Corporate profits increased $105.8 billion in the second quarter (Q2) 2019 after decreasing $78.7 billion in Q1 2019.
Profits of domestic financial corporations gained $4.0 billion in Q2, following an increase of $22.2 billion in Q1. Profits of domestic nonfinancial corporations reversed course this quarter, gaining $43.5 billion after decreasing $108.2 billion in Q1.
Rest-of-the-world profits rose $58.3 billion in Q2 juxtaposed to an increase of $7.3 billion in Q1. In Q2, receipts rose $39.9 billion and payments fell $18.5 billion.
Former FBI Director James Comey Mishandled Documents in Plot to Appoint Robert Mueller Special Counsel to Investigate Donald Trump
Justice Department (DOJ) Inspector General Michael Horowitz concluded former FBI director James Comey violated department guidelines and bureau policies when he drafted, leaked and retained memos detailing his conversations with President Donald Trump.
The now-infamous memos were used in a plot to have Robert Mueller appointed Special Counsel to investigate President Trump. Mr. Comey shared the content of one of those memos with Daniel Richman, who in turn leaked it to a reporter at The New York Times.
Mr. Comey was fired by President Trump in May 2017 on the recommendation of then-Deputy Attorney General Rod Rosenstein, who later said he stood by his recommendation.
“I wrote it. I believe it. I stand by it,” Mr. Rosenstein said in regards to the recommendation letter.
In his report, IG Horowitz revealed Mr. Comey told the Office of Inspector General (OIG) that he considered Memos 2 through 7 to be his personal documents, rather than official government records belonging to the Federal Bureau of Investigation (FBI).
“He said he viewed these Memos as ‘a personal aide-mémoire,’ ‘like [his] diary’ or ‘like [his] notes,’ which contained his ‘recollection[s]’ of his conversations with President Trump,” the IG report states. “Comey further stated that he kept Memos 2, 4, 6, and 7 in a personal safe at home because he believed the documents were personal records rather than FBI records.”
But Inspector General Horowitz found no support for that characterization in the law and stated it was wholly incompatible with the “plain language of the statutes, regulations, and policies defining Federal records, and the terms of Comey’s FBI Employment Agreement.”
We conclude that the Memos were official FBI records, rather than Comey’s personal documents. Accordingly, after his removal as FBI Director, Comey violated applicable policies and his Employment Agreement by failing to either surrender his copies of Memos 2, 4, 6, and 7 to the FBI or seek authorization to retain them; by releasing official FBI information and records to third parties without authorization; and by failing to immediately alert the FBI about his disclosures to his personal attorneys once he became aware in June 2017 that Memo 2 contained six words (four of which were names of foreign countries mentioned by the President) that the FBI had determined were classified at the “CONFIDENTIAL” level.
While the IG report is yet another blistering indictment of Mr. Comey’s conduct — and justifies President Trump removing him as FBI director — he will not be held legally accountable over the matter. The OIG provided a copy of the findings to the Justice Department for a prosecutorial decision and, after reviewing the matter, DOJ declined to prosecute.
“Thereafter, we prepared this report to consider whether Comey’s actions violated Department or FBI policy, or the terms of Comey’s FBI Employment Agreement,” the report states. “As described in this report, we conclude that Comey’s retention, handling, and dissemination of certain Memos violated Department and FBI policies, and his FBI Employment Agreement.”
Update: The Justice Department Office of Inspector General also released a finding of misconduct pertaining to an unnamed Then Deputy Assistant Attorney General, who misused DOJ computers to view pornographic material. He then lied about it under oath.
Again, the Justice Department declined to criminally prosecute.
The Labor Department said initial jobless claims came in at a seasonally adjusted 215,000 for the week ending August 24, higher than forecast but still very low. The 4-week moving average came down 500 at 214,500.
The advance seasonally adjusted insured unemployment rate was unchanged at 1.2% for the week ending August 17.
No state was triggered “on” the Extended Benefits program during the week ending August 10.
The highest insured unemployment rates in the week ending August 10 were in New Jersey (2.4), Connecticut (2.2), Puerto Rico (2.2), Pennsylvania (1.9), Rhode Island (1.8), California (1.7), Alaska (1.6), Massachusetts (1.6), Illinois (1.5), and the Virgin Islands (1.5).
The largest increases in initial claims for the week ending August 17 were in Rhode Island (+142), Vermont (+32), South Dakota (+24), Wyoming (+21), and Idaho (+13), while the largest decreases were in California (-5,974), Texas (-1,122), New Jersey (-683), Iowa (-544), and Florida (-500).
Consumer Spending Easily Beats Consensus Forecast, Tops High End of Forecast Range
The Bureau of Economic Analysis (BEA) “second” estimate for second quarter (Q2) gross domestic product (GDP) in 2019 hit the consensus forecast at 2.0%. While that’s down slightly from the “advance” estimate of 2.1%, strong consumer spending easily beat the high end of the forecast range.
Indicator (Q2 2019)
Prior
Consensus Forecast
Forecast Range
Actual
Real GDP – Q/Q ∆ – SAAR
2.1%
2.0%
1.9% to 2.1%
2.0%
Real Consumer Spending – Q/Q ∆ – SAAR
4.3%
4.3%
4.1% to 4.3%
4.7%
GDP price index – Q/Q ∆ – SAAR
2.4%
2.4%
2.4% to 2.5%
2.1%
GDP core price index – Q/Q ∆ – SAAR
2.4%
1.4%
The third and final estimate for Q1 2019 GDP showed the U.S. economy grew at a solid annual rate of 3.1%.
Real gross domestic income (GDI) rose 2.1% in Q2 after rising 3.2% in Q1. The average of real GDP and real GDI — which is a supplemental measure of U.S. economic activity that equally weights GDP and GDI — gained 2.1% in Q2 after 3.2% in Q1.
Advance Estimate
Second Estimate
Real GDP
2.1%
2.0%
Current-dollar GDP
4.6%
4.6%
Real GDI
…
2.1%
Average of Real GDP and Real GDI
…
2.1%
Gross domestic purchases price index
2.2%
2.2%
PCE price index
2.3%
2.3%
The price index for gross domestic purchases rose 2.2% versus an increase of 0.8% in Q1. The PCE price index gained 2.3%, a solid gain from the 0.4% in Q1. Excluding food and energy prices, the PCE price index rose 1.7% in Q2 after increasing 1.1% in Q1.
Editor: All readers are encouraged to watch for the latest forecast models published. This article is NOT the latest forecast. All forecasts are viewable to the public and outside the paywall.
While the ECMWF (Euro) and GFS models vary, Hurricane Dorian is forecast to strengthen to a major hurricane as it heads toward eastern Florida. The storm is currently on a northwestern track as a Category 1 and packing maximum sustained winds near 85 mph.
On Wednesday, Florida Governor Ron DeSantis declared a state of emergency and urged “every” Floridian to prepare for the storm.
“It’s important for Floridians on the East Coast to monitor this storm closely. Every Florida resident should have seven days of supplies, including food, water and medicine, and should have a plan in case of disaster,” he said. “I will continue to monitor Hurricane Dorian closely with emergency management officials.”
“The state stands ready to support all counties along the coast as they prepare.”
The latest forecasts put landfall on eastern Florida, though the models disagree over whether it will maintain a more southern track.
The National Hurricane Center (NHC) in Miami said in the 5:00 AM forecast discussion that “Dorian appeared to have a bit of a hiccup in its structure,” and the Air Force Reserve mission indicated a “dry slot was noted penetrating into the southeastern portion of the circulation, with the eye becoming cloud- and rain-filled.”
Central pressure ticked up a bit to around 991 mb, but is not cause for optimism. Falling pressure typically indicates a storm is strengthening, while rising pressure indicates weakening.
Nevertheless, the GFS forecast, which indicates weaker ridges to the North, appears to be the outlier. The ECMWF (Euro) model, which forecasts a more southern track, typically (though not always) ends up being more accurate in these debates.
D: Tropical Depression – wind speed less than 39 MPH S: Tropical Storm – wind speed between 39 MPH and 73 MPH H: Hurricane – wind speed between 74 MPH and 110 MPH M: Major Hurricane – wind speed greater than 110 MPH
Given the data, the NHC said the most notable change in their new forecast is that Dorian is a little slower than the previous forecast as it approaches Florida.
“Because of the uncertainty in the track of this storm, every resident along the East Coast needs to be ready,” said Florida Division of Emergency Management Director Jared Moskowitz. “As updates come out, it’s important that Floridians continue to pay attention to media and local officials as the track of this storm has been changing and can continue to change rapidly.”
DNC Winnows Down Crowded Field Ahead of Democratic Debate Amid Criticisms
Graphic concept for Democratic debates, with symbolically red donkeys instead of blue. (Photo: AdobeStock)
The Democratic National Committee (DNC) announced only ten candidates qualified for the third Democratic debate in Houston, Texas, next month. The deadline for qualification was midnight.
From top left to bottom right — and in alphabetical order — the qualifying candidates include former Vice President Joe Biden, New Jersey Senator Cory Booker, South Bend Mayor Pete Buttigieg, former Secretary of Housing and Urban Development Julian Castro, California Senator Kamala Harris, Minnesota Senator Amy Klobuchar, former Texas Rep. Beto O’Rourke, Vermont Senator Bernie Sanders, Massachusetts Senator Elizabeth Warren, and businessman Andrew Yang.
In order to qualify for the third debate, each candidate must have been receiving at least 2% in qualified national or early state polls and 130,000 individual donors.
Rep. Tulsi Gabbard, D-Ha., who is polling in ninth place in the average of national 2020 Democratic nomination polls, did not qualify for the third debate.
Worth noting, Rep. Gabbard took aim at and damaged Senator Harris, D-Calif., in the second debate. She’s currently polling at 3.3% in New Hampshire.
“I think the bigger problem is that the whole process really lacks transparency,” she said in an interview with Tucker Carlson on Fox News. “People deserve having that transparency because ultimately it’s the people who will decide who our Democratic nominee will be.
“When you see that lack of transparency,” she said, it creates “a lack of faith and trust in the process.”
On Wednesday, Senator Kirsten Gillibrand, D-N.Y., who also did not qualify for the debate, announced she was ending her presidential campaign. Senator Gillibrand is the first U.S. senator to drop out of the race, and the third so-called moderate to drop in late August.
Former Colorado Gov. John Hickenlooper said he will run for U.S. Senate against Republican incumbent Cory Gardner, while Washington Gov. Jay Inslee said he’ll run for a third term.
More on Tulsi Gabbard in the Polls
The list of DNC-approved polls focuses on the sponsoring organization, not the pollster. For instance, a recent poll sponsored by the Boston Globe and conducted by Suffolk University found Rep. Gabbard taking 3% in New Hampshire.
Even though Suffolk University has a better track record than polls conducted by the University of New Hampshire (UNH), the Boston Globe isn’t an DNC-approved sponsoring organization.
In 2016, the final poll conducted by UNH found Hillary Clinton leading Donald Trump by 11 points, while Suffolk University found the race tied. Mrs. Clinton barely carried by the state by a 0.3% margin.
For the U.S. Senate, the DNC-approved poll conducted by UNH found Democrat Maggie Hassan leading incumbent Republican Kelly Ayotte by 4 points, while Suffolk University found then-Senator Ayotte ahead by 2 points.
Now-Senator Hassan edged out the race by just 0.2%, meaning Suffolk was still more statistically accurate.
Senator Kirsten Gillibrand, D-N.Y., announced on Wednesday she was ending her presidential campaign, becoming the first U.S. senator to drop out of the 2020 Democratic nomination.
“I wanted you to hear it from me first, that after eight incredible months, I’m ending my presidential campaign” Senator Gillibrand said in a video posted to Twitter. “I know this isn’t the result we wanted. We wanted to win this race.”
“But it’s important to know when it’s not your time and how to best serve your community and country.”
Senator Gillibrand added that she believes the country is best served by her exiting the race and uniting the party to defeat President Donald Trump in 2020.
However, after eight months, she has no coalition to unite. Senator Gillibrand was polling below 1% and struggled to connect with voters. She was criticized heavily recently for lecturing voters in Ohio about their white privilege.
Worth noting, she is the third candidate seen as a more moderate choice to leave the race in late August, following former Colorado Gov. John Hickenlooper and Washington Gov. Jay Inslee. The former said he will run for U.S. Senate and the latter for a third term as governor.
Like other so-called moderates, Senator Gillibrand was no longer the person who ran as a conservative Democrat from upstate New York.
Last week, two former staffers and a friend told The New York Post it was time for her to end her campaign.
“It would be best if she decided that this was not her time,” said one longtime Gillibrand fundraiser. “Most people that I talk to are very happy with her as their senator and don’t want her to give up her Senate seat and don’t see any realistic traction for her.”
Senator Gillibrand struggled to obtain the 130,000 individual donors needed to qualify for the third Democratic debate in Houston next month. The campaign was essentially giving away tee-shirts for donations.
“I don’t know that anyone even wants to see her on the debate stage,” a former staffer said. “Everyone I have talked to finds her performative and obnoxious.”
Tropical Storm Dorian could strengthen to a Category 2 as it approaches Florida, though models vary and confidence in the track remains low.
Source: TropicalTidBits
Above is the Euro model (ECMWF) for the next 240 hours beginning on August 28, 2019. Below is the GFS for the same period of time.
Source: TropicalTidBits
The storm was originally forecast to strengthen to a hurricane ahead of Puerto Rico, but the northern turn would ensure it avoids disruption from mountainous island regions.
“The land interaction could end the strengthening trend or even cause some temporary weakening, however, environmental conditions favor intensification after the storm pulls northward into the southwestern Atlantic,” the National Hurricane Center said.
“Nearly all of the intensity models show Dorian becoming a hurricane in about 2 days, with additional strengthening beyond that time.”
U.S. Consumers Shrug Off Recession Predications as Present Situation Index Hits Highest Level in 19 Years
Consumer confidence 3D gear graphic reporting the Conference Board Consumer Confidence Index.
U.S. consumer confidence remained unshaken by unjustified media hype about a potential recession. The Conference Board Consumer Confidence Index (CCI) declined only marginally in August after a big rebound in July.
The prior month was revised 0.1 higher from an initially reported 135.7. Forecasts ranged from a low of 126.0 to a high of 133.0, with the consensus coming in at a still elevated 130.0.
The Index now stands at 135.1 (1985=100), down only slightly from 135.8.
Interestingly, the Present Situation Index – based on consumers’ assessment of current business and labor market conditions – rose significantly from 170.9 to 177.2. That’s the highest level since November 2000, when it came in at 179.7.
“Consumer confidence was relatively unchanged in August, following July’s increase,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions improved further, and the Present Situation Index is now at its highest level in nearly 19 years.”
The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – fell less so from 112.4 last month to 107.0.
“Expectations cooled moderately, but overall remain strong,” Franco added. “While other parts of the economy may show some weakening, consumers have remained confident and willing to spend.”
“However, if the recent escalation in trade and tariff tensions persists, it could potentially dampen consumers’ optimism regarding the short-term economic outlook.”
Consumer spending has been strong and fueled the strength in last quarter’s gross domestic product (GDP).
Total retail sales for Q2 2019 were estimated at $1,361.8 billion, an increase of 1.8% (±0.2%) from Q1 2019. The stronger-than-anticipated report follows a series of beats and strong consumer spending amid recession fears.
The advance estimate for retail sales came in at $523.5 billion in July, an increase of 0.7% (±0.5%) and more than double the consensus forecast. That followed an increase of 0.4% (±0.5%) in June, also stronger than expected.
U.S. retail e-commerce sales for the second quarter (Q2) 2019 came in at an estimated $146.2 billion, an increase of 4.2% (±0.9%) from Q1 2019.
The Q2 2019 e-commerce estimate rose 13.3% (±1.6%) from Q2 2018 and total retail sales have gained 3.2% (±0.5%) during the same period.
The percentage of consumers reporting business conditions are “good” rose from 39.9% to 42.0%, while those saying business conditions are “bad” fell from 11.2% to 9.8%.
Consumers’ views of the job market was also more favorable.
The percentage reporting jobs are “plentiful” rose from 45.6% to 51.2%, while the percentage reporting jobs are “hard to get” fell from 12.5% to 11.8%.
For all the talk about a recession, consumers were only moderately less optimistic about the short-term.
The percentage of consumers saying business conditions will be better in six months fell slightly from 24.0% to 21.9%, while those saying business conditions will worsen increased marginally from just 8.4% to 10.0%.
The monthly Consumer Confidence Survey is based on a probability-design random sample and is conducted for The Conference Board by Nielsen. The cutoff date for the preliminary results was August 16.
The S&P/Case-Shiller U.S. National Home Price Index (HPI) covering all nine U.S. census divisions posted a 3.1% annual gain in June, down from 3.3% in May.
The 10-City Composite annual gain came in at 1.8%, down from 2.2%. The 20-City Composite posted a 2.1% year-over-year gain, down from 2.4% in the previous month.
“Home price gains continue to trend down, but may be leveling off to a sustainable level,” says Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices. “The average YOY gain declined to 3.0% in June, down from 3.1% the prior month. However, fewer cities (12) experienced lower YOY price gains than in May (13).”
Phoenix, Arizona, replaced Las Vegas, Nevada as the top city for home price gains. Phoenix posted a 5.8% year-over-year increase, followed by Las Vegas at 5.5% and Tampa, Florida, at 4.7%.
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