Apple closes down almost 6% on Monday after news of a major escalation in the U.S.-China trade war.
The company assembles iPhones in China, making it vulnerable to price increases if a tariff were to be placed on Chinese exports.
It also sells a lot of iPhones in China, making it sensitive to Chinese consumer confidence.
CEO of Apple Tim Cook attends China Development Forum 2019 at the Diaoyutai State Guesthouse on March 23, 2019 in Beijing, China.
VCG | Getty Images
Appleclosed down nearly 6% on Monday after news of a major escalation in the U.S.-China trade war.China said on Mondaythat it decided to raise tariffs on some U.S. goods after President Donald Trump threatened to further raise tariffs on Chinese imports last week.
The trade war is affecting a lot of different stocks, but Apple seems to be hit harder than most. The Dow Jones Industrial index dropped 2.6%, and the Nasdaq Composite dropped 3.5%.Apple is especially vulnerable to a trade war with China for two primary reasons.First, it assembles its iPhones primarily in China. Although it has a lot of American suppliers — it spent$60 billion on American suppliersin 2018 — iPhone assembly is done in mainland China.Whenever new tariffs are announced, investors must keep an eye on the details because it’s possible that some of Apple’s products could get caught in the crossfire.Morgan Stanley analyst Katy Huberty estimates that a 25% tariff on the iPhone could lead to a price increase of $160 for the iPhone XS. Or Apple could eat the tax, which could lead to a 23% decrease in earnings per share in 2020.
“Apple has one of the most significant exposures to Chinese exports to the US in our IT Hardware coverage group, given final assembly for many of its consumer electronic devices is located in China,” Huberty wrote in a note last week.“And given the reliance on China’s established, low-cost labor force and expertise in manufacturing/tooling, a large-scale move out of the country would not only be costly, but could take multiple years to complete, potentially raising the odds of execution risk, in our view,” the note continued.Last fall, a draft list of one of Trump’s round of China tariffs would have affected the Apple Watch and Apple AirPods, for example, although the final list did not affect Apple’s products.The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers.Apple reported $51 billion in revenue in 2018 from “Greater China,” which includes Hong Kong and Taiwan. That’s Apple’s third-biggest region, after the Americas and Europe. Apple’s total revenue for the year was $265.6 billion.When Apple said earlier this year that its holiday quarter revenue would be significantly less than it had previously said to expect, it blamed a bad economic climate in China.“It’s clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy,” Apple CEO Tim Cook said in an interview with CNBC in January.“One of the reasons Apple CEO cited for China improvement was increased consumer confidence due to easing of US-China trade tensions,” UBS analyst Timothy Arcuri wrote in a note last week.“However, in recent days, trade tensions have escalated and it bears watching whether this affects China consumer sentiment,” the note continued.Apple has consistently opposed Trump’s proposed tariffs, and Cook has personally told Trump that Apple does not support implementing taxes on imports from China.Apple stock is up 24.9% since Jan. 1.
CEO of Apple Tim Cook attends China Development Forum 2019 at the Diaoyutai State Guesthouse on March 23, 2019 in Beijing, China.
VCG | Getty Images
Appleclosed down nearly 6% on Monday after news of a major escalation in the U.S.-China trade war.China said on Mondaythat it decided to raise tariffs on some U.S. goods after President Donald Trump threatened to further raise tariffs on Chinese imports last week.
The trade war is affecting a lot of different stocks, but Apple seems to be hit harder than most. The Dow Jones Industrial index dropped 2.6%, and the Nasdaq Composite dropped 3.5%.Apple is especially vulnerable to a trade war with China for two primary reasons.First, it assembles its iPhones primarily in China. Although it has a lot of American suppliers — it spent$60 billion on American suppliersin 2018 — iPhone assembly is done in mainland China.Whenever new tariffs are announced, investors must keep an eye on the details because it’s possible that some of Apple’s products could get caught in the crossfire.Morgan Stanley analyst Katy Huberty estimates that a 25% tariff on the iPhone could lead to a price increase of $160 for the iPhone XS. Or Apple could eat the tax, which could lead to a 23% decrease in earnings per share in 2020.
“Apple has one of the most significant exposures to Chinese exports to the US in our IT Hardware coverage group, given final assembly for many of its consumer electronic devices is located in China,” Huberty wrote in a note last week.“And given the reliance on China’s established, low-cost labor force and expertise in manufacturing/tooling, a large-scale move out of the country would not only be costly, but could take multiple years to complete, potentially raising the odds of execution risk, in our view,” the note continued.Last fall, a draft list of one of Trump’s round of China tariffs would have affected the Apple Watch and Apple AirPods, for example, although the final list did not affect Apple’s products.The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers.Apple reported $51 billion in revenue in 2018 from “Greater China,” which includes Hong Kong and Taiwan. That’s Apple’s third-biggest region, after the Americas and Europe. Apple’s total revenue for the year was $265.6 billion.When Apple said earlier this year that its holiday quarter revenue would be significantly less than it had previously said to expect, it blamed a bad economic climate in China.“It’s clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy,” Apple CEO Tim Cook said in an interview with CNBC in January.“One of the reasons Apple CEO cited for China improvement was increased consumer confidence due to easing of US-China trade tensions,” UBS analyst Timothy Arcuri wrote in a note last week.“However, in recent days, trade tensions have escalated and it bears watching whether this affects China consumer sentiment,” the note continued.Apple has consistently opposed Trump’s proposed tariffs, and Cook has personally told Trump that Apple does not support implementing taxes on imports from China.Apple stock is up 24.9% since Jan. 1.
Appleclosed down nearly 6% on Monday after news of a major escalation in the U.S.-China trade war.China said on Mondaythat it decided to raise tariffs on some U.S. goods after President Donald Trump threatened to further raise tariffs on Chinese imports last week.
The trade war is affecting a lot of different stocks, but Apple seems to be hit harder than most. The Dow Jones Industrial index dropped 2.6%, and the Nasdaq Composite dropped 3.5%.Apple is especially vulnerable to a trade war with China for two primary reasons.First, it assembles its iPhones primarily in China. Although it has a lot of American suppliers — it spent$60 billion on American suppliersin 2018 — iPhone assembly is done in mainland China.Whenever new tariffs are announced, investors must keep an eye on the details because it’s possible that some of Apple’s products could get caught in the crossfire.Morgan Stanley analyst Katy Huberty estimates that a 25% tariff on the iPhone could lead to a price increase of $160 for the iPhone XS. Or Apple could eat the tax, which could lead to a 23% decrease in earnings per share in 2020.
“Apple has one of the most significant exposures to Chinese exports to the US in our IT Hardware coverage group, given final assembly for many of its consumer electronic devices is located in China,” Huberty wrote in a note last week.“And given the reliance on China’s established, low-cost labor force and expertise in manufacturing/tooling, a large-scale move out of the country would not only be costly, but could take multiple years to complete, potentially raising the odds of execution risk, in our view,” the note continued.Last fall, a draft list of one of Trump’s round of China tariffs would have affected the Apple Watch and Apple AirPods, for example, although the final list did not affect Apple’s products.The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers.Apple reported $51 billion in revenue in 2018 from “Greater China,” which includes Hong Kong and Taiwan. That’s Apple’s third-biggest region, after the Americas and Europe. Apple’s total revenue for the year was $265.6 billion.When Apple said earlier this year that its holiday quarter revenue would be significantly less than it had previously said to expect, it blamed a bad economic climate in China.“It’s clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy,” Apple CEO Tim Cook said in an interview with CNBC in January.“One of the reasons Apple CEO cited for China improvement was increased consumer confidence due to easing of US-China trade tensions,” UBS analyst Timothy Arcuri wrote in a note last week.“However, in recent days, trade tensions have escalated and it bears watching whether this affects China consumer sentiment,” the note continued.Apple has consistently opposed Trump’s proposed tariffs, and Cook has personally told Trump that Apple does not support implementing taxes on imports from China.Apple stock is up 24.9% since Jan. 1.
Mass arrests of ‘pill-mill’ doctors, dozens of investigations and lawsuits into opioid manufacturers and the wholesalers who distribute the pills to pharmacies and President Trump’s sweeping plan to combat the opioid crisis are finally starting to make a dent in the legal opioid trade.
According toBloomberg, the volume of prescriptions for opioids fell the most in a quarter century last year as doctors have become increasingly cautious about prescribing the drugs for fear that they might be diverted to the black market.The YoY decline for 2018 was 17%.
Since 2011, when prescriptions for opioids peaked, prescriptions have dropped 43%.
But news about falling prescribing rates might distract from the fact that this is too little, too late. Most opioid addicts have long since switched from prescription drugs to heroin.Much of the heroin supply in the US has been cut with fentanyl, which has caused overdose deaths to skyrocket. Drug-overdose deaths reached an all-time high of 70,000 in 2017.Sincethe opioid crisis first started taking shapein the late 1990s, the number of deaths have surpassed 700,000.
And as former FDA head Scott Gottlieb said during an appearance on CNBC’s “Squawk Box” Thursday morning, all the attention given to the opioid crisis has distracted from the burgeoning crisis of methamphetamine use in the US. In both cases, much of these street drugs have been flowing into the US from Mexico.
CNN’s panel of totalitarian wannabes is setting the table for the ban of President Trump’s social media presence.
And while CNN hides behind the Facebook is a private company so we can censor free speech regardless of the 1st Amendment excuse. Does that mean Facebook can violate any and all of its users Bill Of Rights?
And what about CNN? Who has systematically targeted the President over a false collusion narrative, targeted Trump supporting teenagers in DC, and openly targeted tax paying Americans by supporting Antifa. A communist leaning organization hell bent on the take down of the United States. Is there anything we can do to stop what is amounting to full blown treason occupying televisions across the United States?
Why, yes there is.
18 U.S. Code §https://youtu.be/v8pNs51Y51I2385. Advocating overthrow of Governmentreads:
Whoever knowingly or willfully advocates, abets, advises, or teaches the duty, necessity, desirability, or propriety of overthrowing or destroying the government of the United States or the government of any State, Territory, District or Possession thereof, or the government of any political subdivision therein, by force or violence, or by the assassination of any officer of any such government; or Whoever, with intent to cause the overthrow or destruction of any such government, prints, publishes, edits, issues, circulates, sells, distributes, or publicly displays any written or printed matter advocating, advising, or teaching the duty, necessity, desirability, or propriety of overthrowing or destroying any government in the United States by force or violence, or attempts to do so; or Whoever organizes or helps or attempts to organize any society, group, or assembly of persons who teach, advocate, or encourage the overthrow or destruction of any such government by force or violence; or becomes or is a member of, or affiliates with, any such society, group, or assembly of persons, knowing the purposes thereof— Shall be fined under this title or imprisoned not more than twenty years, or both, and shall be ineligible for employment by the United States or any department or agency thereof, for the five years next following his conviction. If two or more persons conspire to commit any offense named in this section, each shall be fined under this title or imprisoned not more than twenty years, or both, and shall be ineligible for employment by the United States or any department or agency thereof, for the five years next following his conviction. As used in this section, the terms “organizes” and “organize”, with respect to any society, group, or assembly of persons, include the recruiting of new members, the forming of new units, and the regrouping or expansion of existing clubs, classes, and other units of such society, group, or assembly of persons.
So much for those who dismissed charges of Obama administration infiltration of Donald Trump’s campaign as paranoid fantasy. Defenders of the Obama intelligence and law enforcement apparat have had to fall back on the argument that this infiltration was for Trump’s — and the nation’s — own good.
It’s an argument that evidently didn’t occur to Richard Nixon’s defenders when it became clear that Nixon operatives had burglarized and wiretapped the Democratic National Committee’s headquarters in June 1972.
At the ripe old age of 30 and with half the globe using it, the World Wide Web is facing growing pains with issues like hate speech, privacy concerns and state-sponsored hacking, its creator says, trumpeting a call to make it better for humanity.
Tim Berners-Lee on Tuesday joined a celebration of the Web and reminisced about his invention at CERN, the European Organization for Nuclear Research, starting with a proposal published on March 12, 1989. It opened the way to a technological revolution that has transformed the way people buy goods, share ideas, get information and much more.
It’s also become a place where tech titans scoop up personal data, rival governments spy and seek to scuttle elections, and hate speech and vitriol have thrived — taking the Web far from its roots as a space for progress-oriented minds to collaborate.
As of late 2018, half of the world was online, with the other half often struggling to secure access.
Speaking at a “Web@30” conference at CERN, Berners-Lee acknowledged that a sense among many who are already on the Web has become: “Whoops! The web is not the web we wanted in every respect.”
His World Wide Web Foundation wants to enlist governments, companies, and citizens to take a greater role in shaping the web for good under principles laid out in its “Contract for the Web.”
Under the contract, governments are called upon to make sure everyone can connect to the internet, to keep it available and to respect privacy. Companies are to make the internet affordable, respect privacy and develop technology that will put people — and the “public good” — first. Citizens are to create and to cooperate and respect “civil discourse,” among other things.
“The Contract for the Web is about sitting down in working groups with other people who signed up, and to say, ‘Ok, let’s work out what this really means,’” Berners-Lee said. It was unclear, however, how such rules would be enforced.
Berners-Lee cautioned it was important to strike a balance between oversight and freedom but difficult to agree what it should be.
“Where is the balance between leaving the tech companies to do the right thing and regulating them? Where is the balance between freedom of speech and hate speech?” he said.
The conference, which brought together Internet and tech experts, also gave CERN the chance to showcase its reputation as an open-source incubator of ideas. Berners-Lee worked there in the late 1980s, and had been determined to help bridge a communications and documentation gap among different computer platforms.
At least nine Indian troops and Kashmir militants died during a shootout on Monday, as tensions escalated following a suicide bombing attack that killed more than 40 Indian paramilitaries last week.
The fighting went on for several hours in the Pulwama district, south of India-administered Kashmir’s main city of Srinaga, where Indian soldiers were searching for militants tied to the Pakistan-based Islamist group Jaish-e-Mohammad (JeM), which claimed last week’s attack.
Four soldiers, a policeman, three militants and a civilian were killed in the latest clash, officials said. An army major was among the dead, along with three militants from the JeM group.
Security force sources told Reuters news agency that the suspected organizer of the suicide bombing in the disputed region of Kashmir was also killed, echoing reports from local broadcaster NDTV.
‘The Time for Talks is Over’
India has blamed the suicide attack on Pakistan, which it says harbors the JeM group, and threatened a “jaw-breaking response.”
Pakistan has warned India against linking it to the attack without an investigation, saying that it was part of New Delhi’s “known rhetoric and tactics” to divert global attention from human rights violations in Kashmir.
Indian Prime Minister Narendra Modi on Monday rejected the possibility of talks with Pakistan following the deadly bombing.
“The Pulwama terror attack shows that the time for talks is over,” Modi said in a reference to a possible dialogue with Islamabad to ease tensions. “Now the entire world needs to unite to take concrete steps to deal with terrorism and supporters. Not taking strict measures against terrorism and those against humanity, also encourages terrorism.”
Meanwhile, Saudi Arabia said it would try to “de-escalate” rising tensions between Pakistan and India during a high-profile summit in Islamabad.
The kingdom’s foreign minister spoke at a press conference in Islamabad as Pakistan recalled its envoy from Delhi for “consultations.”
“Our objective is to try to de-escalate tensions between the two countries, neighboring countries, and to see if there is a path forward to resolving those differences peacefully,” said Saudi Foreign Minister Adel al-Jubeir.
India and Pakistan both administer parts of the border region of Kashmir, with both laying claim to more of the disputed territory. It’s one of the main disputes between the uneasy nuclear neighbors.
We’re now $22 trillion in debt, yet despite all that red ink, the Mexican cartels have control of our border and we’re not one bit closer to spending money on our own security. We’ve gone into deep debt for everything except the core function of the federal government.
It feels like it was yesterday when I was watching the news as a kid with my parents in 1995, listening to Newt Gingrich, during the infamous shutdown fight, warn about the dire consequences of crossing the $5 trillion debt milestone. It feels like it was yesterday when I was writing press releases for candidates in “the year of the Tea Party” on how Obama and the Pelosi Congress took the debt to $14 trillion in such a short period of time. Now, over eight years into varying degrees of GOP control of Congress and the White House, we have crossed the $22 trillion mark, expanding the debt more rapidly than at any time in our history. Whereas the debt exploded by $5 trillion during Bush’s eight-year tenure, a shocking figure at the time, it has now increased $8 trillion just since Republicans controlled the House in 2011 and by $4 trillion over the past four years, since they controlled at least two of the three political organs of government.
Now, the only question Republicans have is how many pennies of border security they will fight for, while refusing to challenge any of thenonessentialand even harmful programs of the federal government. The GOP platform on debt and spending is a lie from top to bottom, as Republicans plan to pass more budget bills allowing us to blow through the budget caps without any effort to systemically reform the way we budget.
Even more indefensible, unlike during the end of Bush’s years and the beginning of Obama’s tenure, when we first began accruing trillion-dollar annual deficits, we are not facing a deep recession. In fact, we are enjoying the most robust period of job growth since the late 1990s, and revenue is at a record high baseline.
Let it be known for all of time that dire predictions of revenue slumping as a result of the tax cuts were fake news. The entirety of the current deficit problem is due to increased spending. According to the latestmonthly reportreleased by the Treasury Department yesterday, spending was up 9.6 percent for the first three months of fiscal year 2019 relative to the first three months of FY 2018. What about revenues? They actually rose slightly by 0.2 percent, despite some declines in certain revenue categories. This is an important statistic, because it is the first clean metric we have comparing a period of time with the tax cuts in full implementation to a period before the tax cuts.
Moreover, some of the increased tax revenue from more payroll taxes likely would not have occurred without the job creation spawned by the tax cuts. If you isolate the revenue tallies for individual and corporate taxes, the government obviously did lose some revenue in certain categories, but it was made up by a $15 billion increase in payroll tax revenue (FICA, Social Security taxes), in addition to increased revenue from excise taxes.
The annual deficit after just three months stood at $319 trillion, well on pace to smash the trillion-dollar deficit mark for the first time in a booming economy.
Thus, this bipartisan era of debt is worse than anything we’ve seen this generation, and it is all happening with record revenue and a booming economy – with no world war consuming our economy and budget.
Thanks to Republican-approved budget deals, for the first three months of the fiscal year, outlays for HHS are up 12.5 percent, outlays for the Department of Education spiked 23 percent, and outlays for the Department of Commerce have doubled! Meanwhile, outlays on Homeland Security have actually been down by 30 percent because of less disaster spending under FEMA than last year. But it’s not like we went on a spending binge for Border Patrol and ICE. Outlays on military spending are up 8.45 percent, but again, what is the purpose of the military if we use it everywhere else in the world except against those who most directly harm us at our own border?
When she made a surprise appearance at the Grammy Awards on Sunday night, the entire auditorium went into a “spontaneous shrieking hysterical meltdown” when she began to speak. She isthe most admired woman in America by a very wide margin, and she is married tothe most admired man in America. She released her critically-acclaimed memoir “Becoming” in November, and here we are in February and it is stillthe best selling book on Amazon. Her national book tour has been filling sports stadiums all over the nation, and Democrats all across America are buzzing about the possibility that Michelle Obama could run for president in 2020.
But she has always insisted that she will never do it. In fact, she has made statementslike this onetime after time…
“I’ve never had the passion for politics. I just happened to be married to somebody who has the passion for politics, and he drug me kicking and screaming into this arena.”
So that is the end of the matter, right?
Unfortunately, in politics you can never trust what people say, and it is much more important to watch what they do.
In recent months, Michelle Obama has been put center stage time after time while her husband has faded into the background. Suddenly, Michelle Obama seems like she is the biggest rock star in America, and there are only two reasons why this would be happening.
Either she wants to capitalize on her fame and make as much money as possible, or she is secretly plotting to run for president of the United States.
And it is entirely possible that she won’t run. Ultimately, all of the motivational pablum in her book and her national tour could be setting the stage for her to become the next Oprah. She definitely doesn’t seem content to drift quietly into retirement, and it is quite clear that she wants to dosomething.
Without a doubt, a career in television would be appealing, but my gut tells me that she has her eyes on an even bigger prize.
I have a feeling that events are being carefully orchestrated for her to become the “reluctant hero” that will step in to save the day for the Democrats in 2020. And judging by the reaction at the Grammy Awardslast night, the left would get behind her in a heartbeat…
At last night’s Grammy Awards in Los Angeles, host Alicia Keys brought a quartet of very famous women onto the stage and introduced them one-by-one to the crowd.
Lady Gaga, Jennifer Lopez and Jada Pinkett Smith all got varying degrees of warm ovations.
But the fourth lady sent the whole place into spontaneous shrieking hysterical meltdown.
In fact, NBC News reported that she received a“hero’s welcome”and that she cut off the applause once it reached 25 seconds…
Many in the audience didn’t immediately seem to pick up on Obama’s appearance, but she was quickly interrupted when she began speaking, making it only as far as “From the Motown records I wore out on the South Side …” before the crowd stood and loudly cheered for 25 seconds.
“All right — we got a show to do,” she said as she tried to wave the audience to quiet down.
No other Democrat that is running for president or that is thinking of running for president can elicit that sort of passionate response.
And let us not forget that Michelle Obama’s book is outselling every other political book in modern history, including all of the books written by her husband. The following comes fromCNN…
The inspirational memoir by the former first lady has been on sale for more than two months, yet it is still No. 1 on Amazon’s constantly updated list of best-selling books.
Amazon said“Becoming”enjoyed the longest streak at No. 1 for any book since “Fifty Shades of Grey” came out in 2012.
No political tome or public figure’s memoir has ranked No. 1 for as long as“Becoming,”according to data the company provided to CNN Business.
Even if Michelle Obama does not want to run for president, top Democrats may really start twisting her arm as we get deeper into this election season. Because even though more than 20 Democrats may ultimately jump into the race, all of them are losers.
The one guy who has a little bit of buzz around him is Beto O’Rourke, and he thought that it would be a good idea to hold a rally on the border on the same day when Trump was holding one. Well, only a few hundred people showed up for Beto,but tens of thousands showed up for Trump…
“There has never been anything like this in the history of our country. We have to understand that. There has never been. If you would say as an example, that tonight 69,000 people signed up to be here. Now the arena holds 8,000. And thank you, fire department. They got in about 10,000. Thank you, fire department. Appreciate it. But if you want to really see something, go outside. Tens of thousands of people are watching screens outside.
“And we were all challenged by a young man who lost an election to Ted Cruz. And then they said you know what? Hey, you are supposed to win in order to run. By the way, we, I, we, I’m 1 for 1. Think of it. We had one election. We won. Now we’re gonna be 2 for all and everything’s gonna be perfect. But a young man who has got very little going for himself except he has a great first name. He challenged us. So we have let’s say 35,000 people tonight. And he has 200 people, 300 people. Not too good.”
“What I would do is, I would say, that may be the end of this presidential bid.”
If you are going to win a presidential election, it really helps to be a rock star, and Trump is a rock star.
The Democrats need their own rock star, and the only one that fits the bill is Michelle Obama.
At this point, many Democrats deeply dislike Hillary Clinton, but they remember the Obama years very fondly. When Barack Obama left office, he had a59 percent approval rating, and that number is much higher than anything Trump has been able to achieve over the last year…
Obama left office with a 59 percent approval rating and a 37 percent disapproval rating, according to Gallup.
In late January, the Gallup poll ratings for President Trump were the exact inverse of Obama’s numbers — 59 percent disapproval and 37 percent approval.
If Michelle Obama decides to run, she will win the Democratic nomination.
And without a doubt, she would be Donald Trump’s toughest potential opponent in 2020 by a very wide margin.
But will she do it?
Only time will tell, but the calls for her to run are starting to become louder with each passing day.
The World Magnetic Model (WMM) enables compasses to point north and is used in navigation systems. Its latest update revealed the North Magnetic Pole is wandering about 34 miles a year. It crossed the international dateline in 2017 and is leaving the Canadian Arctic on its way to Siberia.
This is causing a navigational nightmare for compasses in smartphones, boats and for airport navigators as well as in some consumer electronics, and WMM was forced to update a year early in order to keep it accurate.
Earth’s north magnetic pole has been drifting so fast in the last few decades that scientists say that past estimates are no longer accurate enough for precise navigation. The World Magnetic Model was updated on Monday, showing it is wandering about 34 miles (55 km) a year
WMM provides a five year forecast of changes to the Earth’s magnetic field. The US and UK tend to update the location of the North Magnetic Pole every five years in December, but this update came early because of the pole’s faster movement.
It had been hoped that the updated model could be released even earlier, last month, but it was held up by the recent shutdown in the US government, which oversees the project along with the British Geological Survey in Edinburgh, Scotland.
Turbulence in in the planet’s core, where the motion generates an electric field, has caused the field to change in systems described as ‘akin to weather’.
Airplanes and boats also rely on magnetic north, usually as backup navigation, said University of Colorado geophysicist Dr Arnaud Chulliat, lead author of the WMM.
The military depends on where magnetic north is for navigation and parachute drops, while NASA, the Federal Aviation Administration and US Forest Service also use it. GPS is not affected because it’s satellite-based.
Yet despite the prestige behind the impressive list of signers, the economists mislead the American public on several key points.
Specifically, there is quite open hostility on the progressive Left to merely a carbon tax—for example as is spelled out in the “Green New Deal” that has attracted so much attention. It is thus very dangerous for these economists to tell the public that a carbon tax would promote economic growth by eliminating unnecessary regulation. Furthermore, there is no discussion of just how severely economic growth would be limited, even if the carbon tax receipts were refunded dollar-for-dollar (which of course they won’t be). The talk about average families receiving more back in dividends than they pay out in higher energy prices is extremely misleading, and could only be true if the scheme fails in its ostensible goal of drastically cutting emissions. Finally, the attempt to maintain American competitiveness with a “border adjustment” would simply ensure that the program was symbolic and did little to slow global carbon dioxide emissions.
No, a Revenue-Neutral Carbon Tax Deal to Replace Regulations Is Not Going to Happen
The letter is composed of five separate principles upon which the distinguished economists agree. Here are two of them:
II. A carbon tax should increase every year until emissions reductions goals are met and be revenue neutral to avoid debates over the size of government. A consistently rising carbon price will encourage technological innovation and large-scale infrastructure development. It will also accelerate the diffusion of carbon-efficient goods and services.
III.A sufficiently robust and gradually rising carbon tax will replace the need for various carbon regulations that are less efficient. Substituting a price signal for cumbersome regulations will promote economic growth and provide the regulatory certainty companies need for long- term investment in clean-energy alternatives.
Yes, it is certainly true that if the federal government institutes a carbon tax, then it would be better to keep it revenue neutral, and to also scrap the existing regulations on the energy and transportation sectors that are ostensibly in place to limit greenhouse gas emissions.
However, those observations don’t prove that it’s a good idea to go down this route in the first place, or that these “if, then” statements have any practical relevance. It is extremely naïve for these economists—many of whom are quite familiar with the Public Choice school, and are usually quite skeptical of “government solutions” to social problems—to lead the public to believe that either of these outcomes will occur. Does anyone really believe that in this political climate, with a massive federal debt that is projected to grow by more than a trillion dollars next year, that the federal government will install a gigantic new tax and not touch any of the incoming receipts? (Keep in mind, even if the government didn’t engage in any new spending, but instead used just some of the new carbon tax receipts to partially offset the budget deficit, then that would still constitute a net tax increase, and would not be revenue neutral.)
Regarding the regulations, such as the Renewable Fuel Standard (RFS), CAFE mandates requiring ever higher fuel efficiency in our vehicles, and the so-called “Clean Power Plan” which punishes coal-fired power plants: Yes, I agree wholeheartedly that these are absurdly inefficient regulations, even if we stipulate the basic climate change externality framework. But these economists should ask themselves: If these regulations are so inefficient, then why do they exist in the first place? The answer, of course, is that they are there for political reasons, not because they passed a legitimate cost-benefit test.
Indeed, in contrast to the economists in the Wall Street Journal’s claim that “bipartisan support” exists for the carbon tax, here is what Paul Krugman (who is also a Nobel laureate) said recently in the New York Times: “[C]laims that a carbon tax high enough to make a meaningful difference would attract significant bipartisan support are a fantasy at best, a fossil-fuel-industry ploy to avoid major action at worst.”
A U.S. Carbon Tax (With Border Adjustments) Will Not Solve the Problem
As usual, proponents of a carbon tax engage in a “shell game” as Oren Cass called it. In this case, the WSJ letter tries to save the planet while sparing U.S. jobs:
IV. To prevent carbon leakage and to protect U.S. competitiveness, a border carbon adjustment system should be established. This system would enhance the competitiveness of American firms that are more energy-efficient than their global competitors. It would also create an incentive for other nations to adopt similar carbon pricing.
Here’s what’s going on in principle IV, quoted above: If the U.S. government enacts a stiff (and rising) carbon tax on American industry, it will raise the prices of American-made goods. If foreign imports from countries without a carbon tax were allowed in, they would undercut American products. Not only would this hurt American-based firms, but it would perversely shift production to other countries where emissions are higher (per unit of output) than they are in the U.S., even before the implementation of a carbon tax. (This is the problem of “leakage.”)
In order to stop leakage and maintain U.S. competitiveness, therefore, the WSJ letter calls for a border adjustment, where a special tax is added to any imports coming from countries that lack a carbon tax, and where U.S. exports entitle the American producers to a refund, so that they can still compete in the global market without being hobbled by a unilateral U.S. carbon tax.
A border tax adjustment can indeed partially cushion the blow from a U.S. carbon tax, but it does so by limiting its applicability. In particular, U.S. firms are still allowed to produce and sell to foreigners without taking account of the greenhouse gas emissions involved. Furthermore, most (perhaps all) of the economists signing the WSJ letter are fierce critics of President Trump’s moves on international trade. It seems odd then that they would so cheerfully embrace a proposal that would involve massive new taxes to be levied at the border on imports, especially when there could be all sorts of “regulatory arbitrage” in which multinational corporations rearranged their production chains in order to exploit imperfections in the border adjustment rules.
No, American Families Won’t Benefit Financially From Getting Some of Their Money Back
One of the most misleading claims in the WSJ letter is the final plank:
V. To maximize the fairness and political viability of a rising carbon tax, all the revenue should be returned directly to U.S. citizens through equal lump-sum rebates. The majority of American families, including the most vulnerable, will benefit financially by receiving more in “carbon dividends” than they pay in increased energy prices.
On this one, it’s hard to know where to begin. First, let’s assume for the sake of argument that the WSJ letter is accurately describing the situation. It is telling Americans that only a small segment of the population—“the rich”—have above-average emissions, and so they will be the ones to pay out on net, once we take into account the “carbon dividends” funded by the new tax.
Even on these terms, it is odd to see so many economists—several of whom are considered politically conservative—embrace the claim that a new tax is “fair” if it redistributes hundreds of billions of dollars from a small segment of the population to everybody else. Suppose instead the government levied a one-time surtax of 50% on everybody’s checking account balances, and then sent the money raised in equal lump-sum installments to every citizen. Under that scenario, the “majority of American families” would “benefit financially” too, but how many of these Nobel-winning economists call it fair?
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In any event, the claim is extremely misleading. Remember, the whole point of doing this—so we are told—is to drastically cut U.S. emissions of carbon dioxide. If households and businesses completely revamp their operations in order to reduce their carbon footprint, then they won’t be paying taxes on those avoided emissions. The government can’t send out lump-sum checks with money it hasn’t collected.
I have written on this issue before, with different types of examples to explain the situation to the reader. For our purposes here, let me try this approach: Suppose the economy consists of 90 poor people and 10 rich people. Originally, each poor person emits 10 tons of carbon dioxide per year, while each rich person emits 20. The government institutes a stiff new carbon tax of $100 per ton, leading everybody to cut emissions in half.
When the dust settles, each poor person emits 5 tons of CO2, on which he or she pays 5 x $100 = $500 in annual carbon tax. Similarly, now that the stiff tax is in place, each rich person emits only 10 tons, on which he or she pays 10 x $100 = $1,000. Put the money from the 90 poor people and the 10 rich people into one giant pot, and you have (90 x $500) + (10 x $1,000) = $55,000 in total carbon tax receipts. The government thus mails out lump sum checks of ($55,000 / 100) = $550 to each person in this hypothetical community.
Now in this setting, the rich people are clearly hurt: Each one faces much higher prices on goods and services, and must explicitly pay out $450 in net carbon taxes. (Each rich person pays in $1,000 and gets a rebate of $550). The poor people, on the other hand, might seem to be ahead: Each one only explicitly paid out $500 in carbon taxes, while receiving a lump-sum rebate of $550. What’s happening is that the explicit losses of $450 per rich person adds up to $4,500 (because there are ten total rich people in this example), which is then used to send a net $50 to each of the 90 poor people. Because there are more poor people than rich people, the explicit losses of the rich group are spread out and diluted when they’re redistributed among the whole society.
However, simply following the dollars around is not the full pain caused by our hypothetical carbon tax. Everybody suffers from a lower standard of living. For example, with a $100 per ton carbon tax, according to this online calculator, gasoline prices rise 44 percent, natural gas prices rise 124 percent, and home heating fuel rises 56 percent. And if we consider coal prices, they would rise a whopping 660 percent—which would of course completely knock out coal as a viable energy source, even though it currently provides almost 30 percent of U.S. electricity.
And these obvious jumps in fuel prices (which are calculated based on the chemistry of their carbon content) would spill over into everything you buy. Imagine how much more it will cost to have goods shipped via Amazon, or how much more fruit in the store would cost, when gas and diesel prices rise so much.
This is the way to think about the much-ballyhooed “dividends” that our WSJ letter writers are promising to American households. Right now, would you, the reader, agree to a deal that raised prices by the percentages I outlined above, even if you got an extra annual check for $550 to help compensate you? In this framework, would the extra $50 per year you’re effectively skimming off the rich guy down the street really make you whole?
To repeat, part of what’s going on in the numerical example is that the stiff carbon tax is causing people to reduce their use of carbon-intensive goods and services. To the extent that it is successful, a carbon tax causes people to avoid paying the carbon tax. When economists discuss the society-wide burden or compliance cost of a tax, the issue is not the flow of dollars into the Treasury, but rather it comes from changing patterns of behavior that are less efficient than the status quo.
Now of course, the economists who signed the Wall Street Journal letter would reply that these large economic compliance costs would be more than matched by the environmental benefits of reduced emissions. But if they want to tell Americans that the carbon tax will reduce their material lifestyle, in exchange for less climate change, then they should do so openly.
Before leaving this section, let me try one last attempt to get the reader to see the sleight-of-hand that these economists are pulling here. Suppose that President Trump had his protectionist economic adviser, Peter Navarro (who has a PhD in economics from Harvard, by the way), announce a new tariff of 100% on all Chinese imports, but that the proceeds from this new tax would be sent lump-sum to every American citizen. Would the economists who signed the WSJ letter then agree that “most American families” would benefit financially from the tariff? I mean after all, rich people tend to spend more dollars (in absolute terms) on imported goods than poor people do, so the statement would be correct. And yet, of course none of the WSJ letter signers would endorse such a plan. They would (rightly) warn Americans that such a large tariff would disrupt production decisions and lower just about everybody’s standard of living. The fact that these economists are adopting a completely novel talking point to sell a carbon tax should make Americans quite suspicious.
Conclusion
Dozens of heavy-hitting economists have sent a letter to the WSJ, praising a bipartisan revenue-neutral carbon tax that halts climate change, eliminates inefficient government regulations, and makes most families richer. It would be more fitting for Nobel laureates in literature to pen such a plea, because it’s based entirely in fiction.
As many of these same economists recognize in their other work, there are institutional reasons that government wastes money and produces counterproductive regulations. The only way the “border adjustments” and rebate checks will actually limit the economic fallout from a new carbon tax, is if the scheme fails in its ostensible purpose of sharply curtailing emissions. The simple fact is that rapidly reducing U.S. emissions through a massive new tax is going to have huge economic consequences. If some economists think that this cost is worth it, they should make the case plainly to the public and policymakers, rather than engaging in misleading talk about dividend checks.
GLOBAL MEDIA SENTRY 
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