Day by day individual Democrats realize theyre losing the message battle
By Marc. L. Flaster
Texas Insider Report: AUSTIN Texas By attempting to try a new approach to stem the migratory flow across the Mexican borders the Trumpster shocked the world with his latest foray into managing expectations suddenly imposing trade tariffs on Mexico. This is a new card in the fight to control who comes into our country. An escalating tariff plan is threatened if the Mexican government doesnt take appropriate action.
A review of the weekend press and morning commentary indicates that most observers have applied the same logic. But dont be fooled; Not so. Most trade with Mexico is with intermediate parts for assembly.
For instance Mexico supplies many intermediate parts necessary for the assembly of autos in the U.S. and any interruption in the supply chain would be devastating. In some cases final assembly is in Mexico after parts have gone back and forth. For GM 28 of its unit sales came from the plants in Mexico. For Ford its 10.
Imposing a tariff will increase the price to the U.S. consumer. An immediate reaction may be a decline in sales. How the costs are handled by the companies involved may impact company earnings as well as costs to the auto buyer.
For agricultural foodstuffs the affect is immediate. This could be very damaging to U.S. consumption and price indices. U.S. agriculture is already bearing the brunt of the extended spring storms. Shifting to Latin and South America for fruit and vegetables may keep the supermarket supplied but our Congress will have to deal with the rusting tractors and loans in arrears by the voting farmer. Keep your umbrella handy!
Another big move in reaction to potential further strong arm tactics by the White House with tariffs? Worries about trade with China Brexit uncertainty and weak reports on world economies especially Germany Spain and France. Stocks had been falling for most of last month as investors pulled back from the market altogether. Treasury Bond yields have been falling since last November when the Fed was solidly on the inflation theme.
All this indicates GDP for the 2nd Quarter should be below the 1st Quarters 3.1 growth. 3rd quarter might be slower still. Employment is still high and demand for workers at any level of skill is drawing on the available labor force. Dont know what movie theyre watching but this reporter has been on a different theme all year. Inflation is nonexistent world trade is struggling and politically induced minimum wage boosts have pressured small businesses to find another way to deliver its product or service.
More on 2020
On the political front no new Democrat Presidential entrants of late although last weeks Mueller press conference gave fuel to the call for impeachment. Nancy Pelosi says its a dead end and continues her fight to not bring it to a vote. However it is a unifier for most of the candidates; Each has too narrow a platform.
Day by day individual Democrats realize theyre losing the message battle and after some initial publicity the pollsters quickly found fading voter interest. Joe the Biden still stands tall but its more from a fade-out of his contemporaries than from a better platform. And of course name recognition plays a big part at the voting booth.
A collection of Democratic contenders for the partys nomination showed their colors in California over the weekend. Of interest is that California changed its primary election date to March joining the front line rather than bringing up the rear. This may separate the contenders early as the size of California and the fact that is represents the most delegates could bankrupt many of the Democrat hopefuls well before all the state primaries have a chance to provide their input.
Millennials Keep Complaining
Not enough rental housing where they want to live. However they are always on the move. Supermarket shopping and packaging caters to the family. Bulk sizes offer the best price but are too bulky to store in their small apartments. Fresh food goes bad in the larder. General Mills actually thought that the single crowd would stay at home and bake. There is more to on-line shopping than just sourcing. How about some understanding of the rule Know Thy Customer!
Stats on the economy are still fluid. Retailers continue to suffer. Even big box-ers like Bed Bath & Beyond are finding that they stock more product variety than their shoppers find of interest. Part of this has to do with the internet and part has to do with home ownership. They are now smaller.
And in another look into consumers or taxpayers minds Connecticut was unable to bring back tolls onto its Turnpike. Nor was it able to raise income tax rates on the higher wage earners. Recent experience that chased GE and AETNA out of the State along with a soft real estate market tempered even the liberal legislatures enthusiasm.
Economic Trends
Some wondering if there will be an interest rate cut on the heels of the Mexican Tariff news. Could be that we are looking at this thing all wrong. Not to say that it makes much sense but with two weeks until the next Federal Reserve Open Market Committee (FOMC) meeting could all this be a Trump strategy to encourage a rate cut? Stranger things have happened!
Markets are not listening to the FOMC. Odds makers are now suggesting a 100 basis point decline in the Federal Funds target by year end. The betting line includes a move at the June meeting as the starting point.
Rather than admit defeat in March the Fed took a more cautious approach to just stand pat and monitor events rather than stand ready to pounce at the first opportunity to continue to raise their Federal Funds target. Still unwilling to show their heels Federal Reserve Bank Chairman Powell defended the position as appropriate" on 60 Minutes last night. The Feds Open Market Committee meets for 2 days beginning on June 18th. Investors have made their position known.
For the Number Crunchers Crowd
Measles outbreaks continue to spread across the land. At a time when health is a primary concern of all the media how can this be? We live in a society that is inter-dependent. Everyone has a responsibility.
In 1965 there were 180000 Nuns. Today that number is less than 50000 and falling. Churches are closing as well for lack of participation.
Marc L. Flaster is chairman of the Texas Insider Economic Council.
