A major win for the Trump administration as the Supreme Court has just ruled to stay a lower court ruling that blocked the President from using $2.5 billion in defense funds to build border security wall.   This means the Department of Homeland Security can now use $2.5 billion in defense appropriations to build the border wall.  A massive win!

The ruling was 5-4 with the liberal justices in the minority.

WASHINGTON — The Supreme Court on Friday allowed the Trump administration to move forward with plans to build a wall along parts of the Mexican border while litigation over paying for it proceeds.

A trial judge had prohibited the administration from transferring $2.5 billion from the Pentagon’s budget to fund the effort, and an appeals court had refused to enter a stay while it considered the administration’s appeal.

The Supreme Court entered a stay, allowing construction to proceed while the litigation continues.

[…]  In urging the Supreme Court to intercede, Noel J. Francisco, the solicitor general, wrote that the plaintiffs’ “interests in hiking, bird watching and fishing in designated drug-smuggling corridors do not outweigh the harm to the public from halting the government’s efforts to construct barriers to stanch the flow of illegal narcotics across the southern border.”

Mr. Francisco argued that the lower courts had misread two provisions of a federal law in concluding that the transfer was not authorized. The law allows reallocation of money to address “unforeseen military requirements” where the expenditures had not already been “denied by Congress.” Mr. Francisco wrote that the drug enforcement measures were unforeseen when the Defense Department made its budget request and that Congress had never addressed the particular narcotics measures. (more)

(pdf of ruling here)

CNBC pundits use the drop in exports to attack the GDP result as Larry Kudlow appears to discuss the overall picture. The knuckleheaded pundits point to tariffs as the reason for the drop in exports without even contemplating (Mamet Principle) the devaluation and subsidies from foreign countries that have driven up the value of the dollar.

While currency manipulation/devaluing (EU and China) drops the prices of their export goods, their devaluation drives up the value of the dollar.  The first impact from a high valued dollar is that it causes our export products to increase in price.  This drops our exports, and can be a drag on the GDP growth rate.  Pundits are intentionally obtuse.

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My advice to President Trump: “Tariff the bastards; all of them” !!

Commerce Secretary Wilbur Ross appears with Charles Payne to discuss the latest economic data and the Q2 GDP release.  Within the interview Secretary Ross explains the information behind the data; the status of the USMCA and Pelosi’s motives to delay ratification; the baseline for the U.S-China trade discussions, and the position of the administration to advance the economic interests of the U.S. above all others.

The Bureau of Economic Analysis (BEA) has released the data for the second quarter of 2019.  The Q2 GDP growth rate of 2.1 percent beat all economic expectations, and highlights strong consumer spending throughout the U.S. economy.

The two primary drags on the Q2 release are also the most volatile: Export/Import contributions (-.65%), and Inventory contributions (-.86%) [table 2]. However, consumer spending was much stronger than anticipated (+4.3%) showing the internal strength of the U.S. labor market and the impact of wage growth which still exceeds 3.6 percent.

The inflation index is still low at 1.5 percent year-over-year, and highlights a point all economic pundits overlook.  With countries attempting to stop the impact of tariffs on their exports they are devaluing their currency (EU and China) and subsidizing their export industries (China).  This has the cumulative effect of lowering their price. As a consequence, and with a strong dollar, the U.S. is importing deflation.

The Fed can do nothing of substance to impact low price inflation because the causes are external to the U.S. economy.  CTH predicted this in 2016, and we stand by that assertion today because we now have almost three years of empirical data to prove it.

Wall Street wants bad news because Wall Street wants a lower fed rate.  As a direct consequence Wall Street’s multinational corporate media bias over the GDP data release is hilarious. The headline from NBC is typical: “Economic Growth Slows Less Than Expected in Second Quarter”….    Sometimes you just have to laugh.

When you boil it all down you see the same battle continues: Wall Street -vs- Main Street.

We are in the space of flux where President Trump’s economic policy and trade reset is favoring Main Street blue-collar workers and companies.

Another way to look at it is where the multinationals (Wall St) are Globalists and fighting the economic Nationalists (Main Street).  This really is the heart of the back-n-forth, and there are trillions at stake.

Right now the U.S. middle-class is driving the economy, bigly.  Meanwhile the investment class is trying to keep their old globalist process in place.  Wall Street wants the U.S. to be a “service driven” economy.  President Trump wants the U.S. to be a “balanced production” economy, with an expanding middle-class.

The Wall Street economy generates a wealth disparity; rich and poor with little room in the middle [a limited pie].  A Main Street economy closes the wealth gap by expanding the wealth of the middle-class through higher wages and opportunity [unlimited pie making].

Overall the 3.1% GDP growth in the first quarter and 2.1% GDP growth in the second quarter, puts us on track for typically stronger Q3 to generate a higher than 3.0 percent average.

All of the internals, measurable stats centered around Main Street, are excellent.  It is the externals, measurable stats centered around Wall Street multinational interests, that are weak.  This is exactly what we would expect to see as President Trump focuses on Main Street USA.

It is not a coincidence that the U.S. and Japan are the world’s two strongest economies as the dynamic of Globalists -vs- Nationalists continues.

Don’t forget to take your Winnamins!

President Trump called-in to Sean Hannity’s TV show tonight to discuss his perspective on the Robert Mueller testimony and current DC events.