Wednesday Night #2261

Welcome Peter Berezin!
On 10 July, Peter wrote : Strategy Report: Too Early To Sound The All Clear
Executive Summary
• The June jobs report was weaker than widely perceived, featuring an outright decline in the aggregate number of hours worked in the private sector.
• Consumer spending has failed to grow for five months, while the housing market continues to flounder.
• With the exception of the distorted payrolls, all the indicators the NBER tracks to determine the onset of a recession have rolled over.
• The full impact from the trade war has yet to materialize. Contrary to statements made by the Trump administration, the retail prices of imported goods have risen more than other prices.
• Fiscal stimulus could take the sting out of tariffs. However, any relief will not come until next year, and in any case, could be neutralized by stubbornly high bond yields.
• Go short EUR/JPY on any break above the 172.5 level.
Bottom Line: We will abandon our recession call if US economic data show clear signs of stabilization over the summer months. For now, that has not happened. Maintain a modest underweight to stocks but look to get more defensive if MacroQuant’s equity z-score falls below -1.

Since then, The tariff-driven inflation that economists feared has begun to emerge -and New data showing price increases last month could foreshadow even higher costs if the president imposes steep tariffs on Aug. 1.
U.S. Economy March 2025-

U.S. Education
Every week it seems more difficult to decide which news from the U.S. is the most outrageous and the most dangerous, however this week it seems quite easy to pinpoint the Supreme Court decision allowing Trump to dismantle the Department of Education.
Shame on the craven 6 of SCOTUS!
The Supreme Court Won’t Explain Itself
In their decision allowing the Trump administration to dismantle the Department of Education, the justices didn’t offer one word of reasoning.
Supreme Court Clears the Way for Trump’s Cuts to the Education Department
The move by the justices represents an expansion of executive power, allowing President Trump to dismantle the inner workings of a government department.
(NYT) The Supreme Court agreed on Monday that the Trump administration can proceed with dismantling the Education Department by firing more than a thousand workers.
The order is a significant victory for the administration and could ease President Trump’s efforts to sharply curtail the federal government’s role in the nation’s schools.
See Byron‘s commentary on Bastille Day:
Today, in 2025, the SCOTUS allowed, by emergency docket action, the Trump Organization to destroy one of our primary defenses against rogue states creating their own truths about past, present and future knowledge. The federal Department of Education was created
The federal Department of Education was created by Congress, in 1980, to consolidate data, research, information and standards for education programs and address concerns about access, quality, and civil rights in education. On the urgent versus important grid, I’d say the current state of education in the USA in important, but that completely obliterating the federal department is not an urgency. It’s not an emergency. Unless you are an institutionally racist, fascist and corrupt administration. For criminals, it is always an urgent matter to hide the truth and fact.
So many back door methods to destroy our system of governing by law and representation are being undermined by the Trump Organization legal team embedded in our Department of Justice. These back door methods are shrouded in the cloak of emergencies. …

North Carolina’s AG Jeff Jackson reacts A sudden freeze in education funding
This would lay off 1,000 educators in NC
Two weeks ago – out of the blue – North Carolina received a three-sentence email from the U.S. Department of Education.
It said that $165 million in education funding, scheduled to arrive the next day, was being frozen indefinitely.
No clear reason was given. Since then, the department has refused to answer our questions.
It turns out that email went to all 50 states. The total amount frozen nationwide: roughly $7 billion.
In North Carolina, the impact will be severe.
These funds support after-school and summer programs for over 10,000 students, STEM education, adult literacy classes, mental health support, services for English learners, and smaller class sizes for elementary school kids.
And if the freeze isn’t reversed soon, about 1,000 educators in our state could lose their jobs – just weeks before 1.5 million kids return to school.

Quebec Education
A different outcome in Quebec where After slashing education funding, Quebec announces up to $540 million for student services
“The last month has allowed us to consult school organizations and to listen on the ground. We have listened to the concerns and needs. Today, we act,” the post said. The announcement comes less than one month after the province slashed $570 million in education funding, a move that faced major backlash from school boards, school service centres and the Quebec English School Boards Association (QESBA). QESBA president Joe Ortona said pressure from parents and citizens — including a petition against the budget cuts that has 157,938 signatures as of July 16 — are what pushed the government to “reverse course.”
The government will of course set up road blocks to easy implementation, but we can still count this as a win.

Iran- Israel
We are spoiled having Ali as WN’s resident expert on all things Iran, and it is good to see him receiving exposure in this Open Canada podcast of July 4. We are used to hearing him declare in frustration that the U.S. (even before Trump) and its allies have no understanding of current events or context. We look forward to his comments on The Deadly Tango of Netanyahu and Khamenei by Dr. Saeed Rahnema (see Long reads) as well as recent news regarding European intentions to launch the UN snapback mechanism on Iran to restore sanctions by the end of August if no concrete progress has been made on a nuclear deal by then.
Chaos or Opportunity: Re-thinking Fault Lines in Iran-Israel Relations with Alireza Yazdi (podcast)
(Open Canada) In this episode, Ruth Mojeed Ramirez sits down with Alireza Yazdi, director on the board of the Canadian International Council, a Canadian with both Persian and Jewish roots, to explore the deeply personal and political complexities of the Israel-Iran relationship. Against the backdrop of escalating conflict and shifting power dynamics in the Middle East, they discuss identity, belonging, and what it means to witness two ancestral homelands in tension. Is there space for dialogue and diplomacy, or are we entering a new era of entrenched division?

Trump the dealmaker – NOT SO MUCH
Trump’s dealmaker image hits a wall – not much has changed since Axios piece of 12 June, except for the 12-day war with Iran.
More recently:
President Donald Trump is finally taking the fight to Vladimir Putin. Sort of. For now.
… Trump came into office believing that he could deliver a lasting truce between Ukraine and Russia within 24 hours, banking on his relationship with Putin, which he considered good. … In recent weeks, Trump has grown angrier with Putin. … He told advisers this spring that he was beginning to think Putin didn’t want the war to end, an assessment that U.S. intelligence agencies reached more than a year ago.
When will he come to the same conclusion about Netanyahu who has flown home from Washington without a Gaza peace deal? Of course he won’t, not after the Nobel peace prize nomination.
Tariffs and Trade – Deals made by Trump since pausing his ‘Liberation Day’ tariffs remain sparse and the recent spate of “Letters” (see Long reads) is fodder for much mockery.

Meanwhile, ever-quarrelsome Israel is picking a fight with Syria Israel strikes Syria’s defence ministry in third day of attacks
One person killed and 18 injured, say Syrian officials, as Israel intervenes in clashes between government forces and Druze fighters

Carney’s Canada
Canada Strong and Free (Facebook)
Let’s clear up one of the most dishonest narratives floating around right now: the idea that Mark Carney came into office thinking he could control Donald Trump. He did not!
And if you actually listened to what he said on election night, not the headlines, not the spin, but the speech, you’d know that’s not what this is about at all. Carney never claimed he could tame the chaos. What he said was far more sobering, and far more important. “We are at one of those hinge moments of history. Our old relationship with the United States, a relationship based on steadily increasing integration, is over. The system of open global trade, anchored by the United States, a system that Canada has relied on since the Second World War, a system that, although not perfect, has helped deliver prosperity for our country for decades, is over. We now have to look out for ourselves and above all, we have to take care of each other.”
That’s not a man walking in with delusions of grandeur. That’s a strategist walking into the fire with his eyes wide open. …
Carney announces new measures to support steel industry, prevent dumping, amid trade war
Prime Minister Mark Carney announced Wednesday new measures to bolster Canada’s steel industry and prevent steel dumping in the Canadian market as the trade war with the U.S. drags on with no tariff relief in sight.
The Canadian government plans to “restrict and reduce foreign steel imports,” in part by reevaluating and lowering tariff-free quota volumes, Carney announced in Hamilton, Ont.
Canada is also increasing tariffs on steel products imported from non-U.S. countries containing steel melted and poured in China, Carney said.
First Nations arrive with some optimism — but mostly skepticism — as Carney’s C-5 summit begins
PM has called meetings with Indigenous leaders to allay concerns over major projects law
‘It’s a negotiation’: Carney asked about possibility of U.S. tariffs in a deal, potential retaliation
Prime Minister Mark Carney, speaking Wednesday in Hamilton at an event about steel, declined to offer specifics around negotiations with the U.S., saying ‘we’ll see,’ when pressed on whether Canada would impose more tariffs.
David Lametti says old friend Mark Carney brought him back into politics
Carney is a relative newcomer to the Canadian political scene and most of us still don’t know him all that well. Lametti says his old pal is a straight shooter. “He’s charming and very, very funny,” Lametti said. “You guys, journalists, got some glimpses of that during the campaign. But he’s also really smart and really demanding. He expects the best from himself and he expects the best from people around him.”

Varia
In the footsteps of Benjamin Franklin …
First Felon Ambassador? 
Jared Kushner’s Father Charles, a Felon Pardoned by Trump, Confirmed as New Ambassador to France
Real estate developer Charles Kushner — who once paid a prostitute to sabotage his brother-in-law’s marriage — was previously convicted of illegal campaign contributions, tax evasion, and witness tampering. Not sure how this will go down with the diplomatic world – see Flattery, Firmness, and Flourishes below
If like us, you have been ignoring the headlines about Trump, Epstein and a mysterious list, you may find this from Politico a handy reference should you ever want or need one:
The MAGA factions fighting about Epstein
Multiple heat and air quality advisories are in place across Canada
Environment Canada has issued heat warnings for several provinces today, including parts of Atlantic Canada, Quebec and Ontario.
This is in addition to a number of air quality advisories issued to several parts of the country as a result of wildfire smoke.
The heat warnings cover southern Ontario, Greater Montreal and some surrounding areas, central and northeastern Newfoundland, and the Annapolis Valley in Nova Scotia, though the alert is expected to expand to the mainland of the province.
Exploding watermelons: Montrealer surprised after fruit explodes in heat
As Montrealers find ways to keep cool during this intense heat wave, a warning – keep a close eye on your watermelons. One CTV viewer wrote in to say his newly purchased watermelon exploded on his kitchen counter just hours after he brought it home.
“It’s actually a very natural process of fermentation, ” said Sylvain Charlebois, a food industry expert and visiting professor at McGill University.

Long reads
The Deadly Tango of Netanyahu and Khamenei
It’s no exaggeration to say that the most extreme and reactionary government in Israel’s history is in part a byproduct of Iran’s ruling Islamic fundamentalist policies.

Flattery, Firmness, and Flourishes
World leaders and diplomats quietly swap strategies for managing Trump.

To Whom it May Concern: Trump’s tariff letters, annotated
Ninety trade deals in 90 days didn’t happen early in President Donald Trump’s second term…. So Trump repackaged his plan to slap tariffs on almost every nation in a series of unusual presidential letters to foreign leaders that set new thresholds not just for trade negotiations — but also for diplomatic style, tone and delivery. Most are fill-in-the-blank form letters that include leaders’ names and a tariff rate. … He appears to have paid special attention to his letters to Canada, with which he’s been fighting and taunting for months, and Brazil, which he singled out for 50% tariffs apparently based on a personal grudge rather than economics.