Looking Backwards …
LB #1
One of the weird things I have been hearing about lately is that tariffs are good. Tariffs are about balancing equality amongst countries and protecting countries key exports and have a hundreds of years’ old history. Customers don’t care. We want lower prices. That is why WalMart wins. Always low prices. Costco wins. Amazon wins. There is very little equality of balancing in the check out line. Tom Huddleston Jr. wrote an article about a famous coffee meeting between two of these great companies, “After 30 years in business, Amazon is a $2 trillion behemoth and one of the world’s largest retailers.
But back in 2001, its very survival was in doubt after the dot-com bubble burst and Amazon’s stock dipped by 90 percent. Some critics believed Amazon was doomed to never recover, but founder Jeff Bezos turned things around — with some helpful advice from Jim Sinegal, founder of rival retailer Costco.
That year, Bezos met Sinegal for coffee at a Starbucks inside a Barnes & Noble near Amazon’s offices in Bellevue, Washington, according to the 2013 book “The Everything Store,” by journalist Brad Stone. Bezos wanted to talk about using Costco as a wholesale supplier for some products, but the meeting’s key takeaway ended up involving pricing strategies. Sinegal explained how Costco could sell so many products for “dirt cheap” by eliminating unnecessary costs and maintaining strong relationships with suppliers to secure the best deals on bulk goods, Stone wrote. Those low prices were key to getting customers to pay for Costco’s annual membership, comprising most of the company’s gross profits.
“The membership fee is a one-time pain, but it’s reinforced every time customers walk in and see forty-seven-inch televisions that are two hundred dollars less than anyplace else,” Sinegal told Bezos, according to Stone. “It reinforces the value of the concept. Customers know they will find really cheap stuff at Costco.”
Costco’s roots are in acquiring Price club which was started by Sol Price who ran FedMart. Sol Price is the granddaddy of American retail and that is what Sam Walton tried to emulate. These great companies all understand that the key is low prices. Voters just dumped the Democratic party because prices got too high, and now we are openly talking about higher prices which tariffs always bring as a good thing? Consider me confused…
LB #2
Speaking of higher not lower prices, Germany continues their descent as Thomas Brooke writes for Remix, “Berlin’s inability to stabilize Europe’s largest economy has resulted in soaring energy costs, stagnant growth, and a considerable decline in its competitiveness with the likes of China.
The German automotive sector is in the process of cutting thousands of jobs as it grapples with a global shift toward electric vehicles…The economic crisis is having a knock-on effect throughout the country, with Remix News reporting this week that bankruptcies have soared to their highest level in 20 years.
A total of 1,530 individuals and corporations filed for bankruptcies in October, 17 percent more than last month, according to research from the Leibniz Institute for Economic Research Halle (IWH).”
There are real consequences for making bad investments. I look at the landscape and the Chinese have technical know-how rivalling German engineering and they have a cheaper labor force and they are the big beneficiaries of the war on Ukraine. Cheap and abundant Russian energy that used to flow into Europe has been diverted to the Chinese and Indian economies. Is it any wonder why Europe seems like the odd man out. What is head scratching to me is that they don’t seem to have another plan? This from Mike Shedlock at Mish Talk, “No sun. No wind. Hello Germany, care to rethink your Green New Deal? Welt Business (translated from German, paywalled) reports Now Germany is experiencing a green electricity outage – with huge consequences
“The foggy weather of the last few days has brought green electricity production to a virtual standstill. Not only have particularly climate-damaging power plants been brought into operation as a replacement for wind and solar power, but prices have also exploded. And all of this seems to be just a foretaste of winter.” Instead, Germany, with thanks to an idiotic decision dating to Chancellor Angela Merkel, chose to get rid of nuclear with no viable alternative.
When that failed, Germany had needed to import energy from France but also neighboring countries that produced energy with coal, and the dirtiest coal at that.
How stupid can you get?”
The answer seems to be pretty stupid, Mike. Voters aren’t stupid for long because there are consequences for stupidity, eventually. The voters have revolted, and the elections will upset the apple cart in Germany. Hopefully it will be soon.
LB #3
We often mention poor Liz Truss because of her failed budget and the British gilt market revolt that shortened her stay as the leader of the UK to a couple months. The fundamental problems have been wallpapered over, but she was a little too transparent for the tea drinkers to stomach. What I found interesting was how she spent her last days in office while in the midst of an economic crisis. This from Harry Cole and Nick Parker in The Sun, “Ex-PM Liz Truss spent her final days in office studying weather maps and preparing for UK radiation cases after American spies feared the Kremlin tyrant was hours from pressing the button. Based on “exquisite” intelligence, the US concluded there was a 50 per cent chance Russia could deploy a tactical nuke on the Ukrainian battlefields or test a larger bomb over the Black Sea.
The horrifying details of how close the war came to a massive escalation are revealed in Out of the Blue, an updated biography of the short-lived PM.
It reports Ms. Truss spent “numerous hours studying satellite weather data and wind directions” over fears the “wrong weather patterns” could have a “direct fall-out effect on Britain”.
Separately, a new book, War, by Watergate journalist Bob Woodward also reports the White House believed there was a 50 per cent chance Russia would use a battlefield weapon based on “exquisite” human intelligence received in autumn 2022.
Then UK Defence Secretary Ben Wallace dashed to Washington on October 18 that year to discuss the crisis.”
We discussed recently how we were dealing with a 50% chance of a nuclear exchange happening in September based on my back of envelope math. It appeared to be a certainty had Secretary of Defense Lloyd Austin hadn’t intervened and seemingly conducted a coup on Joe Biden’s military leadership capabilities.
This new 50% chance coming a couple years ago shows how little people know and seemingly care until it is too late. I am convinced that it will take a nuclear exchange before people understand how foolish the west is being with regards to its European expansion of NATO. Russian has been invaded by Europe forever, and it will not happen again and they have the world’s largest nuclear arsenal. I don’t know if Don Trump is going to let Europe swing in the breeze, but their decision making is so suspect in so many areas that I would like to see the US cut the cord with them sooner than later.
Looking Forwards…
LF#1
Don Trump plans on putting more tariffs on China on day 1 of his administration. He started this process of upping tariffs during his first term. I think he would have better luck trying to hold back the tide. This from WION news, “The West should not think or assume that China is lagging behind the US and Europe on technological developments, Microsoft’s president and vice-chairman warned according to a detailed report by CNBC. US and China tensions in the past few years have centered on the battle between the two nations for technological supremacy, resulting in several export control measures on critical technologies from both the nations, the CNBC report explained further.
Late last year, China’s Huawei took the market by shock with the release of a smartphone whose studied reviews indicated downloads speeds associated with 5G. This sparked speculation of an apparently clear chip breakthrough that defied US technological sanctions and hence resulted in further escalating tensions. Speaking at the Web Summit technological conference in Lisbon, Portugal, on November 13, Microsoft’s Brad Smith told CNBC that “in many ways,” China is close to or is even catching up on technology.
“I think one of the dangers, frankly, is that people who don’t go to China too often assume that they’re behind,” he told CNBC in an exclusive conversation. “But when you go there, you’re impressed by how much they’re doing.” It is hence crucial to note that the gap between the US and China in terms of cutting-edge technology is rapidly reducing. This is bound to bring more challenges and difficulties for both the nations to adjust accordingly.”
We, as Americans, are quite confident in our ability to be technologically superior to other countries and perhaps we are, but the gap is closing and closing quickly. What we are not is better at manufacturing, mining, refining, melting, smelting, or building things cheaply. That spells future economic trouble.
LF#2
This from Amelia Lucas writing for CNBC, “After a tough year for the restaurant industry, executives can’t wait for 2025 to start.
“I don’t know about you guys, but I’m ready for ’24 to be behind us, and I think ‘25 is going to be a great year,” Kate Jaspon, CFO of Dunkin’ parent Inspire Brands, said at the Restaurant Finance and Development Conference in Las Vegas this week.
Restaurant bankruptcy filings have soared more than 50% so far in 2024, compared with the year-ago period. Traffic to restaurants open at least a year declined year over year in every month of 2024 through September, according to data from industry tracker Black Box Intelligence. And many of the nation’s largest restaurant chains, from McDonald’s to Starbucks, have disappointed investors with same-store sales declines for at least one quarter.
But green shoots have appeared, fueling tepid optimism for the future of the restaurant industry.
Sales are improving from this summer’s lows. Traffic to fast-food restaurants rose 2.8% in October compared with a year ago, according to data from Revenue Management Solutions. The firm’s data confirms anecdotal evidence from companies like Burger King owner Restaurant Brands International, which said earlier this month that its same-store sales grew in October.
Plus, interest rates are finally falling. Earlier in November, the Federal Reserve approved its second consecutive rate cut. For restaurants, lower interest rates mean that it’s cheaper to finance new locations, fueling growth. Previously, higher interest rates didn’t hurt development much because restaurants were still catching up from pandemic delays and riding the high of the post-Covid sales boom.”
Ok, but interest rates are rising not falling, Amelia. The 10-year yield is almost 70 basis points off the lows reached right before Powell started cutting the short-term interest rate. Companies aren’t borrowing on the Fed Funds rate; they are borrowing further out the curve. The five-year curve is 80 basis points off the lows as well, so interest rates are going up not down. Volumes are up because they cut prices and cutting prices means worse margins, which is what we can expect to see in hospitality in the future.
LF#3
Just as bad decisions are punished, good decisions should be rewarded and boy are they? This from ZeroHedge,” Investigative journalist Chris Papst of Fox45 News’ Project Baltimore visited Crellin Elementary School, Maryland’s westernmost school, just about a mile from West Virginia. It’s a Title 1 school, meaning it has a massive concentration of impoverished students. Of the more than 1,400 public schools in the entire state, 464 are considered Title 1. Of those 464 schools, Crellin is the only one earning a five-star educational excellence rating from the Maryland State Department of Education. Even though the children come from some of the poorest households in the state and possibly the nation, the educational miracle at Crellin is very simple: community. Papst’s report continues:
Principal Dana McCauley knows her school, Crellin Elementary, in Garrett County is unique. She knows Crellin is Maryland’s westernmost school, just about a mile from West Virginia. She also knows it’s likely the only one in the state where elementary students walk chickens at recess.
“The kids have a stake in the school?” Asked Project Baltimore’s Chris Papst.
“Oh yes. Yeah. So, they’re responsible for there’s many chores that need done around here. Many chores,” explained McCauley.
“The kids do chores?” Replied Papst.
“They do chores. Yes,” replied McCauley. “There’s all the barn work that needs done. The stalls have to be cleaned, the animals need fed and watered every day. The eggs need collected.”
So, how does this translate to educational success? McCauley says the students feel like the school is “their place” and “they’re invested in it”.
…
So, how did that happen? The story begins 23 years ago.
McCauley has been leading Crellin Elementary since 2001. Not just as its principal, but also as a teacher. And it was in that role that, 23 years ago, she made a life-changing discovery.
“I remember my first year here sitting in class watching some of the kids. And then going outside with them, going down to the stream and watching some of our squirrel-iest kids in the classroom thrive. I thought, there’s got to be something to this,” McCauley told Project Baltimore.
Soon after, McCauley learned Crellin sits on the polluted land of an abandoned coal mine where acid mine draining has colored the rocks orange. At first, to McCulley, that seemed like a big problem. But it was within the rocks that she had an idea.
“It’s good to not know what you don’t know. That makes sense? So, you’re not afraid of the obstacles because you’re not even aware of what they might be,” explained McCauley.
On a whim, McCauley gathered community support and petitioned Garrett County, which awarded the school ownership of a six-acre site of the mine to clean up. That was the moment Crellin’s unique story began.
“We took the walls down to the school and open it up to the community. So, the community is part of our school,” said McCauley.
Over the next few years, the students, staff, parents and neighbors worked to restore the land. Now, there’s thriving wetlands, a hemlock forest and trout stream, which is all made possible by a limestone retention pond the school built to naturally filter and clean the acid mine drainage.
Once the school had fully cleaned the six-acres, McCauley expanded her vision. Maryland does not have sanctioned agricultural programs for elementary schools. So, in 2013, McCauley started her own. Today, Crellin has an apple orchard, greenhouse, vegetable garden and multiple barns with goats, sheep and – of course – chickens.
Parents, according to McCauley, built the hen house. And now it is maintained by the school community, which includes the students.
You see, where the students work is also where they learn. A classroom amphitheater is built from a giant pile of coal covered in dirt. Class is held in the greenhouse all winter long.
Crellin Elementary is a public school. But McCauley says no public education dollars were used for any of the school’s agricultural or coal mine reclamation projects. Over 23 years, McCauley has applied for dozens of local, state and federal agricultural and reclamation grants. She won most of them, collecting hundreds of thousands of dollars for the school and its many projects.
“It’s a lot of work,” McCauley told Project Baltimore.
Work that over two decades has culminated in Crellin’s five-star rating which makes this school one of one in Maryland.
“Is what you’re doing here. Could it be done at any school?” Questioned Papst.
“I think it’d be different. Because this is unique to our community,” explained McCauley. “Because it’s not about the stream. It’s not about the stream. It’s about those who help make that all possible. That’s what it’s all about.”
The education miracle in the mountains of Maryland, at one of the state’s poorest elementary schools, shows that massive budgets aren’t necessary to improve test scores. Instead, community, family, tradition, hard work, and conservative values create an environment that money can’t always buy, uplifting these children spiritually and setting them up for success.”
This is how you make America great again. This started 23 years ago, long before it became a slogan to move merch.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 43,444.
The 10-year Treasury bond is at …at 4.44%
The price of Brent Crude is … at $71.04 per barrel.
The price of gold is … at $2,567/oz.
The price of silver is … at $30.33/oz.
I leave you with this from the information superhighway, why can’t you explain puns to kleptomaniacs? They always take things literally.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.