Poverty

Does the data show Donald in the dumpster?

Midterm

This is a simple schematic of first term presidents and the results at the ballot box of their first mid term. Since 1910, the incumbent parties have invariably lost ground. More interestingly, Democrats had control of either/both House of Reps and Senate during Nixon, Ford, Reagan and Bush Sr – all Republicans. Republican Presidents Taft, Harding, Hoover, Eisenhower and Trump lost the House at the midterms. Truman, Clinton and Obama suffered the same fate for the Democrats.

Trump achieved the highest number of Senate seats taken by a first term Republican president for over 100 years. George W Bush achieved rising numbers for HoR/Senate  post 9/11 but only Democrats have achieved the feat – Woodrow Wilson, FDR and JFK. Perhaps the irrelevance of the outcomes in the mid-terms is that despite the floggings Wilson, Truman, Ike, Reagan, Clinton, Bush Jr and Obama all were comfortably reelected for a second term.

Given the headwinds Trump was facing from the mainstream media, his unorthodox outbursts, twitter tirades and so forth, the electorate didn’t grant the Democrats a huge gift  they were expecting. Even worse they gave Trump a bigger authority to appoint SC justices should an opportunity arise by bumping his numbers in the Senate. Not surprising given the shocking gutter level political theatre over Justice Kavanaugh, vindicated by  victims confessing they had lied.

The Democrats should still be concerned that the $70mn spent on Beto O’Rourke came to nothing.  Beyonce also endorsed Beto. Oprah endorsed Abrams in Georgia – who is likely to lose. Taylor Swift endorsed Bredesen – who also lost. All four candidates openly supported by Obama lost. So much for celebrity power swaying electorates. It probably had a counter effect.

Even worse, in Nevada a brothel owner and reality TV star won his race despite dying last month. It is hard to work out what is the bigger tragedy. Voting for someone dead or being the competing Democrat to lose to a dead person. A Republican is to be appointed to the seat by county officials.

We shouldn’t forget that the Republicans had the highest number of sitting member retirements at a first midterm in the House of Representatives for 88 years. 25 seats had a new face. Republicans won re-election as governors in New Hampshire, Vermont, Massachusetts and Maryland – three of them deep blue states. Where was the mainstream media on that?

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Turnout was good (for a mid term). 48.1% voted in 2018. In the last 100 years the average has been 41%. Only in 1966, did the first midterm of LBJ exceed this level at 48.7%. So much for either party causing a red or blue wave. Less than half of eligible voters showed up on November 6th 2018. More cared, but not enough.

Felons make for an interesting outlier subset. While it is hard to know their exact voting intentions, for the Gubernatorial in Georgia, would 219,431 felons have made a difference for Abrams? She trails Kemp by just under 100,000 votes. So if 55% of felons (the Georgia midterm turnout ratio) voted, 120,687 votes were up for grabs. Were it legal for Georgian state felons to vote, she would have been wise to campaign there.

Felons

Now that the Democrats have the lower house, one wonders why they have put Nancy Pelosi in charge of the House? This is possibly to be contested. Up to fifty Democrat congressmen might oppose her for Speaker. Trump couldn’t wish for a better adversary as her litany of gaffes will undoubtedly embarrass her party. Pelosi represents pretty much everything Americans have come to despise about the Democrats.

More worryingly, Maxine Waters is being put in charge of the Financial Services Committee. At a point in the cycle where financial acumen is probably most required, this is an embarrassment, made worse by her open calls for payback.

The Democrats need fresh faces. Ones that will look for bipartisan support. If the Democrats embark upon a cocktail of revenge politics and look to push for investigation after investigation in order to impeach Trump but end up with nothing they will be seen for what they are – a party completely self-absorbed with petty vendettas. The toxic Senate debacle should have given them warning enough that voters won’t tolerate more political roadkill like that going forward.  Yet Pelosi will likely use her subpoena powers to drag everything through the gutter instead of working to improve things for Americans. Failure here will only lead the electorate to conclude they wasted two years and gift wrap 2020 for Trump.

This mid-term election was anything but a slam dunk. Put aside personal hatred of Trump, look at the data and see that Americans did not write him off as many pundits predicted. It should be more scary to realise that he is probably more Teflon-Don than he was in 2016. Second biggest mid-term turnout in history, highest net gain of seats in the Senate in 100 years for a first term GOP president, record dollars thrown at Democrat candidates backed by Trump-hating billionaires. At the end of the day folks, this is just the data talking.

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How well do Americans know their Defense budget?

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The US spends more than the next 9 countries combined when it comes to defence. What is probably lost on many Americans is the spiraling cost of funding the veterans who served. The US is forecast in 2020 to spend almost as much on the Dept of Veterans Affairs (VA) as China does on military spending. The direct cost of wars in Iraq and Afghanistan has driven the indirect costs of treating those who served almost 5-fold since the war began. US politicians have passed increase after increase.  Have these increases been thought of in context of the trend? Or do annual increases just get signed off as a reflex action?

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If we put the VA budget next to the defence budget, the former has grown from 14.8% of the latter to around 29% between 2000 and 2020. The number of veterans receiving disability compensation has grown 2 million in 2000 to 4.3 million in 2016. A total of 7.2 million veterans are actively seeking services or payments from the VA, up from 5.5 million in 2000.

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Spending per veteran by priority group also reveals sharply higher costs. This is not an exhaustive list of priorities, but the main 7.

Priority 1

• Veterans with VA-rated service-connected disabilities 50% or more disabling
• Veterans determined by VA to be unemployable due to service-connected conditions.

Priority 2

• Veterans with VA-rated service-connected disabilities 30% or 40% disabling

Priority 3

• Veterans who are Former Prisoners of War (POWs)
• Veterans awarded a Purple Heart medal
• Veterans whose discharge was for a disability that was incurred or aggravated in the line of duty
• Veterans with VA-rated service-connected disabilities 10% or 20% disabling
• Veterans awarded special eligibility classification under Title 38, U.S.C., § 1151, “benefits for individuals disabled by treatment or vocational rehabilitation
• Veterans awarded the Medal Of Honor (MOH)

Priority 4

• Veterans who are receiving aid and attendance or housebound benefits from VA
• Veterans who have been determined by VA to be catastrophically disabled

Priority 5

• Non service-connected Veterans and non-compensable service-connected Veterans rated 0% disabled by VA with annual income below the VA’s and geographically (based on your resident zip code) adjusted income limits
• Veterans receiving VA pension benefits
• Veterans eligible for Medicaid programs

Priority 6

• Compensable 0% service-connected Veterans.
• Veterans exposed to ionizing radiation during atmospheric testing or during the occupation of Hiroshima and Nagasaki.
• Project 112/SHAD participants.
• Veterans who served in the Republic of Vietnam between January 9, 1962, and May 7, 1975.
• Veterans of the Persian Gulf War who served between August 2, 1990, and November 11, 1998.
• Veterans who served on active duty at Camp Lejeune for at least 30 days between August 1, 1953, and December 31, 1987.
• Currently enrolled Veterans and new enrollees who served in a theater of combat operations after November 11, 1998 and those who were discharged from active duty on or after January 28, 2003, are eligible for the enhanced benefits for five years post discharge.

Priority 7

• Veterans with gross household income below the geographically-adjusted income limits for their resident location and who agree to pay copays.

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Countries have an obligation to look after the troops that sustain injury, physical, mental or otherwise. The question is whether politicians are cottoning on to the mounting relative increase in healing the veteran community to the spending on weapons of war?

There are 19.6 million veterans in the US. By 2045 this is expected to dip below 12 million. With 2.1 million serving active duty military personnel and reserves, the overall costs of healing may not come down anytime soon.

What it does say is that there is a massive need to work out how to reduce the costs to the VA without impeding improving healthcare and benefits for veterans.

This Brazilian won by more than a whisker

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Known as the Brazilan Trump, Jair Bolsonaro is set to become the next Brazilian president with a 10mn vote lead. Bolsonaro has been criticized for making denigrating remarks about women, gays and blacks. Despite this, more Brazilians seemingly prefer to break away from decades of establishment corruption.

There in lies the argument. How bad does an opposition have to be to lose to a person who says these unnecessary things? Once again pocket books, jobs, feeding families and dumping crooked self serving incumbents supersedes several incidences of off coloured and unnecessary remarks.

Exactly the same issues Americans faced in the 2016 US election which the mainstream media ignored. Those living in hardship didn’t buy rosy government stats saying how great things were. They weren’t living them. Record levels on food stamps and working multiple jobs wasn’t their idea of the American dream.

Isn’t this also telling from the Brazilian President-elect?

Bolsonaro said, “The people saw the truth, despite the media. A big part of the media put me on a shaming position…Thank you all for your prayers and confidence. Lets together change Brazil’s destiny. We knew where Brazil was headed and now we know where we want to go…We couldn’t continue to flirt with communism and socialism…All pledges will be fulfilled, the  mission of rescuing Brazil will be accomplished.”

Whether he achieves this or not is besides the point. Clearly more Brazilians have had enough of the incompetence to date and are willing to give a left (right?)-field leader a chance to revive their fortunes. A Molotov cocktail to blow up the system.

In recent years Brazil’s currency has fallen 40% in value vs US$ and the GDP growth rate has averaged 0.58% from 1996 until 2018. In the last quarter reported, it was 0.2% with the previous quarter revised down 0.1% in part due to nationwide trucker strikes. 

Switch to the media in the US which thinks Trump’s umbrella event is newsworthy. They just don’t get that he gets even more press coverage this way. It has the opposite effect and only lifts the likelihood of more Americans tuning out of this Trump Derangement Syndrome and voting for him not against. Keep up the good work!

Trump mid term victory more probable than not

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Actions not words. Forget all of one’s personal opinions (hatred) of Trump and analyze the facts.  This is a picture of Obama trying to rally Democrats in Nevada this week. Despite the small audience, Obama mentioned himself 92 times in 38 minutes as opposed to talking up the candidate he was there to support. Sounded like a desperate attempt to save his own legacy. The following pictures are of Trump’s rally for Ted Cruz in Houston, Texas.

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Conventional wisdom tells us that the party in opposition tends to get the House in the mid terms. Politics is in such a funk, why would we for one second believe that consensus should be the default in November 2018? How did that work out on 2016?

Ahh yes, but the Democrats have learned from treating the prior election as a coronation for Hillary Clinton. They’ll be out in droves. No doubt they will but after the Kavanaugh debacle in the Senate and over 10,000 strong Honduran caravan surging to the US southern border (the Dems have been eerily quiet over this) it only plays to Trump’s domestic agenda. What many overlook is that ICE records indicate there are  474,000 illegal immigrants still in the queue for processing. Four hundred and seventy four thousand. Think of the costs to process that.

So to the polls? They were wildly inaccurate at the 2016 election. Largely because they are telephone polls to 1,000 people with landlines. Hardly an accurate assessment. Only old folk have landlines now don’t they?

A MSN (left leaning) online poll conducted last month showed 76% of 73,000 would lean Republican in the mid terms. How valuable are polls? Let’s be honest, a Fox poll leaning to conservatives and and a CNN poll swaying to liberals Shouldnt shock anyone. It is the anomaly that should cause us to question a mood as this MSN poll did. Are 73,000 people representative of the 250mn eligible to vote? More than 1,000 would be that is for sure.

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Once again, forget personal dislikes for Trump. If a p*ssy grabbing, racist, xenophobic, bigoted, nationalist silver back Nazi orange buffoon as he is often referred to as can get this many people to a gathering imagine if he had none of the baggage? Potentially less people because there is not as much shock value.

CM has said for ages that the mainstream media is his best ally. The constant one-eyed bias against him only gives more air time. He is a showman. The White House has become  a reality TV program. All the MSM does is feed his exposure. Sadly ratings reflect that he is winning. The media can only tell the public that Trump is the antithesis of the establishment so many times before it wears thin and people tune out.

Then again perhaps it is more telling that the average American doesn’t look to him as a spiritual leader. Or put that another way, the mid terms will be a measure of how successful he has been to date (even if blasted Russian bots meddling in the voting machines are behind it).

If he has genuinely helped put Americans on a better financial footing in their minds that is all that matters to them. Call Stormy ‘Horseface’, slag off Blasey-Ford for her amnesia and bash CNN at a rally for “fake news”. None of it matters. It appears Americans are less likely to be intimidated by thuggery (chasing Republicans out of restaurants or shooting them) of the left than to join their ranks as the #WalkAway campaign has demonstrated.

Trump is the most left field curve ball President in US history.  So unconventional in his diplomacy. He has shown that pushing back can get results. Whether smashing NATO members for failing to execute on  their own self imposed military spending targets, stopping Rocketman testing nukes or getting Juncker to sign an FTA a week after he stumbled blind drunk at a NATO summit there is some method to the madness.

In two weeks time we’ll get a result which will reflect the mood of America. The observation of CM is that the Dems are playing all the same party tricks as the 2016 election albeit at 11.

CM may be well off the reservation on this but those same vibes from Nov 2015 suggest Trump may well upset decades of history. Fake views? Allie Stuckey did a rather amusing parody of the Democrats here.

We’ll know soon enough.

Is BMW hurting bad enough to offer 10yrs free servicing?

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10 years? Sounds a bit desperate. A bit like the Korean makes a few decades back using monster incentives to lure customers by a value to good to refuse proposition. Have luxury car sales become so hard to get in Australia that the prestige make has to offer 10 years of free servicing and 1yr free insurance?

BMW sales in Australia fell 12.2% year on year in August 2018. Audi crumbled 25.8%. Benz did better at -3.4%. Land Rover fell 32%, Lexus down 11.7%. Porsche crumpled 25.4%.

It is likely the fine print in the 10 years free servicing basic package isn’t transferable between owners so if most buyers hold their BMWs for 5 years the total incentive is much less to roll out. If the fine print allows transfers it only adds to the desperate state of having to hurl freebies to shift metal. Dealers tend to make less on the sale of the car but plenty on gouging customers for service and spares.

Seems the tyres are going flat. Total car sales in Australia were down 1.5% in August. Passenger car sales fell 13.4% while those eco conscious Aussies bought 8.3% more SUVs. Medium and large sedan segments fell 24.1% and 60.3% respectively. Every SUV segment rose except upper large. Toyota finished up 1.7% for the month with 19.8% share.

Harley-Davidson Shinjuku declares bankruptcy after revenues fall 85%. Changes ownership.

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Yahoo Japan reports Harley-Davidson Shinjuku, a central Tokyo dealer for the motorcycle brand has gone out of business after almost 70 years in the trade.  Established in August 1953 before Harley Davidson Japan became the domestic agency, it ran a parallel imports business of the iconic brand. In the fiscal year ended July 1992, the annual turnover was estimated to be about 2,426 million yen. However, as the motorcycle market contracted, annual sales in the fiscal year ended July 2017 fell 85% to about 376 million yen. Even after closing the Yokohama, Hachioji stores, losses continued every year.

Debt is approximately 146 million yen as of the end of July 2017. “Harley Davidson Shinjuku” was closed on July 11.

It has since reopened under new ownership. Customers of the dealership have been informed of the ownership change according to HD Japan. Harley had peak sales of 16,000 units in Japan and is likely to do around 9,500 units in 2018.

Pension blackhole widens

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CM has been saying for quite some time that the US public pension system is a runaway train running out of track. It seems Zerohedge today confirms many of those same trends. The ratcheting down of return targets by ridiculously small amounts because to actuarially mark-to-market to reality is too scary to contemplate.

To quote the article,

CalSTRS is making the bold move to drop its future goal to… 7%…And CalPERS is ratcheting down its return goals in steps to… wait for it, 7% by 2021.

with interest rates near their lowest levels in human history, it’s been difficult for these pensions to generate a suitable return without taking on more and more risk.

And that’s another big problem with pensions – their investment returns are totally unrealistic.

Most pension funds require a minimum annual return of about 8% a year to cover their future liabilities.

But that 8% is really difficult to generate today, especially if you’re buying bonds (which is the largest asset for most pensions). So pensions are allocating more capital to riskier assets like stocks and private equity.”