KOMMONSENTSJANE – ROSS RANT – 10/08/2020

Some in Wall St believe the Moody analysis that all of that spending driven by high taxes and huge deficits is a good thing because all that fiscal stimulus will grow jobs and the economy. Normally fiscal spending grows an economy, but there is no free lunch. The believers in Modern Monetary Theory that says due to ultra-low rates the deficit does not matter, are just dead wrong. It matters because over time rates will rise as a result of all the deficit spending, and then there is no way to pay interest without reducing defense and infrastructure spending. While there may be an uptick initially in stocks from a vaccine being available in January, and from a new fiscal package from Congress of some sort this month, the reality of high taxes creating lower corporate earnings by 9.2% per B of A, a $15 minimum wage causing costs to rise a lot and margins to shrink, high taxes on dividends, higher taxes on investors personal income, and much higher taxes on real estate developers, does not seem to me the recipe for higher stock prices. Moody’s agrees, and they are part author of the Biden plan. They say stock prices will not rise much over ten years as a result. Commercial real estate, in Zandi’s view, and mine, will suffer a lot from a Biden, Dem control. In the next week or two is time to decide what to do. Trump completely blew it in debate one and there is no Durham report or indictments, although the release of the classified docs this week will help. Pence did well, and Harris did not come off well to many independent voters, but it is likely not enough to change the damage Trump did in his debate. A lot of big downers for corporate earnings and stock prices. Let’s see if Trump goes to debate two and controls himself, and attacks Biden on policy in a coherent way. If he acts like last time, he loses for sure. Obama had a bad first round, and then completely recouped after round two. My finger remains on the trigger.

Despite the negative reporting by the media, the jobs report was actually good. It just was not up to projections because the census ended, and there were other layoffs by government employers, but keep in mind they increased the numbers for July and August by 145,000. Private sector jobs actually did very well per the ADP report. My projection of 7.5% unemployment in October is looking very possible as much more of the country opens up. Wages were up 4.7%. There are loads of jobs going unfilled. 30% of the unemployment is all in CA. A lot more is in NYC due to the stupid actions of Cuomo and DeBozzo. Much of the rest of the country is coming back well depending on the business they are in. Consumer confidence is way up. Savings remain high, and companies report were it not for the $300 extra of unemployment, they could hire more people. With the stall in talks for a new subsidy program the boost to the economy will not be there, but continued high savings rates, and ultra-low interest rates and gas prices. there will be a good but not great base for spending in the holidays by those who are doing well. It now all depends on the election results, and I no longer am feeling that Trump will win. He blew it for himself. He may still win, but now it is very unlikely. The debate next week will make all the difference.

Trump did what any good negotiator would do, he walked from the table, and left Pelosi to bear the consequences. I just think he should have done it very differently. He should have blamed Pelosi and in the same message then said he is proposing the separate pieces for the airlines, PPP, and $1200 instead. It seems she was still hung on the $600, even though there was ample evidence that held down people returning to work. She also held out for a bailout of big Dem cities. Although some studies claim the $600 had nil impact, I heard from numerous business owners that it had a major impact. It likely was Pelosi’s goal to never have a deal, and not let the economy heal. So now even the Fed said we need a deal, but Pelosi will have to bear the responsibility for no deal since there was a deal from Trump, and a deal from the bipartisan group of Congressmen on the table that she rejected. The economy needed a deal, but she was more interested in playing dangerous politics, and obviously figured Trump would fold. Even after 4 years she has not figured out how to deal with a NYC real estate developer. She is not used to anyone just getting up and walking away. The press is blaming Trump, but continuing the negotiation when it was clear it was going nowhere made no sense. Wall St is blaming Trump, but as someone who has been in negotiations that go nowhere, walking away from the table is sometimes necessary. I would not assume there will be no deal now. Something now might get done for airlines and the $1200.

The report on unfilled jobs on the surface looks weaker at 6.4 million, but when you peel it back what you find is in the big Democratic cities where things are still locked down and crime is rampant, LA, NYC, Seattle, Minneapolis, Chicago, Washington, available jobs declined anywhere from 20% to over 30%. But in the rest of the country, where things are much more reopened and BLM is not rampaging, available jobs rose, or were only down 5% or less. Draw your own conclusions.

The reason NYC is not coming back yet is crime, and the gross negligence and stupidity of DeBozzo and Cuomo. They have done almost everything wrong. The crusher was when the Dems in the State legislature passed no bail, and then added a law that said the police must give the defendant attorney all of the detail contact info of the victim and witnesses. Result- some victims and witnesses died, and others decided not to testify. So now NYC has a massive crime wave. There are daily stories of people getting shot or stabbed or robbed. It is a breakdown of law and order. That is why NY in dying. The virus is mostly defeated with an infection rate of 1.4%. It is not the thing stopping people from coming back to the city. The other thing stopping progress is the political policy of being against anything that looks like developers or corporations are going to make money. Most recently, a massive project in Brooklyn to renovate a huge set of factory buildings into mixed use was killed because it was perceived as gentrification. In reality it was 20,000 good jobs, and better housing and retail. Same as happened with Amazon. So these lower income areas remain low income and struggling. Amazon was partly the fault of Bezos not understanding how to woo the community, instead of thinking you are doing a wonderful thing so they should just love it. He was arrogant, and that does not work. Had Amazon done what we did in my huge Sacramento project of spending a lot of time meeting with the community, and the little old ladies, and wooing them, then maybe Amazon might have succeeded. We will never know. Every business leader and real estate leader in NYC is now publicly and privately pushing the mayor and governor to clean up the city and to change criminal laws, but so far it has fallen on deaf ears. This is why Dem run cities are failing, and other cities are thriving. They simply do not understand what Giuliani proved, you need to clean up the crime and deal with the homeless getting them off the streets, and out of good neighborhoods, and out of the subway, and then the city will thrive again. Dem mayors have the opposite policies. Outbound moves from NYC are 52% above normal and 128% in San Fran. Seattle is also headed that way. All once great places destroyed by left wing Dem mayors. The pandemic changed everything in that now 40% of people can easily work from home. That has materially changed where people choose to live. Court hearings, even at the Supreme Court, are now virtual, so there is not much that is not. This is another reason why commercial real estate is not a good place to invest if Biden wins and the Dems take the Senate.

I agree with the House conclusion that the big tech companies have far too much power today, and need to be stopped from deciding what is acceptable for all of us to see. It is blatant censorship, and we know from what we see that Silicon Valley is very anti-Trump and very left. Twitter has far too much power over what people see as does Facebook. Google has 90% of the search market, and that is a bad thing. I think it may be years, if ever, that it changes. The tech companies have too much money and corrupt Congressmen always want contributions.

According to the Fed Survey of Consumer Finances which is done every three years, families at the top of the income ladder had little net worth growth between 2016 and 2019, but families at the bottom “experienced substantial gains.” The gap between college grads and those without has decreased. Median incomes for those with no high school degree increased 9% while those with a college degree declined 2.3%. This last was caused by a lot of retirees being replaced by lower wage young people just entering the labor force. Between 2016 and 2019 young people on average earned 13.4% more than under Obama between 2010 and 2016 when they only earned 5.8% more, and under Obama those with no high school degree only earned 1.7% more. It took a long time under Obama Biden for low wage workers to get ahead vs 2001-2004. Net worth for the bottom quintile went up 32% between 2016-2019. Among blacks it was up 32.1% and for Latinos 63.6%. Now there is a cultural lesson from those numbers. In 2019, 14.5% of low income people owned stocks, so the claim that the booming stock market is only for the rich is false. Home ownership rose among blacks 2.3% while under Obama Biden it declined. Business equity among blacks the past three years increased 138% vs nil under Obama Biden. Online businesses and deregulation making starting a business easier, and has been a boom for low income people who want to start a business. So these are facts from the Fed, not the Trump campaign. Trump has been far better for low income workers and blacks than Obama Biden.

Ratcliffe released a memo showing that it was Hilary and Brennan who initiated the whole Russia collusion story. It is clear from Brennan’s notes that everyone up thru Obama was privy to what was happening, and to one degree or another participated, including Biden.. We don’t know what Durham has of this, but he needs to bring charges now. It appears Ratcliffe decided to not wait for Durham and to release the evidence now. Pay attention to what he releases and watch Maria In the Morning on Fox Business to learn what is happening. Trump apparently gave up on Durham and has now released everything. We will see what the media do. This is the worst political scandal in US history by far, and the media, other than Fox, and mainly Maria Bartiromo, has refused to even mention it. That is its own scandal. If Biden wins this will all get covered up, so Trump needs to force it out now. Durham needs to start indicting or they will all get away with it. It is likely Barr will name Durham as an independent special council which Biden and Congress then cannot stop. It may be that Hilary does get charged.

CA is at it again dictating quotas. By 2022 all boards of public companies MUST have 2 diversity seats of minorities or bisexual people, and 3 if it is a large board. So I guess when interviewing people for board seats it is now expected to ask for a person’s sexual preferences which is otherwise outlawed. In jury trials it is now forbidden to use preemptive objection due to race, gender, etc. So much for the rights of the accused. They have formed a committee to study if they should pay reparations. Now who do you think is going to make up that commission. If you live in CA who knows what comes next other than you can count on higher taxes and more insanity and fires. Why does anyone live there anymore?

Trump did a good thing for everyone by getting sick. He showed the virus is not a death penalty, and now there are drugs to deal with it if caught early. The reality, despite the press pushing fear, is that most people do not get sick at all, or not very sick, and if you do get it, the chance of dying is 1% or less, and if you are healthy, it is tiny so long as it is caught very early. That is not much different than with most illness. If you act early, there is often a protocol to cure, or at least mitigate it. The media of course could not let Trump give a message of hope to everyone. The advances in medicine are terrific now, and much more is coming thanks to AI and other technologies. I see people at my tennis club in their seventies and eighties who have had all sorts of diseases and injuries, including cancer, and in two cases brain tumors, knee surgeries, hip surgeries, a mild stroke, etc, and who are out there playing tennis. I know one guy with 9 stents and one with 6 who are playing aggressively almost every day. A lot is in your head to go on with life and enjoy yourself, and be positive. As we age we all have aches and pains, and sometimes an illness, but if you just deal with it, and not let it get you down, you can have a happy and productive, and likely, more healthy period of aging. Complaining does not make the pain go away. Age is just a day on a calendar. Make the most of your time, there is no do over. As my grandmother told me at age 99, far better to die sorry for what you did, than for what you wish you had done, but no longer can.

Watch what happens with Brexit over the next two weeks. Boris has called the bluff of the EU with his change to the Ireland covenants, and he is essentially telling the EU to go stuff it. The UK wants its freedom and will take it no matter what the EU threatens. Boris is a no nonsense guy who is not going to fold. It might be a very hard Brexit in two weeks. He is the EU’s worst nightmare. The EU will pay a heavy price for no deal with the UK who will do deals with the US and others very quickly. Also watch Azerbaijan. That little war could easily spin out of control.

The latest from CA insanity. People are ordered to only pull down the mask BETWEEN bites when they eat out. CA reaches a new level of stupidity almost daily now. Maybe the smoke has clogged their brains. Maybe the fires will impel a lot more people to leave.

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kommonsentsjane

About kommonsentsjane

Enjoys sports and all kinds of music, especially dance music. Playing the keyboard and piano are favorites. Family and friends are very important.
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