Life Comes at You Fast
DOW + 33 = 21,830
SPX – 3 = 2472
NAS – 7 = 6374
RUT – 4 = 1429
10 Y – .02 – 2.29%
OIL + .63 = 49.67
GOLD + 10.50 = 1270.10
BITCOIN – 2.16% = 2744.59 USD
ETHEREUM – 2.92% = 187.70
The Dow Industrial average closed at another record high.
Real gross domestic product increased at an annual rate of 2.6 percent in the second quarter of 2017; that’s up from a revised 1.2 percent rate in the first quarter, but short of expectations. In recent years, the U.S. economy has often started off slowly, improved in the middle of the year, only to sag again toward the end.
The economy grew 3.5 percent in the third quarter of 2016 before slowing down. It grew at 5 percent in the third quarter of 2014 before sputtering out. The result each year has been a return to what some economists call the “new normal” of plodding annual growth of about 2 percent. Today was the first estimate of second quarter GDP growth – other estimates will follow and it is typical to see downward revision.
You should never read too much into any one quarter’s GDP data, especially the first estimate. The GDP report showed balanced economic growth with increases in personal consumption, nonresidential fixed investment, exports and federal government spending.
These were offset by negative contributions from private residential fixed investment, private inventory investment and state and local government spending.
Imports, which subtract from GDP, also increased.
You have probably heard that efforts to repeal Obamacare have failed. It happened late last night. Three GOP senators – Susan Collins of Maine, Lisa Murkowski of Alaska, and John McCain of Arizona – voted against the skinny repeal and the final vote was 49-51 against.
Senator Lindsey Graham of South Carolina called the skinny repeal a fraud but he voted for it anyway. McCain argued in a statement today that the bill would not lower costs, increase competition or improve care for Americans.
So, repeal and replace failed. Repeal only failed. And last night, skinny repeal failed. So, the fight is over. Not so fast. Trump responded with a tweet – “Let Obamacare implode. Then deal.” Meaning the administration should continue undermining the law, to force Democrats to the table to … well, it’s not clear what he wants from them.
There is no actual Trumpcare plan, just anti-Obamacare rhetoric. There are plenty of tools that the administration can employ to keep sabotaging the individual markets and the ACA. The administration can do too little to promote enrollment or scale back enforcement of the mandate or give states more leeway to experiment with Medicaid in destructive ways.
The administration can continue to refuse to guarantee cost-sharing reductions, which has already caused insurers to exit the markets and hike premiums, something that could continue or get worse, leaving many more people without coverage options. Insurers are already warning of such an outcome.
The ACA exchanges, for all their problems, have helped extend coverage to millions more, particularly people with preexisting conditions. While premiums are up and insurer choice is down in several states, the vast majority of Americans will be able to pick between multiple insurers on the individual market next year.
The idea of repeal was widely hated, just 17% approval for any type of repeal. Congress will not repeal. The ACA is not in a death spiral, unless it is sabotaged. If the ACA implodes now, it will be Trump’s doing. But, honestly, the debate is over.
The American people want health care, and they don’t think they should die just because they weren’t lucky enough to get insurance through work, or just because their money ran out before the cancer was cured. Every other developed country in the world has this figured out, and given enough time, so will the United States, after having exhausted all the other possibilities.
President Trump has replaced his White House chief of staff, Reince Priebus, installing retired General John Kelly in his place in a major shakeup of his top team. Trump announced the move in a tweet a day after his new communications director, Anthony Scaramucci, accused Priebus of leaking information to reporters in a profanity-laced tirade.
Now you might think Scaramucci would be having a great day watching Priebus walk out the door, but he just got word that his wife of 3 years filed for divorce today. Hey, life comes at you fast, Mooch. John Kelly is a retired 4-star General and a Marine and had been running the Department of Homeland Security, so he should be able to bring some order to the White House, but he does not have legislative experience, and the next issue on the table is tax reform.
Trump has yet to advance a specific tax proposal. Whatever the plan, it will have to be much more transparent than his health care plans, or lack thereof. House Speaker Paul Ryan struck an optimistic tone on Republicans’ ability to reach a tax reform deal. Ryan’s comments came a day after the Republican leaders working on tax reform released a joint statement saying they will abandon the controversial border adjustment provision and outlining the broad goals for tax reform.
Ryan, Senate Majority Leader Mitch McConnell, Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, House Ways and Means Committee Chairman Kevin Brady and Senate Finance Committee Chairman Orrin Hatch have been meeting regularly to strike a plan that the GOP wants to push through Congress this year. But many unknowns remain.
The joint statement released Thursday by the six leaders did not offer new details on possible corporate or income tax rates, revenue neutrality or other specifics that could be included in the tax plan.
Crude oil prices tacked on about $4 a barrel this week, or 8.6%. Saudi Arabia’s vow on Monday to cut exports in August helped kicked off the rally, while a sharp drop in U.S. crude and fuel stockpiles kept the rebound going.
Royal Dutch Shell laid out a pessimistic vision for the future of oil on Thursday, even as the company reported success in generating cash during a prolonged downturn. Shell Chief Executive Ben van Beurden said the company has a mind-set that oil prices would remain “lower forever”–a riff on the “lower for longer” mantra the industry adopted for a price slump that proved unexpectedly lasting.
He sees the demand for oil topping out sometime in the early 2030s as consumers make the same switch to electric vehicles, something Van Beurden plans to do in the next couple of months. When the boss of Europe’s biggest listed oil company says his next car will be electric, it says a lot about the future of fossil fuels.
Airline seats are shrinking. Over the past couple of decades, the pitch (or distance from your seat to the same position of the seat in front of you, so this is the legroom) – the pitch has declined from 35 inches to 31 inches or less. The width of the seat has shrunk from 18 inches to 15 inches. So, if you think it’s difficult to squeeze into the seat, it might also mean it is tough to get out of the seat in the event of an emergency.
Aviation authorities were ordered back to the drawing board to solve what a federal appeals judge called “The Case of the Incredible Shrinking Airline Seat.” Judge Patricia Millett told the Federal Aviation Administration to take another look at an advocacy group’s assertion that shrinking airline seats are imperiling passenger safety.
The judge rejected the FAA’s argument that seat size was unimportant to getting off the plane in an emergency.
And now, it’s time for another edition of Banks Behaving Badly. Today’s edition features Wells Fargo, this is a bank that is already in the Hall of Infamy. Fraudulent bank accounts, bogus credit cards, compromised customer data and, now, unwanted car insurance.
A 2016 internal review of the bank’s auto lending found more than 500,000 clients may have been improperly charged for protection against vehicle loss or damage while making monthly loan payments, even though many drivers already had their own policies.
Wells Fargo may pay as much as $80 million to affected clients – with extra money for as many as 20,000 who lost cars. Wells Fargo shut down the program in September and was in “regular conversations” with regulators while it worked on a remediation plan. So, why did they wait so long to make this information public? Well, that’s a good question.
I think they just can’t help themselves.