ECB to Restart Open-Ended Bond-Buying Program at €20 Billion Monthly
European Central Bank (ECB), the central bank for the euro that administers monetary policy for the Eurozone, on May 17, 2015 in Frankfurt, Germany.
The European Central Bank (ECB) announced Thursday morning that they are lowering their deposit rate from -0.4% to -0.5%. Additionally, they will be restarting their quantitative easing (QE) bond-buying program in November at a scale of €20 billion per month.
They also gave aggressive forward guidance that their QE bond-buying will be “Open Ended,” meaning it will continue until inflation in the Eurozone hits or gets very close to +2%.
“The governing council expects them to run for as long as necessary to reinforce the accommodative impact of its policy rates,” the ECB said in a statement.
The statement on the action has already sent the Euro convincingly below the 1.10 Euro/$US benchmark, even before the Q&A press conference this morning. However, it is still above the lows for the year in 2019.
While the trade is a very fluid market, 15 minutes in advance of the Draghi presser, the Euro is trading at 1.0968 to the US$$. The low for the year in 2019 is Euro 1.0926 to the US$$, certainly a level everyone will be watching closely should their be a sharper sell off.
The Labor Department reported initial jobless claims fell to a seasonally adjusted 204,000 for the week ending September 7, far more than expected. The 4-week moving average fell to 212,500, a decline of 4,250 from the revised average.
Forecasts ranged from a low of 208,000 to a high of 216,000. The consensus forecast was looking for a dip to only 215,000, still a very low number indicating the labor market remains tight.
In lagging data, the advance seasonally adjusted insured unemployment rate was unchanged at a very low 1.2% for the week ending August 31.
The advance number for seasonally adjusted insured unemployment fell by 4,000 during the week ending August 31 to 1,670,000. The 4-week moving average fell 14,500 to 1,680,250.
The Labor Department also said no state was triggered “on” the Extended Benefits program during the week ending August 24.
The highest insured unemployment rates in the week ending August 24 were in New Jersey (2.4), Connecticut (2.1), Puerto Rico (2.0), Pennsylvania (1.9), Rhode Island (1.8), California (1.7), Massachusetts (1.6), Alaska (1.5), New York (1.5), Illinois (1.4), and the Virgin Islands (1.4).
The largest increases in initial claims for the week ending August 31 were in Illinois (+3,728), Kansas (+983), Wisconsin (+597), Michigan (+562), and Texas (+429), while the largest decreases were in New York (-1,424), Florida (-659), New Jersey (-643), Iowa (-330), and Connecticut (-317).
Trump Scores Major If Only Temporary Victory With 7 – 2 SCOTUS Ruling
The Supreme Court of the United States (SCOTUS). (Photo: AdobeStock/bbourdages)
The U.S. Supreme Court late Wednesday ruled 7 to 2 the government can enforce an asylum rule, a major albeit temporary victory for the Trump Administration.
The U.S. Court of Appeals for the Ninth Circuit blocked the Trump Administration from implementing the new rule barring most immigrants from applying for asylum if they pass through another country – such as Mexico – without seeking asylum there before arriving in the United States.
The ruling applied to Arizona and California, but the High Court granting a stay means the administration can enforce it nationwide while it appeals a decision by a federal judge in California to the Ninth Circuit.
If past is prologue, that case may also find its way to the U.S. Supreme Court.
Justice Sonia Sotomayor — joined by Justice Ruth Bader Ginsburg — dissented.
U.S. Attorney General William Barr argued the rule addresses the “burdens associated with apprehending and processing hundreds of thousands of” illegal immigrants pouring across the U.S. southern border while carving out exceptions for immigrants who legitimately fear persecution.
U.S. District Judge Jon Tigar granted immigrant activist groups a nationwide injunction, barring the government from enforcing the rule. The Ninth Circuit narrowed the scope of the order, limiting the prohibitions only to geographic area covered by the Ninth Circuit.
That included only the U.S.-Mexico border in Arizona and California. However, the Ninth allowed the district court to potentially extend the scope of its order.
On September 9, Judge Tigar issued a new order once again barring the government from enforcing the asylum rule nationwide, prompting the Trump Administration to petition the U.S. Supreme Court the very next day.
Voting, elections and state polls concept: Ballot box with state flag in the background – North Carolina. (Photo: AdobeStock)
Republican candidates swept two special elections for the U.S. House of Representatives in North Carolina on Tuesday, making them 3-for-3 in 2019.
In North Carolina’s Third Congressional District, Republican State Representative Greg Murphy trounced former Greenville Mayor Allen Thomas, a Democrat. With 100% of the 113,607 votes cast and counted, Mr. Murphy carried the district 61.7% to 37.5%.
The seat was left vacant when Rep. Walter B. Jones Jr. died in February. The district covers much of the state’s coastline and includes Morehead City in Carteret County (67.5% to 31.8%), and New Bern in Craven County (59.3% to 39.7%).
It leans strongly Republican.
But all eyes were on North Carolina’s Ninth Congressional District, where polls showed a close race between Republican State Senator Dan Bishop and Marine Corps veteran Dan McCready, a Democrat.
With 100% of the 189,363 votes cast and counted, Mr. Bishop defeated Mr. McCready, 50.7% to 48.7%.
Candidate
Party
Votes
Pct.
✓ Dan Bishop
Republican
96,081
50.7%
Dan McCready
Democrat
92,144
48.7
Jeff Scott
Libertarian
767
0.4
Allen Smith
Green
371
0.2
189,363 votes, 100% reporting (210 of 210 precincts)
County
Bishop
McCready
Scott
Margin
Votes
Rpt
Mecklenburg
28,760
36,986
271
D+12
66,155
100%
Union
36,165
23,751
306
R+21
60,327
100
Robeson
10,293
10,524
58
D+1
20,915
100
Cumberland
7,477
7,441
42
R+0
14,991
100
Richmond
4,713
4,276
39
R+5
9,050
100
Scotland
2,804
3,644
21
D+13
6,482
100
Bladen
3,494
2,363
15
R+19
5,883
100
Anson
2,375
3,159
15
D+14
5,560
100
In 2018, Mr. McCready carried all but Union County and Bladen County, though still came up short against Republican Mark Harris. But state officials ordered another election after it was revealed the Harris campaign paid for an illegal absentee ballot operation.
Mr. McCready could not repeat the magic in 2018, when Democrats enjoyed the historical out-of-party first term midterm favor. Richmond County and Cumberland County both returned to support the Republican.
Still, President Donald Trump won the district by more than 10 points and Democrats are pointing to the closeness of the race as a positive sign going into 2020.
However, Mr. McCready ran a two-year campaign that vastly outspent his opponent and distanced himself from both his party leaders and 2020 presidential hopefuls. A far-lesser known Mr. Bishop had just 6 months and was only financially competitive in the final few weeks.
Republicans are now 3-for-3 in special elections held in 2019.
Previously, Republican Fred Keller defeated his Democratic opponent in Pennsylvania’s Twelfth Congressional District by 36 points. It was nearly the exact same margin Donald Trump carried the district by in 2016.
Ambassador John Bolton addresses the Republican Jewish Coalition in Las Vegas, Nevada, in April 2017. (Photo: Reuters)
President Donald Trump announced on Tuesday that he fired National Security Adviser John Bolton over strong disagreements on a range of issues. He was appointed in March 2018 to replace General H.R. McMaster.
“I informed John Bolton last night that his services are no longer needed at the White House,” the president tweeted. “I disagreed strongly with many of his suggestions, as did others in the Administration, and therefore…”
“I asked John for his resignation, which was given to me this morning. I thank John very much for his service,” he added in a second tweet to the thread. “I will be naming a new National Security Advisor next week.”
….I asked John for his resignation, which was given to me this morning. I thank John very much for his service. I will be naming a new National Security Advisor next week.
Mr. Bolton, a more foreign policy hawk and former Ambassador to the United Nations, is insisting he resigned. He also indicated his offer was not immediately accepted by the president.
“I offered to resign last night and President Trump said, ‘Let’s talk about it tomorrow.'”
I offered to resign last night and President Trump said, "Let's talk about it tomorrow."
A White House official said the differences on issues, particularly Afghanistan and Iran, were too great. Mr. Bolton was allegedly unhappy over talk of the president inviting the Taliban to Camp David to resume peace talks, and the apparent willingness to meet with Iran.
To be sure, Mr. Bolton was not on board with the president’s goal of withdrawing U.S. troops from Afghanistan. Since the start of his administration, the president has found it challenging to end the nation’s longest war without opposition from his own party and advisors.
The removal of H.R. McMaster was an expected move meant to shift the Trump Administration back toward structural realism and economic nationalism. A similar situation played out with General James Mattis, who served as secretary of defense.
In early 2018, President Trump told his national security team in the Situation Room that U.S. troops must come home from Syria. The primary objective, at least publicly, had been the defeat of ISIS, or the Islamic State.
He then ordered the Central Intelligence Agency (CIA) to shutdown Operation Timber Sycamore, a covert operation authorized by Barack Obama that ultimately aided in the creation and rise of ISIS.
These decisions were made without the consent or the support of his more hawkish advisors, to include then-Secretary Mattis, who along with many in the Trump Administration disagreed with the decision and feared a similar announcement regarding Afghanistan was imminent.
The civil war in Syria was being used as a predicate for regime change to remove President Bashar al-Assad.
There are roughly 14,000 U.S. troops serving in Afghanistan, most of whom are part of the seemingly never-ending NATO-led mission to train, advise and assist Afghan forces.
The U.S. has spent more than $1 trillion on military operations, more than $100 billion on “nation-building,” or funding and training an army of 350,000 Afghan soldiers. Roughly 2,400 U.S. soldiers have lost their lives.
The longest war in U.S. history began almost immediately after the attacks on September 11, 2001. President Trump has long-criticized continued U.S. involvement, and as a candidate campaigned on prioritizing the rise in illicit drug trades over foreign intervention.
The annual opium survey from the U.N. Office on Drugs and Crime (UNODC) for 2017 found a record high 9,000 metric tons for the year, rising 87% compared with 2016.
Joe Biden Maintains Front-Runner Status as Runner-Ups Fail to Build Minority Coalitions
While Elizabeth Warren, D-Mass., continues to generate buzz, she has not been able to secure the second place poll position against Bernie Sanders, D/I-Vt., in 2020 Democratic presidential nomination polls. Despite his repeated gaffes and growing speculation over health concerns, Joe Biden continues to maintain his front-runner status.
In the rough two-week average of polls, Mr. Biden leads the still-crowded field of candidates with 29.7%, followed by Senator Warren at 18% and Senator Sanders closely behind in third at 17.5%.
The difference between Senators Warren and Sanders is not statistically significant.
In the six polls included in the latest average as of Tuesday morning, Senator Warren leads in only two, while Senator Sanders leads in the remaining four. It is her larger leads in surveys conducted by Economist/YouGov (22% to 14%) and IBD/TIPP (24% to 12%) that have propelled her back into second place.
Senator Sanders holds more moderate leads in polls conducted by ABC News/Washington Post (19% to 18%), Politico/Morning Consult (20% to 16%) and Harvard-Harris (16% to 13%). An Emerson College Poll conducted from August 24 to August 26 found Senator Sanders leading by a larger margin, 24% to 15%.
Senator Sanders first lost his solid runner-up status mid-July and has fought his fellow Northeastern rival for the slot ever since.
However, the two far left U.S. Senators have been unable to make significant gains against the former vice president. Their appeal remains largely limited to white liberals, who are a shrinking share of the Democratic presidential primary electorate.
“The liberal national media like to generate headlines week-to-week, but the fundamentals of a Democratic nomination process have not changed,” said Rich Baris, the Director of Big Data Poll and the PPD Election Projection Model.
“None of the progressive candidates du jour have been able to overtake Joe Biden, despite his obvious flaws, because they have thus far failed to build a minority coalition.”
Nonwhites cast roughly 4 in 10 votes in the previous Democratic presidential nomination in 2016. Hillary Clinton won 75.9% of black voters in 2016, compared to just 23.1% for Senator Sanders.
“There are simply too few white liberals to go around,” Director Baris added. “No minority coalition, no Democratic nomination. Pure and simple.”
“Manic” Recession Predictions Having Psychological Effect, Creating Uncertainty
A team of millennial business owners collaborating on an online project using a touchpad tablet in a modern office space. (Photo: AdobeStock/AYAimages)
The NFIB Small Business Optimism Index fell 1.6 points to 103.1 in August due solely to the “doom and gloom narrative” in the media hoping for a recession. Job creation accelerated, positive earnings trends improved, and quarter-on-quarter sales gains remained strong.
However, “manic predictions of recession are having a psychological effect” and increasing uncertainty. The Uncertainty Index rose 4 points in August, which makes small business owners more hesitant to commit to capital expenditures.
“In spite of the success we continue to see on Main Street, the manic predictions of recession are having a psychological effect and creating uncertainty for small business owners throughout the country,” said NFIB President and CEO Juanita D. Duggan.
“Small business owners continue to invest, grow, and hire at historically high levels, and we see no indication of a coming recession.”
As People’s Pundit Daily (PPD) has repeatedly reported, and the NFIB confirms, the main impediment to small business growth is the skills gap. It has swelled to a record level of no qualified workers.
Still, capital spending put up strong gains in August with 59% of owners reporting capital outlays, up 2 points. Of those, 42% reported spending on new equipment, 24% acquired vehicles, and 18% improved or expanded on existing facilities.
“The August report does not show a sign of inflation or reflect what the Fed has noted,” said NFIB Chief Economist William Dunkelberg. “The pessimism we’re seeing is contagious, even though the actual economy is thriving.”
Four percent (4%) acquired new buildings or land for expansion and 15% spent on new fixtures and furniture. Optimism declined only because fewer small business owners said they expect improved business conditions and real sales volumes in the next new months.
“Expectations can be infected and, as a result, could turn sour,” Mr. Dunkelberg added. “All the talk about an impending recession can create a false reality, but it doesn’t make it right.”
“Main Street is continuing to produce and remains strong in spite of the headlines.”
Twenty-eight percent (28%) still have plans for capital outlays in the next few months. Interestingly, those plans were led by manufacturing (35%), agriculture (30%), and wholesale trades (30%). These are industries most focused on by the media narrative pushing for a recession.
The NFIB’s August Jobs Report found a record 27% of owners saying finding qualified workers is their top business problem. Two percent (2%) reported financing as their top business problem, 14% cited taxes, and 14% cited regulations and red tape.
IUPA: Trump “Stands with America’s Law Enforcement Officer and We Will Continue to Stand With Him”
Supporters of President Donald Trump hold up Make America Great American and Keep America Great signs A supporter of Donald Trump dons a T-shirt with a new twist on an old joke targeting Hillary Clinton during a rally in Tampa, Florida on Tuesday, July 31, 2018. (Photo: Laura Baris/People’s Pundit Daily)
The International Union of Police Associations (IUPA) AFL-CIO endorsed President Donald Trump for re-election in 2020. The IUPA has a bipartisan history of endorsements to include Senator Sherrod Brown, D-Ohio, and Governor Ron DeSantis, R-Fla., in 2018.
“Every top Democrat currently running for this office has vilified the police and made criminals out to be victims,” IUPA President Sam A. Cabral said in a statement. “They seem to take any union’s support for granted.”
“Many of them still refer to the tragedy in Ferguson as a murder, despite the conclusions of every investigative inquiry to the contrary.”
That would include Senator Elizabeth Warren, D-Mass., who has surged in the polls for the 2020 Democratic nomination. On the anniversary, Senator Warren tweeted characterizing the shooting as a murder, though the evidence in state and federal investigations concluded it was a justified shooting.
The Trump campaign welcomed the endorsement from the organization. The IUPA represents more than 100,000 law enforcement officers.
“President Trump stands behind and supports our men and women of law enforcement and honors them for risking their own lives every day to keep the rest of us safe in our communities,” Trump 2020 campaign manager Brad Parscale said in a statement. “Too often today, law enforcement officers are treated as scapegoats, when in fact their jobs are incredibly difficult, dangerous, and depend on life-or-death, split-second decision-making.”
“This union endorsement of President Trump means a great deal, because not only does the President stand for working people, he also stands for law enforcement.”
Mr. Cabral argued that President Trump has done more for law enforcement the first half of his first term than was done in the eight years that preceded his election, including reversing some of the harmful acts of his predecessor.
President Trump ran on law and order in 2016 against then-Democratic nominee Hillary Clinton. Mr. Cabral said the president has delivered on those campaign promises.
He cited the Mental Health and Wellness Act, which expanded care for law enforcement, funding for the hiring of law enforcement officers, an executive order that provided agencies “life-saving” surplus military equipment and the resuming of capital punishment for federal prisoners sentenced to death after a near two-decade freeze.
“While his candor ruffles the feathers of the left, I find it honest and refreshing,” Mr. Cabral added. “He stands with America’s Law Enforcement Officer and we will continue to stand with him.”
Small Caps in Russell Rally, Broader Market Indexes Notch Slight Losses
The Dow Jones Industrial Average (^DJI) extended its 4-day winning streak to the longest in 8 weeks, climbing +38.05 points, or +0.14% to 26,835.51. The run to near all-time highs matches a similar stretch of gains that ended July 15, 2019.
Today’s Winners
Walgreens Boots Alliance, Inc. (WBA) led the charge gaining +3.03 points, or +5.76% to $55.59. The jump marks a reclaiming of its 50-day. Caterpillar, Inc. (CAT) rose +4.55 points, or +3.71% to $127.25.
Russell Small Caps Rally
The Russell 2000 (^RUT) closed higher +19.06 points, or 1.27% to 1,524.23.
Broader Market Moves
However, the other indexes saw slight losses as investors mulled monetary policy moves from the Federal Reserve and the European Central Bank (ECB). Investors worried over uncertain U.S.-China trade policy anticipate both central banks to make announcements amid mixed global economic data.
The Nasdaq Composite (^IXIC) closed down −15.64 points, or 0.19% to 8,087.44. The S&P 500 (^INX) barely closed in the red by −0.28 points, or just 0.0094%.
Nevertheless, all remain above their 50-day moving average lines.
Wage Growth Exceeded 3% for 11th Straight Month in August
Wages, or average hourly earnings (AHE), have risen by or exceeded 3% on a seasonally adjusted annual basis (SAAR) for 13 consecutive months. Wage growth in August exceeded 3% (SAAR) for the 11th consecutive month.
In August, average hourly earnings for all employees on private nonfarm payrolls rose by 11 cents to $28.11 after 9-cent gains in both June and July.
Over the past 12 months, wages increased 3.2% and the Labor Department reported even larger gains for lower-income workers. Average hourly earnings for production and nonsupervisory employees posted the largest monthly gain ever recorded for the series dating back to 1964.
Data indicates wage growth in 2019 is likely stronger than we current believe.
Annually revised data from the Bureau of Economic Analysis (BEA) revealed wages grew even stronger than initially reported in 2017 and 2018, the first two years under the Trump Administration.
Meanwhile, the far more moderate gains reported for the tenure under Barack Obama, were revised further down. Compensation increased 42% more during the first two years of the Trump Administration than in latter two years under the Obama Administration in 2015 and 2016.
Employee compensation rose 4.5% and 5% in 2017 and 2018, respectively. That’s roughly $4.4 billion and $87.1 billion more than initially reported.
In the fourth quarter (Q4) 2018, wages posted the biggest gain (3.1%) since Q3 2008, hitting that mark for the first time since the Great Recession.
That trend has clearly continued into 2019.
Compensation rose $378 billion, or 3.4% in the first six months of 2019. That means employee compensation in the first six months of 2019 gained $150 billion more than all of 2016.
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