Vice President Kamala Harris’ role as President Biden’s “border czar” has sparked the worst border crisis in American history, a fact well known by now. However, a new report highlights a concerning new threat stream: drug cartels on the southern border are increasingly weaponizing drones with explosives, similar to what’s being seen on modern battlefields in Eastern Europe and the Middle East. All of this is happening under VP Harris’ watch. 

Here’s the report from the New York Post: 

Cartel drones packed with explosives are flying just south of Arizona’s border with Mexico, The Post has learned, alarming Senate defense hawks who are pushing for legislation to counter novel aerial incursions into the US.

Members of Los Salazar, a cell of the notorious Sinaloa Cartel in Mexico, are using drones “to drop explosives” on Los Pelones, an independent rival cartel, as part of ongoing conflict in Sonoyta, Mexico, according to an internal bulletin circulated by the US Border Patrol’s Yuma Sector Intelligence Unit on Tuesday.

The US Border Patrol’s internal bulletin noted the following:

The Yuma Sector Intelligence Unit recently received information that members of Los Salazar are utilizing drones to drop explosives on members of Los Pelones in an ongoing confrontation south of Sonoyta, MX. Other confrontations between these two organizations have occurred along the border, south of Wellton Stations area of operations, in recent months.

Separately, US Northern Command’s top general, Air Force Gen. Gregory M. Guillot, told the Senate Armed Services Committee in a hearing in mid-March that more than 1,000 incursions of drones occur along the southern border each month.

Guillot warned lawmakers on Capitol Hill that the incursions present a “growing” defense threat to the homeland. 

Since the Biden-Harris Administration assumed office, there have been more than 8 million illegal aliens encountered entering the country through the southwest border and over 1.6 million ‘gotaways.’ 

Biden-Harris’ border crisis is an absolute mess, which has contributed to murders, sexual assaults, and serious bodily injuries committed against numerous Americans by illegal aliens. 

Earlier this week, an interim staff report from the House Judiciary Committee and Subcommittee on Immigration Integrity, Security, and Enforcement, revealed nearly 100 illegal aliens on the FBI terror watchlist were released into the US after being arrested by Border Patrol. 

Most Americans care about two things before the elections: 1) inflation and 2) the border. 

For Harris and Obama’s Democrat party, there’s no escaping that disastrous border issue.

Authored by Victor Davis Hanson via X,

Harris’s selection of Walz at least reveals the left’s full-bore agenda, something that previously her handlers seemed at pains to hide: an overt doubling down on the Biden neo-socialist record that will require a far more vigorous stealth 90-day campaign to camouflage the hard-left record of both Harris and Walz.

Minnesota under Walz became merely a smaller version of Gavin Newsom’s California – shameless woke pandering, wars against fossil fuels, fiscal nihilism, thousands fleeing the state, high crime, high taxes, poor services, sanctuary city/pro-illegal alien activism, eroding downtowns of once majestic cities, loud-in-your-face, attack-dog denials of reality, a two-tier state legal system, tolerance of BLM/Antifa/Hamas street violence, and on and on.

So Walz is a force multiplier of Harris’s vulnerabilities.

His selection (was Harris terrified of leftwing threats from her base that a Shapiro pick would guarantee her 1968-like riots at her Chicago convention?) did not just reveal the now overt anti-Semitic, anti-Israel nature of the Democratic Party (Shapiro would have likely ensured Pennsylvania’s electoral votes). Her pick also reveals the confidence that the Left has in winning what will be the most flagrant, bait-and-switch 90-day campaign in presidential history.

So, the real Harris-Walz campaign messaging will be: ‘In 2024 we have to lie and mislead you about who we are and what we did, so that in 2025 we can govern you in ways you will not like.’

What are the challenges for this weirdest of tickets?

Harris, in Biden-fashion, cannot finish a coherent thought. So again, like Biden in 2020, she will retreat and outsource her campaign to the media, while counting on outspending Trump 3-1, and radiating feigned moderation.

She is taking heat for neither yet meeting with a real journalist nor speaking impromptu. But in her defense, to do either might at any opportune moment collapse her stealth campaign, given that to listen to her for 60 seconds off script is to prefer her to remain silent and hidden. And she has confidence in absentia that a bankrupt media will praise her nonexistent elegance, fluency, and articulateness.

Walz will customarily serve as a designated hit man for Harris. But he is just as much a liability— a shoot-from-the-hip blowhard, while owning an even more embarrassing leftwing record than Harris. And he is even less discreet.

This week Walz introduced himself to the nation as a VP candidate by smearing J.D. Vance with the brazen “couch” lie. And then while foolishly beaming, he doubled-down on his crude slur (“See what I did there?”). So, he even outdid Harris who had recently called Trump a “predator”—just days before it was disclosed that her married husband earlier had once impregnated his own children’s young nanny and tutor and had never disclosed what followed from his predation.

Both will either ignore or lie about their joint opposition to fracking and pipelines; their disgraceful pro-BLM/Antifa advocacy during the lethal and destructive 2020 looting and rioting; their support for open borders and illegal immigration; their woke pandering; and their generic leftwing promotion of the usual high taxes, big government, poor services, and ‘who cares if they flee my state’ arrogance.

The Harris-Walz ticket will also collapse if, horribile dictu, the prior Biden-Harris appeasement of Iran, distancing from Israel, weakening of the military, and loss of deterrence in the next 90 days leads to theater-wide wars on the Ukrainian borderlands or in the Middle East and/or to a recession due to cumulative inflation, high interest, stagnant wages and anemic citizen employment, and unsustainable national debt service.

In sum, Trump is very much even in the race. He was given a rare gift by the shunning of Josh Shapiro as Harris’s running mate. That leftwing blunder could energize the Trump campaign—if again he sticks to warning the country of who these two are, what they have done, how they are hiding their real agendas, what they will do if elected, and how they differ from his own presidential record and future agenda.

Nothing else matters.

And that means Trump should ignore the now inert and evaporating Biden, refrain from attacking any Republican, stop all recriminations about 2020, avoid race and DEI ambushes, and prep hard and in detail for as many debates as he can obtain.

Trump should appear magnanimous and above the fray by compromising with Harris on the debates: one debate now by her rules on ABC, and one by his rules on Fox before early voting begins.

Rarely have the Democrats so foolishly gone hard left.

And when they did in 1972, 1980, and 1988, Republicans used to know how to use those gifts, expose them, and win landslides despite media and institutional bias.

They can do it again, but only if they are as adroit, united, and disciplined as their predecessors once were.

While Western mainstream media in general has a terrible record of reporting on Iran and its intentions, a fresh report in The Telegraph comes to an interesting conclusion concerning the prospect of major war breaking out with Israel.

It claims that there is an ongoing severe internal split among Iran’s top decision-makers on how to respond to Israel’s killing of Hamas leader Ismail Haniyeh in Tehran last month. Well over a week after the July 31st assassination, and the ballistic missiles have still been held back, despite several vows of severe retaliation against Israel being issued from Iranian leadership.

New Iranian president Masoud Pezeshkian is said to be fighting hardliners especially within the military establishment, specifically leaders of Iran’s Islamic Revolutionary Guard Corps (IRGC), over the extent of a response. Pezeshkian reportedly wants a toned down and limited response, akin to the April 13th missile and drone attack on Israel – which was something highly telegraphed and thus averted all-out war. The IRGC is ready to launch a much bigger operation, the report says.

Pezeshkian, widely viewed as a ‘moderate’, wants to strike hidden Mossad spy bases in the region, while IRGC generals have pressed for more aggressive retaliation which is direct in nature, The Telegraph says. According to the publication’s sources within the Iranian government:

“These recent [military]exercises in the country’s western border are just to intimidate Mr Pezeshkian. Sepah [the IRGC] is very insistent on targeting Israel and they think it is easy,” a second aide to Mr Pezeshkian told The Telegraph.

“He has suggested targeting somewhere related to Israel in the Republic of Azerbaijan or [Iraqi] Kurdistan and let these countries know before that and get done with the whole drama.”

The Telegraph report further paints a picture of a somewhat rogue IRGC leadership which has by and large dismissed the newly installed president as too weak.

The IRGC is directly answerable to Supreme Leader Ali Khamenei, so if this is accurate it means there is currently some distance between the Ayatollah and Pezeshkian’s office as well.

The UK-based report says an IRGC official has conveyed: “The number one consideration is still striking Tel Aviv with Hezbollah and others at the same time.” The official is further cited as saying, “There has been discussion within the forces on how to block Mr. Pezeshkian’s efforts. Almost everyone believes what he is insisting on is not in the revolution’s reputation.”

🚨#BREAKING: Is Iran bluffing?

U.S. Secretary of State, told Members of the G7 during a Conference Call last tonight, that Iran could launch an Attack against Israel in the next 24-48 Hours

but all Iran has done so far is air war propaganda videos, threaten that they have… pic.twitter.com/kp9bKQt65V

— Wesley Marius (@WesleyMarius) August 5, 2024

But again, whether the report detailing this alleged back-and-forth between moderate and conservative factions within Iran over how to respond to Israel is accurate remains an open question.

Authored by Aldgra Fredly via The Epoch Times,

Texas Gov. Greg Abbott issued an executive order on Aug. 8 requiring that hospitals collect data on patients living illegally in the United States and report the costs of medical services provided to them.

In a statement, Abbott said he aims to collect data on illegal immigrants who use public hospitals so that Texas can seek reimbursement from the federal government for their medical expenses.

“Texas will hold the Biden-Harris Administration accountable for the consequences of their open border policies, and we will fight to ensure that they pay back Texas for their costly and dangerous policies,” the Republican governor stated.

Under the executive order, Texas hospitals are required to collect data on inpatient discharges and emergency visits by illegal immigrants, as well as the costs of medical services provided to them, starting on Nov. 1.

Hospitals will need to report the information to the Texas Health and Human Services Commission (HHSC) by March 1, 2025, and continue reporting data on a quarterly basis.

The executive order also requires that hospitals inform patients that, under federal law, their responses to questions about their immigrant status will not affect patient care.

It stated that HHSC will need to report annually to the governor, the lieutenant governor, and the House speaker on the preceding year’s costs for medical care provided to illegal immigrants starting Jan. 1, 2026.

Abbott said that people in Texas should not have to “shoulder the burden” of financially supporting medical care for illegal immigrants.

The Epoch Times has reached out to the White House for comment.

The Texas Hospital Association (THA), representing over 85 percent of the state’s acute-care hospitals and health care systems, said that it is reviewing Abbott’s executive order “as quickly as possible.”

“Right now, hospitals don’t ask about patient immigration status as a condition of treatment,” THA said in a statement.

“Hospitals are required by law to provide life-saving treatment to anyone, regardless of ability to pay or status.”

More than 1,000 illegal immigrants wait in line to be processed by U.S. Border Patrol agents after crossing the Rio Grande from Mexico in Eagle Pass, Texas, on Dec. 18, 2023. (John Moore/Getty Images)

Texas has seen a 74 percent decrease in illegal border crossings since the launch of the state’s border security mission, dubbed Operation Lone Star, in March 2021, the governor’s office stated on June 14.

As part of the initiative, state authorities have deployed floating border barriers, installed wire fencing, and used the Texas National Guard to stem the flow of illegal immigrants.

According to the statement, the multi-agency effort has led to over 513,700 illegal immigrant apprehensions and more than 44,000 criminal arrests, with more than 38,600 felony charges so far.

The Texas governor criticized President Joe Biden’s recent executive actions, announced by the White House in June, stating that they “will do little to stem the flow of illegal immigration into the country.”

“As long as the Biden Administration refuses to provide any type of enforcement, any type of blockage, of people crossing illegally, all that this new Biden policy is going to do is to actually attract and invite even more people to cross the border illegally,” Abbott said in the statement.

According to a White House fact sheet published on June 4, the executive orders will bar illegal immigrants from receiving asylum when border officials deem illegal border crossings are at “high levels.”

“This ban will remain in place until the number of people trying to enter illegally is reduced to a level that our system can effectively manage,” Biden said at a news conference on June 4.

U.S. Customs and Border Protection recorded more than 1.44 million encounters with people trying to enter the United States nationwide as of June 2024.

Authored by James Howard Kunstler via Kunstler.com,

“Who Elected YOU Boss of This Outfit?”

“There’s some perversion that’s happened in our country in the last several years.”

– Candidate Kamala Harris

You might well wonder: how does the Democratic Party rank and file sustain such fervor for the wrecking crew of Harris & Walz conjured up with zero input from the Party’s demos? Just plopped onstage as by the old MGM studio heads casting a pair of iffy contract players in a “B” movie musical called Our Pronouns Are Cash and Carry.

So far, Harris and Walz levitate in fake polls on gusts of idiot wind from the Party’s unofficial public relations team of the The New York Times / MSNBC / CNN / NPR media matrix. But it’s already obvious that Veep Kamala Harris’ brain is just a laugh generator triggered by anything that sounds like an idea from the material world: the economy? Hee-haw. . . Ukraine? Bwa-ha-ha-ha-ha. . . The border? Tee-hee. . . Transitioning minor children?  Yuk-yuk-yukity-yuk. . . The Middle East? Cackle cackle. . . .

You are well aware, I’m sure, that the veep has yet to be exposed to a single unscripted interchange with anyone outside her promotional circle. It’s been kind of neat trick to behold, like watching a barking terrier walk around the stage on its hind legs — but after a while the audience might be thinking, What else can you show me?

You must not suppose this liminal moment in history between the defenestration of “Joe Biden” and the apparent selection of Harris &  Walz is anything but a transient psychotic episode in American politics. The tell is that nobody in the Dem fold is inquiring as to how it happened, and especially who is behind it. Has the Dem Party become just Speaker emeritus Nancy Pelosi’s personal mafia? It appears that she was the one who delivered the black spot to “JB.” Do Chuck Schumer and Hakim Jefferies even matter in that supposed hierarchy, or is Mrs. Pelosi sole proprietor of the org now?

There must be a few unfettered souls among the Dem delegates who detect that, without the smoke and mirrors of the media matrix, Harris & Walz can’t possibly make the case for getting elected honestly. And the odds of successfully rigging another national election seem to be on-the-fade, too, with such obvious pranks as registering 371 illegal aliens (non-citizens) to vote using an address that turns out to be a Walmart parking lot. Yesterday, Governor Glen Youngkin of Virginia signed an excutive order requiring paper ballots and voter ID along with other new regs. Is a trend underway among the states to clean up their acts?

The so far railroaded national Dem delegates have ten more days to watch the Harris / Walz tag-team get vivisected on “X”, which, like it or not, has become the sole open conduit for news and commentary in a nation ruled by a psychopathocracy. You can say that because the policies they promote are obviously inimical to our country’s well being — open borders, harrassment, arrest and censorship of political opponents, the pointless Ukraine war, sexual mutilation of children, mass digital surveillance, medical quakery, and a policy of lying about absolutely all of it. Many still recognize insanity when they see it in action. These matters are not defensible and, deep down, they must know it, and maybe enough of the delegates will decide to do something about it — like revolt against the candidates foisted on them.

One possible result, of course, is that such a revolt will rip the party to shreds. You can easily imagine chaos in the streets of Chicago among the disaffected delegates and the Antifa shock troops called forth to punish them. Chaos for its own sake is highly valued by so-called “progressives” looking to progressively destroy the entire armature of civilized life in order to create out of the ashes a nirvana of sadomasochistic persecution and punishment — their Hieronymus Bosch Wokester utopia.

I’m guessing that there will be untoward discoveries about, and mortifying blunders galore by, Harris & Walz these ten days ahead, and they will go into the Chicago convention like two pitiful creatures marked for sacrifice. Gawd knows what will emerge from the turbulence that ensues — but I’m still dogged by the feeling that the only plausible outcome is a giant flying reptile with a face like Hillary’s swooping into the arena on her great, flapping, leathery wings crying, Caw caw caw, I own you all now, you miserable cat ladies, incels, nose-rings, and sundry victims of hateful offense! Follow me once more into the glorious rapture of defeat! And it shall be done!

*  *  *

Support his blog by visiting Jim’s Patreon Page or Substack

If you took the week off and are just now looking at your book, you could be forgiven for being confused and unimpressed… S&P unchanged, rate-cut expectations notably lower, TSY yields up 15bps, and oil surging.

Source: Bloomberg

What you missed was a 6% collapse in stocks (and 20bps plunge in TSY yields) on Monday as yen-carry-unwinds wreaked havoc in risk markets with VIX exploding to crisis highs, before vol-sellers piled back in…

Source: Bloomberg

As Goldman’s Tony Pasquariello highlighted this morning, the wedge of market enthusiasm that opened up the summer has narrowed considerably…

Additionally, if you wondered just how correlated global positioning cross-asset was, we found out real quick this week, as the Yen Carry trade dominated all and every asset-class…

Source: Bloomberg

As we mentioned above, the big picture for stocks on the week was ‘meh’ with S&P and Nasdaq back up to unchanged. The Dow a small laggard and Small Caps down for the second week in a row (but obviously well off its lows)…Yes, that is a 6%-ish plunge in Nasdaq and Small Caps on Monday that was erased by the end of the week.

Energy and Tech were among the outperforming sectors (even after Tech’s collapse on Monday) while Materials were the laggard…

Source: Bloomberg

‘Most Shorted’ stocks were squeezed back into the green on the week after Monday’s collapse but remain well down from pre-payrolls…

Source: Bloomberg

Mag7 Stocks rebounded dramatically off the 8%-plus pukefest at the cash open on Monday, but ended the week in the red still…

Source: Bloomberg

Goldman’s trading desk noted that the floor better to buy today though overall activity light in notional terms (volumes -10% vs the trailing 20 days) and top of book (liquidity) continues to be weak compared to average.

• LOs very quiet with small buy skew across Hcare and macro products, vs selling tech.

• HFs selling Tech, Industrials, and Cons Discretionary, vs buying Energy + Macro Products.

Treasury yields were up on the week (with the short-end underperforming – 2Y +18bps, 30Y +12bps on the week), but including Friday’s post-payrolls plunge, yields are still down with the short-end outperforming…

Source: Bloomberg

Rate cut expectations tumbled from the initial surge on Monday withe most of the swing in pricing concentrated in 2024…

Source: Bloomberg

The yield curve (2s10s) briefly disinverted on Monday, but was flatter (more inverted) by the end of the week…

Source: Bloomberg

The dollar ended lower on the week as yen strengthened after BoJ folded…

Source: Bloomberg

Gold rebounded yesterday and today, back above $2400 but ended marginally lower on the week…

Source: Bloomberg

Oil prices had a big week, with WTI ripping back from 6-month lows around $72 to $77 by the end of the week (making it back to pre-payrolls levels)…

Source: Bloomberg

Bitcoin also had a wild week only to end approximately unchanged.  Having puked from $62k to $50k, it rebounded all the way back to $62k overnight (before finding support at $60k)…

Source: Bloomberg

Finally, amid the carnage of the last week, money market fund total assets soared to a new record high…

Source: Bloomberg

A huge $53BN inflow (the most since April – Tax Day) suggests ‘real money’ market participants are perhaps more than a little nervous as HFs, vol-sellers, and algos lift the market on thin volumes.

By Caleb Revill of FreightWaves

U.S. Customs and Border Protection announced several large drug busts this week after field operatives seized a record-breaking 3,400 pounds of methamphetamine on the Southern border and 266 pounds of cocaine on the Northern border – all on the same day.

According to a CBP news release, field operatives seized the methamphetamine – valued at $48 million – from a tractor trailer at the Pharr International Bridge cargo facility on the Texas-Mexico border on Aug. 1. The release states that this seizure is the largest ever in the port of entry’s history.

CBP officers assigned to the facility encountered a tractor trailer entering from Mexico and selected it for inspection. After using nonintrusive inspection equipment and physically inspecting the shipment, officers found 1,488 packages of alleged methamphetamine concealed in the shipment of lettuce.

Officers seized the narcotics and vehicle. Homeland Security Investigations special agents have initiated a criminal investigation, according to the release.

“Our CBP officers remain vigilant and intercepted this massive methamphetamine load, preventing it from reaching American streets,” said Carlos Rodriguez, port director of the Hidalgo/Pharr/Anzalduas Port of Entry, in the release.

The same day, CBP officers at the Blue Water Bridge port of entry near Port Huron, Michigan,  seized 266 pounds of cocaine from a tractor trailer leaving the U.S. for Canada. According to another news release from CBP, an X-ray scan of the trailer and subsequent physical inspection conducted by officers and a K-9 team revealed 100 bricks of suspected narcotics concealed behind a fake wall in the trailer.

The illicit drugs were confirmed to be cocaine through later testing, and they were seized along with the truck and trailer. The driver, a Canadian citizen, will face local prosecution in St. Clair County, according to the release. The case remains under investigation by Homeland Security Investigations.

“We will continue to use all tools at our disposal to disrupt the flow of dangerous drugs into our communities,” said Port Director Jeffrey Wilson. “This seizure showcases the effectiveness of our layered approach to border enforcement, which is further enhanced by the assistance of our regional law enforcement partners.”

The release states that this discovery comes on the heels of one of the largest inbound fentanyl seizures on the Northern border within the past five years in Detroit. Nearly 6 pounds of fentanyl pills were seized by CBP officers from inbound international mail during that incident on June 2.

Virginia Governor Glenn Youngkin (R) on Wednesday signed an executive order to implement various security measures ahead of the November election – including the use of paper ballots, tracking possession of ballots during early voting, matching the number of ballots casts with then number of voters who have checked in, and the number of ballots sent to voters.

The order also requires absentee ballots to be requested before being mailed to voters, in addition to rejecting ballots mailed back unless the voter provides the last four digits of their Social Security number and birth year.

The state notably uses paper ballot counting machines that aren’t connected to the internet and are tested before elections.

Meanwhile, Youngkin also ordered the state to update its voter rolls – including adding or removing people based on whether they are allowed to vote in the state, removing those unable to prove residency, removing the names of dead voters, and ensuring illegals cannot cast a ballot.

According to Virginia AG Jason Miyares, 6,303 illegals have been removed from the state’s voter rolls during Youngkin’s tenure, and almost 80,000 deceased voters have been removed.

As the Epoch Times notes further, Youngkin instructed the Department of Motor Vehicles to “expedite the interagency data sharing with the Department of Elections of noncitizens by generating a daily file of all noncitizens transactions, including addresses and document numbers.”

The Department of Elections compares a list of noncitizens with a list of those registered to vote. Those who are on both lists get removed from voter rolls. If someone is erroneously removed, he or she has 14 days to prove eligibility to cast a ballot.

Additionally, Virginia has cameras monitoring drop box locations 24/7.

Moreover, according to the executive order, the Department of Elections is to inform voters about prohibited activities including, but not limited to, electoral intimidation, illegally disclosing or using Social Security numbers, unlawful registrations and votes, and tampering with or stealing voting items.

There have been almost two dozen cases of election fraud cases in Virginia since 2007, according to the Heritage Foundation, a conservative think tank in Washington.

Election Integrity

In a statement, Youngkin said that the issue of election integrity isn’t partisan and that elections should be held fairly.

“This isn’t a Democrat or Republican issue, it’s an American and Virginian issue,” he said. “Every legal vote deserves to be counted without being watered down by illegal votes or inaccurate machines. In Virginia, we don’t play games and our model for election security is working.”

While Youngkin and the GOP flipped the gubernatorial mansion and the House of Delegates in November 2021, Democrats have controlled both houses of the state Legislature since earlier this year.

Polling has showed that former President Donald Trump is competitive in the Old Dominion State. More recent polls, after President Joe Biden dropped out and Vice President Kamala Harris received the nomination, have shown a tighter race.

The last time a GOP presidential candidate won Virginia was in 2004, when President George W. Bush won reelection.

In addition to the presidential race, other major races in Virginia in November include the Senate race between incumbent Sen. Tim Kaine (D-Va.) and Republican Hung Cao and key House races in the state’s Second, Seventh, and 10th congressional districts.

The next Virginia gubernatorial election will be held in November 2025. Youngkin is ineligible to run for a second consecutive term in accordance with the state’s constitution. Rep. Abigail Spanberger (D-Va.), who isn’t running for reelection, is seen as the early front-runner for the governor’s mansion.

Authored by Mike Shedlock via MishTalk.com,

Greg Ip says the conditions for recession are not in place. I disagree. And I show where and how he went wrong.

The chart itself explains where Ip went wrong. See if you can figure it out.

“This Doesn’t Look Like Recession” Says Greg Ip

Please consider This Doesn’t Look Like Recession. Here’s How One Could Happen.

Unemployment is rising, stocks are falling and bond yields are well below short-term interest rates. These are all telltale signs of recession.

But a closer look suggests that while recession risk has risen, the U.S. isn’t in one now. The distinction is crucial because it means it isn’t too late to head off a downturn. It all depends on the Fed, and on the unpredictable moods of investors, consumers and employers.

The increase in unemployment to date, according to a rule-of-thumb popularized by the economist Claudia Sahm, in the past has only occurred during recessions.

To decide if it’s raining, it’s better to stand outside than count umbrellas. Similarly, to determine whether recession has begun, better to look at the indicators the NBER uses than the Sahm rule. Three—payroll employment, industrial production and real (inflation-adjusted) incomes, minus government transfers—were all shrinking in the four months up to and including the month the Sahm rule was triggered, in 1990, 2001 and 2008. In all three, a recession had begun several months earlier.

In the four months through July, payrolls were growing, and in the three months through June, so were real incomes and industrial production. If a recession had already begun, it would be a very unusual one. (Sahm said last week she didn’t think a recession is imminent).

Background on the McKelvey (Sahm) Rule

Edward McKelvey, a senior economist at Goldman Sachs, created the indicator.

Take the current value of the 3-month unemployment rate average, subtract the 12-month low, and if the difference is 0.30 percentage point or more, then a recession has started.

Claudia Sahm, a former Federal Reserve and White House Economist, modified the indicator from 0.3 to 0.5.

Please consider The Sahm Rule: Step by Step written December 7, 2023 by Claudia Sahm.

I created the Sahm rule, and it’s on me to communicate it well. I try. If you have any questions, please add them to the comments.

Sahm claims to have invented the rule. However, credit should go to Edward McKelvey, at Goldman Sachs.

The Lag Effect

Sahm modified the McKelvey rule to eliminate false positive. But that was at the expense of being far less timely.

In the 2008 recession, the Sahm rule triggered three months late. In the 1973 recession, Sahm triggered 7 months late.

Ip’s Huge Mistake

Ip’s huge mistake is comparing conditions in place when the rule triggers instead of conditions when the recession began.

Ip shows 4-month sum pf payrolls as negative, when in fact, they were positive.

Change in Nonfarm Payrolls Oct 2007-Jan 2008

• Oct: +72,000

• Nov: +116,000

• Dec: +105,000

• Jan: +1,000 Recession Start

Every month was positive, including the start of the recession.

Change In Nonfarm Payrolls Using Sahm Trigger

• Jan: +1,000

• Feb: -71,000

• Mar: -70,000

• Apr: -219,000 Sahm Trigger (was this remotely useful?)

The Sahm rule did not trigger until three months into the recession when payrolls were -219,000.

And look at December 2007. Despite a report of +105,000. It was clear recession was unavoidable.

Bernanke did not see recession until April, when it obvious to the world.

Industrial Production Index Oct 2007-Jan 2008

• Oct: 101.6

• Nov: 102.2

• Dec: 102.3

• Jan: 102.1

Industrial production peaked one month before recession started.

Look at Ip’s chart for Industrial Production and note how negative (and wrong) that it is. September Industrial Production was 101.9.

The average of the four months at the start of recession is (101.6 + 102.2 + 102.3 + 102.1) = 102.1 That’s up from 101.9 not hugely down as Ip shows.

Now let’s take a look at things from the perspective of the Sahm indicator.

Industrial Production Using Sahm Trigger

• Jan: 102.1

• Feb: 101.8

• Mar: 101.4

• Apr: 100.7 Sahm Trigger (was this remotely useful?)

“Real-Time” Nonsense

Sahm labels “her” indicator as “real-time”.

With lags as long as 7 month and never leading in the history of the data to 1948, there is nothing “real-time” about it.

Ip enhances the mistakes by taking a lagging indicator then applying those conditions to other indicators with varying lags.

QCEW and Business Employment Dynamics (BED)

Greg Ip also ignores or is unaware of enormous discrepancies between the monthly nonfarm payroll reports, also called Current Employment Statistics (CES) and the QCEW reports.

BED is a large subset of the Quarterly Census of Employment and Wages QCEW which covers 11.6 million businesses

The nonfarm payroll reports are based off surveys of under 700,000 businesses. QCEW is based off 11.6 million businesses.

Expect the BLS to Revise Job Growth Down by 730,000 in 2023

On July 26, 2024, I commented Expect the BLS to Revise Job Growth Down by 730,000 in 2023, More This Year

Bloomberg’s chief economist, Anna Wong, arrived at a -730,000 overstatement in nonfarm payrolls. Using the same data, I calculated (in advance of her number), -779,000.

By her estimate, the BLS jobs overstated nonfarm payrolls by 81,111 jobs every month for 9 months. Click on link for more details.

Yet, here we are, putting faith in nonfarm payroll numbers that are not only lagging, but outright nonsense.

My July 8 Recession Call

July 8: Weak Data Says a Recession Has Already Started, Let’s Now Discuss When

I’ve seen enough. A recession has started. Let’s discuss starting with a very good indicator that has few false positives and no false negatives.

Since then ….

ADP Change in Employment

Data from ADP, chart by Mish

Unemployment Rate

August 2: Unemployment Rate Jumps, Jobs Rise Only 114,000 with More Negative Revisions

August 2, 2024: The McKelvey (Sahm) Unemployment Rate Recession Rule Just Triggered

A recession indicator based off rising unemployment triggered in July. Claudia Sahm, a former Fed economist, takes credit for an indicator she did not invent. Let’s discuss.

Key Points

• Due to the lagging nature of the Sahm rule, recession is highly likely to already be underway when it triggers.

• Applying her rules to other indicators is a serious mistake.

• I like a trigger of 0.4, halfway between the original McKelvey idea and Sahm’s revised rule.

• Click on above link for details.

Also, please take a look at my July 31 post Small Business Employment Growth Is Now Negative (and What It Means)

ADP data shows year-over-year payroll growth is negative 88,000 for small corporations sized 20-49!

Payroll trends are negative in all but very large corporations (Given Intel’s 15,000 Mass Layoff and tech woes in general, how long will that last?)

Recession is underway.

The Pentagon on Thursday was asked by a reporter during the daily briefing whether Ukraine forces’ use of American weapons in its ongoing Kursk incursion is “consistent” with US policy of what Ukraine can and cannot do with US weapons. It has become clear that Ukrainian troops are currently using American weapons to attack Russian territory, troops, civilians, and infrastructure.

Spokeswoman Sabrina Singh answered without hesitation that “yes it is consistent with our policy” and explained that Washington has supported the need for “crossfire” from Ukraine back across the border onto Russian positions from which it is being attacked, even if that is on Russian territory. She framed what is happening in Russia’s Kursk oblast—an offensive which has entered day four—as ‘defensive’ in nature.

Singh still tried to point out that it remains US policy for Ukraine to avoid striking deep into Russian territory using American arms; however, when pressed about the scenario of a direct attack on Moscow, she simply said: “I’m not going to put a specific range on it” and thus refused to rule it out. But she did caveat that “we still don’t support long-range attacks into Russia.” Singh additionally explained, “I’m not gonna draw a circular map for you here of where they can and cannot strike.” The Kremlin is likely to remain unconvinced when hearing this clear escalation in rhetoric from the Pentagon where attacking the Russian capital is discussed, even if theoretically. Watch the full exchange related to the Kursk offensive below:

Needless to say we have entered incredibly dangerous times in this major proxy war when the Pentagon’s daily press briefing is openly talking about strikes on Moscow.

The Ukrainian cross-border offensive, which may have involved up to 1,000 men, began early Tuesday morning and was led by fast moving armored vehicles, which were able to penetrate up to 10km into Ukraine. Moscow says that it has observed US-supplied equipment being utilized in the attack on Russian soil.

A prior Russian Defense Ministry (MoD) statement said, “Video monitoring data shows that Lancet loitering munitions destroyed a US-made Bradley infantry fighting vehicle, a Kazak armored vehicle, a Ukrainian armored personnel carrier and an infantry fighting vehicle in their firing positions.” Newsweek also confirmed based on video evidence.

The MoD further said that dozens of armored vehicles breached the border and were operating inside Russia amid a major response to push out the invaders which has included airpower.

As of Friday, the fighting in Kursk is in its fourth day, which is unprecedented for a Ukrainian military incursion inside Russia. Ukraine has simultaneously stepped up its cross-border drone attacks, reportedly hitting an important military airfield in the Lepetsk region, impacting a facility where glide-bombs are stored. According to the latest:

• Ukrainian drones struck a key military airfield in Russia’s Lipetsk region, as Kyiv continues its largest offensive on Russian soil since the start of the war.
• Ukrainian forces targeted the airfield in Lipetsk — roughly 300 kilometers (186 miles) from the border with Ukraine — on Thursday night, hitting warehouses and a number of unspecified objects in the vicinity of the airport, Ukraine’s General Staff of Command said in a Google-translated Telegram post.
• Earlier in the week, the Ukrainian offensive led to the evacuation of thousands of people and a state of emergency being announced in Kursk.

🔥 Detailed video of a Russian military column near Rylsk which was targeted tonight. Dozens of Russian soldiers were killed during the transportation. https://t.co/gFNPNABAAS pic.twitter.com/ICwIPMhR72

— Special Kherson Cat 🐈🇺🇦 (@bayraktar_1love) August 9, 2024

The timing of this high-risk assault is interesting, happening at a time where Ukraine has been on a slow and steady retreat in the Donbass. Ukraine needed something ‘big’ to both distract Russia’s military command from front line operations and as a blow to Moscow’s morale. 

And now Kiev is pressing the Biden White House to let it use ATACMS long-range missiles to strike deeper into Russia.

“This will give them the leverage they need for negotiations with Russia — this is what it’s all about,” Mikhail Podoliak, a senior advisor to President Zelensky, told The Washington Post.

On Thursday, Zelensky himself had said Russia needs to “feel” the consequences of its invasion and war. “Russia brought the war to our land and should feel what it has done,” he said.

🇺🇸🇷🇺🇺🇦 The US believes that the current situation in the Kursk region does not threaten an escalation of the Ukrainian conflict 🤷‍♂️ pic.twitter.com/QxsJJJHcjp

— Roberto (@UniqueMongolia) August 8, 2024

It is now looking like Ukraine will actually seek to maintain hold over parts of Kursk Oblast, and its officials have dubiously claimed to have captured approximately 100 square kilometers of territory. Ukraine also says it has taken hundreds of Russian soldiers as prisoners.

According to The Washington post as well as Ukrainian media sources:

The Ukrainian leadership has approached the US for permission to use ATACMS to target Russian territory after the Armed Forces of Ukraine (AFU) conducted an incursion into Russia’s Kursk Oblast. This could allow Kyiv to hold the territory they have pushed into, according to The Washington Post, citing an anonymous advisor to President Volodymyr Zelensky.

The long-range missiles are planned to be used to strike Russian military airfields from which Russian aircraft conduct bombing raids on Ukrainian positions. According to the source, such a political decision would help the AFU maintain control over parts of the Kursk Oblast.

Based on the above-mentioned words of the Pentagon press secretary where she noticeably did not verbalize limits on striking Moscow, this potential greenlight from Washington to use ATACMS on Russian territory is looking more likely by the day.

President Putin will see this as the US much more directly entering the war, and has previously set firm red lines on such a scenario.