Friday, April 29, 2022

Trump 2022

Trump 2022?

Trump is not running in 2022. What gives?

Even though Trump is not running this year the former President has been endorsing a number of candidates in contested Republican primaries. 

How those candidates perform may provide a clue as to how much approval and influence Trump still has in the Republican Party looking to 2024.

I wrote a blog post last July, "Trump 2024?", in which I detailed three things that could benefit Trump's prospects looking to 2024 as well as three things that would signal problems for Trump.

One of the items on the latter list concerned the success of Trump's endorsed candidates in 2022.

This is what I wrote about that risk to Trump.

Trump's endorsements and efforts at promoting candidates in 2022 falls flat and/or the GOP generally has disappointing results in the mid-term elections.

This might apply even if the GOP gain seats in the mid-terms but the results do not meet the expectations set before the election.

Any mid-term setback will likely create a narrative that the losses were due to Trump's influence on the party and a change of direction is necessary for 2024.

I also wrote in that post that the worse things got for the country under Biden the better Trump would look.

An implosion of the country under the Democrats and Biden/Harris. Trump has many critics but hard times have a way of focusing people on what is most important. Trump's personality is the most cited reason why many did not like him. When people are in trouble they are less concerned with personality and more concerned about performance. A deteriorating situation in the country will make Trump a lot more attractive to more people than you can imagine. 

You can already see that in recent polling regarding Trump's approval ratings.

Trump's approval rating has improved by 16 points since Biden has taken office.


In fact, Trump's approval rating is better than every other national politician right now based on the RealClearPolitics average.

Trump has made a number of endorsements and some are what many political observers considered as bets against the odds when he made them.

A good example is the Ohio GOP Senate primary. Trump endorsed J.D. Vance (the author of Hillbilly Elegy) who was running a weak third in the race when he made the endorsement a week or so ago for the May 3 primary. 

In Pennsylvania, Trump endorsed Dr. Oz (of TV fame) in the GOP Senate primary who did not even live in the state when he entered the race. That primary is on May 17.

Ted Budd has gotten the Trump endorsement in North Carolina for the Senate seat being vacated by Richard Burr who is retiring . Budd was little known in the race before Trump endorsed him in which the early frontrunner was former Governor Pat McCrory. That primary is also on May 17.

Trump has endorsed former U.S. Senator David Perdue against incumbent Georgia Brian Kemp in the Georgia Governor's race. Trump also recruited Herschel Walker to run for the Senate seat held by Raphael Warnock. Walker is way ahead of five other GOP candidates for the nomination. Georgia goes to the polls on May 24.

Keep your eye on these races to see if there is any Trump effect. They are particularly important as all are in swing states that will be important in 2024 in both the primary and general election.

Polling before the endorsements suggested that all of these candidates would have definitely lost without Trump endorsing them.

If they win you can also expect all of them to be in Trump's corner for 2024. Such is the give and take of politics. That would give Trump an advantage in these critical states in the 2024 Presidential primary.

Does Trump still have signifiant influence?

A recent Morning Consult poll shows that Trump still garners high favorability ratings with Republicans in all these states.

How his endorsed candidates do in these early primary swing states may tell us even more about Trump's influence and prospects for 2024.

Brit Hume recently made an observation about Trump and 2024 that I think is interesting.

Many Republicans want Trump to go away because they think he will be nominated in 2024 and lose.

Democrats are afraid he will be nominated by the GOP and win.

So true.

2024 is still a long way off but 2022 is going to tell us a lot about how big a force Trump will play in that election.

Looking at the numbers right now (including the -1.4% contraction in the economy reported yesterday), I do not expect Donald Trump to be going away anytime soon.

However, keep your eyes on the races I have highlighted in May for your first hint on whether that assessment is accurate or not. 

Wednesday, April 27, 2022

Supporting Ukraine

Everywhere you go these days everyone wants to show their support for Ukraine.

Even the Russian market in my neighborhood wants to distance itself from Russia and fly the Ukrainian flag in the window to show its support.

Notice the x-out of "Russian" in the sign with the blue and yellow tape?

Moral support is great but where is the military and financial support to Ukraine coming from to confront Russia's invasion?

You would think at the forefront would be European countries as they have the most to lose if Putin is successful and continues his expansion westward.

That was not the case in the first month of the war which is the most complete data available right now.


The United States is providing the bulk of the aid.

France did not even make the list of the Top 10.

The USA has also provided the most humanitarian aid by a wide margin.

Again, no France in the Top 10 list.

Notice that Germany is way down the list on military assistance.

In fact, it was only yesterday, two months after the invasion, that Germany finally agreed to provide heavy weapons to Ukraine.


I dare say that if Ukraine had been relying on Germany, France and many others in Europe from the beginning, Putin would have long ago declared victory.

The United States has sent another $1.6 billion in military aid to Ukraine in the last two weeks.

The United States has also provided $1 billion in economic aid to Ukraine in the last two months.

At the same time, most European countries ( particularly Germany) have been unwilling to stop buying Russian oil and natural gas which provides Putin the money to fund his war effort.

Europe is currently paying Russia $850 million/day for oil and natural gas and almost 50% of Putin's government apparatus and military are paid for by oil and gas revenues.

I seem to remember an American President telling the Europeans that it was not a good idea to be that dependent on Russia for its energy.

The Germans laughed at him.


Recall that in 2018 the Democrats and the mainstream media were still claiming that Trump was something close to a Russian agent who had been elected through Russian collusion in the 2016 election.

Despite everything that has occurred since that time proving that the Russian collusion claims appear to have been totally orchestrated by Hillary Clinton's campaign (expect more about this from the investigation of independent counsel Durham in the coming months), 72% of Democrats still believe that Trump's election was due to Russian interference.

Many of these same people today think we are not doing enough for Ukraine.

Senator Chris Coons (D-DE) wants to begin a conversation about deploying American troops to Ukraine.


Actor Sean Penn, who is known for his love of Communists such as Hugo Chavez and Nicolas Maduro in Venezuela, is worried that the United States may not be willing to use nuclear weapons in Ukraine!

What a world we live in today. In the 1970's leftists like Sean Penn argued the U.S. had no reason to be in Vietnam. Penn is now arguing we should use nuclear weapons to defend Ukraine?

How do you make sense of it? You can't. Pray for the Ukraine people.

Look at the facts above and ask if Trump was President would Putin have even invaded Ukraine?

If he had, would Trump have allowed Europe to talk so big but do comparatively little when confronting Russia?

I wish I could laugh. 

All I can do is cry.

It is a sad, sad situation.

Monday, April 25, 2022

Not As Great As He Thinks It is

Joe Biden has been telling everyone how great the U.S. economy is.

Of course, NPR is there supporting his argument and claiming that Biden is not getting the credit he deserves on the economy.

I wonder why Biden is struggling to get credit on the economy?

Real worker earnings have fallen further than at any time in the last 40 years as inflation erodes wage gains.

That is what an 8.5% inflation rate will do.

At some point the CPI number will come down. That doesn't mean current prices are going to go down.

If gas prices are the same next year that would be a 0% increase in the CPI index. Keep in mind the CPI is only measuring price changes over the last year. The base the CPI is being measured against is getting larger every month for the inflation that started just over a year ago.

I would expect we will see at least another couple of months of the CPI in the  7%-8% range. 

For example, the Producer Price Index (the prices that producers pay for products before they reach consumers) increased 11.2% for the year ended March 31. That indicates that more prices increases are going to be passed on.

Compare that to Germany where the PPI for March was 31% while CPI was 7.3%.

U.S. investors in stocks and bonds are in a worse position than wage earners.

Stock and bond prices are down in actual terms before you even consider inflation losses.

The first quarter was one of the worst in 40 years for stock and bond investors.


Across equity and fixed-income markets broadly, the least-bad performance among U.S. assets were declines of 4.9% in the S&P 500 and speculative credit. They were followed by a 5.6% fall in Treasuries and a 7.8% slide in investment grade. Not since 1980 has the best return among those four categories been so paltry, data compiled by Bloomberg show.

Numerous periods have obviously been far worse for specific sectors. This quarter’s retreat in equities pales in comparison to the 20% drubbing they took at the start of 2020. But viewed as a whole -- and leaving out commodities, which soared -- the new year has been a futile one for an investor seeking shelter from the global storm.



The last time we have seen anything  that is remotely close to what has happened this year to bond prices is...NEVER.

For example, if someone bought a U.S. 30-year treasury note in May, 2020 they would have now lost 34% of their investment. That loss does not include the loss in spending power due to inflation either.


It will take a long, long time to make up for that loss in value.

This will have devastating effects, in particular, on the investment portfolios of insurance companies and pension funds which typically buy long-term bonds for stability.

There is nothing stable about this.

What about stocks?

One investment analyst I follow suggests that 2022 is a year to invest in stocks of companies that produce things that people NEED to live and to divest of companies that provide things people DON'T NEED to live.

First and foremost, you need food and energy to live.

On the other hand, you don't need Netflix to live.

Compare the stock charts of ExxonMobil and Netflix over the last year.

Most particularly, look at the divergence since January 1, 2022 in those two companies.

You also don't need the Walt Disney Company to live.

Some investors may have also decided that the best business strategy for what is supposed to be a family-based entertainment company might not be to go "all in" supporting an LBGT+ agenda focused on small children.

The stock has lost over $70 billion in value since January 1.

People have also apparently decided that they did not need CNN+ to live.

CNN rolled out a premium "news" streaming subscription service on March 29.


CNN+ will cease to exist on April 30--a month after it began.

Reports are that CNN has already invested more than $300 million in the venture and it would require $1 billion in total to meet its revenue goals.

The big question I have is how CNN executives could look at cable tv ratings and believe that there were that many people who would pay for a CNN+ in the first place?

For example, here are the most recent cable news ratings.

Is it any surprise that CNN+ was having trouble getting subscribers even at a discounted $2.99/month price?

Mark CNN+ down with the Edsel and New Coke as one the bigger product flops of all time.

Biden is not getting the "credit" he deserves?

I would suggest that most Americans disagree.


They understand very well what Joe Biden has done for them when it comes to their financial health.

There is nothing about the economy right now that is as great as Joe Biden thinks it is.

Wednesday, April 20, 2022

What Is Happening With Covid?

What is happening with Covid?

The good news is that Covid does not dominate the news cycle everyday as it did for the last two years.

Part of that is due to the Ukraine war but the overall decline in cases since the Winter surge and more people accepting the fact that they need to find a way to live with Covid have also contributed to that trend.

However, that also means that fewer people really are up to date on what the Covid landscape looks like right now.

I thought I would provide some perspectives based on what I have been seeing.

Everyone is probably aware about a federal judge ruling that the CDC exceeded its authority in extending the mask mandate on airline travel. 

This was good news for the airlines and most air travelers.

It was not received well by Biden's chief Covid advisor.

Others argued that a federal judge should not have such power.

However, what about the power that unelected bureaucrats had at the CDC for over two years?

There is an argument that in a public health emergency bureaucrats should be able to bypass the legislative process for a limited time.

However, we are over two years into this "emergency".

If there is a mandate it should come from Congress. We are beyond the use of emergency powers.

As for Dr. Jha's comment. It is laughable.

He said that CDC scientists had "asked for 15 days to make a more data-driven durable decision" and the judge should have allowed it.

What has the CDC been doing for the last two years? They have had two years and have yet to provide any data on the effectiveness of masks on airplanes or anywhere else.

This is the best rationale he could give that the mandate should continue? 

Let's look at other facts about Covid that have not gotten as much attention.

Cases in the United States dropped dramatically after the Winter surge.

There was a 97% decrease in new cases between January 15 and April 4.

The last two weeks has seen a small increase but those cases are generally being seen in states in the Northeast.

Interestingly, all of the states that are seeing the largest increase in cases right now are among the most highly vaccinated states.

Source: The New York Times

Heavily vaccinated and mandated Canada is also seeing a spike in cases right now.

Cases per capita are three times higher in Canada as in the United States.

This may be explained by seasonal factors as Canada also saw a surge last April. However, cases are still 50% higher this year than they were at the same time last year despite 86% of all those age 5 and older being fully vaccinated and 57% of those eligible having been boosted.

The Asia Pacific area is also seeing a lot of cases.

For context, at the peak of cases in the United States there were 2,400 cases/per million.

Right now the United States has about 100 cases per million.


Australia peaked at more than 4,000 cases/million per day and is averaging around 1,800/million per day right now.

That is 18x the level in the U.S. right now.

New Zealand.

16x the level of the U.S. currently.

South Korea.

27x the U.S. level.

Hong Kong.

Hong Kong peaked on March 4 at 3.5 times the peak the United States had in January. Cases dropped dramatically but they are still twice the per capita rate in the U.S. right now.

What is interesting in all of these countries is that the cases seemed to skyrocket at the same time that booster doses were rolled out and administered to large portions of the population.

Is that a coincidence? Perhaps. What if it isn't?

Of course, no one really knows what is going on in China.

It appears to be dealing with a major Covid outbreak.

370 million (about one-fourth of China's population) is under some form of lockdown.


Shanghai's 26 million residents have been locked down since late March. Many people are hungry and dispirited. There seems to be little question that more have died from the lockdowns than the virus.

Commercial activity has almost ceased including shipments from the largest port in the world. The area where lockdowns are in effect represents about 80% of China's GDP.

Why is China doing this?

Is it just an authoritarian action because the Chinese Communists refuse to admit to their citizens that they cannot control everything?

Is there something about the virus that the Chinese know that nobody else does?

Are the Chinese just using the Covid outbreak to further sow chaos on the world's supply chain?

We will likely see the effects in the United States in a couple of months when all of the stuff that was supposed to be delivered in those shipping containers does not show up.


What is next with Covid?

I recently came across data that Walgreen's is publishing on all of the Covid tests it administers in its stores across the United States. The data looks back over the previous seven days.

What is interesting in looking at the data is that the unvaccinated have a lower positivity rate for the virus than those who are vaccinated.

In fact, it is not even close.


Does this indicate that the vaccines are suppressing the innate immunity system such that those vaccinated are actually more susceptible to the virus?

I don't know.

It could be that those who are unvaccinated are having to get tested just to engage in activities that vaccinated people do not have to. This might mean that the unvaccinated are healthier to begin with when they get tested. This then skews the results.

However, it is food for thought especially when you look at the charts above in those heavily vaccinated and boosted countries.

Geert Vanden Bossche (I have cited his work previously in these pages here and here) believes that the virus is continuing to mutate as it is put under immune pressure by the large number of people who have been vaccinated.

He argues that it is just a matter of time before there is a variant that is more contagious and more virulent than Omicron. 

He also believes that those who have had the most doses of the vaccine will be most vulnerable to the virus at that point because their innate immune system will have been compromised.

I have stated before that I hope Vanden Bossche is dead wrong. However, his views and predictions on where Covid is going over the last year have matched the data better than anyone else I have followed on the subject. He strongly condemned the mass vaccination approach at the time the vaccines were first rolled out and argued they would lead to more variants and more infections. He has been correct thus far on that score.

On the other hand, I have seen another view ("Eugyppius" on Substack) that believes that the virus has run its course as a significant threat.

He cites German data that tracks all Acute Respiratory Infections going back to 2017/18.

That data shows that there has been nothing abnormal about anything that has occurred in this "pandemic" compared to other years with acute numbers of respiratory infections. In fact, the last year with Omicron has been below normal.


What does he make of this and what does it mean for the future?

More than that, you can see here what a complete nothingburger the entire Omicron wave has been. Despite all the screeching headlines. Germans spent the latest SARS-2 wave on balance healthier than in the pre-pandemic era. If it weren’t for all the pointless quarantining, nobody would’ve noticed that anything was amiss.

He does believe that the vaccinated have more risk of infection but he rejects the doom and gloom predictions of Vanden Bossche and others.

Our primary obligations must be to the truth, and right now, the truth is this: The vaccinated suffer some degree of immune imprinting, and Omicron replicates preferentially in their lungs. That is not great, but we’re not seeing higher levels of death, hospitalisation or sickness right now. Corona has become a bad cold, and the default assumption must be that it stays that way. We don’t lose sleep over the possibility that some terrifying new hCoV-OC43 variant will emerge to bring back the mortality of 1889. The murky laboratory origins of SARS-2, and the limited evidence of tinkering that its genome bears, aren’t enough to support eternal predictions of death and doom.

Like most everything about Covid from the beginning, I am sure we are in for more surprises

My most fervent hope is that the last prediction is correct and this will all soon be a distant memory for us all.

Monday, April 18, 2022

Your Fair Share

It's tax day in the United States.

An estimated 179 million income tax returns are required to be filed by today for the 2021 tax year.

It is projected that  57% of those returns will not owe any federal income tax.


In 2020, thanks to Covid relief and reduced incomes due to the lockdowns, 62% did not have to pay one cent of federal income tax.

Some of you might remember when Mitt Romney made the observation that 47% of Americans paid no income tax in the 2012 Presidential election campaign and stated it was hard for him to get their vote due to that fact.

He was roundly criticized for that remark despite the fact the number was exactly right.


47% isn't anything anymore.

We have reached the point that well more than half are paying no federal income taxes.

However, we still hear incessantly that "the rich" are not paying their fair share.

Elon Musk is now the favorite target of the Left on that score, especially since he wants to buy Twitter.

This is a tweet from a "community organizer" in Tennessee who is running for Congress.

This is a tweet from a current member of Congress.

This intellectual giant has 408,000 followers on Twitter.


And these are the same people who think that everyone who complains about high gasoline prices should buy an electric car.


Never mind as well that Elon Musk disclosed in December that his income tax bill for 2021 was over $11 billion.

That is reported to be the largest individual income tax amount in history.

I think that shows no matter what it is, it is never enough.

Having practiced as a tax attorney and CPA and worked on thousands of tax returns I always find it incredible that so many people believe "the rich" are not paying their "fair share."


Of course, no one ever seems to be able to define exactly what a "fair share" is to begin with.

We also know that 62% in a recent Rasmussen poll (March, 2022) say they pay more than their "fair share".

I thought that was interesting in that 57% are paying no federal income taxes on their tax returns due today.

Is a fair share ZERO?

What are the facts on who is paying what when it comes to federal income taxes?

The IRS will not have detailed data for 2020 and 2021 for several years but in 2019 (before Covid relief) the top 1% of earners paid 39% of all federal income taxes. The share of the top 5% was 59%.

These numbers were undoubtedly higher in 2020 and 2021.


In 2019, that 47% number Romney cited as those who paid no income taxes had dropped to 44% primarily due to the strong economy in the Trump years.

However, the bottom 50% of taxpayers only paid 3% of all income taxes while the top half paid 97%.


Yes, the top 1% earn much more. The top 1% had 20% of all income. However, they paid 39% of all of the income taxes.

For those that argue for a flat tax take note. That would actually reduce the income tax paid by "the rich" by half.

The share that the top 1% is paying has also been increasing over the last 40 years.

Part of that is due to greater concentrations of income in the wealthy but it is also due to the U.S. tax system becoming more progressive with fewer deductions and tax shelters over the last 40 years,

What is your fair share?

What is the fair share that the wealthy should pay?

Senator Russell Long (D-LA) was the Senate Finance Committee Chairman from 1966-1981.

He always said this about how most people viewed taxation.

"Don't tax me. Don't tax thee. Tax the man behind the tree."

The same is true today. 

It is always someone else that is not paying their fair share.

YOUR share is always too much.