U.S. stocks closed higher Thursday, seizing a fresh round of records, after the market got another shot of confidence from promised trade tariff reductions.
How did benchmarks fare?
The Dow Jones Industrial Average DJIA, +0.30% closed up 88.92 points, or 0.3%, to settle at 29,379.77, after carving out a intraday record at 29,408.05. The S&P 500 index SPX, +0.33% rose 11.09 points, or 0.3% to settle at 3,345.78. The Nasdaq Composite Index COMP, +0.67% advanced 63.47 points, or 0.7% to settle at 9,572.15. All three indexes closed at new records.
Category: Economy
Coronavirus tests U.S. medical system’s unhealthy reliance on China for drugs, supplies.
The basic building blocks of U.S. health care are now under the control of the Chinese Communist Party.
It’s not just the “building blocks of U.S. health care”, it’s all the stuff imported from China and how much of that stuff we depend on that’s not being manufactured because of so many people being in quarantine.
Chinese President Xi Jinping recently warned of the “grave” situation posed by the “accelerating spread” of the coronavirus in China. Xi’s frank warnings were unusual for the seniormost official of the Chinese Communist Party and reveal the depth of the concern at the highest levels of the country’s leadership.
Already, nearly 500 people have died and tens of thousands more have been diagnosed with the novel coronavirus. It has been found in Taiwan, South Korea, Japan, Europe and the United States. Tens of millions have been put under travel restrictions and even quarantine by the Chinese government.
While many are rightfully concerned about stopping the virus, few are focused on the fact that the more it spreads, the more the U.S. ability to treat any Americans who are stricken is vulnerable to the tender mercies of the Chinese Communist Party because of a strategic shift in health care that occurred without debate or decision in Washington.
Everything from antibiotics to chemotherapy drugs, from antidepressants to Alzheimer’s medications to treatments for HIV/AIDS, are frequently produced by Chinese manufacturers. What’s more, the most effective breathing masks and the bulk of other personal protective equipment — key to containing the spread of coronavirus and protecting health care workers — and even the basic syringe are largely made in China. The basic building blocks of U.S. health care are now under Xi’s control.
As Rosemary Gibson, author and health care expert noted, the United States does not produce its own penicillin anymore — the last U.S. based penicillin production facility closed in 2004. Of course, antibiotics may not do any good against the coronavirus, but they may be needed to deal with a related sickness, just as flu often leads to respiratory infections.
This makes the U.S. acutely vulnerable for several reasons. First, China has a record of faulty products and poor oversight that have resulted in recalls, production delays and other problems Americans certainly don’t want to encounter when trying to obtain lifesaving drugs. As Secretary of Commerce Wilbur Ross stated recently, it is time for the U.S. to “consider the ramifications of doing business with a country that has a long history of covering up real risks to its own people and the rest of the world.”
Why Unlocking More Oil and Gas is Good for Every American – And the Environment
What if gasoline prices doubled? In other words, if you had to pay $5.00 per gallon, how much would that hurt your life?
That’s what happened during the 1970s oil crisis. The Middle East-led Organization of Petroleum Exporting Countries (OPEC) weaponized oil by embargoing the United States twice. At that time, America lacked the capacity to make up for the lost oil. In 1978, the average price per gallon was around 60 cents. By 1981, it reached $1.35. The economy went into severe recession and millions lost their jobs.
But more recently, major unrest in the Middle East has not affected Americans as strongly as it used to.
On September 14, 2019, Iranian-backed militias attacked the world’s largest oil refinery, in Saudi Arabia. The attack cut the refinery’s capacity in half.
But despite some expert predictions, oil prices barely flinched. Americans saw no price spike at the pump.
Iran escalated the violence. Its proxies assaulted the American embassy in Baghdad just before New Year’s Day. This attack could have sent fuel prices through the roof, hurting our economy. But even after the United States responded by killing the Iranian terrorist general who orchestrated the attacks, fuel prices rose a little and then dropped back to where they were before the hostilities. If you blinked, you missed it.
The likelihood that Iran or any other bad actor can use violence or weaponize oil to hurt the global economy has dramatically receded. Why?
American energy leadership is why. As the chief regulator of oil and gas production in Texas, I am on the front lines of American energy production. And I am seeing a revolution that helps all Americans.
Our modern economy needs energy. From the smart phone in your hand to the lights in your home to the electric cars more Americans drive, we depend on affordable and reliable energy. We have vast proven oil reserves, we have the technology to extract it, and under the Trump administration we have the freedom to produce it and get it to market. Americans produce oil and gas more affordably and reliably than anyone else.
This affects everything for the better, including the environment. When I was building my business, I visited about half the world’s refineries. No one produces energy more cleanly than Americans do. Some point to flaring natural gas as an issue. Natural gas is a by-product of oil production. No one likes flaring, but producers are flaring just one to three percent of the total natural gas produced in Texas.
The solution to flaring is not to slow down oil production, or ban fossil fuels as some suggest, but to speed development of pipelines and other capacity to get natural gas to market. America has actually reduced emissions faster than any other industrialized country, thanks to the market-driven switch to natural gas. We just need to get more of it to market here and around the world.
The United States was once desperately dependent on foreign oil. In 1973 we imported about 35% of our oil from the Middle East. In 2019, the United States became a net oil exporter. Now, we produce 12 million barrels per day (5 million in Texas alone) and import less than 10% of our oil from the Middle East.
We have diversified our other foreign sources. When we were dependent on Middle Eastern oil, American forces had to stand cop on the beat to keep the oil flowing through chokepoints such as the Straits of Hormuz. This made us more likely to get into wars. Now our energy sources are more stable and reliable than ever.
Energy is one cost that no one in our modern economy can avoid. Unlocking America’s energy makes us safer and richer. For the teacher or nurse making $60,000 per year, at current gas prices you’re paying about $2,600 per year for gas if you commute 25 minutes to and from work every day. A 1973-size gas price spike would raise your costs significantly, to around $4,000 per year – just to drive to work. The price of the electricity to power your home would also rise significantly. You’d feel that pinch right in the wallet. I’m working every day to make sure that doesn’t happen.
What do Americans really want from oil and gas producers? Affordable and reliable energy produced as cleanly and safely as possible. How do we get that?
Drill baby drill. Right here in America.
Ryan Sitton is the Texas Railroad Commissioner.
Private payroll growth surges in December to end 2019 strong, ADP says
Private payroll growth ended 2019 on a strong note, with companies adding 202,000 positions in December in another sign of a healthy labor market, according to a report Wednesday from ADP and Moody’s Analytics.
The total was well above the 150,000 consensus estimate from economists surveyed by Dow Jones and sets the stage for the government’s official count that will be released Friday. Economists expect the Labor Department’s tally to show a gain of 160,000.
In addition to the solid December growth, ADP revised the initial November count of 67,000 up to 124,000.Despite the big beat in December, the jobs market continues to “moderate,” said Mark Zandi, chief economist at Moody’s Analytics.
“Manufacturers, energy producers and small companies have been shedding jobs. Unemployment is low, but will begin to rise if job growth slows much further,” Zandi said in a statement.
Job gains for the month were spread across sectors, with construction adding 37,000, the best monthly gain since April and a reversal of the initially reported 5,600 loss in November.
African Americans Are Taking Back Jobs Stolen By Illegal Aliens
African Americans are taking back jobs that were stolen from them by illegal immigrants. In August, Immigration and Customs Enforcement (ICE) officers swept up 680 illegal immigrants during raids on seven food processing plants in Mississippi. Without the cheap labor, the companies were forced to hire Americans to do the work.
(The New York Times explains)
By the end of the 1960s, black workers predominated on the lines.
It was an important win for African-Americans looking for an alternative to housework in wealthy white homes, or for those who had seen fieldwork dry up in an increasingly mechanized agricultural sector.
“The chicken plant,” Dr. Stuesse [an associate professor of anthropology at the University of North Carolina] quoted a civil rights veteran saying, “replaced the cotton field.”
But as American chicken consumption boomed in the 1980s, manufacturers went in search of “cheaper and more exploitable workers,” Dr. Stuesse wrote, chiefly Latin American immigrants.
At the time, the Koch plant in Morton was owned by a local company, B.C. Rogers Poultry, which organized efforts to recruit Hispanics from the Texas border as early as 1977. Soon, the company was operating a sizable effort it called “The Hispanic Project,” bringing in thousands of workers and housing them in trailers.
And we were told Americans just wouldn’t do the jobs illegal aliens are doing.
U.S. Stocks Climb Again in Santa Claus Rally as All Three Main Indexes Close at Records
U.S. stocks powered higher again Thursday, helped by reports of record year-end retail sales, though trading volumes were light and markets were closed in Europe, Hong Kong and Australia for another post-Christmas holiday.
Amazon led the market up, with the stock gaining more than 4% after the e-commerce giant said the holiday shopping season broke all records.
The Dow Jones Industrial Average rose 105.94 points or 0.37% to 28,621.39 and has gained for 9 of the past 11 trading days to post a year-to-date rise of 22.69%.
The S&P 500 gained 16.53 points, or 0.51%, to 3,239.91 for a year-to-date return of 29.24%.
The Nasdaq Composite rose 69.51 points, or 0.78%, to a new record at 9,022.39 after posting a record close for a 10th straight day, the longest winning streak since July 1997. Year-to-date the Nasdaq has risen 35.98%
Paul Krugman — Nobel Prize-winning economist, retired Princeton professor, New York Times columnist, and village idiot — was not alone in predicting a worldwide recession upon the election of Donald John Trump as president.
3 days after we made Donald John Trump president, Business Insider reported, “One of Trump’s major economic policies could lead to a ‘global recession.'”
That one policy was the keystone to his economic plan: engaging the trade wars.
Business Insider said, “Trump made the free trade debate one of the central topics of his campaign after criticizing China, Mexico, and Japan. He suggested putting a 45% tariff on Chinese imports, said he would declare China a currency manipulator on his first day in office, proposed taxing imports from Mexico, argued in favor of ‘ripping up’ trade deals, and called the Trans-Pacific Partnership, or TPP, ‘a rape of our country.’
“If Trump were to pursue these policies, Willem Buiter, chief economist at Citi, wrote in a note to clients that it might spark a global trade war, ‘which could easily trigger a global recession.'”
The story said researchers at Deutsche Bank warned, “The biggest threat to growth is a possible protectionist turn, which could depress global trade and even trigger trade wars.”…………
On August 12, 2019, NBC reported, “President Donald Trump’s trade war with China is increasing the odds that America will be thrown into a recession, according to investment bank Goldman Sachs.”
But once again, the experts were wrong.
President Trump did not kill the world economy. In fact, the opposite happened.
CNBC reported, “Global stock markets have been on a torrid run in 2019, adding more than $17 trillion in total value, according to Deutsche Bank calculations.
“The value of global equities began the year just under $70 trillion but has now surpassed $85 trillion, according to a chart from Deutsche Bank’s Torsten Slok.”
That is a 25% increase, which means 2019 was a pretty good year for investors and the global economy.
The story said, “The large climb for world markets has been largely dominated by the U.S. markets, however. The rally in the U.S. has been broad, with the S&P 500, Dow Jones Industrial Average and Russell 2000 all rising more than 20% this year.”
Enjoy because the good times will not last forever. They never do.
Figures Don’t Lie, But…
…you know the rest.
Of course, the numbers are used to argue the case for “Free” College for All. I don’t need to point out to readers of this blog the stupidity of that idea.
One ‘heart-rending’ factoid used in the article is that Black students will be ‘unfairly’ the biggest recipients of the crash. The figures are below.
Student Loan Default Rates Are Highest For African Americans
The default rate among African American graduates is more than five times the rate of white graduates.
BACHELOR’S DEGREE GRADUATES
TOTAL AMOUNT BORROWED
DEFAULT RATE
Black $55,667 20.6%
Hispanic or Latino $28,599 8.6%
White $26,005 4%
Asian $30,612 1.4%
Notes
Debt and default among bachelor’s degree graduates 12 years after college entry, 2004 entry cohort.
Source: Judith Scott-Clayton, Brookings InstitutionSeveral considerations come to mind:
Black students are borrowing more than twice as much as White students, which might lead one to ask:
Are Black students majoring in subjects that pay off at higher levels than White students?
The short and dirty answer – No. A study of college majors, and the proportions of students by ethnicity and sex, is here. Very scholarly, very much supportive of the idea that minorities do not major in fields that will pay adequately with just a bachelor’s degree.That’s a hard thing to get minorities/women to understand. A college degree is not just a college degree – major field of study counts.
I once had a discussion with an English teacher, who was indignant that her brother, with ‘only’ a bachelor’s degree, made considerably more than she, with a Master’s in English from a prestigious university.
I asked what her brother had majored in.
Electrical Engineering, I was told.
I diplomatically suggested that the field of engineering was short of people to fill those jobs, and might, therefore, pay more.
After being lectured about how pay should have NO relation to the number of applicants, but should be the same for the same ‘level’ of education required, I shrugged, and left.
She wasn’t unique. MANY women, and minorities, have those egalitarian principles. Of course, that does inhibit upward mobility for individuals, but, hey – they keep their ‘pure’ ideals.
So, how should the student debt crisis be handled?
Put a ceiling on the amount that can be borrowed. Limit that amount to a MAX equal to the amount that the average person in that field earns after 5 years. No loan guarantees after that amount.
Also, put a maximum on the amount that can be borrowed each year equal to a year’s tuition, minus other financial aid. If a college really wants a kid to attend, let them pony up a GRANT for room and board.
What does this mean? Fewer kids going to ‘away’ colleges, more attending local ones, including community/tech colleges.
NO money for coursework that is below college level. Let them take those classes at a junior college, before attending a four-year one. Admittance to four-year colleges for the low SAT/ill-prepared dependent on successful completion of an associate’s degree.
Yes, I realize that this will likely KILL Big 10 football/basketball, but some sacrifices have to be made.