Financial news

2:00PM Water Cooler 10/10/2019

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Lambert here: I want to put in a plug to pick up the pace on Original Reporting. Up to this point we have, as it were, funded the tour bus, the venues, the roadies, and the rhythm section. All those are essential! But Original Reporting is the lead guitarist and the singer!

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Trade

“Two Gadget Makers Look to Move Manufacturing Out of China, Citing Trade War” [Industry Week]. “Tile Inc. said it’s considering plans to make its Bluetooth-enabled location trackers in other countries, after the company was hit with tariffs last month. Fitbit Inc. said on Wednesday that it would stop Chinese manufacturing of its health trackers and smartwatches by January…. ‘The biggest challenge for a company like Tile is our ability to plan for shifting changes in U.S. policy toward China,’ said Chief Executive Officer CJ Prober. ‘With recent impacts, we are looking at other regions.’… The gadget maker does the majority of its manufacturing in China, but as the U.S.-China trade war has escalated, it’s now considering Mexico, Malaysia, Vietnam and ‘possibly the U.S.’ as future manufacturing hubs, Prober said.” • “Possibly….”

Politics

“But what is government itself, but the greatest of all reflections on human nature?” –James Madison, Federalist 51

“They had one weapon left and both knew it: treachery.” –Frank Herbert, Dune

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2020

Alert reader dk (not to be confused with DK) is in the process of developing the following interactive chart. Here is (are) the latest Dem Primary Polling as of 10/8/2019, 12:00 PM EDT:

Note that the implicit narrative of this chart diverges radically from the implicit narrative of RCP’s chart.

Still waiting for the impact of Sanders heart attack. If there are no shifts by the end of the week, I’d say Sanders, er, dodges a bullet (though the impact may be to set a ceiling on his support). Ditto for Warren’s various difficulties with oppo (which I think will affect her in the general anyhow, not the primary). And here are the poll results:

Thanks to everyone for the good discussion yesterday.

I think dk has started a really neat project, and in the near future we’ll seek your feedback (within reason) for the tool “live.”

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Sanders (D)(1):

Sanders (D)(2): “Physicians: Bernie Sanders had a heart attack, but OF COURSE he could still be president” [CNN]. “The fact is, this expectation of immaculate health for our political leadership is unrealistic and naïve — an American obsession reflected in presidents’ long history of sanitizing their medical conditions. For example, John F. Kennedy’s treatment for Addison’s disease, a potentially debilitating illness, was hushed up but did not materially affect his presidency in any way. Franklin D. Roosevelt took pains to disguise his paralysis, which nonetheless became an inspiration to differently-abled people.”

Trump (R)(1): “Donald Trump is Blowing It” [The American Conservative]. “Yes, the Donald Trump haters are blowing the Ukraine story out of proportion in their frenzied effort to drive him from office just months before Election Day—or at least to humiliate him and his followers with a House impeachment. And, yes, many of those same partisans carried out a years-long project to destroy his presidency with that so-called Russiagate investigation, which turned out to be based on bogus suspicions and allegations. And, yes, Trump is correct in his complaint that no president has ever before been subjected to the kind of relentless political assault that he has endured from the nation’s political, governmental, and cultural establishment. But all that misses a fundamental point about American presidential politics—that presidents get the credit for what’s going well in the country and the blame for what’s not going well. And the man most responsible for the current impeachment mess that’s tearing the country apart is Trump himself.” •. It is known. More: “The nation’s elites and their most fervent followers—globalist in outlook, anti-nationalist by instinct, increasingly contemptuous of national borders—want to remake the country through mass immigration, global finance, and a fierce demand for diversity, all enforced through the bludgeon of political correctness and the weapon words deployed in its behalf*. Trump’s followers don’t see why they should simply acquiesce in this transformation that seems destined to leave them marginalized and their heritage in shreds. They needed a champion, and nobody throughout the firmament of American politics seemed interested in the job—until Trump. But it was a big job, rendered politically dangerous by the ferocious resolve on the part of the elites to continue their transformation project unimpeded. Anyone who got in their way would have to be destroyed, and Trump got in their way.” • NOTE Silly conservatives and their red meat culture wars. Can’t they see how finance “enforces”? Or even mass surveillance?

Impeachment

“Trump Gears Up for Fight, Vowing to Stonewall Impeachment Probe” [Bloomberg]. “Trump on Tuesday enlisted former House Oversight Chairman Trey Gowdy in his impeachment fight. Gowdy, a former prosecutor from South Carolina who left Congress after the last session, will help lead Trump’s legal strategy and coordination with Republican lawmakers…. Until Tuesday, Trump’s push-back was mostly confined to his Twitter feed and television appearances by his GOP supporters. But the risks of an improvised self-defense have become more clear, and the administration appears to be adjusting.” • My bestiary of Republicans is not nearly as exhaustive as my bestiary of Democrats, so what I remember of Gowdy is that he butchered the “ZOMG!!!! Benghazi!!!!!” scandal (though IIRC, and I could be way off on this, the real scandal was that Clinton’s State Department wasn’t competent enough to run a successful arms-smuggling operation to the Syrian “rebels” out of our consulate basement, which of course neither party could talk about). Anyhow, my recollection is that at the very least Gowdy didn’t make shit up (and he might have been more successful if he had). The real issue was Gowdy never managed to create a narrative where Benghazi was anything other than an enormous hairball. However, I’m sure the White House has amply facilities to create narratives for him! More: “The administration’s plan, which still appears to be taking shape, involves grinding the impeachment inquiry to a crawl by refusing requests for witnesses and documents. That could frustrate House Democratic leaders, who are pushing to complete articles of impeachment by the end of next month.” • Surely US Attorney John Durham’s forthcoming report on the origins of the “Russia investigation” must also figure largley in the administration’s “plan.”

“Must the House Vote to Authorize an Impeachment Inquiry?” [LawFare]. “Impeachment has frequently been analogized to a grand jury indictment, and the analogy is informative here. The House is a prosecutorial body in an impeachment context. The House members themselves must decide what steps they think are necessary to satisfy themselves that a particular impeachment is warranted and to prepare a credible case that can be argued in the Senate, where the defense will have an opportunity to poke holes in it. It might be prudent for the House to create a more robust adversarial proceeding in order to help the House members themselves assess the strength of the case, but any such process is for the benefit of informing the House, not protecting the accused from a possible impeachment. A federal officer has no particular right not to be impeached, and the bar for impeachment is consequently set low. The Senate trial, by contrast, provides an opportunity for an accused officer to mount a robust defense, plead his or her case, and seek total vindication. The procedural bar for a Senate conviction is set high.” • This is worth reading. It’s level-headed response to White House Counsel Pat Cipollone’s letter to the House (also worth reading). Even if the Grand Jury analogy holds up, I’m not sure that’s a good thing; everybody knows that a Grand Jury would indict a ham sandwich if the prosecutor says it should.

Realignment and Legitimacy

Liberal Democrat Rehabilitation (1):

As liberals continue to move the Democrat Party’s center of gravity toward the conservatives… For those who came in late, Axelrod was “Chief Strategist” for Obama’s Presidential campaigns. I’m so old I can actually remember when people thought Obama had taken a principled position against the Iraq War!

Liberal Democrat Rehabilitation (2):

“New York Democrat Nita Lowey won’t seek reelection” [The Hill]. “After 31 years in the United States Congress, representing the people of Westchester, Rockland, Queens and the Bronx, I have decided not to seek re-election in 2020,” [Lowey] said in a statement…. The district has traditionally been a Democratic stronghold.” • I take note of this only because of the curious role played, if played it was, in the Brooklyn voter supression scandal of 2018. See here and (more concise) here. Of course, this is all a tale of New York real estate, so it’s more likely than not to be completely on the up-and-up. The New York Post (2016) says that [genuflects] Chelsea Clinton is being groomed to take over Lowey’s seat, but will Chelsea really want to mix with the proles in the House?

Stats Watch

Consumer Price Index, September 2019: “The inflation outlook has softened, underscored by a lower-than-expected… September rise in the core CPI that follows this week’s decline for producer prices and the prior week’s flattening out in average hourly earnings” [Econoday]. “Consumer inflation had been edging up in a shallow but favorable climb but now, despite lift for housing and medical care, is more flat than up, results that do not point to any unwanted tariff effects, at least for consumer prices. Signs of slowing growth in the labor market together with lack of punch for inflation make further rate cuts by the Federal Reserve all the more likely.”

Jobless Claims, week of October 5, 2019: “Job growth may have slowed this year but layoffs have not increased at all, on the contrary they remain firmly near historic lows” [Econoday].

Commodities: “Cocoa prices are skyrocketing and for once it has nothing to do with supply and demand. The surge is coming as traders grapple with a new method for pricing exports… in a plan designed to alleviate poverty among farmers in Ivory Coast and Ghana, the world’s largest growers of the chocolate ingredient. That’s helped push futures up by double digits in recent weeks but it’s also sowing uncertainty and confusion among traders and investors over how to account for the shakeup from the ‘living income differential’” [Wall Street Journal]. “The premium is supposed to kick in when prices fall below a prescribed level, and it’s due to apply to next year’s cocoa crop. It’s already having an impact, however, as companies that normally buy directly from West Africa appear to be buying beans from exchanges that stockpile cocoa at a U.S. East Coast warehouses.”

Real Estate: “Small is getting much bigger in U.S. industrial real estate. A new analysis by CBRE Group Inc. says rents for warehouses between 70,000 and 120,000 square feet rose by more than a third over the past five years… more than twice as fast as the leasing costs for big distribution centers” [Wall Street Journal]. “The higher rents come as availability of smaller facilities is getting tighter, the result of what CBRE says is a push by businesses including online retailers and their logistics providers to get goods closer to dense population centers to speed up deliveries. Some analysts suggest other commercial trends could be leading some operators away from sprawling warehouses. The WSJ’s Carol Ryan cites a UBS report on online retailers that says the ever-larger warehouses needed to store a vast range of online stock may make it harder to process orders efficiently.” • Lol, why not start selling oods out of the front of the new small warehouses? Then we’d come 360° back to bricks-and-mortar retail again!

Tech: “Apple’s Unpleasant Behaviour Is Hurting The Macbook Pro” [Forbes]. “Even restricting a comparison to the headline feature (increasing the screen size to 16 inches), the new MacBook Pro is falling short not just of Apple’s previous large screened MacBooks, but also of the top line large screened laptops where the going rate on the diagonal is seventeen inches. It might be ‘the biggest and best MacBook Pro from Apple’ but it’s nowhere close to being the biggest or the best laptop in the market.” • That’s because Tim Cook wants to kill their laptop line. Cook and Muilenburg should get together and compare notes.

Tech: “Apple Confirms Serious MacBook Pro Problems For Media Creatives And Others In MacOS Catalina” [Forbes]. “The Mac platform is especially popular with DJs, who cart around MacBook Pro machines jam-packed with music, playlists, mixes and specialist software to allow them to perform every evening. These have been tied to iTunes’ underlying XML database. But after nearly 20 years, iTunes has been discontinued in macOS Catalina, and the XML file no longer exists to index a local music collection….. It’s not just music applications that are suffering under the public roll-out of software that has been in public beta since shortly after WWDC. A number of creative tools—including Apple Aperture, Microsoft Office 2011 and Adobe CS6—are experiencing issues.” • That’s nice. Destroying client relations at the best, businesses at the worst. More: “Although you can step back from Catalina to the previous version of macOS (Mojave), that is a destructive process that requires you to erase your hard drive and have a back-up from before the upgrade to Catalina.” • [Cthulhu voice:] Fools! You trusted Apple! [laughter].

Tech: “HP to hike upfront price of printer hardware as ink biz growth runs dry” [The Register]. “Traditionally, printers were sold at a loss and the profit was generated by consumables over the lifetime of the device, in much the same way as the razor industry operates…. [HP’s incoming printer president, Tuan Tran] discussed ways HP is attempting to safeguard its supplies revenues by shifting to Smart Tank and Neverstop printers that come fully loaded with an estimated two years’ worth of ink or toner. This is for customers that want to exclusively buy the printer and supplies from HP. ‘They [customers] will get a model that delivers a more secure, more reliable, higher quality and sustainable print experience,’ said Tran.”

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Today’s Fear & Greed Index: 32 Fear (previous close: 23, Fear) [CNN]. One week ago: 34 (Fear). (0 is Extreme Fear; 100 is Extreme Greed). Last updated Oct 9 at 12:27pm.

The Biosphere

“Mutual Aid for PG&E Shutdown” [Google Docs]. • This spreadsheet may be useful to readers in the PG&E shutdown area.

They tweet:

“Please use your own resources….”

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“Two-thirds of North American birds are at increasing risk of extinction from global temperature rise.” [Audobon (NippersMom)]. “Audubon scientists took advantage of 140 million observations, recorded by birders and scientists, to describe where 604 North American bird species live today—an area known as their “range.” They then used the latest climate models to project how each species’s range will shift as climate change and other human impacts advance across the continent. The results are clear: Birds will be forced to relocate to find favorable homes. And they may not survive… By stabilizing carbon emissions and holding warming to 1.5°C above pre-industrial levels, 76 percent of vulnerable species will be better off, and nearly 150 species would no longer be vulnerable to extinction from climate change.” • This is one of those mobile-friendly layouts that are informative but inefficient on a laptop. Can any readers who use mobile tell us what their experience with it is?

“Warm ocean water attacking edges of Antarctica’s ice shelves” [Phys.org]. “Upside-down “rivers” of warm ocean water are eroding the fractured edges of thick, floating Antarctic ice shelves from below, helping to create conditions that lead to ice-shelf breakup and sea-level rise, according to a new study.” • Sounds like how ice melts in the Spring thaw.

“Compressor critics say website issues impeding research” [Patriot Ledger]. “Residents say they need more time to review more than 1,000 pages of data on a proposed natural-gas compressor station and related documents because of technical errors with the state Department of Environmental Protection’s website that have delayed and even prevented their research…. [Weymouth resident Margaret Bellafiore] said scientists, doctors and residents have been ‘stymied’ trying to evaluate the plan due to technical problems with the state agency’s website, including links to necessary reports that don’t work. ‘The missing documents appear to include most, if not all, of the documents related to MassDEP guidance on site cleanup and human health risk assessment,’ she said. ‘These documents refer to guidance on risk characterization, soil contamination calculations, and risk to construction workers at contaminated sites, among other topics.’” • Sounds legit.

Health Care

“CCHF Victory! POTUS Signs Executive Order on Medicare” [CCHF]. “Last June, CCHF formed a coalition urging President Trump to separate Social Security benefits from Medicare Enrollment. Forty-three other free-market organizations co-signed CCHF letters (November 2018| June 2019) to President Trump requesting him to sign an executive order that would allow senior citizens to voluntarily opt out of Medicare – without losing their Social Security benefits. Today’s executive order includes this provision in Section 11. ‘This executive order couldn’t have come at a better time,” said Twila Brase, president and co-founder of CCHF. ‘It is estimated that 10,000 baby boomers enter Medicare every day. With Medicare six years from insolvency, seniors need the freedom to opt out of Medicare and into private coverage without losing their Social Security benefits.’” • The currency issuer cannot become insolvent. Still, that’s why they believe!

Class Warfare

“The Abandonment of Small Cities in the Rust Belt” [Industry Week]. “During the 20th century, America built thousands of manufacturing plants in small cities in the Midwest. There were food processing plants, auto manufacturers, textile fabric mills, cut and sew apparel mills, paper mills, foundries, hand tool manufacturers, major appliance manufacturers, machine shops, and many others, according to the Bureau of Labor Statistics data from that era. When these plants were built, whole communities formed around them providing good paying jobs for millions of people without college degrees, as well as jobs for all of their supplier companies and the merchants in the communities.” • This is the America I remember. More: “Things began to change for these communities in the 1980s, when American corporations began to outsource production and re-engineer their organizations to adapt to globalization. But, at the turn of the 21st century, two things happened that would seal the fate of many of these communities. The Chinese were allowed into the World Trade Organization and the NAFTA Agreement went into effect. These changes led to the devastation of many smaller cities and towns…. But so far, Trump has made little progress in bringing manufacturing jobs back to these suffering communities. It will be interesting to see in the 2020 election if either a Democrat or President Trump will propose policies that will genuinely help the communities and citizens in these Rust Belt towns–because the outcome of the 2020 election may depend on Wisconsin, Michigan, Pennsylvania, Indiana, and Ohio.” • The story gives really good detail on ten towns, including Muncie, IN near where I grew up. Sort of amazing to see a story like this in Industry Week.

“Some Places Are Much More Unequal than Others” [Liberty Street Economics]. “[T]hat the most unequal places tend to be large urban areas with strong economies where wage growth has been particularly strong for those at the top of the wage distribution. The least unequal places, on the other hand, tend to have relatively sluggish economies that deliver slower wage growth for high, middle, and lower wage earners alike. Many of the least unequal places are concentrated in the Rust Belt. These differences in the degree of wage inequality are tied to powerful economic forces arising from technological change and globalization, which have pushed up wages strongly for high-skilled workers in locations that have become the most unequal. Yet those same forces have kept wage growth compressed within a fairly narrow range for workers in places that are the least unequal…. Many large urban areas, such as New York City, Washington, D.C., Chicago, Houston, Los Angeles, and the San Francisco Bay area, are among the most unequal places. Inequality is also relatively high in parts of the South, such as metro areas in Texas, Louisiana, and Alabama. By contrast, wage inequality is lowest in metropolitan areas in the Midwest and the Great Lakes region, often referred to as the “Rust Belt,” as well as in Washington State and some parts of Florida.” • So whaddaya know, “just move” isn’t necessarily an answer.

“Uber and Lyft Drivers Talk About Getting Ripped Off” [Splinter News]. From one driver: “The apps do not offer the value to us or to the customer to justify the amount of money they hold back from drivers and keep for themselves. We are not being compensated fair market value for our services, not even slightly. When gas rates go up, our fees should be passed along to the consumer, because the consumer requires the service and therefore must pay the costs. There is no trusting the app companies who are defrauding us by denying our value and input. It’s the fattest, greediest, most unfair business model that exists, and its only saving grace is feeling like you are helping the people of the community.”

“The Fantasy of Opting Out” [The MIT Press Reader]. “For all the dramatic language about prisons and panopticons, the sorts of data collection we describe here are, in democratic countries, still theoretically voluntary. But the costs of refusal are high and getting higher: A life lived in social isolation means living far from centers of business and commerce, without access to many forms of credit, insurance, or other significant financial instruments, not to mention the minor inconveniences and disadvantages — long waits at road toll cash lines, higher prices at grocery stores, inferior seating on airline flights.”

“Why Good People Still Can’t Get Jobs” (transcript) [Peter Cappelli, Wharton School (David Carl Grimes)]. Cappelli: “[T]he evidence suggests that we have doubled the amount of time we spend interviewing, which is typically about the worst way to hire people. Because unless you’re trained as to how to interview, the questions you’re asking probably aren’t predicting anything. What they probably are doing is leading to demographic biases.”

News of the Wired

“Is Death Reversible?” [Scientific American]. “Evolution equipped our species with powerful defense mechanisms to deal with this foreknowledge [of mortality]—in particular, psychological suppression and religion. The former prevents us from consciously acknowledging or dwelling on such uncomfortable truths while the latter reassures us by promising never-ending life in a Christian heaven, an eternal cycle of Buddhist reincarnations or an uploading of our mind to the Cloud, the 21st-century equivalent of rapture for nerds. Death has no such dominion over nonhuman animals. Although they can grieve for dead offspring and companions, there is no credible evidence that apes, dogs, crows and bees have minds sufficiently self-aware to be troubled by the insight that one day they will be no more. Thus, these defense mechanisms must have arisen in recent hominin evolution, in less than 10 million years.” • Anyone for violating Betteridge’s Law?

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Readers, feel free to contact me at lambert [UNDERSCORE] strether [DOT] corrente [AT] yahoo [DOT] com, with (a) links, and even better (b) sources I should curate regularly, (c) how to send me a check if you are allergic to PayPal, and (d) to find out how to send me images of plants. Vegetables are fine! Fungi and coral are deemed to be honorary plants! If you want your handle to appear as a credit, please place it at the start of your mail in parentheses: (thus). Otherwise, I will anonymize by using your initials. See the previous Water Cooler (with plant) here. Today’s plant (WB):

WB writes: “Chestnuts belonging to the Sackville-Wests, Knole House, Sevenoaks, Kent.”

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