Jack Rasmus

Read my quick takes and analyses from my January tweets on some of the key economic and political events of this past month.

#China

Virus spreading fast: watch India contagion especially. China mkts re-open today. Watch big stock contraction there, followed by accelerating world contagion: stocks, oil, commodities, EME currencies fall; $, bonds, gold rise. Brexit=EU/UK double hit.

#impeachment

4th swing vote Senator, Alexander, voting no to allow witnesses & evidence. Says Trump did it, was inappropriate, but not convictable. What’s to stop Trump now in rest of election year again soliciting (via buddy Guliani) foreign assistance in his election? Nothing.

#impeachment

If acquitted, will Trump govern bypassing Congress? With impeachment blocked, he can now divert funds as he pleases, spend on what he wants, govern by executive order. 2020=the dawn of the Imperial presidency in domestic affairs. Party loyalty trumps the Constitution

#impeachment

the fear of founders of US Constitution is now being played out: i.e. that party factions would undermine the Constitution. Trump acquittal will mean impeachment will only occur in rare cases, where one party controls both House & Senate and other party the executive

#USChinatradedeal

China cutting back on global oil/commodity imports due to expected impact of virus on economy. China’s Phase 1 trade deal with US has clause “except when mkt. conditions & demand” permit. China now won’t buy est. $76B US goods, esp. gas/oil in 2020 Predict $50b

#Coronavirus

Why are US returnees from China kept from departing US airports for only 72 hrs, when the virus gestation period is 2 weeks? Compare to Australia quarantine of returnees on remote Christmas Island for weeks. 8000 cases now in China. Forecasts to 190,000 in 2 weeks.

#impeachment

Just released Fox News poll show all voters favor Trump conviction & removal by 50%-44%. Some Republican Senators furious Trump-McConnell has put them in a box in election year. Meanwhile, Justice Dept. taking action to prevent Bolton book’s publication.

#impeachment

At start of trial Trump lawyers said US House should have gone to court to resolve Trump refusal to allow witnesses & docs. Same lawyers now say judiciary has no authority to settle impeachment disputes between Congress-President. (How much are they getting paid??)

#USstocks

Addendum to prior post: new int’l financial structure facilitating the excess demand for fin. assets: shadow banks; nonfin corps portfolio investing: comm. banks feeding shadow banks; dark pools; passive index funds; equity ETFs; fintech; AI enabled arbitraged trading

#BigPharma

Drug companies answer to runaway drug prices: pay by installment over 5 or 10 yrs for drugs like your car + ‘value-based contracts’: If drug doesn’t work, Pharma rebates part of cost…but to your employer not you. (Will Crispr gene tech end Pharma’s pill monopoly?)

#BigPharma

US consumers spend $1 trillion on hospital services & $335 billion on prescription drugs. But consumers pay out of pocket more than $12 billion more on drugs than on hospital services out of pocket. (Sources: Centers for Medicare-Medicaid Services, Drug Channels Inst.

#BigPharma

says it’s raising prices only 5.8%. How they do it: Keep thousands of drugs on their books marginally profitable & raise their prices $1T annual deficits for 2020s decade? While in the lair of billionaires, at Davos, Trump let’s it slip: cuts to social security & medicare that he says he’ll consider right after 2020 election. Then he immediately ‘walks it back’ next day. Too late

#Techtrends

Why US-China tech war over 5G? (now decoupled from US-China tariff war): Military dominance of 2020s. Military 5G=hypersonic missile guidance & detection avoidance; drone instant remote targeting; human-machine battlefield coordination. Goes with US space force plan

#Techtrends

What’s AI? Massive computing power+massive database instant processing+generative-adversarial neural nets teaching each other (deep machine learning), glued together by advanced stats + programming via python, R, or other=disaster of loss of millions low decision jobs

#Techtrends

Addendum to last post: What about projected destruction of 30% occupations (fewer jobs;fewer hrs work) by 2025 from AI, etc., per McKinsey Report? What will such massive loss of jobs & income mean for consumption & GDP? Watch for big social backlash to tech by 2025.

#TechTrends

Microsoft CEO Nadella says 42b connected devices+cloud+machine learning will mean big rise in productivity & economy 2020s. Myopic econ view. Massive corp. debt today + debt defaults, bankruptcies & no credit = little invest in nextgen tech by most Businesses in 2020s

#impeachment

Despite Sup. Ct. Justice, Roberts reading rules day #1 that all Senators must remain in chamber at all times (with no phones), today 19 Republican Senators have left the chamber on day #1 trial. But you can’t see that; McConnell rules now prevent TV view of chamber

#impeachment

McConnell’s announces rule: witnesses must be deposed first in secret. Then based on what they say, it will take 51 senators to allow witnesses in trial. That way McConnell screens beforehand what witness testimony is allowed–his fallback if he loses witnesses fight

#impeachment

US Constitutional convention of 1787 debates made it clear: executive privilege is not absolute. Need of evidence takes precedence over executive privilege. Founders then left out of actual Constitution all reference to executive privilege

#impeachment

Republicans’ main argument: House should not ask Senate to conduct trial with insufficient evidence House itself didn’t gather. But insufficient evidence due to Trump refusing to allow witnesses & docs to appear in House hearings. Transparent rhetoric. Circular logic

#Fed

announces will issue new 20 yr. T-bonds. Why? 3 reasons: 1)raise funds to cover>$1 trillion annual US budget deficits in 2020; 2)need for more liquidity for Repo mkt injections; 3)Fed can’t raise rates due to Trump threats. Thus 20yr T bonds alternative. Fed policy a mess

#Chinatradedeal

Trump says China has agreed to buy $40b farm goods in 2020. Fact: China’s Liu He says will buy “as consumer needs and market conditions determine” (read: as Trump reduces tariffs).

#Yuan

Trump declares China no longer a currency manipulator. A phony claim from the start. China has intervened in mkts to keep Yuan in stable range for years. Rising US $ has stoked global currency devaluations, not Yuan. But Trump claims trade deal cause of stable Yuan

#budgetdeficit

It’s official: US deficit 2019 at $1.02 trillion. (Add another $80-$100B if counting military ‘black budget’ on new weapons that doesn’t show up in print anywhere). Trump’s 2 yrs budget increases>20%/yr on ave. each yr. Causes? tax cuts (60%)+military-social prgms

#tradewar

Council on Foreign Relations on Trump’s China trade deal: “China is set to do little more than restore agric. purchases and offer some nice words on financial services and intellectual property…Trump could have had that two years ago” Wall St. Journal 1-13-20, page 1

#Tradewar

Trump says China will buy $50b in US agric. in each of next two years + another $50b/y in non-ag goods. And US will keep $370b in tariffs on China imports. China refuses to confirm. $200b will never happen if $370b tariffs remain. 1-15 trade deal signing will come & go

#jobsreport

Friday’s Dec. US jobs report showed 145,000 net new jobs created. But that should be reduced by thousands as 45,000 GM strikers still returning to work & thousands of US 2020 census workers (500,000 total) still being hired. Real Dec. jobs number closer to 100,000

#USstocks

Wonder why US equity mkts just keep powering ahead? Fed keeps flooding mkts with liquidity: $83B in repos 1-9-20 + $46b on 1-8-20. Add wall of money offshore coming to US+record profits+corp. bond finance+ institutional structure & indexing/ETFs=record demand for stocks

#repomarket

Fed injects another $77b into repo market in just its first week of January 2020. Who now believes the fiction any longer that the Fed only targets real GDP, 2% goods inflation (PCE), or employment? Since December 2018 Fed rates clearly targeting financial asset mkts

#repomarket

fter providing $255B to repos in 2019, Fed to continue same vol. thru Jan. & more at least thru April. Dealers now borrowing via Repo Mkt cheaper than from private mkt before Sept. TD Securities: “The repo operations are a band-aid, but the wound isnt’ fully healed”

#Neoliberalism

Read David Baker’s review of my just released book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Jan. 2020 at https://jackrasmus.com/2020/01/01/book-review-1-the-scourge-of-neoliberalism-us-economic-policy-from-reagan-to-trump-by-dr-jack-rasmus-reviewed-by-david-baker/Now available at 20% discount from my blog and on Amazon and elsewhere Jan. 15.

#USeconomy

US manufacturing index (PMI) contracts for 5th month in December, from 48.1 to 47.2. Worst since June 2009. Watch US real investment continue to fall 4Q19 as well, extending decline to 9 mos. US CEOs #1 fear: recession 2020, up from #3 last yr. Now same as world CEOs

#Repomarket

Fed reports it provided net $255 billion in Repos since Sept. That’s ‘net’. Many more billions rolled over. But no year end crisis emerged. What’s next? Permanent Fed Repo (& reverse Repo) facility, a 2nd channel & the sleuth NEW QE. Fed balance sheet now $4.17T again

#Trump

For my analysis of Trump’s economic policies, their deep historical origins since 1978, successes & failures to date, and future prospects, read my just published book, ‘The Scourge of Neoliberalism: US Policy from Reagan to Trump’, now at my blog,