Monthly Archives: October 2018


In the 2016 presidential election, roughly 60% of eligible voters cast a ballot, which is common and shows that the majority of Americans think picking a president is worth the effort. But in midterm elections, typically only 40% of eligible voters bother to turn up at the polls.

The Trump Train

Clearly, many people disagree with President Trump’s policies, and even more people are put off by his Twitter comments and off-handed remarks from the stage. But he was still elected.

Almost half of the nation approves of his work, and he’s overseen a healthy economy. What’s more, President Trump has followed through on many campaign promises. Many of the president’s policies are outside the scope of economics, such as moving the U.S. embassy in Israel to Jerusalem and building a wall along the Mexican border.

But Trump is pushing many business-friendly policies that have immediate effects. He’s cut 22 regulations for every one imposed, so far, and has opened more federal land for energy exploration. He’s also directed the Federal Drug Administration to fast-track new drugs and generics while working on reducing drug costs.

And, of course, at the top of the business-friendly list is the budget-busting Tax Reform, which moved $1 trillion from national taxpayers to corporate balance sheets by increasing the national debt.

We can debate all day about whether or not these policies are right for the country but it won’t change the fact that investors have cheered such moves by pushing stock prices higher. The S&P 500 is up 33% in less than two years since Trump’s election, and the Nasdaq 100 is up a whopping 63%. Corporate earnings are up more than 20% in just the past year.

Largely due to tax reform, GDP growth shot above 4% this year and unemployment has fallen below 4%. Those are economic numbers that other countries would kill for.

He didn’t raise taxes on companies or high earners. Of course, it’s not all fun and games. In addition to cutting some regulations and relaxing others, President Trump also started a trade war with just about everybody.

He demanded that Canada and Mexico revisit NAFTA, and he’s put tariffs on goods from the European economic bloc. China has incurred his greatest trade wrath, by far. The president imposed tariffs on roughly $30 billion worth of goods from China, and just recently imposed tariffs on another $200 billion worth of goods. He noted that if the Chinese retaliate, he’ll slap tariffs on just about everything else we import from China, which is another $267 billion worth of goods.

The president claims to be defending America from unfair trade practices. With the Chinese, it’s absolutely true. We already had a venue for dealing with that, it’s called the World Trade Organization, but our president isn’t one for international bodies.

In addition, conservatives also controlled both chambers of Congress. That sweep gave President Trump the ability to push through some of his agenda, but the easy days are over.

The Party Might be Over

The midterm elections are here, and Republican congressmen are retiring in droves. What’s more, midterm elections don’t favor the political party that controls the White House, and that’s before we factor in Trump’s polarizing style.

In 36 of the 39 elections since the Civil War, the president’s party has lost ground, giving up an average of 26 seats in the midterm election following his ascent to office, which is a bit more than the 23 seats the Democrats need to establish a majority next month. The numbers in the Senate are quite different

If the Democrats won all 35 Senate seats that are up for election, that would only give them a 58 to 42 majority because Democrats occupy many of the seats in play. Such a landslide is highly unlikely since some of those Senate seats are in very conservative states. Republicans likely will retain control of the Senate.

If the Republicans Win the House

The president will keep up his rapid pace of nominating conservative judges for district and appeals courts no matter what, because these matters only go through the Senate. Maintaining a majority also in the House will allow him to push Congress to confirm his political appointments within his administration.

We can expect Trump to come out swinging on matters large and small, from Stormy Daniels to Kim Jong-Un. He’ll beat the table about more tariffs on China, demand greater concessions from the European Union, and pound his chest on his success in redrafting NAFTA.

If the Democrats Win the House

Just like the Republicans in 2010, the Democrats are giddy with excitement over the midterm elections. With history and current polling on their side, a victory in the House of Representatives looks all but assured.

People don’t want details. They want bold strokes. Now the Democrats have assumed a new slogan: “For the People,” which residents in the Southeast will recognize at as the tagline for personal injury attorney John Morgan.
The “For the People” platform is sparse, calling for lowering health care and prescription drug costs, increasing worker pay, and cleaning up corruption. But don’t let the lack of words fool you. The Democratic plan for winning the House is to let local politicians run races best suited to them, with minimal interference from the national Democratic leadership.

Like Republicans, the Democrats want to focus on infrastructure, but they have a different way to fund such a push. Trump has called for a yet-to-be-defined public-private partnership that would cost American taxpayers little. No one is sure of the details, but it seems unlikely.

The only way to get private dollars for public use facilities is to provide a path for revenue, such as toll roads; and even then, it’s tough. One of the greatest hurdles to infrastructure building is the length of time it takes to get permits and start actual construction. A 2014 study by the Government Accountability Office found that government permitting in general took 4.6 years.

For Democrats, the path to infrastructure is easier—simply raise gasoline taxes.

The current federal gasoline tax of 18.4 cents per gallon of gas and 24.4 cents per gallon of diesel were last raised in 1993 and aren’t indexed to inflation, which is up more than 65% since then.
In addition to raising taxes on fuel, the Democrats plan to provide greater access to healthcare, most notably by allowing some groups to buy into Medicare before they reach 65. One proposal calls for allowing anyone over 55 to join Medicare, which will appeal to many state governments.

A recent study found that retiree healthcare benefits for public employees are underfunded by $862 billion dollars! If those retirees were allowed to buy into Medicare for their years between 55 and 65, it would dramatically reduce the cost of providing the benefits even if the cities and states paid the monthly premiums.

The money for the difference has to come from somewhere—that would be the American taxpayer. If the current trend continues, Medicare will go bankrupt in less than five years.

Adding more people to the system won’t help the situation, unless than can pay their own way, plus some. The chances of that happening are zero. That would leave the government to pick up the tab.
Obviously, the Democrats have other priorities, such as gun control, a resolution of the Dreamer Act, protecting the Affordable Care Act, and bringing back state and local tax (SALT) exemptions.

But, along with their plans for infrastructure and Medicare, all of these items require legislative action that must be approved by the Senate and then signed by the president. That’s not very likely over the next two years.
The main goal of a Democratic House of Representatives will be to stymie President Trump and his agenda at every turn. The House leadership will use the power of the vote to derail any legislative agenda emanating from the White House, as expected. But it won’t stop there.

Through the power of subpoena and investigation, the various committees in the House will bury the administration with demands for documents and testimony relating to Russian election interference, hush money, and anything else that comes to mind.

The push will be made in the name of rooting out corruption and increasing transparency, and many people will throw around the word impeachment. That’s a distraction, though.

With a Republican majority in the Senate, it’s almost certain that such a trial wouldn’t happen. Even if it did, it takes 67 votes to impeach a president, which would be an impossibly high bar, unless new information comes to light.

Besides, if they actually impeached Trump or somehow convinced him to resign, they’d be left with a very credible President Mike Pence. While Democrats might take issue with his political stances, it would be much harder to attack his character.

Democrats hate Donald Trump. The national media loathe him. Republicans fear what he might say or twee next. But investors can’t get enough of the guy.

Sure, the tax reform adds more than $1 trillion to the U.S. debt over the next 10 years, and, yes, trade deficits actually happen when a country does well, but let’s not dwell on specifics.

There’s no doubt that President Trump has ushered in a golden age for businesses, and therefore investors.

So, now it’s up to you to decide who will control the Congress.


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Two Big Strikes Against the Trump Agenda

President Trump’s White House has been dealt its most serious blows yet. The guilty plea by Michael Cohen, his former personal lawyer, and the conviction and plea deal of Paul Manafort, his former campaign manager, will rock the administration. Especially damaging: Mr. Cohen’s admission to paying a porn star hush money at Mr. Trump’s request, apparently violating campaign finance laws.
How much will that hurt Mr. Trump’s ability to govern—and to continue deregulating business?

Well, legal and political experts agree that Robert Mueller probably won’t seek to indict Mr. Trump while he is in office, and that lawmakers are likely to shy away from impeachment.
But all eyes are on his allies in Congress. Mr. Trump, Jonathan Bernstein of Bloomberg Opinion argues, is now “an unusually weak president.” The rewards of helping and protecting him may be shrinking.

Women-owned Businesses are Rising. Their revenues? Not so much.

American Express commissioned a report on the state of U.S. women-owned businesses, based on Census Bureau data. Some findings:

• Some 40 percent of U.S. businesses are now female-owned, up from 29 percent in 2007.
• Women of color made much of the difference. While the number of women-owned businesses grew 58 percent from 2007 to 2018, the number owned by women of color grew 163 percent.
• But employment and revenues aren’t on the same course. All these businesses are responsible for 8 percent of total employment (it was 6 percent in 2007) and claim 4.3 percent of total business revenue (up from 4 percent).

Justice Kavanaugh Will Win The Confirmation War

After an extended series of hearings and last-minute accusations, Brett Kavanaugh survived a sad, chaotic arena of politically inspired character assassinations to become a member of the Supreme Court, only to be delayed by a 7th FBI investigation of Prof. Ford’s unsubstantiated allegations.

Based on the available evidence to date, the FBI will most likely conclude they can neither confirm nor deny Prof. Ford’s allegations.

In the process, America lost a long-standing tenet of our legal precedent. The presumption of innocence has now been obliterated by the gender warriors who clearly stated, if you doubt any woman’s accusations about misconduct, you, too, are an abuser.

What a horrendous cost to pay for abandoning and forsaking the rules of fair play into approving/disapproving a nominee. It was a disastrous blow to democracy no matter whether you wanted Kavanaugh approved or not.

A Hard Day’s Work is its Own Reward…at Least in Theory

Consider this: 86% of Americans men and 67% of American women work MORE than 40 hours a week.

Annually, that’s 137 MORE hours than Japanese workers, 260 MORE hours than British workers, and a staggering 499 MORE hours than French workers.

67 Million People in the U.S. Do Not Speak English at Home

A record 67 million people living in the United States do not speak English at home, a new study has revealed, accounting for just over a fifth of the population. The study was carried out by The Center of Immigration Studies. It is based on the newly released Census Bureau Data for 2017.

California has by far the highest number of non-English speakers per state, with 16.5 million people (44 percent of its population) favoring other languages. Texas, where the number is 36 percent, has the second highest percentage, followed by New Mexico, New Jersey, and Nevada. In the country’s five major cities, the numbers are especially high. In New York City and Houston, the figure is 49 percent; in Los Angeles, it is 59 percent; it is 36 percent in Chicago; and 38 percent in Phoenix. The highest percentage per city of anywhere in the country is in Hialeah, Florida, where 95 percent of the population do not speak English.

Monday Night Football

For Americans who fear the country is in decline on a social level, a sports analogy might demonstrate that very well. The passage of time has not been kind to Monday Night Football. Once the biggest cultural event on TV, it is now a telecast that is actually hard to watch because of awful production values and lack of star power.

When Roone Arledge put together the broadcast for ABC in the early 1970’s, he eventually selected three major stars to call the game: Frank Gifford, Don Meredith, and the uber-controversial Howard Cosell. Ratings were enormous as politicians and celebrities swarmed into stadiums hoping for a few minutes of recognition.

John Lennon even showed up in the booth. America and MNF were made for each other!

No longer. As with many other television situations, the Monday night broadcast has deteriorated. The opening song by Hank Williams, Jr. is tired and the montage over it headache-inducing. The show goes downhill from there.

Our PC culture has badly damaged spontaneity and creative analysis. If Howard Cosell were alive today, he’d be eaten alive by the grievance mob. And there is no Roone Arledge to protect him. Many football announcers now fall back on clichés; they are masters and mistresses of the obvious, living life in the safe zone.

And it’s not just TV that’s in trouble. The Miss America telecast in September was a disaster, losing 20 percent of its viewers from last year.

Potential Democratic Presidential Candidate

Word on the street is that former New York City mayor Michael Bloomberg may run for president as a Democrat in 2020.

Bloomberg, who was a decent mayor, has been an independent but realizes that he needs the Democratic machine to defeat Donald Trump. Like President Trump, Michael Bloomberg is a billionaire with vast business holdings. He is generally a liberal thinker but not far-left like Bernie Sanders, who is also likely to run.

Trump and Bloomberg Don’t Like Each Other.

Don’t Fear a Flattening Yield Curve

The yield curve is essentially the difference between interest rates on short-term government bonds and long-term government bonds. Every time since 1960 that it has inverted—when long-term rates are lower than short-term rates—a recession has followed. For much of this year, the spread has been at its narrowest level in more than a decade. Many economists believe it will invert next year.

But Jay Powell, the Fed chairman, has played down the yield curve’s significance as an omen. The curve is “just one factor that you want to look at” when setting interest-rate policy, he said. Of the economy as a whole, he added, “there’s no reason to think that the probability of a recession in the next year or two is at all elevated.”

Counterpoint: Martin Feldstein, the chairman of the Council of Economic Advisers under President Ronald Reagan and a professor at Harvard, argues in a WSJ op-ed that a long, deep recession is looming—and the Fed has few tools to solve it.

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