Monday, July 3, 2017

"The Month That Was - June 2017"

Sydney M. Williams

The Month That Was – June 2017
July 3, 2017

It is better to be a young June bug than an old Bird of Paradise.”
                                                                                                            Mark Twain (1835-1910)

With June behind us, so is the first half of 2017, a year that seems to have just begun, yet which has brought so much news.

Mainstream media has assumed a Potemkin village-like stance – twisting news to corroborate a prescribed narrative. James Comey’s testimony before the Senate (see my TOTD “The Dystopian World of James Comey,” June 19, 2017) began as an investigation into alleged Russian interference in last year’s election, but then had to adjust, as Comey suggested that former Attorney General Loretta Lynch needed scrutinizing for persuading him to refer to the investigation into Hillary Clinton’s e-mail server as a “matter.” Muddying the waters further, it was disclosed that then President Obama tried to put a lid on probing Russian interference last fall, when it seemed probable that Mrs. Clinton would win the Presidency. In Georgia’s sixth district, Republican Karen Handel overcame a $30 million spending campaign by Democrat Jon Ossoff to keep Tom Price’s seat in Republican hands. DNC Chair Tom Perez blamed the loss on gerrymandering, while mainstream media took succor from the fact that Democrats narrowed the size of the loss; though they skipped over the inconvenient fact that Congressional wins in Georgia and South Carolina were by wider margins than that achieved by the President in November.

The Senate healthcare bill was released by Majority Leader Mitch McConnell, but a full vote in the Senate was delayed until after the July 4th recess. Unilateralism, as we saw in the previous Administration, encourages partisanship. In 2009, with 60 Democrat Senators, it took 18 months to pass the Affordable Care Act, and it was passed without a single Republican vote. The insufferable Nancy Pelosi, then House Speaker, said we would have to pass the bill to see what was in it. The American people would like the Party’s to work together, but the media knows that bad news (partisanship and bickering) sells better than good news (reconciliation and concessions). In the meantime, the Affordable Care Act is in trouble. An article in the June 9th The New York Times reported that by next year no insurance companies would be operating in 45 counties in the U.S., and that 1,388 counties will only have one plan. For left-leaning Democrats, the only option to a failing ObamaCare is a single-payer system – socialized medicine. For right-leaning Republicans, the only answer is repeal, and replace later. Neither is good. The best would be for the two Party’s to find a bipartisan path – seek common ground, fix what needs to be fixed, eliminate what’s wrong, work on tort reform and allow insurance companies to compete across state borders. But that is not what Party leaders want, nor is it what the media prefers.

Hysteria about Mr. Trump persisted during the month, manifested by investigations into anything that can be contrived, with flames of hatred fanned by a media that cannot stand him. Granted, Mr. Trump’s Tweet regarding Mika Brezinski was inexcusable. Nevertheless, does it compare to the Obama Administration’s setting the IRS on conservative groups? The first is boorish and uncivil; the second, a threat to democratic principles. While a few Democrats are concerned over brand identity, most and the media are driven by a palpable hatred for Mr. Trump. CNN’s Reza Aslan called President Trump a s**t on national television and CNN’s Kathy Griffin blamed him for her loss of a job, after she held up a bloodied mask of his face. One wonders: Does the Left understand the consequences of what they are doing? Do they not realize that actions today beget similar reactions tomorrow? Does rending the nation in two warrant the satisfaction of driving Mr. Trump from office? Debates are healthy. Hatred is not.

Two parades in New York during June displayed the differences between urban progressives and middle-Americans. The first was the Puerto Rican Day Parade, which highlighted convicted terrorist, Oscar López Rivera. The second was the Gay Pride parade that applauded convicted traitor, transgender Chelsea Manning, while booing U.N. Ambassador Nikki Haley. In this dystopian, Potemkin-village-like world the left has created, one is reminded of the quote often attributed to George Orwell: “In a time of universal deceit, telling the truth is a revolutionary act.” Obama’s Orwellian world, depicted in the “Pajama Boy” and “Life of Julia” – government from cradle-to-grave – is the goal of the far-left.

The Supreme Court, in a 9-0 decision, temporarily allowed the Trump’s Administration travel ban to remain in effect while they wait to hear the Administration’s appeal of lower courts’ blockage. In Trinity Lutheran v. Comer, the Court ruled 7-2 that churches cannot be denied access to a public benefit simply because they are religious. The Justices extended that principle by overturning a ruling that had struck down Colorado’s school voucher program on religious grounds. In Matal v. Tam, the Supreme Court, in an 8-0 decision, said the Patent and Trademark Office was wrong for denying an Asian-American rock band to register the name, “The Slants.” The Justice Department then dropped the case the previous administration had brought against the Washington Redskins. A former Bernie Sanders supporter and vocal Republican hater, James Hodgkinson, shot four Republicans on a ballfield in Arlington Virginia, including Representative Steve Scalise of Louisiana. Many on the left immediately indicted the proliferation of guns and the election of Donald Trump as the cause, ignoring a culture of dissonance promulgated by identity politics. In an incredulous statement, FBI officials later said that Mr. Hodgkinson didn’t have any “concrete plans” to inflict violence on Republicans he “loathed.” President Trump selected Christopher Wray, a lawyer and former Assistant Attorney General under George W. Bush, to serve as the new FBI Director. Attorney General Jeff Sessions ended the Obama Administration’s practice of forcing corporate defendants to allocate a portion of penalties (known as “Slush Funds”) to Left-wing activists.

In international news: Tensions between Washington and Pyongyang worsened when Otto Warmbier died within days of being released from imprisonment. Three Americans remain captive in North Korea. President Trump nixed the Paris Accords. (See my TOTD, “The Paris Accords – Much Ado About Nothing,” June 12, 2017.) A horrific fire in a London council apartment, the 24-story Grenfell Towers, killed at least 80. More than 60 people were burned in wild fires in Portugal, many of whom were incinerated in their cars, as they tried to flee. The election called for by British Prime Minister Teresa May in April proved disastrous, as Conservatives lost their majority in Parliament. A known, radicalized Islamist rammed his car carrying explosives into a van filled with police on Paris’s Champs-Élysées. The driver of the car was shot; none of the police were killed. Eight people died in Britain’s third Islamist terrorist attack this year. Later, a van drove into a crowd leaving the Finsbury Park Mosque, showing that violence begets violence. The U.S. shot down a manned Syrian military jet that had dropped bombs near U.S. forces. Saudi Arabia and three other Arab nations severed relations with Qatar, a nation known for harboring terrorists. Parliamentary elections in France solidified Emmanuel Macron’s new political party, En Marche!

First quarter GDP, at 1.4%, was double what was initially reported. The Federal Reserve raised the Fed Funds Rate by 25 basis points to 1.5%, still low by historic comparison, but, at least, moving toward normalization. The yield-curve has flattened, with the 10-Year to 2-Year spread having narrowed from 126 basis points at the start of the year to 92 today. Some see that as portending a tougher time for the economy. But since the Fed is only now beginning to raise short rates after a prolonged period of extraordinary low rates, old rules may not apply. Stocks during the month continued higher, with the DJIA rising 1.6 percent. The Wall Street Journal, the repercussions of which are yet to be told, reported that the number of publically traded stocks in the U.S. has been halved over the past twenty years, declining from 7,355 in 1997 to less than 3,600 today. Ironically, there are today about two and a half times the number of mutual funds and ETFs as individual stocks – 9,511, according to the website Reasons for the decline in the number of publically-traded companies include regulations – Sarbanes-Oxley and Dodd-Frank being most prominent – and a flood of money in venture capital and private equity funds that support private companies. The amount of investible capital continues to increase, which may account for rising multiples – more money chasing fewer stocks. Keep in mind, index funds and many ETFs are blind as to multiples. The ECB and the Bank of England are considering detoxification – normalizing interest rates and tapering their bond buying programs – extricating banks and economies from years of easy money and stimulus programs. Dependency is not only a risk to individuals. Facebook announced that they now have over two billion monthly users (more than a quarter of the world’s population) – giving enormous power to the company in terms of cultural and political influence. Will it be used wisely? Jeff Immelt resigned as CEO of General Electric. He will be replaced by John Flannery, who had been CEO of their health care business. Immelt had a tough act to follow in Jack Welch, but after sixteen years as CEO the stock price is lower than when he took over. European Union regulators, hungry for resources, slapped a $2.7 billion fine on Google, alleging the company hindered competition.

Satire is healthy, but New York’s Shakespeare in the Park crossed a line of incivility, with their mocking depiction of Trump as Julius Caesar. A U.S. destroyer, the USS Fitzgerald, was struck by a Philippine-flagged containership sixty-four miles south of its homeport in Yokosuka, Japan, killing seven U.S. sailors. A mudslide in China buried more than a hundred in Sichuan Province in southwestern China. An oil tanker truck exploded near the eastern Pakistan village of Bahawalpur, killing 153. Damage was done but no lives lost when a Tsunami hit Greenland. Indicative of a growing vulnerability to technology, one cyberattack hit Britain’s Parliament and another affected more than a hundred businesses and institutions around the world. More than $1 billion in aid money has gone missing in Mozambique. Alex Honnoid, 31, became the first person to climb the 3000-foot El Capitan in Yosemite National Park, without using ropes.

Identity politics are affecting campuses: Harvard held its first commencement for African-American students; the University of Delaware held “lavender” graduations for its LGBT students. At Columbia, students who were the first in their families to graduate from college were invited to the college’s inaugural “First-Generation” graduation. Yet the pendulum may be swinging back. The Harvard Law School named a conservative, John Manning, as dean. Mr. Trump is pushing for the privatization of the U.S. air traffic control system. The President made apprenticeships a centerpiece of his labor policy, a policy that would allow those for whom college is not the right option to get paid while learning specialized skills. Chinese scientists succeeded in sending specially-linked particles from space to Earth, “an achievement,” according to a report in The Wall Street Journal, “experts say gives China a leg up in using quantum technology to build an ‘unhackable’ global communications network.” The New York Times reported that the oldest fossils of Homo Sapiens – dating back 300,000 years – were found in Morocco.

The Pittsburg Penguins beat the Nashville Predators to win the Stanley Cup, while the Golden State Warriors defeated the Cleveland Cavaliers to clinch the NBA title. At age 23, Jordan Spieth joined the 10-win club, becoming, other than Tiger Woods, the only golfer to do so before age 24 in the post-World War II era. (Woods won 15 times before he turned 24.)

As is his wont, the grim reaper made an appearance. Helmut Kohl, orchestrator of German reunification, died at 87. Also, dying at age 87 was Jimmy Piersall, long-time outfielder for the Boston Red Sox. Emmy-winning TV journalist, Gabe Pressman succumbed at 93. Adam West, best known as ‘Batman,’ died at 88. “Flounder,” also known as Stephen Furst, died at 63, prompting my wife and me to re-watch “Animal House.”  And I lost a good friend and former Salomon colleague, ‘Bobby’ Hamecs who had a heart attack at 69.

Welcome to July, the birth month of our nation! 

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