iftttwall

House Speaker Mike Johnson (R-LA) is banning transgender individuals from bathrooms on the House side of the Capitol Complex regardless of their gender identity.

The move comes after the election of Rep-elect Sarah McBride (D-DE), who will become the first transgender member of Congress.

“All single-sex facilities in the Capitol and House Office Buildings (like restrooms, changing rooms, and locker rooms) are reserved only for individuals of that biological sex,” Johnson said of women with johnsons, adding “Like all policies, it’s enforceable. We have single-sex facilities for a reason. Women deserve women’s only spaces.”

“We’re not anti-anyone. We’re pro-woman. I think it’s an important policy for us to continue. It’s always been, I guess, an unwritten policy, but now it’s in writing,” Johnson continued.

The move comes after Rep. Nancy Mace (R-SC) introduced a resolution to ban transgender women from women’s bathrooms in the House.

As Axios notes, Mace pushed Johnson to include her measure, which charges the House sergeant-at-arms with enforcing the ban.

Biological men do not belong in private women’s spaces. Period. Full stop. End of story. pic.twitter.com/IhR7kExkBU

— Rep. Nancy Mace (@RepNancyMace) November 18, 2024

Meanwhile, Rep. Marjorie Taylor Greene (R-GA) told colleagues at a Tuesday closed-door GOP conference meeting that she might get into a “physical altercation” if she’s forced to share the bathroom with a trans woman.

In a Monday statement, McBride, a woman with a penis, said “This is a blatant attempt from far right-wing extremists to distract from the fact that they have no real solutions to what Americans are facing.”

lol what?

Authored by Lance Roberts via RealInvestmentAdvice.com,

Following President Trump’s re-election, the S&P 500 has seen an impressive surge, climbing past 6,000 and sparking significant optimism in the financial markets. Unsurprisingly, the rush by perma-bulls to make long-term predictions is remarkable. For example, Economist Ed Yardeni believes this upward momentum will continue and has revised his long-term forecast, projecting that the S&P 500 will reach 10,000 by 2029. 

His forecast reflects a mix of factors that he believes are reigniting investor confidence, including tax cuts, deregulation, and advancements in technology that could drive productivity growth.

The chart shows the current bull market from the 2009 lows to the present, with a 12-month moving average and a trend channel extension into 2030. While Yardeni’s forecast seems astonishing, it represents a bit more than a 7% annualized rate of return through the end of the decade.

Specifically, Yardeni highlights the potential for substantial corporate tax cuts. He suggests that Trump could reduce the corporate tax rate from 21% to as low as 15%, which would significantly boost corporate profitability. Tax cuts and deregulation would help companies expand their margins and grow earnings. As a result, Yardeni predicts a continuation of record-high profit margins for S&P 500 companies, further supporting his bullish outlook on the stock market.

Yardeni’s analysis is equally striking, even in the shorter term. He anticipates the S&P 500 will reach 6,100 by the end of 2024, with additional gains to 7,000 by 2025 and 8,000 by 2026. He believes these targets are achievable in the current environment, bolstered by solid performances from tech giants and the reinvigoration of investor “animal spirits.”

As investors, is such optimism warranted? Are there essential risks to consider with his forecast? That answer would be “yes,” as Yardeni has previously made bullish forecasts that failed to mature. In the late 1990s, he predicted that the S&P 500 could reach 5,000 by 2000, reflecting his optimism during the dot-com boom. However, the market downturn in 2000 prevented the achievement of that target. Then, during the market run-up into 2008, he maintained his bullish outlook, forecasting significant gains derailed by the “Financial Crisis.” As discussed in this past weekend’s Bull Bear Report:

Concerning long-term market outlooks, it is helpful to remember that Wall Street analysts predicted the same in 1999 and 2007. At the time, valuations were elevated, but analysts and economists believed that economic growth would remain strong and support earnings growth well into the future. Unfortunately, despite the rather rosy outlook, economic realities overtook the exuberance, leading to significant market declines. The same assumptions existed in 1972 about the “Nifty Fifty,” Also, let’s not forget 1929 when Irving Fisher proclaimed the market had achieved a “permanently high plateau.”

However, the rise in “animal spirits” continues to support more bullish outlooks. But what exactly does that mean?

The Problem With Animal Spirits

The term Animal Spirits” comes from the Latin term “spiritus animals,” meaning “the breath that awakens the human mind.” 

The term can be traced back to 300 BC in human anatomy and physiology. It refers to the fluid, or spirit, responsible for sensory activities and nerves in the brain. Besides the technical meaning in medicine, animal spirits were also used in literary culture. In that form, they referred to states of physical courage, delight, and exuberance.

Its modern usage came about in John Maynard Keynes’ 1936 publication, “The General Theory of Employment, Interest, and Money.” He used the term to describe the human emotions driving consumer confidence. Ultimately, the financial markets adopted the “animal spirits” to describe the psychological factors that drive investors to take action. This is why human psychology is essential in understanding the close linkage to short-term valuation measures.

The 2008 financial crisis revived interest in the role that “animal spirits” could play in the economy and financial markets. The Federal Reserve, under the direction of Ben Bernanke, believed it necessary to inject liquidity into the financial system to lift asset prices to “support” consumer confidence. The result would be a self-sustaining environment of economic growth. In 2010, Bernanke made his famous statement as the economy was on the brink of slipping back into a recession. The Fed’s goal was simple: ignite investors “animal spirits.”

“This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.” – Ben Bernanke

“Bernanke & Co.” successfully fostered a massive lift in equity prices, boosting consumers’ confidence. (The chart below shows the composite index of the University of Michigan and Conference Board surveys. Shaded areas are when the index is above 100)

Unfortunately, since 2009, despite the massive expansion of the Fed’s balance sheet and the surge in asset prices, there has been relatively little translation into wages, full-time employment, or corporate profits after tax, which ultimately triggered very little economic growth.

The problem with reviving the “animal spirits” is the monetary policy “transmission system” collapsed following the financial crisis.

The Instability Of Borrowing From The Future

Instead of flowing through the system, liquidity remained bottled up within institutions and the ultra-wealthy, who had “investible wealth.” However, the bottom 90% of Americans continued to live paycheck-to-paycheck. The chart below shows the failure of the flush of liquidity to translate into economic growth. While the stock market returned over 300% since the 2007 peak, that increase in asset prices was more than 7x the growth in real GDP and roughly 3x the growth in corporate revenue. (I have used SALES growth, which is not subject to accounting manipulation.) 

Asset prices should reflect economic and revenue growth. Therefore, the deviation is evidence of a more systemic problem. The market has acted as a “wealth transfer” system from the middle class to the rich. Such has not gone unnoticed by the masses as the complaint that “capitalism is broken” continues to rise. However, while capitalism is not broken, there has been a clear shift in the underlying economic dynamics. One of the critical issues is corporate profitability, which we addressed last week:

“Companies have been able to push through profit‑margin‑expanding price increases under the cover of two key events, namely 1) supply constraints in the aftermath of the Covid pandemic and 2) commodity cost-push pressures after Russia’s invasion of Ukraine. But we still emphasise that one of the main sources of the recent surge in profit margins is massive fiscal expansion. In short, the government has been spending more to the benefit of corporates.” – Albert Edwards, Societe Generale

As he notes, U.S. corporate profits are incredibly elevated as a percentage of GDP, well outside historical norms.

However, that surge in profitability has come at the expense of the employee. We discussed this point in “Does Technology Make Things Better?”

“Monopolistic behavior stifles competition, reduces innovation, and limits consumer choice. Furthermore, corporate profitability soared by reducing labor, which is the most costly expense for any business.”

While the rise in “animal spirits” may foster an appearance of economic growth, especially when combined with monetary and fiscal policy support, the sustainability of that growth is questionable. Pulling forward growth does work in the short term; however, the void it leaves in future consumption continues to grow. As such, without continued, outsized fiscal deficit increases, the reversion risk to corporate profitability seems quite significant.

Which brings us to the risks in Yardeni’s bullish long-term forecast.

Risks To Forecasts

In conclusion, while Yardeni’s optimistic forecast is enticing, several risks could derail this bullish outlook. First, historical precedents remind us that unforeseen economic downturns can reverse market momentum even during seemingly unstoppable growth. As noted, Yardeni made bullish forecasts previously, only for economic realities to undermine those projections. The risk of repeating history remains, especially if overconfidence blinds investors to underlying vulnerabilities.

A significant threat lies in the sustainability of the so-called “animal spirits,” the psychological factors that drive market exuberance. While heightened investor confidence can fuel short-term market gains, it often relies on continuous support from monetary and fiscal policies. The long-term effectiveness of those policies is debatable. If economic growth fails to match rising market valuations, the illusion of stability could shatter, leading to sharp corrections.

Yardeni’s bullish case also hinges on expectations of substantial tax cuts and deregulation. However, such fiscal policies have trade-offs, including potential federal debt and deficit increases. Over time, these imbalances could strain economic growth. Such is especially the case if rising deficits erode economic growth or investor confidence in the government’s fiscal health.

Lastly, corporate profitability also poses a challenge. The elevated profit margins, primarily boosted by fiscal spending and price increases, may be unsustainable. As supply chain constraints ease and cost pressures subside, companies could struggle to maintain margins, particularly if labor costs rise or consumer spending weakens. While the outlook remains positive, investors should remain vigilant. Acknowledging that optimism can quickly give way to economic headwinds and market instability is crucial.

Here are five steps investors can take to position portfolios for potential market gains if Ed Yardeni’s bullish forecast is correct. However, these steps can also hedge against unexpected economic downturns or market volatility:

1. Diversify Across Asset Classes

• Strategy: Spread investments across various asset classes, including equities, bonds, real estate, and alternative assets. Diversification reduces the risk of being overly exposed to a single market downturn.
• Implementation: Consider maintaining a core allocation to broad-market index funds or ETFs that can capture market upside while diversifying into sectors like fixed income and real assets, which tend to perform well in risk-off environments.

2. Maintain a Balanced Equity Portfolio

• Strategy: Balance growth-oriented stocks, which could benefit from continued market gains, with defensive and dividend-paying stocks that provide stability.
• Implementation: Allocate a portion of your portfolio to high-quality, large-cap tech and growth stocks to capture Yardeni’s expected upside. Simultaneously, invest in defensive sectors like utilities, healthcare, and consumer staples to cushion against market corrections.

3. Use Bond Investments as a Hedge

• Strategy: Invest in a mix of short- and long-term bonds to benefit from potential interest rate cuts while providing stability if equities falter.
• Implementation: With the expectation of falling inflation and interest rates, long-term Treasuries could increase in value, serving as a hedge. Short-term bonds and cash equivalents provide liquidity and reduce volatility.

4. Add Exposure to Alternative Investments

• Strategy: Incorporate alternatives such as gold, commodities, or real estate investment trusts (REITs) to diversify risk and hedge against inflation or market disruptions.
• Implementation: Gold and commodities can act as a hedge if inflation unexpectedly rises, while REITs may offer income and stability, benefiting from lower interest rates.

5. Keep Cash Reserves and Stay Flexible

• Strategy: Hold a portion of your portfolio in cash or cash equivalents to capitalize on future market opportunities and mitigate downside risk.
• Implementation: Cash reserves allow you to quickly take advantage of market dips or reallocate to higher-yielding investments if conditions change. Staying flexible ensures you can adapt to evolving economic landscapes without being forced into reactive decisions.

We, nor anyone else, know what the market will do in 5 months, much less 5 years from now. History clearly shows that the most optimistic forecasts are often disappointed by economic realities; however, by taking some action within portfolios, investors can remain well-positioned to benefit from potential market gains while being prepared for unforeseen economic shocks.

Authored by Mike Shedlock via MishTalk.com,

CA-45 will come down to the wire, perhaps decided by 10 votes or less…

California House District 45 Image courtesy of the Washington Post, annotations and insets by Mish.

If these percentages hold, and anything remotely close to what’s happening in Pennsylvania happens in California, guess what.

Admittedly, the setups are different so that comparison is gone. But there are other issues such as illegal immigrants voting.

I doubt illegal immigrant voting widespread.

But it doesn’t have to be to steal the election.

If the winning margin is 6 or even 600, this question is going to come up.

Election Fraud by Democrats Must Stop

In Pennsylvania, there is admitted election fraud underway.

The state supreme court had to step in, and did with feeble actions.

In Bucks County one of those counting votes openly stated “I think we all know that precedent by a court doesn’t matter anymore in this country and people violate laws anytime they want. So for me, if I violate this law, it’s because I want the court to pay attention to it.”

For discussion, please see Pennsylvania Supreme Court Rules Election Fraud by Democrats Must Stop

Time to Prosecute

Regardless of how one feels about the 2020 election (and this one), the one and only way to stop this kind of purposeful fraud is to prosecute these cases to the fullest extent of the law.

The governor is missing in action.

And where the heck is the outrage from Democrats?

“No one is above the law”. Yes, hypocrites, tell me about it.

Determined to leave an even bloodier legacy, President Biden has violated his own policy and approved the shipment of antipersonnel mines to Ukraine, two US officials have told the Washington Post. The move — which threatens to cause civilian injuries and deaths even after the war ends — comes in the face of months of Russian battlefield success in which its army has posted the fastest pace of territorial gains since 2022. 

The land-mine approval is Biden’s second intensification of US military support in just the last few days: Acting very much like a man whose life in politics and life on Earth are both rapidly nearing their ends, Biden over the weekend approved Ukraine’s use of long-range, US-supplied, ATACMS missiles against targets deep inside Russia. Brushing aside concerns that such an escalation would nudge the world’s foremost nuclear powers closer to World War III, Ukraine wasted no time flexing its new freedom, striking a Russian military facility near the city of Karachev in the Bryansk region — about 71 miles from the Ukraine border. 

In 2022, Biden restored an Obama-era policy that bars America’s provision of antipersonnel mines anywhere other than the Korean Peninsula. Biden had condemned then-President Trump as being “reckless” in nixing Obama’s policy, saying “It will put more civilians at risk of being injured by unexploded mines, and is unnecessary from a military perspective.”  

Now, however, Biden has thrown that sentiment out the window. While the 164-nation Ottawa Convention bans both the use and transfer of anti-personnel mines, neither the United States nor Russia is a signatory. However, Ukraine is. 

As has been the case with various other types of weapons systems, the Biden-Harris administration had for years refused Ukrainian President Volodymyr Zelensky’s pleas for anti-personnel mines — only for Biden to now cave just two months before he turns the Oval Office over to Trump, who’s promised a swift, negotiated end to the war that has raged since Russia’s February 2022 invasion in support of separatists in Ukraine’s eastern regions.   

One of the officials who spoke to the Post acknowledged that Biden’s policy change reflected the Ukrainian army’s relentless loss of territory:  

“Russia is attacking Ukrainian lines in the east with waves of troops, regardless of the casualties that they’re suffering. So the Ukrainians are obviously taking losses, and more towns and cities are at risk of falling. These mines were made specifically to combat exactly this.”

Ukraine is already among the world’s most-mined countries: According to Human Rights Watch, mines cover about 30% of its territory, an expanse about as large as Florida. As of last February, 1,000 civilian deaths were attributed to land mines — however, most of these deadly incidents involved anti-vehicle mines. Both Russia and Ukraine have liberally deployed anti-personnel mines, and Human Rights Watch had condemned Ukraine for using rocket-deployed anti-personnel mines, which litter a territory with small explosive devices which often come in colors that could invite the curiosity of children.  

Anti-personnel mines are reviled because of their inability to distinguish between combatants and innocents. Organizations that oppose their use were quick to condemn Biden’s decision. “It’s a shocking and devastating development,” Mary Wareham, deputy director of the crisis, conflict and arms division at Human Rights Watch, told the Post. 

Seeking to allay concerns about anti-personnel mines’ notorious record for causing civilian casualties, one of the US officials described the mines in question as being “non-persistent” — that is, they self-destruct or run out of battery power in a way that supposedly renders them harmless. Civilians better cross their fingers and hope they’re not around when these mines randomly blow up or are made to explode in some other unintended fashion — perhaps as an ex-president Biden is simultaneously sunning on a Delaware beach. 

Crude prices are extending recent gains this morning – albeit modestly – as geopolitical risk premia are rebuilding amid missiles flying in Russia, MidEast tensions continuing, and Biden seems set on WW3 as his legacy.

Last night’s API report showed a larger than expected crude inventory build and traders are on the lookout for whether a contango market structure is here to stay after the WTI prompt spread dipped into negative territory this week for the first time since February, signaling near-term oversupply.

API

• Crude +4.75mm

• Cushing -288k

• Gasoline -2.48mm

• Distillates -688k

DOE

• Crude +545k (-620k exp)

• Cushing -140k

• Gasoline +2.05mm

• Distillates -114k

The official DOE data was very different from the API reported data with a small crude build and large gasoline build. This is the third straight weekly crude build and the biggest gasoline build since early September…

Source: Bloomberg

The Biden admin added 1.4mm barrels to the SPR last week – the biggest addition since August – making its the fifth straight week of total crude stocks rising…

Source: Bloomberg

US Crude production plunged by 200k b/d and does not look hurricane-related…

Source: Bloomberg

WTI dipped after the data…

Source: Bloomberg

Oil investors are pricing in Trump’s foreign policy approach as bearish. Of 10 traders surveyed by Bloomberg, eight said that Trump’s proposals will limit price increases, with some suggesting a trade war with China will erode demand and potentially offset any new sanctions on Iran.

By Michael Every of Rabobank

What, me worry?

Bloomberg went with a one-word headline in Asia this morning: “Escalation”, which was what I said on Monday while proposing it might be to de-escalate in places. Bloomberg then shifted to “Shambles” to complain ‘Chaos in Rio Shows a World Untethered Even Before Trump Returns’, referring to a G20 meeting with a backdrop of North Koreans fighting in Europe, Israel resisting Middle East US ceasefire attempts, China practicing blockading Taiwan, and nuclear threats now commonplace. Yet going from “All is well (except Trump)” to “PANIC!” lacks nuance. Indeed, while I recently told clients attending our financial market outlook presentations that 2025 was ‘The Year of Living Dangerously’, not everything is worth worrying about equally. Allow a professional worrier to show you how to do it properly!

First, once you see “World War 3!” headlines you might as well go risk on because why not? Ahead of the first Ukrainian ATACMS strike in Russia proper yesterday President Putin had changed his nuclear doctrine so it can use nukes if an attack on its territory is supported by a nuclear power, which it elsewhere stated includes US ATACMS. That saw bond yields fall before reversing. So far, this Russian red line appears to have been crossed without any nuclear fallout. If that all changes, I won’t be writing this Daily, and you won’t be reading it.

Good luck collecting “YES” pic.twitter.com/7pwt34PuOv

— zerohedge (@zerohedge) November 19, 2024

‘Keep Calm and Carry On’ doesn’t apply to lower-level wars, but there’s room for optimism. In the Middle East, Hezbollah is reportedly not yet willing to sign a ceasefire allowing Israel to still defend itself, without which a pause in fighting will be used to rearm – but a deal might yet be struck. There has been a dialling down of rising tensions in the Horn of Africa. Even in Ukraine, everything is about escalating to be in the best position to de-escalate ahead.  

So, if you want to worry, look at less glamorous but arguably more significant headlines that don’t point to world war, per se, but to world disruption, and major world market volatility.

Official allegations of sabotage were made in the EU as: two of Finland’s five nuclear plants had to be shut down; a key Norwegian oilfield was shut by a power outage; the support cable on a Finnish suspension bridge broke; and two key Baltic EU data cables were severed. The Chinese vessel Yi Peng has been flagged as a possible cable culprit and at time of writing was forcibly moored in Denmark. This is likely to prompt a strong Chinese diplomatic response; and perhaps an EU one if it proves a Chinese ship damaged key seafloor infrastructure (again: this also happened to a gas pipeline between Finland and Estonia in October 2023).

Europe is already confronting China in saying its battery producers – and all green tech – can only avoid EU tariffs and set up factories benefiting from subsidies if there is tech transfer. This mirrors Chinese policy back at it, long warned as the only way to avoid deindustrialisation. China might say no, which means one set of problems. Yet even if it says yes, Europe needs huge scale, so huge subsidies, so huge changes to its fiscal rules or banking sector; and huge supplies of inputs like lithium, which “are uneconomic” to develop domestically, and tied up by China internationally. The geopolitical bifurcation of supply chains is still just beginning.  

On bifurcation, Howard Lutnick is going to be US Commerce Secretary. Although this isn’t the Treasury Secretary he’d wanted, Lutnick – as representative of US businesses – has flagged tariffs and ‘Made in the USA’ tax breaks in tandem as a policy he wants to see put in place. Again, we see a mirror of China’s strategy back at it and rapid bifurcation of global supply chains.

On The Search for Spock the US Treasury Secretary, Trump is today speaking to ex-Fed member Warsh and hedge fund manager Rowan, while Senator Haggerty and Trump economic advisor Bessent are still in the mix. For markets thinking there is a chance someone who doesn’t like tariffs might get the top role, think again: why would Trump appoint a pro-tariff Commerce Secretary, who usually opposes such measures by default, only to then select a Treasury head who would not support his trade agenda?  

Moreover, with a Trump ally urging 60% duties on Chinese goods shipped via its new port in Peru, or any port in Latin America, the US is perhaps dipping into its Monroe Doctrine economic statecraft playbook to show what it wants the new world economic geography to look like: it won’t stand for trans-shipment of Chinese goods, so people are going to have to take sides. Relatedly, if China builds a railway across the Andes from Brazil to Peru to allow iron ore and soy access to the Pacific it may trigger the US to build a larger navy to rule the waves. Given China builds far faster than the US, that requires structural changes in its economy and tying ship-building allies like South Korea and Japan into a US bloc; and for national security reasons, Japan will require the US to show a firm hand vis-à-vis Taiwan – a red line for China.

In short, try not to worry about the obvious stuff like “World War 3!” Do worry about whether we are drifting towards a world split in three, geopolitically and economically: the US and allies, China and allies, and would-be ‘neutrals’. Markets might have priced in the leading edge of the Trump Trade, but they haven’t begun to grasp what the above scenario truly looks like.

The Financial Times understands the gravity with its op-ed today explaining ‘Why Trump’s trade war will cause chaos’, and that “tariffs, especially on one country, will lead to an unholy economic and political mess.” It’s right that every Trump cabinet nomination so far shows a determined approach to up-end old ways of doing things, including trade.

That said, the hoary old textbook arguments the FT uses to make its chaos case show it still doesn’t understand international trade. It’s wrong on how comparative advantage works, which Ricardo said assumes no mobile international capital, not free-flowing, free-wheeling capital; on savings vs. investment as the driver of trade when talking about forced-savings mercantilists vs. free traders, not free traders vs. free traders; on assuming the US shifting trade from China to others is a nasty side-effect of a trade war rather than a deliberate aim of one; and on not being able to join the dots from a US no longer able to sustain its global military primacy -on which the plump, pink free-market Financial Times ultimately rests- and the US being forced to run persistent trade deficits by mercantilists which deindustrialise it.

Really: worry that some high-level people still can’t grasp key fundamentals even when they are right in front of them alongside the socio-economic and geopolitical failure of the policies they keep advocating for instead. Worse, this is the same op-ed writer, Martin Wolf, who recently claimed that ‘Market forces are not enough to halt climate change’ and ‘Investor returns imply that the welfare of future human beings is close to irrelevant’; but free trade is obviously sacrosanct. Because reasons.

You can certainly worry that these kinds of prognostications are rapidly going to look like those of holier-than-thou Professor Lichtman of the magical ’13 keys’ that didn’t unlock a Harris victory two weeks ago as expected. As another commentator put it more civilly, “The failure of Allan Lichtman’s keys is not merely a personal failure; rather, it reflects the decline of the political expert class in America” as the epistemological foundations upon which these “experts” have sat crumbles away.

At the very least, you can worry that nobody in D.C. is listening to what Wolf is saying.  

Comcast on Wednesday announced that it will move forward with plans to spin off its NBCUniversal cable TV networks – including MSNBC, CNBC, USA, Oxygen, E!, Syfy and the Golf Channel. (of course a season 2 Firefly reboot might have saved the whole thing… hint to the new buyer).

All together, the assets generated around $7 billion in revenue in the 12 months ended Sept. 30, the WSJ reports.

The company will keep Bravo – known for the “Real Housewives,” as well as the Peacock streaming service and NBC broadcast network. Executives are betting that their remaining assets – including in broadcast TV, sports, movies and theme parks, will be better positioned for growth.

Comcast will announce Wednesday that it is moving forward with a plan to spin off its NBCUniversal cable TV networks, including MSNBC, CNBC, USA, Oxygen, E!, Syfy and Golf Channel. Bravo will stay in the mother ship

Real Housewives > Cramer + Maddow

— zerohedge (@zerohedge) November 19, 2024

Of course, the decision also comes as a major source of ad revenue – pharmaceutical companies, are about to get the monkey hammer of justice from RFK Jr.

And guess who’s most exposed?

Meanwhile, years of cord-cutting have taken a big toll on both subscribers and viewership – with every major media company pulling back on spending. Comcast, however, is the first to carve out nearly the entire business into a separate firm.

The transaction, structured as a tax-free spinoff to Comcast shareholders, is expected to take around a year to complete. The new cable venture will have an ownership structure that mirrors Comcast’s, with Comcast Chairman and CEO Brian Roberts holding a one-third voting stake. Roberts won’t be on the board of the new venture.

Mark Lazarus, who is currently the chairman of NBCUniversal’s media group, with oversight of TV and streaming platforms, will be named chief executive of the new venture. Anand Kini, who has served as chief financial officer of NBCUniversal, will be the CFO and operating chief of the new company. -WSJ

Other leadership changes related to the spinoff include Chief Content Officer Donna Langley transitioning to the chairman of NBCUniversal Entertainment and Studios – which will allow her greater authority to greenlight productions and more control over content spending. She will also oversee the entire entertainment portfolio’s marketing efforts.

Comcast veteran Matt Strauss – who heads the direct-to-consumer business, will beecome the chairman of NBCUniversal Media Group, while Cesar Conde will remain chairman of NBCUniversal News Group, which oversees NBC News, Telemundo and local TV stations.

You’re doing great guys…

Authored by Steve Watson via Modernity.news,

The newly formed Department of Government Efficiency has shared some examples of the kind of obscene government waste that it will abolish.

The X account of the department shared a video of Senator Rand Paul highlighting absolutely mental programs and studies that the US government has funded recently.

One example was pumping a hundred grand into an experiment to determine whether gin or tequila makes a sunfish more aggressive.

Another involved almost one million dollars towards a study to discover whether cocaine makes Japanese quail more “sexually promiscuous.”

The video also highlights how the government spent $750,000 to determine if Neil Armstrong said “One small step for man” or “one small step for ‘a’ man,” with the outcome determined to be “inconclusive.”

Paul also discovered that $2 million went toward the “construction of a kelp and shellfish nursery in Maine.”

Items your tax dollars are being spent on:
-$100,000 to study if tequila or gin makes sunfish more aggressive
-Nearly $1M to study if cocaine makes Japanese quail more sexually promiscuous
-$750,000 to study if the moon landing line was “One small step for Man” or “One small… pic.twitter.com/kXl4IXV8FE

— Department of Government Efficiency (@DOGE) November 18, 2024

Paul has been doing this for years with his ‘Festivus’ report.

Happy #Festivus! This year, Ranking Member @SenRandPaul’s annual Festivus Report identifies ~$900,000,000,000 worth of federal waste! Below are some of the most outrageous examples of federal spending. You can read the full report here: https://t.co/kvHsZwc9IL

— HSGAC GOP (@HSGAC_GOP) December 22, 2023

DOGE also highlighted the monumental amounts of money that are unaccounted for in government.

– Pentagon can’t fully account for $824 Billion
– $236 Billion in improper payments in federal programs in 2023
– $200 Billion in pandemic relief went to fraud/abuse
– The U.S. failed to track $1 Billion in Ukraine Aid

How much do we not yet know about? pic.twitter.com/FJx0zvIwJJ

— Department of Government Efficiency (@DOGE) November 19, 2024

As we previously highlighted, Vivek Ramaswarmy, who is heading up DOGE with Elon Musk, recently announced that DOGE will shut down entire government agencies as part of its effort to abolish waste.

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Washington appears fully aware it has poked the Russian bear, after President Biden greenlighted Ukraine striking Russian territory with long-range missiles.

US officials have warned Wednesday that “potential significant air attack” on Kiev is likely coming, and have announced the closure of the US Embassy in the capital “out of an abundance of caution”. This follows immediately on the heels of Ukrainian forces having struck an arms depot inside Russia with U.S.-supplied weapons, specifically the Army Tactical Missile System (ATACMS), on Tuesday.

“Embassy employees are being instructed to shelter in place,” a new alert on the embassy website said. “The U.S. Embassy recommends U.S. citizens be prepared to immediately shelter in the event an air alert is announced.”

Embassy diplomats and all staff are being asked to observe the following precautions:

• Monitor local media for updates
• Identify shelter locations in advance of any air alert
• Immediately take shelter if an air alert is announced
• Follow the directions of Ukrainian officials and first responders in the event of an emergency

The embassy closure is also happening the day after Putin signed a decree which updates and expands Russia’s nuclear doctrine, which effectively lowers the threshold for nuclear weapons use. “As we said earlier this month, we were not surprised by Russia’s announcement that it would update its nuclear doctrine; Russia had been signaling its intent to update its doctrine for several weeks,” the White House National Security Council responded in a statement.

Other Western embassies have also shuttered their operations amid air raid warnings in Kiev and other regions, including Italy, Spain, and Greece.

Al Jazeera notes that “Germany’s embassy in Kyiv remains open in a limited capacity and can still be contacted by German nationals who are in the country, a German Foreign Ministry official has said.”

“We are in constant contact with our colleagues on the ground so that we can take appropriate measures if the situation changes,” the official said.

Ukraine’s military has since said that warnings of a large-scale missile attack from Moscow forces are likely a “psychological operation” carried out by Russia, precisely in order to instill fear and cause further embassy closures. According to the military statement:

It said Russia is conducting a “psychological attack against Ukraine”, warning of fake messages circulating on social media on alleged increased missile threats that it said were part of a “psychological operation”.

It appears Russia may bomb the US embassy in Kyiv today. The state dept response will be to provide additional arms, funding and longer range missile strikes inside of Russia. This is the escalatory trap we’ve all been warning about. Congress needs to hear from us: No more funds. https://t.co/Z6foXbc6EW

— Clint Russell (@LibertyLockPod) November 20, 2024

With merely two months to go until Trump is sworn into office, many Republicans have blasted the Biden administration and his national security officials for risking World War 3, and at least assuring major escalation, by at the last minute greenlighting long-range strikes on Russia–even knowing full well the Trump administration plans to pursue peace negotiations. 

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

• Mark Cuban Says Trump’s Tariff Proposals Will Ramp Up Prices- Business Insider

• Fed’s Kashkari Says Trump Tariffs Could Reheat Inflation If They Provoke Global Trade War- CNBC

• Blanket Tariffs Would Be Incredibly Inflationary, Says Strategist- CNBC

• Treasury Secretary Janet Yellen Warns “Sweeping Untargeted Tariffs” Would Reaccelerate Inflation- CBS News

• Trump Tariffs Expected To Spike Inflation, Interest Rates- Business Insider

The headlines regarding Trump’s proposed tariffs and their inflationary consequences are undoubtedly worrying, but will they prove correct?

Instead of taking the “experts” word, let’s consider how tariffs may affect the prices of all goods and services, not just the items subject to tariffs. Furthermore, it’s worth discussing how tariffs could impact the economy, as economic activity greatly influences inflation. Lastly, we lean on historical precedence, capitalism, and the dollar to further evaluate how tariffs might impact inflation and economic growth.

Higher Prices And The Substitution Affect

Price changes of a good or service are primarily a function of supply and/or demand variations. However, price indexes, the basis for which economists measure inflation, are constructed on the prices of a basket of goods and services. The goods and services within the basket are weighted by the consumption of said items.

Considering the difference between the price of one good and the inflation index for an economy, let’s think about how consumers react to higher prices.

If the price of an imported good increases due to a tariff and the company selling the good commensurately increases the price, consumers respond in three ways.

• Some consumers will decide not to pay the higher price and purchase a substitute good.

• Others decide not to pay the higher price or buy competing goods and save their money.

• Another group of consumers will pay the higher price, leaving them with less money to buy other goods.

Consumers buying a substitute good at a lower price will shift the composition of the inflation basket of goods, minimizing the impact of the tariff. 

Saving, thus not spending, will reduce economic activity, which is deflationary, as we will discuss when we consider how sellers might react to tariffs.  

Some consumers will pay higher prices. While this is inflationary for the tariffed item, the consumers have less money for other items, which is deflationary for those goods.

While the prices of the tariffed item and substitute items may change with demand preferences, the net effect after re-weighting the inflation basket and accounting for any broad economic impact will be minimal.

The demand for goods and the prices within the inflation pie will shift with a tariff. However, the aggregate supply and demand should be largely unaffected unless new money is injected into the economic system.

Business Owners Reaction

The prior section focused on consumers’ reactions to business owners passing on 100% of the tariff through higher prices. Typically, that does not happen unless demand is inelastic, meaning consumers have no choice but to buy a good or service.

Despite the price of the tariffed good increasing, the sellers’ profit margin does not change. However, as noted, the seller will likely lose some sales to substitute goods or savings. Accordingly, in many cases, sellers decide to eat some of the tariff costs to avoid losing sales. Doing so reduces their profit margin.

Sellers, faced with reduced profit margins and lost sales, will try to reduce expenses to offset the loss from the tariff. This means they might lay off employees, reduce capital expenditures, or choose other cost-saving methods.

The bottom line is that reduced profit margins, diminished spending, and layoffs will reduce economic activity. The economy will suffer, and demand for more than just the tariffed goods will decline. The result would be lower inflation and growth.

Retaliatory Tariffs

It’s equally important to consider that countries may not readily accept tariffs on their exports to the US. Many countries will retaliate with tariffs on US imports into their country. Such tariffs would make US-made exports more expensive and, thus, less desirable to foreign consumers.

As a result, US exports would decline, thus reducing economic growth and resulting in potential job losses and less inflation. 

With an appreciation for how tariffs can impact the economy and prices, let’s review the history books.

Smoot Hawley Tariff Act

In 1930, Herbert Hoover signed the Smoot-Hawley Tariff Act into law. The timing could not have been worse as the world was entering the Great Depression. Smoot-Hawley was intended to protect American jobs and farmers. The reaction from our trade partners was retaliatory tariffs on exported US goods.

US imports and exports were reduced by more than 50% within four years of the Act’s passage. Many Great Depression scholars blame the tariffs for playing a substantial role in amplifying the scope and duration of the Great Depression. The US paid a steep price for trying to protect its workforce through short-sighted political expedience.

While it’s hard to isolate the effect of the tariffs on the economy, GDP fell by an estimated 15% from 1930 to 1932. As a result, the unemployment rate rose to over 25%. From 1930 to 1932, the CPI index fell by 24%. The following table and graph, courtesy of Inflationdata.com, show the stunning deflation experienced in the early 1930s.

Trump 1.0 Tariffs

In 2018, Trump levied tariffs primarily aimed at China for a select group of goods. It is estimated the tariffs covered a little over $300 billion in imports. That accounted for about 12% of all imported goods. The tables below, courtesy of the Peterson Institute, show the share of the tariffs by country.

The following paragraph comes from The Impact of the 2018 Tariffs on Prices and Welfare, courtesy of the Journal of Economic Perspectives:

The figure shows a big surge in imports in the wave 1 products, washing machines and solar panels, prior to the imposition of tariffs, which was likely caused by importers moving forward import orders in order to obtain products before the imposition of the tariffs. For the remaining goods, it appears that on average their import levels were rising a little faster than for unaffected goods in the months prior to the imposition of the tariffs. In all cases, import values declined sharply after the imposition of the tariffs, typically falling 25 to 30 percent after the imposition of the tariffs. This drop is particularly striking given that imports for unaffected sectors and countries rose by about 10 percent over the same period, where this rise could in part reflect some import substitution from affected to unaffected countries and products in response to tariff changes.

As we wrote earlier, higher prices reduced the amount of imports of the tariffed goods and increased consumption of those goods not impacted by the tariffs. To this end, we just read the following headline: New York retailers stock up, switch suppliers as Trump tariffs loom

Furthermore, the article states:

Therefore, the full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018. We see similar patterns for foreign countries that have retaliated with their own tariffs against the United States, which suggests that the trade war has also reduced the real income of these other countries.

The graph below shows that US import prices fell from 2018 until the price surge due to the pandemic in late 2020.

Trump’s tariffs were designed to boost American industry. However, despite good intentions, the broader impact was reduced economic activity, with specific sectors facing deflationary pressures.

What About The Currency?

The reaction of the US dollar versus the currency of tariffed nations is also worth considering. For this, we lean on Hudson Bay Capital.

While in principle tariffs can be noninflationary, how likely is it? In the macroeconomic data from the 2018-2019 experience, the tariffs operated pretty much as described above. The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019 (see Brown, 2023). As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7%, so that the after-tariff USD import price rose by 4.1%. In other words, the currency move offset more than three-fourths of the tariff, explaining the negligible upward pressure on inflation. Measured from currency peak to trough (who knows exactly when the market begins to price in the news?), the move in the currency was 15%, suggesting even more offset.

Measured CPI inflation moved from slightly above 2% before the start of the trade war to roughly 2% by the armistice. Measured PCE inflation went from slightly below the Fed’s target to further below the Fed’s target. Of course, there were crosscurrents like the Fed’s tightening cycle at the time, but any inflation from this trade war was small enough that it was overwhelmed by these cross-currents. This explains the Trump camp’s view that the first U.S.-China trade war was noninflationary.

Only 11% of Chinese goods are subject to tariffs. The prices of the other 89% of non-tariffed goods fell for Americans due to the depreciation of the Chinese yuan versus the dollar. The net currency effect of prices of all goods imported from China was negative. If we could, we would edit the last line in the comments above and say the US- China trade war was deflationary.

 

Let Capitalism Work

The US is one of the world’s most productive and wealthiest countries. Consider that our poorest state, Mississippi, has a higher GDP per capita than France. Our prosperity is the result of many factors, most of which are beyond the scope of this article. However, one key factor is that we generally have less government economic interference than most other countries.

While adding tariffs to level the playing field may win votes and sound like a good idea, they are government interference. This is not to say that discussions with our trade partners shouldn’t occur or actions shouldn’t be taken, but it is to say that tariffs tend to bode poorly for the economy and result in lower prices.

Taxes, regulations, and other domestic or international governmental actions are not a recipe for more robust growth.  

Summary

Economic theory and experience tell us tariffs are not inflationary. It’s correct to claim that a tariff on a good will raise its price. However, the claim fails to consider how consumers and sellers of the goods will react to higher prices.

Once all the economic, price, behavioral, and currency impacts net out, another round of tariffs will likely prove deflationary and harmful to economic growth.