2:00PM Water Cooler 3/23/2018

By Lambert Strether of Corrente.


“President Donald Trump said the tariffs would hit goods with a combined total value of “about $60 billion,” although the administration said earlier they would cover $50 billion of imports. That amounts to about 10% of U.S. imports from China, and the administration chose 1,300 product categories that may be covered. China quickly fired a retaliatory shot back against what called a “vile” action, targeting for higher tariffs $3 billion in U.S. goods, including fruit, pork, recycled aluminum and steel pipes. Bigger items like Boeing Co. aircraft and soybeans weren’t on Beijing’s list, suggesting there’s still room for negotiations, or for the confrontation to escalate” [Wall Street Journal].

“‘I don’t think this is a trade war,’ says veteran Wall Street strategist” [MarketWatch]. “‘We have been to this dance before,’ [veteran strategist Marc Chandler] writes at his Marc to Market blog. ‘Countries will respond with some symbolic retaliation on a small number of goods that make a little more than a rounding error in bilateral trade, take some measures to ensure that the defection of the U.S. does not lead to an import surge, and appeal to the conflict resolution mechanism at the WTO.'”



“2020 Dems compete for top campaign operatives” [The Hill]. Robbie Mook is quoted as an authority. IIRC, Sanders’ campaign manager ran a comic book store. So maybe candidate and message count too?

New Cold War

“US imposes sanctions on Iranians for hacking” [Digital Journal]. “The United States imposed sanctions on Friday on 10 Iranians and an Iranian company for alleged hacking of hundreds of universities in the US and abroad and the theft of ‘valuable intellectual property and data.'” That was fast.


“Deja Vu All Over Again. Health Care Takes Center Stage in 2018 Campaigns” [Amy Walter, Cook Political Report]. “A nurse and former HHS official under President Obama, Lauren Underwood won the primary for the exurban Chicago-based 14th district currently held by GOP Rep. Randy Hultgren. Her ads featured her in scrubs, where she boasted of her work in ‘expanding access to care‘ while ‘our congressman has not looked out for the folks in the 14th district.’ Betsy Dirksen Londrigan, who won the Democratic primary to face Rep. Rodney Davis in the Springfield-based 13th district, talked of her son’s rare and almost fatal infection, arguing that ‘Trump’s health care plan would have bankrupted us.’ Last week, I met half a dozen Democratic candidates running for GOP-held seats. Every one of them mentioned health care as one of the main reasons for their candidacy. Most mentioned the vote the GOP incumbent had taken last year to repeal Obamacare, framing it as a Republican attempt to ‘take away health care’ from district constituents that will raise the cost of insurance.” Note the propagation of the “access to care” — as opposed to “care” — talking point. “Access,” as we know, involve co-pays, deductibles, narrow networks, eligibility requirements… Everything makes ObamaCare unfair and broken by design.

“A Creeping Sense of Doom for Republicans” [Charles Cook, Cook Political Report]. “In my meetings with GOP strategists, there is a sense of doom and resignation. On and off the Hill, Republicans are now settling into the new normal of their 2018 midterm-election plight. Unemployment and inflation are both low, consumer confidence is high, and GDP growth for this quarter is expected to come in around 2.5 percent—although it should be noted that the U.S. economy is growing pretty much at the same pace as the rest of the world in what economists call synchronized global growth. Despite those favorable indicators, Trump’s approval ratings remain at historically and toxically low numbers and his party is heading into a very challenging midterm-election campaign. At least today, it looks fairly likely Republicans will lose their House majority, while there is enormous uncertainty about how their 51-49 Senate majority will fare…. While things certainly could change between now and Nov. 6, they would have to change quite a bit for Republicans to salvage their House majority and take advantage of what should be a great opportunity to gain Senate seats.”

“Insiders See Democratic House Gains of 30-45 seats” [Stuart Rothenberg, Inside Politics]. “Seven and a half months before the midterm elections, the combination of attitudinal and behavioral evidence leads to a single conclusion: The Democrats are very likely to win control of the House in November. Just as important, Republican and Democratic campaign strategists also agree that an electoral wave has already formed…. ‘It’s baked in now,’ one veteran Republican campaign veteran told me, noting the GOP’s problems with women and college-educated voters. ‘We knew single women hated [the Republican Party]. We couldn’t do anything about that. But married women were different. We figured out how to deal with them by talking about pocketbook issues. But now college-educated women hate us. Even with the current economy. It’s the bullying, the nastiness, the tweeting. It’s all about Trump’s behavior.’ Republican insiders also worry that a chunk of ‘Trump voters” won’t turn out in November even though they still like the president personally. ‘There are blue-collar Democrats who voted for Trump but don’t care about the Republican Party. They are unlikely to turn out for a Republican candidate in the fall, though they could still help Trump in 2020,’ one GOP consultant said.”

IL: “In Chicago primaries, a string of defeats for the Democratic establishment at the hands of progressive Democrats” [Boing Boing]. “Four Democratic challengers backed by United Working Families (linked with the progressive Working Families Party) have successfully challenged establishment Dems backed by Chicago’s legendarily unassailable “Democratic machine,” effectively winning their offices at the same time, because the Democrat candidate always gets elected to those offices, thanks to Republicans not bothering to field candidates… The four upsets include the office of the County Assessor (who determines property taxes — traditionally an office that was able to trade favors for large Democratic Machine cash “contributions”), which went to Fritz Kaegi, who campaigned on a promise to eliminate the racial bias in assessments that overtaxed black and Latino neighborhoods to subsidize affluent white neighborhoods. Kaegi’s opponent raked in millions in campaign contributions from property tax-appeal lawyers, and won the endorsement of the Dem establishment, including state house speaker Mike Madigan and Congressman Luis Gutierrez. Other upsets: Aaron Ortiz beat Daniel J. Burke in a state-house nomination bid; Ortiz campaigned for legal marijuana, free college tuition, single payer healthcare, and an end to cash bail. Another house race was upset by teacher’s union organizer Brandon Johnson, beating Richard Boykin, and Delia Ramirez easily took the 4th House District nomination.”

NY: “Cynthia Nixon can beat Andrew Cuomo” [The Week]. “Cuomo has three large weaknesses. The first is how his self-image of Mr. Competence has been severely tarnished by his grotesque mismanagement of the New York subway.… The second is his history of treachery. Cuomo is one of those instinctively vicious politicians who thinks that betraying people, especially weaker and left-leaning ones, is the right thing to do almost by definition…. The third is his legendary thin-skinned pettiness…. Nixon is well-suited to press the attack on all three points.” Maybe. IIRC, Teachout did surprisingly well. Perhaps Nixon will do even better.

TX: “DCCC Boosts Texas Runoff Candidates, Risking Backlash” [RealClearPolitics]. “The committee added Colin Allred, a former NFL linebacker running in a Dallas district, and Gina Ortiz Jones, an Air Force veteran running in a perennial swing district on the border with Mexico, to the DCCC’s Red to Blue program, which gives beneficiaries fundraising and campaign support. Both Allred and Ortiz Jones are former Obama administration officials running for Congress for the first time, and both finished first in their respective primaries earlier this month, though each fell short of 50 percent, triggering the runoffs.” About MILO Ortiz’s opponent: “Treviño was a convention delegate for Bernie Sanders in 2016 and was endorsed by Our Revolution, a progressive group run by Sanders allies.” So what the liberal Democrats learned from 2016 was to rig their primaries openly. Will Treviño still have to attend a unity event with Ortiz Jones after being screwed by the Democrat nomenklatura?

Realignment and Legitimacy

“A new survey released by the Polling Institute at St. Leo University reveals some discouraging trends. While it’s not news that America is a deeply divided country, many of us appear to be losing hope we can reduce those divisions. Just 33 percent say they’re ‘optimistic’ about reducing political discord in America, a significant drop from the 49 percent who expressed optimism in March of last year. Even more disturbing: People appear to be more accepting of stifling speech and committing crimes on behalf of their political beliefs. Forty-two percent of those surveyed said ‘not all free speech patterns should be protected,’ up almost seven points from last year. Nineteen percent said that ‘at times, physical violence during demonstrations is justified,’ up one point from last year. And 17 percent said that damaging property is also sometimes justified during demonstrations, up three points from the previous year” [RealClearPolitics]. The published results give no indication of partisan or ideological affiliation.

Stats Watch

Durable Goods Orders, February 2018: “Significant strength is the verdict for February’s durable goods orders and with it, significant strength is now the tangible outlook for this year’s factory sector” [Econoday].”Durable goods orders jumped 3.1 percent in February to just top Econoday’s high estimate with ex-transportation orders, at a gain of 1.2 percent, very near the high estimate. The most convincing strength in the report comes from core capital goods (nondefense ex-aircraft) where orders surged 1.8 percent, which is well beyond the high estimate…. Year-on-year rates of growth are moving from the mid-single digits to the high single digits led by 8.9 percent overall with ex-transportation up 8.1 percent and capital goods up 8.0 percent. Today’s report helps confirm the enormous strength that has been posted over the last year by regional and private factory surveys and points to a sector that will increasingly contribute to employment growth and to GDP growth.” So the surveys are right and the data is wrong? But: “Civilian and defence aircraft were the main tailwind this month. This series has wide swings monthly so our primary metric is the unadjusted three month rolling average which marginally declined. I consider this a weaker report than what is observed at first glance” [Econintersect].

New Home Sales, February 2018: “Near expectations” [Econoday]. “Prices, however, are showing traction… Sales, whether for new homes or existing, have been struggling to gain traction so far this year. But they did end last year on an up note and heavy weather always makes winter a tough time to judge for housing. But rising supply and a strong jobs market are pluses for the new home market going into the spring selling season which will help offset drag from rising mortgage rates.” And but: ‘This month the backward revisions were upward” [Econintersect]. “Because of weather and other factors, the rolling averages are the way to view this series – and the rolling averages remain average for the levels seen since the beginning of 2016…. This data series is suffering from methodology issues which manifest as significant backward revision. Home sales move in spurts and jumps – so this is why we view this series using a three month rolling average.” And: “Disappointing growth, but no worries – yet!” [Calculated Risk].

Energy: “Radar images show large swath of West Texas oil patch is heaving and sinking at alarming rates” [SMU Research News]. “Analysis indicates decades of oil production activity have destabilized localities in an area of about 4,000 square miles populated by small towns, roadways and a vast network of oil and gas pipelines and storage tanks.Two giant sinkholes near Wink, Texas, may just be the tip of the iceberg, according to a new study that found alarming rates of new ground movement extending far beyond the infamous sinkholes. That’s the finding of a geophysical team from Southern Methodist University, Dallas that previously reported the rapid rate at which the sinkholes are expanding and new ones forming… The SMU researchers caution that ground movement may extend beyond what radar observed in the four-county area. The entire region is highly vulnerable to human activity due to its geology — water-soluble salt and limestone formations, and shale formations.”

Shipping: “New York dry bulk investment fund launches” [Splash 247]. “The Breakwave Dry Bulk Shipping ETF has been created by Breakwave Advisors and ETF Managers Group (ETFMG). The fund, called BDRY for short, provides long exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. This offers investors exposure to dry bulk freight without the need for a futures trading account. BDRY is designed to reduce the effects of rolling contracts by using a laddered strategy to buy contracts while letting existing positions expire and settle in cash. ‘We are thrilled to bring such an innovative product to the market, allowing investors to participate directly in the exciting world of dry bulk shipping’ said John Kartsonas, founder and managing partner of Breakwave Advisors.” I think if the world of dry bulk shipping gets exciting, then something is terribly wrong.

Shipping: “At least 2,000 commercial truck drivers will need to be medically re-certified in order to continue operating after the federal government today said it would revoke the medical certificates issued to drivers in the past two years by an Alabama chiropractor who was arrested and indicted on multiple criminal offenses” [DC Velocity].

The Bezzle: “Why Are Phantoms And Vampires Plaguing Tesla’s Model 3?” [Seeking Alpha]. A frankly speculative theory. Nevertheless: “If the phantom touch and vampire drain issues are not resulting from the pedestal design, and can be fixed with an OTA software update, then those problems may soon be forgotten. However, their emergence is yet another reminder that Tesla took huge shortcuts on the usual production parts approval process, and production line validation, and beta testing.”

The Bezzle: “Tesla Shows Signs of a Model 3 Surge” [Bloomberg]. “Our model is, by design, slow to respond to such changes in the data. In order to avoid over-reacting to unusual batches, we’ve averaged our production rates over time. That means our model’s current estimated production rate is still being held back by February’s temporary manufacturing pause. We expect the improving trend will continue next week, based on the data [registered and spotted VINs] we’ve already received.” Note that the numbers are still well short of Musk’s self-serving fantasies, and given Tesla’s quality assurance problems (see above) I’d like to know what they did to get those autos out the door.

Concentration: “Repost: Given Facebook’s current scandals, this seems like a good time to revisit this argument” [Observational Epidemiology]. Better than the headline: “For most of the 20th century, the government kept a vigilant watch for even potential accumulation of media power. Ownership was restricted. Movie studios were forced to sell their theaters (see United States v. Paramount Pictures, Inc). The largest radio network was effectively forced to split in two (that’s why we have ABC broadcasting today). Media companies were tightly regulated, their workforce was heavily unionized, and they were forced to jump through all manner of hoops before expanding into new markets to insure that the public good was being served. In short, the companies were subjected to conditions which we have been told prevent growth, stifle innovation, and kill jobs. We can never know what would’ve happened had the government given these companies a freer hand but we can say with certainty that for media, the Post-war era was a period of explosive growth, fantastic advances, and incredible successes both economically and culturally. It’s worth noting that the biggest entertainment franchises of the market-worshiping, anything-goes 21st century were mostly created under the yoke of 20th century regulation.”

Tech: “Silicon Valley’s Regulatory Exceptionalism Comes to an End” [Lawfare]. “Nor is talk of regulation hypothetical. Congress just passed (and President Trump is expected to sign) the ‘Allow States and Victims to Fight Online Sex Trafficking Act of 2017’ (also known as SESTA or FOSTA). This landmark bill will make online platforms liable if they’re used to facilitate sex trafficking. As I’ve written before, the background immunity that the law abrogates, Section 230 of the Communications Decency Act (CDA) of 1996, ‘is the most important legal driver of digital free expression’ and enjoys ‘enjoys near-mythic status among internet activists and technology companies.’ Talk of amending CDA 230 liability has always been ‘a third rail of internet-policy debates.’ Yet it’s finally happened—and though backers of SESTA and FOSTA have played down the bill’s effects on CDA 230, the legislation is likely to have important consequences. Now that Congress has limited CDA 230, it has made “make conceptual space for the kind of regulation … that technology companies have until now successfully fended off.” And the law signals that Congress is playing for keeps; if it’s willing to amend the Magna Carta of the internet, it’s hard to imagine any area of technological regulation that’s off limits.”

Tech: “How Congress Censored the Internet” [Electronic Frontier Foundation]. “The U.S. Senate just voted 97-2 to pass the Allow States and Victims to Fight Online Sex Trafficking Act (FOSTA, H.R. 1865), a bill that silences online speech by forcing Internet platforms to censor their users. As lobbyists and members of Congress applaud themselves for enacting a law tackling the problem of trafficking, let’s be clear: Congress just made trafficking victims less safe, not more…. The history of SESTA/FOSTA—a bad bill that turned into a worse bill and then was rushed through votes in both houses of Congress—is a story about Congress’ failure to see that its good intentions can result in bad law. It’s a story of Congress’ failure to listen to the constituents who’d be most affected by the laws it passed. It’s also the story of some players in the tech sector choosing to settle for compromises and half-wins that will put ordinary people in danger.”

Tech: Well, this is interesting:

Tech: And speaking of Facebook:

Tech: “Robotic process automation [RPA] efforts suffer from poor planning. Software robots don’t need to take breaks, they don’t make mistakes, and they can do the boring work for human employees. But there are growing pains associated with deploying robotic process automation, analysts say. A study by The Hackett Group finds that companies are failing to optimize processes or address data quality issues before introducing RPA to the workforce, and they’re underestimating the amount of time and resources required to deploy the robots” [Wall Street Journal]. If you think call centers and help lines are bad now, just wait ’til the robots are doing it.

Tech: Tim Berners-Lee on the Facebook Fracas. Thread:

Oddly, or not, Sir Tim doesn’t mention concentration, and doesn’t advocate that platforms be broken up.

Tech: We’re not the only ones who know that Google Search has been crapified. Thread:

The Fed: “Opinion: The Federal Reserve’s Powell might keep the party going longer than expected” [MarketWatch]. “In truth, no one knows just how low the unemployment rate can go before ‘bad things’ start to happen. But Powell seems open minded to the possibility that, in the low-inflation world we find ourselves in, it could be very low. In testimony to Congress in February, he said it’s possible that it could be as low as 3.5%. Which would be the lowest since 1969.”

The Fed: “The Great Inflation Mystery” [Bloomberg]. “Here are some of the things about inflation the Fed and other central banks are uncertain of: what causes it; what effects it has; what to count in measuring it (stock prices?); how low, or high, it should be; and how to move it up and down. The Fed, in other words, is driving blind. Daniel Tarullo, in a tell-all address at the Brookings Institution in October after his resignation from the Fed’s Board of Governors, said, ‘We do not, at present, have a theory of inflation dynamics that works sufficiently well to be of use for the business of real-time monetary policymaking.'” Alrighty then.

Five Horsemen: “In late morning trade, the Fab Five hovered near unchanged after yesterday’s shellacking” [Hat Tip, Jim Haygood].

Five Horsemen Mar 23 2018

NakedCap Mania-Panic Index: “The mania-panic index fell to a year-to-date low of 29 as the S&P 500 slid below its 125-day moving average and underperformed bonds during the past month” [Hat Tip, Jim Haygood]. (The NakedCap mania-panic index is an equally-weighted average of seven technical indicators derived from stock indexes, volatility (VIX), Treasuries, junk bonds, equity options, and internal measures of new highs vs new lows and up volume vs down volume … each converted to a scale of 0 to 100 before averaging, using thirty years of history for five of the seven series.)

Mania panic index Mar 22 2018

Health Care


“How to invest in water: A long-term bet on an essential commodity with limited supply” [MarketWatch]. “With global demand for water expected to explode in the coming years, fund managers are recommending investing in the space as a long-term bet on an essential commodity whose supplies are limited…. The Guggenheim S&P Global Water Index ETF has gained 11% in the last 12 months, while the PowerShares Water Resources ETF has added 20% and the PowerShares Global Water Portfolio has risen about 15%.”


“The Great Pacific Garbage Patch Isn’t What You Think it Is” [National Geographic]. “Microplastics make up 94 percent of an estimated 1.8 trillion pieces of plastic in the patch. But that only amounts to eight percent of the total tonnage. As it turns out, of the 79,000 metric tons of plastic in the patch, most of it is abandoned fishing gear—not plastic bottles or packaging drawing headlines today.”

Class Warfare

“Scotland Yard has admitted Special Branch officers passed information to a controversial network that blacklisted construction workers” [BBC]. “It follows a six-year battle to find out if the Metropolitan Police supplied the intelligence on trade unionists. The force says its investigation had ‘proven’ the allegation, which will be investigated by a public inquiry. Workers who say they were unfairly barred from jobs have already received millions of pounds in compensation.”

News of The Wired

“A Pillowcase Makes a Fine Substitute Pouch for an Orphaned Kangaroo” [BLCKGRD]. An 2011 sighting of John Bolton with pre-#Resistance act of Resistance. (BLCKDGRD is another old-school blogger, apparently hit hard by recent Facebook algo changes.) And then there’s this.

‘Do Crowds Know Best? Some Reflections on CBS Correspondent David Begnaud’s Experiment in Crowdsourcing Journalism on Puerto Rico #6MonthsAfterMaria” [The Puerto Rico Data Lab]. “[C]rowdsourcing works best when a majority of the people who responded to his ‘call-out’ have some prior knowledge of the issues being considered. Thus, this particular analysis does not answer whether or not crowds are always right. But it does demonstrate that a majority of the followers who responded to Begnaud’s call for information knew quite a bit about Puerto Rico’s and its challenges following Hurricane Maria.”

“Why Amazon’s Data Centers Are Hidden in Spy Country” [The Atlantic]. Well worth a read. Speculating freely: Amazon locating it’s second headquarters in the Beltway is a foregone conclusion, and not just because The Jeff Bezos Shopper circulates there.

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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 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 (Oguk):

Oguk writes: “This is coming up all over my (small) garden right now. Apparently, it is Pennsylvania bittercress. ‘All parts of C. pensylvanica are considered edible.’ Tastes a little like horseradish.”

* * *

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. Jim Haygood

    At least today, it looks fairly likely Republicans will lose their House majority, while there is enormous uncertainty about how their 51-49 Senate majority will fare

    A democrat-led House ain’t much of a bulwark.

    But it beats a straight Hoover ticket.

    1. sleepy

      Oh, but if the dems take control of the house it will be nonstop “heal the wounds of a divided nation” and “let’s end this partisan bickering” stuff. By god, the nation put us here to Do Something!

      Gridlock is great, but much of the present gridlock has come about because of congressional repubs clubbing each other. With dems running the house, no telling what BS compromises they’ll cook up.

    2. Big River Bandido

      Honestly…between Amy Walter’s piece for Cook Political Report and the Real Clear Politics story on the corrupt DCCC’s open tilting of the playing field in favor of the usual hacks and against Sanders supporters, I’m beginning to expect this election cycle to be a whole lotta nothin. The “Democrats” (read: DCCC, DSCC and DNC) will spend a toiletful of money on consultants, with the exact same results as the last few years.

      And if most of their nominees come from that same place in the party, I’m beginning to think I would prefer the “Democrats” remain in the minority in the fall.

      1. dontknowitall

        After the election I expect to hear Nancy Pelosi declare that impeachment is off the table and that they must keep the powder dry.

        Seriously, this smells like the prognostications before the presidential election that Hillary was as good as elected. Dems are nearly broke compared with the republicans and there are many months and a hot summer to go.

        1. hunkerdown

          Shouldn’t the Democrat establishment be a little more cautious about sitting on top of so much dry powder? Remember, remember, the fifth of November? Or the 7th, for that matter.

      2. sierra7

        Dems will be proffering another bad ham sandwich from the same corrupt contaminated deli…….

      3. Lambert Strether Post author

        I think the key element here is that the conventional wisdom needs to congeal immediately before the campaign consultants get hired. Because otherwise the consultants don’t know how to tailor their pitch.

    3. Yves Smith

      Come on. Trump is deficit spending. Smoot Hawley didn’t case the Depression. And Trump’s tariff threat re China is pretty certain to be dialed down and China is barely retaliating. This is just another trade spat and they happen all time. This one looks worse because Trump is great at looking and being reckless, but his actual recklessness is in his personal proximity. As Jim Baker pointed out. Presidents are subject to a lot of restraints.

    4. ebbflows

      So do you Jim understand the long term ramifications, T-bills are like the pacific plastic play pool, remediable some where in the future mate.

  2. lyman alpha blob

    This morning on the way to work a woman stepped into the street right in front of our car. My wife, who was a human being last I checked, gently tapped the brakes and everyone is still alive. Fancy that.

  3. David

    China quickly fired a retaliatory shot back against what called a “vile” action, targeting for higher tariffs $3 billion in U.S. goods, including fruit, pork, recycled aluminum and steel pipes.

    The largest pig and pork producer in the world (Smithfield Foods, Inc.) is a wholly owned subsidiary of WH Group of China.

    Enjoy your tariffs.

    1. Elizabeth Burton

      It’s a pity the Chinese opted not to include a tariff on almonds, which might have had some benefits for the water table in California.

      1. Wukchumni

        Nuts are included in the tit for tat tariffs from China, maybe we’ll see these tv commercials again pleading with us to consume a can of almonds a week?

    2. jo6pac

      I was thinking the same thing until

      Or maybe Smithfield foods get exception from the Chinese govt. and the smaller producers in Amerika go under the wheels of the bus. It would raise prices and they would control the market. It’s sound like a business plan even wall street would like;-)

      1. Duck1

        Just spitballing here, but maybe the Chinese investors bought Smithfield to manage setting up CAFO’s in China, along with the downstream supply integration.

        1. Eudora Welty

          Yes, I learned from a governmental hearing on C-span that nearly all the slaughterhouses in the USA are now owed by Chinese firms. I wonder if they are still consulting with Temple Grandin about the most humane ways to create productions lines.

          1. MyLessThanPrimeBeef

            I would think baby formula makers as attractive acquisition targets as well.

            Maybe Australia offered/is offering better deals.

    3. MyLessThanPrimeBeef

      California has benefited a lot from imports replacing what used to be made by the Deplorables.

      Conversely, this state has a lot to lose as well.

      I wonder if gov. Brown will offer tariff sanctuary to Chinese steel and aluminum.

  4. JohnnyGL

    “Opinion: The Federal Reserve’s Powell might keep the party going longer than expected”

    Perhaps he was given the job because he was instructed to keep the party going long enough to get Trump re-elected?

    Last time the Fed let things go, the party kept going until we had a massive financial crisis that collapsed under its own contradictions.

    1. Jim Haygood

      ‘Instructed to keep the party going’ assumes that someone actually thought four years ahead.

      But the R party’s crackpot fiscal stim which starts rolling off after 2019 as debt mushrooms suggests a planning horizon of next week.

      A recession in election year 2020 is at least a 50-50 shot. If Lord Japewell succeeds in inverting the yield curve, we’ll hike the recession probability to 95 percent. And that’s no joke.

      Herbert Hoover — by all accounts a very stable genius — was a one-termer. :-0

      1. JohnnyGL

        My gut tells me the fiscal stim is going to be underwhelming, in spite of the size. The multiplier is just so low….more cash being piled ever higher in the Caymans.

      2. Scott

        I never thought of it before, but there are a number of similarities between the presidential campaigns of Herbert Hoover and Hilary Clinton. Both were cabinet secretaries who ran on continuation of the current president. Both stressed their experience and competence. Both were popular oversees. Both were “pro-business” and thought the economy was strong. And following their defeat (Hilary the year she ran and Hoover after losing to FDR) decried the actions of the president.

        1. Darthbobber

          And a couple of differences. Hoover in cabinet made his rep in European reconstruction and relief, if I remember. Clinton in blowing things up and rattling sabres at those not yet attacked.

          +Hoover successfully became president and looked popular enough until the wheels fell off the wagon late in ’29.

      3. djrichard

        A recession in election year 2020 is at least a 50-50 shot. If Lord Japewell succeeds in inverting the yield curve

        Well the Fed Reserve is at 1.75% now. Let’s say another 125 basis points to go and that yield curve is definitely inverted. So five hikes down the road. Could happen in 2019, who knows. Certainly by 2020.

        Looking at the 3 month yield it’s been roughly rising 25 basis points every two months consistently, since Sept 2016, well before Trump was elected. Either the Fed Reserve has been doing a fantastic job of telegraphing where they want it to be. Or there’s some other machinery at work in driving that trend, not only for the 3 month treasury, but for Libor and commercial paper market as well. Machinery that’s either creating more issuance of paper at the short end or currency is getting more consumed at the long-end.

      4. griffen

        What’s the joke about economists & recessions ? But sure I’ll go with a 50-50 potential in / prior to 2020.

        I’m interested in how the 10yr – 30yr
        UST duration / maturities perform in such an environ. Perhaps, just maybe, something is to come in high yield & credit

  5. Jim Haygood

    More than ‘symbolic retaliation’ —

    Hu Xijin 胡锡进

    I learned that Chinese govt is determined to strike back. Friday’s plan to impose $3b tariffs is [only] to retaliate tariffs on steel and aluminum products.

    China’s retaliation lists against the 301 investigation will target US products worth $ tens of billions. It is in the making.

    11:49 AM – Mar 23, 2018

    Sad! Stocks are puking again today, as well they should be. Flake-o-nomics don’t pay — who woulda thought?

    1. MyLessThanPrimeBeef

      Three fronts, for China.

      North Korea

      Of the three, the last one is the least uncompromisable for them.

      Just watched PBS’ the Battle of Chosin.

      It can be argued that it was a crime against humanity to send ‘volunteer’ Chinese Liberation Army soldiers, without shoes at all, to teach those Americans a lesson, as Mao surprised MacArthur on his way to the Yalu, where it was -30 degree to – 40 degree around lake Chosin.

      Some Chinese soldiers, after they had surrendered, can be seen to have ice formed around their bare feet. (“But our heroes made those capitalist Yanks run and retreat.”)

      So, they will earn fewer US dollars and may have to work with Russia to protect their northeast flank, their industrial center, where the key province, Liaoning, is the name given to the aircraft carrier they recently sent into the Taiwan Strait, but they will not take orders from anyone when it comes to one member of their family, Taiwan, a rebel island, that until it was expelled from the UN (expulsion, not annulment of its previous membership), was recognized, widely, as China.

      So, Trump’s ace may be to keep embracing Tsai ever more tightly.

      1. Lambert Strether Post author

        The excellent Military Misfortunes has a chapter on Chosin, contrasting the differing fortunes of the First Marine Division and the Eighth Army.

        The Marine’s retreat from Chosin really was an epic of the Homeric scale.

    2. Jim Haygood

      Well, that escalated quickly — stocks took a turn for the worse in the final hour of trading. Now the curmudgeonly James Howard Kunstler has rolled into town to help shoot the wounded:

      What is unspooling for [Trump], and the body politic, are the nation’s finances, and the dog of an economy that gets wagged by finance. Yesterday’s 724-point dump in the Dow Jones Industrial Average is liable to not be a fluke event, but the beginning of a cascade into the pitiless maw of reality — the reality that just about everything is grossly mispriced.

      There is plenty of dysfunction in plain sight to suggest that the financial markets can’t bear the strain of unreality anymore. Between the burgeoning trade wars and the adoption in congress this week of a fiscally suicidal spending bill, you’d want to put your fingers in your ears to not be deafened by the roar of markets tumbling.

      A 40 to 75 percent drop in the equity markets will leave a lot of one-percent big fish gasping on the beach as the tide rolls out. But the minnows and anchovies will suffer too, as regular economic activity declines in response to tumbling markets.

      And then the Federal Reserve will ride to the rescue with QE4, which will very sharply drive the dollar toward worthlessness. The result: a nation with a sucking chest wound, whirling round the drain en route to political pandemonium.


      Rex Tillerson was right: Trump is a moron. He’s hell bent on driving this bus off the cliff with the throttle floored, the brake lines cut, the sound system blasting Ride of the Valkyries and his buddy John Bolton hurling smoke bombs to obscure the view ahead.

      Got gold?

      1. Wukchumni

        Luckily for many Americans, their $4.01k isn’t effected by falling stock prices, although that 9% hit when cashing it in @ Coinstar, has got to hurt.

      2. Carolinian

        Jeff Bezos lost $3 billion yesterday. Good times.

        And was the bus ever not going to run off the cliff? Kunstler doesn’t seem to be blaming this on Trump, actually.

        None of this makes President Trump a more reassuring figure. His lack of decorum remains as awesome as his apparent lack of common sense. But he has labored against the most intense campaign of coordinated calumny ever seen against a chief executive and his fortitude, at least, is impressive. What is unspooling for him, and the body politic, are the nation’s finances, and the dog of an economy that gets wagged by finance. Yesterday’s 724-point dump in the Dow Jones Industrial Average is liable to not be a fluke event, but the beginning of a cascade into the pitiless maw of reality — the reality that just about everything is grossly mispriced.

        1. Jim Haygood

          I’m with Kunstler on the ‘coordinated calumny’ which is certainly disturbing as it reeks of high-level corruption and the risk of a constitutional crisis.

          But the unilateral Section 301 tariffs and the egregious fiscal spree literally have Trump’s signature on them. They are unforced errors.

          1. MyLessThanPrimeBeef

            I hope I can improve my Social Credit score by saying ‘what is is.’

            In China, one can get a bonus point chanting the patriotic slogan, “Our tofu makers can take it. The weak American auto manufacturers can’t.’

    3. djrichard

      How’s 10Y yield doing? Is it above 3% yet? No? How can that be? That cataclysm was supposed to be imminent.

      The market will do as it always does, eat a cookie, and be right as rain as they climb that wall of worry again. Until the Fed Reserve pulls that punch bowl, and the Fed will make sure they telegraph that well in advance. You don’t even need to watch the Fed Reserve. Just watch the 3 month yield. It’s common knowledge, except for the muppets.

      1. Jim Haygood

        As we were discussing in another post, a sub-three percent note yield cuts both ways. If it holds stable while short rates rise, the yield curve will invert after a few more rate hikes.

        We’ve all free-climbed that old wall of worry, laughing at danger. But today VIX closed at 24.87, way below the high 30s it reached in early February with stock indexes about where they are now.

        From a buy-the-dip standpoint, one would want VIX to be higher on the retest of the Feb 8th bottom. VIX traders are too complacent, blind to the possibility of a sucker punch.

        Show me the fear! :-)

  6. diptherio

    A really good thread on the misuse of the term/concept of “white privilege” from Black Socialists of America:

    Let’s dissect the term and/or concept of “white privilege” and how it has been mistakenly used over the last few years by Liberals, Conservatives, and confused Leftists drawn into misinformation and propaganda (once and for all).

    You might want to bookmark this thread.


    1. Mo's Bike Shop

      Miigwech. Saving for tomorrow. My father’s first language was Pennsylvania Deutsch, my mother was hurt by how low the newsweeklies put Polish Catholics on their race evaluation tables. Has Coates ever written about the Irish struggle?

  7. foghorn longhorn

    Re: Permian Basin sinkholes
    Our genius overlords decided it would be wise to introduce nuclear waste storage into these shifting sands.
    The WIPP project has already had major issues, not as familiar with the one outside Andrews on the Tex/NM border.
    We don’t travel on that road anymore tho…

    1. Darius

      Senate Dems can show displeasure at the Bolton appointment by opposing Pompeo. It appears the Dem grandees can arouse themselves at least to condemn Bolton, as in an op/ed in the current NYT.

      1. We’re doomed!

        This John Bolton-thing really makes me depressed. He is a real threat to the world.

        1. Lambert Strether Post author

          Unfortunately, George W. Bush, who appointed him, is now a Hero of the Republic. So it’s not quite clear where a good faith, full-throated takedown is going to come from.

  8. dcblogger

    I almost never see Jeff Weaver quoted in the press. It might be because the press is anti-Sanders, or it might be because Weaver has decided that publicity is not in his interest.

  9. barrisj

    Re: Google search engine….all of our devices have DuckDuckGo as default SE, and I’ve checked and compared “quality” of defined search on both platforms…you lose nothing using DDG, even gain some really old links.

    1. Mo's Bike Shop

      Dark? Every time I have clicked a ‘sign in this picture’ I contributed to this result. This is why I try to put about 20 fails between me and ‘not a robot’.

  10. Carolinian

    This is an interesting article about Toys R Us.

    Retail is now moving towards automation and mechanization, with some fast food outlets replacing cashiers, and with Amazon Go reinventing the store as an empty self-service warehouse with bare industrial ceilings festooned with CCTV cameras. Indeed, if one goes back to the early days of the supermarket in the late 1920s and early 1930s, the whole point was self-service. An illuminating book on the history of A&P, “The Great A&P and the Struggle for Small Business in America,” recounts the backlash against what were then large, centralized supermarkets. A&P was destroying the mom-and-pop store. Yet those vintage A&Ps would today appear to be basic grocers and would be about the size of a CVS. There is an appropriate middle ground between moral panic and “it has always been thus.” The difficulty, of course, is finding where that middle ground lies.

    Will we one day recall, with a tinge of nostalgia, the warmth and community of the Amazon Go store, before we turn back to our headsets to do more “v-commerce”? Will the experience of actually going out shopping with help from informed, enthusiastic business owners be as distant to the average consumer as self-flagellation and hair shirts are to the average Catholic? Perhaps. Yet one of the fastest growing areas of retail is the local, the artisanal, and the seasonal. The spirit that animates farmers markets and craft breweries and bars lighted with Edison bulbs may well come to breathe new life into ordinary retail. In fact, small neighborhood toy stores—the kind that Toys “R” Us ran out of business over the decades—are making a comeback. The kids like them better, but whether the fickle globalized economy will has yet to be seen.


    My New Urbanized downtown has one of these mom and pop toy stores and perhaps it will do well. But the local downtown revival features far more coffee shops than retail stores. Strip centers still reign, at least for now.

  11. RenoDino

    “‘We have been to this dance before,’ [veteran strategist Marc Chandler] writes at his Marc to Market blog. ‘

    No, we’ve never been to the Bat an Eyelash dance before. That’s all North Korea and Iran will have to do to have their dance cards punched “Expired.”

    1. MyLessThanPrimeBeef


      I got a voice mail yesterday that my Microsoft Windows key had expired and I should call a number.

      I am still thinking that one over.

      1. Jim Haygood

        Prolly the same Dutch banker who emailed me yesterday to discuss sharing the proceeds of a “bonded account” in a Rotterdam bank with my surname on it.

        Too bad … I coulda used the ill-gotten loot to buy me a turnip truck. :-(

        1. MyLessThanPrimeBeef

          Then, later, also yesterday, there was another voice mail, this time, about being on some list at the IRS and to call a 855 number.

          1. Elizabeth

            There’s a new scam going around regarding “Apple devices” – the scam message says do not use your Apple devices to do financial information, and goes on to say to either speak to an Apple representative (press 1) or dial an 855 number. The scammers are really busy these days, and so far I’ve received 3 of these messages. I don’t use Apple, so I don’t know what that’s about.

  12. kareninca

    Would you think that Walmart could actually become more crapified? Well, it has.

    No, I am not a Walmart fan at all, but I go there about once every six months for a couple of things that I can’t reasonably get elsewhere (a few such things do exist). When I go I get a cartful of stuff, to make the trip worthwhile. The local Walmart (Mountain View, CA) has always been crowded and has had long lines and few cashiers; I have been resigned to that.

    Well, now they have gotten rid of almost all of the cashiers. Wednesday night I went for my twice a year shop, and there was one cashier; her line was unimaginably long. But they have created a “self-check-out corral.” It is huge – dozens of self-check-out machines in a giant circle. But not enough for the number of shoppers. There is a mob in the center of the corral, and when a spot comes open, a portion of it surges towards the machine; only the hardiest gets to check out.

    So, I left my filled cart and departed. I hope they enjoy putting my proposed purchases back. I hope that happens a lot to them. What a demeaning, horrible place to shop. But the thing is, some people can only afford Walmart. And I will be back myself; I have to have a couple of things they carry. I will be bringing a book, and waiting in the cashier line.

    1. Carolinian

      Well some of us prefer the self check out and I wish my nearby Walmart had one (they did, but then they took it out). However almost all Walmarts now have the “corral” and usually people wait patiently in line for the next machine. I’ve never been in an actual Walmart that only had one cashier but i’ve noticed the local Walmart grocery (small, grocery version of Walmart) has switched to one cashier and the rest self checkout. They also now have curbside grocery pickup so perhaps they put the cashiers to work pulling grocery orders. Blame it on Bezos?

      Believe or not Walmart is under some pressure from competition. Across the street from my nearest Walmart is a billboard that proclaims “Lidl–as much as 23 percent cheaper than Walmart.” Lidl is the new German owned grocery.

      1. begob

        In the UK the German grocers, Lidl and Aldi, don’t do self check-out. The queues are tolerable.

      2. kareninca

        Here in Silicon Valley Walmart has no competition. It is by far the cheapest place for a lot of things. We don’t have the same discount places that other areas have; we don’t have Aldi or Lidl; I guess the rents are too high. And people don’t wait patiently in line in the corral; they are not trying to be rude but there is no system or order. You have to be a gladiator – or maybe the most aggressive steer – to check out. I went back last night and they suddenly had several cashiers again; maybe enough people had left behind their full shopping carts. I had come prepared with something to read so the long line for the cashier was tolerable.

    2. Lambert Strether Post author

      > a “self-check-out corral.”

      May the most feral “smart shopper” win!

      * * *

      Maybe Walmart management could call in Temple Grandin to make the “check-out process” less painful for the animals. If they wish to do that, of course.

      1. kareninca

        At one point Walmart’s aim was to get better-off customers. Perhaps this is a sign that they have given up on that. They can torment poor people as much as they like, since they have no other options, but if they torment middle and upper middle class people enough they will pay Safeway/Amazon prices to avoid the ill-treatment.

  13. Oregoncharles

    We have a version of bittercress here, usually called wintercress because that’s when it grows. I’d say it tastes like watercress, which would set you back a pretty penny at the store. Ours is blooming now, little white flowers. Good in salads.

    The disadvantage: if you touch the ripe seed pods, they explode, throwing seeds all over the garden and potentially into your eyes. A very clever way of spreading the joy. Aside from that, a very useful edible winter cover crop, rather like corn salad in its habits. That volunteers in my garden, too.

  14. Summer

    “The company reacted with a strategy that, in the words of one confidential planning document, would “correct seniority mix.” It slashed IBM’s US workforce by as much as three-quarters from its 1980s peak, replacing a substantial share with younger, less-experienced and lower-paid workers and sending many positions overseas. ProPublica estimates that in the past five years alone, IBM has eliminated more than 20,000 American employees ages 40 and over, about 60 percent of its total US job cuts during those years. (Read more about how ProPublica got the story here.)…”

    “…And the way it treats its experienced workers will eventually affect younger IBM employees as they too age….”

  15. Wukchumni

    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran (force our hand)
    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran
    You’ve got Bolton rockin’ and a-rollin’
    Rockin’ and a-reelin’
    Bomb Iran
    Ba ba ba ba bomb Iran

    Want to recant
    An agreement just because we can
    Saw we could bomb Iran
    So we thought we’d take a chance and
    Bomb Iran, force our hand
    You’ve got Bolton rockin’ and a-rollin’
    Rockin’ and a reelin’
    Bomb Iran
    Ba ba ba ba bomb Iran

    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran (force our hand)
    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran
    You’ve got Bolton rockin’ and a-rollin’
    Rockin’ and a reelin’
    Bomb Iran
    Ba ba ba ba bomb Iran

    Tried Flynn
    Tried McMaster too
    Tried Tillerson, the Exxon dude
    But the Donald knew they wouldn’t do
    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran
    You’ve got Bolton rockin’ and a-rollin’
    Rockin’ and a reelin’
    Bomb Iran
    Ba ba ba ba bomb Iran

    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran (force our hand)
    Ba ba ba ba bomb Iran
    Ba ba ba ba bomb Iran
    You’ve got Bolton rockin’ and a-rollin’
    Rockin’ and a reelin’
    Bomb Iran
    Ba ba ba ba bomb Iran

    Bomb Iran, bomb Iran
    Bomb Iran, bomb Iran
    Bomb Iran, bomb Iran


  16. The Rev Kev

    In a shocking development, Special Counsel Robert Mueller has confirmed that there was indeed collusion in the 2016 US elections. However, it was not with the Russians as has been investigated but with the British via Cambridge Analytica. Furthermore, it was not with the Trump team as suggested but instead the Clinton team with the FBI being accessories both during and after the fact.
    In response to this shocking development, the US has announced more financial sanctions on Russia with 144.3 million Russians being added to the sanctions list.

  17. Alex Cox

    Did the BBC really report Scotland Yard as saying “The force says its investigation had ‘proven’ the allegation”?

    These are both English entities and the correct English usage is “proved.”

    “Proven” is American usage. No surprise at all, I suppose.

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