The U.S. Owes UNESCO Half A Billion Dollars

This week, the U.S. and Israel announced that they would be withdrawing from UNESCO, citing "continuing anti-Israel bias".

As Statista"s Niall McCarthy notes, the move comes as a major blow to the organization which is known for designating cultural sites around the world such as the Grand Canyon or ancient Palmyra in Syria.

The U.S. has been expected to pay the bulk of UNESCO"s budget for years and it cancelled its financial contributions back in 2011 in protest of Palestine"s admission as a full member.

In the years since, it has amassed significant arrears of over $500 million...

You will find more statistics at Statista

This year, the UK, Japan and Brazil have all failed to pay their contributions so far, accrueing nearly $70 million of arrears between them.

This isn"t the first time the U.S. has turned its back on UNESCO.

The country also left the organization under Ronald Reagan in the 1980s before rejoining under George W. Bush in 2003.

The latest withdrawal will come into effect at the very end of 2018.

Wayback Machine Video – The Great Ronald Reagan, the Awesome Johnny Carson, and the Current Late Night Wusses

For full archives, please visit The Entry Points:

There was a time when late night TV talk show comedy was a place for, well, comedy, and civility.  Going after all politicians in a talented, witty, smart, well thought out manner is, well, funny. As the great Jerry Seinfeld has pointed out, funny is hard work. But now the degenerates who host the late night “comedy” shows, force their audience to watch them make spectacles of themselves crying (about President Trump), attacking (President Trump), and spouting disgusting vulgarity (at President Trump). But the problem with this has nothing to do with Trump per se, it has to do with, uh…comedy. Is there some hidden “comedy” in those wimps’ routines? Is there humor in their personal attacks? Is it hilarious to see grown men act like hormonal teenagers? And the real question, is it “funny” when they only direct their attacks at Republicans? Answer, no it’s not. How many Trump-type supporters would have found it “hilarious” to direct the exact same kind of “humor” towards President Obama? Answer – not many.

Yes there was a time when humor and civility went hand in hand on late night talk shows. And making fun of, and creating humor, was across the board. For instance both President Carter and President Reagan were the butts of jokes. There were also very friendly appearances by politicians on late night, where they were allowed to discuss their philosophies. (Not yet President) Reagan was on with Johnny Carson in 1975, and it was masterful, showing his natural wittiness. Unfortunately, as President his optimism and his great ideas were considerably watered down. During the interview Mr. Reagan had some great lines about how to balance the budget, how government is the problem not the solution, and how taxing business is just a hidden tax on consumers. Forty years ago he was already warning about the unelected bureaucrats taking control over policies, and how we need to drastically simplify taxes. He also had an idealistic proposal to put a % limit on how much of our (you know, the citizens) earnings could be taken/snatched by the government, thus going above that limit would require our “approval”.

Isn’t it interesting that then Governor Reagan and Johnny were joking about the CIA, since it would be 5 years later when a certain former CIA Director would become his Vice-President. Was this decision forced upon Reagan? Did it play a role in future events? Also in the interview, foreshadowing modern times, he had no problem with the government shutting down for a while, “we’d never miss them”.

The Divergence Between 'Hard' & 'Soft' Data Explained (And Republican Bulls Won't Like It)

Another dataset, another head-scratching disparity between ostensibly fulsome confidence and evidently sluggish activity.  While markets get whipsawed reacting to divergent hard and soft data points, the question that traders need to ask is whether this gap makes any sense.

Bloomberg"s Macro Strategist Cameron Crise may have the answer... If you"re willing to believe that survey respondents allow their political beliefs to color their answers, then it very well might.

I modeled U.S. economic growth since 1975 using the softest of the soft data releases: consumer confidence and the small business optimism survey. I omitted the ISM because it includes factual questions, i.e. are orders increasing?  The fit is actually pretty good for such a simple model, with an r-squared of 0.51.  As you can see, the model is now pretty upbeat.

I then disaggregated the data and compared the model forecast to actual economic growth for each president since Gerald Ford. The results were fascinating.

• Under Republican presidencies, average annual growth has been 2.7%...but the model has forecast it at 3%.


• Under Democrats, growth has been a little higher, at 2.8%...but the model has forecast growth of just 2.3%.

In fact, the model slightly underestimated growth during the Ford and Reagan years. Since George HW Bush, however, the trend is pretty pronounced: survey respondents have been optimistic relative to underlying growth for GOP presidents and pessimistic relative to growth for their Democratic counterparts.

It seems likely that at least some of the recent boost to confidence is evidence of the same phenomenon manifesting itself.  That being said, the model currently projects growth of nearly 3.5%, so even if we were to knock off the usual half a percent for a post-Reagan GOP presidency that would still imply a marked uptick over the post-crisis run rate.

Of course, achieving that growth will probably be contingent on the government enacting some of its more business-friendly campaign promises such as tax reform or deregulation. If they don"t, then the "optimism gap" may close, and not in a way that the White House might like.

Either way, traders will need to keep an eye on government policy and its implications. The efficacy of the Trump administration may not matter on a day-to-day basis for bond markets, but in the long run it probably will.

A glance at the last 20 years or so of "soft" and "hard" data also helps confirm this over-confidence... it"s the hope that pumps... then dumps... and never the reality that jumps...

More Americans Think The US Spends "Too Little" Than "Too Much" On The Military

Following The House"s decisive approval of a $578 billion spending bill to keep the US armed forces operating through September, Gallup recently conducted a poll to gauge public opinion on the current level of U.S. military expenditure. The results may surprise some...

As Statista"s Niall McCarthy notes, Gallup found that 37 percent of people think the government is spending too little compared to 31 percent who say it"s too much and 28 percent who think it"s about right.

You will find more statistics at Statista

The trend of "too little" exceeding "too much" is infrequent in Gallup"s polling only occurring before or after a Republican administration replaces a Democratic one.

Historically, the percentage of Americans saying Washington spends too much on defense peaked during the Vietnam War in the early 70s and again at the end of the Cold War in 1990 under Reagan.

Barclays: "Equities Rushed To Price In The Reagan 1986 Tax Cuts Before Crashing In 1987"

With concerns rising that the market has gotten well ahead of itself over the practical reality of Trump tax cuts - most recently voiced by Goldman which over the weekend said that "we are approaching the point of maximum optimism and S&P 500 will give back recent gains as investors embrace the reality that tax reform is likely to provide a smaller, later tailwind to corporate earnings than originally expected" - Barclays decided to look at one of recent history"s most notable tax regime changes: the Reagan tax cuts.

What it found was interesting.

First, the market wastes no time in factoring in any to corporate taxes and according to Barclays calculations, corporate tax cuts get 85-90% priced in very short order. As an example, Barclays points out that the Reagan 1986 tax cuts showed that equities price in the benefits quickly. Perhaps too quickly.

There were some other notable similarities between the current tax-regime transition and 1986, namely "the oil collapse and growth cycle were also issues in 1986." In any case, a harbinger of the current market rally driven by Trump tax cut hopes, "the S&P 500 rallied 40% pricing in the tax plan before it was really even implemented in July 1987."

The S&P then infamously crashed in October of 1987, for a variety of reasons, one of which, Barclays suggests, was the rapid pricing in of the Reagan tax cuts. In fact, seen this way, the infamous Black Monday crash may have been - in addition to all the other noted catalysts - a very vivid example of "sell the news."

There was also good news: for those who survived the 30% drawdown, though the post-1987 period was marred by the crash, S&P 500 EPS actually rose 55% compared to 1986 levels. Barclays foresee a similar dynamic likely playing out whereby the market multiple prices in the first order effects of a tax plan very quickly, once known.

One could perhaps add that the market has already priced most of the tax cut without even knowing the details. On the other hand, Barclays notes, second order effects such as rates and growth will also affect the multiple. Two notable difference between the Reagan and Trump tax cuts, as the level of government indebtedness - far greater now than it was 30 years ago - and the Fed"s tightening cycle, which for the time being are seen as bullish although inevitably the market will realize that tighter financial conditions inevitably lead to lower risk prices.

Weekend Dedication/Inflation

This blog appeared 11/11/16 at Trader Scott"s Market Blog.

These weekend dedications are done in the style of the great Casey Kasem who made them very popular when, for many years, he hosted the American Top 40 radio show. But the difference here is these are mocking dedications instead. They mock the globalist, neocon elitists and their puppets. While also highlighting their agenda attempting to control and exploit the rest of us. For example: What"s the deal, Barry Soetoro, with that funky odor? or Who was the real Prez from 2001-2009?  The globalists had the wind at their backs for many decades until President Reagan, but he proved to be only a minor threat to them. And after President Reagan, they got way too greedy. Now Donald Trump is a much bigger threat to their agenda. But he’s only the face – the real problem confronting them is that enough of the masses are fed up with the old order of doing things, and desire/yearn for REAL change. The elitists were completely focused on defeating Trump, and seemed to be oblivious to the actual threat – the revolt of the masses. And they ain’t seen nothin yet. The 35 year bond bull market (falling yields) has gotten us intoxicated and addicted to/comfortable with amassing DEBT of any kind. So the opiate like effects of the ultra low yields have helped to calm and soothe us. However, that is soon to change in a huge way. Trend extrapolation is one of the biggest mistakes we make in markets. And a 35 year bond bull market can certainly get almost everyone to assume low/zero rates will extend basically forever - because, of course, the CBs can extend and pretend as long as they want. At least that is the basically omnipresent belief. But it"s wrong. I believe in supply and demand (nature), I have zero faith in governments and CBs. And now it is the death of this humongous bond bull market which will slowly destroy the widespread belief in low inflation/"deflation" (allegedly) to stick around basically forever. I have been arguing for a long time, it is the rising rates (on the long end) which will bring about the inflation. The low rates allowed the huge inflation to mainly infect the financial asset markets and also the collectibles. It is the persistent rise in long term yields which will suck much of the inflation out of financial assets and will begin to "deposit" (infect) the huge inflation into real assets. The bottom in inflation, as well as in commodities and PMs is in 2016. From 2017 onward, commodities will be big beneficiaries from the massive capital leaving global bond markets. 

But, I"m being rude, this weekend dedication is for the vivacious and beautiful Hillary Diane Rodham Clinton (and I will borrow from this previous dedication). As we all know, Mrs. Rodham Clinton is a devoted environmentalist and is also a true advocate for global warming, oops excuse me, climate change. Diane is also devoted to helping women, minorities and homosexuals. She has been accused of taking bribes from countries whose official policies target those three groups with horrific consequences. Well I’m outraged at such lies, and it must surely be nothing than a vast right wing conspiracy.  And of course, she is also devoted to helping the least fortunate among us. I was so excited for the prospect of having our first female President. It is something which has been long overdue. In fact, in my view, she should have just been crowned President for life. Especially since the always honest and unbiased polls showed ubiquitous support for Diane. Why was Hillary Diane even forced to go thru the grueling election process. That proves we live in a misogynistic culture and the proverbial glass ceiling is still intact. I"m outraged, I tell you. Outraged! So we all know the racist Donald Trump stole the election from Hillary Rodham. How else could she have lost. Everyone loves her. So Hillary Diane Rodham Clinton, this song is for you, my dear.