Bernie Sanders gave a speech yesterday, promoting his Democratic Socialism platform in a bid to spark his candidacy and to remind voters he’s the godfather of this movement, which has seen many Democrat candidates cherry-pick parts for their own White House ambitions.
Socialism is an idea that has had cyclical appeal throughout history, and it’s been beaten back by logic and its own disastrous track record each time. There are times when crony capitalism and special treatment for the wealthy become so distorted that it reopens the door and the debate over which is a better system.
There are millions of people, probably more than half of the nation, that feels the system isn’t completely fair, especially when it comes to economic issues like opportunities, wages, and the ability to prosper in a nation where only three things seem certain:
- The higher cost of living
Bernie Sanders has tapped into this, and more recently, his Democrat rivals have been cherry-picking his ideas for their own. However, he’s saying the nation needs the whole enchilada: Democratic Socialism.
It’s an idea most scoffed at the last time he ran, but scoffing now would be dangerously arrogant if Bernie can couple the extraordinary benefits of the wealthy and big corporations like:
- Bank bailout
- Special low tax rates for billionaires
- Taxpayer-funded sports stadiums
Corporate Welfare Queens and Kings
Yesterday, Sanders was floundering as his speech didn’t have its old oomph. However, his day got better when he took on Wall Street prince Jamie Dimon, who dissed socialism earlier in the day at a Business Roundtable event. This tweet underscores the only thing more absurd than talk of socialism, and that’s the talk of giant banks looking out for Main Street.
I didn't hear Jamie Dimon criticizing socialism when Wall Street begged for the largest federal bailout in American history—some $700 billion from the Treasury and even more from the Fed.
Bernie and those that grabbed his socialist baton (even as they feign affection for capitalism) will find an audience that goes well beyond millennials riddled with guilt and seeking fairness. Lots of Americans think our financial system needs an overhaul, so defenders of capitalism should be listening to them.
Bernie’s speech wasn’t the only thing that was boring yesterday. The stock market has shifted into a wait-and-see mode, trading in a very narrow range this week, as rallies trigger selling and selling seduces some buyers off the sidelines. We aren’t quite at those summertime blues, just back to equilibrium after a big dip and recovery.
Remember major indices are only a couple percentage points from all-time highs. Moreover, markets moved up and down before the China trade war. Each down day isn’t because of Wall Street’s concerns over trade -just more sellers than buyers. Right now, there are by far more fence-sitters than either.
Speaking of China; after the close, Restoration Hardware (RH) posted record quarterly results. RH announced it was making moves to bring some production out of China and possibly to the United States. The company offset current tariffs through suppliers and selected price increases (it’s already expensive stuff. I was in a store during the quarter, and nothing I saw was up 10% and certainly not 25%).
By the way, if gains hold for RH, it will be another horrible day for the shorts who got rocked by the spike in Tesla (TSLA) and Beyond Meat (BYND), as Lululemon (LULU) popped initially after reporting earnings as well.
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Despite another attack on oil tankers in the Gulf, equity futures have held up nicely in part to earnings reactions.
The big economic data point this morning showed import prices decreasing. Looking closer to at the data, it is almost amazing that the massive price hikes promised by tariffs haven’t materialized yet.
May Import Prices
- -0.3 m/m
- -1.5% y/y
Non-Fuel Import Prices
- -0.3 m/m
- Down four of the first five months of 2019
- Down eight of 12 months in past year
Interestingly, US import prices rocked +4.5% from May 2017 to May 2018. Go figure.
I like the way the market has held up this morning – in recent sessions, rally attempts have been faded. Let’s see how the market acts.