Bill Owens: Confounding And Confusing Events 6/1/20

President Trump continues his elimination of Inspector Generals and effectively the oversight which they deliver.  The latest firing of the Department of State Inspector General raises a whole new set of concerns because Mr. Pompeo is under investigation for arms sales to Saudi Arabia and for utilization of Department of State employees for personal matters.  He is the latest of the President’s cabinet appointees who has been investigated and several have already resigned.  This is an overall pattern of behavior which reflects a complete distain for the rule of law.

Jason Kenney who is the Premier of Alberta is calling for the reshoring of manufacturing as he slams China for its handling of the Corona virus.  Clearly, an acolyte of Mr. Trump, and fails to include in his discussion what the increased cost would be, in his case, to the Canadian public and in the United States, President Trump refuses to share government estimates of what increased costs would be to US consumers.  It would be interesting to see polling which tested whether or not Americans were willing to pay 10% more, 20% more, 30% more, for goods produced in the United States.  This only works if the goods are produced in the United States and consumers are willing to buy them.  I suspect some of those who would howl the loudest at increased costs would be Mr. Trump’s supporters. 

The Canadian dollar continues to move up and down, but stays in the range of about 70¢-71¢ versus the US dollar.  This is important on any number of fronts, but we must continue to monitor this indicator as it has strong implications for both economies which are tightly bound together.

POTUS is now seeking to put limits on the importation of beef from Canada and Mexico in violation of the USMCA.  Cattlemen recognize that their exports will be negatively impacted and don’t support the latest irresponsible and possibly illegal trade tactic from POTUS.  If it rally’s 10 people to his side and injures 90, POTUS thinks it makes sense.

You might remember POTUS criticized President Obama on numerous occasions for playing golf, both the amount and specifically during the Ebola crisis.  President Trump and Ms. McEnany (POTUS’s Press Secretary) thought it was fine for POTUS to play as we pushed toward 100,000 deaths.  Please note, he did not utter nor did McEnany any words of sympathy.

The retail economy is continuing to change.  Online sales increased in the last several months while brick and mortar retail like Target are seeing a decline in instore sales and an online surge of 141%, but net profit fell 64.3% due to a rise in operating costs of 11% driven primarily by COVID-19 expenses.

The US trade deficit in March was $533 billion, on an annualized basis, while Canada’s was $17 billion, which was  “standard” in terms of goods and services, with goods bearing the brunt of the negative numbers, while services were a positive.  This particular information is of interest, but not totally relevant in light of the downturn in the economies of both countries, and we will need to be watching this into April, May, and June to see what direction we are both going.  This type of data becomes critically important to our analysis and hopefully, to the federal government as it determines what additional, if any, stimulus is provided. 

Congresswoman Stefanik took a sharp turn to the right during the impeachment process becoming a staunch defender of POTUS.  She has also become a significant critic of Governor Cuomo.  Does the Trump administration believe that the Governor is a potential threat to the President, which seems very unlikely given the fact that there is no chance that Mr. Cuomo will become the Democratic nominee in the 2020 election.  Could it be that Congresswoman Stefanik is setting up for a challenge to Mr. Cuomo.  Is she working to cement her position with Mr. Trump, should he be re-elected to secure a possible cabinet post? Given Governor Cuomo’s 71% favorability rating, seems not to be an inviting target. 

Tensions with China rise on trade, COVID-19 responsibility, tightening up on Hong Kong, governance, and the Huawei case turning against China is Canada.  Our economic interdependence with China is very important to consider as we roll forward and attempt to recover our economic strength.  Shooting from the hip won’t work.

As we noted last week, the US/Canadian border is closed until June 22, 2020.  Assuming the border opens on June 23^rd, what will it look like?  Will there be travelers seeking to go south, polling shows Canadian’s are concerned about travelling to the US so they may not come.  If they do, will New York state treat them like Vermonters or other neighboring states? How will Canada treat our citizens?  What we do know is that CBP will not be doing any significant health checks nor should they.   

Health experts are telling us that there is clear scientific evidence now, from numerous sources that droplet experiments show that a mask does prevent droplets from reaching others.  Out of respect for each other, as Americans that care for each other, we need to be wearing masks in public when we cannot social distance.

Unemployment continues to rise nationwide, but is highest in Georgia, Florida and Kentucky with Alabama and Virginia rounding out the top five.  The Governor’s of Georgia and Florida have touted their looser responses and early reopening as a success story.  Did they speak to the unemployed in their states to see if they agree.

We celebrated Memorial Day Monday which is always an emotional holiday.  Remembering is important, but upholding the ideals that so many perished for is the ultimate honor we can give. 

A Harvard Epidemiologist has summed up the reason for wearing a mask, social distancing, washing hands, etc., and it is quite simple; “The idea of harm reduction gives us a way of thinking about risk as a continuum, and thinking about the middle ground between those two options (staying closed or opening).  One of the struggles I have had with the reopen group is their apparent lack of concern about others, which in many respects, makes little sense to me. If the goal is to reopen, what is the harm in wearing a mask, washing your hands, etc.  Is it somehow unmanly or unwomanly, or does it evidence your concern for others?  There are some polls that indicate that only about half of the population is willing to take or receive the Covid-19 vaccine.  Certainly, in the short-term, as we await the results, that makes some sense, because there certainly will be concern about side effects, but over the long haul, it is something that is absolutely necessary. 

The demonstrations following Mr. Floyd’s death are wholly understandable.  Rioting is also understandable, but problematic because it destroys business serving the injured community and in many cases owners who are members of the community.  These are difficult emotional situations and government needs to deliver swift justice to the murderer and his accomplices.

Let me conclude with “what was Governor Cuomo thinking” with his postponement of Phase II openings.  Then the next day authorizing reopening.  Frustration is mounting which never leads to good outcomes, so share information when you issue such orders.  

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