I would like to begin this evening with my sincere condolences to the family of the former Prime Minister Shinzo Abe and to the people of Japan. During my three years in government, I got to know him well. He was head and shoulders above all heads of state. He was a brilliant politician, a great leader of Japan. President Trump, with whom I spoke earlier today, considered Mr. Abe his closest friend and ally.
Once, at a bilateral UN meeting with Mr. Trump and Mr. Abe, I witnessed the best presentation I have seen in my three years as Director of the NEC and Sherpa international. Mr. Abe calmly presented my boss with a chart book of about 50 pages clearly showing that Japan is America’s number one investor and manufacturer. Indeed, more Japanese cars are made in the United States than in Japan. In fact, more Japanese cars were made in the United States than several American automakers.
Jaws fell into this room while the Japanese Prime Minister was proving himself. Discussions of trade protectionism were put aside for good, and instead Abe’s book of maps opened the door to several trade-enhancing agreements between the United States and Japan. Mr. Abe has always been nice to me, personally, especially after my brief – and thankfully minor – cardiac episode. Where whenever he saw me at the White House, at the G7, G20, UN meetings, he always came up to me to see how I was doing. I appreciated that.
Mr. Abe was a great Japanese patriot, America’s staunchest supporter and in plain language he is what you would call a “great man”. Once again, my condolences to his family and to the Japanese nation. May God watch over him. May he rest in peace.
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National Security Advisor Robert O’Brien will be with us later to tell us more about the hideous assassination and the potential consequences on the free world and US-Japan relations.
Next on my riff list tonight: today’s jobs report all but guarantees a 75 basis point hike in the Fed’s key rate in three weeks and another 75 basis point hike in September. , which would bring it to 3.25%. Still well below the core inflation rate of 6%.
The Fed is currently more determined to fight inflation than to recessionor says Jay Powell who recently regained his price stability manhood and new hair growing daily on his chest, but today’s jobs report wasn’t as strong as many think.
While the revised non-farm payrolls increased by 300,000, the household survey fell by 315,000 and in the last three months it fell by 116,000. This survey is more dependent on family members and small businesses and is often a leading indicator of turning points in the economy.
Additionally, wages for production workers have risen 6.4% over the past year, but that’s 2 percentage points below the CPI inflation rate. Thus, workers are better paid, but they buy less and disposable income after inflation is down 3.3% over the past year. So I still think we’re at the start of a recession, caveat emptor, which brings me to my third riff tonight.
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It’s sheer madness given high inflation and a likely recession for Biden Democrats to launch a trillion-dollar spending spree accompanied by a trillion-dollar tax hike. Spending will drive up inflation and higher taxes will make the recession worse. Additionally, this new regime to extend the net investment tax of 3.8% to pass through corporations such as limited liability companies, wholly owned businesses, sub-chapter S corporations , puts the money in general revenue, and then swears loud and clear to the American people that it’s really going to fund the Medicare hospital fund, is bogus stuff in my opinion.
This fund is supposed to be financed by payroll taxes, not by general revenues. It would be a big break with the past. They’re going to have to somehow create language that would affect or designate that those taxpayer funds would actually go to Medicare and then convince the reconciliation people to tag it and that’s one of many gimmicks likely to come in this insane BBS. So save America, kill the bill.
This article is adapted from Larry Kudlow’s opening commentary on the July 8, 2022 edition of “Kudlow”.