Friday, February 19, 2021

You Can Tell A Book By It's Cover. Rough Start Suggests Prepare For Disastrous End. Pastor Nails It and Ross Rants. Kim And Slush..



 









You can judge a book by it's cover.











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A little Alabama humor:

 

Bubba and Billy Joe are on vacation in Chicago, walking aimlessly on a downtown street, window shopping, and they see a sign on a store which reads, "Suits $5.99 each, shirts $1.99 each, trousers $2.49 each.” 

 Bubba says to his pal, "Billy Joe, Lookee here!  We could buy a whole gob o’ these, take ‘em back to Alabama, sell 'em and make a fortune.  Just let me do the talkin', 'cause if’n they hear your accent, they might think we's ignorant, and not wanna sell that stuff to us. Now, I'll talk in a slow Texas drawl so's they don't know we is from Alabama." 

They go in and Bubba says with his best fake Texas drawl, “I'll take 50 of them suits at $5.99, 100 of them there shirts at $1.99, 50 pairs of them there trousers at $2.39.  I'll  go get my pickup and back it up  and...."

 "The owner of the shop interrupts, "Y'all from Alabama, ain't ya?"

 "Well...yeah," says a surprised Bubba  "How come y'all knowed that?"

 "Because this is a Dry-Cleaners."

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Rough start could lead to disastrous ending, stay tuned:  https://www.wsj.com/articles/bidens-rough-start-with-the-world-11613430041?mod=opinion_major_pos8

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This pastor got it right:


Prayer in Kansas senate

 

This interesting prayer was given in Kansas, USA, at the opening session of their lSenate. It seems prayer still upsets some people.


When Minister Joe Wright was asked to open the new session of the Kansas Senate, everyone was expecting the usual generalities, but this is what they heard:


"Heavenly Father, we come before you today to ask your forgiveness and to seek your direction and guidance. We know Your Word says: "Woe to those who call evil good", but that is exactly what we have done.


* We have lost our spiritual equilibrium and reversed our values.


* We have ridiculed the absolute truth of Your Word and called it Pluralism.


* We have worshipped other gods and called it multiculturalism.


* We have endorsed perversion and called it alternative lifestyle.


* We have exploited the poor and called it the lottery.


* We have rewarded laziness and called it welfare.


* We have killed our unborn and called it choice.


* We have shot abortionists and called it justifiable.


* We have neglected to discipline our children and called it building self-esteem.


* We have abused power and called it politics.


* We have embezzled public funds and called it essential expenses.


* We have institutionalized bribery and called it sweets of office.


* We have coveted our neighbor's possessions and called it ambition.


*We have polluted the air with profanity and pornography and called it freedom of expression.


* We have ridiculed the time-honored values of our forefathers and called it enlightenment.


Search us, Oh GOD, and know our hearts today; cleanse us from every sin and set us free. Amen!"


The response was immediate. A number of legislators walked out during the prayer in protest.

In 6 short weeks, Central Christian Church, where Rev. Wright is pastor, logged more than 5,000 phone calls with only 47 of those calls
responding negatively.


The church is now receiving international requests for copies of this prayer from India, Africa and Korea.

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Ross Rants again:

I keep warning about the coming day of reckoning in the stock market. I only repeat this again because the little group of investment professionals that lets me join in, and other respected investor pros keeps talking about it, and the January data show inflation is beginning to happen. There is unanimous consent among the group that all of this fiscal spending, Fed activity, and the hyper prices in the stock market right now, cannot last forever, and it is just a question of when, and how bad it will be. None of us has any real idea of when, so don’t think I am going to today tell you when. What I do know for sure, it will come, and it will be bad when it does. I just care that you are aware of reality, and are prepared to act when the time comes.

 

 In the meantime, the market is likely to continue going up for much of this year, barring some new black swan, or unless the inflation numbers are high again in February. If that happens, then the bull market may end early. How much higher could the market go, maybe to 4500 on the SPX, but maybe 4250, or less. 4500 is around 14% higher, which would put it much too high given earnings multiples that make fundamental sense, but nothing makes much sense right now to us who believe in old time Graham & Dodd fundamental investing. The market believes the economy will ramp up through the rest of the year as vaccines get widespread, and earnings return to substantial growth across all industries.

 

The consensus of analysts is for 23% earnings growth for the SPX in 2021. Industrials, consumer discretionary and material to lead the way.  I agree with that general concept of good earnings growth in 2021, but we are in a classic over enthused bull market now where euphoria appears to exceed reality when it comes to valuation thanks to the Fed. Therefore, there is no way to predict much of anything with confidence, and these types of bull markets always end badly. If inflation does rise more than the Fed forecasts, then everything will change. A lot of people besides me are getting concerned this will happen. The ten year is already at 1.3%, core PPI is up 2% year over year. CPI core is up 1.2%, but it is hard for companies to raise retail prices right now, so there could soon be a margin squeeze. Food prices will rise now with the freeze in TX killing livestock and things like milk and egg processing is stopped. Retail sales were up 5.3% in January, way above forecast. That is the one shot $600 stimulus checks being spent.

 

There is still $1 Trillion unspent from the last stimulus bills, and an added $1.9 Trillion is going to be wasted on all sorts of things that do not impact the economy or Covid. Yet Joe says it will create 7 million jobs. Utter BS. Those 7 million will happen by itself if they open schools and lift the shutdowns. A lot of the $1.9  won’t get spent in 2021. This is a pure Pelosi payoff to her favorite people, and will be spread over three years. Whatever money does go to individuals from the new stimulus, part will go back into debt reduction, savings and Robinhood investing, with only some being spent. Biden is blatantly lying about the $1.9 package, or likely he has no clue what is really happening, and the press ignores the facts again. The left says go big as a better answer, but they are going around $1.4 Trillion too big and spending is not the solution. Vaccination and opening is.

 

Meantime retirees are continuing to work because with zero rates they need the cash since they are not getting interest on savings. So young people are in some places being kept from jobs because the old people are not retiring. One small part of why unemployment is high.

 

Bitcoin is pure fantasy. Don’t get sucked in. It is not, and will not be, a currency. Institutions are just playing with it as a speculative investment, not as currency, regardless of what Musk says or does. It has no other value than what the next sucker is willing to pay to buy  it from you. Real hard currencies have a stable government, or gold backing them. Bitcoin has hot air, and a lot of speculators.

 

Right now Cathie Wood, CIO of AARK Investments is the star of the moment. She has a great record, and is attracting major new investment dollars. Here is the issue. She is likely to be another falling star at some point as all before her have been. Abby Joseph Cohen, Mary Meeker etc. The more new funding coming into AARK, the harder to put it to effective use. She will have to start owning too much of some of the companies, and then when she wants to get out she is the market. The old story-I bought 1000 shares of X, and it went up 2 points, and so I bought more, and it went up more, so I kept buying more. Now that it is up 25% I want to sell, only to discover I am the buyer. AARK now owns a big piece of some of these companies so getting out at high prices might drive the shares back down.

 

Interest rates have declined over the 40 year period since the eighties. However, long bond rates are now back up over 2%, and will rise from here. Short rates will stay lower than 2% for quite a while since the Fed will just buy the short bonds to keep the rates low, creating a false market price. However the ten year is now at 1.3%, and if it gets to 1.5% the stock market will not react well. Inflation is happening, but is being hidden from the public for now by the Fed buying bonds. All of the basic costs from oil, to trucking rates, soy, corn, copper, lumber, aluminum, and other basic commodities are up a lot. Oil is up and going higher which means gas prices will be up. It is possible the long bond will rise another 50-100 BP over the next two years.  If that happens your bond portfolio will get creamed. TIPs might be OK, but that is not something I am knowledgeable about

 

There is a short term good news for some with these low rates, especially for junk debt. Many companies considered on the edge of default, or even BK, have been able to refinance their debt at much lower rates than their outstanding liabilities had carried, which were going to take them down with the slow economy.  Along comes absurdly low rates on junk loans, ( under 4%), and the good fairy and the angels have landed. Many of these zombie companies will now live to see another day as the economy improves and with  lower debt service. The problem is, many of these businesses were junk because they were poorly managed, or their product is not very good and is losing out to competitors, or their other costs of production are too high. So in some cases all that has occurred is companies that should go out of business will survive a little longer. Taken on a macro basis, this is not helpful to the economy to have weak, unproductive businesses sucking up capital that should go to more productive entities. This is a major problem in the EU where banks have essentially carried large numbers of zombie businesses which should have died. It burdens the banks with essentially bad debt, and the economy, and simply delays the day of reckoning. The first loss is almost always the best loss.

 

A major economic forecasting firm projects that the market will go down 10%-20% in 12-18 months. I believe that to be a realistic forecast. The euphoria is feeding on itself now, and that always ends badly at some point.  To me this feels like mid-2007, and the black swans are circling. I plan to stay fully in equities for several more months at least, and to monitor the ten year, inflation, oil prices, Fed Speak, and the VIX. In the end I will rely on my gut to say time is up. That might not be until 2022. I have no idea now. I do not know anyone who is a sophisticated investor who does not basically agree that the market is now in the euphoric stage, and will crack in the next 1-2 years. One could say given all that, we should be short, but the risk is the market likely will go up a lot for many more months, and shorts will get creamed as just happened with GME. Not a good risk reward scenario to my mind. Nobody should count on me knowing when the exit sign lights up. You need to figure that out yourself. I was early out in May, 2007, and exactly on time back fully invested in March of 2009.  But past performance is not a predictor of the next time when it comes to markets that act irrationally, and a Fed that is, in my view, driven to do things it should not be doing.  The Fed and fiscal spending is just pulling demand forward, and that will just intensify the down when it happens.  

 

2/3 of all hotel staff earn under $15 per hour. Hotels have been devastated by shutdowns and travel restrictions. The last thing they need is higher wage costs. So what do Pelosi and Biden want- higher wage costs. Logical. What will hotels do- cut staff permanently and turn to tech solutions. Same for restaurants. That is why CBO predicts 1.4 million jobs will be eliminated with a $15 minimum. Politics over brains. They will sell it as lifting people out of poverty by ignoring that  prices will rise when wage costs rise, and leave low income people maybe worse off???  No job and higher prices. I guess if you are a DC politician and never had a real job all of your life, you cannot understand how this works in the real world.

 

Reality check on $15 minimum wage. A 2014 study, which is believed to still be relatively valid, showed that only 13% of minimum wage earners are poor. Only 5% are single mothers. 2/3 have family earnings over 2x the poverty level. 40% earn 3x poverty level. Most are teens in their first job living at home, or are retirees working part time for a few extra dollars income. Another study showed that young blacks depend on these jobs to get a start learning about working and to have a start to improve their lives. Fact. Minimum wage laws were first passed in the thirties to keep blacks unemployed so they would not take union jobs at a lower wage.  JFK publicly stated in 1957,  when he was a senator, that “we needed minimum wage laws to keep blacks from coming north and taking union jobs from whites”. Truth is, black teenagers who want an entry level job, would be the big losers if it is raised to $15. Bernie and Nancy do not understand any  of that.

 

The Robinhood hearing just proved what we all know-Congressmen know nothing at all about how the markets really work, and just like to posture for the camera. Nothing will change.

 

Next move by Cuomo was to blame the nursing homes, staff people, misunderstanding by all, Trump, and the wicked witch, for the deaths he mandated, and next comes suing some of the homes with a claim of dereliction of duty. This is classic shift the press attention from Cuomo to the people who run nursing homes after he forced homes to take in the Covid cases. Since the press has lavished praise on Cuomo, and he was even given an Emmy, similar to Obama getting the Noble Peace Prize, you can be sure the press will push this line of, it’s the nursing homes fault, and try to let him off the hook when he should be prosecuted for his actions. If you need another glaring example of press bias and failure to hold their favorites accountable, watch what happens in NY on this.

 

US virus case numbers are down 62% from the peak in January, as of Feb 11. To me that shows that the number of people who had it already, plus vaccines being administered-58 million as of Feb 18-, has created a very large number of people who are immune- or at least one shot protected by now --Feb 18-- maybe as many as 90-100 million, plus 72 million kids under 18. So maybe in reality there are almost half the total population now that is at least partly protected, or unlikely to get sick. By month end there will be another 18 million since Feb 18 with at least one shot, and then J&J will be starting to be administered in March.  There are around 30% who refuse to get the shot so that is another 100 million.

 

Johns Hopkins says we may have herd immunity by end of April citing the same data I have been stating. The CDC published in medical literature this week that says similar things, but the latest public press statements from CDC this week on behalf of the White House (read teachers unions) are political and inaccurate, and not medical science according to John Hopkins. And the press said Trump mislead us on Covid. Ignore all the numbers from the White House that is trying to project the story that there was “no plan” and Joe is making a difference, and press accounts that count on fear. Instead, look at the entire picture as I try to do. The medical experts like Fauci will always give the worst case so they can’t get blamed no matter what happens, and they can say later, “look how much better it is due to my actions.” Now Fauci has recently changed his story to better align with the teachers. The reality just emphasizes why the teachers are being disgusting by not going back to work.

 

Remember when in the campaign it was “we will listen to the science”, except now it is, unless the teachers unions tell us to say otherwise. The head of the CDC was clear last week that teachers do not need vaccines to teach, and suddenly she had a new script this week that appears to have been written by the teachers. The other thing it suggests is that the economy will soon be in much better shape as some states are already loosening the mask and other restrictions. If NY, CA and IL would speed up opening and full return to school, we would be in good shape in reemployment by late April.

 

Biden and Kamala are lying about there being no plan from Trump, and Biden said there was no vaccine when he came into office. In reality, Biden has done nothing different than had already been laid out in the original plans. Shots did not begin until about 60 days ago, and over 58 million have now gotten shots.13%  compared to 5% in the EU and zero in 130 countries. We were already doing 1.1 million a day on Jan 20 which is when Joe said there was no vaccine when he took office. . Both Joe and Kamala got their shots before they were inaugurated. By April 20-100 days- they likely will have given shots to at least 160 million, and possibly as many as 175 million.

 

 Joe will take undeserved credit. It was always the plan to have herd immunity by June, assuming kids under 18 do not need to get shots immediately. It was always the plan to have drug stores give shots, and it was always the case that it would take time to ramp up production. If the Dems had agreed to give business lawsuit protection, millions of more people would be back in the office now for at least two days a week. Then many more restaurants could survive, but the Dems don’t see how the real world works. For them it is all politics. I am not sure what the CEO of Pfizer is trying to prove now, but he has been quoted as saying that Trump blew the entire distribution of the vaccine.

 

So how did 55 million get vaccinated as it is only less than 30 days since inauguration. Ah, magic syringes. He is the same CEO that held back announcing the vaccine until after November 3. States where there has been botched rollout claim DC did not give good guidance. Except many other states somehow figured it out on their own. The law required states to do the last mile, not the Feds. There will be major geopolitical ramifications with so many billions of people not getting shots and falling back into poverty.

 

The real solution for vaccine distribution is the private sector, and not FEMA and National Guard inoculation centers. Walmart, CVS, Walgreens are far better at mass distribution to every out of the way town than any government effort. Harris lied when she claimed there was no distribution plan. There was an extensive plan, and though Joe is in office only 27 days, the original Trump plan has vaccinated 55 million people. How does Harris explain that. The complaints are similar to the PPP program which was done so fast it took time to get it all just right. Vaccine distribution to 325 million people is complex.

 

Just so you have reality as to where the US is on climate before Biden can do anything- India is building 450 coal fired power plants, China is building 1100 new ones.  The US only has 15 left, and they are already scheduled to close over the next few years, and we are building ZERO.  Under the Paris accords India and China have no limits until 2030, but the US does, and we are obligated to spend US tax dollars to subsidize other countries plans to cut emissions.  So of course Biden couldn’t wait to sign up again. I wish I had encountered Kerry and Biden across the table in some deal I did instead of the people I did have to contend with. Now the power problems in TX will change the story about windmills

 

Biden does really seem to be the avatar I claimed.  They roll him out to an empty desk to sign some orders in blue folders, and then he reads a prepared statement, and then disappears. He shows up at some event, makes a prepared statement, takes a few scripted questions from preselected reporters, and then walks away as Fox attempts to ask real questions. So far he has not yet had a completely free, open press conference. They continue to protect him from having to really answer questions. Now Kamala is making the calls to some of the world leaders instead of Joe. That is not the role of the VP, unless the White House staff feels Joe is not capable of these calls. Biden had a call with Xi, but then he reported that the Chinese have” different norms” they go by.  What the hell does that mean. That is the public line China uses to try to deflect from their human rights abuse, and Joe is repeating it. He still has not publicly told Xi he cannot sanction an ex-secretary of state.  Now Kamala is blatantly lying about vaccine distribution. So far Joe and Kamala have lied about many key things-no better than Trump.

 

If you were wondering how reliable wind and solar really are, the wind turbines in TX all froze up and solar farms were covered in snow and ice, so no power.  The fossil fueled utilities remaining are not sufficient to make up the difference which is 40%, so people froze and some died, and pipes burst in the 9 degree temperature. Welcome to the real world of green energy. Huge lesson for everyone that fossil fuels are here for a long time. This event should cause everyone to better understand that wind and solar are not viable solutions. We need nuclear and natural gas, not wind. Over the next ten years there will be more technological breakthroughs. We should not rush ahead with today’s technology and should push for much more research on energy production. Meantime the US must retain energy independence.  

 

I had my second shot. Zero side effects.  Not even a sore arm. 60% have no side effect. Sarasota doing it very efficiently. They call and text to say come tomorrow at 3:30.  In and out in 30 min including 15 minute wait time.  

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Kim suggests Republicans should stop their "oinking" so Democrats get "boinked."


Return of the Swamp Creatures

Democrats prepare to bring back earmarks. Republicans should resist the temptation.

By  Kimberley A. Strassel

 

Washington doesn’t usually make it easy to pinpoint the moment when things went wrong. So thanks to Rep. Rosa DeLauro for publicly heralding the return of the swamp.

The announcement actually came from a spokesman for the House Appropriations Committee, which the Connecticut Democrat oversees. “Chair DeLauro supports Member-directed funding for community projects,” Evan Hollander told HuffPost this week. For those uninitiated in Washington doublespeak, earmarks are back.

A few other English words to describe what’s returning: Pork. Logrolling. Sleaze. Bridges to nowhere. Republicans banned earmarks in February 2011 after the term became synonymous with Congress’s embarrassing habit. The late Sen. Tom Coburn of Oklahoma had led a years long campaign to expose earmarks as a “gateway drug” to greater spending and corruption. In the face of a tea-party revolt, his colleagues finally chose wisdom.

Democrats are choosing power. According to reports, Ms. DeLauro and Senate Appropriations Chairman Patrick Leahy will soon announce that earmarks are welcome in annual spending bills. Why would Democrats risk such a move? Politico explains that House Majority Leader Steny Hoyer has reassured his party that it won’t suffer, since the effort will be “bipartisan.” Democrats are banking on spend-thirsty Republicans to provide cove

The question is whether the GOP will succumb, handing the Democratic leadership a uniquely powerful tool in today’s narrowly divided Congress. Republicans may botch their first opportunity to draw a stark contrast in governance, wield some real power, and energize their base.

The temptation is real. GOP earmarkers have been honing high-minded constitutional arguments. They claim it is urgent that Congress reclaim authority from the executive branch by flexing “the power of the purse.” Some Republicans contend earmarks will be the party’s best way to rein in federal bureaucrats doling out Covid relief money.

This amounts to reducing Congress’s power to pork—never mind the lawmakers who managed to create Social Security, build the federal highway system and produce civil-rights legislation—all without earmarks for teapot museums or indoor rainforests. Earmarks are a largely modern phenomenon. They gained a toehold in the 1980s before exploding in the 1990s and early 2000s. In fiscal 2005, Congress included nearly 14,000 earmarks in its spending bills. Far from making Congress work, they undermine its function. Earmarks are the prizes of the most powerful members and the tools leaders and lobbyists use to shut down debate and compel votes.

The latter is why Democrats want them back now. Speaker Nancy Pelosi and Majority Leader Chuck Schumer preside over the slimmest of majorities. As Punchbowl News’s Jake Sherman tweeted about the earmark return: “This is a BIG legislative development. . . . Earmarks help the leadership govern. People who don’t listen to leadership don’t get them. People who do, do.” So next time West Virginia Sen. Joe Manchin is the one vote standing against a radical legislative proposal, Mr. Schumer will have the means to threaten or entice him into submission.

No doubt Ms. DeLauro will insist that earmarks on her watch will be cleaner and more transparent. In reality there could be no more dangerous moment in congressional history to reintroduce earmarking. Congress’s budget process is more dysfunctional than ever. It consists of ignoring duties all year, waiting until government is on the verge of shutdown, writing an omnibus bill in the dead of night, and holding a vote on it a few minutes after release. Those “omnis” are already a disgrace of riders, pet projects, tax giveaways and wasteful spending. Imagine what they’ll look like with earmarks in the mix.

It doesn’t have to happen. In a Washington dominated by Democrats, this is a rare moment when Senate Minority Leader Mitch McConnell and House Minority Leader Kevin McCarthy hold the whip hand, as well as the ability to do their party some real good.

Earmarks are traditionally inserted into spending bills. Unlike in the reconciliation process, which Democrat are using for Covid relief, those bills require 60 Senate votes. The GOP can continue to enforce an earmark ban for its members. More important, Mr. McConnell can declare that spending bills with earmarks will be dead on arrival. They won’t go through a bipartisan appropriations process, and won’t get 60 votes.

Democrats may balk and even threaten a shutdown. Republicans should call that bluff. Let Democrats own earmarks. Let them explain to voters that they are willing to bring government to a standstill over their demand for pork and pet projects like the Tallahassee Turtle Tunnel or Boston’s Big Dig. Let them define themselves as the party of self-dealers. And let that further cast doubt on their other claims of reform.

The alternative is for GOP leaders to bow to their own big spenders, further eroding their claim to be fiscal conservatives and further inflaming distrust in the GOP establishment and widening the rift within the party. Already, Rep. Ted Budd and Sen. Ted Cruz are soliciting GOP names on a letter opposing a return to a system designed to “buy and sell votes and reward favors.”

Earmarks are the kind of definitional difference that can help put the GOP back in congressional power—especially given how toxic earmarks remain with the public. Opposing them is an easy call.

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