The Market, Energy, And Political Page, T+21 -- May 31, 2018

EU, Mexico, and Canada: anyone paying attention knows that these three are not in great position to take on Trump mana a mano.

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Did Ford Make The Correct Strategic Decision?

Gloating, and re-posting:

American auto industry: looks like Chrysler will be history by the end of the week. Parent company likely to "retire" the brand.

It will hardly be missed; Chrysler namesake is now on only two vehicles, the "ancient" 300 (a car my dad had many, many years ago) and the Pacifica. I've had three Chrysler minivans, loved them all, still driving two of them. Or at least my wife is.

Ford will be down to two automobile models (one of them the Ford Mustang, which is clearly a niche offer) and then the rest of the Ford stable: SUVs, cross-over SUVs, and pick-up trucks.

I saw a lot of nice Chevy automobiles on my recent cross-country trip. Something tells me GM may fill this US automotive niche quite nicely. I loved the Chevy Sonic I had rented from Enterprise, but still -- I found it amazing the dash on my 2012 Honda Civic was so much more modern than that of the Sonic. In addition, the switchology on the Honda Civic was so much better. Chevy was handicapped by the fact that it could not integrate its entertainment system with the car's dash data (fuel, range, etc). Tesla, however, does that very, very well.

I posted that note this morning, before the market opened. So, what did GM do today. Remember, the Dow dropped over 251 points again today. GM? Jumps almost $5, up almost 13%, now trading near $43, trending toward 52-week high. Why? Softbank’s Vision Fund is investing $2.25 billion in General Motors’ driverless car unit. GM will also put $1.1 billion into the unit, assuring funding through the planned beginning of commercialization in 2019.

By the way, GM rose almost 13% -- the very day that Trump slaps aluminum / steel tariffs on Canada. Wow. 

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GDP Now

Does anyone really believe the Atlanta Fed any more? 2Q18 GDP -- Latest forecast: 4.7 percent — May 31, 2018.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.7 percent on May 31, up from 4.0 percent on May 25.

The nowcast of second-quarter real consumer spending growth increased from 3.2 percent to 3.4 percent after this morning's personal income and outlays release from the U.S. Bureau of Economic Analysis (BEA).

The nowcasts of the contributions of net exports and inventory investment to second-quarter real GDP growth increased from 0.17 percentage points and 0.76 percentage points, respectively, to 0.43 percentage points and 1.00 percentage points, respectively, after yesterday's Advance Economic Indicators release from the U.S. Census Bureau and the BEA's updates of first-quarter GDP and the National Income and Product Accounts tables released yesterday and today.

Mexico: in deep, deep trouble --

• Trump triggers tariffs on EU, Mexico & Canada 
• oil sector appears to be ready to implode
• but most concerning for Mexicans: a far-leftist -- think Bernie Sanders on steroids
• Mexico's response to Trump's tariffs: will impose tariffs on table lamps, cranberries, cheese, and pork. I can't make this stuff up.

So, that I don't forget:

• Trump tax cut stimulus: + $800 billion (CNBC analyst, May 31, 2018)
• EU retaliation on tariffs: - $1 billion (CNBC analyst, May 31, 2018)
• Canadian retaliation on tariffs: maybe -$5 billion 
• Mexico retaliation on tariffs: similar to Canada
• in other words, retaliation tariffs pale in comparison to Trump tax cut stimulus (CNBC analyst, May 31, 2018) 
• [just between you and me, an estimate of $800 billion rounds to $1 trillion -- just saying -- yeah, as an investor, like I'm really worried about retaliatory tariffs; please don't share this comment with anyone else -- it's just between you and me; and, definitely don't take it out of context]

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ObamaCare Re-Surfaces In New Jersey

Link here. Whatever.

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Feelings

I have no idea how things are going with the North Koreans or what is being discussed, but there are days (like today -- May 31, 2018 -- Trump's tariffs) that I think our "enemies" like North Korea are more accommodating than our "allies" like Canada, Mexico, and the EU. Just saying. And I'm probably wrong. I'm just saying that some days I have those feelings. 

30-Second Elevator Speech -- March 28, 2018 -- Nothing About The Bakken

Driverless / autonomous driving: dead.

China / North Korea / US: huge turn of events. Xi-Trump-Kim triangulation. US seldom comes out in a "winning" position when two foes complete the threesome.

Mideast: off everyone's radar scope. Quiet won't last.

ObamaCare: back in the news. Most thought it was dead. Not.

Facebook: huge losses anticipated even if losses limited to a) no more selling data; b) lawsuits. If only revenue is from on-screen advertising, market value of Facebook plummets. When was the last time you clicked on an ad at your Facebook account?

California: civil war with itself over sanctuary cities. Link.

US auto industry: rolling back 2022 - 2025 CAFE standards could be worse for the auto industry than keeping them. With CAFE standards rolled back, US auto industry in a no-win situation: California vs US.

US auto industry, sticker shock: surveys suggest Americans unable to afford new models.

Tesla: I thought Tesla would survive 2018 just fine. But no more: a) Norway syndrome; b) Moody's downgrade; c) fiery crashes; d) poor craftsmanship; e) Jaguar - I-PACE - 20,000 auto fleet announced.

Market: everyone spooked.

Fake news: will only get worse. Print media: what you read, defines you.

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Shaden

See this post.

You can track the supertanker Shaden at this site.

Projected route of the Schaden:

The Witch Is Dead -- December 23, 2017

Going biking. Christmas Eve eve. Heavy, heavy traffic. Very dark. Should be a sporting ride.

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My, How Quickly Things Change In Washingon

From don't mess with taxes.com: 

IRS goes against Trump's "order. IRS backs off Trump's Obamacare order, will enforce ACA coverage reporting rule.What's going on with the Affordable Care Act (ACA)? It depends on where you're looking for answers.

Federal lawmakers remain in a quandary over how to deal with the ACA, or as it's known (for now) Obamacare.

The Internal Revenue Service, however, made it clear this week that it plans to follow the health care law's reporting requirements as long as they are officially on the books.

That's a reversal of a prior IRS position.

However, given the confusion with the law, both under its namesake president and since Donald J. Trump moved into the Oval Office, the tax agency's position change isn't surprising.

I find it amazing that a government agency that works directly for the executive branch ignores the President of the United States. Tell me again about draining the swamp. Tell me again there's no "deep state." But I digress.

Flash forward two-and-a-half months: Congress easily passes and president wastes no time signing the biggest tax cut in the history of the US which, among a few other things, specifically states that, "no, the IRS won't enforce the individual mandate."

Ding, dong, The witch is dead.

ObamaCare. Effectively. Repealed. RIP.

The Wizard of Oz

Atmospheric CO2 Surges From 401 PPM To 403 PPM -- October 11, 2017

From CO2 Now:

Down from 405.07 last month (August, 2017).

September, 2016: 401.01 ppm.

So,

403.38 - 401.01 = an increase of 2.37 parts per million. Is that even statistically significant? Is that even "reproducible -- in other words, if an independent group of researchers measured atmospherica CO2 from the same location at the same time, would they get the same number?

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US Debt: About $20 Trillion?

Top Six Wealth Management Companies: managing $19 trillion. 

Source: http://www.visualcapitalist.com/chart-trillion-dollar-club/.

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ObamaCare Premiums To Rise 25% In California

From The Los Angeles Times:

California’s health insurance exchange said Wednesday it has ordered insurers to add a surcharge to certain policies next year because the Trump administration has yet to commit to paying a key set of consumer subsidies under the Affordable Care Act.

The decision to impose a 12.4% surcharge on silver-level health plans in 2018 means the total premium increase for those policies will average nearly 25%, according to Covered California.

Taxpayers, not consumers, will bear the brunt of the extra rate hike because federal premium assistance for policyholders, which is pegged to the cost of coverage, will also increase.

Statewide, rate increases will vary by insurer and region. What consumers pay depends on where they live, their income, what level of coverage they want and which insurer they choose.

Californians can get their first look at next year’s health plan prices and options on the state’s rate calculator, released Wednesday.

The state’s open enrollment period, which is longer than that for the federal exchange, runs from Nov. 1 to Jan. 31. About 1.4 million Californians buy their own coverage through the state marketplace and nearly 90% receive financial assistance that reduces what they pay.

In August, Covered California announced that 2018 premiums would rise by 12.5%, on average, statewide. That ticked down slightly to 12.3% during regulatory review. But the exchange also warned that the additional increase, averaging 12.4%, would be added to the silver-tier plans if President Trump failed to commit to continued funding for the so-called cost-sharing subsidies that help reduce some consumers’ out-of-pocket expenses. Those payouts total about $7 billion this year nationwide.

Trump has continued paying the subsidies on a month-to-month basis while repeatedly threatening to cut them off and repeal the entire health law. He has referred to the payments as “bailouts” for insurance companies.

Peter Lee, executive director of Covered California, said the surcharge is far from ideal but that the uncertainty in the nation’s capital left the state with no other option.

Don't blame Trump. It's Obama's health care plan, not Trump's. The state of California directed that rates be increased. Trump has not changed the funding. He is simply talking about it.