bohrer is Kyle’s father. A tool and die maker born and raised in Erie, he’s never left to live elsewhere. Joe started his political awareness as a Democrat and began moving away from the party with each election.

“By the time Reagan came along, I was a full Republican,” he said.

Joe is all-in for Trump. He longs for a time when the dignity of work mattered, not just locally, but in the national conversation about hard work. Inflation is his top concern – he says high prices are hurting him.

“I can kind of blame Republicans and Democrats with their spending. So, the more money you spend that you don’t have, it has to diminish buying power. Because there’s not any more goods, but you have more money to spend on goods that aren’t being produced. Especially coming off of COVID,” he said.

He does not understand why Biden doesn’t embrace talking directly to the middle class about inflation. He doesn’t understand his shouting, either.

“It used to be Democrats, I felt, were anti-establishment,” he said. “Now I feel like it’s the opposite. They are establishment.”

For more than two hours, they all discussed their love of their community and how they could better impact it, all within the framework of having very different political worldviews.

Kyle Bohrer says he understands Erie is going to be ground zero for the election – not just for the state but for the entire country. “That is a lot of pressure for voters. I think the candidate who shows they understand the concerns here will translate to other cities and towns like ours and resonate.”

Until then, Bohrer says, “Buckle your seatbelts, Erie, it’s going to be a bumpy ride.”

Salena Zito is a reporter for the Washington Examiner, Wall Street Journal contributor, and co-author of “The Great Revolt: Inside the Populist Coalition Reshaping American Politics.”

Uranium mining stocks soared on Wednesday after a surprise hike in extraction taxes in Kazakhstan, the world’s largest uranium-producing country, which BMO Capital Markets said will limit future supply growth.

As Interfax first reported, the government in Kazakhstan introduced a new Mineral Extraction Tax (MET) for uranium, replacing the existing 6% flat rate MET introduced in 2023.

Per the new code, the new MET rate is to increase to 9% from 6% in 2025. However, the biggest change is from 2026 onwards where the Government has introduced a two-tier MET, calculated based on production output and spot uranium prices (see the table below).

According to BMO analyst Alexander Pearce, the new mineral extraction tax “is a surprise given it was increased in 2023.” He also notes that “the new rates are not marginal, thus the new MET penalizes large mining assets with potential MET of up to 20.5% (18% for anything over 4ktU, or ~10.4Mlb U3O8, plus an additional 2.5% if the uranium price is >US$110/lb).

Pearce calculates the potential impact to cash flow and concludes that the new MET could impact Kazatomprom’s NPV10% by 5-10% and 2025 EBITDA by up to 5%, and that “from 2026 onwards the EBITDA impact could be ~8-12%.”

More significantly, however, he warns that the new rates “appear to provide less incentive for Kazatomprom to increase production, in our view, with less penalty for higher uranium prices than production, which could add to support for the uranium price.”

The bottom line is that “with rates as high as 18% linked to production (from 6%) and additional 2.5% linked to uranium prices, there would now appear to be less incentive to increase production in future year” and “while this could have as much as a 5-12% impact to future cash flow, increasing uncertainty over future supply could drive higher uranium prices“

As news of the new tax spread across markets, the top-performing stocks in the S&P/TSX Composite Index on Wednesday are all uranium miners, led by NexGen Energy +6.8%, Denison Mines +6.8% and Cameco +6.6%. US-trader uranium stocks were also all sharply higher, with names such as CCJ, UEC, URA and URNM all soaring.

 

Authored by Michael Lebowtiz via RealInvestmentAdvice.com,

As quoted below from an executive summary of a joint report by the Department of Treasury and the Office of Management and Budget (OMB), the current deficit policy is deemed unsustainable. However, they fail to mention how long the Fed, via fiscal dominance, can sustain the unsustainable.

“The debt-to-GDP ratio was approximately 97 percent at the end of FY 2023. Under current policy and based on this report’s assumptions, it is projected to reach 531 percent by 2098. The projected continuous rise of the debt-to-GDP ratio indicates that current policy is unsustainable.” – Financial Report of the United States Government  -February 2024.

Fed speakers will deny any notion that its monetary policy aims in part to help the government fund her debts. Regardless of what they say, we are already in an age of fiscal dominance. Monetary policy must consider the nation’s debt situation.  

Fiscal Dominance

Fiscal dominance is a condition whereby the amount of debt in an economy reaches a point where monetary policy actions must allow Federal debts and deficits to be serviced and funded cost-effectively. By default, such monetary policy decisions will often come at the expense of traditional employment and price goals. As a result, the Fed must further distort the price of money and ultimately lessen the wealth of the nation’s citizens.

The age of fiscal dominance is here. Consider the following paragraphs and graph from our article Stimulus Today Costs Dearly Tomorrow.

A lender or investor should never accept a yield below the inflation rate. If they do, the loan or investment will reduce their purchasing power.

Regardless of what should happen in an economics classroom, the Fed has forced a negative real rate regime upon lenders and investors for the better part of the last 20+ years. The graph below shows the real Fed Funds rate (black). This is Fed Funds less CPI. The gray area shows the percentage of time over running five-year periods that real Fed Funds were negative. Negative real Fed Funds have become the rule, not the exception.

Soaring Debt Outstanding and Rising Rates

The government has added $2.5 trillion in debt over the last four quarters. Of that, over $1 trillion was to pay its interest expenses on the entire debt stock. Despite recent high interest rates, the average interest rate on the debt is still relatively low at 3.06%.

The two graphs below show why a relatively minimal uptick in the average interest rate on the debt is so troublesome. The federal debt (blue) has grown by 8.5% annually over the last ten years. Despite the amount of debt more than doubling over the period, the interest expense on the debt until very recently has remained very low. The first graph shows that the average interest rate increase is barely visible.

However, the second graph shows that the rise in the government’s interest expenses is substantial.

As debt issued years ago with low interest rates matures and new debt with higher interest rates replaces it, the interest expense will keep rising. For context, if we assume the government’s average interest rate is 4.75%, likely close to their weighted average rate on recent debt issuance, the interest expense will rise to $1.65 trillion, not including new debt.

$1.65 trillion is over $300 billion above the government’s next largest expenditure, Social Security. Furthermore, it is double defense spending for 2023. The annual federal deficit has only been above $1.65 trillion twice (2020 and 2021) since its founding in 1776.

While the situation may sound gloomy, lower interest rates solve the problem. If interest rates return to the levels existing before 2022, the interest expense could easily fall below $700 billion, about half of the cost than if rates remain at current levels.

Therefore, interest rates will have to be kept in check by the Fed.

The Fed Understands Their Role

In 2008, Ben Bernanke said QE was a temporary measure that would be reversed once the economy and markets returned to normal. Trillions worth of Treasury purchases later, and the Fed now tells us it’s permanent. Consider the following graph and paragraph by the New York Fed.

“Under the two purely illustrative scenarios, the size of the SOMA portfolio continues to decline to $6.5 trillion and $6.0 trillion, respectively. The portfolio size then remains steady for roughly one year before increasing to keep pace with growth of demand for Federal Reserve liabilities, reaching $9.2 trillion and $8.4 trillion, respectively, by the end of the forecast horizon in 2033.”

The SOMA portfolio is the Fed’s System Open Market Account Holdings. This is the portfolio that holds bonds purchased via QE as well as its other monetary operations.

The graph on the left shows that the Fed expects the SOMA account to rise by about 40% starting in later 2024 through 2032. More importantly, the graph on the right shows that its increase will be commensurate with GDP. In other words, the Fed will continue to help fund the deficit by buying Treasury debt.

Monetary Policy

We know how QE and lower interest rates cut interest expenses, allowing the government to spend recklessly. However, there are other ways the Fed can supplement their efforts if needed. For instance, in our daily Market Commentary from April 24th, we shared the following:

If enacted, the new bank rules would force all banks to “preposition billions more in collateral” at the Fed to support future discount window borrowing. The article estimates that the Fed would require collateral matching up to 40% of a bank’s uninsured deposits, accounting for about 45% of the $17.5 trillion commercial bank deposits. Further, the new rules would require the banks to borrow from the window numerous times a year to help remove the program’s stigma.

In addition to bolstering the banking safety net, it would also force banks to hold significant collateral balances at the Fed. Collateral for Fed loans is quite often U.S. Treasury securities. Accordingly, this new bank rule is another way to help the Treasury fund its massive deficits and stock of outstanding debt from years past.

In late March, we shared another idea floating around Wall Street. Per our article QE By A Different Name Is Still QE we wrote:

Rumor has it that the regulators could eliminate leverage requirements for the GSIBs. Doing so would infinitely expand their capacity to own Treasury securities. That may sound like a perfect solution, but there are two problems: the banks must be able to fund the Treasury assets and avoid losing money on them.  

The bank bailout BTFP enacted in March 2023 addresses the problems. As we wrote:

In a new scheme, bank regulators could eliminate the need for GSIBs to hold capital against Treasury securities while the Fed reenacts some version of BTFP. Under such a regime, the banks could buy Treasury notes and fund them via the BTFP. If the borrowing rate is less than the bond yield, they make money and, therefore, should be very willing to participate, as there is potentially no downside.

Summary

With the Fed willingly helping the government fund her debts, we believe the odds are small that any significant deficit reduction is possible. While the path is unsustainable, it is likely much longer than most pundits appreciate.

However, fiscal dominance comes with a significant cost. The Fed fuels the widening wealth gap by manipulating interest rates and indirectly influencing the stock market. As we have seen glimpses over the last five years, social unrest will likely become more prevalent. With that comes poor economic confidence from consumers and businesses, which in turn generates a headwind to the economy.

It’s not too late to try and fix our fiscal problems, but time is ticking. As the saying goes, Rule #1 of holes: when you are in one, the first thing to do is stop digging.

Authored by Jonathan Turley,

Months ago, I wrote a column about how Democrats have continued to try to block voters from being able to vote for candidates while claiming the mantle of the defenders of Democracy. This effort not only included Democratic Secretaries of State attempting to remove former president Donald Trump from the ballots, but efforts in the primary from the ballot. Many of these Democrats now calling for a “blitz primary” previously said nothing as voters were barred from having a choice in the primary.

Now, in North Carolina, Democrats are seeking to bar third-party candidates from the general election . . . all in the name of perfecting democracy.

The Democratically controlled North Carolina’s Board of Elections voted against giving ballot access to new parties supporting presidential candidates Robert F. Kennedy Jr. and Cornel West. 

All three Democrats (Alan Hirsch, Jefferson Carmon, and Siobhan Millen) voted to prevent voters from being able to vote for Kennedy and West, though the decision will have to be reconsidered. Yet, even if reversed, they are preserving uncertainty as to whether they will be viable candidates in the minds of voters.

The excuses for this action are superficial and manufactured.

Chairman Alan Hirsch insisted that their organizations were “problematic” in how they gathered signatures and how Republicans may be supporting their efforts to allegedly “take away votes from Joe Biden.”

They also said that they were concerned that the third-party candidates were using the new party rules to gain an easier path to ballots. That is a bizarre objection. They are opting for the best approach under the existing rules. It seems openly partisan for these three Democrats to suddenly raise concerns over the existing rules when it could harm Joe Biden or the Democratic Party.

Yet, Democratic commissioner Siobhan Millen worked hard to rationalize what is a raw political muscle play to prevent voters from having a choice:

“If this board keeps rubber-stamping thinly veiled so-called parties, national operatives are going to continue to come in and keep manipulating our system. Allowing unaffiliated candidates to follow the more lenient new-party rules is allowing a blind eye to partisan mischief, potentially.”

If Millen wants to see partisan mischief, she does not have to look far. She and her colleagues are engaging in precisely such mischief to deny voters choices this election to try to bolster the chances of Biden in a swing state.

Democrats continue to claim to defend Democracy while resisting democratic choice and abusing the legal process. This glaring disconnect was evident when President Joe Biden spoke on the top of the Point-du-Hoc in Normandy on the 80th anniversary of D-Day. Biden again used the event to suggest that democracy was in danger in the United States with the upcoming election.

Yet, Biden has overseen widespread government censorship with federal agencies targeting those with opposing views on everything from elections and climate change to COVID-19 and transgender policies.

As Democratic secretaries of state sought to bar Trump from ballots, Biden refused to oppose the efforts. When liberal law professors and members demanded to pack the Supreme Court to guarantee a liberal majority, Biden refused to denounce it during the last campaign.

This is why some in the country may view Biden and the Democrats as existential threats not just to Democracy, but to themselves. They see a party that is engaged in efforts to cleanse ballots (of Republicans), censor dissenting voices and prosecute political opponents.

The effort in North Carolina continues this hypocritical and cynical narrative. These three Democratic board members just voted to prevent their fellow citizens from being able to cast votes for third-party candidates who are attracting increasing support among disgruntled voters.

By Peter Earle of the American Institute of Economic Research

Since the start of 2024, numerous well-known restaurant chains have announced sizable closures and incrementally more drastic restructuring efforts.

TGI Fridays has closed numerous locations across the US and sold eight corporate-owned locations to strengthen their franchise model and close underperforming stores. Denny’s shut down 57 restaurants in 2023 and announced additional closures for 2024 due to inflationary pressures. Boston Market drastically reduced its number of restaurants from around 300 to just 27 by March 2024, driven by landlord evictions, unpaid bills, and state shutdowns due to unpaid sales taxes. Mod Pizza abruptly closed 27 locations across the US, including five in California, just before the new minimum wage law took effect. Also suddenly, Coco’s Bakery and Carrows chains closed 75 locations, leading to a federal lawsuit by former employees due to the lack of notice provided for the layoffs. PDQ, a regional restaurant chain, closed eight restaurants across North and South Carolina in February 2024 due to market conditions. Outback Steakhouse’s parent company, Bloomin’ Brands, announced the shuttering of 41 locations of Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill in February 2024 as part of a major financial restructuring. Subway has been undergoing a massive drawdown, closing over 400 underperforming locations since last year alone. And Applebee’s has been selectively closing locations since the start of 2024, focusing on optimizing its restaurant portfolio by shutting down low-revenue stores.

In 2024, Buffalo Wild Wing will eliminate sixty locations in the United States. IHOP (International House of Pancakes) will wind down 100 locations. Other firms eliminating locations include Pizza Hut, Red Lobster, Hooters, and Chili’s. A handful of others may close down entirely. 

COVID lockdowns significantly weakened chain restaurants by drastically reducing their customer base and revenue streams. This disruption made it difficult for many restaurants to sustain operations, some of which took on more debt in the face of depleted financial reserves. At the start of 2024, FSR (Full Service Restaurant) Magazine summarized:

Another after-shock of COVID was the debt pile. Going back to August 2020, the James Beard Foundation released survey data that suggested only 66 percent of independent bars and restaurants expected to survive the fall season without direct aid. Frothing to the top of this fear was the fact that close to 75 percent reported taking on new debt obligations north of $50,000. Moreso, 12 percent tagged the number at $500,000 and above. Growing debt, and the deterioration in operating performance required to service it, forced heightened levels of investor and debt-holder concern and oversight[.] … This increased debt between 2019 and the last 12 months 2020 by 8.1 percent for limited-service units and 15.7 percent for full-serves. The former, by the fall, sat at more than four times as much debt, while full service was at nearly 50 percent more than 2008 levels … [In] the current environment … 68 percent of full-service restaurants reported carrying some amount of debt. On average, it was $51,863.20 — a number that could creep up as interest rates continue to rise.

FSR continues:

“If debt is a piece of the profit puzzle, food costs are another. In fact, they appear to be an even bigger, more widespread concern … than the year before. This year, 58 percent of operators in the survey said rising inventory costs was their No. 1 source of financial strain, up from 54 percent in 2022.”

The total and annual percentage changes in the index prices of six key ingredients of restaurant and diner menu items, from 2010 to 2020 and then from 2021 to the present, are shown below; in most cases, over the last three years prices have risen at multiples of their annual increases over the prior decade.

Since January 2021, core CPI has risen just over 17 percent, while food-away-from-home prices have risen over 22 percent. 

Core CPI (blue) vs. CPI Food Away From Home (black), 2014 – 2024

Those higher prices have translated to falling foot traffic. As costs of living have risen and pandemic savings have dissipated, eating outside the home has become more costly. Where meals continue to be purchased, order sizes are falling or cheaper items purchased. A small handful of massive firms with tremendous economies of scale are experimenting with lower priced options, but most eateries have cost structures which preclude similarly priced offerings. In fact, some franchisees of those huge restaurant chains are claiming that the depth of those discounts is financially untenable for them. 

Recent data highlights a decline in restaurant visits, with several factors contributing to this trend. A report from Bar and Restaurant points out that many top revenue-generating restaurants experienced significant year-over-year declines in customer traffic in late 2023 and early 2024, with a further pronounced drop in January 2024. This decline is attributed to consumers curtailing their restaurant expenditures and opting for more cost-effective alternatives, such as cooking more meals at home due to high menu prices driven by inflation and wage increases​. (This is also behind recently emerging controversies over tipping quantities and imperatives.)

Similarly, Produce Blue Book reports that same-store sales growth for restaurants was negative in February 2024, marking the worst-performing month since February 2021. Despite a slight improvement in sales growth compared to January, the data suggests that consumers are pulling back on restaurant visits and spending due to financial pressures such as growing credit card balances, high interest rates, and inflation. The expected slowdown in restaurant sales is attributed to these economic factors, which are leading consumers to moderate their restaurant consumption​​. Additionally, QSR Magazine notes that US traffic for limited-service chains fell by 3.5 percent year-over-year in the first quarter of 2024, further illustrating the challenges faced by the restaurant industry in attracting customers​

More recently, atop the compounded challenges of inflation and falling consumer demand are substantial jumps in state minimum wages. Since the start of 2024, more than half of all US states have, or planned to, to raise minimum wages:

*California’s minimum wage, which rose to $16.00 on January 1st, increased again on April 1st, after which all fast food restaurant employees covered by the new law must be paid at least $20.00 per hour.

On July 1, Nevada and Oregon raised their minimum wages to $12 per hour while Washington DC increased theirs from $17 to $17.50 per hour for non-tipped workers and from $8 to $10 per hour for tipped workers. Florida’s minimum wage will rise to $13 per hour on September 30. 

For traditional restaurants, profit margins are generally low, typically ranging between 3 to 5 percent, while in the fast food industry, profit margins are comparatively higher, generally lying between 5 and 8 percent. Estimating the impact of a minimum wage increase on the profitability of these establishments requires a nuanced understanding of their current profit margins and cost structures. Given these average profit margins, labor costs are a major expense, significantly affecting profitability. Any increase in the minimum wage substantially raises costs, squeezing the already narrow profit margins. For traditional restaurants with lower margins, even a small increase in labor costs could result in operations becoming unprofitable if prices aren’t adjusted accordingly or if cost-saving measures aren’t effectively implemented. Even before the substantial rise in wages and the slowing disinflation of the first quarter of 2024, food service industry strains were mounting. 

According to the National Restaurant Association (NRA) Restaurant Business Conditions Survey, nearly all full-service restaurant owners — 92 percent — consider rising food costs a significant challenge. Increased labor costs are not far behind at 90 percent, and 67 percent percent say utilities present a significant challenge. But they’re also spending more on the same things you’re spending more on — dishwasher detergent, hand soap, paper products, linens, laundry services, plates, silverware, and on and on.

A little over two-and-a-half years ago, I wrote about the breakdown of the NYC Pizza Principle as prices began to rise. Restaurants nationwide are now grappling with a financial maelstrom including rising prices, higher minimum wages, falling sales, and in many cases higher debt costs. The health of the industry is summed up by comparing the stability of the National Restaurant Association Performance Index from 2010 through the pandemic with its trajectory since 2021, as the general price level hit four decade highs – and remains elevated to this day.

National Restaurant Association Restaurant Performance Index, 2010 – present

The cumulative impact of these pressures is straining the industry from single-location establishments to nationwide and international chains. If accelerating US unemployment registers the impact of contractionary monetary policy measures on the broader economy, the current difficulties faced by the restaurant sector are likely to escalate. And insofar as those economic conditions persist, all but the stoutest and most well-capitalized food service industry interests may find it increasingly challenging to serve customers, the impact of which will be felt by employees, investors, and peripheral businesses alike.

By Emma Dayton of CampusReform

A Harvard University course this fall semester will study “trans monks,” cross-dressing, “genderless angels,” and intersectionality in the Byzantine Empire (also known as the Eastern Roman Empire). 

The course, “Gender in Byzantium,” focuses “on the entire spectrum of binary and non-binary conceptualizations, representations and performances of gender in Byzantium by exploring textual and visual material alongside recent scholarship on gender and sexuality.”

“Topics for discussion include: normative concepts and representations of masculinity and femininity; asceticism and the gendered body; emotions and gender; same-sex desire and relationships (homosociality); cross-dressing (trans monks?); intersectionality (gender, race and class); authorial (cis- and trans-) gender performance; eunuchs (a ‘third gender’?); incorporeal/genderless angels,” the course description continues. 

One course text, “Byzantine Intersectionality,” labels the terms “transvestite” and “cross-dressing” as “problematic.” Referring to women who pretended to be male eunuchs in order to live as monks, the text adds: “[S]cholars repeatedly have shied away from referring to these figures as ‘transgender,’ instead calling them ‘transvestite nuns,’ ‘cross-dressing’ saints, or women in ‘disguise.’ These pejorative terms, which are pervasive throughout the historiography, negate these subjects’ identification as transgender persons.”

The text gives the example of Marinos, a woman–whom the text consistently refers to as “he” and “him”–who snuck her way into a monastery and successfully passed herself off as a man in order to become a monk. The text also refers to her life as “a typical narrative for a transgender monk.”

Another course text, “Women, Men, and Gender in Christianity,” claims that the Gospels “enshrine” anti-Semitic rhetoric, and that “Gender has been an idea of considerable fluidity throughout history, and throughout Christian history as well.”

“[S]ociety in our current moment is struggling in very literal terms with gender ambiguity—an ambiguity that has always been part of Christian rhetoric,” the text continues. 

Another text, “Byzantine Gender,” states: “The stock [gender] roles do not seem to have been straightjackets but rather a wide repertoire of behaviours that people could mimic or embody in order to craft the responses others would have to them. . . . Gender, like much of social interaction, seems thus to have been highly performative.” 

Harvard offers various other courses focusing on gender and sexuality, such as “Feminism in the Age of Empire,” “Gender & Sexuality in Korean Pop Culture,” “Psychology of the Gendered Body,” and “Power to the People: Black Power, Radial Feminism, and Gay Liberation.”

American-made F-16 fighters jets are currently on their way to Ukraine, Secretary of State Antony Blinken announced Wednesday during a NATO public forum of the alliance’s annual summit being hosted in Washington D.C. President Biden confirmed alongside European allies that “The transfer process for these F-16s is now under way.”

The program has been one year in the making, which has included training Ukrainian pilots at sites on US soil and in Europe. “Those jets will be flying in the skies of Ukraine this summer, to make sure that Ukraine can continue to effectively defend itself against the Russian aggression,” Blinken said further.

Additionally a joint statement from partner countries in the program, Denmark and The Netherlands, said specifics and details are being withheld for “operational security.”

“The first of more than 60 American-made F-16 jet fighters are on their way to Ukraine and will be flying later this summer,” the allies said.

It was only in May that the first batch of pilots graduated from a US training program. Earlier reports disclosed that they are being trained at Air Forces bases in San Antonio, TX – and in Arizona.

The announcement which comes on the second day of the NATO summit strongly signals the alliance is digging its heels in and looking for a fight.

Monday saw one of the biggest Russian aerial attacks on Ukraine in months. The assault involved at least 40 missiles and Russia has been widely accused of attacking Kiev’s largest children’s hospital. Monday’s strikes killed dozens and injured more than 170 across the country.

The Kremlin has claimed, however, that it was a Ukrainian anti-air missile which fell on the hospital, and highlighted that it’s being used as a “provocation” close in time to world leaders gathering for the NATO summit.

As for the F-16s, Russia has repeatedly vowed that it will not only shoot them out of the skies, but might attack any external base near Ukraine’s borders hosting them. 

For example, in March President Putin vowed while visiting a pilot training base, “We will destroy their warplanes just as we destroy their tanks, armored vehicles and other equipment, including multiple rocket launchers.”

A recent slip-up by NATO chief Jens Stoltenberg…

Stoltenberg slips up and admits NATO pilots will be flying F-16s. This is so easy. pic.twitter.com/EqefO38OIJ

— Canadian Prepper (@PrepperCanadian) June 17, 2024

Significantly, Putin had upped the ante given he made clear that even bases in Western countries could be targeted if Ukraine flies sorties from them. “Of course, if they are used from airfields of third countries, they become a legitimate target for us, wherever they are located,” he had said.

Meanwhile, Ukraine plans to base at least some of the jets at allied bases outside its territory, on fears that the F-16s will be the first assets targeted by superior Russian aerial forces. Russia has effectively controlled the skies throughout the whole course of the conflict, and Kiev has a steep uphill battle if its hopes to regain control no matter how many Western-supplied jets it possesses.

Crude prices remain lower this morning ahead of the official inventory data – though continuing yesterday’s somewhat chaotic intraday swings. This is notable as oil options markets are pricing in the lowest volatility in six years – despite the potential geopolitical chaos.

“The market has been buffeted by opposing forces, with OPEC, geopolitics, weather on the one hand providing a floor and weak economic data and relatively strong dollar, Fed on hold providing the cap which has ultimately left us range bound,” said Harry Tchilinguirian, group head of research at Onyx Capital Group.

Overnight, API reported a bigger than expected crude and gasoline draw; traders are anxiously awaiting the official confirmation.

API

• Crude -1.9mm (-1.3mm exp)

• Cushing-1.2mm

• Gasoline -3.0mm

• Distillates +2.3mm

DOE

• Crude -3.44mm (-1.3mm exp)

• Cushing -702k

• Gasoline -2mm

• Distillates +4.88mm

The official data confirmed an even larger crude inventory draw. Distillates stocks rose more than exp3ected – perhaps drioven by refinery outages from Beryl….

Source: Bloomberg

The Biden admin added to SPR once again (+477k barrels)

Source: Bloomberg

US Crude production rose back to a record high 13.3mm b/d…

Source: Bloomberg

As Bloomberg reports, swings in volatility in recent months have been shaped by the outlook for Israel’s war with Hamas. The same gauge spiked in October when the conflict began, and jumped again in April when Iran fired a salvo toward Israel.

Last week, Hamas dropped its objections to a US-backed cease-fire in the conflict with Israel, the clearest sign yet that a truce in the conflict is possible.

Sen. Michael Bennett (D-CO) on Tuesday became the first Democratic senator to publicly cast doubt on President Joe Biden’s chances against Donald Trump in November.

“Donald Trump is on track, I think, to win this election, and maybe win it by a landslide, and take with him the Senate and the House,” Bennett told CNN‘s Kaitlan Collins on Tuesday – after telling colleagues the same in private. “So for me, this isn’t a question about polling. It’s not a question about politics. It’s a moral question about the future of our country.”

“The White House, in the time since that disastrous debate, I think, has done nothing to really demonstrate that they have a plan to win this election,” he continued.

Watch:

Senator Michael Bennet (D-CO) got outed by the media for saying privately that Biden is on track to lose badly to Donald Trump. He went on CNN to own his comments publicly. Respect. This is an absolutely brutal clip if you’re inside the Biden White House right now. pic.twitter.com/oS7BWdkHJF

— Charlie Kirk (@charliekirk11) July 10, 2024

Bennet’s comments echo those of a growing number of congressional Democrats who say Biden’s reelection bid could hurt the entire party in down-ballot races this fall. As CNN reports, “Democrats, including those inside the administration, view this week as critical to Biden’s political survival, and lawmakers on Capitol Hill gathered privately for their weekly meetings on Tuesday.”

“The stakes could not be higher,” said Bennett, who says his voters have “deep concerns” over whether Biden can win.

Punchbowl News had a sobering take on the state of affairs for Democrats in their Wednesday AM newsletter, saying Biden has “made a mess of the Democratic party.“

Senate Democrats were far from united about whether Biden is the best person to defeat Trump. Sen. Richard Blumenthal (D-Conn.) told us that Biden needs to “continue to aggressively make his case” to his fellow Democratic senators in order to “earn full support.”

New Jersey Democratic Rep. Mikie Sherrill issued a statement Tuesday afternoon calling on Biden to step aside in favor of another Democratic candidate.

“[B]ecause I know President Biden cares deeply about the future of our country, I am asking that he declare that he won’t run for reelection and will help lead us through a process toward a new nominee.”

Fellow New Jersey Democratic Rep. Andy Kim — who’s running for Senate — walked right up the line of whether Biden should get out.

“What steps can we actually take right now [to replace Biden.] That’s where some of the confusion is. Especially with all the talk of what are the actual deadlines. It’s hard to kind of make a decision without fully understanding that. We need to get a better grasp on it,” said Kim.

Meanwhile, House Democratic leaders met privately on Tuesday morning with some of their most vulnerable members, for a conversation that was “honest, brutal and intense,” and left some members crying, according to sources with knowledge of the meeting.

Stephanopoulos Opines

ABC News anchor George Stephanopoulos, meanwhile, told TMZ that he doesn’t think Biden can serve another four years.

The 63-year-old Stephanopoulos sat down for a closely-watched interview with Biden last week following the president’s disastrous debate performance last month against Donald Trump.

“Do you think Biden should step down?” the TMZ journalist asked the “Good Morning America” co-host and moderator of “This Week.”

“I don’t think he can serve four more years,” replied Stephanopoulos after a pause.

#GeorgeStephanopoulos just made a STUNNING comment: he told someone on the streets of #NewYork that he doesn’t think President #JoeBiden can serve another term! https://t.co/cFMK2Uxx4z pic.twitter.com/pxKkolFcGt

— TMZ (@TMZ) July 9, 2024

Stephanopoulos walked back his comment hours later, telling Puck News “Earlier today I responded to a question from a passerby. I shouldn’t have.”

ABC News told the outlet: “George expressed his own point of view and not the position of ABC News.“

During the interview between Stephanopoulos and Biden, the president failed to tamp down concerns over his cognitive fitness to continue as president – claiming that he was “exhausted” and “sick” with a “bad cold” heading into the June 27 debate against Trump in Atlanta.

At another point in the interview, Biden rejected calls to exit the race, saying “If the Lord Almighty came down and said, ‘Joe, get out of the race’, I’d get out of the race, but the Lord Almighty’s not coming down.”