???No man???s life, liberty or property is safe while the legislature is in session.??? — Judge Gideon Tucker (1866)
Once again, it???s possible that the federal government will shut down many of its operations on midnight Friday because the Treasury has run out of money.
Talk about a libertarian???s dream! Yet Wall Street doesn???t seem very concerned. Stocks have soared even as we come closer to a fiscal crisis.
The fact is that most federal closings haven???t hurt stock market performance over the years. In the 18 previous government shutdowns, the stock indexes have posted an average loss of only 0.6%. In 44% of the cases, the market rallied. The biggest decline was a 4.4% drop during an 11-day shutdown in the fall of 1979.
Investors wisely realize that this fiscal crisis is simply a short-term game played by Republicans and Democrats, and that it won???t be long before funding resumes.
Tax Cut Is Historic, a Clear Supply-Side Triumph
The stock market has soared because the supply-siders can rightly claim a major victory with the new Tax Cuts and Jobs Act signed by President Trump last month. The changes in the personal income tax schedule were marginal, but the sharp cuts in business taxes were historic and already have been felt in corporate America.
I???ve been following all the stories about major corporations paying out bonuses of $1,000 or more, increasing matching funds for 401(k)s and raising the minimum wage for their workers. Yesterday, Apple announced that it was hiring 20,000 new workers and building a new campus somewhere in the United States in the next five years, amounting to a $350 billion capital investment. CEO Tim Cook said part of the decision was related to the new tax law.
The critics of the Republican tax cut have been proven wrong. They said that big business would just buy back shares and increase dividends. Not so!
Grover Norquist???s Americans for Tax Reform is compiling an ongoing list of companies which have transformed the tax cut into employee benefits. Go to www.atr.org/list. The list includes AT&T, U.S. Bancorp, Waste Management, Wal-Mart, Southwest Airlines, Bank of America, Fiat Chrysler and Nationwide Insurance.
Let???s hope voters reward supporters of the tax cut in November, so this bull market on Wall Street will continue.
You Nailed It! High-Speed Trains: Florida Does It Better than California
This is a tale of two of the nation???s most populous states, Florida and California, and how Florida???s high-speed transportation system outshines its West Coast rival and has adopted a sounder economic approach.
The leaders of both states recognize the need to improve transportation in the face of unprecedented traffic congestion.
Both states are now offering high-occupancy vehicle (HOV) lanes and peak pricing methods to reduce congestion and improve transportation speed. But they differ significantly on alternative rail travel.
Recently, Robert Poole, co-founder of Reason magazine and a transportation expert, has praised Florida???s new privately financed Brightline trains, while criticizing California???s expensive public train system.
In his latest ???Surface Transportation Report #171,??? Poole reported that the first leg of Florida???s Brightline train system is now complete between Ft. Lauderdale and West Palm Beach, and plans are underway to finish the line between West Palm and Orlando, and to reach Miami by 2020. The idea is to provide an easy three-hour trip from Orlando to Miami rather than four hours of driving or a hassle-filled plane trip.
Poole added, ???I have written previously about the many differences between this project and government-funded high-speed rail projects such as the one in California. As a commercial venture, Brightline was not required to serve low-population intermediate points, making possible quick express train rides for its paying customers. Rather than aiming for 200 mph ???high-speed??? service, they figured out that 110-125 mph was sufficient to give them a strong competitive edge over driving or flying — and that speed limit reduced the cost of track and the operating costs (since air drag goes up at velocity squared, significantly increasing fuel burn as speeds rise). Adding associated real estate development takes a leaf from successful passenger rail service in Hong Kong and Japan.???
California officials could learn something from Florida.
Three Special Announcements
I have three important updates:
- The federal government will release my gross output (GO) statistic tomorrow morning the for third-quarter 2017. GO measures spending at all stages of production, including the supply chain and business-to-business (B2B) spending. GO is the true measure of total spending in the economy. Gross domestic product (GDP) accounts for final output only, and leaves out the all-important supply chain. I???ll have a full report in Monday???s hotline, and a press release that will be posted at www.grossoutput.com and www.mskousen.com.
- On Monday, I will be appearing on CNBC with Rick Santelli at 10:40 – 10:50 a.m. ET to discuss the significance of the latest GO data and the outlook for the economy and the stock market. Stay tuned!
- I am pleased to announce that George Will, who the Wall Street Journal calls ???the most powerful journalist in America,??? has agreed to speak at FreedomFest for the first time. Dates are July 11-14, at the Paris Resort, Las Vegas. He has wanted to come to ???the world???s largest gathering of free minds??? for years, but family vacations and his love of baseball (the All-Star Game) have always precluded him — until this year.
George Will (center) poses with Jo Ann and Mark Skousen in New York.
Oxford Club???s Alex Green calls George Will the most influential writer in his life, ???an intellectual genius.??? I agree, and I look forward to hearing and meeting him. He is the only journalist I know who has worked for ABC, NBC, and Fox News — and boy, does he have a story to tell!
He will be our keynote speaker at the opening ceremonies on Wednesday, July 11, at 5 pm, addressing the topic, “Discord? Nonsense. America’s Biggest Problem is Consensus??? and ???The Most Predictable Crisis in America.???
He will be joined that day by Grover Norquist, who CNN calls ???the most dangerous man in Washington??? because of his ???no tax??? pledge and his work behind the scenes in passing the tax cut. Norquist will be holding his famous private ???Wednesday Meeting??? on 7/11 in Vegas at FreedomFest. You???ll have a chance to be a Washington insider!
Other speakers include financial gurus Jim Rogers, Alex Green, Robert Kiyosaki (???Rich Dad, Poor Dad??? author), National Review Editor Rich Lowry, Patrick Byrne (CEO, Overstock.com) and, of course, our two ambassadors, Steve Forbes and John Mackey — they attend all three days!
I also am pleased to announce that Vince Foster, the CEO of Main Street Capital (one of my favorite stocks for income investors), will address us at FreedomFest for the first time. Yes, Vince Foster is still alive!
Register now and save $200 over the retail price of $695/$995. You pay only $495 per person/$795 per couple. We also have a super discount on the hotel block at Paris Resorts — only $129 per person. Sign up at www.freedomfest.com, or call toll-free 1-855-850-3733, ext. 202.
What???s FreedomFest all about? Watch this four-minute CNN report on FF2017.