Somebodys always there complaining
By Marc. L. Flaster
Texas Insider Report: AUSTIN Texas The Trumpster started his re-election bid in Florida last night. People stood in line ahead of the event for 48 hours. And Beto had an interview on NPR Radio. He said he wants to bring all sides together to talk things out. Let the people decide he said! That sounds like a formula for instant chaos. Its going to be a long Summer Fall & Winter.
And while the president may have returned ONE OF his tariff weapons (on Mexico) to the holster quick draw practice continues. China comes back into target range. If he could only figure out a way to include the Federal Reserve in his line of fire we might see a different response from Chairman Powell to the criticism hes absorbing from the White House. (More on this below.)
Meanwhile the megaphones tuned in to the economy continue to be focused on the old drivers of activity. Monitors of employment have failed to take notice of the change in how things are produced. The U.S. is now an assembler more than a manufacturer. Just as retail failed to see the shift to on-line purchasing manufacturing only recently realized how this affected their business. Mexico was/is the glaring example. Units of assembly move back and forth across our borders multiple times before theyre ready to be included in the final product. Parts may be designed here but are built there and then are tested here only to be returned there before theyre included in another sub-assembly. It may sound inefficient but is actually cost effective and quality assurance has been improved.
And when we talk about employment opportunities the real question is where and what skills are needed. The skill set required is more dependent on mental capacity than brawn. Marketing and trade dominate the movement of goods. Services dominate the need to assure follow through. As Ive mentioned before youngsters today want experiences not houses or cars… and theyre willing to forego outings to high-end restaurants. The most important thing is to be able to show others where your outings have taken you. So photos and Facebook are most important. A loner society in the making.
More on 2020
On the political front the 24 hopefuls to be Democrat standard bearer for president each got a boost in the polls when they first threw their hats into the ring but now competition is getting more intense. Theyre getting ready for their first official debate tonight. The DNC (Democrat National Committee) has set rules for participation that have the players up in arms. As each debate date approaches the required hurdles get higher. The field will only show 20 contestants at either of the June 26 -27 Miami events.
Concern is rising that what accumulated funds do exist will be wasted for this purpose not for gaining exposure with the voter. Liz Warren and Pete Buttigieg are the latest to make a move to the front on the recognition meter. They are keeping their message to electronic outlets rather than walking down Main Street.
Each of the 24 reports that their initial war chest has more withdrawals than deposits. A common theme to impeach the President has worn thin with voters. Nancy Pelosi claims to have turned her attention to more important things like managing legislation to assist in running our country. The crowd cannot find a common theme other than undermining each others promises If I were elected."
And dont forget because they certainly havent that the first primary-caucus in Iowa is less than a year off. California changed its primary date to Super Tuesday after which time almost a majority of the delegates will either be won or lost by each. With all these delegates at risk most of the money thats been collected will be spent early. The saga of the Democrats trudge to the starting gate will not be viewed by the success of the last man standing but by the few who have anything left after Super Tuesday to continue.
Somebodys Always There to Keep Complaining
New York City will not get out of the news. Governor Cuomo signed a Tenant Protection Bill." It puts landlords out on the stoop with no leverage to protect their investment. The value of multi-family housing took a hit as a result. To be a landlord in NYC is the definition of sucker." Bonds downgrading related to the same is surely to come. And loan defaults.
And as they say: There ought to be a law. A family is suing New York City Housing Authority for $2.1 million for a death in the family from a fire in their apartment. NYFD says the fire started from an unattended pot cooking on the stove. The tenant had disconnected the smoke alarm. The tenant had also blocked access to the fire escape with heavy furniture. Harvey Weinstein may have a better case in his harassment suits than they do.
And everywhere you go theres a movement to re-write history. This is the 50th Anniversary of the LGTB turnout at the Stonewall Inn. The 75th Anniversary of the Allies Landing on Omaha Beach recently went off with little controversy. Times have changed. Big issues are being handled very differently by the Me Generation. Anyone for The New Guide to College Admissions?
On the Economic Trends Front
Away from these headlines weather across the U.S. heartland has not improved in time to create the seasons harvest. Heavy weather of biblical proportions floods the mid-section of our country. Crop production and planting cycles have not only been interrupted yields are also substantially reduced. Climate change sensitivity is not an immediate course to put food on the table. In addition if you look at who is doing the work in the fields at the check-out register or mixing the Starbucks latte they are the new Americans wherever they have come from. Documented or not. U.S. trade with Mexico is now bigger than with China. Tariff threats on Mexico caused some double ordering even though the threat was withdrawn. Uncertainty reigns at the border.
Demand of oil is falling faster than new supplies come to market. Oil prices are volatile in reaction to the mess at the Straits of Hormuz. (Tanker collisions and terrorist attacks.) OPEC production restraints have been replaced with record U.S. production. Even without crude from Venezuela and Angola a surplus is now of glut proportions. But oil is a big ingredient in Consumer Expenditures and gasoline prices at the pump are down big just in front of the summer driving season. Whether you own a car or rent one you have to put fuel in it. Natural gas is in excess as well and the markets for LNG are too soon to be in demand.
Housing sales and starts are lower than forecast and reports are that many potential buyers dont even have the down payment. Builders report that land and materials are expensive. In addition they cannot find quality workers. Believe it or not several states are encouraging lenders to assist new home buyers with not just mortgage aid but also with the down payment! Heres a twist the emerging home owner will have no Skin in the Game." Maybe he or she will turn out to be a good citizen!
Auto sales are really suffering. To add to the pressure many of the larger cities have implemented Fuel & Emissions Standards that were not expected for another year. After this month other than electric cars those currently sitting idle on dealer lots do not meet the new standard.
A side bar on our China TNT: Australia reports its economy is struggling as a result of the downward turn in China caused by the U.S. tariff fight. For all those reasons and more the U.S. dollar is strong gold is strong the U.S. stock market continues to chug along towards higher ground and T Bond Yields are falling.
Needless to say there is no source for an inflation bias struggling to be heard. The leaders at the Fed are not listening anyway. They march to their own drummer and that band is being compromised by the criticism from the Trumpster. Federal Reserve Open Market Committee Meetings take place as we speak (June 18-19) and July 31. Odds they make a rate cut at the July meeting keep gathering support. To quote a phrase: I shot an arrow into the air it fell to earth I know not where.
And For the Number Crunchers in the Audience
NYC has 13000 licensed Yellow Cabs and 80000 Uber/Lyft cars on the streets. Affluent riders represent 83 of the Uber/Lyft riders. The congestion controversy was a scam to secrete money from honest citizens. Makes sense to me. In this city theyre always thinking of another way to skin the cat.
Toronto made the NBA whole the other night. St. Louis did the same for the NHL. Now that the new champions have been crowned as they say Wait til next year." It aint over til its over!
Marc L. Flaster is chairman of the Texas Insider Economic Council.