Good morning. Here’s your Early Warning for Tuesday, 23 April 2019.
Politics & Governance
President Trump is expected to sign a memorandum that restricts travel on countries whose citizens have over a 10 percent visa overstay rate. “What we’re doing here is shutting a backdoor for illegal immigration. This is part of the Trump Administration’s comprehensive approach to combating illegal immigration,” said one Trump administration official. “This issue is not only an issue of national security and public safety, but also one of economic security, as this form of illegal immigration imposes dramatic costs on American society because you have people promising to stay on a very short-term basis, but then never leaving and becoming dependent on our public welfare system paid for by U.S. taxpayers.” [source]
Democratic political action committee Act Blue has launched a “Unify, or Die” campaign, which is using a modified “Unite, or Die” graphic (below) from the American Revolution. “This will be the most important Democratic primary in our lifetime… But when it’s over—no matter which candidate we fought for, and even if we didn’t see eye to eye—it’ll be up to every single one of us to work together to accomplish our greatest mission: taking back our country.”
During a CNN townhall last night, Senator and presidential candidate Bernie Sanders was asked if he would allow Boston bomber Dzhokhar Tsarnaev to vote from prison, as a part of his policy plan to allow felons to vote. Sanders replied that, yes, his plan would allow Tsarnaev to vote in elections from prison. Sanders also confirmed that his plan would allow murderers and rapists to vote in elections, referring to a “slippery slope” if the country began choosing which felons could and could not vote.
Far Left Daily
I will give Congress 100 days “to get their act together and have the courage to pass reasonable gun safety laws, and if they fail to do it, then I will take executive action.” – Sen. Kamala Harris (D-CA)
“I can’t wait to tax Howard Schultz back into the middle class.” – Ian Milhiser, ThinkProgress
“If we don’t take up impeachment, what we will do is wave the flag of surrender. We will say to a reckless, ruthless president do what you may. We’re not going to take up the calls of impeachment. It is — it is to deter a president as well as to start the process of removal from office. And if this president understands that we won’t impeach him, watch and see what he will do.” – Rep. Al Green (D-TX)
“We are now rapidly approaching Election Day 2020. In this age of cyberwarfare, we owe it to the American people to make sure that the election is decided by the will of the voters, not foreign governments… Under my leadership, the Democratic National Committee will not encourage the theft of private data, nor will we seek out or weaponize stolen private data for political gain. And I’m calling on you to put country above party and publicly pledge that the Republican National Committee will do the same.” – DNC Chair Tom Perez, in an open letter to RNC Chair Roana McDaniel
“For political reasons the Trump administration does not want a fair, accurate Census count. 3 federal courts have said so. 6.5 million people may go uncounted if Trump/Ross prevail-redistricting impacted. The Supreme Court must affirm the 3 lower courts” – Eric Holder
“If it ain’t broke, don’t fix it... [The VA] provides some of the highest quality [healthcare]… If you ask me, I would like VA for all.” – Rep. Alexandria Ocasio-Cortez (D-NY)
Bridgewater’s Greg Jensen warns in a new paper that corporate profits face a greater risk. Explaining that the end of expanding corporate profits is ending, Jensen writes, “We think there is a decent chance that we are at a major turning point for corporate margins, and if that is correct, U.S. equities have a major valuation problem.” He continues: “If margin gains can be extrapolated, then valuations look reasonable; if margins stagnate, then valuations are a bit expensive but not terrible… if margins revert toward historical averages, then equities are highly overvalued… [I]t will be hard for companies to maintain the current level of profitability over the coming decade, let alone increase the margins further from here.” Jensen is the chief co-investment officer for Bridgewater Associates, the world’s largest hedge fund, and has previously warned of a secular low growth period for the United States.
In this week’s note, JPMorgan’s Chief Global Strategist David Kelley has a similar warning to that previously expressed by Bridgewater’s Jensen. “However, in planning from here,” Kelly writes, “it’s important to recognize the limits that slow growth and high valuations put on future returns, even in a relatively benign environment… For investors, the timing of the downturn is less certain, but it is just as necessary to be positioned for slower growth and to be prepared, just in case it turns into something worse.”
Blackrock’s Larry Fink also weighed in recently on his recession expectations. “I see no signs of a global recession in the coming 12 months… We will go through a phase in which things are not great but also not bad… But we are naturally in a late phase of the economic growth cycle.”
(Analyst Comment: JPMorgan CEO a short time ago stated his belief that the U.S. economy has two years of growth ahead. Still, there does seem to be a growing amount of concern about what happens in 2020-2021 and beyond.)
* A caveat on recession: Spikes in oil prices have long been associated with economic recessions. High oil prices raise the cost of doing business and force consumers to make choices about their spending. Yesterday, the Trump administration announced that they were ending sanctions waivers for countries who purchase Iranian oil. There’s also a bill on the books — the No Oil Producing and Exporting Cartels Act, or NOPEC — that would allow the U.S. to bring an anti-trust lawsuit against the Organization of the Petroleum Exporting Countries (OPEC). Oil watchers are warning that higher oil prices could become a political issue, and OPEC lobbyists are warning Wall Street about the effects if NOPEC is passed by Congress. And yesterday, an Iranian admiral threatened to close the Strait of Hormuz. This threat has been made before, however, if Iranians follow through, then we could see oil prices spike and a potential conflict between the U.S. and Iran.
Strategic/Defense Situational Awareness
Sri Lankan authorities say that Sunday’s terror attack was retaliation for the Christchurch massacre. We can’t rule out the possibility that this generates a tit-for-tat escalation.
“The likelihood that the Democrats will try to impeach the president is next to zero.” – Anonymous White House official