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Showing posts from May, 2021

Policies Do Have Consequences

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 As reported in the Wall Street Journal, the unemployment rate in April nationwide was 6.1%, but this obscures giant variations in the states.  With some exceptions, those run by Democrats such as California (8.3%) and New York (8.2%) continued to suffer significantly higher unemployment than those led by Republicans such as South Dakota (2.8%) and Montana (3.7%).  It’s rare to see differences that are so stark based on party control in states. But the current partisan differences reflect different policy choices over the length and severity of pandemic lockdowns and now government benefits such as jobless insurance. Nine of the 10 states with the lowest unemployment rates are led by Republicans. The exception is Wisconsin whose Supreme Court last May invalidated Democratic Gov. Tony Evers’s lockdown... Most states in the Midwest, South and Mountain West aren’t far off their pre-pandemic employment peaks. One obstacle to a faster recovery may be the $300 federal unemployment bonus, whi

Cartoon of the Week

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Jobless Claims Lower, GDP Revised Lower

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Weekly initial jobless claims came in at a level of 406,000 for the week ended May 22, below the Bloomberg consensus estimate of 425,000 and the prior week's unrevised 444,000 level. The four-week moving average fell by 46,000 to 458,750, and continuing claims for the week ended May 15 dropped by 96,000 to 3,642,000, south of estimates of 3,680,000. The four-week moving average of continuing claims dipped by 2,750 to 3,675,000. April preliminary durable goods orders declined 1.3% month-over-month (m/m), versus estimates of a 0.8% rise and compared to March's upwardly-revised 1.3% increase. However, ex-transportation, orders grew 1.0% m/m, above forecasts of a 0.7% gain and compared to March's favorably-adjusted 3.2% rise. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, were up 2.3%, compared to projections of a 1.0% rise, while the prior month's figure was revised higher to a 1.6% increase. The second look (of three) at

Housing Bubble? Or Just Supply and Demand?

The following was written by Kelly Evans, CNBC . We've been talking about the reversal in liquidity that's popped some bubbles in stocks and crypto over the past few months (growth in M2 has dropped from 27% in February to 18% year-on-year as of April), but one place that's still rip-roaring is the housing market. In fact, home prices are accelerating, as the Case-Shiller release showed yesterday. Year-on-year gains rose to 13.3% in March, from 12% in February. Still, that's a composite of 20 big cities. You might expect the broader FHFA national index to show more modest gains, but nope. That index showed prices up nearly 14% in March! I asked the CEO of Realogy about this the other day--are we back to the bad old days of the early '00s housing bubble? No, he said. This one isn't driven by psychology (hey, buy a house, make a ton of money! Home prices never go down!) so much as real, consumer demand. All the millennials are buying houses all at once. Now that

More Climate Change Hysteria

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A little-noticed news event this week with potentially major long-term implications for the U.S. oil and gas industry was President Biden's executive order directing federal agencies to address the risks climate change poses to the U.S. financial system and federal government. Biden's order directs federal agencies to incorporate the economic risks from climate change into decision-making, and it does not specifically address fossil fuel investments, but the concern among energy producers is that financial regulators ultimately will use their power to steer banks and investors away from the industry . Many big banks, setting targets to align their financing with the Paris climate agreement, already have ended funding for coal projects, and the oil industry fears it could be next. This week, the G7 nations agreed to stop international financing of coal projects by the end of this year and phase out such support for all fossil fuels. Also this week, environmental activists who

AT&T: Panic Selling Sets In

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By Rida Morwa Seeking Alpha In the last two days, we have seen extreme panic among income investors rushing out of the door and dumping their shares of AT&T (T) after hearing about the announcement of a dividend cut following the AT&T/Discovery transaction. The shares of the company are down by 8% in the past two trading sessions. This panic has created a great buying opportunity, and we explain why. AT&T decided that they would be acquiring Discovery (DISCA) in a "Reverse Morris Trust transaction." Essentially, T will be spinning off WarnerMedia and all of its assets into a new company that will be owned 71% by current shareholders of T and 29% by current DISC shareholders. The market's initial reaction to the merger was broadly positive until panic hit the market about the divided reduction, without looking at the big picture. The Dividend The dividend will be reduced. From the conference call, CEO John Stankey said: The transaction is expected to be tax-fre

Schools: The New Havens of Wokeness

Awakened parents crashing party preaching anti-white hate White students at the University of Wisconsin-Milwaukee were instructed to “confront whiteness” on their college campus by two far-left speakers, the latest example of rampant anti-white lectures, but elsewhere the public is rising up and pushing back on the Left’s twisted version of equality. Strategies to Combat Classroom Indoctrination From critical race theory, which divides the world into race-based oppressors and oppressed, to anti-capitalism lectures, children in America’s schools are being force-fed one-sided ideological instruction. The increasingly widely used The New York Times’ 1619 curriculum, which incorrectly claimed that America was founded to protect slavery, and new mandates such as California’s controversial ethnic studies curriculum, which one teacher says teaches students “that the privileges they have are all based on race that makes them dominant or oppressors over other people,” are just a couple of promi

After CPI Rise; Producer Prices Up More Than 6%

Companies paid much higher prices to producers in April for everything from steel to meat in another sign of inflation in an economy rapidly recovering from the pandemic. The new data comes a day after a sharp gain in consumer prices sent the stock market reeling. The Producer Price Index rose 0.6% from March, according to the U.S. Bureau of Labor Statistics. Year over year, the PPI spiked 6.2%, the largest increase since the agency started tracking the data in 2010. Economists polled by FactSet were expecting a 0.3% monthly increase in April and 3.8% year over year. The core PPI, which excludes volatile items like foods, energy and trade services, rose 0.7% in April from the previous month and jumped 4.6% year over year. The increase from a year ago was the biggest jump since 2014 when the department first calculated the data. The Producer Prices Index came into focus after Wednesday’s consumer prices report showed hotter-than-expected inflation and triggered a big sell-off in the sto

Inflations Fears Rear Ugly Head; May Be Justified

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The Consumer Price Index (CPI) rose 0.8% month-over-month (m/m) in April, above the Bloomberg consensus estimate of a 0.2% gain, and compared to March's unrevised 0.6% increase. The core rate, which strips out food and energy, increased 0.9% m/m, north of expectations to match March's unadjusted 0.3% increase. Y/Y, prices were 4.2% higher (see chart below) for the headline rate, exceeding forecasts projecting a 3.6% increase and north of March's unadjusted 2.6% rise. The core rate was up 3.0% y/y, north of projections of a 2.3% rise and March's unrevised 1.6% increase. The report showed that prices for used cars and trucks rose 10.0% m/m, posting the largest one-month increase since the series began in 1953, and accounting for over a third of the seasonally adjusted all items increase. Food prices increased in April as prices for food at home and food away both increased, while energy prices decreased slightly. Core consumer prices registered the largest monthly increas

Up to the plate: Bad jobs report, inflation and supply chain fears

In an amazing display of deception, Biden declared after the Labor Department had its worst report in decades, “This month’s job numbers show we are on the right track.” He then went on to say how important it was to spend another $4 trillion on "jobs" and "recovery" programs. House Speaker Nancy Pelosi stated, “The disappointing April jobs report highlights the urgent need to pass President Biden’s American Jobs and Families Plans,” referring to the additional $4 trillion of spending bills now being proposed. As one commentator stated: "We are witnessing a witches’ brew of stupidity that, taken together, amounts to the American people piling on yet more debt for the privilege of stopping an economic recovery." The U.S. economy added just 266,000 jobs in April after economists predicted it would add a million, according to a Department of Labor report released Friday morning. The U.S. remains nearly eight million jobs short of the 2020 peak that the econom

PRO Act does nothing for American workers, everything for Union fat-cats

I currently am working for a small company in North Texas on a short-term contract. If the PRO Act were to pass, I probably would not have been able to get this contract, as this small company would not have been able to hire me as an employee. Or the rate I which I get paid would be much lower. This is another step toward the government's full control over its populace. Biden was so wrong when he said "We the people..is the government." Sorry, We The People...Are the PEOPLE.    During his remarks to Congress, Biden asked the lawmakers “to pass the Protect the Right to Organize Act—the PRO Act—and send it to my desk so we can support the right to unionize.” The legislation dubbed the PRO Act essentially would take a California law known as AB 5 national. However, the California measure wasn’t very popular after the Legislature passed it and the governor signed it into law. Previously, drivers for ride-hailing services such as Uber and Lyft; freelance writers, musicians,