2:00PM Water Cooler 10/17/2017

October 18, 2017
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By Lambert Strether of Corrente.

Trade

“Canadian firm could dodge 300 percent tariff by building jets in Alabama” [WaPo]. “Canadian jet-maker Bombardier announced Monday that it is selling a controlling stake in its 100- to 150-seat C-series jetliner to European manufacturer Airbus, just weeks after the Commerce Department moved to impose 300 percent tariffs on the plane. The companies also said they will expand the plane’s production to a new facility in Mobile, Ala., a move that could help it avoid the import duty.” As Theresa May and the DUP heave huge sighs of relief.

“At a private lunch following a rare public speech at the Center for Strategic and International Studies on Sept. 18, Lighthizer told a group of about 25 people that he believed the size of the U.S. market was still the driving force for getting countries to meet U.S. demands, according to sources familiar with the meeting. And despite a global movement toward rules-based, regional trade deals, he said bilateral agreements are where the U.S. can better exert its leverage. As for rules, Lighthizer said they are generally weak and not easily enforced. In sum, they don’t matter, he said” [Politico].” One source’s takeaway from the meeting: “I think he’s a true believer in this stuff.”

“Canada and the United States are headed further down a collision course over dairy after Washington offered a proposal on Sunday calling for 10 times more access to Canada’s dairy market than what had been agreed upon under the Trans-Pacific Partnership” [Politico].

“The early read so far is that the end of Nafta wouldn’t necessarily be catastrophic, but would hurt the overall economy, cause a big squeeze to some sectors and states and could dent stocks. One firm estimates that although some factory work would move north from Mexico, the U.S. still would lose a net 256,000 jobs over three to five years. Among the losers: auto, food, and apparel makers that have crafted efficient supply chains around duty-free passage of parts and goods across borders” [Wall Street Journal].

Politics

2016 Post Mortem

“Cambridge Analytica: the Geotargeting and Emotional Data Mining Scripts” [Medium]. Apparently an intern’s…

“FBI uncovered Russian bribery plot before Obama administration approved controversial nuclear deal with Moscow” [The Hill]. “Before the Obama administration approved a controversial deal in 2010 giving Moscow control of a large swath of American uranium, the FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States, according to government documents and interviews…. They also obtained an eyewitness account — backed by documents — indicating Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow, sources told The Hill.”

2020

“Mavericks owner Mark Cuban ‘seriously considering’ presidential run” [USA Today]. Just what the country needs. Another squillionaire with bright ideas.

2018

“The 3 most serious downgrades are all from lean Republican to Toss Up. [The Cook Political Report] is so conservative in their prognosticating that “lean Republican” usually means the Democrat will win unless the DCCC screws up royally by winning the nomination for a fake Democrat and turning off grassroots voters, something they do very frequently” [Down with Tyranny]. So Cook is right, but for the wrong reasons?

“Bannon on GOP insurgency: ‘Nobody can run and hide’” [AP]. “President Donald Trump’s former chief strategist is promoting a field of potential primary challengers to take on disfavored Republicans in Congress and step up for open seats. Among the outsiders: a convicted felon, a perennial candidate linked to an environmental conspiracy theory and a Southern lawmaker known for provocative ethnic and racial comments.”

Trump Transition

“SEC Asked to Probe Trades of Student Loan Firm Navient” [Bloomberg]. “The [AFL-CIO] on Tuesday urged the U.S. Securities and Exchange Commission ‘to examine the trading in Navient’s common stock on Aug. 31’…. The trades occurred before public disclosure of a letter from the Department of Education to the Consumer Financial Protection Bureau marking a critical shift in Trump administration policy.’”

Health Care

“The Fight For Single-Payer Health Care Intensifies In California” [International Business Times]. This is really just a wrap-up of single payer efforts in California, though useful.

New Cold War

“Twitter provided Senate investigators the names of 201 Russia-linked accounts” [The Verge]. ZOMG!!!! Stop the presses!!!!! 201 accounts!!!!!!!!

Realignment and Legitimacy

“As a political analyst, I have trouble understanding how a substantial number of counties and communities could vote twice for Barack Obama and then flip to Donald Trump” [Cook Political Report]. No comment. Well, one comment: “Change versus more of the same” in 2008 and 2017.

“Soros shifts $18 billion to his Open Society philanthropic organization” [MarketWatch]. “Soros doesn’t plan to trade the billions that now belong to Open Society, according to the people familiar with the situation. Soros was trading his own money, held separately within the Soros firm, as recently as last year, when he bet — wrongly, it has turned out — that stocks would slump after Donald Trump was elected president.”

Women’s March reacts to beatdown by Clintonite enforcers:

Here is an example of the “hurt and confusion”:

(Masterful use of passive-aggression; Neera’s problem is that the women who organized the Women’s March conference invited Bernie Sanders to speak, after [genuflects] Hillary Clinton, Elizabeth Warren, and Kamala Harris all turned them down.

“#MeToo: Social media flooded with personal stories of assault” [CNN]. “On Sunday actress Alyssa Milano tweeted a note that read “Suggested by a friend: If all the women who have been sexually harassed or assaulted wrote “Me too” as a status, we might give people a sense of the magnitude of the problem.”

For example:

Idea: Liberal Democrats clean their own side of the street on this issue?

“It’s time for Democrats to stop being such gormless chumps” [The Week]. Rather, it’s time for the donor class to stop paying Democrats to lose.

Stats Watch

Readers, this will be a bit of a pantry clearout, especially on The Bezzle, after my dereliction of duty yesterday. –lambert

Industrial Production, September 2017: “The factory sector isn’t showing much life based on the Federal Reserve’s industrial production report where the manufacturing component managed only a 0.1 percent increase in September which is 3 tenths below Econoday’s consensus and only the 2nd gain in 5 months” [Econoday]. “But there are not a lot highlights in today’s report as the weakness in manufacturing, given this year’s enormous strength in private reports like Empire State and ISM, remains an unfortunate surprise.” And: “There was significant downward revision to the existing data over the last 6 months – so even though the data was better than last month, overall the improvement was very little. The best way to view this is the 3 month rolling averages which declined” [Econintersect]. And but: “Capacity utilization at 76.0% is 3.9% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007” [Calculated Risk].

Empire State Manufacturing Survey, October 2017 (yesterday): “Empire State’s sample continues to report exceptionally strong activity” [Econoday]. “It’s important to remember that diffusion indexes offer only rough assessments of activity and in Empire State and Philly Fed are based on relatively small samples where responses are always voluntary. And the rare strength of these samples has yet to be matched by the government’s factory data.”

Import and Export Prices, September 2017: “Oil skewed cross-border prices sharply higher at the headline level in September, up 0.7 percent for imports, which is 2 tenths above Econoday’s consensus, and up 0.8 percent for exports which is double the expected gain” [Econoday]. “Pressure on the export side is centered in industrial supplies which rose 3.0 percent in September following August’s 1.8 percent gain in a component where petroleum inputs play a significant part. This gain offset a sizable 0.7 percent decline in agricultural exports.” And: “The elephant in this month’s changes were fuel / oil commodities” [Econintersect].

Housing Market Index, October 2017: “Optimism among home builders, which has been easing slightly from very strong levels, bounced back strongly in Octobe” [Econoday]. “Sales of new homes were very strong at the outset of the year but have faded since though housing permits have been coming alive in recent months. This report, much like other measurements of economic confidence, has been very solid this year and is pointing to a possible year-end uplift for new housing.” And: “This was above the consensus forecast, and a strong reading” [Calculated Risk].

Real Estate: “Leasing rates for warehouses in the U.S. have never been higher, and the country’s biggest markets are driving the price increases. Asking rents for industrial space in New Jersey soared 11.8% in the third quarter and rates in Northern California also rose at a double-digit pace” [Wall Street Journal].

Commodities: “Copper price soars to highest since February 2014” [Mining.com]. “Copper futures trading in New York surged on Monday on renewed optimism about the strength of the Chinese economy going into a crucial policy-setting meeting of the country’s leaders.”

Commodities: “Craft beer pours $2 billion into Michigan economy” [Michigan Business].

Commodities: “Milk is a low-margin commodity subject to big price swings, but it’s a staple of grocery sales and big chains see important value in controlling the flow. That’s upending traditional suppliers, including dairy processors and farmer-owned plants that have been coping with a dairy glut and milk prices that have fallen by a third since 2014. Some cooperatives with cash are adding plants to get closer to customers and cut transport times. But the huge new retailer-owned plants may speed up consolidation in the dairy industry, squeezing out cooperative-owned facilities” [Wall Street Journal].

Shipping: “Police on Monday sought an arrest warrant for Hanjin Group Chairman and Korean Air CEO Cho Yang-ho, who stands accused of embezzling funds to renovate his private home.” [Korea Herald]. Cho’s daughter was a piece of work, too…

Retail: “Amazon.com Inc said it would hire 120,000 workers in the United States this holiday season, same as last year, as the online behemoth prepares for the holiday shopping frenzy” [Business Insider]. “Overall, U.S. retailers are expected to hire 25,000 fewer workers this holiday season, the NRF said, as current staffing levels are strong, and as companies such as Wal-Mart offer existing workers more hours rather than adding temp workers.”

Retail: “Users can now order food for delivery without ever leaving Facebook” [CNBC]. “The company announced Friday that it has partnered with Delivery.com, DoorDash, ChowNow, Zuppler, EatStreet, Slice and Olo to offer users the ability to order meals without having to open each of those individual applications. Facebook also teamed up with restaurant chains like Papa John’s, Five Guys and Panera, the company said.” I hate this because it’s good for chains and bad for small local restaurants. Heaven forfend that we Facebook should just make an API available to them. No, no, they’ve got to partner to suck even more money out of my local economy…

ETFs: “Three rules will make exchange-traded funds more accessible to new types of investors. In the U.S., the fiduciary duty and new insurance guidelines will enable retirement savers and insurers to raise their exposure to ETFs. In Europe, the Markets in Financial Instruments Directive II is expected to increase flows from retail investors” [Bloomberg].

Venture Capital: “SoftBank was behind four of the five biggest venture capital deals last quarter” [Recode]. “In general, venture capitalists are spending more money on fewer deals, as companies stay private longer and need more late-stage funding.”

Tech: “Facebook Is Looking for Employees With National Security Clearances” [Bloomberg]. “Facebook Inc. is looking to hire people who have national security clearances, a move the company thinks is necessary to prevent foreign powers from manipulating future elections through its social network, according to a person familiar with the matter.” Uh huh.

Tech: “Several times in conversations with people in Hollywood, I heard the tech people referred to as ‘dumb money’ — the sort of outsiders (in the past, they came from oil, then from finance) who parade through town looking to call the shots. One Hollywood executive who has worked often with tech companies told me: ‘I wouldn’t say we’ve looked at them with fear, no’” [New York Times].

Tech: “iPhone X makers still struggling to refine facial recognition” [Nikkei Asian Review]. “A tech executive familiar with iPhone X production told Nikkei Asian Review on Thursday that manufacturers are still struggling to perfect 3-D sensors and in particular dot projectors in Apple premium handset’s TrueDepth camera system, though the person could not pinpoint exactly the problem.”

Public Relations: “Macej Ceglowski, leader of a national grassroots tech activism group called Tech Solidarity that sprung up after Trump’s election, said tech companies aren’t helping displaced disaster victims as much as they’d like to think. “Puerto Rico is an example of the government failing its citizens, who have no federal representation,’ he told BuzzFeed News. ‘These tech companies have enormous lobbying clout, but choose instead to promote their own science projects in a moment of crisis’” [Buzzfeed].

The Bezzle: “This Steak-Sharing Startup Targets Foodies Looking for High-End Beef” [Bloomberg]. “Crowd Cow expects to post revenue of at least $7 million this year. The initial fundraising round brought in $2 million. Investors included Fuel Capital, Zulily Inc. founders Mark Vadon and Darrell Cavens, and ex-NFL star Joe Montana, who has a venture fund.”

The Bezzle: “Walmart Wants Keys to Your House So It Can Put Groceries Directly in the Fridge” [Grub Street]. “Walmart explains in a blog post how the process works: Delivery people get a one-time passcode that opens a ‘smart lock’ that shoppers must install first. (The whole service is essentially built around that lock — it’s actually a partnership with August Home, a smart-lock start-up.) When the driver gets to the door, you get a phone notification that your delivery is occurring. You can watch from an app ‘in real-time’ if you like. This person will drop off packages in the foyer, then put away all the groceries in the kitchen.” See, there’s your problem. Alexa could just open the damn door on its own.

The Bezzle: “Uber, Lyft reduce transit use, increase vehicle miles, report says” [San Francisco Chronicle] (original). “”Although we found that ride-hailing can be complementary to transit and reduce vehicle ownership for a small portion of individuals, we found that (overall) these services currently facilitate a shift away from more sustainable modes towards low occupancy vehicles in major cities,” said Regina Clewlow, lead author of the [UC Davis Institute of Transportation Studies] report, in a statement.”

The Bezzle: “How Waymo is designing the self-driving car passenger experience to feel convenient and safe” [Recode]. “The car will find a way to come to a safe stop if it detects unsafe driving conditions. In the rare occurrence of an accident, the car will also communicate instructions using audio and visual cues.” Oh.

The Bezzle: “Airbnb teams up with developer to launch branded apartments” [Financial Times]. Silicon Valley just innovated the long-stay hotel.

The Bezzle: “Wag, the ‘Uber for Dog-Walking,’ Is Drawing Uber-Like Scrutiny” [Bloomberg]. “Despite the high commission, Wag is burning about $4 million a month, said three people who recently reviewed the startup’s financials. The older, more established Rover, said it’s also losing money but expects to become profitable next year. Both Wag and Rover, which are privately held, declined to provide specifics of their financials. Wag’s expenses are especially high because the startup relies on celebrity endorsements and costly marketing campaigns…. Despite the red ink, venture capitalists have poured more than $200 million into Wag and Rover combined.”

Mr. Market: “Everything Is Crazy and the Markets Aren’t Freaking Out” [Bloomberg]. “[F]or Credit Suisse’s [Mark] Connors, the shift in market psychology can be traced back to a different signal event: Brexit. After the U.K. voted to leave the European Union in June 2016, $2.6 trillion was wiped off the value of equities worldwide in just three days. Many were calling it one of the most dramatic and shocking turns of events in modern British history. Among investors, the panic was palpable, and some were paralyzed with fear. But almost as quickly, the markets roared back and jolted investors out of their crisis-era fatalism. Since then, naysayers selling into any weakness have looked like suckers. In the aftermath of other post-crisis upheavals, ‘we got a lot of incoming client calls,’ Connors said. ‘But that all ended with Brexit. Now, even though the events seem dire, volume is low and and reversals are sharp. People are looking through to things that keep them long. Buy-the-dip is in place.’” With handy chart of “buy the dip” mentions.

Five Horsemen: “AMZN and GOOGL shares are over a thousand dollars apiece, as Facebook careens off the top of our chart. Life is good” [Hat tip, Jim Hyagood].

Five Horsemen Oct 17

Rapture Index (yesterday): Closes up 1 on Drought. “The lack of rain has caused the Mississippi River levels to decline” [Rapture Ready]. Record High, October 10, 2016: 189. Current: 185.

Today’s Fear & Greed Index: 78 Extreme Greed (previous close: 78, Extreme Greed) [CNN]. One week ago: 85 (Extreme Greed). (0 is Extreme Fear; 100 is Extreme Greed. Last updated Oct 17 at 12:30pm.

Police State Watch

“Orlando man arrested when cop mistakes doughnut glaze for meth, gets $37,500 settlement” [WFTV]. Cops confused about donuts? How does that work?

“Chicago incentivizes abusive policing through overtime policy” [The Chicago Reporter]. End-of-shift arrests mean overtime.

Gaia

“FERC’s approval of Mountain Valley Pipeline stirs defiance, determination” [Roanoke Times].

“Lawsuit Aims To Recognize Colorado River As A Person” [KJZZ].

Black Injustice Tipping Point

“Nonviolent, cross-racial coalitions are the only way back to a decent America” [Todd Gitlin, The American Prospect]. And:

[#BlackLivesMatter] is the third term in a syllogism that goes like this:

1. All lives matter.

2. Black lives are lives.

3. Black lives matter.

Class Warfare

“Employees who follow a strict automated protocol—some call them ‘meat robots’—need little training. Even the drill was attached to a computer-assisted arm; the worker just had to move it to the right position and let the machine do its magic. A decade ago, industrial robots assisted workers in their tasks. Now workers—those who remain—assist the robots in theirs” [The New Yorker]. “For decades, the conventional view among economists was that technological advances create as many opportunities for workers as they take away. In the past several years, however, research has begun to suggest otherwise.”

“AN EVALUATION OF THE PROGRAM FOR REDUCING THE WORKWEEK IN THE USSR” (PDF) [The Central Intelligence Agency].

“The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network*” [The Quarterly Journal of Economics]. From the abstract: “We show that a strike on the Underground, which forced many commuters to experiment with new routes, brought lasting changes in behavior. This effect is stronger for commuters who live in areas where the Underground map is more distorted, which points to the importance of informational imperfections. Information resulting from the strike improved network efficiency. Search costs alone are unlikely to explain the suboptimal behavior.”

“‘Miners are dying’: The human cost of WA’s FIFO economy” [Mining.com]. WA: Western Australia. FIFO: Fly-In, Fly-out. “Having worked in the industry for over 10 years on West Australian sites, he said the stress from his job, his workmates and his family had him lose his hair ‘in clumps’ at one stage….. ‘The impact of FIFO work practices on mental health’ report made 42 key findings and 30 recommendations regarding depression, workplace bullying, alcohol, harassment and suicide.” I wonder if the same issues apply to workers in the fracking boom.

News of the Wired

“You have almost certainly been hacked” [The Week]. “So much information has been stolen by hackers that virtually everyone in the U.S. has been affected by a data breach in some way — even those who never go online.”

“Google Bombs Are Our New Normal” [Wired]. Right after George W. Bush was re-elected in 2004 and claimed a mandate (“I have political capital, and I intend to spend it”) I actually, personally, Google-bombed “Bush mandate” to Mandate Magazine; the cover boy was, IIRC, wearing a sailor’s hat. I did it because I thought it would drive Republicans crazy, but it’s also exactly the kind of thing I wouldn’t do today.

“Want to see something crazy? Open this link on your phone with WiFi turned off” [Medium]. I only have a dumb phone (and a landline) so this story doesn’t apply to me. But readers may wish to test.

“The New York Times released new staff social media guidelines, so phew, thankfully that’s settled” [Nieman Lab]. The bias against Sanders by Times reporters was pretty staggering. It’s probably best that it’s out in the open, instead of being driven underground.

“An Oxford philosopher’s moral crisis can help us learn to question our instincts” [Quartz]. “Why bother with moral philosophy when common sense serves most of us perfectly well? The simple answer is that, as history shows, commonsensical beliefs are very often wrong. Slavery, marital rape, and bans on interracial marriage were all widely accepted in the relatively recent past.”

“Photo Essay: ‘A sequence of delights and ruptures’” [Scalawag]. “Each photograph is driven by the landscape and a deep sense of place. Geographically, Panola County sits mostly in the red clay hills of Mississippi, with its large forests of pine timber, rolling hills lathered with kudzu vines, lakes, gravel and clay pits for digging.”

“Our obsession with mindfulness is based on limited scientific evidence” [Quartz]. So squillionaire Paul Tudor Jones got conned.

* * *

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 put it in the subject line. Otherwise, I will anonymize by using your initials. See the previous Water Cooler (with plant) here. Today’s plant (JB):

JB, “who danced my Snoopy happy-dance today”: “Oaks are funny trees. They can withstand abuse from a hurricane and bounce back, or just die. This is why I was saddened following the damage Hurricane Irma unleashed on the many oaks that border my property. I was mourning one I feared we’d loose because it was virtually denuded but astonishingly, it’s had an overnight transformation that has left my jaw hanging as it sprouted bright green new growth, as if it were late February instead of early October. None of the other oaks was as severely damaged and this one so no others are putting on new growth.”

After writing about trees in both Puerto Rico and California, I’m starting to think they really do run the world…

* * *

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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.

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