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It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so (Mark Twain)

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THE DAILY EDGE: 14 OCTOBER 2021: Transitory Fading

SKINNING THE INFLATION CAT

In so many ways. The cat being out of the bag, everybody is scrutinizing the data.

  • The CPI Food-at-Home index is up 4.5% YoY but beware: last 3 months +9.5% annualized!
  • Core Goods prices are up 7.3% YoY and +4.0% in the last 3 months annualized.
  • Core Services are still behaving well: +2.9% YoY and +2.0% in the last 3 months annualized.
  • But that is because Transportation Services (vehicle maintenance and repair, insurance and air fares), up 4.4% YoY are down 16.1% annualized in the last4 months.
  • Shelter costs are up 3.2% YoY and +4.0% in the last 3 months annualized. The rising threat.

The Cleveland Fed’s MoM data all look bad, except for core CPI lately. The trimmed-mean CPI, which weeds out the outliers, is particularly worrying:

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While core CPI is behaving, median CPI is accelerating. Just the beginning?

Median CPI increases? Wait for it…

  • The last 6-months viewed by NBF:

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  • And it’s no longer the pandemic as Bloomberg explains:

Last month, substantially all of the increase in inflation came from sectors that were not particularly affected by the pandemic. On a month-by-month basis the pandemic effect is over, and yet inflation remains elevated.

relates to The Inflation Numbers Are Undeniable Now

TRANSITORY FADING

Yesterday’s CPI seems to have seriously shaken certain convictions:

We also got the September Fed Minutes:

The Fed’s staff now accepts “higher for longer”:

  • “The staff interpreted recent inflation data as indicating that supply constraints were putting a larger amount of upward pressure on prices than previously anticipated,” the minutes said. Compared with the previous projection made in late July, “these supply constraints were also expected to take longer to resolve.”

But ended up elongating the transitory period:

  • The Fed’s staff forecast prepared last month revised its inflation projection higher, but bank economists still expected this year’s rise in inflation to prove transitory, the minutes said. That forecast called for inflation to slow to slightly below the Fed’s 2% target next year amid a sharp drop in import prices before returning to 2% by 2024.

Yet, “most [FOMC] participants saw inflation risks as weighted to the upside because of concerns that supply disruptions and labor shortages might last longer and might have larger or more persistent effects on prices and wages than they currently assumed.”

To me, the “and wages” part is the surprise and indicates that “most participants” are starting to worry about wage inflation.

  • The minutes also indicated that staff economists pointed to a risk that households’ and businesses’ expectations of inflation in the future “would move appreciably higher,” which would be an alarming development for central bank officials because they believe such inflation expectations play important roles in influencing actual inflation.
  • Fed Vice Chairman Richard Clarida said Tuesday that the Fed would need to raise interest rates if it sees evidence households and businesses were beginning to expect recent inflationary pressures to persist. “Monetary policy would react to that,” he said. “But that is not the case at present.”

Right on cue, as if to support Clarida’s assertion:

Atlanta Fed’s Business Inflation Expectations Unchanged at 3.1 Percent

  • The BIE was created to measure the year-ahead inflationary sentiments of businesses in the Sixth District.
  • Firms’ year-ahead inflation expectations remain unchanged at 3.1 percent, on average.

Year-Ahead Inflation Expectations (4)

  • So, the business inflation anchor looks reasonably solid. But when asked for their 5-year inflation expectations, the mean forecast was +4.3%…with a 3.3% standard deviation…What kind of an anchor is that?
  • Sales levels “compared to normal” increased slightly. However, profit margins remain unchanged at levels below the 2015-2019 experience.

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  • Good thing that sales remain good because year-over-year unit cost growth increased significantly to 3.5 percent, on average.

Year-over-Year Unit Costs (3)

  • 29% of the firms said their unit costs were “up significantly” vs 12% 6 months ago and 30% said “very significantly” (vs 14%); 31% were “up somewhat” (vs 55%).

So, businesses’ “inflationary sentiment” is stable at 3.1% for the next year. Yet, their presumably “measured actual” unit costs are spiking up. They surely think the Fed’s staff will prove right, even though they seem to seriously doubt it with a 4.3% 5Y inflation sentiment.

Meanwhile:

  • Oil Demand to Rise as Gas Crunch Forces Plants to Switch Soaring natural-gas and coal prices are forcing power-generation companies and manufacturers to switch to using oil, a move that could add half a million barrels a day to global demand, the IEA said.
  • Inflation drives up drillers’ costs in US shale oil patch Rising wages and equipment delays help lift Texas crude above $80 a barrel
  • A Winter of Giant Gas Bills Is Coming According to the Energy Information Administration, nearly half of U.S. households that warm their homes with mainly natural gas can expect to spend an average of 30% more on their bills compared with last year.
  • From TSMC’s conference call: “TSMC’s production will likely remain stretched through 2022, as demand for semiconductors that power everything from cars to the latest smartphones drove lead times to record highs and helped fill order books. In order to secure supplies, more customers are now paying upfront, compared with just “one or two” before. (…) We expect TSMC’s capacity to remain very tight in 2021 and throughout 2022,” Chief Executive Officer C.C. Wei said on a conference call.”
  • U.K. Companies Increase Salaries and Still Can’t Find Workers
  • Eight in 10 U.K. companies struggled to find workers last month despite many of them increasing wages, according to a survey that shows labor shortages are intensifying.

    The proportion was up sharply from three months earlier, with the squeeze most pronounced in the catering and hospitality sectors where 92% of firms that attempted to recruit reported difficulties, the British Chambers of Commerce said Wednesday. (…)

China’s Factory-Gate Prices Rise at Record Pace Surging prices of coal and other commodities pushed up the country’s inflation to the highest level since 1996, dimming hope it would ease globally in the near term.

China’s producer-price index, a gauge of factory-gate prices, rose by 10.7% in September from a year ago, accelerating from a 9.5% increase in August, and grew at the fastest pace in 25 years, according to the National Bureau of Statistics. (…)

The record increase was due mainly to rising prices of coal and some energy-intensive products such as nonferrous metals, steel and chemicals, said Dong Lijuan, a spokeswoman for the statistics bureau, on Thursday. (…)

Beijing’s aggressive energy-efficiency campaign has led to the closure of many high-polluting coal mines, while a drop in imported coal from countries including Australia, Mongolia and Indonesia exacerbated the shortage. This week, flooding hit northern Shanxi province, where about one-third of coal in China is produced, worsening the supply shortfall. (…)

The most actively traded thermal coal futures on the Zhengzhou Commodity Exchange jumped by 60% in September and kept climbing through October to date. It touched a record of the equivalent of $255 a ton on Wednesday.

(…) Chinese manufacturers, already hammered by higher costs of other materials and power rationing, are likely to either cut back on output or pass on more costs to western consumers, whose appetite for goods such as toys and electronic gadgets has stayed strong ahead of the Christmas shopping season. (…)

China allowed electricity prices for industrial users to rise by as much as 20%, compared with the previous 10% cap, likely boosting the headline producer-price index to 12% in October or November and adding 0.5 percentage point to consumer inflation, according to estimates by Zhaopeng Xing, a strategist from ANZ. (…)

Scary chart from ZeroHedge:

Superimposing these 2 charts allows us to expect higher consumer inflation in China in coming years:

While consumer inflation stays muted

Companies not passing on producer price rises yet

  • BTW: At least 13 companies listed on China’s A-share market have announced price hikes this year, while tire producers said they plan to adopt new price policies in October, according to state media reports.

If you worry about inflation, particularly on essentials such as energy, rent, food, apparel, you must then start worrying about the consumer, 70% of GDP, although this is more a 2022 story.

The Chase card spending tracker remains solid through Oct. 4 even with weak travel and entertainment spending:

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Chase’s control sales tracker was up 0.8% MoM in September.

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In the conference call, Chase said that spending on Chase consumer credit cards rose 30%, while outstanding card loans rose just 2% — a sign consumers are still slashing balances rather than carrying them over even as the economy emerges from the pandemic.

It seems that many Americans are rethinking their life, and their jobs. The Quit Rate is higher than ever:

With February 2020 = 100, August 2021 = 107.4 for private hires but 132.0 for private quits. The absolute scales are very different but the amazing and unprecedented trends must be saying something about the labor slack and worker motivations. Either people are retiring, or they are moving to better jobs, for monetary or other reasons.

fredgraph - 2021-10-13T144023.717

Since June, per the JOLT reports, 300k Americans quit their job while hires declined by 390k. In the last year: 1 million quits against 161k hires.

Cass Transportation Index Report

The shipments component of the Cass Freight Index® slowed to just 0.6% y/y growth in September.

  • On a seasonally adjusted (SA) basis, the Cass Shipments Index fell by 4.9% m/m in September, after a 4.8% m/m increase in August.
  • The two-year stack reversed to a 1.3% decline from 3.7% growth in August.

The softening in September fits the pattern of many data sets, like rail volumes and employment, and we’d ascribe some of the softness to Hurricane/Tropical Storm Ida. This suggests some rebound in Q4, but the chip shortage also worsened in September, and that recovery will take longer.

Freight volumes also remain capacity-constrained, as shown by the armada of containerships at anchor off North American ports. Signs are emerging that rail network congestion is improving, which could help things unlimber a bit, but we think intermodal volumes will be limited by chassis tariffs for some time.

  • On a two-year stacked basis, the Cass expenditures index was up 34% in September, more than explained by higher rates, as shipment volumes were down slightly on this basis.
  • The freight rates embedded in the two components of the Cass Freight Index were 31.4% higher y/y in September, accelerated from the 26.6% y/y increase in August on a similar prior year comparison.
  • The inferred rates rose 2.6% m/m on a seasonally adjusted basis in September, building on a 6.1% m/m increase in August.

Though difficult to quantify, there are a lot of excess miles in the system due to all of the supply chain disruptions in the shortage economy of 2021. Examples include containers being offloaded at small remote ports to attempt to avoid the backlogs in LA and Long Beach, and chassis shortages pushing freight from the congested rail network onto truckload, considerably raising the length of haul in the largest freight market.

These excess miles are part of the 31.4% y/y increase in inferred freight rates, because, as noted in the calculation above, these rates are on a per shipment basis, rather than a per mile basis. But the difference between the increase in overall inferred freight rates (2.6% m/m) and the Cass Truckload Linehaul Index® (1.1% m/m) also includes higher fuel surcharges, sharper increases in air cargo rates, and mix shifts between modes, with a smaller proportion of low-cost intermodal and rail, and a larger proportion of relatively higher-cost air and refrigerated truckload.

Moreover, these data show broad and material increases in freight rates across modes. For full-year 2021, if normal seasonality were to play out, this index would be up about 20% from 2020.

The data set is diversified among all modes, with truckload representing more than half of the dollars, followed by LTL, rail, parcel, and so on.

Cass Inferred Freight Rates, January 2010Cass Freight Index Inferred Rates September 2021

Freight demand is clearly still strong, and supply challenges continue to mount, keeping upward pressure on rates.

A skeptic might look at flattish volume and record rate increases and shout “stagflation!”, but we would disagree. Freight demand is anything but stagnant, and has been caged by supply constraints, which are likely peaking with the season.

The extent to which constraints on equipment and driver supply ease in the coming months will largely dictate volume and rate trends. Intermodal volumes have been inching up sequentially in recent weeks as chassis turns improve, and China’s power outages will likely impact exports, so the containership backlog should ease in the coming months. Still, a low inventory/sales ratio and an early Chinese New Year in 2022 starting on February 1st support strong import demand in early 2022.

  • Equipment. Semiconductor shortages continue to separate Class 8 tractor production from demand, and trailer supply chain challenges have also limited capacity. Chassis production is still below replacement, but has improved in recent months and improving chassis turns are also helping to reduce rail network congestion.
  • Drivers. Though driver capacity is still generally tight, the BLS trucking employment data have improved for four straight months and the ACT Research For-Hire Driver Availability Index continues to recover.

Eventually, improving driver and equipment capacity will help rebalance the market, but several recent factors, including Hurricane Ida, the Delta variant, and the chip and chassis shortages have been inflationary for freight rates, extending the cycle at the margin.

Vaccine mandates and a closed loophole in the FMCSA Drug & Alcohol Clearinghouse are new inflationary risks this month and will challenge the driver recovery.

Freight demand fundamentals remain strong, based on a strong U.S. consumer balance sheet, inventory restocking, and an industrial sector struggling to grow into record orders with infrastructure stimulus likely on the way.

But the dynamics of tight supply and exceptionally strong demand which have characterized the past year or so will not last indefinitely. The chip shortage continues to be a key fulcrum on which much in the world economy depends. As discussed in depth in ACT’s monthly report, there’s good reason to hope easing will start in Q4.

THE DAILY EDGE: 20 AUGUST 2020

Next Steps on Stimulus Package Divide Both Parties Senate GOP leaders are trying to rally support for a new, smaller aid bill, while some House Democrats want to vote this weekend on extending unemployment benefits

(…) Mr. McConnell told lawmakers on a call Tuesday he didn’t plan to hold a vote on the skinny bill next week to avoid any overlap with the GOP convention, which Republicans want to occupy center stage next week. (…) Voting on a new proposal would give the most vulnerable Senate Republicans up for re-election in November an action to highlight to voters, but it appears unlikely to break the gridlock that stymied recent negotiations among congressional Democrats and the White House. (…)

On Tuesday, a group of centrist Democrats were circulating a letter to Mrs. Pelosi and House Majority Leader Steny Hoyer (D., Md.) urging them to hold a vote Saturday on legislation to extend federal jobless benefits. The chamber is already scheduled to convene Saturday to vote on a bill that would prohibit operational changes to the Postal Service until well after the election and give $25 billion in additional funding to the agency.

A senior Democratic aide said there wasn’t currently a consensus among House Democrats around what kind of additional coronavirus aid should be voted on, and leaders hope to keep the focus Saturday on the Postal Service. (…)

If Congress and the White House can’t reach an agreement over a new stimulus package this summer, the negotiations could be combined with discussions over a spending bill that will be needed after the government’s funding runs out at the end of September.

And after many ordinary Americans’ funds will also have run out.

Delinquencies as % of Total Loans

Fed advances policy review on ‘very elevated’ uncertainty Policymakers warn about impact of coronavirus outbreaks and waning fiscal stimulus
Fed Sees Need for Additional Support but Is Vague on Timing Federal Reserve officials said at their meeting last month they expected the economy would require greater support recovering from the coronavirus pandemic but were hazy about when they should deploy their tools

Minutes from the Fed’s July 28-29 meeting released Wednesday showed officials believed more government spending would be needed to prevent a longer or deeper downturn amid difficulties states have faced suppressing the virus.

A number of officials also believed more stimulus from the Fed could be required, the minutes said. With interest rates already cut to near zero, Fed officials could do this by providing more specifics about how long they will keep rates low—including by describing an inflation threshold and various labor market conditions that would warrant withdrawing any stimulus.

The minutes didn’t offer strong signals about the timing of such a move, saying only that a number of officials believe more explicit guidance would be “appropriate at some point.” (…)

Officials are preparing to wrap up a yearlong review by adopting an approach of making up for periods of low inflation by seeking subsequent periods of somewhat higher inflation. The practical effect is it will be a long time before they raise interest rates. (…)

The minutes indicated many officials don’t currently see a need for a new tool by which the central bank would cap yields on short- and medium-term Treasury securities by committing to buy whatever amounts are needed to do so. (…)

U.S. SALES MANAGERS REPORT A FURTHER DECLINE IN PROFITS, SALES AND JOBS IN AUGUST

Panelists responses to the question of sales performance were not positive in August, although the Index moved a full 5 points towards the 50 “no change” level. The Sales index is now way above the all-time low level seen in May of 34.3, recording an index level of 48.8 in August, no longer very far from the 50 level. But it should be remembered that this positive looking improvement (a fall in the rate of decline) relates to sales activity relative to that of the previous month. A bad month followed by a slightly less bad month will produce a positive looking result, but does not suggest an increase in sales levels, or economic activity in general.

The Staffing Index is of considerable significance this month, as (unlike the Sales Growth Index) it compares staffing levels in August this year with levels seen last year. The Staffing Index remains deep in negative territory, with few respondents appearing to have need of more people, and most making do with fewer employees than a year ago.

In general, panelists report an economy slowly re-opening and ready to produce, but still waiting for the consumer demand that makes up a sizeable proportion of overall economic activity in the United States.

UNITED STATES: STAFFING LEVELS INDEX

Cass Transportation Index Report July 2020

The Cass Freight Index showed that sequential volume improvement continued in June but still remains well below year-ago levels and also below where we were in the first quarter of the year. According to carriers on second quarter earnings calls, July was better than expected in the trucking market, both from a rate and demand standpoint. Rail traffic has also continued to march higher off the bottom at a faster pace than the Cass Freight Index (rail is only a small part of this index). Everything in the freight world, although mostly still below year-ago volume levels, seems at least to be moving in the same direction – up.

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Cass Freight Index – shipments are sharply below previous years

Cass Freight Index - Shipments

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Note that this doesn’t include a likely much higher number of small businesses that are
permanently closing but not formally going bankrupt. Sometimes creditors are willing to
write off losses when the legal recovery process would cost even more. But those closures
still represent jobs lost and dreams crushed. (Mauldin)

  • The U.S. recorded 44,000 new COVID-19 cases Wednesday, up from the prior day’s 35,000, but the seven-day average of new cases remains below recent totals.
  • Germany recorded more than 1,000 new coronavirus cases for a third straight day, with the number of infections near Tuesday’s four-month high. Cases increased by 1,586 in the 24 hours through Thursday morning, compared with a gain of 1,420 a day earlier and 1,693 on Tuesday, according to data from Johns Hopkins University.
  • In France, new infections totaled 3,776 over the past 24 hours, the government’s health office reported Wednesday, the largest daily jump since May 6. Deaths increased by 17 to 30,468.

New German infections exceeded 1,000 for third day

  • Just one in seven parents said their children would be returning to school full time this fall, but four in five parents said they would have no in-person help educating and caring for them. (Morning Consult)

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(NBF)

China and U.S. to Double Number of Weekly Flights

China and the United States agreed to double the number of scheduled passenger flights operated by each other’s airlines to eight a week in a move to ease a standoff between the world’s two largest economies on travel restrictions amid the pandemic.

The U.S. will allow four Chinese airlines flying to American cities to operate a combined eight weekly round trips, up from the current four, the Transportation Department said Tuesday. China’s civil aviation regulator issued a similar ruling concerning U.S. carriers.

The accord brings the number of scheduled flights between the two countries to 16 a week. Before the pandemic, Chinese and U.S. airlines operated about 300 weekly round-trip scheduled passenger flights between the two countries.

Trudeau Outlines ‘Expansionist Strategy’ With Freeland On Board

(…) The moves suggest Trudeau isn’t in any rush to reverse the kind of spending that has already driven the nation’s budget gap to 16% of economic output this year — the highest deficit since World War II. While the pandemic has been devastating, it also offers up an “unprecedented” opportunity for a long term recovery plan and to fill “gaps” in public health and social safety nets exposed by the pandemic, Trudeau told reporters.

“This is our moment to change the future for the better,” the prime minister said. “We can’t afford to miss it because this window of opportunity won’t be open for long.”

In Freeland, Trudeau has found an ally on aggressive fiscal policy, but someone with enough political clout in cabinet to maintain discipline on how the money is spent. (…)

Freeland on Tuesday endorsed the idea of an ambitious government plan. “This is a once in a lifetime challenge for our whole country and our commitment as a government is to do whatever it takes to support Canadians as we get through that challenge,” she said at the same press conference. The government wants “to turn this tremendous challenge into a fabulous opportunity for our country.”

Canada is poised to see budget deficits well in excess of C$100 billion for at least one more year. Economists see Canada’s budget gap at about that level in 2021 without new measures. The deficit for the current year is projected at C$343 billion — more than six times the previous all-time record. (…)

Trudeau said he will deliver a so-called Throne Speech in on Sept. 23 to outline the parameters of his new agenda, which is expected to include measures to bolster the country’s social safety net, such as revamping unemployment insurance, and more money for green infrastructure.

Without a majority of seats in parliament, he will need the support of at least one of the three opposition parties to press ahead, with the most likely partner being the left-of-center New Democratic Party.

Inflation in Canada Unexpectedly Falls Back to Near Zero

The consumer price index increased only 0.1% from the same month a year earlier, Statistics Canada reported Wednesday from Ottawa. That’s a reversal from last month when inflation turned positive on higher gas, food and shelter prices. On a monthly basis, prices were flat, and seasonally adjusted actually fell 0.1%.

Core inflation readings — seen as a better measure of underlying price pressure — ticked down to 1.63%, from 1.7% a month earlier. (…)

EQUITIES

The most benchmarked index in the world finally set a new high, ending the shortest bear market in history. It did so with only a single sector following it to a new high, and with odd readings and divergences. Relatively few tech stocks are above their medium-term averages, and even fewer industries, sectors, and countries are in solid uptrends. When the S&P reaches its first new high in months with only 1 or 2 sectors following suit, its future returns were mediocre with only one exception (1995). (…) It’s also odd to see a new high in an index like the S&P 500 with so few of its industries in solid uptrends. Only 57% of industries have a rising 200-day moving average. Even worse, only 55% of sectors have a rising average, and a pathetic 23% of countries do. There have only been three times in 30 years when the S&P hit a high and no more than 60% of industries, sectors, and countries were in solid uptrends. (SentimenTrader)

Yesterday, Lowry’s Research saw weak Breadth and Demand with total NY Volume again well below its 30-DMA, “suggesting a lack of conviction by bulls and bears, alike. Meanwhile, the Percent of NYSE Stocks Above 10-DMA fell to 41.76% as the short-term condition continues to weaken.”

SPY VS SPY EQUAL-WT

SPY VS RSP

NDX VS NDX EQUAL-WT

NDX VS NDXE

US share buybacks almost cut in half by pandemic Provisional figures put the quarterly total at $89.7 billion, down 46% year-on-year, on pace for the lowest quarterly total since Q1 2012.

So, who’s doing the buying now?

  • Does Robinhood’s Design Make Trading Too Easy? The Silicon Valley company has turned the complex process of trading stocks into a simple, free swipe across a screen. But some researchers say the app’s simplicity nudges inexperienced investors to take bigger risks.

Well, at some point, many will discover the swipe does not really come free…

Barstool’s Portnoy Rattles Investors Saying He’s Sick

(…) Portnoy said he hasn’t left his bed in 40 hours. “Do I have Covid? Maybe,” he said in the video, which was posted to social media. “I’m just going to get better, so I can come back and do what I do, which is to entertain you.” (…)

Portnoy posted the video to explain to his followers why he didn’t post his live streamed day trading this morning. During quarantine, millions of Americans stuck at home with little to do have turned to investing and trading for the first time, including Portnoy, whose live stream show reaches millions of his followers. He tweeted last week about his interest in crypto. (…)

PANDEMONIUM

Trump calls for boycott of Goodyear tires after company bans political attire in the workplace

U.S. President Donald Trump on Wednesday called for a boycott of Ohio-based Goodyear Tire & Rubber Co. in response to a company policy that has deemed political attire, including that of the Trump campaign, unacceptable for the workplace.

“Don’t buy GOODYEAR TIRES – They announced a BAN ON MAGA HATS,” the Republican President tweeted, referring to his slogan, “Make America great again,” that often features on baseball caps worn by his supporters.

White House Press Secretary Kayleigh McEnany said Mr. Trump was concerned that the company allowed attire supporting the Black Lives Matter movement and other issues related to equality, but not the Blue Lives Matter group backing police officers, or MAGA. (…)

Goodyear said, it asks employees to avoid “workplace expressions in support of political campaigning for any candidate or political party as well as similar forms of advocacy that fall outside the scope of racial justice and equality issues.” (…)

FYI, Goodyear had about 15% of the U.S. tire market in 2019, in third place after Japan’s Bridgstone (27%), France’s Michelin (27%) and ahead of Germany’s Continental (13%) according to Statista. “MAGA!”

White House press secretary leaves open door to Trump rejecting results of election

“The only way we can lose, in my opinion,” he [Trump] said, intently, “ … is if cheating goes on.” (…)

In focusing so insistently on allegations of fraud, he has convinced many of his supporters that it occurs at significant scale and poses a persistent threat to our electoral system. According to his press secretary, Kayleigh McEnany, Trump himself actually believes his dishonest claims.

“The president said this week the only way we lose this election is if the election is rigged,” a reporter asked McEnany at a briefing Wednesday. “It begs the question: Does the president believe there’s any circumstance under which he can lose the election fairly?”

“The president believes he’s done a great job for the American people, and he believes that will show in November,” McEnany responded. “He believes that voter fraud is real, in line with what we see all across the country, particularly with mail-in ballots which are prone to fraud.”

“Is the president saying if he doesn’t win this election, that he will not accept the results unless he wins?” another reporter asked later.

“The president has always said he’ll see what happens and make a determination in the aftermath. It’s the same thing he said last November,” McEnany said, presumably referring to his assertions about November 2016. (…)

Trump Says QAnon Followers Are People Who ‘Love Our Country’ When asked, the president did not question the truth behind the claims of the QAnon conspiracy movement. Instead, he offered his help.

President Trump on Wednesday offered encouragement to proponents of QAnon, a viral conspiracy theory that has gained a widespread following among people who believe the president is secretly battling a criminal band of sex traffickers, and suggested that its proponents were patriots upset with unrest in Democratic cities.

“I’ve heard these are people that love our country,” Mr. Trump said during a White House news conference ostensibly about the coronavirus. “So I don’t know really anything about it other than they do supposedly like me.” (…)

The FBI intelligence bulletin from the bureau’s Phoenix field office, dated May 30, 2019, describes “conspiracy theory-driven domestic extremists,” as a growing threat, and notes that it is the first such report to do so. It lists a number of arrests, including some that haven’t been publicized, related to violent incidents motivated by fringe beliefs.

The document specifically mentions QAnon, a shadowy network that believes in a deep state conspiracy against President Trump, and Pizzagate, the theory that a pedophile ring including Clinton associates was being run out of the basement of a Washington, D.C., pizza restaurant (which didn’t actually have a basement).

“The FBI assesses these conspiracy theories very likely will emerge, spread, and evolve in the modern information marketplace, occasionally driving both groups and individual extremists to carry out criminal or violent acts,” the document states. It also goes on to say the FBI believes conspiracy theory-driven extremists are likely to increase during the 2020 presidential election cycle.

Alexei Navalny in a coma after suspected poisoning Russian dissident’s spokeswoman says the toxin was put in his tea on a flight to Moscow.