The Markit composite PMI is barely above contraction level. Economic activity in the US is at the stall rate.
The IHS Markit Flash U.S. PMI™ shows business activity growth falters to a three-year low.
Key Points
Flash U.S. Composite Output Index at 50.9 (53.0 in April). 36-month low.
Flash U.S. Services Business Activity Index at 50.9 (53.0 in April). 39-month low.
Flash U.S. Manufacturing PMI at 50.6 (52.6 in April). 116-month low.
Flash U.S. Manufacturing Output Index at 50.8 (52.7 in April). 35-month low.
Chris Williamson, Market Chief Business Economist Comments

“Growth of business activity slowed sharply in May as trade war worries and increased uncertainty dealt a further blow to order book growth and business confidence.”

“A decline in the headline ‘flash’ PMI to its lowest for

New home sales fell 6.9% in April to a 673,000 (SAAR). Upward revisions added 39,000 sales to the prior two months.
The Census Bureau’s New Residential Construction report shows new home sales at a seasonally adjusted annualized rate or 673,000.
New Home Sales by Region

New home sales are down in everywhere but the tiny North-East region. However, sales are up year-over-year except for the North-East.
Lower interest rates have helped housing.
Yet, sales are about at 1963 level of 663,000.
Mike "Mish" Shedlock

US low-income consumers will feel the most pain of the next round of tariffs. Munchin met with Walmart’s CFO to discuss.
Trump’s next round of tariffs on China will hit things like diapers, strollers, infant formula, and children’s products in general.
To alleviate concerns, Mnuchin says he’s talked to Walmart.

The U.S. recently raised the tariffs it had applied to roughly $200 billion of Chinese goods to 25% from 10% and has proposed a 25% tariff on the remaining $300 billion of Chinese goods not yet subject to those levies.

Responding to Rep. Ben McAdams, a Utah Democrat who pointed out that his state leads the nation in children per household, Mnuchin replied that he’s talked on the phone with Walmart’s — Brett Biggs, though Mnuchin didn’t name him — to find out what things the

Rumor this morning was that Theresa May would quit. Instead, there is yet another open revolt as May refused to resign.
Tory Turmoil
Rumors this morning said Theresa May would resign. Then there were rumors the 1922 committee would force her out. Wrong again.
Instead, Andrea Leadsom Resigns From the Government as May Refuses to Quit.

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Leadsom was a pro-remainer in the referendum, but even she has finally had enough.
Leadsom Statements
"I do not believe that we will be a truly sovereign United Kingdom through the deal that is now proposed;
“I have always maintained that a second referendum would be dangerously divisive, and I do not support the government willingly facilitating such a concession. It would also risk undermining our union which is something I passionately want to see

The Fed minutes of the April 30-May 1 FOMC meeting are posted. The Fed will be patient.
Please consider the Minutes of the Federal Open Market Committee for the meeting held on April 30 and continued on May 1.
Financial Stability

Among those participants who commented on financial stability, most highlighted recent developments related to leveraged loans and corporate bonds as well as the current high level of nonfinancial corporate indebtedness. A few participants suggested that heightened leverage and associated debt burdens could render the business sector more sensitive to economic downturns than would otherwise be the case. A couple of participants suggested that increases in bank capital in current circumstances with solid economic growth and strong profits could help support

[embedded content]Michel Barnier, the EU’s Brexit negotiator, admits on film, that he sought to trap the UK in a permanent customs union.
The comeuppance and arrogance of the EU towards the UK is staggering. And it’s all captured on film by Lode Desmet, a Belgian filmmaker.
In my video I put a spotlight on five key items.
The EU bragged about crushing Theresa May: "We Got More Than We Hoped"
The EU admitted Theresa May wanted a customs union all along.
Michel Barnier spoke on film of "using Ireland for future negotiations. Isolating Ireland and not closing this point, leaving it open for the next two or three years."
Barnier used the words "permanent pressure" in regards to the backstop.
The EU bragged about "getting rid of the UK on EU terms" and turning the UK into a "colony"
Why Did

Nigel Farage’s Brexit Party is on a stunning roll. That’s what happens when you take a firm position the public favors.
The final YouGov poll on the European Parliament elections for the UK is in.

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Some will be shocked. I am not.
Beyond Embarrassment
Theresa May truly embarrassed herself today.
Her Meaningful Vote 4 Speech Flopped Splendidly.
She tried to reach out to everyone at the same, offending everyone. May has changed her tune so many times, who the hell even knows what she wants?
The best summation I can come up with is "Any deal is better than no deal".
Labour
Please be serious.
Jeremy Corbyn is just like Theresa May. He wants to "honor" Brexit, by not doing it.
Two Peas in a Pod
Corbyn is simultaneously for and against another referendum, just like Theresa May!
Despite how

The national average rent price is $1,436. The pace of rent increases is the lowest in nearly a year.
The Rent Cafe reports the Average Rent Reaches $1,436 in April.
Key Points
The national average rent reached $1,436 in April 2019, up by 3% ($42) year over year, and by 0.3% ($5) month over month, the second month in a row to witness a 0.3% m-o-m growth. Compared to last April, renters pay $42 more on average per month following relatively flat m-o-m rent increases during the off-season.
Of the 253 cities included, 64% have average rents below the $1,436 national average, while 36% have average rents above.
Average rent was just shy of $650/month in the nation’s most affordable rental market – Wichita, KS, while rents in Manhattan, NY hit $4,130.
20 Largest Metro Areas

BLS Shelter

Theresa May gave a speech today on MV#4 promoting a customs union and potential referendum. She pleased nobody.
Theresa May just won’t give up, and she looks like a complete fool in the process.
In her speech today promoting meaningful vote number 4 (politely called reading number two), she attempted to please fence sitters on both sides.
May offered changes on the customs union (that the EU would have to agree with), and to please Remainers, she promised the "possibility" of a referendum.
The end result is she lost support from both sides judging from the responses in the Guardian Live Blog and Tweets.
Ten More Tories Oppose

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Boris Johnson

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Not Brexit – Worse Than Before

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Guardian Comment: There is a rule in journalism that, if someone frames a headline in the form of a

Existing homes sales fell 0.4% in April. The Consensus expected a rise.
The National Association of Realtors (NAR) reports Existing-Home Sales Inch Back 0.4% in April.

Existing-home sales saw a minor decline in April, continuing March’s drop in sales, according to the National Association of Realtors®. Two of the four major U.S. regions saw a slight dip in sales, while the West saw growth and the Midwest essentially bore no changes last month.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 0.4% from March to a seasonally adjusted annual rate of 5.19 million in April. Total sales are down 4.4% from a year ago (5.43 million in April 2018).

Nobody Concerned
Lawrence Yun, NAR’s chief economist, said he is not

St Louis Fed researchers concocted a scheme to pay banks still more free money, but this time hiding all of it.
At the current rate of 2.35%, the Fed hands out about $33.58 billion in free money to the banks.
Interest Rate on Excess Reserves

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The two charts show the moving target.
Excess reserves peaked at $2.7 trillion in August of 2014 but the interest rate on excess reserves then was only 0.25%.
0.25% of $2.7 trillion is "only" $6.75 billion in free money at an annualized rate. At the current rate, banks take in over $33 billion in free money.
The peak annualized rate was probably in August of 2017 with the interest on excess reserves at 1.95% on $2.2 trillion. That’s free money to the tune of $42.9 billion at an annualized rate.
St. Louis Fed Proposal
Please consider Why the Fed

China produces 80% of the world’s rare earth elements. They are used in weapons, cell phones, hybrid cars, and magnets.
China does not have the means to match the US in the total number or amount of tariffs. But China can strike back in other ways. One critical way would be to cut off the US supply of rare earth elements.
Rare earths are 17 minerals used to make cell phones, hybrid cars, weapons, flat-screen TVs, magnets, mercury-vapor lights, and camera lenses.
Xi Visits Rare Earth Plant
Bloomberg reports Xi’s Trip to Rare-Earths Plant Stokes Talk of Trade Retaliation

Shares in JL MAG Rare-Earth Co. surged by their daily limit Monday after state news agency Xinhua said the Chinese president had stopped by the company in Jiangxi. Official news outlets give regular updates on the

Ford announced 7,000 salaried layoffs, only 800 in the US. But that is on top of 1,500 buyouts.
In another sign of troubling auto sector news, Ford Announces Restructuring Plan to Eliminate 7,000 Jobs.

Ford Motor Co. said it is cutting 7,000 salaried employees, or about 10% of its white-collar workforce, as part of Chief Executive Jim Hackett’s broader plan to revitalize the auto maker.

In an email sent to employees Monday, Mr. Hackett said the cuts include some buyouts and layoffs that already have occurred, and the process will be completed by August. The cuts will save about $600 million annually and are part of a broader, multiyear restructuring that will result in about $11 billion in charges.

The reductions will include 800 layoffs in North America, where Ford already has made

Every poll in Australia had the Labor party winning the national election. Instead, the Conservatives won.
Before discussing the results, it’s important to note that Australia’s "Liberal" party would be deemed as conservative in the US.
With that fact out of the way, Liberal Scott Morrison was reelected despite all polls suggesting otherwise, for two straight years.
Please consider Election 2019: How the Polls Got it so Wrong in Predicting a Labor Victory.

Nearly all polls predicted Bill Shorten would have an easy win with a 51:49 lead over Prime Minister Scott Morrison on a two-party preferred basis. In fact, for two years the polls had picked the Opposition to take government.

Instead it was a shock loss for Labor which was hit by a blue sweep through Queensland, less than desirable

Stories abound regarding who will win Trump’s trade war with China. Trump? China? Neither? Both?
Steven Moore, a Trump Fed nominee who backed out, says Trump Will Win the Trade War with China.

“I think by the end of this year I think China is going to relent. I think they underestimated Trump. I think that we’re going to get a trade deal with China that ends some of these abusive trade practices that the Chinese impose on us ,” Moore said Sunday during an interview with John Catsimatidis on his AM 970 radio show.

Calling it the “epic battle of our times” and a new Cold War, Moore said China is stealing technology from American companies and engaging in unfair trade practices in an attempt to unseat the U.S. as the world’s greatest economy.

Win the Battle, Lose the War
CBS News says

Trump says he loves collecting tariffs. What he really means is he loves to collect taxes.

Fed Chair Jerome Powell is preaching economic nonsense regarding inflation. His worry is the US becomes Japan.
Bloomberg reports Powell Aims to Dodge Japan Deflation Trap With Dovish Fed Tilt.

Declaring that too-low inflation was “one of the major challenges of our time,’’ Powell left open the possibility on Wednesday that the Fed’s next interest-rate move might be a cut after four increases last year.

The world’s most powerful monetary policy maker also sketched out a harmful scenario in which consumers and companies lose faith in the Fed’s ability to hit its 2 percent inflation target.

“If inflation expectations are below 2 percent, they’re always going to be pulling inflation down and we’re going to be paddling upstream’’ to keep prices up, he told reporters after the Fed

Tesla so badly needs cash that Musk will personally review and sign every tenth payment. The CFO will look at them all.
On May 13, in Tesla Can’t Spare a Dime, the Wall Street Journal commented "Elon Musk’s electric-vehicle pioneer is running out of cash and out of time, even after a recent capital increase."
The full extent of that article became readily apparent on Friday in an Email that Elon Musk sent to all employees. MSN posted the Full Email to Employees.
Key Quotes
It is important to bear in mind that we lost $700 million in the first quarter this year, which is over $200 million per month.
Investors nonetheless were supportive of our efforts and agreed to give us $2.4 billion (our net proceeds) to show that we can be financially sustainable. That is a lot of money, but actually

Illinois has its eyes on your pocketbook, again. This time: gas taxes, registration fees, Netflex, and Uber.
The Illinois Policy Institute reports Gov. J.B. Pritzker’s office is using a major capital bill as a vehicle to grease lawmakers for a progressive income tax amendment. But the tax hikes to pay for it would make Illinoisans’ gas tax burden the second highest in the nation.
Gas tax hike ($1.2 billion): The preliminary capital plan relies on doubling Illinois’ motor fuel tax to 38 cents from 19 cents per gallon, effective July 1. This would make Illinois’ total gas tax burden the second highest in the nation. Under the proposed gas tax hike, drivers filling up in Chicago would pay 96 cents in taxes and fees on a $2.46 gallon of gasoline – an effective tax burden of 39%.
Vehicle

UK Labour Party Leader Jeremy Corbyn looks remarkably like the Chicago Cubs Manager. Let’s compare their profiles.
Another Image Comparison

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Joe Maddon’s Political Affiliation
Jeremy Corbyn’s Political Affiliation
UK Labour Party Leader – Corbyn sings the praises of Venezuela and former radical Left leader Hugo Chavez.
Very Relevant
Joe Maddon’s Aspirations
Win another Division
Win another Pennant
Win another World Series
Jeremy Corbyn’s Aspirations
Displace Theresa May as the UK’s next Prime Minister
Nationalize the UK energy grid
Turn the UK into another socialist Mecca like Venezuela
Political Statements
Jeremy Corbyn says Hugo Chavez is an ‘Absolute Legend in Every Way’

Two years before becoming leader of Britain’s Labour Party in 2015, Jeremy Corbyn addressed a meeting of the

Trump does not want a trade war with the EU and China at the same time. In a cop-out, he delays imposing auto tariffs.
When it comes to trade, Trump is economically stupid, but he isn’t stupid enough to fight everyone one at once.
Thus, a trade-war fearful Trump Puts Off Final Decision on Auto Tariffs for 180 Days.

The Trump administration said Friday it would postpone for six months a final decision on whether to impose broad tariffs on automobile and auto-part imports.

Mr. Trump has repeatedly warned he could slap tariffs on cars produced by major trading partners including the European Union and Japan, citing national-security concerns. The administration has sought to use the pressure from that threat to negotiate bilateral trade agreements.

Major automakers including America’s

The lie of the day: Skilled pilots could have prevented the two 737 Max crashes.
The deeper we dig into the 737 Max crashes, the easier it is to make a case that Boeing, not software, not poorly trained pilots is to blame for the 737 Max crashes.
The Seattle Times addresses the issue in How much was pilot error a factor in the Boeing 737 MAX crashes?

In his opening statement Wednesday at the House Aviation subcommittee hearing on the 737 MAX in Washington, D.C., the lead Republican congressman blamed errors by the Indonesian and Ethiopian pilots for the two deadly MAX crashes in those countries.

“Pilots trained in the United States would have successfully been able to handle” the emergencies on both jets, said Rep. Sam Graves of Missouri, ranking member of the House Transportation and

Nigel Farage’s Brexit Party is on the verge of overtaking the Tories. From zero members to 100,000 in just Five weeks!
Nigel Farage has some exciting news.

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Party Membership

On the surface it would appear Labour ought to be ruling by a landslide. Since it isn’t, its numbers are more than a bit suspect. Note that only 20% of the Labour total is registered.
Numbers from UK Political Party Affiliation.
Ability to Disrupt
The New Yorker writes Nigel Farage Makes Trumpian Trouble with His New Brexit Party

The thirty-odd per cent that the Brexit Party is polling is far from a majority, but the basic problem of Brexit politics is the lack of a coherent majority anywhere. Cross-party talks on a Brexit compromise have stalled. A second referendum doesn’t seem to be on offer. Jeremy Corbyn, the

A tearful Theresa May pleaded to hang on until she delivered Brexit. 1922 said no, but there is still no formal date.
Please consider How the ‘Men in Grey Suits’ Called Time on Theresa May’s Premiership.
The Conservative Party’s most powerful backbenchers had just made it clear that her premiership was at its end, but the Prime Minister pleaded with them to be given more time.

Tears welled in her eyes as she made her argument for just a little longer in Downing Street. She dabbed at her nose with a handkerchief. Yet the sympathy and patience of the 1922 Committee had run out. “She voiced her view about Brexit, which she regards as a debt of honour,” said one of those present. “She was emotional – a lot more emotional than I have ever seen her before.

Over the following hour, Mrs May and

Blacks do not score as well on SAT tests as Asians or whites. College administrators "won’t let that happen".
Welcome to new math that says an SAT score of 964 equals a score of 1223.
“We can’t sit on our hands and ignore the disparities of wealth reflected in the SAT,” claim college administrators.
To compensate for the fact that Blacks score lower on average than Asians and Whites, SAT to Give Students ‘Adversity Score’.

The College Board plans to assign an adversity score to every student who takes the SAT to try to capture their social and economic background, jumping into the debate raging over race and class in college admissions.

This new number, called an adversity score by college admissions officers, is calculated using 15 factors including the crime rate and poverty levels

Theresa May will finally set her departure date and Boris Johnson announced a leadership bid for the Tory Party.
There’s significant Brexit news in the UK today. Let’s take a look at highlights from the Guardian Live Blog and related Tweets.
1922 Committee – Men in Grey Suits

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1922 Committee Chair Graham Brady Statements
"We have agreed to meet to decide the timetable for the election of a new leader of the Conservative party as soon as the second reading has occurred and that will take place regardless of what the vote is on the second reading – whether it passes or whether it fails."
"It was a very frank discussion, I tried to make sure that all the views represented on the executive were expressed and we had a very frank exchange with the prime minister."
Guardian Comment

Housing starts broke a spell of abysmal economic reports. Housing permits are mixed with single-family permits lower.
Bloomberg Econoday offers a mostly optimistic outlook.

Last month’s starts and permits data were one of the big disappointments for the housing sector in contrast to today’s report for April which is one of the most positive reports so far this year. Starts rose 5.7 percent on the month to a higher-than-expected annual rate of 1.235 million while permits gained 0.6 percent to 1.296 million which is slightly higher than expected. But the battle is still uphill for housing as year-on-year comparisons show: at minus 2.5 percent for starts and minus 5.0 percent for permits.

Yet April’s improvement in starts is convincing, up 4.7 percent in the month for multi-family units to

UK Labour leader Jeremy Corbyn made an absurd proposal on Wednesday. He wants to nationalize SSE. Shares hammered.
The Telegraph reports Labour Power Grab Wipes £500m Off Firms.

The threat of a Labour government wiped more than £500m off SSE and National Grid on Wednesday as party plans to seize UK energy networks emerged.

Sector shares slipped as The Telegraph revealed Jeremy Corbyn wants to renationalise the £62bn network, compensating shareholders with government bonds below market rate.

SSE shares closed at a five-month low, sinking as much as 3.2pc as the City baulked at the plans. National Grid, which presents full-year results tomorrow, sank more than 2pc before halving its losses.

Labour’s official Bringing Energy Home proposal claims public ownership would spark a “Green

Surprise surprise: All of a sudden Huawei is a threat to US national security.
President Trump signed an executive order on Wednesday afternoon effectively banning the use Huawei’s 5G technology just days after the US and China failed to reach a deal to end the trade war between the two countries.
Trump’s based the decision on national security. Curiously, it was not a matter of national security before the trade talks collapsed.
Please consider Trump Telecom Ban Takes Aim at China, Huawei.

President Trump signed an executive order Wednesday that allows the U.S. to ban telecommunications network gear and services from foreign adversaries, in a measure widely believed to be aimed at China and telecom companies including Huawei Technologies Co. and ZTE Corp.

A White House press release

The number of babies born in the US has declined in 10 of the last 11 years as the fertility rate slumps.
The Vital Statistics report on 2018 Births shows the baby bust continues.
Key Numbers
The provisional number of births for the United States in 2018 was 3,788,235, down 2% from 2017 and the lowest number of births in 32 years.
The general fertility rate was 59.0 births per 1,000 women aged 15–44, down 2% from 2017 and another record low for the United States.
The total fertility rate declined 2% to 1,728.0 births per 1,000 women in 2018, another record low for the nation.
Birth rates declined for nearly all age groups of women under 35, but rose for women in their late 30s and early 40s.
The birth rate for teenagers aged 15–19 was down 7% in 2018 to 17.4 births per 1,000 women; rates