Looking Backwards …
LB #1
When the Fed left interest rates unchanged and said that their dot plots still see an average of 3 cuts in 2024, the markets rejoiced. Remember when the Fed said they would cut three times 5 months ago and the market melted higher in on of the quickest rallies in history. Fed projections now show that we won’t get to 2% inflation until 2026. We are still ripping. We go to ZeroHedge…
“2024 Median dot: unchanged at 3 cuts, but composition changed…
2 officials saw no cuts (unch)
2 officials sew one cut (one more than in Dec)
5 officials saw two cuts (unchanged)
9 officials saw three cuts (up from 6 in Dec)
1 saw four cuts (down from five who saw 4 or more cuts in Dec)
…literally one voter stood between 50bps and 75bps in cuts in 2024…”
If we would have gotten two cuts instead of three as the announcement, something tells me the market would have shrugged it off and ripped anyway. This is fin, people are excited, they are making money and they are planning to spend it. It will be the Summer of George. Naps, and vacations, and finding yourself with a huge retirement account. Hurray.
Someone or something isn’t buying it though, gold is making new all-time highs and silver is breaking out as well. This smells like inflation and the oldest markets are reacting appropriately. None of this should come as a surprise regarding the gold price. The only surprise is how long the wagon of people riding the wave of euphoria can approach the cliff. Powell had a chance to push back and he didn’t do it. The Jedi, our Jedi, is looking more and more like a pussy. I would say he is, but I am holding out the hope that one of those dots is his, and his is really the only one that matters. The pivot is still verbal Jerome, but the tough talk of pain 18 months ago in Jackson Hole is sure different than the loose financial conditions that you have put us back into.
LB#2
Less gloom, less doom, more room for positivity. Hologic is a company that is doing something very efficient and interesting. I have been trying to find examples of good business practices that I like as I think we should learn from those doing something well. They are company that made covid test kits and made a ton of money during Covid but since then their revenues have dropped back to normal. They used a bunch of temp workers to handle the volume increase because they didn’t think it would be permanent, and they were right and now they are back to normal and didn’t have to do any layoffs.
Lauren Webber writes for the Wall Street Journal, “Since then, demand for those products has dried up, capping a boom-and-bust cycle that played out at a range of companies over the past four years.
One thing never swung up or down at Hologic: the size of its full-time workforce.
Drawing a hard line on hiring that rankled some workers, Hologic has kept head count steady, at just under 7,000 employees, during a volatile stretch. At Marlborough, Mass.-based Hologic, managers are told to question the need for every new hire, redeploy positions to keep compensation budgets from growing, and find savings to offset staff additions.
When employees leave, positions aren’t necessarily backfilled. Instead, managers ask whether another part of the business needs the position more than the department losing it.”
We talk a lot of about bad companies, and bad ideas, but when we get a good example of something, it is important to recognize that there are plenty of good business people out there, but they just aren’t making the news very often.
LB#3- Speaking of terribly run companies, let’s look at Hertz. Stephen Sherr, their CEO, stepped down after recently realizing that his EV decision was somewhere on the spectrum between outrageously dumb and baby diapers. Chris Isidore writes for CNN Business, “But the problem for Hertz wasn’t necessarily that the cars were electric, and customers simply do not want to drive electric cars. The problem was how Hertz handled the fleet in general, according to industry analysts.
“The execution and marketing of EV’s [by Hertz] was a horror show across the board,” said Daniel Ives, an analyst with Wedbush Securities who follows the EV market. “It’s a black eye they couldn’t recover from.”
Isidore notes that Hertz was once the largest rental car company in the world while now doing 78% of Avis Budget numbers. Bad decisions get punished and this is how capitalism is supposed to work. It is nice to see it when it does.
Looking Forwards…
LF#1
Here is what our future might look like if Don Trump gets another term. He is saying that he will add a 100% tariff on any car made in Mexico that is Chinese. Now Don, you might want to think about this. Don might not want to campaign too hard for those swing states of Michigan and Pennsylvania. This is all he is doing is blowing hard for votes. However, if he wants to play ball with a real manufacturing powerhouse, I am sure Xi can accommodate him. It might be financially assured self-destruction, but it would be two sided. Let me give you an example,
According to a 2021 article by Rosemary Gibson in Market Watch, “Right now, the U.S. has virtually no capacity to manufacture antibiotics. That’s because China currently controls roughly 90% of the global supply of inputs needed to make the generic antibiotics that treat bronchitis, pneumonia, pediatric ear infections, and life-threatening conditions such as sepsis.” She goes on, the last penicillin fermentation plant in the US, which used to produce 70% of the world’s supply closed in 20024. Today, 2/3 of the top 2 antibiotics used in the US are produced in China.
Remember during Covid when we couldn’t produce masks, this is much worse and China can snap their fingers and our hospitals would fill with dying people in a week. That is one item.
Meanwhile our state department has announced that we don’t like the new state security law passed in Hong Kong that allows the central government more leeway to quash dissent. Can you imagine if China publicly condemned the stupid policies of Gavin Gruesome? How overreaching would that be? China didn’t take that kindly and issued a statement via LeeYing Shan on CNBC, “China’s embassy hit back against U.S. criticism of Hong Kong’s new national security law on Thursday, saying the U.S. should “respect China’s sovereignty.”
Our house has been in such disarray, but we have to stick our beak in everyone else’s business as well. I’m afraid this conflict is escalating and not in a good way. The simple truth is without tariffs, the auto industry in this country is over. It will be like textiles, steel, and electronics. It is a pseudo-state sponsored enterprise right now anyway. If Don does Don things, it will delay not stop. He doesn’t realize that buying cheap stuff from China is our economy. He should.
LF#2
We just talked about the state of steal city of Pittsburgh last week and now Mike Shedlock has a nice writeup about how the commercial real estate crisis is affecting their downtown and their tax base. “Confidential real estate information obtained by the Pittsburgh Post-Gazette estimates that 17 buildings are in “significant distress” and another nine are in “pending distress,” meaning they are either approaching foreclosure or at risk of foreclosure. Those properties represent 63% of the Downtown office stock and account for $30.5 million in real estate taxes, according to the data.” That isn’t good. I wonder if this is why they now have 20 officers on the overnight shift to watch the entire city and they will no longer consider many classes of crimes, crimes. Shedlock details how they have unrealistic revenues still on the books, pricey new union contracts that they will have to navigate, and the hollowing out of the downtown tax base which will only reduce revenue and make more cuts unavoidable. This is the difference between when cities and states do this and when the Fed does it. The Fed prints more money and we get inflation, the hidden tax. The cities and states will have to get to their numbers and layoffs are a coming, crime is a coming, and you will not find me in Pittsburgh anytime soon.
LF#3
This week in Florida the state voted to not allow homeless encampments in the state. The state will make the homeless use temporary shelters where drug use will not be permitted and treatment will be offered to those that seek it.
Eric Lundrum writes for American Greatness, “The bill was sponsored by State Representative Sam Garrison (R-Fla.), who said that “in Florida, we will learn from the mistakes of cities like San Francisco, Denver, Los Angeles, and more, which are paying the price for their unwillingness to act.”
“This bill will not eliminate homelessness,” Garrison admitted.
“But it is a start. And it states clearly that in Florida, our public spaces are worth fighting for. The status quo is not an option. In Florida we choose to act. It is simply the right thing to do.”
This is a great way for states to juxtapose themselves against other states, and use our system to provide a way to please our citizens. DeSantis and his state are again proving that they are amongst the best at governing which matters far more than winning elections. Go visit Florida and skip California. Your experience will be rewarded.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading at ……….39,476.
The 10-year Treasury bond is at …4.202%
The price of Brent Crude is … $85.43 per barrel.
The price of gold is … at $2,167/oz.
The price of silver is … $24.84/oz.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.