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[Markets] Bond Report: Treasury yield curve flattens on U.S. growth fears The U.S. yield curve flattened Tuesday as investors mulled how far the Federal Reserve will hike interest rates as the U.S. economy slows.
Published:7/5/2022 7:07:36 AM
[Markets] Futures Slide As Recesson Fears Trump Tariff Optimism Futures Slide As Recesson Fears Trump Tariff Optimism

The rally that pushed stocks well above 3,800 during Monday's illiquid session when US cash stocks were closed for July 4 amid speculation that Biden was about to rollback many Chinese tariffs (unclear how this would help ease inflation but a move that the market clearly read as risk positive), fizzled as soon as Europe opened this morning and alongside the tumbling euro which plunged to a 20-year-low and approached parity with the USD on growing recession fears, also dragged US equity US futures lower as investors turned their focus back to the looming recession, which outweighed optimism around an improvement in Washington’s ties with Beijing. Contracts on the Nasdaq 100 were down 0.7% by 730 a.m. in New York, while S&P 500 futures slipped 0.6%. The cash market was closed for a holiday on Monday.  10Y TSY yields swung from gains to losses before trading 2bps higher around 2.90% while bitcoin rose, and traded around $20K after dropping below $19K over the weekend.

US markets are set to reopen Tuesday after capping 11 declines in the past 13 weeks as an unprecedented first-quarter contraction boosted the prospects of a recession to near certainty. At the same time, consumer prices are far from peaking with inflation surging to 8.6% in May that left little room for the Federal Reserve to slow monetary tightening.  

Sentiment was lifted on Monday as senior US and Chinese officials discussed US economic sanctions and tariffs amid reports the Biden administration is close to rolling back some of the trade levies imposed by President Donald Trump. While that came as a relief, investors continued to fret over a potential US recession, stubborn inflation and monetary tightening. Economic reports in Europe, including French purchasing managers’ indexes, came in below estimates.

“The Fed will likely remain aggressive in its fight against inflation for now,” said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital. “At the same time, European growth is slowing down fast. This just puts additional fire on the growth concerns about the US.”

“The government is very conscious that they need to act on the supply side of the inflation issue because the Fed has been slamming the brakes on the demand side whereas the real issue is on the supply side,” said Deepak Mehra, the head of investments at the Commercial Bank of Dubai. “Trying to fix that issue is giving the market a bit of an ease and comfort that we are finally addressing the problem where it is and not giving the wrong medicine,” he said in an interview with Bloomberg TV.

Among notable moves in premarket trading, cryptocurrency-exposed stocks edged higher as Bitcoin briefly traded above the closely watched $20,000 level.  Recession fears echoed in US premarket trading, where Carnival Corp. and ASML Holding NV dropped more than 4% each. Meanwhile, Morgan Stanley strategists led by Michael Wilson said the US economy is firmly in the middle of a slowdown that’s turning out to be worse than expected amid the war in Ukraine and China’s Covid Zero policy. “Any fall in rates should be interpreted as more of a growth concern rather than as potential relief from the Fed,” they wrote in a note. Here are some other notable premarket movers:

  • Cowen (COWN US) shares jump as much as 14% in US premarket trading, following a report late Friday that Canadian bank Toronto-Dominion was said to be exploring a takeover of the brokerage. Piper Sandler says that a possible combination would be “reasonable” for Cowen at the right price.
  • Antero Resources (AR US) shares rise 2.8% in premarket trading after the stock was upgraded to buy from hold at Truist Securities, with the broker saying that a recent selloff in the oil company is an opportune entry point given gas and natural gas liquids are likely to remain strong.
  • Cryptocurrency-exposed stocks are gaining in US premarket trading on Tuesday as Bitcoin trades above the closely watched $20,000 level. Coinbase (COIN US) +1.4%, Riot Blockchain (RIOT US) +1.9%, Marathon Digital (MARA US) +2.4%, MicroStrategy (MSTR US) +2.8%, Ebang (EBON US) +5.9%
  • Tesla (TSLA US) shares fall 0.8% in premarket trading, though analysts note that the electric vehicle company’s record production in June is a silver lining in an otherwise disappointing quarter of deliveries.
  • Netflix (NFLX US) shares decline 0.8% in premarket trading as Piper Sandler cuts PT to $210 from $293, reiterating neutral recommendations, while estimating that the company’s ad-supported tier, which is expected to launch by year-end, represents a quarterly revenue opportunity of about $1.4 billion.

Most European equity indexes slumped over 1% with miners, autos and insurance names among the worst-performing Stoxx 600 sectors. CAC 40 and FTSE 100 lag, dropping as much as 1.4%. Miners underperformed the broader European market on Tuesday amid concerns over the risks of a global recession and the blow it would deliver to demand for raw materials. Copper fell to the lowest level in 17 months and traded solidly below $8,000 a ton, as sentiment remains sour toward the industrial material used in everything from construction to new energy vehicles. Stoxx 600 Basic Resources sub-index declines 1.6% as of 9:42am in London, led lower by miners like Antofagasta, KGHM and Anglo American, even as iron ore rises after a four-day slide. Broader European benchmark is down 0.4%. The Stoxx 600 energy sub-index slides 1.3% after rising most since May on Monday. TotalEnergies drops 1.6%, BP -1.1%, Shell -1.3%. Shares in renewable fuel producer Neste outperform, rising 1.3%. The Stoxx 600 Automobiles & Parts Index dropped 1.5%, the third-worst performing subgroup in the broader European equity market. Automakers had their worst June sales in decades in the UK, while German new-car registrations also plunged. Here are some of the biggest European movers today:

  • Miners and energy shares underperform the broader European market on Tuesday amid concerns over the risks of a global recession and the blow it would deliver to demand for raw materials.
  • KGHM shares decline as much as 6.7%, Anglo American -4.5%, TotalEnergies -2.5%, Shell -2.2%
  • Rheinmetall shares fall as much as 6.1%; Deutsche Bank expects 2Q at the lower end of the guidance range for the quarter while most-in-focus unit Defence will likely trend above.
  • SAS falls as much as 15% after the company announced it was filing for chapter 11 bankruptcy protection in the US.
  • European media stocks slide after Goldman Sachs slashed earnings forecasts across its media and internet coverage to factor in a more cautious macro outlook. Prosieben drops as much as 9.5%, Publicis -4.5%
  • Uniper shares edged lower, paring earlier gains of as much as 11%, as analysts speculated on what a possible government bailout might look like.
  • Dechra Pharmaceuticals advances as much as 4.5% on Tuesday after RBC upgrades to outperform in note in which it describes the stock as the “pick of the litter.”
  • Cellnex Telecom shares rise as much as 5% following a Bloomberg News report that a KKR-led consortium is emerging as the frontrunner to buy a stake in Deutsche Telekom’s tower unit, beating out a rival bid from Cellnex and Brookfield Asset Management that had been viewed negatively by analysts.
  • Lonza Group climbs as much as 3.8% after it got upgraded to buy from neutral at Citi, citing the market’s under-appreciation of demand for biologics manufacturing.
  • PGS shares soar as much as 20% as Pareto Securities upgrades the oilfield services firm to buy following a period under review, with the broker saying that “the future is looking brighter” for the company.

The euro extended its losses, tumbling to the lowest level since 2002 against the dollar. It also slid to the weakest since January 2015 against the Swiss franc.

Earlier in the session, Asian equities were modestly higher Tuesday as China’s stocks gave back early gains after initial enthusiasm about the country’s improving ties with the US waned.  The MSCI Asia Pacific Index rose as much as 0.8% before narrowing the advance to 0.2% as of 6:14 p.m. in Singapore. Energy and health care shares were among the gainers.  Chinese shares fell, after the province of Anhui reported more than 200 Covid cases for Monday and market participants assessed whether the potential scrapping of US tariffs on Chinese goods would help address global inflation concerns. The US 10-year Treasury yield trimmed an intraday advance over recession worries, giving tech shares a slight boost.

Australia’s main index edged higher as the domestic central bank met market expectations by raising interest rates a half-percentage point and suggesting that inflation may peak this year. Benchmarks in the Philippines and South Korea led gains in Asia, with each rising at least 1.8%.  “The easing of tariffs -- if confirmed -- comes at the dream timing to save its economy from the endless virus battle,” said Hebe Chen, an analyst at IG Markets, referring to the China. “Even though it may not stop the downtrend, it could at least slow the pace and restore the world’s confidence in the second-largest economy.” Meanwhile, Thailand’s gauge was the latest to enter a technical correction. Asian stocks have been stuck in range-bound trading since the end of April as markets digest higher interest rates, the possibility of a recession in advanced economies and continued virus flareups in China. The MSCI regional gauge is down more than 18% this year

In Australia, the central bank raised its key interest rate as expected to 1.35%. It’s among more than 80 central banks to have raised rates this year. The nation’s dollar weakened after the decision.

Key equity gauges in India pared early advances to close lower as worries over an economic recession weighed on the sentiments.  The S&P BSE Sensex dropped 0.2% to 53,134.35 in Mumbai, while the NSE Nifty 50 Index also dropped by the same magnitude. Stocks rose earlier in the day, tracking advances in Asian peers on the possibility of US rolling back some levies on China. A fast progress of monsoon rainfall, which waters most farmland in India, along with quarterly earnings for top companies that start this week added to the sentiment.   Consumer goods maker ITC was the biggest drag on the Sensex, falling 1.7%. Seven of BSE Ltd.’s 19 sectoral sub-gauges declined, led by information technology companies.    Asia’s biggest software exporter Tata Consultancy Services, will kickoff the April-June earnings season for companies on Friday

In FX, the Bloomberg Dollar Spot Index advanced for a third day as the greenback gained against all of its Group-of-10 peers. Treasuries were mixed. The single currency fell as much as 0.9% to 1.0331, its weakest level since December 2002, with losses compounded by poor liquidity and selling in euro-Swiss franc. German bond curve bull steepened and money markets trimmed ECB tightening bets to less than 140 basis points this year after French services PMI was revised lower. That’s down from more than 190 basis points almost three weeks ago, widening the interest-rate differential with the Federal Reserve. Scandinavian currencies were also dragged down by the euro sell-off and were leading G-10 losses against the greenback. Cable fell amid broad- based dollar strength. Bank of England rate-setter Silvana Tenreyro speaks later Tuesday and the BOE will issue its financial stability report. The Australian dollar extended a slump on the back of the broad-based US dollar strength. The Aussie had already given up gains after the RBA increased its cash rate to 1.35% as expected. It had risen earlier amid reports the US will roll back tariffs on some Chinese goods. The yen pared an Asia session loss as risk sentiment worsened.

In rates, Treasuries were off session lows reached during Asia session, remain under pressure as US markets reopen after Monday’s holiday, giving back a portion of Friday’s steep gains. Five- and 10-year yields remain below 50-DMA levels while 2- and 30-year are back above. Yields higher by as much as 6bp at short end vs ~3bp at long end after rising as much as 13bp and 9bp, respectively. 2s10s curve is slightly positive after briefly inverting for first time since mid-June; 5s30s spread ~22bp after reaching widest level since May 31 on Friday. Short-end Germany richens over 10bps, outperforming gilts. Cash USTs fade Asia’s gains. Peripheral spreads widen to core with short-end Italy underperforming.

In commodities, brent crude swung between gains and losses, last trading Brent down 1.5% near $111.78, while WTI rose after a long holiday weekend in the US with investors weighing still-strong underlying market signals against concerns a recession will eventually sap demand. Most base metals trade in the red; LME aluminum falls 2.8%, underperforming peers. Spot gold falls roughly $5 to trade near $1,803/oz.

Bitcoin resides underneath the USD 20k mark and at session lows of 19.4k amid the broader risk tone. BoE Financial Stability report said falling crypto markets expose vulnerability, but not stability risk overall.

To the day ahead now, and data highlights include the global services and composite PMIs for June, as well as the ISM services index from the US. Otherwise, there’s French industrial production for May and US factory orders for May. From central banks, the BoE will be releasing their Financial Stability Report and we’ll also hear from the BoE’s Tenreyro.

Market Snapshot

  • S&P 500 futures down 0.3% to 3,814.75
  • STOXX Europe 600 down 0.3% to 408.04
  • MXAP up 0.3% to 157.72
  • MXAPJ up 0.2% to 521.38
  • Nikkei up 1.0% to 26,423.47
  • Topix up 0.5% to 1,879.12
  • Hang Seng Index up 0.1% to 21,853.07
  • Shanghai Composite little changed at 3,404.03
  • Sensex up 0.3% to 53,387.68
  • Australia S&P/ASX 200 up 0.3% to 6,629.33
  • Kospi up 1.8% to 2,341.78
  • German 10Y yield little changed at 1.27%
  • Euro down 0.8% to $1.0338
  • Brent Futures up 0.4% to $114.01/bbl
  • Gold spot down 0.3% to $1,803.33
  • U.S. Dollar Index up 0.64% to 105.81

Top Overnight News from Bloomberg

  • Senior US and Chinese officials discussed US economic sanctions and tariffs Tuesday amid reports the Biden administration is close to rolling back some of the trade levies imposed by former President Donald Trump
  • UK automakers had their worst June sales in decades in the UK as ongoing components shortages kept them from meeting demand. New-car registrations declined by 24% to 140,958 vehicles, the lowest for the month since 1996, according to data from the Society of Motor Manufacturers and Traders
  • Italy declared a state of emergency in five northern and central regions devastated by a recent drought, as a severe heat wave takes its toll on agriculture and threatens power supplies

A more detailed summary of global markets courtesy of newsquawk

Asia-Pac stocks traded mostly positive amid a pick-up from the holiday lull although Chinese markets faltered. ASX 200 was led by the tech and commodity-related sectors with further support from a lack of hawkish surprise from the RBA. Nikkei 225 was propelled by a weaker currency but pulled back from early highs after hitting resistance around the 26,500 level and following softer-than-expected wages data. Hang Seng and Shanghai Comp. were both initially lifted following reports US President Biden could make a decision on rolling back some China tariffs as soon as this week and with Vice Premier Liu He said to have had a constructive exchange with US Treasury Secretary Yellen on the economy and supply chains. Furthermore, participants also welcomed the strong Caixin Services and Composite PMI data, although the advances in the mainland were then pared as the central bank continued to drain liquidity and amid lingering COVID concerns.

Top Asian News

  • PBoC injected CNY 3bln via 7-day reverse repos with the rate at 2.10% for a CNY 107bln net drain.
  • China is to set up a CNY 500bln state infrastructure investment fund and will issue 2023 advance local government special bonds quota in Q4, according to Reuters sources.
  • Chinese Premier Liu He spoke with US Treasury Secretary Yellen regarding the economy and supply chains, while the exchange was said to be constructive and both sides believed in the need to strengthen communication and coordination of macro policies between China and the US, according to Reuters.
  • US Treasury Department confirmed Treasury Secretary Yellen held a virtual meeting with China's Vice Premier Liu He as part of efforts to maintain open lines of communication, while they discussed macroeconomic and financial developments in both China and US, as well as the global economic outlook and food security challenge. Furthermore, Yellen raised issues of concern including the impact of Russia's war against Ukraine on the global economy and "unfair, non-market PRC economic practices", according to Reuters.
  • RBA hiked the Cash rate Target by 50bps to 1.35%, as expected, while it reiterated that the board expects to take further steps in the process of normalising monetary conditions with the size and timing of future interest rate increases will be guided by the incoming data and the board's assessment of the outlook for inflation and the labour market. Furthermore, the central bank noted that Australian inflation was high but was not as high as in other countries and it forecast inflation to peak this year before declining back towards the 2-3% range next year.

European bourses are pressured across the board, Euro Stoxx 50 -0.8%, as a broader risk-off move takes hold despite a relatively constructive APAC handover and limited newsflow in European hours. A move that has impaired US futures, ES -0.4%, as we await the lead from stateside participants re-joining after the long-weekend with a quiet schedule ahead. European sectors are predominantly in the red, though the clear defensive bias is keeping the likes of Food and Healthcare afloat.

Top European News

  • UK faces its first national train drivers' strike in 25 years with the head of the UK train drivers' union warning of 'massive' disruption as members vote on their first strike since 1995, according to FT.
  • BoE Financial Stability Report (July): will raise the counter-cyclical capital buffer rate to 2% in July 2023. Click here for more detail.
  • Ukraine Latest: Turkey Renews Threat to Veto NATO Expansion
  • Bunds Bull Steepen, ECB Hike Bets Pared After French PMI Revised
  • UK Train Drivers Would Make Threatened Strikes National: Union

FX

  • DXY sets new 2022 best above 106.000 after taking time out to mark US Independence Day, reaches 106.24 before waning marginally.
  • Euro slumps to fresh multi-year lows as EGBs rebound strongly and risk appetite evaporates; EUR/USD probes 1.0300, EUR/CHF sub-0.9950 and EUR/JPY below 140.00.
  • Aussie underperforms irrespective of 50bp RBA rate hike as accompanying statement sounds less hawkish on inflation; AUD/USD under 0.6800 from close to 0.6900 overnight and AUD/NZD cross retreats through 1.1050.
  • Pound down regardless of upgrades to final UK services and composite PMIs as Buck rallies broadly and BoE’s FSR flags material deterioration in global economic outlook, Cable beneath 1.2050 from circa 1.2125 peak.
  • Yen holds up better than others amidst Greenback strength on risk and rate grounds; USD/JPY eyes support into 135.50 vs 136.00+ at the other extreme.

Fixed Income

  • Bonds on course for a turnaround Tuesday after marked retreat from pre-weekend peaks on Independence Day.
  • Bunds back above 150.00 from 148.72 low and Friday's 151.65 high, Gilts reclaim 115.00+ status within 116.58-114.60 range and 10 year T-note above 119-00 between 119-20+/118-23 parameters.
  • UK 2051 and German 2033 linker supply reasonably well received, but yields considerably higher.

In commodities

  • Crude benchmarks were fairly resilient to the broader risk tone, but have most recently succumbed to the pressure and are at the lower-end of a USD 3-4/bbl range.
  • Reminder, the lack of settlement due to the US market holiday is causing some discrepancy between WTI and Brent, though they are directionally moving in tandem.
  • UAE’s ADNOC set Murban crude OSP for August at USD 117.53/bbl vs prev. USD 109.68/bbl in July, according to Reuters.
  • Norway's Lederne union said the strike in the Norwegian oil sector had begun, according to Reuters.
  • Saudi Aramco has increased all oil prices for customers in August; sets Aug light crude OSP to Asia at +9.30/bbl vs Oman/Dubai average, according to Reuters sources; NW Europe set at +USD 5.30 vs. ICE Brent; US set at +USD 5.65 vs. ASCI.
  • Russian Deputy Chair of the Security Council Medvedev says the Japanese proposal to cap Russian oil prices would lead to higher global prices, oil prices could increase to over USD 300-400/bbl, via Reuters.
  • Chile’s Codelco copper output fell 6.3% Y/Y in May to 142.9k tonnes, while Chile’s Collahuasi mine copper output fell 15.4% to 49k tonnes and Chile’s Escondida copper output rose 26% to 106.9k tonnes, according to Cochilco cited by Reuters.
  • Russian billionaire Potanin says he is ready to discuss a possible merger of Nornickel with Rusal, via Reuters citing RBC TV; UK sanctions on him do not target Nornickel, Co. is still working under pressure.
  • Spot gold is impaired by the rampant USD action, pressure seen in base metals as well on such dynamics and LME copper now below 8k/T.

 

US Event Calendar

  • 10:00: May -Less Transportation, est. 0.7%, prior 0.7%
  • 10:00: May Cap Goods Ship Nondef Ex Air, prior 0.8%
  • 10:00: May Cap Goods Orders Nondef Ex Air, est. 0.5%, prior 0.5%
  • 10:00: May Factory Orders Ex Trans, prior 0.3%
  • 10:00: May Factory Orders, est. 0.5%, prior 0.3%
  • 10:00: May Durable Goods Orders, est. 0.7%, prior 0.7%

DB's Jim Reid concludes the overnight wrap

I can only apologise in advance for the next few weeks! The Global Institutional Investor Awards will open later this afternoon and not to put it too bluntly we’d like to do well. So if you value our research please vote if you can. More details to follow when the poll opens.

It’s been a quieter 24 hours for markets thanks to the US holiday, but the market remains confused about how to price fixed income in an environment where a recession is coming at some point. We've seen a big yield sell-off to start the week even if equities have stabilised, with a fresh rise in energy prices only adding to concerns about how different economies (particularly in Europe) will fare this winter if Russia cuts off the flow of gas. Overnight the US 2s10s curve has inverted again, the RBA has hiked 50bps as expected and Chinese PMI data has massively beat expectations so a few things going on even in a quieter trading period.

We’ll start with markets in Europe since they were open yesterday. The biggest story there was a sizeable selloff among sovereign bonds as they gave up some of their gains over the last couple of weeks. Yields on 10yr bunds were up +10.1bps, but they were one of the better performers given the risk-off tone and yields on 10yr OATs (+12.7bps) and BTPs (+15.8bps) saw even larger rises, which followed comments from Bundesbank president Nagel who said that it was “virtually impossible to establish for sure whether or not a widened spread is fundamentally justified”. Nevertheless, Nagel did not entirely rule out an anti-fragmentation instrument but said that this “can be justified only in exceptional circumstances and under narrowly-defined conditions.”

This question of how the ECB will deal with a potential widening in spreads is set to come increasingly to the fore as they almost certainly embark on their first hiking cycle in over a decade this month. And yesterday we heard some further comments from ECB officials on that hiking cycle, with Estonia’s Muller pushing back against the calls from others to start with a 50bps hike, saying that it was appropriate to begin with a 25bps move in July, and then 50bps in September as they’ve signalled. In line with the rise in sovereign bond yields, overnight index swaps priced in a slightly more aggressive series of hikes from the ECB, with the rate implied by December up by +7.1 bps on the day.

Whilst the ECB is set to hike rates, their life is being made significantly more difficult by the ongoing energy shock that’s creating increasingly stagflationary conditions. Unfortunately, there was more bad news on that front yesterday, with natural gas futures up by another +10.26% to €163 per megawatt-hour, which is their highest rate since early March and more than double their recent low in early June. Matters haven’t been helped by a planned strike in Norway that puts around 13% of Norway’s daily gas exports at risk, according to the Norwegian Oil and Gas Association, which comes ahead of next week’s scheduled maintenance of the Nord Stream pipeline, which will last from July 11-21.

When it came to equities, the main European indices mostly managed to advance, although as mentioned at the top that was partly a catch-up to the late rally on Friday afternoon in the US, and the STOXX 600 was up +0.54% thanks to a strong performance amongst energy stocks. By contrast, futures on the S&P 500 were lower throughout European trading even if they have flipped higher this morning (futures +0.36%). One similarity between the US and Europe was a slightly more hawkish path for central bank rates being priced, with Fed funds futures taking the Dec-2022 implied rate up by +3.8 bps after last week’s declines. This fits with what Henry mentioned in his latest newsletter yesterday (link here), in which he points out that the recent repricing of the hiking cycle in a more dovish direction is inconsistent with the historic pattern whereby the Fed has always taken rates above inflation as they hike. This morning, yields on US 10yrs (+6.6bps) and 2yrs (+10.8bps) are catching up the global move after the holiday leaving 2s10s very slightly inverted as we go to press.

Speaking of inflation, it was reported by Dow Jones yesterday that President Biden could ease some tariffs on Chinese imports soon, with the article saying that a decision could be announced this week. As discussed in the article and other media reports, this has apparently been a divisive issue inside the administration, since although their removal could help ease inflation, it would also give up leverage in obtaining concessions from China, so there’s geopolitical as well as economic factors at play here.

Asian equity markets are mostly trading higher this morning partly on the tariffs story above and partly on better data overall. Across the region, the Kospi (+1.13%) is leading gains followed by the Nikkei (+0.82%) and the Hang Seng (+0.41%). Bucking the trend are the mainland Chinese markets with the Shanghai Composite (-0.20%) and CSI (-0.95%) both slipping as I type, perhaps on less stimulus hopes after a big beat in the Caixin PMI (see below). Outside of Asia, US and European equities are set to follow the Asian trend with futures on the S&P 500 (+0.36%), NASDAQ 100 (+0.47%) and DAX (+0.60%) moving higher.

Early morning data showed that Japan’s services activity accelerated at the fastest pace since October 2013 as the Jibun Bank services PMI advanced to 54.0 in June from 52.6 in May. Meanwhile, Japan’s real wages (-1.8% y/y) extended its decline in May, notching its biggest contraction in two years compared to an upwardly revised -1.7% decline in April. At the same time, cash earnings rose +1.0% y/y in May (vs +1.5% market consensus, and +1.3% in April), thus adding downside risk to a consumption driven rebound in 2Q22 GDP. Moving to China, growth in the nation’s services sector surprisingly beat as the Caixin services PMI jumped to 54.5 in June, its highest level in nearly a year from 41.4 in May as Covid curbs eased. Elsewhere in the region, South Korea’s CPI rose +0.6% m/m in June (v/s +0.5% expected) and against a +0.7% increase in the prior month.

As widely anticipated, we did see policy tightening by the RBA as the central bank raised its cash rate by 50bps to 1.35% as it moves to tame strengthening inflation. This is the third consecutive increase of the cash rate. The AUD/USD pair was little changed in an immediate reaction.

There wasn’t a massive amount of data yesterday, although we did get German trade figures that showed the country had a monthly trade deficit in goods in May for the first time since 1991. That was thanks to higher import costs as a result of the recent commodity shocks, alongside disruptions to trade from factors including sanctions on Russia, which left the monthly deficit at €1.0bn.

To the day ahead now, and data highlights include the global services and composite PMIs for June, as well as the ISM services index from the US. Otherwise, there’s French industrial production for May and US factory orders for May. From central banks, the BoE will be releasing their Financial Stability Report and we’ll also hear from the BoE’s Tenreyro.

Tyler Durden Tue, 07/05/2022 - 08:03
Published:7/5/2022 7:07:36 AM
[Markets] The Chillingly Realistic Path To Rate Cuts This Year The Chillingly Realistic Path To Rate Cuts This Year

Authored by Jeffrey Snider via The Epoch Times,

Consumer confidence has plummeted already. With gasoline and food prices weighing on far more than American sentiment, it’s no wonder much of the public may have come around to the idea of recession. Politicians and economists are another matter. Nothing in life—let alone the economy—is inevitable, but the entire global system may have passed that point of no return some time ago before anyone (outside of markets) had realized it.

Treasury yields and eurodollar curves have been forecasting contraction not inflation for well over a year already. Starting out as small relative probabilities, as longer-term yields buckled and the eurodollar curve distorted, this was just the markets’ way of signaling a higher degree of confidence in this pessimism.

It all broke wide open, so to speak, once already shameful gasoline prices took a step too far around the beginning of March. In all likelihood, that was the point of no return.

Since then, these same markets after having moved on from “if” to “when” are now thinking especially hard about “how bad.” And this is where recent data fits in.

Unfortunately, various major and minor economic statistics around the world have rather unsurprisingly confirmed these market suspicions. First, a slowdown rather than acceleration in the middle of last year when the public’s attention was exclusively fixed on what “everyone” said was big inflation.

That slowing was a warning it had only ever been “inflation” (supply shock, not excess money) which meant it all came with an expiration date (yes, transitory). This unappreciated 2021 downturn was picked up in all the data, too, including U.S. (and overseas) real GDP.

Then, like curves, GDP changed for the worse during 2022’s first quarter. In America, the Bureau of Economic Accounts (BEA) said output adjusted for prices (real) fell rather alarmingly in those three months. The final revisions to Q1 were released just now and were even weaker than previously thought (below).

To begin with, sales of goods were revised downward, while at the same time inventory accumulation was revised upward; basically, the BEA now thinks fewer goods were sold leaving more stuck in the hands of retailers who other data (Census Bureau) conclusively shows are already drowning in stuff, and are increasingly desperate to get out from under it all.

The inevitable result should be a near-term future of discounting and liquidations (falling prices, at least outside of energy for now) of that inventory pile to go along with canceled, cut, and desisted new orders for producers all around the world, domestic and foreign. We’ve seen this take shape already (PMIs have uniformly shown rapid declines in manufacturing order activity).

Here’s the truly concerning part.

All of these things, bad enough already, have developed and transpired under a relatively benign backdrop. What I mean is, the labor market— therefore jobs— hasn’t thus far been seriously stressed. By most measures, it might appear to be doing rather well.

Confidence has crashed and spending in real terms is decelerating to modestly falling, and yet there are only tangential indications of employment difficulties (the BLS’s CPS, or Household Survey, turned negative in April and didn’t bounce back in May, otherwise most labor data might outwardly appear practically terrific).

What happens if—or when—the aggregate labor situation actually does become meaningfully worse?

We’re already in rough, possibly recessionary shape. Should employers begin to actively cut workers with any sort of serious determination, this could turn a mild recession into, well, what market curves are shaping as some real downside risk just ahead.

All it would take is the very thing that turns the labor market from uncertain and concerning into outright awful: falling corporate profits.

That very situation was included within the update to the bad GDP news for Q1 2022. Along with revised estimates for spending and investment across the U.S. economy, the BEA also produced profit estimates that fell by nearly 5 percent from the fourth quarter (first chart below). Like overall GDP and output, company bottom lines had previously been pressured throughout the second half of 2021 before this.

Much, maybe most, of the prior 2020-21 profit “growth” had been due to Uncle Sam’s various “rescue” schemes including all those PPP “loans” which immediately (corruption at America’s finest) became “grants.” It was an enormous transfer from the Treasury market via the federal government to corporations that were supposed to maintain and then add back their workforces.

The latter didn’t happen, not as much.

As a reminder, there are fewer jobs (CES) today than there had been in February 2020, well more than two years ago. Obviously, the grant-making scheme didn’t play all the way out as it was meant to (and there are honest arguments about whether the economy would’ve been much worse had it not been done).

In short, Uncle Sam massively boosted corporate earnings and these companies responded rationally to what was a temporary, one-time gift. They were cautious about rehiring (which is why jobs overall still lag so far behind, not some ridiculous Great Resignation excuse) because the “transitory” supply shock phenomenon isn’t the same thing as real and actual recovery.

It’s sure not overheating.

There is, as you’d expect, a pretty tight correlation between the rate of hiring economy-wide and bottom lines (specifically, between BEA’s corporate profit series and BLS’s Establishment Survey). With companies already more likely to have pocketed last year’s windfall than to have acted on it, and with profitability like the overall economy starting to go down already, what might this propose about this quarter right now before, then, the second half of this year?

It is shaping up to be a perfect storm of negative factors, only some of which have been thus far fully unleashed: strained consumers at their limits; overfilled retailers and wholesalers demanding mercy from producers by fast-canceling orders; global manufacturers and industry now dealing with fewer orders while struggling from input costs such as commodities; a pernicious lack of overall economic strength for about a year, despite so much talk about red-hot macro and inflation.

On top of all that existing woe, then comes the more-than-hypothetical hammer blow—very real prospects for widespread layoffs. In point of fact, it may not take that many to push it all over the edge, just further lack of a jobs rebound.

If consumers are already in the dumps when jobs aren’t disappearing, think ahead to what happens to all the above if they do start going away.

That’s what has happened on these curves.

All the preconditions for nasty have been set, met, and made plain by the flow of recent data. Therefore, taking curves more literally, exactly the way in which the inflation-fighting certitude and aggression from the FOMC becomes the meek, embarrassing U-turn (or “pivot,” as the Fed’s apologists prefer) into rate cuts.

This year.

Tyler Durden Tue, 07/05/2022 - 07:20
Published:7/5/2022 6:31:49 AM
[Markets] Need to Know: Here’s how far house prices are set to fall as rates go up, says Capital Economics This is not a 2008 reboot, says Capital Economcs' Neil Shearing.
Published:7/5/2022 6:31:49 AM
[Markets] Apollo inks venture for $2 billion LNG marine infrastructure platform Apollo inks venture for $2 billion LNG marine infrastructure platform Published:7/5/2022 6:08:08 AM
[Markets] Bezos' $500 Million Superyacht Trapped At Dutch Shipyard  Bezos' $500 Million Superyacht Trapped At Dutch Shipyard 

Jeff Bezos' massive superyacht was built by Oceanco, a Netherlands-based custom yacht builder, and informed the city of Rotterdam it would scrap the request to dismantle a historic bridge to accommodate the Amazon founder's vessel, according to the Dutch news website Trouw

Bezos' new yacht, codenamed Y721, will have to pass under the Koningshaven Bridge, known locally as De Hef. The landmark bridge can only rise 130 feet into the air, but this isn't far enough to accommodate the yacht's 127-meter schooner and its three massive masts. 

Oceanco built the $500 million vessel for Bezos, and the plan was to have Rotterdam temporarily take apart the bridge -- though now, the shipbuilder abandoned its plans to dismantle the bridge following public outcry earlier this year. 

"As a result of the reports, shipyard employees feel threatened and the company fears vandalism," Trouw reported. 

Rotterdam politician Stephan Leewis recently tweeted Bezos' request was a "bridge too far." 

"This man has earned his money by structurally cutting staff, evading taxes, avoiding regulations and now we have to tear down our beautiful national monument?" Leewis said.

It's unclear how Y721 will now be transported to the North Sea. The superyacht remains at the shipbuilder yard until Rotterdam grants Oceanco permits to dismantle the historic bridge. Residents have said if the possible tear-down occurs, they would organize huge protests against the billionaire and bombard the vessel with rotten eggs as it passes by the bridge. 

Tyler Durden Tue, 07/05/2022 - 06:55
Published:7/5/2022 6:08:08 AM
[Markets] 3 Dow Stocks That Are Screaming Buys in July For well over a century, the iconic Dow Jones Industrial Average (DJINDICES: ^DJI) has been the most-watched stock index in the world. Originally comprised of 12 mostly industrial companies when it debuted in 1896, the Dow Jones has, today, grown to a 30-stock index packed with profitable, time-tested, and diverse multinational businesses. The maturity of the 30 components that comprise the Dow makes these stocks especially popular with the broader market undergoing its steepest downturn since March 2020, and closing out its worst start to a year since 1970. Published:7/5/2022 5:00:21 AM
[Markets] Hamburg Official Tells Residents Prepare For Hot Water Rationing Amid Energy Crisis  Hamburg Official Tells Residents Prepare For Hot Water Rationing Amid Energy Crisis 

The second-largest city in Germany is mulling over the potential rationing of hot water as the energy crisis worsens. 

"In an acute gas shortage, warm water could only be made available at certain times of the day in an emergency," Hamburg's environment senator Jens Kerstan told German newspaper Welt am Sonntag on Saturday. 

Kerstan also spoke with the German daily newspaper Hamburger Abendblatt and warned, "We are in a much worse crisis than most people realize." 

He asked Hamburg residents to reduce shower times, install energy-saving shower heads, and modernize thermostats for maximum power savings. 

"The more we save now, the better the situation will be in winter because the storage tanks fill up," he added, referring to the need to save power so more NatGas injections can be made into storage ahead of the winter season. 

Kerstan's possible hot water restrictions follow German Vice-Chancellor and Economy Minister Robert Habeck's interview with Der Spiegel magazine last month that called for German citizens to shower less to overcome the worst energy crisis in a generation. 

The German government's increasing talk about reducing shower time and conserving hot water comes as Russia reduced Nordstream NatGas flows by 60%. Germany is heavily reliant on cheap Russian Natgas, and fears mount that Europe's largest economy could face even more NatGas cuts later this summer. 

Weeks ago, Germany triggered the "alarm stage" of its NatGas-emergency plan to address shortages. Yasmin Fahimi, the head of the German Federation of Trade Unions, warned over the weekend, "Because of the NatGas bottlenecks, entire industries are in danger of permanently collapsing: aluminum, glass, the chemical industry." 

Fahimi warned: "Such a collapse would have massive consequences for the entire economy and jobs in Germany."

Germany's worsening energy crisis shows no signs of abating, and it seems probable that Hamburg residents could be showering in cold water. 

Tyler Durden Tue, 07/05/2022 - 05:45
Published:7/5/2022 5:00:21 AM
[Markets] U.S. stock futures turn lower as dollar surges against euro U.S. stock futures turn lower as dollar surges against euro Published:7/5/2022 4:13:52 AM
[Markets] Global PMIs Promise Further Rates Downside Global PMIs Promise Further Rates Downside

By Simon Flint, Bloomberg Markets Live commentator and analyst

The themes of mounting recession risks and declining price pressure - leading to lower rates - are apparent in JP Morgan’s consolidated manufacturing PMIs for June.  The overall manufacturing PMIs showed a falling headline figure, and more depressed new orders. Rapidly improving price data and Supplier Delivery Times (SDTs) undercut inflation fears. In more detail:

The global manufacturing PMI declined by only 0.1 point to 52.2, held up by parts of EM and rogue G-10 countries like Australia.

This figure has been trending lower since May 2021

  • New orders were less encouraging, falling 0.8 points to 50.1. This bodes somewhat ill for the headline number, which has a 20% lagged correlation in changes terms since July 2019
  • Output prices fell to 65.8, decisively lower than the April peak of 69.9, and the largest decline since April 2020
  • SDTs improved sharply with the most rapid rate of improvement since June 2020 and now sit well above the pits of 34.7 in Oct. 2021

The global PMIs have both coincident and leading relationships with 10-year interest rates, suggesting that yields can fall. 

Using data from July 2019 through June 2022, the levels correlation for the headline number, new orders, output prices, and Supplier Delivery Times (SDTs) are 30%, 55%, 63% and -15% respectively (remember SDTs are inverted, so a lower number is more inflationary). These correlations tend to rise steadily until the PMIs are lagged by four months.

Readers might immediately think that these figures are blown-up by the Covid shock, making them very unreliable.

But using data from 2015 through 2019, simultaneous changes and lagged correlations with yields are surprisingly high, at least for output prices and SDT. Output prices enjoy an 88% simultaneous correlation in terms of changes and the correlation remains above 40% until the 3rd lag. SDTs start insignificant at -10% (concurrent), but correlations intensify steadily to -43% at a 6-month lag. The headline PMI number correlated by an average of 13% over 1-5 month lags.

This makes sense. The recent focus on inflation risk has been key for rates, and can be immediately felt through higher output prices. SDTs tend to act with a delay, as unresolved supply problems are more gradually pushed into prices. This looks to be borne out by a somewhat lagged relationship between SDTs and output prices.

Tyler Durden Tue, 07/05/2022 - 05:00
Published:7/5/2022 4:13:52 AM
[Markets] Kelley Blue Book: How electric truck buyers are hedging their bets Customers who reserved a Cybertruck, Rivian, Ford F-150 Lightning or Chevy Silverado EV are making sure they get the first one to come along.
Published:7/5/2022 4:13:52 AM
[Markets] Scandinavian airline SAS files for chapter 11 bankruptcy protection in the U.S. Scandinavian airline SAS files for chapter 11 bankruptcy protection in the U.S. Published:7/5/2022 3:24:48 AM
[Markets] FTSE falls as UK braces for first national rail strike in 25 years Union bosses have warned of further disruption during the Summer holiday period as British commuters face rail, air and road travel chaos. Published:7/5/2022 3:24:48 AM
[Markets] UK Fuel Price Protests Cripple Motorways With "Go-Slow" Convoys UK Fuel Price Protests Cripple Motorways With "Go-Slow" Convoys

British authorities warned drivers of "serious disruption" on Monday as protestors seeking relief from high fuel costs used "go-slow" convoys to cause traffic jams on major UK motorways over a wide swath of territory. 

Organized via social media under the banner of "Fuel Price Stand Against Tax," rolling, slow-moving roadblocks of cars, trucks and tractors started their protests around 7am. According to The Guardian

Motorways in the Bristol area, Devon, Cornwall, south Wales, Essex, Yorkshire and Lincolnshire were among those affected. Two tractors caused long tailbacks into Aberdeen by driving slowly side by side along the A92 northbound.

Police escorted some of the blockades, only to block them at their turnaround points and make arrests. The PA News Agency reports a dozen motorists were detained after blocking traffic across the Prince of Wales Bridge between South Wales and Somerset. The Telegraph reported the bridge was hardest hit in the protest, with traffic closed for more than an hour. 

“The right to protest under UK law must be balanced with the rights of the wider community who may be affected," said Gwent police chief superintendent Tom Harding. UK authorities say the protests threaten to impede the response of emergency services. 

The founder of the FairFuelUK, Howard Cox, told the Scottish Sun that protestors were targeting three-lane freeways, with the intent to slow traffic in two lanes while leaving the "fast lane" free.  

a police officer points to spike strips while talking to a man holding a sign reading
Police used spike strips to prevent a protest convoy from entering a freeway (Cameron Smith/Getty Images via Guardian)

The price of petrol in the UK has surged to to a record 191.53 pence per liter, which equates to $8.78 a gallon.—the highest among the five largest European economies.

The protestors are bent on achieving a cut in fuel taxes. None of their quoted rhetoric connects the dots between the price at the pump and Western sanctions against Russia. In March, the UK declared it will phase out Russian oil imports by December, as will the European Union. 

Cox told The Independent the effort is largely driven by small business owners: 

“People are at the end of their tether. This is hard-working, decent people who are fed up to their back teeth with the high cost of pump prices. Across Europe, diesel is on average 25p cheaper and petrol 20p cheaper than in the UK. Germany cut fuel tax by 26p, Spain by 20p and Ireland by 17p. Why can’t the Government do the same? They did 5p in the Spring Statement and it didn’t even touch the sides.”

That 5 pence tax cut came in March and is slated to last until March 2023. At the time, UK Chancellor of the Exchequer Rishi Sunak touted it as "the biggest cut to all fuel duty rates ever." The 8.6% cut left the tax at 53 pence per liter. 

Protestor Vicky Stamper told The Guardian she and her partner quit their jobs because they couldn't afford the commute. “It was costing us £380 [$460] a week just to get to and from work. I then lost a job two weeks ago because the company couldn’t afford to put fuel in that many lorries so last in, first out,” she said. 

Protestors warned their next action might come in the form of a blockade on oil refineries. When previously employed in 2000 by farmers and truck drivers fighting taxes so high they represented 80% of the cost of gas, just one week of the tactic caused havoc, from huge lines at gas pumps to mail stoppages and grocery-rationing. 

The Royal Automobile Club (RAC), akin to the American Automobile Club, told Bloomberg the rising price at the pump is inconsistent with a five-week drop in wholesale prices. “We would love to hear their reasoning for keeping their prices so high in this instance,” said RAC spokesman Simon Williams.  

Some drivers on the M4 stepped out of their idle vehicles and took the opportunity to hone their soccer skills—or, football skills, if you like: 

Idled drivers on the M4 pass the time with a "kickabout" (screenshot from Guardian video

 

Tyler Durden Tue, 07/05/2022 - 04:15
Published:7/5/2022 3:24:48 AM
[Markets] Market Extra: With prices skirting a 17-month low, Dr Copper’s prognosis about the global economy is downbeat The Nymex copper contract flirted with sub-$3.50 per pound, its cheapest since February 2021.
Published:7/5/2022 3:24:48 AM
[Markets] The Woke Inquisitors Have Come For The Freethinking Heretics The Woke Inquisitors Have Come For The Freethinking Heretics

Authored by J.B.Shurk via The Gatestone Institute,

Attacks on free speech are on the rise.

A British college recently expelled a student for expressing support for the government's official policy of deporting illegal immigrants. A Wisconsin school district charged three middle-schoolers with sexual harassment last month for refusing to use the plural pronoun "they" when referring to a single classmate. US President Joe Biden's National Climate Advisor Gina McCarthy recently encouraged social media companies to censor from their online platforms any opinions that contradict Biden's climate change narrative.

In its continued commitment to preserve the government's monopoly over COVID-19 information, Twitter actually suspended a medical doctor for merely sharing a scientific study that suggests the Pfizer vaccine affects male fertility. And the NFL's Washington Commanders fined defensive coordinator Jack Del Rio $100,000 and forced him to apologize only weeks ago for having expressed his opinion that 2020's summer of riots across the United States after George Floyd's death was more destructive than the few hours of mayhem at the Capitol on January 6, 2021.

In contrast, it has become newsworthy that entertainment powerhouse Paramount has chosen not to censor old movies and television shows containing content that today's "woke" scolds might find "offensive." In a "cancel culture" world where censorship and trigger warnings have become the norm, preserving the artistic integrity of a film is now considered outright daring. In fact, even publishers of old literary classics have begun rewriting content to conform with "politically correct" sensibilities.

Examples such as these, where personal speech is either censored or punished, are becoming much more frequent, and anybody who minimizes the threat this increased intolerance for free expression poses to a democratic society is either gullibly or willfully blind. As any defender of liberty knows, nothing more quickly transforms a free society into a totalitarian prison than crackdowns on speech. Of all the tools of coercion available to a government, preventing individuals from freely expressing their thoughts is most dangerous. Denying citizens that most basic societal release valve for pent-up anger and disagreement only heightens the risk for outright violence down the line. Either silenced citizens become so enraged that conflict becomes inevitable, or the iron fist of government force descends on the public more broadly to preemptively curtail that possibility. Either way, the result is a disaster for any free society.

For Americans who cherish free speech, this undeniable war on language and expression is jolting but not shocking. Whenever censorship slithers back into polite society, it is always draped in the mantle of "good intentions."

Fifteenth-century Dominican friar Girolamo Savonarola's "bonfire of the vanities" destroyed anything that could be seen to invite or reflect sin.

The notorious 1933 Nazi book burning at the Bebelplatz in Berlin torched some 20,000 books deemed subversive or "un-German".

During Communist China's decade-long Cultural Revolution in the 1960s and '70s, the vast majority of China's traditional scrolls, literature and religious antiquities went up in smoke.

All three atrocities were celebrated as achievements for the "greater good" of society, and people inebriated with "good intentions" set their cultural achievements aflame with fervor and triumph. Much like today's new censors who claim to "fight hate" because "that's not who we are," the arsonists of the past saw themselves as moral paragons, too. They purged anything "obscene" or "traditional" or "old," so that theocracy, Nazism, or communism could take root and grow. And if Western institutions today are purging ideas once again, then it is past time for people to start asking just what those institutions plan to harvest next.

We in the West are running — not walking — toward another "bonfire of the vanities" in which normal people, egged on by their leaders, will eagerly destroy their own culture while claiming to save it. This time around the "vanities" will be condemned for their racist, sexist, transphobic, anti-science or climate-denying ways, but when they are thrown into the fire, it is dissent and free expression that will burn.

There will one day be much disagreement as to how the same Western Civilization that produced the Enlightenment and its hallowed regard for free expression could once again surrender itself to the petty tyranny of censorship.

Many will wonder how the West's much-vaunted "liberal" traditions could meekly fold to the specter of state-controlled speech.

The answer is that the West has fallen into the same trap that always catches unsuspecting citizens by surprise: the steady encroachment on free speech has been sold as a "virtue" that all good people should applaud.

First, certain thoughts became "aggravating factors" that turned traditional crimes into new "hate crimes" deserving of additional punishment.

Then the definition of what is "hateful" grew until politicians could comfortably decree anything at odds with their agendas to be examples of "hate."

Who would be for "hate," after all? Surely no-one of good sense or good manners.

Now "hate" has transformed into an elusive description for any speech that can be alleged to cause the slightest of harms.

From there, it was easy for the state to decree that "disinformation," or rather anything that can be seen to contradict the state's own official narratives, causes "harm," too.

Those who despise free speech told society, "If you do not punish hate, then you're a bigot." And today, if you oppose the government's COVID-19, climate change, immigration, or other contentious policies, your harmful "disinformation" must be punished, too.

It is a slippery slope, is it not? Once governments normalize censorship and the punishment of points of view, free expression is firmly stamped with an expiration date.

After the Nazis went down this poisonous path, repentant Germans built a public memorial to remember the book burning at the Bebelplatz and ensure its tragic lesson was never forgotten. On a plaque in the square is a commemorative engraving, paraphrasing the 19th century German writer Heinrich Heine:

"That was only a prelude; where they burn books, they will in the end also burn people."

That warning comes with no expiration date.

Tyler Durden Tue, 07/05/2022 - 02:00
Published:7/5/2022 1:08:44 AM
[Markets] The Wall Street Journal: Biden could announce easing in some China tariffs this week, say sources The Office of the U.S. Trade Representative is conducting a mandatory four-year review of the Trump-era tariffs. 
Published:7/5/2022 12:49:53 AM
[Markets] The Margin: Macy’s Fourth of July fireworks: how to watch and what’s new in the star-spangled show On July 4, 48,000 shells and effects will light the sky with new shapes like howling wolves and color-changing ghosts. Here's where to watch or stream.
Published:7/5/2022 12:12:43 AM
[Markets] Dow Jones Futures Rise, Bond Yields Jump; BYD Leaves Tesla In The Dust Don't feed the bear market, prepare for the next bull run. Tesla deliveries fell sharply in Q2 with BYD on tap. Published:7/5/2022 12:12:43 AM
[Markets] The People Crafting US Policy Aren't In America The People Crafting US Policy Aren't In America

Authored by Joseph Solis-Mullen via The Libertarian Institute/Mises.org,

In a piece of news that shocked the mainstream media, but which shocked no one familiar with the academic industry writ large, retired US Army general John Allen was forced to resign as president of the Brookings Institution after it was revealed the FBI was investigating him for lobbying on behalf of the Qatari monarchy.

Of course, the real news, scarcely noted by The Washington PostNew York Times, or any other purported paper of record, is that Allen was only really in trouble because he hadn’t fulfilled the pro forma legal requirements for those lobbying the U.S. government on behalf of a foreign agent or government.

The Foreign Agents Registration Act (FARA), under which such activities are regulated, includes several exceptions that allow for such activities without declaring a conflict of interest. Think tanks, a misnomer if ever there was one, operate under an "academic exception" that allows for engagement in "bona fide religious, scholastic, academic, or scientific pursuits or the fine arts."

Anyone who has ever picked up one of the many deadly dull social science journals where actual, bona fide empirical academic work is done knows this constitutes perhaps a fraction of what think tanks almost daily churn out. Rather think tank commentary, touted as objective analysis, is regularly featured or cited by publications and outlets as apparently diverse as The Wall Street Journal and NPR.

Of course, think tanks are hardly alone. As Ben Freeman, a specialist on foreign influence on U.S. policy, has documented, such democratic bastions of liberal values as the UAE and Saudi Arabia donate hundreds of millions, even billions, to universities around the country.

Of course, from a libertarian perspective, who is to say who should be giving money to whom and for what? Further, FARA’s provisions are so nebulous that virtually anyone could be targeted for virtually any reason, an obvious opportunity for unaccountable federal officials to impinge on Americans’ civil liberties.

But the blatant hypocrisy of it all is what really stands out, as the same universities and think tanks regularly decry the apparently perfidious influence of countries like China, which they breathlessly warn uses our "open institutions" for its own gain. Should any of their number dare to go off message and report, for example, on the well-documented and wholly negative influence of countries like Israel on US foreign policy, they are tarred as anti-Semites, racists, or foreign agents themselves!

The truth is the powerful Israel and Saudi Arabia lobbies have been able to steer US policy in directions clearly at odds with the best interests of the American people for decades. Unsurprisingly, perhaps nowhere has the deleterious effect of their money been more felt than in US policy toward Iran, with the Saudis, Israelis, and Emiratis dumping literally billions of dollars into attacks on a country the United States should have normalized relations with decades ago.

The Uyghur lobby is another such interest group that enjoys an open door in Congress and the op-ed pages of prominent papers—this while its nakedly paramilitary arm advocates the violent overthrow of the Beijing government! And what are we, or foreign governments like China, to think when the parent organization of such extremists, the World Uyghur Congress, takes funding from the US government itself? We aren’t supposed to think about it at all.

Just like we aren’t supposed to question any of the other nakedly self-serving policies. Who, for example, is surprised to learn there is a large and active Ukraine lobby in Washington? That has paid off handsomely, with our government now handing over $130 million daily to Kyiv with little to no oversight.

And of course, most maddeningly, any critically thinking American who even dares to question the US government’s obviously dangerous and counterproductive policies, bought and paid for by literal foreign agents, are themselves accused of being in the pay of Moscow, Beijing, or Tehran.

Never mind that all the evidence points in the opposite direction.

Again, the American people aren’t expected to think at all, only to stay in line and keep the money flowing. This is the sad state of foreign policy in America, and it happens right out in the open.

Tyler Durden Mon, 07/04/2022 - 23:30
Published:7/5/2022 12:12:43 AM
[Markets] Market Extra: Ray Dalio attacks U.S. populists and warns Russia may be ‘lesser loser’ in Ukraine war The founder of Bridgewater Associates took to Linkedin on the U.S. Independence Day holiday to deliver an update on forces he believes are shaping the world.
Published:7/4/2022 1:45:54 PM
[Markets] Beauty Contests And Market Bottoms Beauty Contests And Market Bottoms

By Nick Colas of DataTrek Research

Today we will discuss an early classic in the field of behavioral finance: John Maynard Keynes’ “Beauty Contest”. Its lesson is that market prices are set by what investors think other investors think. At present, that dynamic is creating ever-lower stock prices because of the increasingly consensus idea that the S&P 500 will bottom somewhere between 3,000 and 3,400. Those levels come from expectations of lower earnings due to a recession. The bottom will come when investors think other investors believe it has arrived.

For Story Time Thursday this week we have a discussion of an early behavioral finance concept called the “Keynes Beauty Contest”. While distinctly out of step with modern values – the idea comes from John Maynard Keynes 1936 work “The General Theory of Employment, Interest and Money” - it is still a hugely useful paradigm today. Especially today, frankly …

Richard Thaler published a wonderful analysis of the Beauty Contest in 2015 (link below), which quotes from the 1936 Keynes work to describe how it works:

  • Imagine a newspaper contest “in which the competitors have to pick out the six prettiest faces from 100 photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole …”

  • “ … each competitor has to pick, not those faces that he himself finds prettiest, but those that he thinks likeliest to catch the fancy of other competitors, all of whom are looking at the problem from the same point of view …”

The analogy to equity markets:

  • Investors and traders look for investment ideas they think other market participants will find more attractive in the future.

  • The timeframe may be a day or a week for a trader and 6-12 months for an investor, but the idea is the same. Buy things that you expect other people will find more valuable at some future date. Any analysis worth pursuing must be in service to that goal.

The hard bit about the Beauty Contest as far as its application to investing is that it is iterative. It is not enough to pick faces you think the crowd will find attractive. Everyone else is doing that too. To win, you must run multiple cycles of “what will the crowd think?”

Thaler’s article updates Keynes’ idea with a numerical version which explains why this is so challenging:

  • “Guess a number from zero to 100, with the goal of making your guess as close as possible to two-thirds of the average guess of all those participating in the contest.”

  • “To help you think about this puzzle, suppose there are three players who guess 20, 30 and 40 respectively. The average guess would be 30, two-thirds of which is 20, so the person who guessed 20 would win.”

  • The naïve guess would be 50 – the midpoint between 1 and 100 – based on the assumption contestants are lazy and would just pick random numbers rather than latch on to the wrinkle of “two-thirds of the average guess”.

  • More educated guesses might be 33 (two thirds of that 50 naïve estimate) or 22 (on the assumption contestants have thought the problem through, but not iterated one level deeper).

Math nerds will think of this as a Nash equilibrium problem, and Thaler makes the point the only viable answer using this approach is zero. Iterate the last point’s math ad infinitum and you get zero. Yes, this assumes only math Ph.D.s are playing the game. But it is a logical conclusion nonetheless.

We can use this idea to estimate what market participants think fair value on the S&P 500 is today:

The naïve guess is today’s close: 3785. We’ve had a horrible first half of 2022, and maybe all the bad news is finally baked into stock prices.

The second order guess might be 3,386, if we assume investors will think other market participants will key off either pre-pandemic highs and/or discount a modest earnings recession:

  • This was the last S&P 500 high before the Pandemic Recession (February 19th, 2020).

  • It is also 18x S&P earnings of $188/share, which is roughly 15 percent (14.5 pct, to be exact) below current earnings power of $220/share.

  • While earnings typically decline 25 percent in a recession, perhaps any upcoming economic downturn will be milder than most. The 18x multiple is slightly richer than the 10-year average of 17x, but fair since investors tend to pay more for trough earnings as they anticipate higher earnings in a recovery.

The third order guess could be around 3,000, if investors believe markets must discount a full-blown recession before there is enough general interest in stocks to make for a durable low:

  • Assume an average hit (25 pct decline) to S&P earnings from a recession and you get $165/share versus the current $220/share earnings power.

  • Put an 18x multiple on that $166/share and you get an S&P of 2,970.

Takeaway: fair value on the S&P – or any other stock market index – is a function of what investors think other investors think. In bull markets those beliefs are iteratively revised upwards. In bear markets, such as now, those revisions trend lower until specific catalysts change investor perceptions. Then, the whole cycle starts all over again. At the end of a very difficult 6 months for stock prices, it is worth remembering that there is always a low and a next bull market. The goal now is to play defense until those arrive.

Source: Thaler article: https://www.chicagobooth.edu/review/keyness-beauty-contest

Tyler Durden Mon, 07/04/2022 - 14:30
Published:7/4/2022 1:45:54 PM
[Markets] How Far Could the Stock Market Fall? 2 Indicators May Hold the Answer If there's a perfect word to sum up the first six months of 2022 for the investing community, I believe it's "Yuck!" As of the closing bell on June 30, 2022, the U.S. stock market delivered its worst first-half return in 52 years. Since hitting their respective all-time closing highs between mid-November and the first week of January, the widely followed Dow Jones Industrial Average (DJINDICES: ^DJI), broad-based S&P 500 (SNPINDEX: ^GSPC), and growth-stock-driven Nasdaq Composite (NASDAQINDEX: ^IXIC), respectively plunged by as much as 19%, 24%, and 34%. You'll note these figures firmly entrench the S&P 500 and Nasdaq in a bear market, with the iconic Dow Jones just one bad day away from joining its peers. Published:7/4/2022 6:23:47 AM
[Markets] Von Greyerz: This Implosion Will Be Fast... Hold On To Your Seats Von Greyerz: This Implosion Will Be Fast... Hold On To Your Seats

Authored by Egon von Greyerz via GoldSwitzerland.com,

The massive money creation in the 2000s has led to a debt and asset bubble, which is about to burst. Investors will be shocked by the speed of the decline and won’t react before it is too late.

The massive money creation by central and commercial banks in this century has resulted in a growth of global assets from $450 trillion in 2000 to $1,540 trillion in 2020.

DEBT TO GDP GROWTH

As the chart below shows US debt to GDP held well below 25% from 1790 to the 1930s, a period of almost 150 years. The depression with the New Deal followed by WWII pushed debt to GDP up to 125%. Then after the war, the debt  came down to around 30% in the early 1970s.

The closing of the gold window in 1971 ended all fiscal and monetary discipline. Since then, the US and much of the Western world has seen debt to GDP surge to well over 100%. In the US, Public Debt to GDP is now 125%. Back in 2000 it was only 54% but since then we have seen a vote buying system with a money printing bonanza and an exponential increase in debt to 125%.

A major part of the debt increase has gone to finance the rapid growth in property values.

The table below shows that property has grown on average by 250% between 2000 and 2020. So individuals are creating wealth by swapping properties with each other. Hardly a sustainable form of wealth creation.

The exponential growth in property prices has been global although countries like China, Canada, Australia and Sweden stand out with over 200% gains since 2000. Most of the properties bought in the last 20+ years involve massive leverage. When the property bubble soon bursts, many property owners will have negative equity and could easily lose their homes.

So both private and government debt is continuing to grow rapidly. But nobody should believe that it will stop here. The Fed’s intention to reduce the balance sheet is not working and the debt is at best going sideways currently.

BIDEN BANS RUSSIAN GOLD

So it is happening again. The US has decided to ban imports of Russian gold and told the whole G7 to follow suit. President Biden sent the following Tweet last week:

So what will the consequences be?

Russia is the second biggest gold producer in the world after China. Just like  with oil, gas and many other commodities, the effect will be higher gold prices over time. The gold trade is international and the major buyers of gold are China and India. So Russia can continue to sell gold to the Far East, the middle East and South America.

Also, when the EU sanctions started, the LBMA (London Bullion Market Association) decided not to accept gold that had been refined in Russia. 

So the effect of the G7 ban will be minimal since gold deliveries from Russian refiners to the bullion banks already stopped in early March.

SANCTIONS ARE COUNTER PRODUCTIVE

Biden also signed an executive order on 15 March this year, prohibiting US persons to be involved with gold trading with Russian parties.

Still, more sanctions by the US and Europe will over time create shortages in gold just as it has in other commodities. So Russia will be able to sell its commodities including gold to other markets at higher prices.

But since Russia by far has the greatest commodity reserves in the world at $75 trillion, the value of these reserves are going to appreciate for years as we are now at the beginning of a major bull market in commodities.

The US and EU sanctions of Russia affect around 15% of the world population so there are still plenty of markets where Russia can trade.

The Roman Empire controlled parts of Europe, North Africa and the Middle East. The Empire prospered primarily due to free trade within the whole area with no sanctions. Sanctions hurt all parties involved. And since Russia is such a major commodity country that can continue to trade with major nations, they will over time suffer less than the sanctioning countries.

The consequences of these sanctions especially for Europe where many countries are dependent on Russian oil and gas will be totally devastating. So the US and Europe have really shot themselves in the foot.

GOLD, THE US DOLLAR & STOCK MARKETS

Coming back to gold, the US and G7 move is more likely to have a beneficial effect on gold over time with demand increasing and supply being restricted.

Gold started an uptrend in year 2001 that lasted for 10 years to 2011 when gold reached $1,920. After a major correction for 3 years until 2016, to $1,060, gold has resumed its exponential uptrend as can be seen in the chart below.

Although gold has not yet made sustained new highs in dollars, we have seen much higher highs in gold against most currencies. The temporarily strong dollar is making gold look weak measured in the US currency but that is unlikely to last for long.

MAJOR GOLD MOVE COMING

As the chart below shows, gold is finishing a Cup and Handle technical pattern. It does allow for a slightly lower price before the next move up although that is not certain. Regardless, the major trend for gold is substantial and I expect a sustained move up to at least 2026 but probably for much longer. Obviously there will be major corrections on the way.

DOLLAR FALL NEXT

If we look at the chart of the dollar against the Swiss franc since 1970, we can see that the 78% fall so far has gone sideways for 10 years.

The next move down is likely to be another 50% to 0.45-0.50 at least.

So the feeble and temporary dollar correction up is likely to end soon with a strong down move next.

MAJOR STOCK MARKET FALL AHEAD

Stocks globally are down around 20% this year.

The next move down in stocks could happen within the next few weeks. This is likely be a shocking move which will paralyse investors as they won’t have time to react.

So we could see stocks and dollar strongly down at the same time with the metals up. Even if gold and silver comes down initially, that move will not last. The uptrend in the metals is soon about to resume.

Wealth preservation

Our company made substantial purchases of physical gold at the beginning of 2002 for our investors and ourselves.  The price was then $300. We have never sold an ounce since then but added at opportune moments.

There was, as the gold chart above shows, a major move until 2011 and then a vicious 3 year correction to $1,060 before the bull trend resumed. As I mentioned above, gold has made much higher highs above the 2011-12 highs in Euros, Pounds,Yen, Swedish kronor, Australian dollars etc.

US dollar highs are just around the corner.

As we bought gold for wealth preservation purposes, it was essential that it was physical with direct ownership and control for the investor. To be able to inspect your own gold is also a requirement. 

It is also imperative to store the gold outside an increasingly fragile financial system. If you buy gold as insurance against such an over-leveraged and weak system, it obviously serves no purpose to store it within that system.

To store your insurance asset in a safe jurisdiction is clearly critical. Especially with the current geopolitical unrest it is essential to take advice on location. Also important is to be able to move the gold quickly if necessary.

The reputation and values of the company that assists you with your gold investments must be impeccable.

It serves no purpose to make your choice based on the lowest cost of storage, insurance and handling when you are protecting one of your most important assets. 

BE CAREFUL

So there are likely to be major moves in markets next.

No one can of course time these moves exactly. But what is critical to understand is that risk is now extremely high and investors are not going to be saved by central banks.

And remember that fire insurance can only be bought before the fire starts!

Tyler Durden Mon, 07/04/2022 - 07:10
Published:7/4/2022 6:23:47 AM
[Markets] 'Reset' This! 'Reset' This!

Authored by Michael Walsh via AmericanMind.org,

The following is an excerpt from Michael Walsh’s forthcoming book, Against the Great Reset: Eighteen Theses Contra the New World Order, which will be published by Bombardier Books and be available October 18, 2022. Walsh has gathered a series of essays from among eighteen of the most eminent thinkers, writers, and journalists—including the American Mind’s own James Poulos, as well as Claremont Senior Fellows Michael Anton and the late Angelo Codevilla—to provide the first major salvo in the intellectual resistance to the sweeping restructuring of the western world by globalist elites.”

Part I: The Problem

What is the Great Reset and why should we care? In the midst of a tumultuous medical-societal breakdown, likely engineered by the Chinese Communist Party and abetted by America’s National Institutes of Health “gain of function” financial assistance to the Wuhan Institute of Virology, why is the Swiss-based World Economic Forum (WEF) advocating a complete “re-imagining” of the Western world’s social, economic, and moral structures? And why now? What are its aspirations, prescriptions, and proscriptions, and how will it prospectively affect us? It’s a question that the men and women of the WEF are hoping you won’t ask.

This book seeks to supply the answers. It has ample historical precedents, from Demosthenes’s fulminations against Philip II of Macedon (Alexander’s father), Cicero’s Philippics denouncing Mark Antony, the heretic-hunting Tertullian’s Adversus Marcionem¸ and the philosopher Friedrich Nietzsche’s Nietzsche contra Wagner. Weighty historical issues are often best debated promptly, when something can yet be done about them; in the meantime, historians of the future can at least understand the issues as the participants themselves saw and experienced them. Whether the formerly free world of the Western democracies will succumb to the paternalistic totalitarianism of the oligarchical Resetters remains to be seen. But this is our attempt to stop it.

So great is mankind’s perpetual dissatisfaction with its present circumstances, whatever they may be, that the urge to make the world anew is as old as recorded history. Eve fell under the Serpent’s spell, and with the plucking of an apple, sought to improve her life in the Garden of Eden by becoming, in Milton’s words, “as Gods, Knowing both Good and Evil as they know.” The forbidden fruit was a gift she shared with Adam; how well that turned out has been the history of the human race ever since. High aspirations, disastrous results.

The expulsion from the Garden, however, has not discouraged others from trying. Indeed, the entire chronicle of Western civilization is best regarded as a never-ending and ineluctable struggle for cultural and political superiority, most often expressed militarily (since that is how humans generally decide matters) but extending to all things both spiritual and physical. Dissatisfaction with the status quo may not be universal—timeless and static Asian cultures, such as China’s, have had it imposed upon them by external Western forces, including the British and the Marxist-Leninists—but it has been a hallmark of the occident and its steady civilizational churn that dates back at least to Homer, Plato, Aeschylus, Herodotus, Pericles, and Alexander the Great, with whom Western history properly begins.

The philosopher Friedrich Nietzsche, assaying the inelegant Koine, or demotic, Greek of the New Testament in Beyond Good and Evil, observed: “Es ist eine Feinheit, daß Gott griechisch lernte, als er Schriftsteller werden wollte—und daß er es nicht besser lernte”: “It’s a particular refinement that God learned Greek when he wanted to become a writer—and that he didn’t learn it better.” Nietzsche, the preacher’s son who became through sheer willpower a dedicated atheist, was poking fun at the fundamentalist belief that the Christian scriptures were the literal words of God himself (Muslims, of course, believe the same thing about the Koran, except more so). If something as elemental, as essential to Western thought as the authenticity of the Bible, not to mention God’s linguistic ability, could be questioned and even mocked, then everything was on the table—including, in Nietzsche’s case, God Himself.

With the death of God—or of a god—Nietzsche sought liberation from the moral jiu-jitsu of Jesus: that weakness was strength; that victimhood was noble; that renunciation—of love, sex, power, ambition—was the highest form of attainment. That Nietzsche’s rejection of God was accompanied by his rejection of Richard Wagner, whose music dramas are based on the moral elevation of rejection, is not coincidental; the great figures of the nineteenth century, including Darwin and Marx, all born within a few years of each other, were not only revolutionaries, but embodied within themselves antithetical forces that somehow evolved into great Hegelian syntheses of human striving with which we still grapple today.

Wagner, the Schopenhauerian atheist who staggered back to Christianity and the anti-Semite who engaged the Jew Hermann Levi as the only man who could conduct his final ode to Christian transfiguration, Parsifal. Charles Darwin, ticketed for an Anglican parsonage but mutating into the author of On the Origin of Species, The Descent of Man, and all the way to The Formation of Vegetable Mould through the Action of Worms. Karl Marx, the scion of rabbis whose father converted to Lutheranism and, like Wagner for a time, a stateless rebel who preached that the withering away of the state itself was “inevitable”—and yet the state endures, however battered it may be at the moment.

It’s fitting that the “Great Reset of capitalism” is the brainchild of the WEF, which hosts an annual conference in the Alpine village of Davos—the site of the tuberculosis sanatorium to which the naïf Hans Castorp reports at the beginning of Thomas Mann’s masterpiece, The Magic Mountain. Planning to visit a sick cousin for three weeks, he ends up staying for seven years, “progressing” from healthy individual to patient himself as his perception of time slows and nearly stops. Castorp’s personal purgatory ends only when he rouses himself to leave—his Bildungsreise complete—upon the outbreak of World War I, in which we assume he will meet the death, random and senseless, that he has been so studiously avoiding yet simultaneously courting at the Berghof.

Central Europe, it seems, is where the internal contradictions of Western civilization are both born and, like Martin Luther at Eisleben, go home to die. And this is where the latest synthetic attempt to replace God with his conqueror, Man, has emerged: in the village of Davos, in the canton of Graubünden, Switzerland: the site of the annual meeting of the WEF led by the German-born engineer and economist Klaus Schwab, born in Ravensburg in 1938, the year before Hitler and Stalin began carving up Poland and the Baltics.

Once more into the breach, then: behold the present volume. In commissioning sixteen of the best, most persuasive, and most potent thinkers and writers from around the world to contribute to our joint venture, my principal concern has been to offer multiple analyses of the WEF’s nostrums and in so doing to go poet Wallace Stevens’s “Thirteen Ways of Looking at a Blackbird” a few better. Then again, given the surname of the WEF’s chief, perhaps a better, more potent literary citation might be Margret’s little ditty from the Büchner/Alban Berg expressionist opera, Wozzeck (1925): In’s Schwabenland, da mag ich nit—”I don’t want to go to Schwab-land.” Nor, as Hans Castorp’s journey illustrates, should anyone wish to visit Davos-land if he prizes his freedom, his possessions, and his sanity. To the Great Resetters, we are all ill, all future patients-in-waiting, all in dire need of a drastic corrective regimen to cure what ails us.

In these pages, we shall examine the Great Reset from the top down. The eminent American historian Victor Davis Hanson begins our survey with “The Great Regression,” locating Schwab’s vision within its proper historical context. He is followed by Canada’s Conrad Black and America’s Michael Anton and their views of capitalism and socialism, with not a few attacks on conventional, osmotic wisdom that will both surprise and enthrall. Britain’s Martin Hutchinson outlines the contours of the Reset’s “Anti-Industrial Revolution,” even as the American economist David Goldman confronts both Schwab’s notion of the “Fourth Industrial Revolution” and China’s immanentizing its eschaton in real time, along with the Red Dragon’s commitment to the upending of Western civilization and its own Sino-forming of a post-Western world.

American writer, editor, and publisher Roger Kimball tackles the implications of a neofascist Reset in his essay, “Sovereignty and the Nation-State,” both of which concepts are under attack in the name of “equality,” its totalitarian successor “equity,” and the political consequences of our re-embrace of Rousseauvian concepts as applied to governments. British historian Jeremy Black discusses the misuses toward which the study of history has been and will be put to by the Resetters. The late Angelo Codevilla contributes what alas became his final essay, “Resetting the Educational Reset,” to sound the tocsin about the dangerous left turn of the once-vaunted American educational system, now reduced to a shrill, sinistral shell of its former dispassionate glory.

From Down Under, the Philippines-born Richard Fernandez twins two eternally competing faiths, religion and science; the American-born, Australian-based political sociologist Salvatore Babones contributes a remarkably clear explication of the kinds of transportation feasible under the “green energy” regimen the Reset seeks to impose upon us, and its practical and social implications. Writing from Milan, Alberto Mingardi, the director-general of the Istituto Bruno Leoni, gets to the heart of the Great Reset’s deceptive economic program with an essay concerning faux-capitalist “stakeholder capitalism” and its surreptitious replacement of shareholder capitalism in the name of “social justice.”

The Great Reset, however, is not strictly limited to matters financial, pecuniary, or macroeconomic. Social and cultural spheres are of equal importance. James Poulos looks at the Reset’s unholy relationship with the predatory Big Tech companies that currently abrogate the First Amendment by acting as governmental censors without actually being commanded by an act of Congress or, increasingly, an arbitrary presidential mandate. From British Columbia, noted Canadian author and academic Janice Fiamengo weighs in on the destructive effects of feminism upon our shared Western culture while, on the lighter side, Harry Stein examines the history of American humor—which in effect means worldwide humor—and how the leftist takeover of our shared laugh tracks has resulted in a stern, Stalinist view of what is and what is not allowed to be funny.

The British writer Douglas Murray has a go at the permissible future of Realpolitik under the panopticonic supervision of the Reset, the Chinese Communist Party, and the Covid hysterics, while the American journalist John Tierney lays out the road to civilizational serfdom that the unwarranted panic over the Covid-19 “pandemic” has triggered during its media-fueled run between 2019 and 2022. My contribution, in addition to this Introduction, is an examination of the Reset’s—and, historically, elitist tyranny’s—deleterious effects on Western culture: the very thing that gave birth to our notions of morality and freedom.

At its heart, the Great Reset is a conceited and self-loathing central-European blitzkrieg against the cultural, intellectual, religious, artistic, physical, and, most of all, moral inheritance we have received from our Greco-Roman forebears. This has been latterly shorthanded, with the rise of “wokeness,” to “white” culture. Typically racialist, if not outright racist, the cultural Marxists behind wokeness insist on reducing humanity to its shades of skin color and then claiming that although all skin colors should achieve in exact same proportions to their share in a given population, some skin colors are better than others and any skin color is preferable to white. It’s a deeply repellent principle that masquerades as a perversion of Judeo-Christianity but is in fact a simultaneous attack on individuality and merit that seeks to roll back the scientific and cultural advances of the past two millennia, wielding both science and culture as weapons against our shared technological and moral heritage.

The goal, as always, is power—the eternal fixation of the socialist Left…

Tyler Durden Sun, 07/03/2022 - 23:45
Published:7/4/2022 2:00:37 AM
[Markets] The New York Post: $300,000 raised for Burger King employee who never missed work in 27 years and got mediocre gift Kevin Ford, 54, has toiled as a cashier and cook at the chain’s McCarran International Airport location since 1995.
Published:7/4/2022 2:00:37 AM
[Markets] The Economic Growth That Never Was The Economic Growth That Never Was

Authored by Tuomas Malinen via The Epoch Times,

In March 2019, we published an ominous special report, entitled: Why the global growth model is broken. In it, we explained a troubling phenomenon: productivity growth in the world economy had stalled in 2011 and started to decline.

We first noticed this in September 2017, and the situation has remained the same ever since. We named the period as the “Great Stagnation.”

A figure presenting the growth of total factor productivity (TFP) in the regions of the world from 1990 to 2021. (GnS Economics, Conference Board)

The total factor productivity, or TFP, presented in the figure above measures the share of GDP growth that cannot be accounted for by capital investment (in equipment and machinery) and the quantity and the improved quality of the labor force (skills and training). Effectively, TFP is the “unexplained” element of economic growth.

Solow Model of Economic Growth (1956) first suggested that one can find the value of TFP by collecting data from observed factors for capital, labor, and economic growth, and then, by applying some basic statistical estimation techniques to the growth model, calculate TFP, or “Solow Residual” as the remainder. It was also discovered that a large part of GDP growth was explained by technological innovations rather than purely by capital and labor, which the “residual” or TFP represented (see, e.g., our blog for more info).

In the December 2020 forecasting report, we postulated the perplexing problem of stagnated productivity growth as: “Stagnating global productivity growth is extremely worrying, because it implies that if firms are unable to increase their productivity, they will be unprofitable as well. And when their indebtedness grows yet profitability stagnates or falls, their ability to service debt will also diminish over time.”

And we continued: “Decreasing productivity growth thus implies that the ability to increase profitability and service debt has diminished for several years—at the same we have become ever more indebted! Global debt is expected to reach an astonishing $277 trillion U.S. dollars, or around 350 percent of global GDP by the end of the year.”

How did we end up here?

It turns out—or we consider it the most plausible explanation—that the continuous monetary and fiscal stimulus by central banks and governments has destroyed or seriously damaged two main forces behind economic growth: creative destruction and the risk-and-reward relationship.

Long-term economic growth is driven by technical innovations, which increase productivity. What this means is that innovations, from the spinning-jenny (practically a first actual industrial machine) to industrial robots (and beyond), grow the productivity of a human worker. This also increases his or her wage and makes products cheaper. This process, i.e., the growth of productivity, is behind the spectacular rise in living standards since the 18th century.

However, this process assumes a crucial element dubbed as creative destruction due to its dual nature. It implies, simply, that more efficient (more productive) methods will replace the old and inefficient. This requires that old firms fail (go bankrupt) and new firms take their place. This process is at the heart of the capitalist market economy.

Both gains and failures in the private sector drive economic progress. The former accumulates income and capital, while the latter uncovers sustainable businesses, setting the stage for creative destruction. Government plays an important role by setting laws, governing human and property rights, and guaranteeing income through social security, but it is, ultimately, the private sector and markets that drive progress. Do not let the MMT (Modern Monetary Theory) crowd tell you otherwise! As socialist market economy experiments have recurrently shown throughout history, this risk-and-reward relationship is essential for this creative destruction to work and for the economy to grow, dynamically.

The reason that our economies have grown, relatively decently, after the Panic of 2008, is presented in the figure below.

A figure presenting the ratios of debt to gross domestic product between main sectors of the economy in advanced countries from 1990 Q4 to 2021 Q3. (GnS Economics, BIS)

It shows especially that government debt has grown quite a bit faster than GDP since 2008 in advanced (rich) economies. Without the massive growth of government debt, the world economy would not have grown at this speed. We have been in constant resuscitation since 2008!

This has also made our economies fragile. Currently, they tend to succumb without constant support or at least when there are efforts to withdraw it. I have explained in my previous column why central banks have been forced to bail out the global economy and markets several times during the past five years. Now, with the aggressive rate hikes and balance sheet run-off (QT) of the Federal Reserve, we are fast approaching another breaking point, which is likely to require a full-scale bailout of the world economy.

The European Central Bank is way ahead of the Fed. They are already planning an anti-fragmentation tool for the eurozone. In it, they plan to support the sovereign debt markets of the weakest members of the eurozone. Socialization of Europe is proceeding fast.

There are also rumors of an another, considerably large “bailout” fund of the EU in the making. Just two years ago, EU members agreed on a 750 billion euro Recovery Fund.

Back in 2020, Dr. Peter Nyberg, a retired director general of the Financial Markets Department at the Finnish Ministry of Finance, and I warned about the Stealth Federalization of the EU. The sovereignty of EU member states had been eroding slowly, but with the Recovery Fund, it took a massive leap forward. Another such a common-debt-scheme would effectively seal our fate.

Alas, we have lived in a “mirage” of an economic recovery since the Great Financial Crisis. Our leaders on both sides of the Atlantic have not allowed the normal economic process, especially bankruptcies and failures, to clean our economies from unproductive, “parasitic” activities, over-indebtedness, and (zombified) companies.

This is why our economies are so weak, and this is why we are heading either to a complete socialization of the world economy or an epic economic collapse. We, the people, have let our political leaders to “sleepwalk” us into this cataclysmic watershed. Now would be an excellent time to wake up.

Tyler Durden Sun, 07/03/2022 - 19:45
Published:7/3/2022 7:01:04 PM
[Markets] Weekend Sip: Review: We tried the crab-flavored whiskey that’s gone viral Tamworth Distilling, an innovative New Hampshire producer of spirits, is behind the Crab Trapper bourbon infused with invasive green crabs
Published:7/3/2022 7:01:04 PM
[Markets] Monday's July 4 holiday means banks, markets and federal offices are closed Monday's July 4 holiday means banks, markets and federal offices are closed Published:7/3/2022 6:10:06 PM
[Markets] : Mark Zuckerberg issues dire economic warning to Meta employees Zuckerberg's chilling message to Meta Platforms Inc. employees: The company faces one of the "worst downturns that we've seen in recent history" that will necessitate a scaling back in hires and resources.
Published:7/3/2022 6:10:06 PM
[Markets] Dow Jones Futures Fall: Don't Feed The Bear; BYD Leaves Tesla In The Dust Don't feed the bear market, prepare for the next bull run. Tesla deliveries fell sharply in Q2 with BYD on tap. Published:7/3/2022 6:10:06 PM
[Markets] Understanding The Economic Crisis In Sri Lanka Understanding The Economic Crisis In Sri Lanka

Sri Lanka is currently in an economic and political crisis of mass proportions, recently culminating in a default on its debt payments. The country is also nearly at empty on their foreign currency reserves, decreasing the ability to purchase imports and driving up domestic prices for goods.

As Visual Capitalist's Avery Koop details below, there are several reasons for this crisis and the economic turmoil has sparked mass protests and violence across the country. This visual breaks down some of the elements that led to Sri Lanka’s current situation.

A Timeline of Events

The ongoing problems in Sri Lanka have bubbled up after years of economic mismanagement. Here’s a brief timeline looking at just some of the recent factors.

2009

In 2009, a decades-long civil war in the country ended and the government’s focus turned inward towards domestic production. However, a stress on local production and sales, instead of exports, increased the reliance on foreign goods.

2019

Unprompted cuts were introduced on income tax in 2019, leading to significant losses in government revenue, draining an already cash-strapped country.

2020

The COVID-19 pandemic hit the world causing border closures globally and stifling one of Sri Lanka’s most lucrative industries. Prior to the pandemic, in 2018, tourism contributed nearly 5% of the country’s GDP and generated over 388,000 jobs. In 2020, tourism’s share of GDP had dropped to 0.8%, with over 40,000 jobs lost to that point.

2021

Recently, the Sri Lankan government introduced a ban on foreign-made chemical fertilizers. The ban was meant to counter the depletion of the country’s foreign currency reserves.

However, with only local, organic fertilizers available to farmers, a massive crop failure occurred and Sri Lankans were subsequently forced to rely even more heavily on imports, further depleting reserves.

April 2022

In early April this year, massive protests calling for President Gotabaya Rajapaksa’s resignation, sparked in Sri Lanka’s capital city, Colombo.

May 2022

In May, pro-government supporters brutally attacked protesters. Subsequently, Prime Minister Mahinda Rajapaksa, brother of President Rajapaksa, stepped down and was replaced with former PM, Ranil Wickremesinghe.

June 2022

Recently, the government approved a four-day work week to allow citizens an extra day to grow food, as prices continue to shoot up. Food inflation increased over 57% in May.

Additionally, the increasing prices on grain caused by the war in Ukraine and rising fuel prices globally have played into an already dire situation in Sri Lanka.

The Key Information

“Our economy has completely collapsed.”

- PRIME MINISTER RANIL WICKREMESINGHE TO PARLIAMENT LAST WEEK.

One of the main causes of the economic crisis in Sri Lanka is the reliance on imports and the amount spent on them. Let’s take a look at the numbers:

  • 2021 total imports = $20.6 billion USD

  • 2022 total imports (to March) = $5.7 billion USD

In contrast, the most recent reported foreign currency reserve levels in the country were at an abysmal $50 million, having plummeted an astounding 99%, from $7.6 billion in 2019.

Some of the top imports in 2021, according to the country’s central bank were:

  • Refined petroleum = $2.8 billion

  • Textiles = $3.1 billion

  • Chemical products = $1.1 billion

  • Food & beverage = $1.7 billion

Of course, without the cash to purchase these goods from abroad, Sri Lankans face an increasingly drastic situation.

Additionally, the debt Sri Lanka has incurred is huge, further hampering their ability to boost their reserves. Recently, they defaulted on a $78 million loan from international creditors, and in total, they’ve borrowed $50.7 billion.

The largest source of their debt is by far due to market borrowings, followed closely by loans taken from the Asian Development Bank, China, and Japan, among others.

What it Means

Sri Lanka is home to more than 22 million people who are rapidly losing the ability to purchase everyday goods. Consumer inflation reached 39% at the end of May.

Due to power outages meant to save energy and fuel, schools are currently shuttered and children have nowhere to go during the day. Protesters calling for the president’s resignation have been camped in the capital for months, facing tear gas from police and backlash from president Rajapaksa’s supporters, but many have also responded violently to pushback.

India and China have agreed to send help to the country and the the International Monetary Fund recently arrived in the country to discuss a bailout. Additionally, the government has sent ministers to Russia to discuss a deal for discounted oil imports.

A Foreshadowing for Low Income Countries

Governments need foreign currency in order to purchase goods from abroad. Without the ability to purchase or borrow foreign currency, the Sri Lankan government cannot buy desperately needed imports, including food staples and fuel, causing domestic prices to rise.

Furthermore, defaults on loan payments discourage foreign direct investment and devalue the national currency, making future borrowing more difficult.

What’s happening in Sri Lanka may be an ominous preview of what’s to come in other low and middle-income countries, as the risk of debt distress continues to rise globally.

The Debt Service Suspension Initiative (DSSI) was implemented by G20 countries, suspending nearly $13 billion in debt from the start of the pandemic until late 2021.

Some DSSI and LIC countries facing a high risk of debt distress include Zambia, Ethiopia, and Tajikistan, to name a few.

Going forward, Sri Lanka’s next steps in managing this situation will either serve as a useful exam for other countries at risk or a warning worth heeding.

Tyler Durden Sun, 07/03/2022 - 19:05
Published:7/3/2022 6:10:06 PM
[Markets] Home Price Cuts, Rising Inventories Are Ominous Signs Of Top Home Price Cuts, Rising Inventories Are Ominous Signs Of Top

The pandemic housing boom hit a peak and should start rolling over as rising inventory forces some home sellers to slash prices. The weight of soaring mortgage rates and increasing inventory are the possible markings of a top that has already led some sellers in major US cities to cut listing prices. 

"The housing market is absolutely in need of a reset," George Ratiu, senior economist at Realtor.com, told Bloomberg

Realtor.com's data showed almost a third of listings in June had price cuts in Austin, Phoenix, and Las Vegas metro areas. Price cuts are a growing national trend as higher rates triggered an affordability crisis, removing millions of new prospective home buyers. 

Bloomberg spoke with Naples, Florida, real estate agent Jennifer DeFrancesco who advised her clients to drop listing prices as she believes the flood of demand from the Northeast has eased. 

Carolyn Young, a broker associate with Christie's International Real Estate Sereno in the San Francisco Bay Area, said demand for homes in a 55-and-over community in Brentwood had seen dramatic declines since many retirees were battered by awful performance in their stock and bond portfolios in the first half. She advised clients at Trilogy at the Vineyards to lower their listings by $50,000 to $100,000 because of faltering demand. 

"For sellers, it's devastating, especially if they bought something else earlier and paid too much for that," Young said.

Price cutting comes as a flood of inventory enters a very tight market. Another Realtor.com report this week showed the number of active US listings soared 18.7% in June from a year earlier.

Danielle Hale, the chief economist for Realtor.com, said, "We anticipated that more inventory will eventually cool the feverish pace of competition." The rise in inventory was more profound in Austin, Texas; Phoenix, Arizona; and Raleigh, North Carolina, which saw active listings more than double from a year ago. In Nashville, Tennessee, active listings jumped 86%, and 72% in Riverside, California. 

Mortgage applications and pending home sales are down, which suggests the jump in the 30-year fixed-loan mortgage rate from 3% to over 6% this year (back in March, we warned coming rate explosion would trigger a housing affordability crisis) is quickly cooling the market. Next, we should first see price declines in areas that were red hot during the early days of the pandemic.

It's only a matter of time before the Case-Shiller (newly minted S&P CoreLogic CS) home price index data turns. 

Tyler Durden Sun, 07/03/2022 - 15:25
Published:7/3/2022 2:45:37 PM
[Markets] NY Governor To Require 3 Years Of Social Media History To Obtain Concealed Carry Permit NY Governor To Require 3 Years Of Social Media History To Obtain Concealed Carry Permit

Within an hour of the US Supreme Court striking down a law which required New York residents to show "proper cause" to obtain a concealed carry license, Governor Kathy Hochul (D) promised legislation to counter the ruling.

To that end, Hochul on Friday signed sweeping gun legislation into law that adds several layers of red tape for those who wish to obtain a gun in the state - including a new rule requiring anyone applying for a concealed carry permit to submit a three-year history of their current and inactive social media accounts. The new law will take effect on September 1, 2022.

Applicants for concealed carry permits must also undergo 16 hours of firearm training, provide four character references, and list the contact information for domestic partners or adults who reside in the same house.

More via the Post Millennial:

Potential applicants will also be required to show "good moral character," meaning "the essential character, temperament and judgment necessary to be entrusted with a weapon and to use it only in a manner that does not endanger oneself and others."

At a press conference regarding the new legislation, Hochul said "we are creating a definitive list of sensitive locations where individuals will not be able to carry firearms."

This list includes "schools, summer camps, libraries, daycares, parks and playgrounds, places children gather, theaters, museums, entertainment venues, places of worship for religious observation, polling places, educational institutions, and health medical facilities. Federal State Local government buildings, homeless and domestic violence shelters, places where alcohol is consumed, restaurants, bars, public transportation, subway buses, airports and at public demonstrations and rallies, and in Times Square."

Another new rule is a "Default of No Concealed Carry on Private Property and Businesses Unless Deemed Permissible by Property Owners." Hochul said of this law, "We are making 'no open carry' the default position for private businesses. That means that any business, grocery store, retail, private home, place that wants to allow guns on their premises will have to demonstrate that and establish that they put a sign out there that says concealed carry guns are welcome here."

*  *  *

One day after the June 23 ruling in New York State Rifle and Pistol Association v. Bruen, both Hochul and NYC Mayor Eric Adams vowed to enact legislation that would work around the USSC ruling.

"Our state will continue to keep New Yorkers safe from harm even despite this setback from the Supreme Court," Hochul said on Friday.

In reaction, the state GOP said "the legislation not only violated the Second Amendment, but also privacy and free speech rights," according to the Associated Press. The lawmakers were reportedly "incensed" and predicted that the new rules would be struck down.

As Jonathan Turley further notes;

One of the most questionable elements is the requirement that gun owners show “good moral character.” That obviously raises comparisons to the invalid Sullivan Act of 1911, giving local officials discretion over who can carry concealed guns based on a showing of “proper cause.”  The Court rejected the notion that citizens must prove their need to use an individual right as opposed to the government shouldering the countervailing burden:

“We know of no other constitutional right that an individual may exercise only after demonstrating to government officers some special need. That is not how the First Amendment works when it comes to unpopular speech or the free exercise of religion. It is not how the Sixth Amendment works when it comes to a defendant’s right to confront the witnesses against him. And it is not how the Second Amendment works when it comes to public carry for self-defense.

New York’s proper-cause requirement violates the Fourteenth Amendment in that it prevents law-abiding citizens with ordinary self-defense needs from exercising their right to keep and bear arms.”

Under the New York law, applicants must undergo “enhanced screening” with in-person interviews and submit to reviews of their social media, including required access to social media. That provision seems ripe for challenge on a host of grounds, including the denial of free speech and associations rights.

The law seems another overreach by the state. As I noted earlier, New York has thus far been about as effective in curtailing gun rights as Monty Python’s “Judean People’s Front Crack Suicide Squad” was effective in combating Roman occupation.

After all, who needs Texas when gun rights advocates have New York?

Tyler Durden Sun, 07/03/2022 - 14:50
Published:7/3/2022 2:12:36 PM
[Markets] Gas prices in the U.S. have been trending lower since mid-June: AAA Gas prices in the U.S. have been trending lower since mid-June: AAA Published:7/3/2022 1:45:00 PM
[Markets] Oil Price Could Hit "Stratospheric" $380 If Russia Retaliates To G7 Oil Price Cap Oil Price Could Hit "Stratospheric" $380 If Russia Retaliates To G7 Oil Price Cap

As discussed previously, one of the most notable events of the past week was the decision by G7 leaders "to work" on a price cap for Russian oil as part of efforts to cut Moscow’s revenues.

However, it didn't take long for the same G7 motley crew to realize that they have a major problem on their hands: as JPM's commodity desk notes, given Russia’s strong fiscal position, the country can cut up to 5 mbd of production without excessively hurting its economic interest. Meanwhile, a 5mbd cut would spark a Europe-wide depression, confirming that once again Europe had not even done the simple math.

What about prices? According to JPM, given the high levels of stress in the oil market, a cut of 3.0 mbd could cause global Brent price to jump to $190/bbl, while the most extreme scenario of a 5 mbd slash in production could drive oil price to a stratospheric $380/bbl.

Let's back up: as we noted last week, the stated goal set out by G7 leaders this week is two-pronged:

  1. to limit upward pressure on global oil prices
  2. to curb Russia’s revenues from oil sales.

To achieve those goals, the allies agreed to explore a new mechanism that aims to impose a ceiling on Russian oil prices. The idea behind this price cap is to permit countries that have not imposed import bans to buy Russian oil as long as it is priced at or below a predetermined price. The cap could be enforced via limits on availability of European insurance for Russian oil cargoes as well as shipping services and US finance. While G7 leaders have not indicated where the price cap would be set, it must be lower than the $80/bbl at which Russia’s Urals grade trades today (a $32/bbl discount to Brent) and higher than Russia’s marginal cost of maintaining production levels, estimated at around $40/bbl to ensure Russia’s earnings are reduced while production is maintained.

A $50-60 per barrel price cap would likely serve the G7 goals of reducing oil revenues for Russia while assuring barrels continue to flow. Of course, for the price cap to work, oil importers like India China and Turkey—which have significantly increased their purchases of heavily- discounted Russian grades—would need to agree to participate to access even cheaper oil.

That's the background. Here are the 3 scenarios as to what happens next. They are, as one would expect from any plan conceived by hapless politicians, bad, worse and much worse.

Scenario 1: Russia does not cooperate and retaliates — a 3 mbd cut would likely deliver a $190/bbl oil price

The most obvious and likely risk with a price cap is that Russia would not to participate (which, of course, it won't as why would Putin agree to produce oil at a lower price than clearing) and instead retaliates by reducing exports. In fact, as JPM head commodity strategist Natasha Kaneva notes, Russia had already showed its willingness to withhold supplies of natural gas to EU countries that refused to meet payment demands. Indeed, emboldened by a surging current account surplus, after entirely cutting off the flow of piped gas to the Netherlands, Bulgaria, Finland and Denmark, since the start of June Gazprom has reduced the flow of gas to Italy by 50% and to Germany by 60%—though claiming the latter reductions in June were due to maintenance-related issues.

As a result, the EU as a whole is now receiving 53% less gas from Russia than it averaged before the start of the war. Withholding gas volumes from Europe comes at a personal cost to Russia—as a measure to manage the reduced export-related flows, Russia has had to allow for natural production declines. According to Gazprom, the company will reduce its production by 17 Bcm this year, or 3% of 2021 production. That said, history suggests that there is far more capability for production reductions in Russia. For example, in 2019 Gazprom production was ~500 Bcm, while in 2020 Gazprom production fell to ~453 Bcm. So far in 2022, Gazprom production has been down 20 Bcm yoy, suggesting further declines are likely relative to Gazprom’s current forecast.

Unlike gas, which accounts for about one-fifth of Russia’s budget revenues, oil makes up over half. Russia’s policymakers will likely address the challenge of the oil price cap from the position of strength, and as JPM concedes, "Russia’s starting fiscal position is strong." Besides, the global oil market has tightened, while the strong balance of payments opens room to accommodate lower export volumes without inflicting too much financing pain. Which brings up the key question: How much oil production can Russia realistically cut without hurting its economic interest?

In answering this question, JPM notes that Russia's fiscal position strong: low deficit, low debt.

Russia’s sovereign balance sheet remains strong even as half of CBR’s reserves were frozen. Last year, Russia’s federal budget recorded a modest surplus of 0.4% of GDP or $7bn, while this year, as things stand, is tracking a modest deficit of less than 1% of GDP. Financing needs are equally low. The National Wellbeing Fund—effectively, a government deposit at the CBR—reached an equivalent of $198bn by May 2022, with $116bn in usable funds. Treasury cash balances exceed ~$85bn. Gross sovereign debt stood at 15.9% of GDP (~$279bn) as of end-2021.

Federal budget revenues, originally budgeted at RUB25tn ($347bn), are tracking about RUB26tn this year ($394bn) as higher oil & gas revenues more than offset the shortfall in non-energy fiscal revenues. If fiscal rule was still operational, Russia would  accumulate around $80bn into the sovereign fund this year. Yet, as following the old fiscal rule has become challenging, the authorities decided to use additional oil & gas revenues to increase spending and reduce issuance instead. A new fiscal rule is being debated in the government.

So let's assume the G7 plan is effectuated and a hypothetical $50/bbl price cap on Russian oil was imposed and effective, Russia could lose about $75bn per year in export revenues and about $42bn in budget revenues compared to JPM's base case of an average annual price of around $80/bbl. The impact on budget balance would be smaller, as exchange rate would offset part of the impact.

JPM concludes that the Kremlin would not face big problem financing a deficit of ~$40bn given the large stock of savings and low initial level of debt. The local financial system should be able to absorb additional issuance, especially given the scarcity of available instruments for savings outside of Russia. For example, in 2020, the government raised an equivalent of 4.8% of GDP ($71bn) from the local market.

However, as JPM's commodity team also notes, the Russian government will likely retaliate by cutting output as a way to inflict pain on the West, especially since the tightness of the global oil market is on Russia’s side, the continued appreciation pressure on the exchange rate would ease, and the strong public finances could absorb the revenue losses without too much difficulty.

As a hypothetical scenario, a cut of 3 mbd from JPM's base case of 9.7mbd output assumed for this year could open up a deficit of $50bn at a $50/bbl price, which could be relatively easily funded by issuing local bonds without stressing the oil fund. Importantly, the imbalance in Russia’s external accounts, which generates excessive inflows of hard currency to the local market, might, ironically, even be considered as a relief.

Then there is the question of too much USDs and EURs to stomach. Russia’s key macro-economic challenge following the imposition of sanctions has been the unsustainable dynamics of the balance of payments, which has resulted in significant appreciation of the exchange rate. Main sanctions-induced developments were the following:

  • First, sanctions against the central bank made it close-to-impossible for the CBR to accumulate reserves. Last year, the CBR accumulated $64bn in reserves, while this year, if the fiscal rule was still operational and domestic crude price averaged ~ $80/bbl (at a big discount to Brent), the CBR would have had to purchase more than $75bn. Today, the CBR is only able to buy gold from local producers (small scale). Policymakers study the feasibility of buying assets of friendly EM countries, but infrastructure constraints, closed capital accounts, and lack of depth of EM markets will likely make the rollout of EM-buying slow and lacking scale in the near term.
  • Second, sanctions and, more importantly, risks of further financial sanctions (asset freezes) have made residents reluctant to accumulate foreign assets in ‘unfriendly’ countries. In the past, accumulation of foreign assets was traditionally the main channel of private capital outflows, averaging ~$80bn in the past 10 years. This has largely dried up now.
  • Third, trade and logistical restrictions have dramatically affected imports, which, judging by indirect data, halved. Given the strong oil revenues, Russia's 2022 current account surplus to reach ~$170bn this year ($68bn in 1Q22).

The higher current account surplus and the lack of private and public sector capital outflows has meant that the RUB has been the main adjustment valve. This has made Russia’s non-energy exports expensive and uncompetitive. Policymakers have focused their efforts on reviving imports, by stimulating domestic demand and addressing logistical challenges and the CBR has cut policy rate aggressively, while fiscal authorities are contemplating a stimulus of 2-3% of GDP. Obviously, given the nature of sanctions / trade restrictions, reviving imports, especially of investment-related goods, will be hard.

In addition, most of capital controls that were introduced at the height of the crisis have been removed. Also, a couple of quasi-sovereign institutions have had to accumulate foreign assets in recent months, but this is not seen as sustainable or desirable due to sanctions risk. As Russian officials often put it, USDs and EURs have become “toxic”.

Although authorities’ preference would be to increase imports and recycle petrorubles in friendly EMs, this does not look an easy task, especially in the near term. Hence, if the geopolitical situation requires, it now appears more likely that export cuts could be used as leverage / policy tool.

Putting it all together, JPM concludes that "given the high level of stress in the oil market, a cut of 3.0 mbd could cause global Brent price to jump to $190/bbl, while the worst-case scenario, a 5 mbd cut, could drive oil price to a stratospheric $380/bbl."

* * *

Russia would be able to cut 3 mbd of production, if done temporarily

If Russia decides to make significant cuts to its output, JPM warns that there do not appear to be significant limitations to doing so if done temporarily. In general, halting oil production carries serious risks, depending on how long oil production reductions are needed. Prolonged cutbacks in specific Russian regions could potentially lead to some permanent shut-ins due to operational challenges across an industry with little storage capacity and natural geological constraints in a large number of maturing fields. Currently, Russia has more than 200 thousand active wells that are capital and labor intensive to operate, especially the country’s older wells, which have meager flow rates and poor economics. For some wells, the longer a reservoir remains idled, the higher the chance pressure, water content, and clogging could affect future production. For example, West Siberia—an oil producing region in central Russia that contributes more than half of Russia’s total crude output—is facing permafrost melting and rising associated water levels. A prolonged, large-scale shut-in would mean closing tens of thousands of marginal wells, many of which could never return to profit. For example, following the collapse of the Soviet Union, Russian crude oil production reached a record low of about 6.0 mbd in 1996, down from a record high of 11.4 mbd in 1987. Only after more than two decades of strong capital investment, equating to hundreds of billions of dollars, was Russia able to restore its crude oil production capacity.

The nearly 2.0 mbd decline in Russia crude oil production in May 2020—or around a fifth of its total output—was the first time since early 1990s that Russia experienced a double-digit collapse in the oil ouput. But despite the unprecedented magnitude and speed of the 2020 cuts— Russia shut in 1.94 mbd of oil production in just one month between April and May 2020—fears that future Russian oil production would be compromised didn’t materialize. As OPEC+ tapered its cuts over the following year and a half, there does not seem to be any indication that Russian oil fields had issues restoring output. Because the Russia-Ukraine war and the resulting sanctions on Russian oil supplies started before Russia had fully restored output—in March 2022, fields where Russia shut in production during 2020 were still producing about 350 kbd less than they were in January 2020—one cannot be certain that those fields would have returned to full output without issue, but the recovery in those fields leading up to April 2022 appears to have been relatively stable with few exceptions. Since there do not seem to have been significant issues in this circumstance, with oil fields at least partially shut in for nearly two years, JPM does not think that, if Russia decided to once again cut output, their ability to restore production would be a significant barrier to doing so, especially if those cuts were only expected to last a few months. Rotating shut-ins between fields or among wells within fields can also help limit the risk of reservoir issues. Simply throttling wells instead of shutting them entirely can also mitigate some of those risks.

Additionally, Russia has tools outside its domestic production to interfere in the global oil supply. About 80% (~1 mbd) of Kazakhstan’s crude exports are shipped from the Caspian Pipeline Consortium terminal in the Black Sea port of Novorossiysk, controlled by Russia. Most of this crude goes to the EU. In Libya, political unrest continues to escalate, and fighting is at levels not seen since 2020, when General Khalifa Haftar, supported by the Russia-linked Wagner Group led his forces to take Tripoli. Libya’s oil production is now likely below 400 kbd after Libya’s National Oil Corp. announced on Thursday that it has declared force majeure on two of its three largest oil export terminals this week, while two other major oil export ports have not shipped any oil in months.

2.  Scenario 2: China and India don’t cooperate—the end of the European insurance dominance

History shows that oil sanctions are notoriously leaky, and sanctioned oil supplies almost always find a buyer at the right price, and China and India might not cooperate with the goals of Western governments. The state-run Shipping Corporation of India has in the past carried Iranian oil for state-run Indian refiners when the West first sanctioned Iran in 2012. The Indian government has previously approved coverage from state-run insurers, setting a precedent that it could do so again in the future, should the need arise. Similarly, China’s COSCO vessels have in the past transported Iranian oil in 2013 with Iran commenting that insurance was handled by the “Chinese side.” Similarly, Japan had also guaranteed up to $1 billion of insurance claims for Iranian shipments made in 2012.

Russia and some buyers have already found alternatives to European insurance markets, effectively circumventing European cargo insurance bans. While Russia initially struggled to find a replacement for Western consumers of its oil products and has had to shut in refining capacity, Russian crude oil has not only found new buyers, but waterborne flows of Russian crude are actually higher than they were before the Ukraine crisis. Not only are Russian crude oil deliveries resilient, but there are signs that shipments of bottom-of-barrel oil products like fuel oil are beginning to recover as well (Exhibits 6 & 7). The reality is that with almost 1/5 of global oil production capacity today under some form of sanctions (Iran, Venezuela, Russia), there is no practical way to keep these barrels out of a market that is already exceptionally tight.

The state-controlled Russian National Reinsurance Company (RNRC) is now acting as the main reinsurer of Russian ships, including Sovcomflot’s fleet. In mid-June, Sovcomflot disclosed that it has insured all its cargo ships with Russian insurers and the cover meets international rules, likely enough to keep Russian vessels sailing around the world. To guarantee RNRC has adequate resources to provide reinsurance, Russia’s central bank in March raised RNRC’s capitalization to 300 bn rubles ($5 bn) and hiked its guaranteed capital to 750 billion rubles.

India is also providing safety certification for ships operated by Sovcomflot, enabling oil exports to India and elsewhere. Certification by the Indian Register of Shipping (IRClass)—one of the world’s top classification companies—is the final link after the insurance coverage for gaining access to ports. Chinese insurers are also apparently looking to take on business that was previously covered by their Western counterparts, but they would likely require a sovereign guarantee, which China would provide.

Scenario 3: Russia fully re-routes exports from west to east but loses pricing power, prices stabilize in low-$100s

Left to their own devices, JPMorgan strategist write that energy markets tend to work very efficiently and effectively, and the market adjustment mechanism has kicked in. Record oil product prices and rapidly tightening central banks are cooling consumption so that supply can catch up. In the US, a lackluster driving season so far pushed gasoline demand further below pre-pandemic norm, contributing to an unseasonal build in national stockpiles. As the EU gradually but unequivocally transitions away from Russian energy sources, Russia will continue to re-route its discounted oil flows toward other buyers and global ex-OPEC+ supply growth would have time to grow sufficiently to fill at least some of the Russia-sized hole in global oil supply. US production growth will likely be very strong (especially once the Democrats lose the midterm elections), adding more than 0.7 mbd through the end of 2022, though that growth is expected to halt in 1H 2023 as natural gas infrastructure constraints in the Permian Basin place a temporary cap on oil output. These conditions should be sufficient to stabilize global oil prices in low-$100s in 2H22 and high-$90s in 2023. Because JPM expects global refinery margins to normalize in 2023 and for refined products prices to fall from current levels, a sustained $100/bbl crude oil price, though still substantially higher than it has been since 2014, should be low enough allow demand to continue to grow. This process of normalization is already under way and is especially visible in other commodities like metals, where there is less policy intervention.

Consequently, Russian revenues from crude oil exports have declined.

Tyler Durden Sun, 07/03/2022 - 14:15
Published:7/3/2022 1:44:59 PM
[Markets] Several Hit By Gunfire At Copenhagen Mall, Police Say  Several Hit By Gunfire At Copenhagen Mall, Police Say 

Update (1322ET): DW News and Sky News both report one person has been arrested at the Field's shopping mall in the capital of Copenhagen after a shooting inside the mall left several injured. 

* * * 

Copenhagen Police said gunshots were reported at the Fields shopping center in the capital of Copenhagen on Sunday evening. 

"We are still present, shots have been fired and several people have been hit. We work on-site. People in the Fields must stay and await the police," Copenhagen Police tweeted.

Sky News now reporting the incident. 

Here's an alleged video from within the shopping mall at the time of the incident. 

People were seen fleeing the mall. 

Danish radio said heavily armed police have arrived on the scene as well as ambulances. 

There are no official reports of how many people may have been killed or wounded.

*Developing 

Tyler Durden Sun, 07/03/2022 - 13:16
Published:7/3/2022 12:43:02 PM
[Markets] : Believe it or not, gas prices have been edging down this Fourth of July — here’s why National gas price averages have been dropping since mid-June, AAA data says
Published:7/3/2022 12:43:02 PM
[Markets] Dow Jones Futures: EV Giant BYD Races Past Tesla Deliveries; Don't Feed The Bear Don't feed the bear market, prepare for the next bull run. Tesla deliveries fell sharply in Q2 with BYD on tap. Published:7/3/2022 12:14:34 PM
[Markets] IEA: Global Nuclear Capacity Needs To Double To Meet Net-Zero Goals IEA: Global Nuclear Capacity Needs To Double To Meet Net-Zero Goals

Via OilPrice.com,

  • The IEA is calling for the world to boost nuclear capacity.

  • The agency says global nuclear capacity needs to double over the next three decades to reach net-zero goals.

  • An IEA official also noted that the energy crisis has presented a unique opportunity for a nuclear revival.

Nuclear power capacity needs to double worldwide over the next three decades to reach net-zero carbon emissions targets to ensure energy independence, argued the International Energy Agency (IEA).

The Paris-based group’s executive director Fatih Birol outlined that nuclear has a unique opportunity for a revival in the context of the global energy crisis, skyrocketing fossil fuel prices, energy security challenges, and climate commitments.

However, he suggested this was not guaranteed, and instead depended on government policy geared toward greater expansion.

Birol said: “It will depend on governments putting in place robust policies to ensure safe and sustainable operation of nuclear plants for years to come.”

In the group’s latest report, Nuclear Power and Secure Energy Transitions, the IEA revealed nuclear power has to be significantly ramped up to meet the twin aims of supply security and net zero carbon emissions.

It has warned that to reach net-zero emissions, nuclear power capacity has to increase to 812 gigawatts (GW) by 2050 from its current 413 GW total.

While advanced economies operate nearly 70 percent of global nuclear capacity, the IEA noted nuclear fleets across the West were aging, amid stalled investment and over-budget projects.

The IEA calculates that around 260 GW, or 63 percent, of nuclear plants in the world, are currently over 30 years old and nearing the end of their initial operation licenses.

In the 2030s, annual additions of nuclear power capacity needed to reach 27 GW just to offset closed-down power plants – which could shrink by a third over the coming decade in developed economies.

For context, the UK’s ‘big new’ bet on nuclear, which represents a historic boost in nuclear power generation, is an increase from 7GW to 24GW over the next three decades.

Hinkley Point C is expected to open within the next five years, with the Government looking to secure public funding for Sizewell C – as it targets the greenlighting of eight new reactors by 2030.

Tyler Durden Sun, 07/03/2022 - 12:50
Published:7/3/2022 12:14:34 PM
[Markets] The Big Move: I’m close to retirement and I own 2 homes. If I sell my primary home, I’ll get $100K. My plan is to rent a place for $1,400. Is that a good idea? 'When I retire and possibly downsize and rent, my vacation home will be used as an Airbnb.'
Published:7/3/2022 12:14:34 PM
[Markets] Leaked Documents Reveal Wide Scope Of China's Human Rights Violations In Xinjiang Leaked Documents Reveal Wide Scope Of China's Human Rights Violations In Xinjiang

Authored by Lawrence Franklin via The Gatestone Institute,

  • One of the leaked documents, which contains "a shoot to kill order" for guards in the camp's watchtowers, confirms that these camps are indeed prisons. Another leaked report stipulates how detainees are to be transported from one site to an alternate location: ankle shackles, handcuffs and hoods.

  • Previous leaks of official documents, unauthorized films, commercial satellite images and testimony from escaped former inmates have scripted a profile of the hell that the Chinese Communist state has crafted for the Uyghurs and other minorities in Xinjiang. This massive province-size gulag regime includes forced abortions, sterilization and rape of female detainees, separation of husbands and wives, removal of children from the custody of parents, obligatory retraining of workers in skills supportive of CCP economic goals, and daily ideological indoctrination of inmates.

  • Democratic countries should distribute these leaks globally as cautionary warning to all societies that the CCP's projected panda bear image of China obscures the reality of a quite different animal with an insatiable appetite.

The massive gulag regime for ethnic Uighurs in Communist China's Xinjiang Province includes forced abortions, sterilization and rape of female detainees, separation of husbands and wives, removal of children from the custody of parents, obligatory retraining of workers in skills supportive of Party economic goals, and daily ideological indoctrination of inmates.

"The Artux City Vocational Skills Education Training Service Center," a facility where mostly Muslim ethnic minorities are detained, north of Kashgar in Xinjiang. (Photo by Greg Baker/AFP via Getty Images)

Documents and photos of thousands of ethnic Uighurs arrested by Chinese authorities, made public in late May, lend additional indisputable evidence to the Communist regime's massive human rights violations in Xinjiang. Many of the leaked documents are official Chinese Ministry of Interior dossiers of incarcerated individuals just from Shufu, one among 61 counties in Xinjiang Province. The Shufu County in the Kashgar Prefecture is the site of several large internment camps.

One of the leaked documents, which contains "a shoot to kill order" for guards in the camp's watchtowers, confirms that these camps are indeed prisons. Another leaked report stipulates how detainees are to be transported from one site to an alternate location: ankle shackles, handcuffs and hoods.

The documents also contain policy papers and speeches by high-level officials of the Chinese Communist Party (CCP) concerning the "Uyghur Question." One speech was delivered on June 18, 2018 by Xinjiang Party Secretary Chen Quanguo , the principal architect of the Uyghur Re-education Infrastructure. Chen developed his minority-suppression model while regional Party leader in Tibet from 2011 to 2016. Chen was then transferred by China's President Xi Jinping to apply his skills to Xinjiang, where he was Party leader from August 2016 to December 2021. Chen's replacement should not be viewed as a demotion for Chen. He remains a full (voting) member of the CCP Politburo and may be promoted even further in the upcoming 20th CCP Congress this autumn.

In another report, authored a few days before Chen's address, China's Minister of Public Security Zhao Kezhi draws a solid line connecting Xi and the campaign supposedly to eradicate "separatism, terrorism, and religious extremism" among Xinjiang's Turkic minorities. The imprisonment and "reprogramming" of the daily lives of millions of Xinjiang's inhabitants is fully in concert with CCP policy. In fact, the replacement of the brutal Chen as Xinjiang's Party boss by the hi-tech savvy former Guangdong Province Governor of Ma Xingrui probably does not signal a decision by China "to clean-up its act" in Xinjiang because of international pressure. It is more likely a sign of the regime's confidence that the repressive infrastructure it has visited upon Xinjiang's Muslim minorities has successfully suppressed any separatist sentiment for an independent state in China's Far West.

The CCP's propaganda machine has attempted to blunt international criticism but not at price of sacrificing its abusive policies in Xinjiang. The Party has produced several propaganda documentaries on Xinjiang, some of which have been aired on the Chinese Global Television Network (CGTN). These videos of life in Xinjiang display a pluralistic society while modernizing, but that still celebrates ethnic minority traditions. Visiting dignitaries are given orchestrated and "sanitized" tours of allegedly authentic daily life in the province. China's power, wealth and commercial prowess also tend to dampen or even mute criticism of the CCP's anti-Islamic regulations from the world's many Muslim nations. Any citizen of Xinjiang sporting a beard, wearing a veil, attending a religious service or downloading verses from the Koran is subject to arrest and confinement in an internment camp.

Previous leaks of official documents, unauthorized films, commercial satellite images and testimony from escaped former inmates have scripted a profile of the hell that the Chinese Communist state has crafted for the Uyghurs and other minorities in Xinjiang. This massive province-size gulag regime includes forced abortions, sterilization and rape of female detainees, separation of husbands and wives, removal of children from the custody of parents, obligatory retraining of workers in skills supportive of CCP economic goals, and daily ideological indoctrination of inmates. The comprehensive and intense nature of the persecution of non-Han Chinese minorities in Xinjiang amounts to a conscious plan by China's leaders to erase the culture and values of the native populations of northwest China. Democratic countries should distribute these leaks globally as cautionary warning to all societies that the CCP's projected panda bear image of China obscures the reality of a quite different animal with an insatiable appetite.

Tyler Durden Sat, 07/02/2022 - 23:30
Published:7/2/2022 10:42:47 PM
[Markets] Singapore Brewery Launches New Beer Made From Recycled Sewage Water Singapore Brewery Launches New Beer Made From Recycled Sewage Water

How tough are things getting globally? Well, a new "admired" beer that's breaking through in Singapore is being made from "recycled sewage". 

What part in the global macroeconomic cycle is this again?

The beer, called “NEWBrew”, is a "collaboration between the country’s national water agency, PUB, and local craft brewery Brewerkz," according to a Bloomberg report this week. The idea was first discussed in 2018 and it finally went on sale this past April. 

58 year old Chew Wei Lian, who recently tried the beer, told Bloomberg: “I seriously couldn’t tell this was made of toilet water. I don’t mind having it if it was in the fridge. I mean, it tastes just like beer, and I like beer.”

How's that for a ringing endorsement? At least it's not Busch Light.

The beer uses Singapore's "NEWater", which is the country's drinking water that has been recycled from sewage. The water was first used in 2003 as a project to "improve the island's water security," the report says. 

It also says that the idea of processing sewage into drinking water "has been gaining support in the past decade as the world’s supply of fresh water is increasingly under stress". 2.7 billion worldwide find water scarce for at least one month a year. 

Singapore is hardly the first to try such endeavors. Countries like Israel have also incorporated the technology being used into their supplies. L.A. and London are also looking at similar methods to implement the technology. 

Mitch Gribov, Brewerkz’s head brewer, said about the water: “NEWater perfectly suits brewing because it tastes neutral. The mineral profile of water plays a key role in chemical reactions during brewing.”

But not everyone is "sold" on the idea. 22 year old student Low Yu Chen concluded: “There are many kinds of beers around. If I wanted a beer, I’d pick something made of normal water.”

Tyler Durden Sat, 07/02/2022 - 22:00
Published:7/2/2022 9:13:08 PM
[Markets] Mystery Surrounds Intensifying 'Earthquake Swarm' Shaking South Carolina Mystery Surrounds Intensifying 'Earthquake Swarm' Shaking South Carolina

A swarm of earthquakes rattled South Carolina and appeared to be getting more powerful. About 30 quakes have hit the state this year, and geologists are stumped about what's causing "earthquake swarms" similar to those felt in Southern California. 

Two earthquakes hit Elgin, South Carolina, on Wednesday. The first was a magnitude 3.5, and the second 3.6, according to data from the United States Geological Survey. A 3.4 magnitude earthquake hit the state days before, while a stronger 3.9 rattled parts of the Georgia-South Carolina border on June 18. 

Wednesday's earthquakes were the strongest since a magnitude of 4.1 struck the state in 2014. 

South Carolina's Emergency Management Division shared a video of Wendy Bohon, an earthquake geologist at the Incorporated Research Institutions for Seismology in Washington D.C., who said about 30 quakes struck in the year's first half. She said the swarm of quakes is different than others because "there is no mainshock, or a larger earthquake that happens first then there are lots of smaller earthquakes that happen afterward ... in this case, the swam of quakes are happening a few every week without a large shock." 

The emergency agency also tweeted the state does have several fault systems and is "one of the most seismically active states on the East Coast." However, some geologists are puzzled at why so many swarms are happening. 

"Most earthquakes occur where the earth's plates come together, and they're the result of the tension and the stress that builds up as those plates are grinding and moving, slamming into each other. That's not happening to us here on the East Coast.

"But there are ancient fault lines here from in the past when continents had slammed together … and they are still building up stress and strain but on a much, much slower time scale," Bohon told the Weather Channel. 

"If you can figure that out, you should go get your tux and pick up your Nobel Prize," Thomas Pratt, regional coordinator of the Geological Survey's earthquake hazard program, told The State newspaper. "The Eastern United States, in general, is not on a plate boundary, so it's a mystery in the scientific community why in this exact location, in the middle of a plate, something would trigger this."

Could the rumblings under ground suggest the next big quake is nearing? The last powerful quake to shake the state was a magnitude 7.3 in 1886.

Tyler Durden Sat, 07/02/2022 - 20:00
Published:7/2/2022 7:25:51 PM
[Markets] California Gives Free Healthcare To Illegal Immigrants California Gives Free Healthcare To Illegal Immigrants

Authored by Jamie Joseph via The Epoch Times,

California is now the only state in the U.S. to offer free healthcare to all low-income illegal immigrants after Gov. Gavin Newsom signed a $307.9 billion budget June 30.

The allocation will give an estimated 764,000 people free healthcare coverage for $2.7 billion annually beginning 2024 under the budget provision’s expanding of the state’s Medi-Cal coverage.

“This is what being ‘pro-life’ ACTUALLY looks like,” Newsom wrote on Twitter Thursday.

Across the country, federal and state governments currently provide free healthcare to low-income residents through Medicaid, but it excludes illegal immigrants. Newsom’s provision will make California the only state to offer free healthcare regardless of citizenship status.

An estimated 92 percent of Californians have some form of healthcare, but that will change once the budget is in full swing and illegal immigrants—who make up the largest group of people in the state without healthcare—receive it under the expansion.

Various reports give different estimations of how many illegal immigrants live in the state, but according to Pew Research Center, there were roughly 2.2 million recorded in 2016. Despite not having legal status, these immigrants make up about 7 percent of the state’s workforce according to a 2020 report by the healthcare nonprofit Kaiser Family Foundation.

Hailed by immigrant advocates and proponents of universal healthcare, some critics worry that free healthcare will further incentivize illegal crossings at the Southern border at a time when deaths among those crossing are increasing.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, told the Associated Press the expansion of Medi-Cal is “a magnet for those who are not legally authorized to enter the country.”

“I think many of us are very sympathetic to the immigrant community, but we really wish we had better control of who enters this nation and this state,” he said.

Tyler Durden Sat, 07/02/2022 - 19:30
Published:7/2/2022 6:45:13 PM
[Markets] Does Sam Bankman-Fried Own Everything Now: Recap Of Last Week's Top Crypto News Does Sam Bankman-Fried Own Everything Now: Recap Of Last Week's Top Crypto News

By Donavan Choy of Bankless

Three Arrows Capital Contagion, Act III

The dominoes continue to fall from 3AC’s collapse. 

The fund was ordered into liquidation by a British Virgin Island court after failure to repay debts.

Singapore’s central bank MAS — where 3AC was previously headquartered — then stated that the fund willfully submitted false information on its balance sheets, and exceeded its allowed assets under management for several months.

The collateral damage from 3AC’s implosion has spilled over into other crypto companies, namely Voyager Digital and BlockFi.

Last week, Voyager halted withdrawals on its platform. This week saw Voyager issuing 3AC a default notice after the latter failed to make payments on a $670M loan.

Meanwhile, SBF’s Alameda Ventures stepped in with a $500M loan package to save Voyager, of which $75M has already been accessed. VOYG shares have taken a hit of ~60% in the past two weeks after news of its exposure to 3AC broke.

BlockFi’s troubles include an overcollaterized loan of $1B to 3AC, which was liquidated early on in the domino charge. In a public message released today, BlockFi reported a loss of ~$80M in the past month’s events, as well as a credit line of $400M from FTX (also an SBF joint) which to-date has not yet been drawn on.

Both FTX and Morgan Creek Digital are competing to acquire BlockFi, as BlockFi continues to pursue a public offering.

How 3AC ended up in this mess is beyond the scope of this newsletter, but it’s a heady brew of bad investment decisions and poor risk management involving overleveraged loans from other institutions and DeFi protocol treasuries.

With FTX and Alameda scooping up the rubble from the fallout across the contagion, this looks like an effective power play by Sam Bankman-Fried, see:

* * *

Grayscale sues the SEC

Grayscale Investments’ application to convert its GBTC asset into a spot-based Bitcoin ETF saw rejection by the SEC this week.

Now Grayscale is taking the SEC to court.

The official press release charges that:

“... the SEC is failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934”.

As it stands, the Grayscale GBTC financial product is a trust that enables investors to gain exposure to Bitcoin without buying it directly (with an initial lockup period of six months).

Why buy GBTC at all when you can buy BTC directly? Because it’s a legal way for mainstream investors to gain exposure to crypto.

But it’s also terribly market-inefficient. In theory, GBTC is meant to mirror Bitcoin in value. In reality it trades at a premium or discount depending on market sentiment. This opens an arbitrage opportunity that transforms GBTC from a “Buy this if you like Bitcoin” financial product into a hybrid speculative futures-based product.

That lured institutions like 3AC into scooping huge stakes in GBTC when numbers were going up, and we’ve seen how that ended up.

Of course, modern finance has an easy fix to this like: an ETF which trades at a 1:1 parity with the underlying asset.

But access to crypto ETFs are still blocked up as the SEC continues to drag its feet on regulatory approvals. But that’s not stopping institutions from pursuing the license, as VanEck files another application this week.

* * *

DeFi DAO governance dynamism

Two big DAO governance items dominated this week. The first was a contentious Maker DAO proposal to centralize the protocol’s governance in a “core unit.” It failed to pass. The proposal saw an unprecedented ~30% of MKR tokens participating.

The second big governance proposal is a Lido initiative to self-limit the amount of ETH deposits into the liquid staking protocol. The context of this proposal lies in the potential risks that a concentration of ETH in Lido might pose to the underlying Ethereum protocol.

It’s hardly a surprise that the proposal was overwhelmingly shot down by LDO holders - that’s a little bit like asking an investor if you’d like to see a company you own a part of to stop growing.

* * *

Web3 News Roundup

Arbitrum Odyssey paused, Optimism numbers go up

The Arbitrum Odyssey campaign was paused this week due to blockchain congestion from the overwhelming success of Odyssey.

Meanwhile, Arbitrum’s closest L2 competitor Optimism is also booming, with a big uptick in DEX trading volume.

Horizon bridge gets hacked

The Horizon bridge by L1 blockchain Harmony endured a $100M exploit this week, allegedly by the North-Korean hackers Lazarus Group. Those are the same guys that hit the Axie Infinity Ronin bridge in March.

Microstrategy goes Bitcoin shopping

Microstrategy is a small software company, but it has come a long way from doing small software things. CEO Michael Saylor shut down market rumors of any potential insolvency in perhaps the most demonstrative way possible: a $10M purchase of another 480 Bitcoins.

El Salvador too checks out another purchase of 80 Bitcoin.

Tyler Durden Sat, 07/02/2022 - 18:30
Published:7/2/2022 5:40:10 PM
[Markets] 86% Of Recent Student Loan Borrowers Banked On Biden Bailout 86% Of Recent Student Loan Borrowers Banked On Biden Bailout

Nearly 9 out of 10 recent student debt borrowers say Joe Biden's campaign pledge to cancel at least $10,000 of college debt affected their decision-making. And a big majority think he'll do more than that. 

The survey results come as Biden is reportedly considering $10,000 cancellations for federal college borrowers earning under $150,000 a year.

At the same time, Biden faces a decision over whether to allow student debt repayments to resume after several pandemic-era pauses, but at a time when surging inflation gives postponement advocates more ammo. 

Absent signing off on his fifth extension, borrowers would resume payments after August 31—as midterms approach and Democrats stare down the barrel of a major nationwide setback.  

It remains to be seen whether Biden will use debt cancellation as a spoonful of sugar to help the payment-resumption medicine go down, or if he'll pair cancellation with yet another payback postponement as a self-serving election gimmick.

The college-focused website intelligent.com surveyed 1,000 people who'd taken on student debt since the 2020 election. A whopping 86% claim Biden's campaign promise affected their decision to take on debt. 

Of those who are still enrolled, 30% say they're either unlikely or very unlikely to continue going to college unless Biden takes a chunk of debt off their backs and redistributes it across everyone else's. 

For this crowd of debtors, Biden's $10,000 pledge doesn't seem relevant, as a whopping 71% are either confident or very confident that Biden will forgive most or all of student debt. Cancelling it all would represent a nearly $1.7 trillion giveaway. 

If Biden doesn't forgive any debt, 31% of the Democratic survey participants say they're either unlikely or highly unlikely to vote for him in 2024. 

It reminds us of a sentiment that that's been expressed in many ways and dubiously attributed to various historical figures. Its accuracy, however, is unquestionable:  "When the people find they can vote themselves largesse from the treasury, it will herald the end of the republic."

 

Tyler Durden Sat, 07/02/2022 - 18:00
Published:7/2/2022 5:18:02 PM
[Markets] Retirement Weekly: 10 things to talk about with your financial adviser Use these discussion points in your midyear review.
Published:7/2/2022 4:45:37 PM
[Markets] How Public Pensions Turn Cities Into Unlivable Hellholes How Public Pensions Turn Cities Into Unlivable Hellholes

Authored by MN Gordon via EconomicPrism.com,

“It’s like going to the ATM in Vegas and then going to the roulette wheel and it comes up red and you go back to the ATM.”

The remark was recently made by Steve Mermell.  The man retired last year as city manager of Pasadena, California.  He knows a thing or two about how borrowing to enhance pension fund returns can result in spectacular losses.

The Wall Street Journal article did not clarify whether red was a winning turn of the roulette wheel or not.  Within the article’s context it didn’t really matter.

The main point was that public pension funds are grossly underfunded.  Consequently, more and more pension funds are borrowing money to play the markets.  The goal is to boost returns to cover their massive funding gaps.

If you recall, public-sector retirement plans offer defined benefits, where retiree pension checks are calculated based on salaries and years of service.  Private employers, on the other hand, generally offer defined-contribution plans (like 401Ks), where payouts are based on market returns.

If you live long enough, and are a recipient of a public pension fund you will get out far more than you put in.  If you work in the private sector, there’s a good chance you will outlive your retirement savings.

Certainly, pension funds can attempt to fill their funding gaps by requesting increases in yearly contributions from governments and workers.  But the public-employee unions go full ape when such measures are proposed.  So the remaining option is to take on greater risk.  What could go wrong?

The late Robert Citron could tell you.  As he discovered the hard way, even the most calculated bets will eventually go against you.

Something Special

Nearly 20-years ago, while providing consulting services to a county sanitation district, we crossed paths with a grumpy fellow who had only a secondary interest in providing industrious work.  His primary interest was deliberating on his upcoming retirement; he could bend your ear off.

Between sips of coffee and bites of a glazed donut one Friday morning, he told us of an important milestone that would be reached within six months.  This would be achieved by the coalescing of two critical marks: (1) his 55th birthday, and (2) exactly 36 years of doing time at the district.

As he explained it, after 55 years of age the retirement formula went from 2 to 2.5.  So after collecting a paycheck every two weeks for the past 36 years, something special was about to happen.

He could take a factor of 2.5 and times it by 36 to equal 90.  Specifically, he would now receive 90 percent of his final year’s pay for the rest of his life.  He set his retirement date accordingly.

Mr. Grumpy was an entitled member of the roughly $469 billion California Public Employees’ Retirement System (CalPERS).  The nation’s largest public pension fund.  It’s so large it takes 2,843 full time equivalent positions to administer it.

At last count, there were over 2 million members in the CalPERS retirement system.  Some of these people may have done good work prior to retirement.  Others were likely career loafers.  All, without question, did their time with purpose and intent and eyes squarely on the prize.

Are they feeling lucky?

Starting this month, CalPERS will add leverage for the first time in its 90-year history.  Perhaps it will all work out just fine.  Regardless, the fund’s managers have their work cut out for them.

Legacy Costs

Officially, CalPERS has roughly two-thirds of the money it needs to pay benefits that state and local governments have promised their workers.  But this is based on an assumption of future investment returns averaging 7 percent a year.  Historically, CalPERS’ returns have fallen well short of this assumption.

Over the last 20 years, the average annual return has been 5.5 percent.  Hence, the unofficial gap between what CalPERS has and the promises it owes is much larger than advertised.

For instance, if CalPERS investment returns assumption was lowered to its historical average, unfunded liability would rise from $160 billion to over $200 billion.  For this reason, the mega pension fund will now attempt to lever its returns.

In the case of Pasadena and Steve Mermell’s experience, funding the local pension plan it once offered to its police and firefighters has been a decades long struggle.  In 1999, in an effort to keep pace with its inflation-adjusted benefits, Pasadena borrowed $102 million through municipal bonds.  The borrowed money went towards its pension obligations.

The idea was simple enough.  The pension fund could immediately begin earning on a larger amount of money, while the bonds would be paid back gradually.

But then the stock market crashed during the dot com bust in 2001-03.  Yet the city still had to make bond payments at interest rates north of 6 percent.

Pasadena then went back to the ATM in 2004 with another pension-obligation bond.  Several years later, in 2007-09, the stock market crashed again.  Still, the city’s pension legacy costs remain.  As noted by the Wall Street Journal:

“The local police and fire pension plan has been closed for nearly 50 years.  Pension recipients have dwindled to fewer than 180.  But the city still owes about $135 million in bond debt on the plan.  Payments on it are expected to be about $6 million in 2022.”

What a complete cluster.

Following Pasadena’s closure of its local pension plan, public pensions are managed by CalPERS.  To add insult, the city’s annual contributions to CalPERS have doubled since 2015, to about $70 million last year.  That’s more than the city spends on transportation.

What to make of it…

How Public Pensions Turn Cities into Unlivable Hellholes

Without question, gambling with public money is a foolish thing to do.  Nonetheless, many pension funds – like CalPERS – are now using leverage to juice returns.

According to a Municipal Market Analytics analysis of Bloomberg data, more than 100 city, county, state, and other governments borrowed for their pension funds last year.  This is twice the highest number that did so in any prior year.

Standing behind these pension funds are state and local taxpayers – that’s you, acting as the ATM.  Moreover, when the investment returns of public pension funds fall short, governments are primarily responsible for filling the void.  This means cutting other spending and services or increasing taxes.

Covering pension fund obligations is a massive drag on state and local government finances.  The fact is, there’s a legion of public workers out there who’ve been promised a retirement that’s no longer affordable.

These grand promises must be broken.

You can witness the effects when traversing through just about every city in America that has been in existence for more than 60 years.  By repeatedly reallocating spending from much needed services, the present and future conditions of cities and municipalities are being transformed to unlivable hellholes.

Your neighbor, who retired from the city over 25 years ago, may frequently lament the shoddy conditions of the streets and sidewalks.  He may bemoan the lack of resources to address burgeoning homeless encampments and the mobs of mentally ill zombies flailing about on the tired asphalt.

Yet it has never occurred to him that he and his retired cohorts are receiving money that should be used to maintain basic municipal services.  The generous promises made many decades ago – the entitlements – are now destroying the world around them.

*  *  *

A massive wave of municipal and corporate bankruptcies is cresting.  The longer the bear market runs, the greater the collateral damage.  Don’t leave your retirement in the hands of others.  Instead, consider trying simple, practical steps everyday Americans can take to protect their wealth and financial privacy.  The steps are documented in the Financial First Aid Kit.  If you’d like to find out more about this important and unique publication, and how to acquire a copy, stop by here today!

Tyler Durden Sat, 07/02/2022 - 17:30
Published:7/2/2022 4:45:36 PM
[Markets] Delta Offered $10,000 To Flyers Willing To Give Up Seats On Oversold Flight Delta Offered $10,000 To Flyers Willing To Give Up Seats On Oversold Flight

Confronted with an overbooked flight last week, Delta flight attendants channeled Vito Corleone and tried making boarded passengers an offer they couldn't refuse: Give up your seat and receive the princely sum of $10,000 in cash, not flight credit.  

The shock of that number is compounded by the fact that this wasn't a long-haul international flight from Atlanta to Johannesburg or LAX to Sydney. We're talking about a 90-minute hop from Grand Rapids to Minneapolis. 

The episode first gained public attention via a tediously-written, first-person account by Inc. tech columnist Jason Aten. (Lured by a Buzzfeed-grade teaser headline—"On This Flight, Delta Just Did Something Unheard Of"—readers had to endure EIGHT paragraphs of nothingness* before actually finding out what the flying f— Delta had done on Aten's flight.)

Flight attendants were looking for eight people to change flights to a later date. "If you have Apple Pay, you'll even have the money right now," Aten says one of them declared.

Another passenger, Todd McCrumb, told KTVB that Delta's bid started at $5,000, a sum that likely would've generated headlines on its own if things had stopped there. He said the offer sounded so far-fetched he asked fellow passengers if the crew was joking. 

The juicy offer came as the airline industry is beset with cancellations and delays driven by a shortage of pilots and understaffing at the FAA. Seeking to minimize problems during the July 4 weekend, Delta this week offered customers the option to rebook without change fees or even fare differences.  

Apparently not wanting to show its cards to future travelers, Delta declined various media outlets' requests for comment on the specific $10,000 offer. Speaking more generally, a spokesperson told CBS MoneyWatch, "The ability to provide compensation on full flights empowers our employees' efforts to care for customers and get aircraft out on time." 

In 2017, CNBC reported that Delta had boosted the limit for enticements for "voluntary denied boardings." At that time, the standard limit became $2,000, but the real maximum—subject to various rules and authorizations from management—grew to $9,950. 

That Delta policy change came after a spectacular, reputation-bruising episode in which a seated United Airlines passenger, 69-year old Dr. David Dao, refused to relinquish his seat in favor of an airline employee who needed to fly. He was violently removed, with cell phone video capturing his bloody face and broken eyeglasses. According to his lawyers, Dao's was concussed, had a broken nose and lost two teeth. 

Dao, a lung specialist, told USA Today he refused because he was about to oversee the opening of a clinic he founded to serve veterans, as his way of expressing gratitude to service members: The U.S. Navy plucked Dao from the ocean as he fled Communist Vietnam some 44 years earlier. 

At first, United's CEO called Dao "disruptive and belligerent," but apologized after public uproar. Dao sued and received an undisclosed settlement. We're guessing it was far north of $10,000.  

A shot from the last scene of the movie Ferris Bueller's Day Off, in which Ferris looks into the camera, surprised that people are still watching after the credits

*You're still here, Zero Hedge reader? Congratulations, you've unlocked a special July 4th Weekend BONUS FEATURE—an elaboration on Jason Aten's aggravatingly exhausting essay at Inc.com about his first-hand experience of being offered $10,000 to change flights.

Don't forget the clickbait title: "On This Flight, Delta Just Did Something Unheard Of". Unlike our deeply respected Zero Hedge readers, the poor saps who read Inc. were being held in suspense deep into the article. (To our credit, we prefer to center our occasional clickbait indulgences on tastefully tempting imagery.) 

How did Aten manage to fill EIGHT paragraphs before telling readers what remarkable thing Delta did on his flight? His feat started with providing Inc readers this deeply insightful crystallization of the airline business: 

"You sell tickets on flights between cities based on some kind of schedule. People buy those tickets, and in exchange for the money they pay, they expect to end up on a plane flying to wherever it is they wanted to go."

Across the nation, Inc readers' jaws dropped in a shared moment of exhilarating clarity: At long last, they finally grasped the commercial air travel value proposition that had hitherto bewildered them. 

Part of the excruciating journey to Aten's $10,000 punch line included an explanation of the concept of overbooking. Apparently, Aten thinks that too is an alien concept to a business magazine readership with an average household income of $419,000.  

Written as if he's paid by the word, Aten's lesson even included this elaboration on the concept:

"Obviously, a plane with 200 seats can't hold more than 200 people. If you sold 210 tickets, and everyone who bought a ticket shows up for the flight, some of them aren't going anywhere."

By that point—not even realizing I was still five paragraphs from the revelation—I was yelling "What the f— did Delta DO?!" and wondering why my exceedingly well-read college chum would send me this article and subject me to Aten's enhanced-interrogation-technique-level tedium.

By the time I finally saw the truly extraordinary Delta offer at the heart of the story, it was too late. I was a broken man...ready to tell Jason Aten that Saddam Hussein and I presented gift-wrapped, Nigerien, yellow cake uranium to Khalid Sheikh Mohammed in Muammar Gaddafi's living room, our feet casually propped on high-strength aluminum tubes as we helped ourselves to the Colonel's gilded snack bowls brimming with pre-genocide, recreational Viagra

If only Inc. had declared Aten's column overbooked and offered me $4 to get off. 

 

Tyler Durden Sat, 07/02/2022 - 12:00
Published:7/2/2022 11:11:23 AM
[Markets] : These 3 states and 3 cities will increase their minimum wage on July 1. Do you live in one of them? America’s federal minimum wage has remained at $7.25 since 2009.
Published:7/2/2022 11:11:23 AM
[Markets] Dow Jones Futures: Stocks Bounce, But Don't Feed The Bear Market; BYD Vs. Tesla Deliveries Don't feed the bear market; prepare for the next bull run. BYD sales should top Tesla deliveries in Q2. Published:7/2/2022 10:43:35 AM
[Markets] The Most Valuable Form Of Money Nobody's Seen...Yet The Most Valuable Form Of Money Nobody's Seen...Yet

Authored by Charles Hugh Smith via OfTwoMinds blog,

What is "money"? "Money" is a claim on the essentials of life. Ration cards are claims on essentials.

Many people expect "money" will soon be tied to commodities. Agreed. It's called a ration card that grants the holder the right to buy a specific quantity of essential goods at a specified price.

This right is a form of "money" directly tied to the value of commodities.

Ration cards are the only fair way to distribute essentials in times of chronic scarcity. Markets work fine when there's a substitute for whatever is scarce, but there are no substitutes for electricity, food, fuel or fresh water, the FEW essentials (Food, energy, water).

Leaving the distribution of scarce, no-substitutes essentials up to the market leads to the rich eating very well indeed and the poor going hungry. This leads to a little thing called the overthrow of the failed status quo and the destruction of a good chunk of its ruling class (Payback's a witch, etc.). No bread? Let them eat iPhones.

We know ration cards work because a mass experiment in rationing essentials was conducted in World War II. Maybe fairness no longer matters (and if it doesn't, then prepare for the overthrow of the failed status quo and the destruction of a good chunk of its ruling class), but if fairness matters--or the ruling elite wish to keep all their power and all their goodies--then rationing and the ruthless suppression of price gouging are as good as gold.

What is "money"? "Money" is a claim on the essentials of life. Ration cards are claims on essentials, enforced by the state to insure everyone has a minimum of the FEW resources. Beyond that minimum, the market will discover the price of extra goodies. But the point is that ration cards are a fair form of "money."

With a little digital magic, ration cards can't be counterfeited or used by anyone but the person to whom they were issued. If you get your ration and don't need all of it, nobody's stopping you from selling it to somebody else. But at least everyone got the same amount at the same price.

How valuable is ration-card "money"? Let's put it this way: if you're a wealthy, powerful member of the ruling elite, how much would you pay to avoid the overthrow of your regime? If creating ration-card "money" saves your bacon, then what other form of "money" has more value than that?

The other form of "money" that will be valuable isn't even tangible. It's called self-reliance. More on that later.

*  *  *

My new book is now available at a 10% discount this month: When You Can't Go On: Burnout, Reckoning and Renewal. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
 

Tyler Durden Sat, 07/02/2022 - 11:30
Published:7/2/2022 10:43:35 AM
[Markets] : ‘It’s nuts’: Real-estate agents describe chaotic bidding wars in New York City’s red-hot rental market As workers and college students return to the city over summer, rental prices have shot up.
Published:7/2/2022 10:43:35 AM
[Markets] Video Of Israeli-Ukrainian Captured By Pro-Russian Forces Circulates On Social Media Video Of Israeli-Ukrainian Captured By Pro-Russian Forces Circulates On Social Media

Video is circulating on social media of a Ukrainian-Israeli man who's been captured by pro-Russian separatists. In the video, 40-year-old Vladimir Kozlovsky tells a bleak story of his brief service with the Ukrainian military. 

"When the war started, my wife and I wanted to leave the country," says Kozlovsky, according to a translation of the video by Israeli news site ynet. "I am also a citizen of Israel...Before the border, in Uzhgorod, I met with the Israeli consulate, they gave me a special certificate so I could leave the country—but I was stopped at the border. The border guards detained me and did not let me out."

Uzhgorod is in westernmost Ukraine, on the Slovakian border. While Kozlovsky's wife and child were allowed to proceed, Ukraine bars men age 18-60 from leaving the country so they can be available for conscription into the war against Russia. 

Kozlovsky was reportedly pressed into military service as a radio operator for an intelligence unit operating near the city of Lysychansk in the Luhansk Oblast (province) that, along with the Donetsk Oblast, comprises the contested Donbas region central to the ongoing war. On the eve of its invasion, Russia recognized the sovereignty of the breakaway Luhansk and Donetsk People's Republics. 

Sent on a mission to transport personnel, Kozlovsky and fellow members of his unit came under heavy artillery fire. They retreated but, upon returning, were captured by members of the pro-Russian, separatist Luhansk Republic Army.  

It's important to note the possibility that Kozlovsky's statements may be coerced. However, if his account is true, it shows the limited effectiveness of efforts to pour Western weapons into the conflict, and Ukraine's challenge in rapidly turning civilians into soldiers:  

"We had foreign weapon systems but we didn't know how to use them. We were not trained to fight and nevertheless were sent to the battlefield. They didn't tell us we were going to fight either. We thought we'd stay in Western Ukraine, but we were deployed to Lysychansk. We were thrown to the battleground like cannon fodder."

Kozlovsky said Ukrainian military commanders encouraged the hapless conscripts to fight to the death. "We've received messages from the Russians saying we'll be better off if we surrendered. The soldiers also discussed this before, but commanders tried to prevent these talks. They told us that if we surrendered, the Russians would torture us to death, so it is better not to be taken alive."

The video was shared on the Telegram channel of the separatist Luhansk Republic Military. Along with Kozlovsky's video testimonial, the group also provided surrender instructions for Ukrainians who want to exit the war.

After learning of Kozlovsky's capture, Israel's foreign ministry and its Moscow embassy have been in contact with Russian officials, according to the Jerusalem Post.  

Tyler Durden Sat, 07/02/2022 - 08:45
Published:7/2/2022 8:08:38 AM
[Markets] Brett Arends's ROI: Here’s how much the average working boomer has saved for retirement Well over half of people surveyed expect their standard of living to decline in retirement.
Published:7/2/2022 8:08:38 AM
[Markets] If You're A Saudi Cocaine-User, Move To Uruguay If You're A Saudi Cocaine-User, Move To Uruguay

According to the latest edition of the United Nations World Drug Report, 284 million people used illegal drugs in the last year, while around 21 million of them used cocaine.

The use of the drug has risen in the past decade, according to the report, but slowed somewhat in the Covid-19 pandemic. However, as Statista's Katharina Buchholz details below, with global cocaine production reaching new highs, cocaine supply chains to Europe have been diversifying, which is driving prices down and pushing quality up, potentially increasing the level of harm caused by use of the drug in the region.

Infographic: The Street Price of a Gram of Cocaine | Statista

You will find more infographics at Statista

In the United Kingdom, for example, cocaine prices fell from the equivalent of $178 to $103 between 2019 and 2020. The country continues to have a high cocaine retail street price in a global comparison, however, with prices lower in most European countries.

In developed economies outside of Europe, a higher premium is usually charged for cocaine, like in Hong Kong ($145 per gram), Japan ($188 per gram), Israel ($205 per gram) or Australia ($242 per gram). For the United States, no 2020 numbers were reported, but in 2019, the price for a gram of cocaine stood at $200 per gram.

Prices were even higher in Arab countries, which have strict laws forbidding drug use and trade.

A gram of cocaine can be found for a fraction of its price on the Persian Gulf in some parts of Europe, such as in the Netherlands and Portugal where UNODC states it has a retail street price of $58 and $38 per gram, respectively. The later country has recently radically decriminalized the use of even class A drugs.

Uruguay, one of the few Latin American countries for which data was available, came in at the very bottom of the list.

Cocaine is expensive in the only African country on the list, Algeria. India was included in the report for the first time this year, with the price of cocaine set at an average $67 per gram. While this is rather low by international standards, attainability is likely lower than in Europe due to the differences in purchasing power in the country.

Tyler Durden Sat, 07/02/2022 - 07:35
Published:7/2/2022 6:45:49 AM
[Markets] Author Matt Palumbo Lays Out How George Soros Has Significant Control Over Media Narratives Author Matt Palumbo Lays Out How George Soros Has Significant Control Over Media Narratives

Authored by Masooma Haq and Roman Balmakov via The Epoch Times (emphasis ours),

Matt Palumbo, author of “The Man Behind the Curtain: Inside the Secret Network of George Soros,” details billionaire George Soros’s connection to American politics, and illustrates how Soros controls not only what is written about him, but also influences how the American public perceives news events.

Matt Palumbo, author of “The Man Behind the Curtain: Inside the Secret Network of George Soros,” during an interview on "Facts Matter" on June 15, 2022.

Soros created a financial concept called reflexivity, which Palumbo said is “brilliant,” because it can cause what Soros wants in the finance sector to happen.

“But expectations set reality and Soros realized, ‘Well, that’s true of media as well.’ If you tell people what to expect, they’re going to reinterpret reality,” and that can be used to affect how people interpret news events, Palumbo said during a recent interview for EpochTV’s “Facts Matter” program.

“For whatever reason, if people think something’s going to happen, it actually will happen,” and Soros applied this to media companies’ coverage to make people believe something that did not actually happen, happened, said Palumbo.

Soros-backed media agencies use this concept to create false narratives and make people believe in something that did not actually occur. The reason Soros is able to have this level of influence is that he gives tens of millions of dollars to the U.S. media infrastructure.

There are many Soros-linked mainstream media organizations including, “ABC, CBS, CNN, Washington Post, New York Times, I mean, it is a very long list. Type Soros’s name and just look at how they cover him, and if it’s ever anything negative, it’s ‘anti-Semites say: negative claim,’” said Palumbo, adding that their coverage always seems to favor Democrats and Soros.

A watchdog group called the Media Research Center (MRC) has documented Soros’s ties to media infrastructure. “Soros has spent more than $52 million funding media properties, including the infrastructure of news—journalism schools, investigative journalism, and even industry organizations,” according to an MRC report.

Many left-wing groups, including media companies, get funding via Soros’s Open Society Foundation. That group is known to fund progressive initiatives like Black Lives Matter and Defund the Police, as well as political candidates and district attorney campaigns, said Palumbo.

Antifa and Black Lives Matter demonstrators protest on election night near the White House in Washington on Nov. 3, 2020. (Nicholas Kamm/AFP via Getty Images)

Soros’s foundation claims to promote democracy and individualism, but in reality, it supports a more radical agenda, said Palumbo.

There is what they say things are and what they really are,” Palumbo said about the Open Society Foundation

...

In his research, Palumbo also found that many people who once worked for Soros’s Open Society Foundation later went on to work for media outlets.

In addition, Soros has funded campaigns for many Democratic politicians and progressive district attorneys, backing those who will get the results Soros wants.

If you elect a DA, they have total autonomy on all those things, so it’s just hey, I want the law changed, I back a guy who wants to change it exactly the way I do, he goes in and changes it overnight,” said Palumbo.

Read more here...

Tyler Durden Sat, 07/02/2022 - 00:00
Published:7/1/2022 11:36:38 PM
[Markets] The Colossal Untapped Value Of Asteroids The Colossal Untapped Value Of Asteroids

In the asteroid belt that lies between Mars and Jupiter, there is an almost unfathomable amount of resources waiting to be utilized.

As Statista's Martin Armstrong details below, according to data from Wired and Valerio Pellegrini, the asteroid 'Davida', which has a diameter of 326 kilometers, has been identified as the most valuable asteroid in the belt, with a resource value estimated to be some 27 quintillion (26,990,000,000,000,000,000) U.S. dollars.

It is a carbonaceous chondrite asteroid, and contains water, nickel, iron, cobalt, nitrogen, ammonia, and hydrogen.

Infographic: The Colossal Untapped Value Of Asteroids | Statista

You will find more infographics at Statista

June 30 marked Asteroid Day, a UN-sanctioned global awareness campaign with the mission "to inspire, engage and educate the public about asteroids opportunities and risks." While the risks to Earth and all life on it are clearly not to be disregarded, the potential to increase the resources at mankind's disposal - and reap the financial rewards from them - is immense.

As Statista's dossier on space mining reports: "While space mining has not yet become a reality, the technology that will eventually enable to exploitation of the rich resources of the asteroids in the solar system is increasingly being developed by a variety of companies. The market value of these activities amounted to some 712 million U.S. dollars worldwide in 2017, and is forecast to increase to 3.9 billion U.S. dollars by 2025."

Tyler Durden Fri, 07/01/2022 - 23:35
Published:7/1/2022 11:00:47 PM
[Markets] US Falls Behind In Hypersonic Weapons Race After Another Failed Test  US Falls Behind In Hypersonic Weapons Race After Another Failed Test 

America is lagging behind its international competitors in the hypersonic weapons race. This week's test provided more insight into just how badly the U.S. is behind. 

Bloomberg was the first to report the Common Hypersonic Glide Body atop a two-stage missile booster that failed after an "anomaly" occurred during launch at the Missile Range Facility in Hawaii. 

The booster failed to ignite, which would've accelerated the rocket in excess of Mach 5, at which the glide body separates and uses speed and an unpredictable path to strike targets without being detected by the most advanced defense shields in the world. 

"While the Department was unable to collect data on the entirety of the planned flight profile, the information gathered from this event will provide vital insights," said Pentagon spokesman Lt. Cdr. Tim Gorman in a statement. He didn't provide additional details about the failed test. 

Gorman said officials would use data from the rocket's failures to correct the issue for future tests. 

Even though the hypersonic weapons program has experienced multiple "fight test anomalies" over the last year, the spokesman was confident the delivery of the weapons to modern battlefields would occur "on target dates beginning in the early 2020s." 

The previous test of the glide body ended early when the booster rocket failed, which prevented the missile from leaving the launch pad. The Navy and Army have jointly been working on developing hypersonic weapons. 

The Air Force has also been working on a hypersonic weapon. After several failed tests earlier this year, the service successfully tested a hypersonic missile off Southern California in May.  

It's no secret the U.S. is falling behind the hypersonic weapons race as the largest military in the world, in terms of size and defense budget, has yet to field hypersonic weapons.

Meanwhile, Russia (see: here) and China (see: here) have completed successful tests and or fielded super fast weapons on the modern battlefield.

The Biden administration recently revealed a new trilateral security pact between Australia – United Kingdom – United States (AUKUS) partnership, a move to "accelerate the development of advanced hypersonic and counter-hypersonic capabilities."

The takeaway is the U.S. is lagging behind the competition in fielding hypersonic weapons as threats of spillovers from the conflict in Ukraine are undoubtedly rising. 

Tyler Durden Fri, 07/01/2022 - 22:45
Published:7/1/2022 10:14:44 PM
[Markets] Press Corps Blasts "Continued Efforts To Limit Access To The President" By The White House Press Corps Blasts "Continued Efforts To Limit Access To The President" By The White House

Authored by Steve Watson via Summit News,

The White House Press Corps has blasted “ahistoric” efforts to limit reporters’ access to Joe Biden during briefings, charging that their presence is being unprecedentedly and severely restricted without explanation.

In a joint letter to Press Secretary Karine Jean-Pierre, the Corps pointed out that this isn’t the first time complaints have been made about the practice and demanded that access, which was formerly unrestricted under other administrations, be restored.

The letter states “We once again respectfully request the Biden administration – without exception-re-open all of the traditional venues for presidential remarks at the White House, including the East Room and the South Court Auditorium, for any reporter admitted to the White House campus.”

The letter further asserts that “The current method of allowing a limited number of reporters into these events is not only restrictive and antithetical to the concept of a free press, but it has been done without any transparent process into how reporters are selected to cover these events.”

“The continued inability of the White House to be candid and transparent about the selection process for reporters attending his remarks undermines President Biden’s credibility when he says he is a defender of the First Amendment,” the letter continues.

It adds that “The incongruity of these restrictions underscores the belief by many reporters that the administration seeks to limit access to the president by anyone outside of the pool, or anyone who might ask a question the administration doesn’t want asked.”

The reporters further note that restrictions brought in under COVID have yet to be rescinded while other pandemic related measures have been dropped.

The Corps also outline that President Trump while openly expressing contempt for the media on a daily basis allowed freer access than the Biden camp, which is now demanding access request forms be filled in by reporters.

The administration’s continued efforts to limit access to the president cannot be defended. Any notion that space is ‘limited’ is not supported by the fact that every other president before Biden (including Trump) allowed full access to the very same spaces without making us fill out a request form prior to admittance,” the letter notes.

“Let us be candid. Our job is not to be liked, nor is it to be concerned about whether or not you like what we ask. Reporters’ ability to question the most powerful man in our government shouldn’t be discretionary,” they further write.

As we previously reported, White House correspondents are becoming increasingly frustrated by a practice that seemingly limits access of reporters that Biden’s handlers don’t like.

New York Post reporter Steven Nelson implied last month that the White House is actively ‘blacklisting’ correspondents and outlets from events.

Nelson told Press Secretary Karine Jean-Pierre “For more than a year now the White House press office has been having … press events in the state room, state dining room, the executive office building,” adding that “There’s a process where people are selected and able to go into these presidential events where the president often takes questions.”

“I represent the fourth largest newspaper in the country and I haven’t been selected since November,” Nelson urged, noting that no one has explained how this so called section process for access to Biden actually works.

*  *  *

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Tyler Durden Fri, 07/01/2022 - 19:50
Published:7/1/2022 7:00:05 PM
[Markets] "It Is Very Serious": War And Weather Threaten To Send Food Prices Even Higher "It Is Very Serious": War And Weather Threaten To Send Food Prices Even Higher

US agriculture executives are warning that war and extreme weather have put global food supplies in danger as skyrocketing food prices have led to shortages and protests worldwide.

"We’ve actually got two crises," Erik Fyrwald, CEO of pesticide and crop-seed maker Syngenta, told the Wall Street Journal. "The food-security crises and the climate crises."

According to Fyrwald, extreme weather has been on the rise - including heat, drought and flooding which have affected farmers in America, Europe, Australia and India. On top of that, world grain and fertilizer markets have been disrupted by the war in Ukraine - which normally exports roughly one-third of global wheat supply - a figure projected to be cut in half this year according to the USDA.

Rising food prices are prompting unrest, as disruptions in the flow of crops from Ukraine compound existing stress on global supplies of grains and other goods. The head of the United Nations World Food Program has warned outright food shortages are possible in 2023 if Russia continues to block Ukraine’s crop exports.

Even among the world’s wealthiest countries, higher food prices have been taking a toll. U.S. grocery prices in May rose nearly 12% over the past 12 months, the largest annual increase since April 1979, according to the Labor Department. Prices increased 7.4% at restaurants and other food venues outside the home, also marking a more-than-four-decade increase. -WSJ

"It is very serious," said Fyrwald, who added that food prices "will keep going up until and unless we can get product out through the Black Sea in the south of Ukraine."

That said, wheat prices have come down 27% since Russia's invasion drove them to record levels in March.

"There is just not going to be enough supply of certain ingredients," Florian Schattenmann, CTO for Cargill, said during a Tuesday Journal event, adding that the war in Ukraine has put pressure on things such as sunflower oil - forcing companies to scramble for substitutes.

On Monday US Agriculture Secretary Tom Vilsack spoke at the Journal event, where he said that Russia was destroying grain production in Ukraine. "They are making it hard for farmers to plant and grow their crops," he said, while calling for Ukrainian ports in the Black Sea to reopen in order to get grain out of the country and help ease the food supply crunch - in part because trading must resume so that packed grain silos can free up storage space for this year's harvest. Vilsack added that the US needs to find ways to increase its own crop production.

In South America, poor weather has made it more difficult for the agricultural sector to make up for shortfalls in world food supplies given the situation in Ukraine, while in the United States, the Midwest has been forced to slow its planting season for corn and soybean due to wet and windy conditions in the Midwest, while farmers in Western states are grappling with drought that's affecting more than 78% of the region. In California, farmers have been bulldozing thousands of acres' worth of almond orchards and shuttering decades-old dairies.

As conflict continues, Mr. Fyrwald said Syngenta is working with farmers in Ukraine but also continuing to supply Russian farmers with seeds and chemicals. Some agriculture companies, including Syngenta and Bayer AG, and grain traders, such as Cargill, have continued to sell seeds and handle crops in Russia despite pressure to sever ties after the invasion of Ukraine. Companies cite humanitarian grounds for their decisions to keep operating certain parts of their business in Russia, which is expected to increase its wheat exports from a year ago, according to the USDA.

“Snygenta has looked at it and decided that we serve farmers everywhere in the world,” Mr. Fyrwald said. “We are not political.” -WSJ

According to the USDA's Vilsack, the US needs to look for new ways to boost crop production

"Every generation of Americans get tested," he said, adding that the aftermath of the pandemic, weather phenomenon, and the war in Ukraine are "significant challenges, but there is significant capacity for us to emerge stronger."

Tyler Durden Fri, 07/01/2022 - 19:25
Published:7/1/2022 6:42:50 PM
[Markets] Wall Street closes higher but still ends week in the red Stocks shook off a morning slump and ended higher Friday, but not enough to erase their losses for the week. Published:7/1/2022 6:15:30 PM
[Markets] DucDucLow: US Oil Drillers Are Running Out Of Spare Wells DucDucLow: US Oil Drillers Are Running Out Of Spare Wells

By Natalia Kniazhevich, Bloomberg Markets Live analyst and reporter

As oil prices have climbed to around $110 a barrel, US producers have been restarting projects that had stalled.

They’re starting to run low on these extra wells, which could limit future domestic production.

The number of drilled but not completed oil wells -- also known as DUCs -- has been shrinking for almost two years, and is now at its lowest level since the series started at the end of 2013.

The oil production process involves, at a high level, two separate steps: drilling and fracking. When a company drills a well it can leave it uncompleted, which happens when oil prices are low. That’s exactly what we saw during the early part of the pandemic.

When prices, like now, are soaring, companies complete wells and begin to extract crude. But with a limited number of DUCs left, drilling more oil in the US will involve tapping more new wells, a harder process for companies facing pressure to meet ESG targets and maintain capital discipline.

Tyler Durden Fri, 07/01/2022 - 19:00
Published:7/1/2022 6:15:30 PM
[Markets] : Google says it will delete users’ location history for abortion clinic visits Alphabet Inc.'s Google on Friday said it would delete members’ location history whenever they visit an abortion clinic, domestic violence shelter or fertility center.
Published:7/1/2022 5:55:21 PM
[Markets] Apple Top Insider Trading Lawyer Pleads Guilty To Insider Trading Apple Top Insider Trading Lawyer Pleads Guilty To Insider Trading

Apple's former senior director of corporate law and security has pleaded guilty to insider trading after being indicted in 2019, in what prosecutors called a five-year scheme to profit off of quarterly earnings announcements.

Gene Levoff, who's been with Apple since 2008 and moved into his position as senior director of corporate law from 2013 - 2018, made the trades in question between 2011 and 2016 while abusing his position as corporate secretary, head of corporate law and co-chair of a committee that reviewed drafts of Apple's results, according to the indictment.

After initially fighting the charges, Levoff admitted to using nonpublic information about Apple's financials in order to trade company stock, resulting in $604,000 of illegal gains on more than $14 million of trades, according to CNBC.

Specifically, when Levoff learned that Apple was about to have a strong quarter, he would purchase large quantities of stock which would then be sold into the subsequent pop.

Prosecutors said Levoff ignored the quarterly “blackout periods” that barred trading before Apple’s results were released, as well as the company’s broader insider trading policy -- which he was responsible for enforcing. -CNBC

"Gene Levoff betrayed the trust of one of the world’s largest tech companies for his own financial gain," said First Assistant U.S. Attorney Vikas Khanna in New Jersey in a statement. The case was filed in New Jersey because servers which were used to execute the trades were located there.

As 9to5Mac notes, "this case is incredibly ironic: one of Levoff’s responsibilities at Apple included enforcing the company’s insider trading policy. In fact, he even informed Apple employees about a trading blackout period for AAPL stock, while also buying and selling the stock himself."

Lovoff was fired in September, 2018, five months before he was criminally charged.

The indictment carries a maximum penalty of 20 years in prison, which we're guessing Levoff just cut a deal to avoid. His sentencing is scheduled for Nov. 10. The SEC has filed related civil charges.

Tyler Durden Fri, 07/01/2022 - 18:40
Published:7/1/2022 5:55:21 PM
[Markets] Biden Admin Halts 2nd Largest US LNG Plant From Restarting Operations After Blast Biden Admin Halts 2nd Largest US LNG Plant From Restarting Operations After Blast

The Biden administration is preventing the second-largest US liquefied natural gas export facility from repairing or restarting operations in the wake of a fire earlier this month over 'risks to public safety.'

Smoke billows from the Freeport LNG plant in Quintana, Texas, U.S., June 8, 2022, in this still image obtained from a social media video on June 9, 2022. Courtesy of Maribel Hill/via REUTERS

As Reuters reports, the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA), which operates under DOT Secretary Pete Buttigieg, has prevented Freeport LNG's 15 million tonne per year (mtpa) Quintana plant in Houston, TX, exacerbating the global energy crunch.

"Continued operation of Freeport's LNG export facility without corrective measures may pose an integrity risk to public safety, property or the environment," PHMSA said in its preliminary report, after a problem with a safety valve led to an 18-inch stainless steel pipe to overpressurize and burst. This released LNG and methane, leading to the blast.

It laid out a series of steps for investigating what caused a 300-foot (91-m) section of pipe to burst and release about 120,000 cubic feet of LNG.

The root cause analysis likely will delay a partial restart of the plant for 90 to 120 days, and could delay a full restart, analysts said.

Closely-held Freeport said it will continue working with PHMSA and other regulatory bodies to obtain necessary approvals to restart operations. It estimated resumption of partial liquefaction operations to be in early October and a return to full production by year-end. -Reuters

"The actual process (of reviews, repairs and approvals) will take longer than three months, and potentially take six to 12 months," said Alex Munton, director of global gas and LNG at consultants Rapidan Energy Group.

According to the report, PHMSA ordered the company to submit a plan within 60 days for an outside investigator to report on the extent of the damage to the facility - and gave no indication of how long it would take to approve a plan. Freeport must also contract with a third-party to review the condition of its LNG storage tanks.

Then, and only then, can the company submit a repair plan, derailing their goal of a partial restart in September, and full operation by year-end.

Tyler Durden Fri, 07/01/2022 - 17:20
Published:7/1/2022 4:43:10 PM
[Markets] The Tell: Recession fears are slamming the stock market. This GDP tracker explains why. Key Fed GDP tracker shows the U.S. economy slowing sharply.
Published:7/1/2022 4:20:34 PM
[Markets] New Disney Show Accused Of Indoctrinating Kids To Think That Men, Too, Can Get A Period New Disney Show Accused Of Indoctrinating Kids To Think That Men, Too, Can Get A Period

Authored by Bill Pan via The Epoch Times (emphasis ours),

The Walt Disney Company, which recently sparked controversy for inserting radical sex and gender ideology into its children’s programs, has come under scrutiny again after a clip from the new series “Baymax!” showed the namesake nurse robot taking advice on menstrual products from a transgender person.

A Disney+ streaming service sign is pictured at the D23 Expo, billed as the "largest Disney fan event in the world," at the Anaheim Convention Center in Anaheim, Calif., on Aug. 23, 2019. (Robyn Beck/AFP via Getty Images)

The video was obtained and shared by conservative author and filmmaker Christopher Rufo. Earlier this year, Rufo publicized video footage of an internal company call, in which Disney executives discussed the company’s “not-at-all secret gay agenda,” including a push for more LGBT cartoon characters.

I’ve obtained leaked video from Disney’s upcoming show ‘Baymax,’ which promotes the transgender flag and the idea that men can have periods to children as young as two years old,” Rufo wrote in a Jun. 28 post on Twitter. “It’s all part of Disney’s plan to re-engineer the discourse around kids and sexuality.”

In the 27-second clip, Baymax can be seen standing in the female hygiene product aisle of a store. When he asks a woman next to him for suggestions, the woman appears to be surprised but nonetheless recommends “the tampons I usually use,” before several other customers join in to offer advice.

I prefer pads, they’re more comfortable for me,” a woman tells the inflatable robot.

I always get the ones with wings,” recommends a male-sounding person wearing a transgender flag.

“Get unscented and bleach-free if you can,” another woman says.

“My daughter loves these!” a man says while showing Baymax some other product.

“These might be easier if it’s her first period,” yet another woman offers. “These are really environmentally friendly!”

Appropriateness Debated

The clip has triggered a debate on social media over whether the messaging is appropriate for an animated series directly aimed at younger viewers, with many accusing Disney of trying to normalize to children the idea that biological males can have periods.

“I have 4 kids, ages 8-15, who would watch this and it would make them all uncomfortable. What is the purpose?” journalist Nicole Russell wrote on Twitter.

Some others, however, applauded the inclusion of the period talk and dismissed Rufo’s concerns as “conspiracy theory.”

“Apparently, this is all you need to trigger Christopher Rufo into an unhinged rant and conspiracy theories,” Alejandra Caraballo, an instructor at Harvard Law School, wrote alongside a transgender pride flag.

The debate comes as the Disney-Pixar movie “Lightyear” falls short of box office expectations for two consecutive weekends.

The latest installation in the “Toy Story” franchise, “Lightyear” earned only about $51 million in North America on its opening weekend and landed 5th at the box office on the second weekend, with just $17.6 million, falling even behind the independent horror film “The Black Phone.”

Critics argue that the poor performance of “Lightyear” has to do with Disney’s focus on pushing LGBT-friendly messages rather than entertaining the audience. As the result of Disney’s insistence in keeping a same-sex kiss between two female characters in “Lightyear,” the film has been banned in 14 countries, including China and Indonesia.

“Baymax!,” a spin-off of the widely successful 2014 movie “Big Hero 6,” premiered on June 29 on Disney Plus.

Tyler Durden Fri, 07/01/2022 - 17:00
Published:7/1/2022 4:20:34 PM
[Markets] Dow Jones Futures: Don't Feed The Bear Market; BYD Vs. Tesla Deliveries Don't feed the bear market; prepare for the next bull run. BYD sales should top Tesla deliveries in Q2. Published:7/1/2022 4:20:34 PM
[Markets] Stocks rise 1% Friday in a positive start to the second half of 2022 Stocks rise 1% Friday in a positive start to the second half of 2022 Published:7/1/2022 3:45:11 PM
[Markets] AOC Accuses Supreme Court Of A "Coup" And Calls For It To Be "Done Away With" AOC Accuses Supreme Court Of A "Coup" And Calls For It To Be "Done Away With"

Authored by Steve Watson via Summit News,

Democrat Rep. Alexandria Ocasio-Cortez accused the Supreme Court Thursday of instigating a “coup” and called for it to be completely abolished in a series of rants on different subjects.

Following a ruling that will see the EPA’s power to regulate greenhouse gases reined in, AOC tweeted that Joe Biden’s suggestion of suspending the filibuster in the Senate isn’t enough.

“We need to reform or do away with the whole thing, for the sake of the planet,” AOC wrote, referring to the Supreme Court.

The likes of CNN and MSNBC parroted AOC’s comments, suggesting that SCOUTS is attacking the “fundamental right to a livable planet”:

The ‘squad’ leader also accused SCOTUS of a “judicial coup” and called for it to be ‘restrained’ after it took up a 2020 election-related case.

AOC suggested that this sets a precedent to do away with the Presidential election… or something

The latest rants come after a week of AOC calling for the Supreme Court to be abolished in the wake of the abortion ruling:

*  *  *

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Tyler Durden Fri, 07/01/2022 - 16:20
Published:7/1/2022 3:45:11 PM
[Markets] The Wall Street Journal: Klarna to raise new funds at slashed $6.5 billion valuation Klarna Bank AB is nearing a deal to raise new money at a valuation of around $6.5 billion, according to people familiar with the matter, a humbling comedown and a testament to the punishing environment facing startup companies.
Published:7/1/2022 3:45:11 PM
[Markets] ‘Sky-high’ Wall Street earnings estimates need to come down: Strategist Chris Wolfe, First Republic Private Wealth Management CIO, and Rob Haworth, U.S. Bank Wealth Management Senior Investment Strategist, join Yahoo Finance Live to discuss market growth outlooks ahead of the Fed's next meeting, inflation, and how to defensively position investments. Published:7/1/2022 3:45:11 PM
[Markets] U.S. construction spending drops for the first time since last September U.S. construction spending drops for the first time since last September Published:7/1/2022 10:00:03 AM
[Markets] "One Of The Worst Downturns In Recent History": Zuck Warns Facebook Employees To Brace For Layoffs "One Of The Worst Downturns In Recent History": Zuck Warns Facebook Employees To Brace For Layoffs

One month ago we showed that while the BLS still revels in its seasonally-adjusted statistical nonsense to divine the monthly level of payrolls, the real world is seeing a wave of mass layoff the likes of which have not been seen since the covid crash

Fast forward to today when it appears that we are about to hit the motherlode of mass layoffs, after none other than Zuck sounded the alarm bell.

According to Reuters, Facebook-owner Meta Platforms has cut plans to hire engineers by at least 30% this year, CEO Mark Zuckerberg told employees on Thursday, as he warned them to brace for a deep economic downturn.

“If I had to bet, I'd say that this might be one of the worst downturns that we've seen in recent history," Zuckerberg told workers in a weekly employee Q&A session, audio of which was heard by Reuters.

And while Zuck emphasized the lack of hiring - noting that it has reduced its target for hiring engineers in 2022 to around 6,000-7,000, down from an initial plan to hire about 10,000 new engineers, which comes amid a hiring paused announced month - he confirmed that layoffs are also coming saying the company was "turning up the heat" on performance management to weed out staffers unable to meet more aggressive goals.

“Realistically, there are probably a bunch of people at the company who shouldn't be here," Zuckerberg said, adding that "part of my hope by raising expectations and having more aggressive goals, and just kind of turning up the heat a little bit, is that I think some of you might decide that this place isn't for you, and that self-selection is OK with me."

Others made the message even more forcefully, with Chief Product Officer Chris Cox saying that the company must "prioritize more ruthlessly" and "operate leaner, meaner, better executing teams."

"I have to underscore that we are in serious times here and the headwinds are fierce. We need to execute flawlessly in an environment of slower growth, where teams should not expect vast influxes of new engineers and budgets," Cox wrote.

Translation: when even the most profitable tech companies are braching for mass layoffs, the bottom is about to fall out... or as Biden would say:

Tyler Durden Fri, 07/01/2022 - 10:45
Published:7/1/2022 10:00:02 AM
[Markets] Stock market news lives updates: Stocks fall after S&P 500's worst first half since 1970 US stocks fell Friday morning, extending this week's losses and kicking off the first session of July with more selling. Published:7/1/2022 10:00:02 AM
[Markets] The Moneyist: ‘I worry my sister and I will not see anything’: My grandfather married a second time before dying. Do I have any right to an inheritance? 'He was a wealthy man and helped put me through college.'
Published:7/1/2022 10:00:02 AM
[Markets] Pulling Back The Curtain On The 'Real' US Economy Pulling Back The Curtain On The 'Real' US Economy

Revised numbers on US GDP from the Bureau Of Economic Analysis indicate that the economy faces a deeper contraction than originally reported.  GDP shrank in the first quarter of 2022 by 1.6%; this is an impressive and sharp reversal from the fourth quarter of last year, which saw GDP grow by 6.9% due primarily to the continued circulation of covid stimulus dollars and consumer credit spending.   

It's important to keep in mind that this plunge in GDP occurred BEFORE the Federal Reserve started raising interest rates.  Meaning, the Fed did in fact raise rates into economic weakness, much like they did during the onset of the Great Depression, causing even more damage to the economy in the process and prolonging the effects of the crisis.  The difference this time is that we do not face a standard deflationary threat, but a stagflationary one.  It's a completely different ballgame.

Calls for recession are ample from the mainstream financial media and many alternative analysts, though the assumption among many is that price inflation will track down as the recession pressures grow.  This may not be the case.  

Loss of buying power in the dollar due to central bank stimulus and numerous supply chain issues indicate an extended period of price inflation well into next year.  Furthermore, with foreign central banks now incrementally dropping the dollar as the world reserve currency, there will be even more dollars flooding into the US from overseas. That's too many dollars chasing too few goods and services.

With the GDP decline more pronounced that initially thought, will the Fed capitulate quickly and end rate hikes?  It's unlikely as long as price inflation continues through most of the economy.  The Fed has made it clear that they are willing to let markets take a considerable hit as they pursue deflation.  Suggestions in the media that a recession will create an immediate “equilibrium” in markets and in prices ring rather hollow and naive.  These are the same people that were telling the world only a few months back that inflation was “transitory.”

Reflected in the fall in GDP is a growing concern among the public that the price explosion is going to eat away at their wallets and decrease their standard of living.  It is also a signal that credit cards are finally maxed out and covid stimulus measures have finally faded away.  When easy credit and stimulus move out of play the real economy is revealed, and in our case the true face is an ugly one. 

Tyler Durden Fri, 07/01/2022 - 06:55
Published:7/1/2022 6:07:15 AM
[Markets] Dow Jones Futures Fall: Micron Skids On Warning; Tesla Rivals Li, Nio Sales Boom The stock market continues to weaken. Micron sank overnight on grim guidance. Tesla EV rivals reported strong June sales. Published:7/1/2022 6:07:15 AM
[Markets] Coronavirus Update: Novavax is part of the FDA’s COVID-19 booster debate, but its vaccine still hasn’t been authorized The experimental shot played a front-and-center role during this week’s debate about how best to update the COVID-19 vaccines to better protect against omicron.
Published:7/1/2022 6:07:15 AM
[Markets] Market Snapshot: Wall Street on course to continue its rotten run, with ISM manufacturing data in focus As a long holiday weekend looms and after a miserable first-half start to the year, stock investors seem in no mood to bargain hunt on Friday.
Published:7/1/2022 5:11:53 AM
[Markets] Stellantis Says EU's 2035 Combustion Engine Ban Means Auto Industry Is "Doomed" Unless EVs Get Cheaper Stellantis Says EU's 2035 Combustion Engine Ban Means Auto Industry Is "Doomed" Unless EVs Get Cheaper

Today in "saving the environment while destroying the entire global economy news", major European auto manufacturer Stellantis is warning that unless EVs start to get cheaper, that the industry is "doomed" thanks to new deals to try and phase out internal combustion engines.

The company said it is looking to cut the cost of making EVs 40% by 2030, according to a new report from Bloomberg/MSN. This week, the EU pushed forward its agenda to stop the sale of all internal combustion vehicles by 2035. 

Chief Manufacturing Officer Arnaud Deboeuf said Wednesday that “the market will collapse" if electric vehicles don't get cheaper. He called it a "big challenge". 

Stellantis is doing their part trying to keep up with the increased government regulation - they are working on introducing more than 75 fully electric vehicle models this decade and transforming many of its French car plants to exclusively produce EVs. 

Stellantis is also working to develop 5 battery factories across North American and Europe, with the goal of producing 400 gigawatt-hours of cells by 2030. 

But EV prices have been rising, not falling. Tesla, for example, has raised prices by about $6,000 per vehicle this past month. Ford and Rivian have made similar moves, thanks to the rising cost of raw materials associated with EVs. 

Chief Executive Officer Carlos Tavares said that the new mandate shows that policy makers appear to "not care" about whether or not automakers have the raw materials necessary to be able to facilitate such a change. 

Increased battery demand between 2024 to 2027 will benefit Asian producers, he said, and will put at risk cell output in the West, Bloomberg reported. 

Meanwhile, the company also said it is looking at generating its own energy, due to the cost of rising prices associated with the Russia/Ukraine conflict and global inflation. “We have significant areas where we could put solar panels,” Tavares commented. 

Tyler Durden Fri, 07/01/2022 - 05:45
Published:7/1/2022 5:11:53 AM
[Markets] Stocks: The key to ending the bear market, according to Nuveen's Saira Malik Look for these signs that the bear market has run its course, says this Wall Street pro. Published:7/1/2022 5:11:53 AM
[Markets] FTSE heads lower after global stocks suffer worst first-half for decades The FTSE suffered its worst month since the outbreak of COVID-19 in March 2020, while around $13tn was wiped off global stocks in the worst first half of the year on record. Published:7/1/2022 4:23:36 AM
[Markets] EU Imports More US LNG Than Russian Pipeline Gas For The First Time Ever EU Imports More US LNG Than Russian Pipeline Gas For The First Time Ever

Authored by Tsvetana Paraskova via OilPrice.com,

  • For the first time in history, U.S. LNG overtakes Russian piped gas in EU.

  • IEA: The drop in Russian supply calls for efforts to reduce EU demand to prepare for a tough winter.

  • In April 2022 alone, five European countries - France, Spain, the UK, the Netherlands, and Poland - accounted for 54.1% of total U.S. LNG exports.

For the first time ever, the European Union has imported in June more liquefied natural gas (LNG) from the United States than gas via pipeline from Russia, as Moscow slashed supply to Europe earlier this month, Fatih Birol, Executive Director of the International Energy Agency (IEA), said on Thursday.

“Russia’s recent steep cuts in natural gas flows to the EU mean this is the 1st month in history in which the EU has imported more gas via LNG from the US than via pipeline from Russia,” Birol tweeted today, sharing an analysis from the IEA.

“The drop in Russian supply calls for efforts to reduce EU demand to prepare for a tough winter,” the head of the Paris-based agency added.

The significantly lower supply from Russia since the middle of June and the upcoming annual maintenance at Nord Stream that will completely halt deliveries through the pipeline for two weeks in July have left Europe scrambling to fill gas storage sites to adequate levels before the winter. 

The EU has been importing record volumes of American LNG in recent months, although analysts say LNG imports alone cannot replace Russian pipeline gas.

The European Union and the UK saw a record high level of LNG imports in April, as higher spot prices in Europe compared to Asia attracted suppliers with destination flexibility to ship LNG to Europe. Those suppliers were mostly from the United States, the EIA said earlier this month. 

In April 2022 alone, five European countries—France, Spain, the UK, the Netherlands, and Poland—accounted for 54.1% of total U.S. LNG exports, data from the U.S. Energy Department showed earlier this month.  

Despite the record intake of American, and other, LNG, Europe still faces supply troubles this winter if it doesn’t take measures to conserve energy, analysts and the IEA say.

Europe faces a “red alert” for gas supply next winter, Birol said earlier in June.

“Recent disruptions to natural gas supplies, notably Russia steeply cutting flows to EU countries, is set to remove around 35 billion cubic metres of gas from the market this year, posing big challenges to efforts to refill storage. This is a red alert for the EU for next winter, Birol tweeted in mid-June.

Tyler Durden Fri, 07/01/2022 - 05:00
Published:7/1/2022 4:23:36 AM
[Markets] Dow Jones Newswires: Eurozone inflation rose to record high of 8.6% in June Consumer prices rose 8.6% on year in June after climbing 8.1% in May, according to a first estimate released Friday by Eurostat, the European Union's statistics agency.
Published:7/1/2022 4:23:36 AM
[Markets] The Great Reset In Action: Ending Freedom Of The Press, Speech, & Expression The Great Reset In Action: Ending Freedom Of The Press, Speech, & Expression

Authored by Birsen Filip via The Mises Institute,

Governments, corporations, and elites have always been fearful of the power of a free press, because it is capable of exposing their lies, destroying their carefully crafted images, and undermining their authority. In recent years, alternative journalism has been growing and more people are relying on social media platforms as sources of news and information. In response, the corporate state, digital conglomerates, and the mainstream media have been increasingly supportive of the silencing and censoring of alternative media outlets and voices that challenge the official narrative on most issues.

At the recent World Economic Forum meeting in Davos, Switzerland, "Australian eSafety commissioner" Julie Inman Grant stated that "freedom of speech is not the same thing as a free for all," and that "we are going to need a recalibration of a whole range of human rights that are playing out online—from freedom of speech … to be free from online violence." Meanwhile, the Canadian government is seeking to restrict independent media and the freedom of expression via the implementation of Bill C-11, which would allow it to regulate all online audiovisual platforms on the internet, including content on Spotify, Tik Tok, YouTube, and podcast clients.

Similarly, the UK is seeking to introduce an Online Safety Bill, the US "paused" the establishment of a Disinformation Governance Board following backlash, and the European Union approved its own Digital Services Act, all of which aim to limit the freedom of speech. Attempts by elites and politicians to silence dissenters and critical thinkers is not something new. In fact, history is full of examples of "the persecution of men of science, the burning of scientific books, and the systematic eradication of the intelligentsia of the subjected people."

However, these current efforts to curtail freedom of speech and press by supposedly liberal governments are still somewhat ironic, given that even "the most intolerant of churches, the Roman Catholic Church, even at the canonization of a saint, admits, and listens patiently to, a 'devil's advocate.' The holiest of men, it appears, cannot be admitted to posthumous honors, until all that the devil could say against him is known and weighed."

The corporate state, digital conglomerates, and the mainstream media want to ensure that they have the exclusive authority to dictate people's opinions, wants, and choices through their sophisticated propaganda techniques. To do so, they have even resorted to transforming falsehoods into truth. In fact, the word truth has already had its original meaning altered, as those who speak the truth on certain subjects are now regularly accused of spreading hate speech, misinformation, and disinformation.

Presently, truth is no "longer something to be found, with the individual conscience as the sole arbiter of whether in any particular instance the evidence (or the standing of those proclaiming it) warrants a belief; it becomes something to be laid down by authority, something which has to be believed in the interest of the unity of the organized effort, and which may have to be altered as the exigencies of this organised effort require it."

However, modifying the definition of truth comes with the potential for great peril, as truth-seeking often contributes to human progress in that it leads to discoveries that ultimately benefit society at large. It should be noted that truth is by no means the only word whose meaning has been changed recently in order for it to serve as an instrument of propaganda; others include freedomjusticelawrightequalitydiversitywomanpandemicvaccine, etc. This is highly concerning, because such attempts at the "perversion of language, the change of meaning of the words by which the ideals" of the ruling class are expressed is a consistent feature of totalitarian regimes.

As a number of liberal-democratic governments increasingly move toward totalitarianism, they want people to forget that there is "the greatest difference between presuming an opinion to be true, because, with every opportunity for contesting it, it has not been refuted, and assuming its truth for the purpose of not permitting its refutation." According to them, "public criticism or even expressions of doubt must be suppressed because they tend to weaken public support."

In fact, they believe that all views and opinions that might cast doubt or create hesitation need to be restricted in all disciplines and on all platforms. This is because "the disinterested search for truth cannot be allowed" when "the vindication of the official views becomes the sole object" of the ruling class. In other words, the control of information is practiced and the uniformity of views is enforced in all fields under totalitarian rule.

The suppression of freedom of the press, speech, expression, and thought means that current and future generations will be "deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error." They are also at risk of becoming ignorant of the fact that the only way in which a person can know "the whole of a subject" is by "hearing what can be said about it by persons of every variety of opinion, and studying all modes in which it can be looked at by every character of mind." That is to say, current and future generations will be unaware that "the steady habit of correcting and completing" one's own "opinion by collating it with those of others, so far from causing doubt and hesitation in carrying it into practice, is the only stable foundation for a just reliance on it."

At present, it is likely that the masses do not regard freedom of the press, speech, expression, and thought as being particularly important, because "the great majority are rarely capable of thinking independently, that on most questions they accept views which they find ready-made, and that they will be equally content if born or coaxed into one set of beliefs or another." Nevertheless, no one should have the power and authority to "select those to whom" freedom of thought, enlightenment and expression is to be "reserved."

In fact, John Stuart Mill went so far as to claim that "if all mankind minus one, were of one opinion, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person, than he, if he had the power, would be justified in silencing mankind." He further added that silencing the expression of an opinion is essentially an act of "robbing the human race," which applies to both current and future generations. Even though the suppressors can deny the truth to people at a particular point in time, "history shows that every age having held many opinions which subsequent ages have deemed not only false but absurd; and it is as certain that many opinions, now general, will be rejected by future ages, as it is that many, once general, are rejected by the present."

If current efforts to suppress freedom of the press, speech, expression, and thought succeed, then the search for truth will eventually be abandoned and totalitarian authorities will decide what "doctrines ought to be taught and published." There will be no limits to who can be silenced, as the control of opinions will be extended to all people in all fields. Accordingly, contemporary authoritarian policy makers need to be reminded about the crucial importance of freedom of speech, expression, and thought, which the US Supreme Court recognized in the 1957 case Sweezy v. New Hampshire when it ruled that

to impose any strait jacket upon the intellectual leaders in our colleges and universities would imperil the future of our Nation. No field of education is so thoroughly comprehended by man that new discoveries cannot yet be made…. Teachers and students must always remain free to inquire, to study and to evaluate, to gain new maturity and understanding; otherwise, our civilization will stagnate and die…. Our form of government is built on the premise that every citizen shall have the right to engage in political expression and association. This right was enshrined in the First Amendment of the Bill of Rights. Exercise of these basic freedoms in America has traditionally been through the media of political associations…. History has amply proved the virtue of political activity by minority, dissident groups, who innumerable times have been in the vanguard of democratic thought and whose programs were ultimately accepted. Mere unorthodoxy or dissent from the prevailing mores is not to be condemned. The absence of such voices would be a symptom of grave illness in our society.

Tyler Durden Thu, 06/30/2022 - 23:50
Published:7/1/2022 12:24:57 AM
[Markets] Dutch Farmers Livid Over EU's 'Green' Nitrogen Rule Block Border Between Holland And Germany Dutch Farmers Livid Over EU's 'Green' Nitrogen Rule Block Border Between Holland And Germany

Thousands of tractor-driving Dutch protesters came out this week to continue demonstrations against the government's radical plan to cut nitrogen emissions by 30% - 70% as part of their 'green' agenda.

Farmers from the world's 5th largest exporter of food are demanding that the Hague immediately reverse course, and have blocked the border between Holland and Germany over the rule which would lead to the closure of dozens of farms and cattle ranches.

On Wednesday, dozens of tractors blocked a highway close to the German border, according to traffic authorities.

Even larger protests are scheduled for July 4, with organizers taking to Telegram to call people to action against rules they say will "flatten" the country's agriculture industry.

According to the Epoch Times, the message calls on concerned farmers and citizens to organize their own regional actions with the goal of closing all “distribution centers for food supplies and all major polluters” until “the government changes its plans.”

One viral call for a July 4 protest came from a large truckers’ Telegram group, suggesting that some truckers in the Netherlands may find themselves in solidarity with the nation’s agriculturalists.

The farmers, who plan to protest at many of the nation’s airports, specifically mentioned Schiphol and Eindhoven. NLTimes.nl has reported that spokespersons for both airports say they are monitoring the situation but have little information at present.

In 2021, the Netherlands’ coalition government proposed slashing livestock numbers in the country by 30 percent to meet nitrogen emissions targets.

The country has already implemented stringent restrictions on new construction with the aim of curbing nitrogen emissions.

Rabobank has argued that those new hurdles have slowed down homebuilding in the Netherlands, intensifying a housing shortage in the densely populated coastal nation.

On June 10, the government issued a national and area-specific plan for curbing nitrogen emissions. Those emissions are heavily driven by ammonia from livestock manure.

Some parts of the country would have to slash those emissions by 70 or even 95 percent.

It openly acknowledged that “there is not a future for all [Dutch] farmers within [this] approach,” as reported by the U.S. Department of Agriculture’s Foreign Agriculture Service.

The Minister of Nature and Nitrogen Policy expects about a third of the 50,000 Dutch farms to ‘disappear’ by 2030,” the New Zealand Ministry of Foreign Affairs and Trade reported in a June 23 Market Insight Report.

The Netherlands is the world’s fifth-largest exporter of food, exceeded only by the United States, Germany, the United Kingdom, and China, according to World Bank statistics.

The Dutch government offers a multibillion-dollar buyout arrangement for farmers.

Christianne van der Wal, minister of nature and nitrogen policy, has left open the possibility that the government will expropriate land from farmers who do not comply, as reported by NOS Nieuws.

The proposals and resultant protests come amid worldwide fertilizer and food shortages.

United Nations Secretary-General Antonio Guterres warned on June 24 that “there is a real risk that multiple famines will be declared in 2022,” adding that “2023 could be even worse.”

On a recent episode of “Facts Matter” on EpochTV, American farmer John Boyd, Jr. warned of potential food shortages as a result of steeply rising input costs.

He said the expenses of running his own operation have tripled, driven in large part by significantly increased fertilizer costs.

In Sri Lanka, a ban on chemical fertilizers contributed to an economic crisis that has destabilized the government.

The country has recently announced a temporary ban on fuel sales to private vehicles, effective June 27 through July 10.

The latest round of demonstrations by Dutch farmers comes after a wave of similar protests in 2019 after lawmaker Tjeerd de Groot called for livestock numbers in the Netherlands to be cut by 50 percent.

Demonstrators have burned hay bales alongside highways, blocked roads with tractors, and spread manure to make their anger known.

In recent days, protesters have targeted the homes of Dutch government officials, including Prime Minister Mark Rutte and Nitrogen Minister van der Wal.

Footage circulating on social media purports to show protesters spraying manure on Dutch law enforcement.

Rutte criticized protesters, saying, “You can demonstrate, but in a civilized way,” as reported by the Associated Press.

AP also reports that Dutch police say they arrested 10 people on June 28 in connection with the protests.

Tyler Durden Thu, 06/30/2022 - 23:30
Published:6/30/2022 10:33:45 PM
[Markets] Key Words: Liz Cheney calls Trump a ‘domestic threat,’ says GOP can’t be loyal to both him and the Constitution The Wyoming Republican also called Cassidy Hutchinson a ‘patriot’ for her Jan. 6 testimony
Published:6/30/2022 9:58:08 PM
[Markets] Chinese And Russian Navies Circle Japan In "Show Of Force" Chinese And Russian Navies Circle Japan In "Show Of Force"

In yet another example of the increasingly close alliance between Russia and China, the Chinese Navy and Russia's Pacific Fleet have been engaging in war game operations, seemingly in tandem around Japan, according to the Japanese Defense Ministry.  

Reports of coordinated military exercises have not been officially acknowledged by Russia or China, though Japan continues to post regular updates on ship movements.  The naval exercises were apparently focused around the islands of Miyako and Okinawa, which hold 50,000 US forces, as well as a 70-mile wide corridor between the island of Yonaguni and Taiwan.  

While not unheard of, military cooperation in the Pacific between Russia and China has grown in frequency, with naval exercises increasing over the past month.  While Japan calls these movements a “show of force,” they may very well be practice for a conflict planned in the near future.

After the recent BRICS summit in Beijing and the reaffirmation of China's economic support of Russia during its war with Ukraine and NATO sanctions, it only makes sense that the economic relationship would evolve into at least a loose military agreement.  The latest decision on the induction of Sweden and Finland into NATO as well as naval escalation in the South Pacific are only going to drive Eastern interests closer together over time.  

China is nursing a compulsive obsession when it comes to absorbing Taiwan into the CCP, and with the West overly focused on Russia and Ukraine, they may act soon.  If an invasion of Taiwan is planned it would have to take place sometime in September/October when weather conditions in the region are favorable to naval operations.  Leaked reports from Russian intel in March seem to indicate that a fall invasion of Taiwan was indeed in the works.  Some believe that the Russian war with Ukraine will force China to scuttle such plans, but there is also a chance that Ukraine will provide excellent cover for an action against Taiwan; forcing western governments to split their efforts and focus on two fronts instead of one.  

The bigger question is:  Will Russia and China form an official military alliance?  There is no debate now over their trade alliance, but the notion of military cooperation between the two countries will lead many people to scoff.  Keep in mind, however, that there were numerous skeptics that argued only a week ago that the Turkish government under Erdogen would “never” agree to Finland and Sweden joining NATO, and yet that is exactly what they did.  

The geopolitical landscape is changing fast and the old rules no longer seem to apply.  

Tyler Durden Thu, 06/30/2022 - 22:50
Published:6/30/2022 9:58:08 PM
[Markets] MarketWatch First Take: The chip boom likely over, as Micron says it’s in a ‘downturn’ The semiconductor boom of the last two years, in part fueled by pandemic shortages, appears to be coming to an end.
Published:6/30/2022 8:16:38 PM
[Markets] Elmo, Now Vaccinated, Advertises COVID-19 Vaccine Shots For Children Under 5 Elmo, Now Vaccinated, Advertises COVID-19 Vaccine Shots For Children Under 5

Authored by Bill Pan via The Epoch Times (emphasis ours),

“Sesame Street” is advertising COVID-19 vaccines to its youngest audiences after the federal government greenlighted the shots for children under the age of 5.

"Sesame Street" characters Elmo (R) and Louie (L) appear in a public services announcement that encourages parents of children under 5 to get informed about the COVID-19 vaccines. (Sesame Workshop/YouTube)

The 1-minute public service ad, released Tuesday by nonprofit educational organization Sesame Workshop, features the red Muppet monster Elmo and his Muppet dad Louie. It begins with Elmo showing a Band-Aid on his arm next to dad, saying, “Now Daddy has super-duper bandages just like Elmo!”

You were super duper today, getting your COVID vaccine, Elmo,” replied a Louie who has three Band-Aids on his arm, indicating having received two vaccine shots and a booster.

There was a little pinch, but it was OK,” Elmo added.

Louie then turned to the audience, saying that he had a conversation with their family pediatrician about whether it is safe to vaccinate 3-year-old Elmo.

I had a lot of questions about Elmo getting the COVID vaccine. Was it safe? Was it the right decision?” Louie spoke to parents watching the ad. “I learned that Elmo getting vaccinated is the best way to keep himself, our friends, neighbors and everyone else healthy and enjoying the things they love.”

The ad, which is co-produced with the American Academy of Pediatrics (AAP), the U.S. Centers for Disease Control and Prevention (CDC), and New York-based media company Ad Council, ends by directing parents to go to GetVaccineAnswers.org if they have questions related to having their young children vaccinated. The website is created by Ad Council in partnership with the CDC.

Jeanette Betancourt, senior vice president of U.S. social impact at Sesame Workshop, said in a press release that parents will “understandably have questions about the COVID-19 vaccines for young children.

“With help from Elmo and his dad Louie, we want to model real conversations, encourage parents’ questions, and help children know what to expect,” Betancourt said. “We’re proud to continue our efforts with the Ad Council, COVID Collaborative, CDC, and AAP to help families get connected to information and keep their children, neighbors, and communities safe and healthy.”

Sesame Workshop’s new ad is the continuation of a campaign it launched last year to promote COVID-19 vaccine to older children. In November, “Sesame Street” characters appeared on a CNN town hall titled “The ABCs of COVID Vaccines.” The program was hosted by CNN anchor Erica Hill and chief medical correspondent Sanjay Gupta, who answered questions about the pediatric vaccine from the Muppets.

Sen. Ted Cruz (R-Texas), who last year took issue with using beloved children’s show to convince young children to take the jab and called it “government propaganda,” criticized the new ad for promoting something that is not at all backed by science.

“Thanks, [Sesame Street] for saying parents are allowed to have questions! You then have [Elmo] aggressively advocate for vaccinating children UNDER 5. But you cite ZERO scientific evidence for this,” the senator wrote on Twitter.

Cruz is one of the 18 Republican members of Congress who questioned the safety and necessity of the COVID-19 vaccines for the youngest Americans when the U.S. Food and Drug Administration (FDA) granted emergency use authorization (EUA) to the Moderna and Pfizer/BioNTech’s pediatric shots in early June.

When will the FDA and CDC provide the public with more details on those children who have had the most serious adverse outcomes from COVID-19 infections?” the Republicans asked in a Jun. 7 letter (pdf) to the FDA. “What is the cardiac risk factor in administering these EUA COVID vaccines to children?”

“One of the most important things we know is that this virus poses minimal risk for children,” Cruz said in a press release. “Before the FDA approves an Emergency Use Authorization for a children’s vaccine, parents should be able to see the data and paperwork they would use to justify this decision. This is the least the FDA can do for families in Texas and across the country so parents can make the best decisions for their children.”

According to CDC, as of June 22, about 30 percent of children ages 5 to 11 and 60 percent of children ages 12 to 17 had been fully vaccinated.

Tyler Durden Thu, 06/30/2022 - 21:10
Published:6/30/2022 8:16:38 PM
[Markets] New Hampshire Governor Vetoes Ivermectin Bill New Hampshire Governor Vetoes Ivermectin Bill

Authored by Alice Giordano via The Epoch Times (emphasis ours),

New Hampshire’s Republican Gov. Chris Sununu vetoed a bill that would have made Ivermectin available without a prescription.

Ivermectin tablets packaged for human use. (Natasha Holt/The Epoch Times)

The Republican governor vetoed the bill on June 24, the same day that the U.S. Supreme Court overturned Roe v. Wade. Some fellow Republicans questioned the timing.

It certainly seemed like a convenient way to bury a veto of a bill that won support from the vast majority of Republicans in New Hampshire,” JR Hoell, co-founder of the conservative watchdog group RebuildNH, told The Epoch Times.

Hoell is a former four-term House Republican planning to seek re-election after a four-year hiatus from the the New Hampshire legislature.

Earlier this year, the New Hampshire Department of Children Youth and Family (DCYF) tried to take custody of Hoell’s 13-year old son after a nurse reported him for giving human-grade ivermectin to the teen months earlier.

Several states have introduced bills to make human-grade ivermectin available without a prescription at a brick and mortar store. Currently, it can be ordered online from another country. In April, Tennessee became the the first state to sign such a measure into law. New Hampshire lawmakers were first to introduce the idea.

Both chambers of the state’s Republican controlled legislature approved the bill.

In his statement explaining the veto, Sununu noted that there are only four other controlled medications available without a prescription in New Hampshire and that each were only made available after “rigorous reviews and vetting to ensure” before being dispensed.

“Patients should always consult their doctor before taking medications so that they are fully aware of treatment options and potential unintended consequences of taking a medication that may limit other treatment options in the future,” Sununu said in his statement.

Sununu’s statement is very similar to testimony given by Paula Minnehan, senior vice president of state government regulations for the New Hampshire Hospital Association, at hearings on the bill.

Minnehan too placed emphasis on the review that went into the four prescription medications the state made available under a standing order. They include naloxone, the generic name for Narcan, which is used to counter opioid overdoses, hormone replacement therapy drugs, and a prescription-version of the morning after pill.

It also includes a collection of smoking cessation therapy drugs like Chantix, which has been linked to suicide, depression, and other neuropsychiatric conditions. Last year, Pfizer, the leading maker of the FDA-approved drug, conducted a voluntarily recall of Chantix. Narcan has also been linked to deaths caused by severe withdrawals that have led to acute respiratory distress.

Rep. Melissa Blasek, a Republican co-sponsor of the New Hampshire ivermectin bill, told The Epoch Times, that one could veto any drug-related bill under the pretense of overdose concerns.

The reality is you can overdose on Tylenol,” she said. “Ivermectin has one of the safest track records of any drug.”

The use of human-grade ivermectin became controversial when some doctors began promoting it for the treatment and prevention of COVID-19. Government agencies including the FDA and CDC issued warnings against its use while groups like Front Line COVID-19 Critical Care Alliance (FLCCC) heavily promoted it.

Some doctors were  disciplined for prescribing human-grade ivermectin for COVID-19 including a Maine doctor whose medical license was suspended by the state.

Read more here...

Tyler Durden Thu, 06/30/2022 - 20:30
Published:6/30/2022 7:45:29 PM
[Markets] : Uber safety report: Fatalities up, sexual-assault reports down Uber Technologies Inc. on Thursday released its second U.S. safety report, which showed a rise in fatalities from motor vehicle crashes and assault incidents, and a drop in sexual-assault reports, compared with its previous safety report.
Published:6/30/2022 7:13:44 PM
[Markets] Dow Jones Futures: Why This Micron Warning May Be 'Good' News; Tesla Rivals On Tap The ailing market bounced off lows but still fell solidly. Micron gave grim guidance. Tesla EV rivals report June sales Friday. Published:6/30/2022 7:13:44 PM
[Markets] Chip Makers Stall On Building New Semiconductor Plants As Subsidies Bill Languishes Chip Makers Stall On Building New Semiconductor Plants As Subsidies Bill Languishes

The Biden administration is laser-focused on sending Ukraine billions of dollars in weapons, including the latest round of anti-ship systems, artillery rockets, and rounds of 105 mm ammo for howitzer cannons that it has entirely lost focus on reshoring efforts to boost semiconductor production Stateside. 

Multiple manufacturers of semiconductor wafers have announced plans for new multi-billion dollar factories across the U.S. but are contingent on Congress allocating funds to aid in building facilities under the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act. 

Congress passed the CHIPS Act in January 2021 as part of last year's National Defense Authorization Act, which proposed $52 billion in funding for increasing the domestic capacity of chip production, though the House and Senate have come to a standstill over disagreements on certain parts of the bill that have sparked so much uncertainty among companies set to build new factories. 

In a letter on June 15, dozens of technology executives from IBM, Intel, Microsoft, Analog Devices, Micron, Amazon, and Alphabet called on Congress to move quickly on the CHIPS Act. They wrote, "the rest of the world is not waiting for the U.S. to act," and funding for new chip factories must be achieved immediately. 

The uncertainty around Congress not formally allocating any budget to finance the CHIPS Act is causing concern among top chipmakers planning to build massive factories that might have to delay expansion plans. 

"Unfortunately, CHIPS Act funding has moved more slowly than we expected, and we still don't know when it will get done. It is time for Congress to act so we can move forward at the speed and scale we have long envisioned for Ohio and our other projects to help restore U.S. semiconductor manufacturing leadership and build a more resilient semiconductor supply chain," an Intel spokesperson recently said in a statement. 

Taiwan's GlobalWafers announced a new $5 billion factory in the U.S. on Monday, but contingent on subsidies from the federal government. 

"This investment that they're making is contingent upon Congress passing the CHIPS Act. The [GlobalWafers] CEO told me that herself, and they reiterated that today," U.S. Commerce Secretary Gina Raimondo told CNBC, the same day GlobalWafers announced its development plan.

In 2020, Taiwan Semiconductor Manufacturing Corp. announced a new $12 billion plant in Phoenix, Arizona, and said some of the building costs would have to be picked up by the U.S. and Taiwan. 

The Biden administration has hailed the president's efforts to increase chip manufacturing capacity, but Congress appears to be holding things up, which may result in delays for planned expansion projects this fall. 

Currently, the U.S. only accounts for 12% of the world's chip supplies, a 40% reduction since the 1990s. The CHIPS Act is supposed to restore America's dominance in chipmaking -- but expansion plans appear to be on hold as funding Ukraine seems to be the top priority in Washington. 

Tyler Durden Thu, 06/30/2022 - 20:10
Published:6/30/2022 7:13:44 PM
[Markets] Four Men Charged After 53 Migrants Die In Smuggling Disaster Four Men Charged After 53 Migrants Die In Smuggling Disaster

Four men, including two Mexican nationals, have been arrested in connection with the people-smuggling operation that resulted in the horrific death of 53 people in the back of a semi-trailer near the southern US border.

As Bloomberg reports, 45-year-old Homero Zamorano Jr. was arrested on Monday after San Antonio police found him hiding in the brush near the trailer, the US DOJ announced in a statement. His clothing and appearance matched video provided by the border patrol of the truck when it passed through an immigration checkpoint without incident.

Emergency personnel recovered the bodies of 48 individuals from the trailer and transported 16 others to a local hospital, where five died. All of the victims are believed to be in the US illegally, with most hailing from Mexico or Central America. Temperatures that day had reached as high as 103 degrees Fahrenheit (39 Celsius).

Police said they searched Zamorano’s cell phone and traced discussions he had about transporting the smuggled migrants with another man, Christian Martinez, 28, who was arrested in Palestine, Texas. -Bloomberg

Zamorano was charged with smuggling aliens resulting in death, while Martinez was slapped with conspiracy to transport illegal aliens resulting in death. Both could see life in prison or a potential death sentence, according to the DOJ.

Meanwhile, two other men were arrested in connection with the case after police traced the registration of the tractor trailer to a house in San Antonio. One of the men had a gun in his truck outside, while police found more guns inside.

Mexican nationals Juan Claudio D’Luna-Mendez, 23, and Juan Francisco D’Luna-Bilboa, 48, were each charged with one count of being an illegal alien in possession of a weapon - a charge which could land them in prison for up to a decade.

With all four men in federal custody, Zamorano is expected to appear in court on Thursday, while the Mexican nationals are scheduled to appear on Friday for a detention hearing in San Antonio. Martinez, who appeared Wednesday, will be transported to San Antonio.

Tyler Durden Thu, 06/30/2022 - 19:30
Published:6/30/2022 6:45:38 PM
[Markets] Market Extra: Are financial markets closed July 4? Here are the trading hours for markets heading into the Independence Day weekend.
Published:6/30/2022 6:30:45 PM
[Markets] DOJ Has VA Suspend All Benefits Of Jan. 6 Prisoner DOJ Has VA Suspend All Benefits Of Jan. 6 Prisoner

Authored by Patricia Tolson via The Epoch Times (emphasis ours),

Just when the wife of one incarcerated Jan. 6 prisoner believed things couldn’t get worse, the Department of Veterans Affairs (VA) informed her they are going to suspend all of her husband’s benefits. According to United States Representative Louie Gohmert (R-Texas), “this is what you have when vindictive leftists get in charge of major parts of the government.”

The envelope containing the unsigned letter received by Angel and Kenneth Harrelson from the "Director Regional Office" "informing them that their Veterans Benefits are being suspended due to 38 U.S. Code § 6105 - Forfeiture for subversive activities, which requires that an individual be "convicted" of a listed crime, not "indicted." (Courtesy of Angel Harrelson)

In an unsigned letter from the VA—dated June 13 and appearing to originate from the “Director Regional Office,”—Angel and Kenneth Harrelson were notified that the administration “received information from the United States Department of Justice” that Kenneth had been “indicted and charged with Seditious Conspiracy (18 U.S.C 2384).”

Page 1 of the unsigned letter received by Angel and Kenneth Harrelson from the “Director Regional Office” “informing them that their Veterans Benefits are being suspended due to 38 U.S. Code § 6105 – Forfeiture for subversive activities, which requires that an individual be “convicted” of a listed crime, not “indicted.” (Courtesy of Angel Harrelson)

The letter further noted that: “Pursuant to 38 U.S. Code § 6105(a)”—Forfeiture for subversive activities—”after receiving notice of an indictment for the above offense” the “VA must suspend payment of gratuitous benefits pending disposition of the criminal proceedings. If convicted, gratuitous benefits are forfeited, automatically, from and after the date of the offense.”

The “date of the offense” is Jan. 6, 2021.

“Based on the information above,” the VA further informed the Harrelsons that they “propose to suspend” their “compensation benefit payments effective September 1, 2022, which is the first day of the month following a 60-day due process period.”

“If you are subsequently acquitted of this charge, payments can be resumed from the date of suspension, if otherwise in order. If you are convicted, benefits will be retroactively terminated effective January 5, 2021, the date proceeding the offense, or from the date your award commenced, whichever is later.”

Kenneth Harrelson taking photographs inside the Rotunda inside the Capitol Building on Jan. 6, 2021. (FBI Criminal Complaint)

According to 38 U.S. Code § 6105:

“Any individual who is CONVICTED after September 1, 1959, of any offense listed in subsection (b) of this section shall, from and after the date of commission of such offense, have no right to gratuitous benefits (including the right to burial in a national cemetery) under laws administered by the Secretary based on periods of military, naval, air, or space service commencing before the date of the commission of such offense and no other person shall be entitled to such benefits on account of such individual.”

According to the 18-page criminal complaint (pdf), Kenneth Harrelson was charged with Conspiracy (1) Obstruction of an Official Proceeding and Aiding and Abetting (2) Destruction of Government Property and Aiding and Abetting (3) Entering and Remaining in a Restricted Building or Grounds (4) Tampering with Documents or Proceedings (5). According to the Arrest Warrant (pdf), Kenneth was arrested at his home in Titusville, Florida, on March 10, 2021. According to the Criminal Docket, the seditious conspiracy charge was added with several others on Jan. 12, 2022.

Kenneth is currently being held in the Correctional Treatment Facility in southeast Washington and has been incarcerated, without a trial and without being convicted of any crime, for over 475 days.

Page two of the letter explains that: “if convicted,” the change in his benefits “may mean” the VA had paid “too much,” in which case they will send another letter letting them “know if the changes go through.” If so, the “VA’s Debt Management Center will send a letter explaining how much” they’ve “been overpaid, as well as how to repay this debt.”

Page 2 of the unsigned June 13, 2022 letter received by Angel and Kenneth Harrelson from the “Director Regional Office” “informing them that their Veterans Benefits are being suspended due to 38 U.S. Code § 6105 – Forfeiture for subversive activities and that they may have “been overpaid, as well as how to repay this debt.” (Courtesy of Angel Harrelson)

Page three of the letter advises the Harrelsons how to obtain representation.

Page 3 of the unsigned June 13, 2022 letter received by Angel and Kenneth Harrelson from the “Director Regional Office” “informing them that their Veterans Benefits are being suspended due to 38 U.S. Code § 6105 and advises the Harrelsons how to obtain representation.

Page four provides clarification of what VA.gov is and provides information on how “enrolling in VA.gov is easy.”

Page 4, the signature page, of the unsigned June 13, 2022 letter received by Angel and Kenneth Harrelson from the “Director Regional Office” providing clarification of “what” VA.gov “is” and provides information on how “enrolling in VA.gov is easy.” (Courtesy of Angel Harrelson)

 “This is what you have when vindictive leftists get in charge of major parts of the government,” Gohmert told The Epoch Times. “What we’re seeing is when immoral, mean-spirited, leftist people take over the government, they use every aspect of the government in order to try to inflict their hatred on people with whom they disagree. Even after most of the Democrats in the House of Representatives obstructed an official session of Congress back in June 2016, at that time, none of us were saying these people have got to be put in jail. We just wanted to be able to go back into session as the majority. But when they have power, obstructing an official session of Congress—which is the worst charge many of the January Sixers were charged with—we see the left wanting to bury them, take away any benefit, destroy their lives and not only their lives they want to destroy their homes, destroy their children’s lives. This is an evil, toxic atmosphere when these types of people are in control of so much of the federal government.”

Following the June 12 shooting at Pulse Night Club in Orlando, Florida, members of the House Democratic Caucus staged a pre-planned and well-organized protest sit-in on the House floor just after the House convened on June 22, 2016. They demanded that then-House Speaker Paul Ryan (R-Wis.) allow a vote on gun control. Through the day and into the next morning, they obstructed proceedings, chanted “no bill, no break,” and sang “We shall overcome.”

According to The Guardian, Gohmert “stood toe to toe” with then United States Representative Corrine Brown (D-Fla.) “in a confrontation that looked set to spiral out of control” until Rep. John Lewis (D-Pa.) and others intervened. Gohmert said he was angered by the disrespect shown by Democrats for the sanctity of the House chamber, which he called a “last bastion of civility.” He was also angered by the disrespect shown to the 49 victims of the shooting. “I’m amazed here on the House floor that to them [Democrats] it’s all about guns,” he said. On May 19, the Internal Revenue Service announced Brown “pleaded guilty to engaging in a corrupt endeavor to obstruct and impede the due administration of the internal revenue laws” and was “ordered to pay $62,650.99 in restitution.”

Read more here...

Tyler Durden Thu, 06/30/2022 - 19:10
Published:6/30/2022 6:30:45 PM
[Markets] Dow Jones Futures Fall: Why This Tech Warning May Be 'Good' News; Tesla Rivals On Tap The ailing market bounced off lows but still fell solidly. Micron gave grim guidance. Tesla EV rivals report June sales Friday. Published:6/30/2022 6:30:45 PM
[Markets] First-Half FUBAR: Stocks Worst In 60 Years, Bonds & Bitcoin Worst Ever First-Half FUBAR: Stocks Worst In 60 Years, Bonds & Bitcoin Worst Ever

It appears the world's investors were 'over-stuffed' full of liquidity just as 2021 ended...

...which meant the first half of 2022 was a bloodbath for most. Stocks were clubbed like a baby seal, bonds were battered, there was carnage in crypto as the dollar soared and gold was steady...

S&P was down 21.01% in 1970 H1, we are currently down 21.22% H1... so, according to Bloomberg data, this would be worst since 1962... 60 years ago

Nasdaq Composite is down 30% to start the year - that is the worst start to a year ever, worse than the H1 2002 collapse.

Year-to-date, US stocks have been hammered lower with 3 small BTFD efforts...

Only the energy sector is green year-to-date with Consumer Discretionary the worst horse in the glue factory...

Source: Bloomberg

Of course, the ugly quarter has prompted many calls for a rebound based on history... the question is - how many of those times saw stagflationary pressures as large as the current quagmire...

The US economy saw false hopes of recovery in Q1 of 2022, only to have that slapped in the face of optimists in Q2 as May and June saw macro data collapse...

Source: Bloomberg

US Treasuries suffered their worst first half of a year ever...

The Short-end of the curve was the hardest hit, with 2Y rising 220bps in H1 and 30Y up 123bps...

Source: Bloomberg

For a different perspective on this shift, here is the before and after of the US yield curve...

Source: Bloomberg

The credit side of the bond market was also a bloodbath with HYG suffering its worst H1 losses ever...

Commodities, broadly speaking, were up 18% in the first half of 2022 (but we note they were up 22% in the first half of 2021 - which is weird because we are pretty sure that Putin didn't invade Ukraine in 2021).

Oil prices soared 40% in the first half of 2022, but that is less than the surge to start 2021...

Crypto was carnage as Bitcoin fell 59% in the first half of the year - that is the worst start to a year ever for the crypto currency (worse than the 57.99% drop in 2017). Ethereum was worse, falling 72% YTD...

Source: Bloomberg

The Dollar soared in the first half of the year, up almost 10% - its biggest start to a year since 2010...

So having got all that off our chest, let's focus back in on this week...

Stocks rollercoastered today, weakness overnight and then dumping early on in the cash session led to a bid into and across the European close which managed to get the majors back to unchanged on the day... only to see selling return in the afternoon

Interestingly, today's dead-cat-bounce managed to get stocks up to last Friday's cash open level before stocks went panic-bid into OpEx...

Credit markets are breaking bad and signaling significantly more pain ahead for stocks...

Source: Bloomberg

Treasuries were bid today with the short-end outperforming (5Y -14bps, 30Y -9bps) and the belly continues to outperform strongly into the quarter-end...

Source: Bloomberg

This pushed the 10Y Yield back below 3.00%, back below the CPI-spike lows on June 10th...

Source: Bloomberg

Global inflation expectations are starting to really tumble with US 10Y Breakevens at their lowest since Sept 2021. Japanese inflation expectations have fallen the least...

Source: Bloomberg

Rate-hike expectations fell further today and subsequent rate-cut expectations rose as recession fears rise...

Source: Bloomberg

And stagflation is here...

Source: Bloomberg

The Dollar had a big month, quarter, and half; surging back to near COVID safe-haven spike highs...

Source: Bloomberg

On the day, the dollar was lower but still up on the week (and notably higher since CPI on June 10th)

Source: Bloomberg

Bitcoin fell back below $19,000 and then hovered around there today...

Source: Bloomberg

Commodities crashed today, falling down towards pre-Putin levels...

Source: Bloomberg

US Nat Gas tumbled further today on another bigger than expected storage build, plunging to 3-month lows...

Notably this smashed US NatGas below WTI (on an oil barrel equivalent basis) and the widened the spread to EU NatGas dramatically...

Source: Bloomberg

Oil suffered its first monthly decline since November...

Gold extended the week's losses back down towards $1800 with every bounce getting monkeyhammered to a new low...

Finally, we note that global equity and debt capital markets lost a stunning $31 trillion in the first half of the year...

Source: Bloomberg

...a record by a massive margin...

Source: Bloomberg

And that was triggered by just $1 trillion drop in global central bank balance sheets...

Source: Bloomberg

The Biden Bloodbath!

And it could get worse...

 

Tyler Durden Thu, 06/30/2022 - 16:00
Published:6/30/2022 3:15:32 PM
[Markets] U.S. stocks end sharply lower as S&P 500 posts worst first half since 1970 U.S. stocks end sharply lower as S&P 500 posts worst first half since 1970 Published:6/30/2022 3:15:32 PM
[Markets] Bond Report: 2- and 10-year Treasury yields fall below 3% as recession fears dominate financial markets Bond yields tumble on Thursday as investors flock to government debt and the odds of a technical U.S. recession appear to be growing.
Published:6/30/2022 3:15:32 PM
[Markets] Stocks slide to close worst first half in 52 years: S&P 500 plunges 20.6% YTD, 8.4% in June US stocks tumbled on Thursday, with the major averages on track to post steep declines for the month of June and first half of 2022 as concerns over heightened inflation and the prospects of a recession weighed on risk assets. Published:6/30/2022 3:15:32 PM
[Markets] Stocks Remain Negative; Nasdaq On Track For Record-Setting Loss In First Half The Nasdaq led the downside on Thursday and is set to close out the worst first half of any year on record. Published:6/30/2022 2:58:43 PM
[Markets] Futures Movers: Oil prices post a loss for the month, but log strong first-half gains Oil futures fell on Thursday, as a weekly increase in U.S. gasoline and distillate supplies raise worries over the demand outlook and major oil producers pledge to boost production in August, as expected.
Published:6/30/2022 2:58:43 PM
[Markets] The Jaws Of Trade Squeezing The Supply Chain The Jaws Of Trade Squeezing The Supply Chain

By FreightWaves

The jaws of the supply chain vise are squeezing trade so tight that the headache it is creating will be a whopper for logistics managers this peak season. Port congestion is growing again as a result of labor and equipment inefficiencies. Trade requires people, and what we see in the CNBC Supply Chain Heat Maps is the people component in trade is behind this latest squeeze.

Shanghai is still in the process of reopening, and while there are more green lights on the screen, the supplying of drivers and people to move and make the product is slower than normal. This is affecting the delivery of critical medical devices. 

“The manufacturing plant in Shanghai was down for 75 days because of the ‘zero-COVID’ restrictions,” explained Gerry LoDuca, president of Dukal, which sells infection-control products and has manufacturing plants in Shanghai, Wuhan and Xingtai, China. “They are now operating 24/7 and they will be caught up by the end of July. Then the products will need to be packed up, shipped to Shanghai port and moved by vessel.”

Unfortunately, this delay is one of many being experienced by global importers.

Another vise squeezing trade is Europe.

Labor strife between the German trade union ver.di and the Central Association of German Seaport Companies (ZDS) is white-hot. Almost all ports in the German Northern Sea were impacted by a second warning strike last week that lasted 24 hours.  

According to sources, a final offer of a wage increase of up to 11% in 18 months was offered. Some hope for a conciliation procedure in which politicians or a neutral person become involved in mediation.

The delays created by the latest warning strike have added to the congestion already plaguing the German ports. Container ships are currently delayed by several weeks at some German ports. Logistics executives are concerned the congestion is going to get worse, as will the availability of empty containers to be filled with trade.

“The overall situation in North European ports is deteriorating,” warned Andreas Braun, EMEA ocean product director for Crane Worldwide Logistics. “Port congestion is on the increase as well as yard occupancy. The first shipping lines like MSC are reacting to the current scenario with emergency storage surcharges for both imports and exports. These surcharges will be applied after exceeding the standard storage free time and are in addition to the standard tariffs.  Although this surcharge is currently limited to Dutch ports only, and to date only MSC has circulated communication relating to the additional fees, we can assume that other ports and shipping lines will follow.”

Ocean carrier Hapag-Lloyd issued a notice on the increased demand on trucks as a result of this labor slowdown. And Maersk reported it would “absorb” the stoppage at its German terminals, telling customers that “in the interest of minimizing any further disruption to your supply chain, we will be keeping a close eye on developments up to and during the next round of meetings between trade union ver.di and ZDS, acknowledging that further strike action is possible.”

The U.S. logistics system continues to have its own host of issues with the persistent rail problems, chassis shortages and warehouses at capacity.

“Consumer trends are changing,” explained Spencer Shute, senior consultant at Proxima. “Buying patterns have shifted from home, electronics, casual apparel to more services. We are seeing buying apparel for travel and cosmetics coming back to pre-pandemic levels. Luggage, sunscreen, bug spray, these are items in higher demand because consumers need them in their experience pursuits. Larger appliances are not being purchased anymore. It’s an interesting dynamic to see how quickly the consumer has flipped considering what is going on in the economy.”

Despite the historic volume of containers, a pullback is expected as future orders for Chinese manufacturing have dropped anywhere from 20% to 30%, according to shippers surveyed.  Lumber orders have been cut along with orders for furniture, appliances and DIY products.

“But for other sectors like garments, sporting goods and e-commerce, they are still seeing strong demands,” explained Akhil Nair, senior vice president of products for Asia-Pacific at Seko Logistics.

Steve Lamar, CEO of the American Apparel and Footwear Association, explained the continued strength in orders is a result of consumers looking to outfit themselves for experiences like back to school, back to in-office work and travel. But despite this demand, the impact of inflation is a top worry.

“We remain deeply concerned that persistently high prices — in our sector and throughout the economy — will begin to dampen consumer spending and harm American families,” Lamar said. “That is why, with consumers still being a driver for economic growth in our economy, we continue to push for the [Biden] administration to avail itself of all its own inflation-cutting tools, including relief from the high and regressive tariffs that are currently being charged on products in our industry.”

Alan Baer, CEO of OL USA, tells American Shipper the decrease in container volume is being seen.

“We are seeing drops by some customers from 30-50 FEU per week down to 10 FEU per week,” Baer said. 

The squeeze is on. Time to pop that aspirin.

Tyler Durden Thu, 06/30/2022 - 15:45
Published:6/30/2022 2:58:43 PM
[Markets] Market Staring Down The Abyss Of Contraction Market Staring Down The Abyss Of Contraction

Two days ago Nomura's Charlie McElligott laid out the market's pernicious recession/non-recession feedback loop as well as the conditions tracked by traders to gauge if the "all-clear" has arrived, to wit:

A flush down to 3300-3400 is the perceived “all-clear” on the valuation case for Equities, with the whole world seemingly bid “out loud” down there for size, which means it either, i) it doesn’t happen and we don’t trade low enough, or conversely, or ii) we do trade down there, but the supposed size demand doesn’t materialize, and we get the puke through 3k.

Today, McElligott doubles down with some "gory details" on how the quad diagram shows the economy careening into contraction (more below) starting with European inflation which continues its escalation, perversely increasing the likelihood of an “accident” there against a still-toiling ECB who risks a “catch-up” hiking spasm into a hard recession—and accordingly EUR Credit markets are staring into the abyss, with Xover earlier printing through 600bps for the first time since “peak COVID” stress

Well, as we have been saying for months, Charlie notes that the market “gets the joke” on Central Banks being incapable of address “supply side” issues — so they pull the only lever they have on the “demand” side, hence “Recession” gap-risk repricing hard and fast.

And this, according to Elligott, is the brutal truth (something we have been saying since 2020):

in the absence of being able to print oil and gas, refinery capacity, very large crude carriers (VLCCs), fertilizers, grains, rare earth metals for EVs etc…Central Banks are really left with no choice but to drive economies into recession in order to curtail “demand” -pressure on prices, even though they’re a much smaller attributing factor to inflation.

Indeed, with “Demand” the only “lever” they can pull here, since governments (particularly due to their ‘pie-in-the-sky’ aspirational climate goals, but without viable energy transition alternatives in the meantime) and industry (burned in the past from overzealous cash-burning overbuilding and overcapacity, into a future state where western governments are actively seeking to erase them) are unable to come to terms on addressing “supply” side dynamics. So it is a “pick your poison” trade:

Stomp inflation from the “demand” side while global economies still show a remaining semblance of “juice,” but cause a recession and loss of employment—because the alternative case of “unanchored” forward inflation is being painted as an even uglier long-term economic outcome.

As an aside, Biden "punishing" Putin for unleashing global commodity hyperinflation by sending the US economy into a recession and starting a harrowing bear market and the worst tech crash since Lehman is so... 2022. As for a recession with mass layoffs being uglier than inflation, well... we give Biden's handlers a few more days before they completely change their mind on this once the violent protests break out.

This slide into recession is manifesting itself across recent destruction in Cyclicals, Commods and Inflation Breakevens (which have collapsed to 2018 levels), along with resumption of widening in Corp Credit despite the Equities bounce off the cycle lows over the past 2 weeks

To this point, Nomura's Economics team “upped the ante” regarding the risk of unanchored inflation and again, increases the risk of Fed tightening induced “accident” (in a note titled "The Fed’s Inflation Expectations Angst Grows" available to pro subscribers).

And accordingly, the STIRs market is anticipating this “breakage” due to the final throes of this “tightening into a Contraction” dynamic then leading to a 4Q22 recession and 2023 policy reversal: EDZ2EDZ3 (Dec22-Dec23) now shows 53.5bps of CUTS priced in the US for next year, where even Z2H3 (Dec22-Mar23, aka Q1 2023 ) shows a -5bps inversion as of today...

... and the H3M3 (Mar23-Jun23) inversion goes to -15.5bps; while H3H4 (Mar23-Mar24) extends to -60bps vs -44.5bps Tuesday

Looking at markets, equities risk-premia continues to trade this “recession” dynamic as currently expressed by “Momentum,” “Defensive Value,” “Low Risk,” “Quality” and “Dividends” leadership, versus renewed moves lower this week in the prior YTD “losers” of “High Short Interest,” “Leverage,” “Hedge Fund Crowding” and “ISM Manufacturing PMI” (weak balance sheet / high realized vol / unprofitable / low quality / growth sensitive -stuff).

This also matches the current economic quadrant trajectory (see above) which shows us “careening into Contraction” from what is an already embedded “Slowdown” phase...

... which then too corresponds with historical precedent for the next Yield Curve phase-shift into a likely “Bull-Flattener.”

Meanwhile, as discussed earlier this week, equities also now too feeling that “next shoe to drop” of the long-overdue “negative earnings revisions” transition, which is finally kicking-off with a bang as the Street suddenly spasms into taking down estimates in a number of key sectors / industries.

Nonetheless from the Vol side, there remains almost no demand for new “Crash” here (hence VVIX sub-90), as with fund exposures so low, clients are more worried about missing the “right tail” (e.g. some sort of “dovish pivot” scenario from the Fed) than “left tail.”

As such, a part of the “extreme flat Skew” dynamic is wingy Calls looking relative to wingy Puts, and that is “skewing Skew” (and Put Skew) to look so incredibly, historically low / flat, despite SPX ATM Vols remaining historically high.


Finally and tactically with Equities, McElligott reminds us that today is the roll of the infamous JPM Put/Spread Collar which is "gonna be fun" - per Nomura index trader Jordan Farkas, the new structure should look like them selling 42k 6/30 4285 Puts to buy 42k 9/30 3000-3575-3875 PS Collar. This will sell a massive 16mm Vega and will buy 4.7B of Delta, but they will structure the trade such that its neutral at time of trade and will shift Delta to MOC

Tyler Durden Thu, 06/30/2022 - 14:45
Published:6/30/2022 2:05:36 PM
[Markets] Investing In Stocks In The First Half Stunk; Will H2 Be Better? Should you invest in stocks in the second half of this year after the major indexes' sharp declines the first half? Let's look at the data. Published:6/30/2022 2:05:36 PM
[Markets] Your Digital Self: A Google engineer said an artificial-intelligence program came to life. This is why that couldn’t happen Cutting-edge AI algorithms contain impressive, intricate pieces of code. Parts of them are so complex that even the people who wrote them don’t fully understand them.
Published:6/30/2022 2:05:36 PM
[Markets] ECB Will Buy Italian, Greek Bonds Using Proceeds From German, French Bonds To Avoid Crash ECB Will Buy Italian, Greek Bonds Using Proceeds From German, French Bonds To Avoid Crash

Not that long ago we joked that the ECB's cunning "market fragmentation" plan - which became critical after Italian bonds crashed when markets realized that QT is not, in fact, QE and without the ECB backstopping worthless European paper said paper would trade down to its "fair value" - would consist of fighting inflation on even days with higher rates and no QE, and then fighting bond market fragmentation and soaring Italian yields on odd days with NIRP and QE.

It turns out we were not that far off, because instead of splitting QE and QT into odd and even days, the ECB will pursue bond buying vs selling broken down by geography. Reuters reports that the European Central Bank will buy bonds from Italy, Spain, Portugal and Greece with some of the proceeds it receives from maturing German, French and Dutch debt in a bid to cap spreads between their borrowing costs.

The central bank has divided the euro zone's 19 countries into three groups - donors, recipients and neutrals - based on the size and speed of a rise in their bond spreads in recent weeks, according to conversations with a half a dozen people at the ECB's annual forum in Sintra, Portugal. The spreads are gauged against German bonds, which serve as a de-facto benchmark for the single currency area.

In short, the ECB will buy worthless bonds with money from maturing viable bonds (those of Germany, France and Netherlands).

Which, while clearly not QT, at least has a chance of working because as we explained, only explicit bond buying by the ECB will prevent a collapse in Italian bonds. Well, that's precisely what the ECB is doing, even if it means it can't claim with a straight face that it is pursuing Quantitative Tightening.

The ECB will kick off this "rebalancing" on Friday to prevent financial fragmentation among euro zone countries from getting in the way of its plan to raise interest rates - with an additional scheme due to be unveiled next month.

The lists of donor and recipients countries, which will be reviewed monthly, mirror the division between peripheral (insolvent) and core (solvent) countries that emerged at the time of euro zone's first debt crisis a decade ago.  Recipients include a handful of countries perceived by investors as riskier due to their high public debt or meagre growth, such as Italy, Greece, Spain and Portugal, the sources said.

Still, there is a glitch: while redemptions in July and August are substantial, the ECB knows that merely reinvesting of the proceeds will not be enough to calm investors. So the central bank has sped up work on a new tool that will allow it to make new purchases where they are needed if a country meets certain conditions. Needless to say, this is not QT. It is however, QE, and is not just a violation of Europe's deficit funding limitations, but worse, is a targeted violation, one which will infuriate "donor" nations as soon as the next bond crisis sends core yields soaring while keeping Italian spreads artificially low.

The ECB's new tool may be ascertained by the European Commission, based on its fiscal rules or economic recommendations, or by the ECB itself via a debt-sustainability assessment, as it did with Greece a few years ago, sources have told Reuters. The former option would keep the ECB above the fray but make it dependent on another institution. The latter would give central bankers a greater say but open them to accusations of getting involved in politics. The ECB may then drain cash from the banking system to offset its bond purchases, most likely via special auctions at which banks can secure more favourable interest rates if they park funds at the central bank. read more

Policymakers have yet to decide whether to announce the size of the scheme, as they hope its mere announcement will stabilize markets and they may not have to use it.

Tyler Durden Thu, 06/30/2022 - 14:05
Published:6/30/2022 1:26:48 PM
[Markets] Nouriel Roubini warns of a potential 50% drop for stocks Nouriel Roubini warns of a potential 50% drop for stocks Published:6/30/2022 1:26:48 PM
[Markets] The Margin: EXCLUSIVE: Sotheby’s is set to auction a key document related to the U.S. Constitution The item, one of only three known surviving copies of Virginia's ratification of the U.S. Constitution, has a pre-sale estimate of $3 million to $5 million.
Published:6/30/2022 1:26:48 PM
[Markets] US STOCKS-S&P 500 wobbles to the end of its worst first-half since 1970 Wall Street slid into the finish line of a dismal month and quarter on Thursday as a continued sell-off put a grim punctuation mark at the close of the S&P 500's worst first-half in more than half a century. All three major U.S. stock indexes were down but off session lows on the last day of the month and the second quarter, putting S&P 500 has set a course for its steepest first-half percentage drop since at least 1970. Published:6/30/2022 1:26:48 PM
[Markets] Market Snapshot: Dow futures down over 300 points as losing first half closes and Fed’s favorite inflation gauge looms Stocks are looking at the worst first-half of a year since 1970, with investors weighed by worries over inflation, recession and central banks.
Published:6/30/2022 5:51:28 AM
[Markets] ADP says it won't issue next jobs report as it overhauls survey ADP says it won't issue next jobs report as it overhauls survey Published:6/30/2022 5:51:28 AM
[Markets] Prosecutors Say Prince Andrew 'Next Target' After Ghislaine Maxwell Sentenced To 20 Years Prosecutors Say Prince Andrew 'Next Target' After Ghislaine Maxwell Sentenced To 20 Years

Authored by Steve Watson via Summit News,

Following the relatively light twenty year sentence Ghislaine Maxwell has received for sex trafficking underage girls for Jeffrey Epstein, prosecutors representing the victims have said that the ‘next target’ should be British Royal Prince Andrew.

The lawyers acting on behalf of those alleging abuse requested that the FBI continue investigating the Epstein case and look harder at Andrew and other individuals accused by the victims.

“Let’s hope they’re the next target,” Attorney Brad Edwards told reporters.

Edwards represented Virginia Roberts Giuffre, who settled a sex abuse civil lawsuit out of court with Andrew, the Duke of York.

Attorney Spencer Kuvin, representative of several other alleged victims of Epstein and Maxwell added “Obviously, Andrew is one of the targets they will be looking into. He should definitely be concerned, but if he did nothing wrong, then come forward and tell the full story to the FBI, not the media.”

Los Angeles lawyer Lisa Bloom, who is representing several other alleged victims said “We call upon the FBI to fully investigate Prince Andrew. Virginia Giuffre’s civil case should be just the beginning. Everyone associated with Epstein and Maxwell should be carefully investigated.”

Bloom previously told reporters that Prince Andrew “should be quaking in his boots.”

As we previously reported, the British public have expressed concerns that the money for Andrew’s pay off to Virginia Roberts Giuffre, which will likely run into the millions, will be siphoned from taxpayers.

The amount that Andrew will pay Giuffre, and a victims’ rights charity of her choice, has not been disclosed, however it is estimated to be in excess of £12 MILLION, and that won’t even include legal fees.

While not admitting any guilt in the case, a statement read in court noted that “Prince Andrew has never intended to malign Ms. Giuffre’s character, and he accepts that she has suffered both as an established victim of abuse and as a result of unfair public attacks.”

The settlement came just days before Andrew would have been made to undergo a deposition, and be questioned under oath by Giuffre’s lawyers, reported the New York Times.

No individuals other than Maxwell and Epstein have yet been named in court throughout the case.

Maxwell will likely serve her sentence at the Federal Correctional Institution in Danbury, Connecticut, a low security 1000-inmate facility about 55 miles from New York City. The prison is said to be like Disneyland compared to the facility Maxwell has resided for the past two years.

*  *  *

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Tyler Durden Thu, 06/30/2022 - 06:30
Published:6/30/2022 5:51:28 AM
[Markets] Sweden's Riksbank lifts policy rate by 50 basis points to 0.75% Sweden's Riksbank lifts policy rate by 50 basis points to 0.75% Published:6/30/2022 4:43:24 AM
[Markets] Oil Market Confronts US And EU Policymakers With Daunting Choices: Kemp Oil Market Confronts US And EU Policymakers With Daunting Choices: Kemp

By John Kemp, senior energy analyst at Reuters

With global inventories steadily falling and spare capacity eroding, the oil market resembles a geological fault line in which stress is quietly accumulating and will eventually be relieved by an earthquake of as yet unknown magnitude.

The most likely stress relief will come from a deceleration in oil consumption as a result of a recession or mid-cycle manufacturing slowdown in the major oil consuming economies of North America, Europe and Asia.

Economic growth is already slowing in the United States and faltering in Europe and China under the combined impact of accelerating inflation, rising interest rates and coronavirus controls. Financial conditions are tightening rapidly as central banks raise interest rates and commercial banks enforce tougher lending standards.

Unlike previous cyclical slowdowns, central banks are likely to continue tightening financial conditions as the economy slows to snuff out inflation.

The alternative is for a sharp acceleration of production ? meaning more output from OPEC members, U.S. shale producers, other non-OPEC suppliers, or currently sanctioned countries. Most OPEC members are already producing at full capacity, with the exception of Saudi Arabia and the United Arab Emirates.

The precise amount of spare capacity available in Saudi Arabia and the United Arab Emirates is disputed given the secrecy which surrounds their production systems. But it is unlikely to be much more than around 1 million barrels per day (bpd) based on historic production rates (“Can Saudi Aramco Meet Its Oil Production Promises?”, Bloomberg, June 29).

U.S. shale producers are already increasing drilling rates, which will translate into higher production over the next 6-12 months, once the wells have been drilled, fractured and linked up to pipeline systems.

The largest shale producers remain committed to restraining output growth to avoid flooding the market and return capital to shareholders, which is likely to limit growth from this source.

Non-OPEC non-shale producers (NONS) are expected to increase production by under 1 million bpd in both 2022 and 2023 (“EIA forecasts growing liquid fuels production in Brazil, Canada and China”, EIA, June 17).

The only other source of increased production would come from easing sanctions on Venezuela, Iran or Russia, which could add several million barrels daily to the market depending on which sanctions were relaxed.

ACCUMULATING STRESS

Brent’s spot price and calendar spreads are sending contrasting signals about the tightness of oil supplies, implying the market is storing up volatility which is likely to be unleashed over the next few months.

Front-month futures prices are high, but not extremely so once adjusted for inflation, lying in the 85th percentile for all months since 1990 and the 78th percentile for all months since 2000.

The implication is the market is short of petroleum but the shortfall is not (yet) critical and expected to be resolved relatively easily by an increase in production, a reduction in consumption, or both.

But Brent’s six-month calendar spread, usually seen as a clearer signal about the balance between production, consumption, inventories and spare capacity, is trading near record levels.

Brent spreads are signalling the market is already exceptionally tight, with shortages becoming critical and difficult to relieve without a massive increase in output, a recession-driven fall in consumption, or both.

Other calendar spreads, including the very short-term dated Brent spreads for cargoes scheduled to load in the next few weeks, and Murban crude futures, the benchmark in Asia, are already at record levels. The tightness in some of these short-term spreads is likely exaggerated by squeezes, so the price structures should be interpreted with care, but squeezes would not be possible if the market was not under-supplied.

Critical calendar spreads are signalling an extreme shortage of crude - even though the U.S. Strategic Petroleum Reserve (SPR) is discharging 1 million barrels per day until the end of October.

Spreads signal the production-consumption balance is expected to be far tighter than in either 2012-2014 or 2007-2008, the last time that real oil prices were this high.

The contradiction between spot prices and spreads must eventually be resolved, which will likely induce significant volatility: either spot prices must rise to align with tightness implied by the calendar spreads, or the spreads must soften to match the more evenly balanced market implied by spot prices.

TIME TO CHOOSE

The oil market is confronting policymakers with a menu of options. But each of them carries a high cost in terms of diplomacy, domestic politics, the economy, or all three, making them unpalatable for decision-makers. This explains why "clever" technical solutions that appear to avoid these hard choices are so popular at the moment in the United States and the European Union.

The proposed price cap on Russia’s petroleum exports is designed to reduce Russia’s revenues without reducing oil supply, raising prices, increasing the need for a recession, or relaxing sanctions on Iran or Venezuela. But the feasibility of these technical solutions falls as their complexity increases.

It is like going into a restaurant, ordering all the items on the menu, and then being surprised the eventual bill is so high.

In the recent past, stringent U.S.-led sanctions on Iran between 2012 and 2015 contributed to the period of very high real prices between 2012 and 2014. Sanctions have invariably driven up energy prices for consumers unless there are alternative supplies readily available to make up the deficit (“Energy sanctions and the impact on prices for consumers”, Kemp, June 2022).

In the current market, there is very limited spare capacity, unless and until a recessionary slowdown in the global economy and oil consumption creates some more slack.

U.S. and EU policymakers must therefore choose - tougher sanctions on Russia; easier sanctions on Venezuela and Iran; faster production growth from Saudi Arabia and the UAE; faster growth from U.S. shale; or a deeper recession.

Tyler Durden Thu, 06/30/2022 - 05:00
Published:6/30/2022 4:43:24 AM
[Markets] Kelley Blue Book: The popular Lexus RX now has 3 hybrid choices and a handsome new look It's been due for a redesign, and here it is, with new hybrid powertrains and new cabin technology
Published:6/30/2022 4:43:24 AM
[Markets] EU Walks Back Hard Line On Kaliningrad Standoff As Russia Places New Missiles On Baltic Coast EU Walks Back Hard Line On Kaliningrad Standoff As Russia Places New Missiles On Baltic Coast

Following Moscow threatening to retaliate and escalate, it seems the European Union is seeking to rapidly defuse tensions after earlier in June giving Lithuania the go-ahead to block all rail and road transit of Russian goods going to Russia's exclave of Kaliningrad. Some one million Russian citizens of Kaliningrad Oblast have been cut off from normal and vital reception of goods through neighboring EU-NATO member Lithuania since June 17 due to enforcement of EU sanctions against Moscow.

But Reuters is reporting Wednesday that Brussels is ready to climb down quickly from its hard line sanctions enforcement stance, after last week the Kremlin warned Lithuania that "Russia will certainly respond to such hostile actions." A statement from Nikolai Patrushev, the Secretary-General of Russia's Security Council, at the time threatened: "The consequences will have a serious negative impact on the population of Lithuania." But now EU leaders are said to be seeking compromise.

Via Shutterstock

The EU is now talking sanctions exemptions rather than enforcing them over an area that will only ensure escalation with Moscow.

European officials are in talks to exempt the area from sanctions that have so far hit industrial goods like steel and pave the way for a deal in early July if EU member Lithuania drops its reservations, the people who refused said Not to be credited because the discussions are private.

This despite all the talk of a unified front and "resolve" to not only enforce existing anti-Russia sanctions but ramp up further punitive measures over the Ukraine invasion at both the G7 and NATO summits held this week.

Russia has said it would for the time being ferry goods across the Baltic Sea to its territory of Kaliningrad. At the same time, Russia's military nearer to the start of the Kaliningrad 'blockade' initiated missile exercises in the Baltic Sea, which featured anti-ship missile 'live fire' against targets. The Defense Ministry even publicized and promoted footage of the threatening drills.

And more crucially, there are emerging reports of further fresh Russian missile deployments to Kaliningrad's Baltic Sea coast. "Analysis of satellite imagery shows that Russia has now positioned advanced anti-ship missiles on the Kaliningrad coast," a fresh report in the global maritime monitoring site Naval News finds. "The systems are deployed to the Mys Taran headland, a prominent landmark mid-way along the exclave’s short coastline." According to details in the report:

The missile systems are two types which are often deployed together. The first, 3K60 Bal system (NATO: SSC-6 Sennight), is loosely equivalent to the Harpoon. It shoots the Kh-35 missile, known by the NATO reporting name SS-N-25 Switchblade. This is the same missile that Ukraine’s Neptune system is based on. Each Bal TEL (transporter erector launcher, read ‘launch truck’) can carry 8 missiles. This is more than most other comparable coastal defense systems.

Bal has an effective range of around 70 nautical miles, with an improved version increasing this to 160 nautical miles.

The recent drills have given way to fears that Russia could exercises a 'military option' if overland goods to Kaliningrad, which is sandwiched on two sides by NATO states, continue to be blocked, per the Reuters report:

If the traditional route for Russian goods to Kaliningrad, first via allied Belarus and then Lithuania, is not restored, the Baltic state fears Moscow could use military force to plow a land corridor through its territory, the person said.

Germany, meanwhile, has troops stationed in Lithuania and could be drawn into a confrontation with its NATO allies if that were to happen.

Moscow has also in the recent past not hesitated to position short-range Iskander missiles in its Kaliningrad exclave.

Meanwhile, there are some surprisingly blunt admissions coming out of Western officials over the Kaliningrad crisis, such as the following in Reuters:

"We have to face reality," said one person with direct knowledge of the EU discussions, calling Kaliningrad "sacred" for Moscow.

"(Putin) has a lot more influence than we do. It’s in our interest to find a compromise," he said, acknowledging that the eventual result might seem unfair.

Some of the particular forms of compromise could involve freight traffic being exempted on the basis that it wouldn't count as "international" trade according to the 'letter' of EU sanctions policy (given the exclave is already Russia's), or issuing waivers on a "humanitarian" basis; however, Lithuania appears in a mood to "stand up" to Russia and not make significant concessions.

Given the Russian escalation and possible missile build-up in the Baltic region, it is looking like goods could flow normatively to Kaliningrad within a few days, according to officials cited in Reuters.

Tyler Durden Thu, 06/30/2022 - 02:45
Published:6/30/2022 2:19:34 AM
[Markets] UK incomes fall for unprecedented fourth straight quarter - live updates Britain suffering faster and steeper downturn than Europe, warns Andrew Bailey FTSE 100 slumps 1.5pc as incomes fall again Ben Marlow: Britain’s defence industry sell-off is self-harm on a gob-smackingly grand scale Sign up here for our daily business briefing newsletter Published:6/30/2022 2:19:33 AM
[Markets] Dow Jones Futures Fall: Inflation, Jobs Data Could Be Catalyst For Ailing Market Rally The stock market rally searched for direction Wednesday. Jobless claims and inflation data are on tap. Published:6/30/2022 1:45:57 AM
[Markets] Empire To Expand NATO In Response To War Caused By NATO Expansion Empire To Expand NATO In Response To War Caused By NATO Expansion

Authored by Caitlin Johnstone via Medium.com,

Turkey’s President Erdogan has officially withdrawn Ankara’s objection to the addition of Finland and Sweden to NATO membership, with the three countries signing a trilateral memorandum at a NATO summit in Madrid.

The removal of Erdogan’s objection was reportedly obtained via significant natsec concessions from the other two nations largely geared toward facilitating Turkey’s ongoing conflict with regional Kurdish factions, and it removes the final obstacle to Finland and Sweden beginning the process of becoming NATO members. Finland’s addition will more than double the size of NATO’s direct border with Russia, a major national security concern for Moscow.

“Sweden and Finland moved rapidly to apply to NATO in the wake of Russia’s invasion of Ukraine, reversing decades of security policy and opening the door to the alliance’s ninth expansion since 1949,” Axios reports.

So the western empire will be expanding NATO again in response to a war that was predominantly caused by NATO expansion. Brilliant.

At the same NATO summit, President Biden announced plans to ramp up US military presence in Europe in response to the Ukraine war.

“Speaking with Spanish Prime Minister Pedro Sánchez, Biden said the US will increase the number of US Navy Destroyers stationed at a naval base in Rota, Spain, from four to six,” Antiwar’s Dave DeCamp reports.

“The president said that this was the first of multiple announcements the US and NATO will make at the summit on increasing their forces in Europe, steps being taken in response to Russia’s invasion of Ukraine.”

This news comes out as a new CNN report tells us that the Biden administration does not believe Ukraine has any chance of winning this war, yet still won’t encourage any kind of negotiated settlement to end the bloodshed.

From CNN:

White House officials are losing confidence that Ukraine will ever be able to take back all of the land it has lost to Russia over the past four months of war, US officials told CNN, even with the heavier and more sophisticated weaponry the US and its allies plan to send.

Advisers to President Joe Biden have begun debating internally how and whether Ukrainian President Volodymyr Zelensky should shift his definition of a Ukrainian “victory” — adjusting for the possibility that his country has shrunk irreversibly. US officials emphasized to CNN that this more pessimistic assessment does not mean the US plans to pressure Ukraine into making any formal territorial concessions to Russia in order to end the war.

This would confirm what I and many others have been saying since Russia invaded: that this proxy war is being waged not with the intention of saving Ukrainian lives by delivering a swift defeat to Moscow but with the intention of creating a costly, gruelling military quagmire to weaken Russia on the world stage.

This is further confirmed by a new Politico report that British Prime Minister Boris Johnson has discouraged France’s President Macron from facilitating a negotiated peace settlement between Moscow and Kyiv, which would support an earlier Ukrainian media report that Johnson had discouraged President Zelensky from such a settlement during his visit to Kyiv in April.

These revelations emerge in the wake of western officials admitting that Ukraine is crawling with CIA personnel and special forces operatives from the US and other NATO countries.

“As usual it appears that the administration wants to have it both ways: assure the American people that it is being ‘restrained’ and that we are not ‘at war’ with the Russians, but doing everything but planting a U.S. soldier and a flag inside Ukraine,” writes Responsible Statecraft’s Kelley Beaucar Vlahos of this admission.

“The Russians may not see the distinction and consider this news as further evidence that their war is more with Washington and NATO than with Ukraine.”

The empire is guided by so little wisdom in its escalations against Russia that the US congress is now pushing expensive ship-launched nuclear cruise missiles on its naval forces even as the US Navy tells them it doesn’t want those weapons and has no use for them.

Like hey, just take the nukes anyway. What’s the worst that could happen?

We need to really start taking seriously the possibility that a nuclear weapon could detonate as a result of misunderstanding or malfunction amid the chaos and confusion of all these frenzied, foolish escalations and lead to an exchange which ends our entire world. This nearly happened on multiple occasions in the last cold war, and there’s no rational reason to believe we’ll get lucky again.

The only sane course of action here is de-escalation and detente, and all the major players in these escalations are pointed in the exact opposite direction.

This is so much more dangerous than most people are letting themselves consider. It’s being sustained by psychological compartmentalization, emotional avoidance, and a profound lack of wisdom.

As David S. D’Amato recently remarked, “If our species does find a way to survive into the distant future, our descendants will look at right now as the near miss; they’ll think, ‘Wow, that was close.’ How do we convince people in power to preserve that future?”

*  *  *

My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, following me on FacebookTwitterSoundcloud or YouTube, or throwing some money into my tip jar on Ko-fiPatreon or Paypal. If you want to read more you can buy my books. The best way to make sure you see the stuff I publish is to subscribe to the mailing list for at my website or on Substack, which will get you an email notification for everything I publish. Everyone, racist platforms excluded, has my permission to republish, use or translate any part of this work (or anything else I’ve written) in any way they like free of charge. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here. All works co-authored with my American husband Tim Foley.

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Tyler Durden Thu, 06/30/2022 - 02:00
Published:6/30/2022 1:45:57 AM
[Markets] China's War Machine Is Betting The Future On Drones China's War Machine Is Betting The Future On Drones

By Andrew Thornebrooke of the Epoch Times

A swarm of drones flies through the night sky over the Pacific.

Shrouded in darkness and less than 100 miles from the California coastline, they go in groups of fours and sixes, stalking U.S. Navy vessels. They whir about over the ships’ bows, gathering intelligence to deliver to faceless masters.

They match the speed of the naval vessels, flying unimpeded in low visibility for as long as four hours at a time. The alarmed crews of the ships have no idea where they came from or what their purpose is.

This is not the plot of an up-and-coming spy thriller, but a series of actual events that took place in July 2019.

A People's Liberation Army (PLA) Air Force WZ-7 high-altitude reconnaissance drone is seen a day before the 13th China International Aviation and Aerospace Exhibition in Zhuhai, southern China's Guangdong Province on Sept. 27, 2021

The chilling encounters raised alarms throughout the Navy and brought forth an investigative apparatus composed of elements of the U.S. Navy, Coast Guard, and FBI. Members of the Joint Chiefs of Staff and the commander of the Pacific Fleet were kept primed with updates on the situation.

“If the drones were not operated by the American military, these incidents represent a highly significant security breach,” said one investigative report based on the ships’ logs.

Yet, the nature of the drones, where they came from, and who deployed them remained a mystery for more than two years.

However, a new investigative report published by The Drive in June shed light on the incidents, which totaled at least eight encounters involving several unmanned aerial vehicles (UAVs) that were previously referred to simply as UFOs in the press.

The report, based on Navy materials newly obtained through multiple Freedom of Information Act requests, pinpoints the launching point of the drones as a civilian bulk carrier operating in the area at the time. That ship, the MV Bass Strait, is owned and operated by Pacific Basin, flagged out of Hong Kong.

“The Navy assessed that the commercial cargo ship was likely conducting surveillance on Navy vessels using drones,” the report said. During its first-ever operational voyage, the ship may have been linked to previously unknown incidents in March and April 2019, including “intelligence collection operations” targeting the USS Zumwalt, America’s most advanced surface combatant.

“Active surveillance of key naval assets is being conducted in areas where they train and employ their most sensitive systems, often within close proximity to American shores,” the report said.

A model of an FL-71 drone is seen on display at the Chinese Defense Information Equipment and Technology exhibition in Beijing on June 18, 2019.

China’s Growing Drone Force

It is too early to say what connection, precisely, the crew of the Bass Strait, Pacific Basin, and the Chinese Communist Party (CCP) share. Nevertheless, the incident underscores the central role that drones are to play in the next stage of modern warfare and how they are already shaping the battlefield and intelligence gathering processes.

As it so happens, the Chinese Communist Party (CCP) is betting big on drone warfare. The regime has invested heavily for over a decade into everything from cheap and expendable commercial quadcopters to resource-heavy high-altitude long-endurance drones.

Indeed, the CCP and its military wing, the People’s Liberation Army (PLA), have undertaken numerous UAV projects since the early 2000s. However, the first appearance of a large-scale Chinese-built stealth drone came shortly into CCP leader Xi Jinping’s tenure.

Likely built from data obtained from the Iranian capture of an advanced American drone in 2011, China’s “Sharp Sword” was just the first of many advanced UAVs, built through the assistance of foreign technologies gathered as part of the regime’s comprehensive program of technology theft.

Since then, the CCP has funded dozens of varieties of UAVs using a plethora of state-owned corporations that also build the regime’s space and missile technologies. From larger combat drones like the Sharp Sword to small quadcopter drones like those spotted near California to rocket-powered supersonic vehicles intended to zip through the sky gathering targeting information, the CCP buys everything drone-related.

Moreover, the CCP is already building out its drone capabilities across the spectrum of its military assets, deploying those capabilities in some of the world’s most contested regions.

China’s third and newest aircraft carrier, the Fujian, is expected to host a variety of drones. Its electromagnetic catapult system will prove invaluable for quickly launching differently weighted drones with adjustable torque.

That effort will likely build on operational lessons learned from the last several years, as China’s second aircraft carrier, the Shandong, was spotted in early June this year with a small fleet of “commercial or commercial-derivative drones” on its flight deck, according to one report’s analysis of images that appeared on Chinese social media platform Weibo.

“[The images] do underscore the Chinese People’s Liberation Army’s ever-increasing efforts to develop and field various types of unmanned aircraft, including those that can operate together in networked swarms, and often with an eye toward performing various roles in the maritime domain,” one report said.

If that were not enough to underscore the regime’s ambition to dominate the strategic space with a new, drone-first approach to military engagement, there is now the case of the Zhu Hai Yun.

The Zhu Hai Yun is a 290-foot ocean research vessel designed to deploy various underwater and airborne drones for various purposes. The ship is also a drone and can either be remotely controlled by a pilot or left to navigate the open seas autonomously.

In the words of its manufacturer, it is the “world’s first intelligent unmanned system mother ship.”

And though Beijing has officially described that mothership as a maritime research tool, a South China Morning Post report acknowledged that the vessel indeed hosts military capabilities that can “intercept, besiege, and expel invasive targets.”

That news is likely to displease U.S. military leadership, which is not likely to deploy its own such vessel for six more years.

Watching, Learning, Preparing

As the pace of China’s military drone development has accelerated, the rate of international incidents related to drones has also increased.

In August 2021, Japan Self Defense Forces led multiple sorties of fighter jets over several days to intercept PLA drones caught flying south of Okinawa. The drones, comparable in size to the United States’ Predator and Reaper drones, were believed to be collecting strategic intelligence on the Miyako Strait, which provides the PLA with a critical point of entry to the Pacific, and has been the site of increasing Chinese military excursions for the past decade.

The incident serves as a poignant reminder of what so much of China’s drone fleet serves to do: secure vital strategic intelligence for the coordination of military actions.

And it is this point that brings one back to the issue of just what several groups of drones launched from a Hong Kong freight ship were doing spying on U.S. Navy vessels near the coast of California.

If such actions were directly or indirectly tied to the sprawling military-security apparatus of China’s communist government, what would be the end goal for the intelligence gathered? What is the action in “actionable intelligence”?

To that question, one analysis found that 2019’s “adversary drones” were “meant to stimulate America’s most capable air defense systems and collect extremely high-quality electronic intelligence data on them.”

“By gathering comprehensive electronic intelligence information on these systems, countermeasures and electronic warfare tactics can be developed to disrupt or defeat them,” the report said. “Capabilities can also be accurately estimated and even cloned, and tactics can be recorded and exploited.”

“That swarm could have been, and likely was, sucking up, or helping another nearby platform suck up, all that sensitive … data on the most capable warships on earth and at very close range.”

In essence, the drones were achieving two things. The first was the blanket intelligence gathered from spying on U.S. naval vessels up close. The second was learning what would draw an American response and what that response would be.

In this way, the drones were baiting U.S. naval vessels, soaking up intelligence about their response (or lack thereof) for future actions that could not only inform the Chinese military about the technical specifications of U.S. ships, but also how to manipulate their crews and protocols to learn how American forces would behave in conflict.

Winning the Next War

Such tools have very real consequences for the United States, its allies and partners, and the greater liberal international order. Perhaps nowhere more so than in the acute threat of a CCP invasion of the democratic Taiwan, which has maintained its de facto independence since 1949.

Despite that independence, and despite the fact that the CCP has never ruled the island, the regime has made a central point of its current focus the forced unification of Taiwan with the mainland. Drones, it appears, are to play a central role in that endeavor.

In late 2021, the PLA launched a miniature aircraft carrier designed to deploy and recover swarms of drones. Such staging vehicles are designed to work alongside surface combatants to disrupt military operations in the maritime domain by swarming enemy targets or rendering them less effective through distraction.

continue reading over at The Epoch Times

Tyler Durden Wed, 06/29/2022 - 23:40
Published:6/30/2022 12:13:00 AM
[Markets] Tax Guy: Common IRA rollover tax traps — and how to avoid them It’s way too easy to run afoul of punitive tax rules when you do an IRA rollover.
Published:6/30/2022 12:13:00 AM
[Markets] Concerned Graduates Of West Point Challenge Leadership Of Military Academy: Letter Concerned Graduates Of West Point Challenge Leadership Of Military Academy: Letter

Authored by Enrico Trigoso via The Epoch Times (emphasis ours),

Three retired U.S. military officers—LTG Thomas McInerney, USAF; MG Paul Vallely, U.S. Army; and Colonel Andrew O’Meara Jr., U.S. Army—signed a letter authored by “Concerned Graduates of West Point and The Long Gray Line,” protesting against mandatory vaccinations, CRT classes, sanitary conditions, progressive political activism, and other “woke actions,” in the military academy.

U.S. Military Academy cadets attend the 2020 graduation ceremony at West Point, New York, on June 13, 2020. (Timothy A. Clary/AFP via Getty Images)

“The Long Gray Line” refers to the continuum of graduates United States Military Academy at West Point, New York.

“We wanted to challenge the leadership of the Academy and the Defense Dept on their WOKE actions, CRT, Diversity training and the other discrepancies in the Academy. We found it pervasive at the Naval and Air Force Academies so we knew it was directed from the highest levels of our Military Leadership,” Vallely told The Epoch Times.

Paul E Vallely MG US Army (Ret) (Courtesy of Paul E Vallely)

“We all want the Military to get back on track to training and leading our Armed Forces to secure America and its Citizens,” Vallely, who has been sounding the alarm against a socialist takeover of the United States, added.

The letter, titled “Declaration of Betrayal of West Point And the Long Gray Line,” asks for the following information:

  1. An explanation for the irregularities in the enforcement of the Honor Code.

  2. A justification for the mandatory vaccinations of cadets with the COVID Virus despite widespread adverse reactions to the inoculation, as well as provisions for exceptions for cadets with religious objections.

  3. An explanation for teaching Critical Race Theory at the Academy that constitutes an attack upon the Constitution and our constitutional Republic. This is behavior that constitutes unconstitutional conduct, if not sedition.

  4. An explanation of reported mismanagement of the cadet dining facility resulting in unsanitary conditions, inadequate food prepared for the meal, and food served that was reportedly unfit for consumption.

  5. Political activism on the part of civilian faculty members constituting political activity violating the long-standing policy of the Academy and Army Regulations.

  6. The practice of exclusive reliance upon radical progressive guest speakers to address the Corps of Cadets. This practice results in prejudiced political activism on the part of the Staff and Faculty in violation of Army Regulations.

  7. An explanation for the failure of the Superintendent to respond to correspondence inquiring about problems identified at the Academy.

Read more here...

Tyler Durden Wed, 06/29/2022 - 23:00
Published:6/29/2022 10:03:48 PM
[Markets] Dow Jones Newswires: China’s manufacturing, services activity return to expansion in June China's official gauges of factory and services activity rebounded to expansion in June after showing activity contraction for three months in a row, as Beijing eased COVID-19 restrictions and moved to support economic growth.
Published:6/29/2022 9:37:29 PM
[Markets] Known And Suspected Terrorists Entering US In Unprecedented Numbers: Rep. Higgins Known And Suspected Terrorists Entering US In Unprecedented Numbers: Rep. Higgins

Authored by Katabella Roberts via The Epoch Times (emphasis ours),

Known and suspected terrorists are entering the United States in unprecedented numbers amid a surge in illegal immigration, according to Rep. Clay Higgins (R-La.).

Rep. Clay Higgins (R-La.) speaks during a House Committee on Oversight and Reform hearing on gun violence on Capitol Hill in Washington on June 8, 2022. (Andrew Harnik/Pool/AFP via Getty Images)

In an interview with NTD, the Louisiana representative stated that the Biden administration is providing “absurd” figures on the actual number of known and suspected terrorists entering America through its borders.

Higgins, a decorated law enforcement officer, said he believes this number to be much higher in part owing to the number of suspected terrorists who have aggressively avoided interaction with law enforcement at the border, which are referred to as “got-aways.”

Higgins’s comments come after Border Patrol agents captured 50 people who were on the FBI’s terror watchlist from October 2021 to May 2022.

That figure was just 15 in the fiscal year 2021, which included several months under former President Donald Trump’s administration.

“Towards the end of last year, I had estimated that we had lost about 250 KSTs, known and suspected terrorists, so the total numbers now that we’re told could serve about 700,000 ‘got-aways’ are suspected to have crossed into America. I think that’s a low number,” Higgins said.

“From my perspective, with data delivered to me by boots on the ground, from the border and from Central America and Mexico, and from the official numbers that are delivered to Congress from official data collection processes with Customs and Border Patrol, I think it’s reasonable for Americans to sort of step back and say, ‘My God, we have somewhere between 500 and 1,000 known and suspected terrorists [that] have entered into our country across our southern border since President [Joe] Biden has been inaugurated into office.’ This should startle every American citizen regardless of political affiliation,” Higgins said.

‘Conservative Numbers’

Explaining why he believes the actual number of suspected terrorists in the United States could be higher, Higgins, pointed to Biden’s administration, which he said is using “conservative numbers” when it comes to estimating how many there are.

The lawmaker added that this is in part because “got-aways” are very difficult to catch because they aggressively run and hide from law enforcement.

Things have been made even harder, according to Higgins, because much of law enforcement at the border has been pulled away from their primary mission of securing the border to instead processing illegal aliens, giving the “got-aways” more opportunity to escape.

So the men that are aggressively evading law enforcement, we’re looking at true numbers of probably a million but we’ve been told 700,000,” Higgins said. “So just using a number of 700,000, and estimating that a very small percentage of that number would be a known or suspected terrorist, which fits the historical data, you could look at 700 known and suspected terrorists who have crossed into our country.”

It’s a startling number, it should frighten us all, it should drive us to greater action to confront the Biden administration’s failed border policies to insist upon the resignation of [Department of Homeland Security] Secretary [Alejandro] Mayorkas and to promise the American people that if Mayorkas does not resign, he’s going to be impeached,” the lawmaker continued.

Higgins added that huge numbers of those individuals who are evading law enforcement at the border are working for Mexican drugs cartels, and pointed to the rising number of fentanyl deaths in America.

Read more here...

Tyler Durden Wed, 06/29/2022 - 22:20
Published:6/29/2022 9:37:29 PM
[Markets] Dow Jones Futures Fall After Market Rally Shows Further Weakness; Jobs, Inflation Data Loom The stock market rally searched for direction Wednesday. Jobless claims and inflation data are on tap. Published:6/29/2022 9:37:29 PM
[Markets] South Carolina Rep. In Leaked Audio Strategizes "Sleepers" And "Dope Money" To Finance Senate Campaign South Carolina Rep. In Leaked Audio Strategizes "Sleepers" And "Dope Money" To Finance Senate Campaign

Authored by Matt McGregor via The Epoch Times (emphasis ours),

A South Carolina state representative on the ballot for the Democratic primary runoff on June 28 for the U.S. Senate has been heard in leaked audio strategizing on how to utilize Democrat “sleepers” to run as Republicans in local elections, as well as requesting drug money from a state prison inmate.

South Carolina Rep. Krystle Matthews has been recorded in leaked audio strategizing about illegal fundraising methods. (Courtesy of Project Veritas)

Project Veritas, the watchdog organization that obtained the recording, confirmed to The Epoch Times that it verified state Rep. Krystle Matthews as the person speaking with Perry Correctional Institution inmate David Solomon Ballard.

When we get enough of us in there, we can wreak havoc for real from the inside out,” Matthews is heard saying in the recording dated Feb. 15.

Inmate phone calls are recorded and those making the call are notified by an operator that calls are recorded.

It is unclear what the relationship is between Matthews and Ballard, who was incarcerated in 2018 with a four-year sentence for threatening the life and family of a public official, and a ten-year sentence for resisting arrest and assaulting an officer, with multiple disciplinary actions taken against him while incarcerated. He also has an extensive arrest record.

Ballard had been jailed for threatening the life of Aiken County Sheriff Mike Hunt and his family, according to The State.

While in custody at the Aiken County Department of Public Safety, Ballard then assaulted a State Law Enforcement Division agent.

‘Secret Sleepers’

Matthews assumed state office in 2018 as a representative of District 117.

“We need some secret sleepers,” she is heard saying. “Like, you need, we need them to run as the other side, even though they for our side, and we need them to win,” the Senate primary candidate said. “We need people to run as Republicans in these local elections.”

Ballard agrees, stating, “Right, right.”

Watch:

Read more here...

Tyler Durden Wed, 06/29/2022 - 19:40
Published:6/29/2022 6:59:37 PM
[Markets] : LVMH buys iconic California winery Joseph Phelps French luxury-goods conglomerate Moet Hennessy Louis Vuitton is expanding its reach into Northern California's Wine Country, acquiring the acclaimed Joseph Phelps Vineyards.
Published:6/29/2022 6:59:37 PM
[Markets] What's Worth Streaming: Here’s everything coming to HBO Max in July 2022, and what’s leaving Get ready for new shows from Nathan Fielder and Issa Rae, a 'Pretty Little Liars' spinoff, the return of 'Harley Quinn' and 'FBoy Island,' and much more
Published:6/29/2022 5:56:16 PM
[Markets] Market Extra: What the dollar’s historic surge means for markets as stocks and bonds wrap up a brutal first half What's good for the dollar would likely be bad for stocks and bonds --- and vice versa.
Published:6/29/2022 5:45:00 PM
[Markets] De Blasio To AIPAC: Drop Dead De Blasio To AIPAC: Drop Dead

It wasn't long ago that the American Israel Public Affairs Committee had an overwhelming grip on both major parties in the United States. However, in the most striking indication yet that Democrats are slipping from AIPAC's grasp, former New York mayor and current congressional candidate Bill de Blasio has publicly disowned the group. 

In a virtual candidate forum, NY Jewish Week asked de Blasio if he supported AIPAC. "No, I don't," he responded, adding that the group has changed in a manner he called "unacceptable." Hammering home his stance, he said, “I am not seeking their endorsement and would not accept it even if it were offered."

Such an utterance from a prominent member of either party was unthinkable just a year ago—to say nothing of the fact that de Blasio is running in New York City...which, in 2019, de Blasio called "the largest urban Jewish community on Earth." 

De Blasio has both hands in the air, one waving a flag of Israel as he marches in a parade
Then-Mayor de Blasio marches in the 2017 "Celebrate Israel Parade" in Manhattan (photo: NYC mayor's office)

In May, House speaker Nancy Pelosi accepted the endorsement of AIPAC's pro-Israel rival lobby group J Street. Israeli newspaper Haaretz called it "a political development that signals the shifting attitudes on Israel inside the Democratic Party." Walking a political tightrope, Pelosi—a longtime AIPAC ally and recurring attendee at its conferences—hasn't touted the endorsement. 

AIPAC and J Street have gone head to head in many Democratic primary races. Earlier this month, Pelosi recorded a video message to counter AIPAC-sponsored attack ads against a Maryland congressional candidate that has the backing of both Pelosi and J Street.  

Where AIPAC is a relentless defender of seemingly every action of the Israeli government and encourages a hard-line U.S. foreign policy against Israel's rivals, J Street bills itself as "the political home of pro-Israel, pro-peace Americans," and has decried "the injustice of Israel's occupation" and "the ongoing denial of fundamental rights and freedoms to millions of Palestinians in occupied territory."

The difference between AIPAC and J Street came into sharp relief last week:

De Blasio spoke to AIPAC's national conference in March 2019—two months for before declaring his candidacy for president. He laid out what he called a "progressive case for the state of Israel," but condemned the Boycott, Divest and Sanction (BDS) movement that many progressives embrace as a means of opposing Israel's treatment of the Palestinians.

Also that month, de Blasio scolded progressive congresswoman Ilhan Omar for tweeting "It's all about the Benjamins baby" in response to a Glenn Greenwald tweet marveling at "how much time US political leaders spend defending a foreign nation [Israel] even if it means attacking free speech rights of Americans." De Blasio said "there's a long antisemitic tradition associated with that kind of comment." 

In distancing himself from the group, de Blasio cited an AIPAC-affiliated PAC's sponsorship of a successful primary challenger to progressive House candidate Nina Turner in Ohio. “I thought the attack on her was not only horribly unjustified, it deprived our nation of someone who could have been a huge difference maker in terms of our progressive movement,” said de Blasio. 

That race pitted two black women against each other in a district with a substantial Jewish vote. In her victory speech, challenger AIPAC-backed Shontel Brown reminisced about her visit to Israel, which helped her "appreciate the vulnerability of a state, and that has given me the understanding of the U.S.-Israel relationship and I thank my Jewish brethren." 

Turner's sin that provoked AIPAC: A tweeted message of solidarity with "If Not Now," a group that describes itself as "American Jews organizing our community to end U.S. support for Israel's apartheid system and demand equality, justice, and a thriving future for all."  

At last week's candidate forum, De Blasio said "the only path forward to peace in the region for both Israeli and Palestinian people to have their own states. I would fight for that, and I would certainly fight against any organization that attacks my fellow progressives.”

De Blasio, who served as New York's mayor from 2014 to 2021, is running to represent the newly-redrawn New York 10th congressional district, which covers all of southern Manhattan and a big swath of Brooklyn.  

The redrawn New York 10th Congressional District (via Ballotpedia)

 

Tyler Durden Wed, 06/29/2022 - 18:40
Published:6/29/2022 5:45:00 PM
[Markets] Jan. 6 'Electronic Surveillance Unit' Was "Illegal", Says Rep. Gohmert; Attorney Suggests "Entrapment" Jan. 6 'Electronic Surveillance Unit' Was "Illegal", Says Rep. Gohmert; Attorney Suggests "Entrapment"

Authored by Patricia Tolson via The Epoch Times (emphasis ours),

As previously reported in an exclusive June 20 report, evidence proves that “plainclothes” members of a special Electronic Surveillance Unit (ESU) were embedded among Jan. 6, 2021, protesters for the purposes of conducting video surveillance. According to experts, one believes the activity itself may have been against the law. The other contends it was done for the purpose of entrapment.

Even after Capitol occupation and violence on January 6, 2021, Capitol Hill Police made no attempt to apprehend "Q Anon Man," who is on the Senate steps just a few feet from the Capitol Hill Police line. This photo was taken after the Capitol Hill Police removed protesters from inside the Senate wing of the Capitol. (Courtesy of J. Michael Waller)

Against the Law?

Speaking as a former prosecutor and three-term District Judge, Rep. Louie Gohmert (R-Texas) told The Epoch Times, “if you’re going to have electronic surveillance of people there has to be warrants.

As Gohmert explained, “FISA courts have granted warrants,” with “no particular clarity” and “no probable cause that a crime’s been committed or that this person engaged in a crime.”

The Foreign Intelligence Surveillance Court (FISC) was established under the 1978 Foreign Intelligence Surveillance Act (FISA). “Pursuant to FISA,” the FISC website explains, “the Court entertains applications submitted by the United States Government for approval of electronic surveillance, physical search, and other investigative actions for foreign intelligence purposes.”

Regarding domestic electronic surveillance, the Department of Justice (DOJ) website, “Because of the well-recognized intrusive nature of many types of electronic surveillance, especially wiretaps and ‘bugs,’ and the Fourth Amendment implications of the government’s use of these devices in the course of its investigations, the relevant statutes (and related Department of Justice guidelines) provide restrictions on the use of most electronic surveillance, including the requirement that a high-level Department official specifically approve the use of many of these types of electronic surveillance prior to an Assistant United States Attorney obtaining a court order authorizing interception.”

Furthermore, “when court authorization for video surveillance is deemed necessary, it should be obtained by way of an application and order predicated on Fed. R. Crim. P. 41(b) and the All Writs Act (28 U.S.C. § 1651). The application and order should be based on an affidavit that establishes probable cause to believe that evidence of a Federal crime will be obtained by the surveillance. In addition, the affidavit should comply with certain provisions of the Federal electronic surveillance statutes.”

Gohmert surmised: “When you see confirmed judges are just willing to completely abrogate the U.S. Constitution because they’re the star chamber of the secret court, and they figure nobody will ever find out what they’re doing, then you know when you see there’s an Electronic Surveillance Unit, well, something’s not right.”

Gohmert’s concerns with the ESU surveillance are two-fold:

  1. Were the legally required warrants obtained?

  2. If so, how could a judge approve a warrant for surveillance before a crime has been committed and with no probable cause?

“We can’t have secret units doing secret surveillance of people that have committed no crime, no probable cause of a crime. Just getting blanket surveillance,” Gohmert asserted. “We don’t know what kind of warrant they had or even if they had warrants. But to deploy Electronic Surveillance Units tells us there’s a lot more here that we need to find out about and obviously it’s not going to be uncovered at least for another six months.”

But Gohmert added that “there is also more information we haven’t gotten and information that continues to leak out drip by drip.”

“Like this in [article] The Epoch Times,” Gohmert noted, “pointing out how until the deployment of munitions, the crowd was peaceful. I had heard from people and seen people interviewed saying there wasn’t any violence out there. ‘We were just mulling around, chanting stuff from time to time, then they started firing on us with tear gas and provoked the crowd.’ They created chaos, and you just wonder what was going on.”

The Evidence

Evidence of the embedded ESU members was discovered in a Jan. 3, 2021, First Amendment Demonstrations report, issued by Chief of Police Robert Contee of the Metropolitan Police Department (MPD), Homeland Security Bureau, Special Operations Division, obtained exclusively by The Epoch Times. While it is unclear who the MPD ESU “members” were, the report stated they wore a specific “bracelet on their left wrist identifying them as MPD personnel” among the protesters. Of the 37 “Specialized Units” listed as part of the MPD, an ESU is not among them.

Also in the report, revealed now for the first time, was the advisory that the Special Operations Division “will have personnel to assist with this detail and will assist with any demonstration.” Among them were Domestic Security Officers, or DSOs.

Photo of bracelet worn by plainclothes members of the Metropolitan Police Department’s Electronic Surveillance Unit, embedded in the crowds on Jan. 6, 2021 to “document the actions of the demonstrators and MPD’s response to any civil disobedience or criminal activity.” (Metropolitan Police Department First Amendment Demonstrations report.)

The Special Operations Division is part of the United States Secret Service, which is part of Homeland Security.

Under the heading of “Special Operations Division — Deployment Requirements,” the report said “the Incident Commander” shall ensure that specific objectives were “adhered to.” Among those is the order that “Long Range Acoustical Device (LRAD) – The LRAD along with the warning sheets shall be deployed by the DSO members along with the munitions load out and arrest kits.”

Domestic Security Officers (pdf) are also part of Homeland Security’s Special Operations Division.

Homeland Security Organizational Flowchart (ACTIVE MPD Org Charts)

According to The Focus, the DSO “can be heard shouted on audio recordings of the Capitol siege, when law enforcement officers needed additional support against the oncoming masses.”

“DSOs are primarily used as riot police, to dole out such crowd control measures as tear gas, pepper spray, batons and rubber bullets intended to disperse rioters. Their weapons can be lethal and are only to be used in the most extreme circumstances.”

Video evidence shows an unidentified individual handing weapons to people through a window from inside the Capitol building.

Joseph McBride, an attorney for multiple January 6 prisoners and defendants identified a man tagged by “Sedition Hunters” as “Red-Faced 45.” The man McBride says is “clearly law enforcement,” was dressed in red from head to toe—with even his face painted red. He appears in a video engaging in continuous dialogue with others whom McBride also insists are agents embedded in the crowd.

“He passes out weapons, sledgehammers, poles, mace. Some of those things come in contact with some of the other protesters who have subsequently been charged with possessing dangerous weapons and are using dangerous weapons at the Capitol. That is clearly entrapment.

That is clearly the government creating conditions of dangerousness and entrapping members of the crowd to possess weapons and possibly use them for reasons that we cannot comprehend.”

According to a 140-page report issued by then-Capitol Police Inspector General Michael Bolton—”Review of the Events Surrounding the Jan. 6, 2021, Takeover of the U.S. Capitol”—Capitol Police’s Civil Disturbance Unit was ordered by supervisors not to use the department’s most powerful tools, like stun guns. Also, “heavier, less-lethal weapons,” including stun grenades, “were not used that day because of orders from leadership.”

Read more here...

Tyler Durden Wed, 06/29/2022 - 18:20
Published:6/29/2022 5:32:35 PM
[Markets] Crypto: Crypto exchange CoinFlex won’t lift withdrawal freeze yet, despite ‘significant progress’ in rescue token fundraising, CEO says CoinFlex, which has halted user withdrawals since June 23, will not lift the freeze on Thursday as originally planned, according to company CEO Mark Lamb.
Published:6/29/2022 5:32:35 PM
[Markets] Dow Jones Futures: Market Rally Shows Further Weakness; Key Jobs, Inflation Data Loom The stock market rally searched for direction Wednesday. Jobless claims and inflation data are on tap. Published:6/29/2022 5:32:35 PM
[Markets] Crypto exchange CoinFlex won’t lift withdrawal freeze yet, CEO says Crypto exchange CoinFlex won’t lift withdrawal freeze yet, CEO says Published:6/29/2022 5:32:35 PM
[Markets] GLOBAL MARKETS-Dollar gains, yields ease after Powell inflation comments U.S. Treasury yields eased for a second consecutive day and the dollar rose on Wednesday after Federal Reserve Chairman Jerome Powell said there is a risk the U.S. central bank's interest rate hikes will slow the economy too much, but the bigger risk is persistent inflation. Investors have worried that an aggressive push by the Fed to dampen inflation will tip the economy into recession. Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Company, said investors are waiting for Thursday's data on the personal consumption expenditures (PCE) price index. Published:6/29/2022 5:09:47 PM
[Markets] China's Productive Capacity Is Starting To Slip Away To India And Southeast Asia China's Productive Capacity Is Starting To Slip Away To India And Southeast Asia

Continued lockdowns in China aren't helping the country's ongoing, decade-long, production exodus, a new report from Caixin notes.

The accelerating exodus from Asian production powerhouse has been helped along by Covid policy disruptions, rising labor costs and worsening trade tensions between the U.S. and China, the report notes. 

Southeast Asia and India are looking to take China's place thanks to low labor costs and rising domestic demand. This falls in line with India's political objectives, where Prime Minister Narendra Modi is pushing a “Made in India” campaign. 

As an example, Apple said earlier this year that it had started making its iPhone 13 at a factory in India instead of Taiwanese contract manufacturer Foxconn. Like other smartphone makers, it has an incentive not only for exports, but for domestic sales, the report notes:

In India, Chinese smartphone makers set up factories aiming at the huge domestic market. With 1.4 billion people — almost as many as in China — and a high proportion of young people, India has attracted Chinese brands including Xiaomi, Meizu, Vivo and Oppo to build factories. Many Chinese phone part makers have also set up factories there. Now Chinese brands account for nearly two-thirds of India’s smartphone market.

But that doesn't mean China doesn't have advantages: it has an enormous domestic market and decades of manufacturing infrastructure and experience, the Caixin report notes. And while no major aftershocks have been felt in China's economy, the trend is heading in the wrong direction for the country. 

Li Xingqian, director general of the Ministry of Commerce's Foreign Trade Department said the exodus from China was  “in line with the law of economics.”

Exports in the country were up 16.9% in May, the report says, accelerating from April's 3.9%. The country's trade surplus was $78.76 billion in May. 

However, thanks to weak demand in developed countries, "export orders for delivery in June and July, usually the peak season for booking goods for the back-to-school and holiday seasons, didn’t come in as expected," the report said. This weak demand was seen in falling shipping rates. 

Americans may take until the end of this year to work through inventories that were pulled forward over the last year. 

At the same time, President Joe Biden has said that he is considering lifting tariffs on $350 billion a year in Chinese goods. His administration, however, still seems to be divided on the matter and no decision is expected quickly. 

The report noted clearly that, to this day, China remains "the world's factory", which is unlikely to change anytime soon:

Neither Southeast Asia nor India can replace China as the global manufacturing hub in the near future as they are mainly engaged in labor-intensive and low value-added manufacturing, several foreign trade participants told Caixin. They also face problems such as incomplete industrial chains and low labor efficiency to varying degrees, experts said.

To foreign companies, China is not only a manufacturing base but also a huge market, said He Xiaoqing, president of consulting firm Kearney Greater China. In 2020, global companies had $1.4 trillion of domestic sales, far more than their exports of $900 billion, showing the attractiveness of China’s local market, He said.

In addition to India, Vietnam has also been a beneficiary of factories leaving China. Imports for the country were up 16.7% for the first five months of this year, data shows.

Most of the production moving to Southeast Asia involves textiles, furniture and low-end assembly of consumer electronics, the report said. 

Tyler Durden Wed, 06/29/2022 - 18:00
Published:6/29/2022 5:09:47 PM
[Markets] The Wall Street Journal: Court orders liquidation of crypto hedge fund Three Arrows A British Virgin Islands court ordered the liquidation of Three Arrows Capital Ltd. after creditors sued the cryptocurrency hedge fund for failure to repay debts.
Published:6/29/2022 5:09:47 PM
[Markets] RH stock falls after company slashes forecast for the year RH stock falls after company slashes forecast for the year Published:6/29/2022 3:45:38 PM
[Markets] Dow Jones Up As Powell Issues This Inflation Warning; Tesla Stock Falls Amid This Move; 2 Stocks Test Entries The Dow Jones rose despite Fed Chai Jerome Powell issuing an inflation warning. Tesla stock fell amid closure news. Apple stock rose. Published:6/29/2022 3:45:38 PM
[Markets] Rex Nutting: Why are Americans so grumpy about the economy? They’ve never lost so much purchasing power in one year, as the stimulus dries up and inflation boils over Will consumer spending stall and bring down inflation? Or are typical American families really sitting on a pile of cash they'll use to stoke higher prices?
Published:6/29/2022 3:45:38 PM
[Markets] Demand Destruction Emerges As Americans Cancel Road Trips Demand Destruction Emerges As Americans Cancel Road Trips

Gasoline demand destruction is underway as most fuel stations in the country average around $5 a gallon for regular (87 octane). New data finds that high gas prices deter some Americans (most likely the working poor) from road trips this summer. 

Conference Board's data found Americans who planned a road trip in the next six months fell to 22.7% in June. Only 36% intend to take a vacation within the next six months, the lowest level in the dataset going back four decades. 

Slumping gas demand growth is a sign that higher prices are beginning to alter the spending patterns of consumers in what seasonally should be a busy travel season. 

"Demand is currently below seasonal averages, but the key thing for crude is that it is still growing," Rebecca Babin, a senior energy trader at CIBC Private Wealth Management, told Bloomberg. 

A four-week moving average of implied gas demand dropped to about 9 million barrels daily, or 600,000 barrels less than the 2015-19 average. 

Ed Moya, a senior market analyst at Oanda, said, "given where fuel costs are and how expensive dining out has become ... everything is becoming too pricey in America, and lower and middle-income households are feeling the pinch."

We agree with Moya that low to middle-tier consumers have maxed out their credit cards and drained savings, barely able to survive the inflation storm -- which has forced them to change spending habits dramatically. 

The big concern during this summer's travel season is that energy prices could still go much higher. A new report from CNN said the White House is quietly analyzing the worst-case scenario of crude oil at $200 per barrel. 

We have outlined before that refinery capacity bottlenecks are the main driver for higher fuel prices (not Russia). 

Supply fundamentals remain tight as limited refinery capacity will persist. A genuine market rebalancing will only happen through demand destruction with higher prices. 

Tyler Durden Wed, 06/29/2022 - 16:40
Published:6/29/2022 3:45:38 PM
[Markets] Inflation could be lowered to 2% if investors 'believe in globalization': Strategist Raymond James CIO Larry Adam sits down with Yahoo Finance Live to examine the outlook for a soft-landing amid inflation, the Fed's interest rate hikes, defensively positioning tech and energy stocks, and what to tell from mortgage patterns in the housing market. Published:6/29/2022 2:42:53 PM
[Markets] What Will It Take To End Rampant Home-Price Inflation? What Will It Take To End Rampant Home-Price Inflation?

Authored by Ryan McMaken via The Mises Institute,

Real wages are falling, inflation is at a 40-year high, and the Atlanta Fed predicts we'll find GDP growth at zero for the second quarter. Meanwhile, both the yield curve and money-supply growth point to recession.

But when it comes to the latest data on home prices, there's still no sign of any deflation or even moderation.

For example, the latest Case-Shiller home price data shows home prices surged above 20 percent year-over-year in April, marking yet another month of historic highs in home price growth. It's now abundantly clear that a decade of easy money, followed by two-years of covid-induced helicopter money, has pushed home price growth to levels that dwarf even the pre-2008 housing bubble. This continues to make housing less affordable for potential first-time home buyers and for renters. Unfortunately, the options for "doing something" are limited, and probably require a recession. 

But in the meantime, those who are already lucky enough to be property owners continue to see some big gains. According to the latest Case-Shiller home price report, released Tuesday:

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 20.4% annual gain in April, down from 20.6% in the previous month. The 10-City Composite annual increase came in at 19.7%, up from 19.5% in the previous month. The 20-City Composite posted a 21.2% year-over-year gain, up from 21.1% in the previous month.

Tampa, Miami, and Phoenix reported the highest year-over-year gains among the 20 cities in April. Tampa led the way with a 35.8% year-over-year price increase, followed by Miami with a 33.3% increase, and Phoenix with a 31.3% increase. Nine of the 20 cities reported higher price increases in the year ending April 2022 versus the year ending March 2022...

In April, all 20 cities reported increases before and after seasonal adjustments.

According to the index, year-over-year changes have exceeded 18 percent for each month since June 2021, a rate well in excess of the growth rates experienced during the housing bubble leading up to the financial crisis of 2008. This growth is also reflected in month-over-month growth which has not fallen below 1 percent in 21 months. In other words, as of April, there was still no sign at all that price inflation and declining real wages was doing much to dampen demand for home purchases. 

The reader may remember that price inflation began to surge well above the Fed's target 2% rate as early as April 2021. Price inflation hit 40-year highs of more than 8% during early 2022. Moreover, April of this year was the thirteenth month in a row during which price inflation was outpacing growth in average earnings

Housing Is Less Affordable, But There Are Plenty of Buyers

People are getting poorer in real terms, so it's not surprising that April data also shows historic imbalances between disposable income and home prices. As of April this year, the Census Bureau's estimate for the average sales price of new houses sold reached 10.3 times the size of disposable personal income per capita. The average home sale price has been more than nine times disposable income for the past six months of available data. In recent decades, home prices have only been this unaffordable in periods leading up to recessions and financial crises—i.e., 1980, 1991, and 2007. April's home-price-to-income ratio is higher than in any other period in more than 45 years. 

One reason we have yet to see any sign of declining home prices in April data is that employment data—a lagging economic indicator—still showed a relatively strong job market in April. Although total non-farm employment remains below 2019 pre-covid levels, job growth has been strong enough to combine with monetary inflation and fuel big growth in prices. Moreover, as of April, mortgage rates had not yet climbed out of very-low-rate territory. The average 30-year fixed rate did not even reach 5 percent until mid April. This, combined with continued job growth, helped to keep demand high.(As of mid-June, however, the average 30-yar fixed rate is now 5.8 percent, a 13-year high.) 

So what will it take before we begin to see any real reductions in home prices? 

Unfortunately, the only real way out is probably a recession. This is thanks to a mixture of the regime's fiscal and monetary policies. After so many months of reckless monetary inflation fueling out-of-control demand, all that newly-created money continues to chase relatively stagnant supply. Supply has been hobbled by lockdown-induced logistical bottlenecks, US sanctions on Russia, and rising energy prices due to the regime's war on fossil fuels. Thus, consumers can't benefit from the sort of supply-driven disinflationary forces that helped keep price inflation at manageable levels during many periods in the past. Now, we're just left with surging demand fueled by new money, but without the market freedom necessary to provide breathing room through growth in supply. 

Will the Fed Tighten Enough?

Fed Chairman Jerome Powell denied at this month's FOMC meeting that the Fed is trying to bring about a recession to rein in price growth. But whether or not that is the intent, even the Fed's very mild tightening has already accelerated the US economy's slide toward recession—or at least toward job losses. For instance, there is growing evidence of sporadic mass layoff events. JP Morgan announced last week "that it was laying off hundreds of employees due to rising mortgage rates amid a troubling housing market plagued by inflation." Redfin last week announced layoffs for 470 workersHiring freezes and mass layoffs are a growing area of concern in Silicon Valley. 

If the US is indeed headed toward job losses and recession, the danger now is of the Fed not backing off monetary inflation long enough and hard enough to actually allow the economy to clean out the malinvestments and bubbles created by the monetary inflation of the past decade. The danger of too-weak tightening has been evident before. For example, the Fed moderately reined in monetary inflation during from 1972 to 1974. But these measures proved to be too little to really end the inflationary boom. Thus, much malinvestment and price inflation piled up until more tightening had to be done during the early 1980s to finally bring inflation under control. 

So the question now is this: will the Fed pull its foot off the easy-money accelerator only long enough to get a few flat months in price inflation and then return to the same old inflationary stimulus policies? That could win a brief reprieve for first-time home buyers and renters in terms of housing prices. But more than a brief reprieve is greatly needed. Of course, what the Fed should do is completely sell off its portfolio and stop manipulating interest rates altogether. But failing that, it needs to at least allow interest rates to rise enough—and shrink its portfolio enough—to allow for some real modicum of "normalization" in the financial sector. 

In any case, real deflation - both monetary inflation and price inflation - is necessary, and that can only be accomplished if the Fed can resist the temptation to keep doing what it's been doing since 2008 with "non-traditional monetary policy" including quantitative easing, financial repression, and bubble creation. 

Tyler Durden Wed, 06/29/2022 - 15:27
Published:6/29/2022 2:42:53 PM
[Markets] BookWatch: From working life to FIRE life in 3 steps: Follow the ‘Cashing Out’ couple’s road map to early retirement A 15-year plan to manage your savings and debt and achieve financial freedom.
Published:6/29/2022 2:42:53 PM
[Markets] Brutal second quarter is ‘setting up better return potential,’ strategist says John Hancock Investment Management's Matthew Miskin joins Yahoo Finance Live to discuss second quarter returns, the outlook for the stock market, and the speed of the business cycle. Published:6/29/2022 11:00:45 AM
[Markets] Fauci Suffers "Much Worse" COVID Symptoms After 'Paxlovid Rebound' Fauci Suffers "Much Worse" COVID Symptoms After 'Paxlovid Rebound'

Fully-vaxx'd and double-boosted mask-admirer Anthony Fauci is suffering.

Two weeks ago, we reported that President Biden's chief medical adviser had COVID.

The 81-year-old reportedly had 'mild symptoms' and of course he 'said the words'...

Of course, Fauci followed the CDC guidelines and ingested the government-blessed treatment - Paxlovid - due to his age and possible risks from the virus.

So, that should have been it right?

But no. During an event at Foreign Policy’s Global Health Forum, Fauci admitted he had not had a good experience:

“After I finished the five days of Paxlovid, I reverted to negative on an antigen test for three days in a row,” Fauci said Tuesday .

“And then on the fourth day, just to be absolutely certain, I tested myself again. I reverted back to positive.”

Interestingly, Fauci admitted:

"...this is becoming more and more typical based on more clinical studies..."

As Bloomberg reports, large numbers of patients have reported the phenomenon, often called Covid rebound or Paxlovid rebound, of returning symptoms after taking a full course of Pfizer’s drug.

While Pfizer Chief Executive Officer Albert Bourlasaid in May that doctors could prescribe a second course of treatment to such patients, US drug regulators have said there’s no evidence that a repeat will help.

However, Fauci said he started taking a second course of Paxlovid after experiencing symptoms “much worse than in the first go around.”

Now near completion of the five-day oral treatment, he said he was still enduring symptoms but felt “reasonably good.”

Finally, as we reported less than two weeks ago, Pfizer stopped enrolling in a clinical trial for Paxlovid for standard-risk COVID-19 patients after the latest results suggested the drug did not reduce symptoms or hospitalizations and deaths to a statistically significant degree.

Watch the full interview below: (forward to around 5:26:00):

Not exactly encouraging news...

Tyler Durden Wed, 06/29/2022 - 11:45
Published:6/29/2022 11:00:45 AM
[Markets] : Pinterest CEO change suggests e-commerce push that would be ‘welcomed’ in current market Pinterest Inc. is expected to make a deeper push into commerce under its newly named chief executive, a move greeted with some cheers among Wall Street analysts despite a muted stock reaction.
Published:6/29/2022 11:00:45 AM
[Markets] "It Is Possible - Even Probable - That The World System Will Shatter" "It Is Possible - Even Probable - That The World System Will Shatter"

By Michael Every of Rabobank

"and such small portions"

Another messy market day with bond yields down slightly, stocks by more, and oil up a lot. That was on the back of ugly US data, in particular consumer confidence expectations tumbling to 66.4, the lowest in years, and China reducing quarantine times from two to one week, which despite suggestions that Zero Covid will stay for five years(!), is a possible sign of opening up. The irony is that if China does, or stimulates, growth will pick up, commodity prices will go up, and the Fed will have to act more aggressively. The dollar had an up day, perhaps smelling that too.

The news-flow was of utopian plans that can’t be enacted. Like the Woody Allen joke about the Catskills hotel with terrible food “and such small portions”, is this a good or bad thing?

The ECB said it will roll out its anti-fragmentation toolkit from Friday, the same day it stops doing QE. How will it work? Don’t know. Will it work? Don’t know. What is the true price of assets against a backdrop of the ECB both removing and injecting bond market liquidity? Don’t know.

The G7 was all about Russia. The major policies announced were: a “pursuit” of discussions about ideas about a price cap on Russian oil imports (so no actual action); a short-term push for LNG from anyone but Russia; the formation of ‘climate clubs’; and a pledge of $4.5bn to help fight the global food crisis, taking the headline total for that to $14bn.

The ‘oil cap’ is simple in theory: the G7 will refuse to provide insurance to any vessel that carries Russian oil unless the cargo is sold with an agreed price cap. Yet it won’t work and will just push oil prices higher. Russia will never agree. China and India will never agree either. Russia and China may offer their own underwriting services, which would force the West into physically blocking cargoes and confronting China - as a Russian-oil carrying ship is stopped in the US, says the Wall Street Journal. Plus, the G7 are already not taking Russian oil: they are taking Russian oil from India and China that is being on-sold.

In this economic war, the G7 continue to tell their opponents that they will invade in exactly six months, and where, and with which forces, and in the interim demand they are allowed to use that country’s beaches: Russia just counterattacks unannounced (but not unexpectedly). Russian gas flows to the EU will remain low enough for long enough to teach the West a lesson.

On LNG, the G7 says investment is "appropriate as a temporary response” but warns against locking in fossil-fuel use because that would make climate goals unachievable. In short, we need lots of investment and supply - which will then be abandoned. This stance upsets both the environmental lobby and potential LNG exporters and investors.

The G7 also says DM polluters and EM economies should join 'climate clubs' to create global markets for green products through carbon pricing or other climate-mitigation strategies. Just what we need during an economic war – market mechanisms! What this likely means is carbon border adjustment tariffs or quotas on imports from ‘non-green’ countries. These are actually protectionist measures that will separate EM like China from the DM like the US, EU, and Japan, something I have flagged for a long time.

Today sees FT’s Martin Wolf’s promised answer to our global structural dilemmas in his op-ed ‘In an era of disorder, open trade is at risk’. It is, as feared, ‘42’.

He admits we are in an epoch of world disorder, and we can only save the neoliberal trade order with “great difficulty”. Yet his proposed solutions, besides giving small countries a voice on trade --how? By them going on strike?-- are:

  1. Sustainability. Which means ‘climate clubs’, which means DM vs. China green tariffs. It also needs huge DM capital flows to EM to finance green transitions during a food and energy crisis, and when the global system breaking down involves EM capital flows to DM via trade surpluses.
  2. Security. Which means diversifying Western supply chains, which China will fight tooth and nail. It also means allowing governments to set up negative national security lists. Isn’t this happening, and part of the problem, not the solution?
  3. Blocs. Don’t allow them. Friend-shoring is not to be embraced. Neither is regionalisation, because it might mean North America and Europe are locked out of Asia. In short, ‘don’t do anything’. Global problem solved!
  4. Standards. We need them. But not on labour, perhaps, just the environment and digital services. Who gets to set them, to what end? Isn’t this part of China’s and Russia’s gripe?
  5. Domestic policy. We need to “[educate] the public on the cost of protection” and help “all those adversely affected by economic changes.” 40+ years into neoliberalism, and 14 years after the Global Financial Crisis, this is the best we can do?! We just saw ‘Build Back Better’ turn into high inflation, food and energy crises, higher rates, and a looming recession. Somehow bleating “Free trade gooood; tariffs baaaad!” and spending public money on those left behind *without producing any inflation* will solve our problems. If it doesn’t, Wolf warns “an ill-informed nationalism is bound to sever the bonds of commerce.”

Indeed, Wolf is honest at the end: It is possible --perhaps even probable-- that the world system will shatter.” Colour me unsurprised. If this wasn’t the pattern of history, many readers would be Romans. However, he still begs for someone, if not the US, to save global free trade. Which country wants to import from everyone else and deindustrialize in the process? This then takes us back to a more realpolitik great power world. (As has been argued here for many years.)

Yet even in that territory, utopian plans are the order of the day. It appears Türkiye will now let Sweden and Finland join NATO. However, NATO has announced its armies will be carbon neutral by 2050. Nice: but how about being capable of winning dirty wars first? As National Defence Magazine was saying a year ago, ‘Electric Vehicles for the Military Still a Pipedream’. You can’t wait 8 hours to recharge a tank in combat in the middle of a muddy field. You can’t power long-range electric fighter jets. And I don’t think bombs are carbon neutral.

UK PM Johnson has had to abandon his ‘CPI +0.5% until 2028’ defense spending pledge after CPI rose to 9.1%. Welcome to the real world of real economic power and realpolitik. (As Scotland announces an unofficial independence referendum for October 19, 2023, promising even greater economic uncertainty.) Meanwhile, China has 2.1% CPI and is growing its military spending very rapidly. “Freedom has to be better armed than tyranny,” said UK Foreign Secretary Truss recently. Well, freedom needs a new economic plan then, pronto.

Indeed, we all do. We rightly focus on the Fed and the ifs and buts and maybes of its pivots and divots, as another 75bps for the next meeting is waved as a prospect. But if it’s “perhaps even probable” that “the world system shatters”, perhaps markets should start thinking about what it implies for rates and FX? That thinking is currently served up in such small portions.

Tyler Durden Wed, 06/29/2022 - 10:45
Published:6/29/2022 10:08:36 AM
[Markets] US STOCKS-Sharp rate hike bets keep Wall Street subdued, Goldman lifts Dow The S&P 500 and the Nasdaq were flat in volatile trading on Wednesday on worries over faster interest rate hikes even as recent data painted a dour picture for the economy, while a boost from Goldman Sachs shares kept the Dow afloat. Investors fretted over the impact of hefty rate increases on the U.S. economy, as data highlighted the contraction of the U.S. economy in the first quarter amid a record trade deficit following a Tuesday report that showed U.S. consumer confidence hit a 16-month low. Published:6/29/2022 10:08:36 AM
[Markets] : Institutional investors have bought hundreds of thousands of single-family homes, many in Black communities. Critics say it’s creating a ‘generation of renters’ As rental prices soar nationwide, the Democratic chair of a House subcommittee called out 'predatory' behavior by institutional investors.
Published:6/29/2022 10:08:36 AM
[Markets] Market Snapshot: U.S. stocks push higher as Powell sees path back to 2% inflation while sustaining strong labor market Equities are limping toward the end of a miserable first half of the year.
Published:6/29/2022 9:38:10 AM
[Markets] Stocks resume upward push as Powell addresses path back to 2% inflation rate Stocks resume upward push as Powell addresses path back to 2% inflation rate Published:6/29/2022 9:38:10 AM
[Markets] Jim Chanos' Next "Big Short Right Now" Is REIT-Owned Data Centers Jim Chanos' Next "Big Short Right Now" Is REIT-Owned Data Centers

One of the world's most well-known short-sellers, Jim Chanos, is betting against "legacy" data centers facing increasing competition from technology giants that have been their biggest customers. 

Chanos and his firm Kynikos Associates are raising several hundred million dollars for a fund that will place bearish bets on data center REITs. 

"This is our big short right now," Chanos said in a Financial Times interview. "The story is that although the cloud is growing, the cloud is their enemy, not their business. Value is accruing to the cloud companies, not the bricks-and-mortar legacy data centers." 

Chanos's thesis is that the largest cloud providers, Amazon Web Services, Google Cloud, and Microsoft Azure, are building their own data centers instead of leasing from REIT-owned data centers. He believes many of these REITs are overvalued and are on the cusp of experiencing a slump in revenue and faltering earnings growth.  

"The real problem for data center REITs is technical obsolescence ... Their three biggest customers are becoming their biggest competitors. And when your biggest competitors are three of the most vicious competitors in the world, then you have a problem," Chanos continued. 

Watch Digital Realty and Equinix, as well as data center operators Cyxtera Technologies and Iron Mountain, are ones to watch after Chanos announced his new short thesis. American Tower Corporation is another after it recently acquired CoreSite Realty Corp. 

Chanos also spoke about equity valuations. He said, "One thing that amazes me is how sanguine inventors are ... People just shrug their shoulders and don't seem to notice where equity valuations are today versus historically and that there are so many flawed business models. It's a little bit baffling that no one seems to think they need financial insurance because it's pretty cheap. It's another reason to be more cautious — no one is beating down the door of short-sellers these days." 

He said today's turmoil in stocks could be described as "the dot-com era on steroids" amid the implosion of profitless companies. 

Chanos expects more downside in stocks as the market cycle trends lower, noting it will be a rewarding environment for short-sellers: "We'll be feasting on the returns of these stock ideas for years — very similar to the post-dotcom era."

Tyler Durden Wed, 06/29/2022 - 10:20
Published:6/29/2022 9:38:10 AM
[Markets] Stock market news live updates: Stocks edge up despite lingering inflation, growth concerns US stocks fell Wednesday morning, extending Tuesday's losses as investors remained focused on mounting signs of a slowdown in US economic growth. Published:6/29/2022 9:38:09 AM
[Markets] FTSE runs out of steam amid fears of global slowdown It came as the British Retail Consortium said retailers were having to pass on some of the burden of higher raw material costs, leading to the biggest price increases since September 2008. Published:6/29/2022 4:00:29 AM
[Markets] Naval Mine Found At Russia's CPC's Black Sea Terminal Naval Mine Found At Russia's CPC's Black Sea Terminal

A naval mine was found near the second mooring area of the Caspian Pipeline Consortium's (CPC) Black Sea terminal, according to Bloomberg, citing the facility's press office and a statement from the port city of Novorossiysk, located on the Black Sea in southern Russia.

The discovery of the sea mine near CPC's second mooring didn't shutter operations at the terminal. CPC's third mooring will continue to operate. Reuters said CPC accounts for "around 1% of global oil trade," and any disruption at the facility could impact crude oil prices. 

Bloomberg vessel-tracking data shows crude oil tanker "Prometheus Energy" is moored at the terminal. 

Following the discovery of the mine, Novorossiysk has declared a state of emergency in some areas of the Black Sea. It's believed the mine is from World War II and is expected to be disposed of in the coming days. 

CPC said on June 15 that minesweeping operations at the terminal would begin -- there's no further information on the device's origins.

Tyler Durden Wed, 06/29/2022 - 04:15
Published:6/29/2022 4:00:29 AM
[Markets] Economic Report: Spain delivers fresh inflation shock as prices surge 10.2% to a 37-year high Higher fuel, food, hotel and restaurant prices helped drive an unexpected surge in Spanish inflation for June.
Published:6/29/2022 4:00:29 AM
[Markets] Snoop Dogg For Bank Of England Governor? Snoop Dogg For Bank Of England Governor?

Authored by Nick Hubble via FortuneAndFredom.com,

There’s an old adage that central banking is all about having the guts to “take away the punchbowl just when the party gets going”. Unfortunately for history, the man who said it also nicely demonstrated how hard it is to do.

Actually, it’s not very hard at all. You just have to raise interest rates. That’s it.

The challenge is putting up with the burning effigies with your face on them when you do.

Anyway, William McChesney Martin Jr was chairman of the Federal Reserve between 1951 and 1970. So, he had plenty of opportunity to prove his adage. But that’s not how things unfolded.

The year before he took the helm, US inflation sat at 1.26%. The year he took the chair, it soared to 7.88%! That’s almost as high as it is now…

But… that jump was due to the outbreak of the Korean War. And prices soon came right back down.

I wonder if there’s a lesson there for our times…?

Martin stuck around for long enough to get stuck with another war. By 1970 he was dealing with inflation above 5% and Vietnam.

Some argue that the story of US inflation is largely tied to wars.

Why? Because during a war, it’s especially hard to remove the government’s punchbowl. You get accused of a lot of nasty things if you pull away the government’s funding while it’s making the world safe from communism.

Despite Martin’s unimpressive performance in terms of inflation, his adage remains… an adage. And not much has changed.

These days, central banking is all about spiking the punchbowl sufficiently to keep the party going until someone passes out. And then to administer the cure, which happens to be hair of the dog.

But I want to go on a different drug analogy today. Alcohol just doesn’t come close to explaining what central bankers have been up to lately…

And so we’re talking marijuana instead of alcohol. And our question is how high central bankers will manage to get.

The answer is not high enough, and nowhere near high enough to impress prominent marijuana advocate Snoop Dogg.

He’s probably the only central banker out there who could get high enough. However, I had better explain why marijuana is my drug of choice…

The last 40 years of economic policy and financial market action can be understood as a sequence of bubbles and bailouts brought on by central banks. Specifically, they bring on the bubble, and then the bailout too after the inevitable bursting of the said bubble.

It’s always difficult deciding where to begin the explanation of a cycle, but here goes…

The story begins when central bankers are faced with some sort of crisis. They lower interest rates to help the economy and financial markets deal with it. This move gets the next boom going.

But that boom becomes a bubble when the central bankers forget to remove the punchbowl as Martin advised (but failed to do). The bubble eventually overflows into inflation, which makes central bankers tighten rates. This pops the bubble they inflated, triggering the next crisis.

And then central bankers jump back in to save the market with lower interest rates, funding the subsequent bubble, and rounding off the cycle.

That cycle has been repeating since the 1980s. But what is noticeable about it is that it requires a lower peak in interest rates each time to prick the bubble and trigger the crash. And it requires ever lower rates to get the next bubble going again each time.

Alfonso Peccatiello did a better job of explaining this than I can on Twitter:

Peak in Fed Funds before the “something breaks” moment:

2000: 6.50% (Dot-Com)

2008: 5.25% (Real Estate)

2018: 2.50% (Credit/Risk Sentiment)

2023: 4.00% priced in

And indeed quite a few things are breaking already.

So, when bonds?

Source: Alf @MacroAlf

Alfonso only mentioned the last few bubbles which popped, and the peak in interest rates that popped them going back to 2000. The same story applies right back to 1980, but nobody remembers the Asian Financial Crisis (1997-8) or the Savings and Loan Crisis (late 1980s).

But the crucial point is that it takes ever lower interest rate increases to pop the bubble. The reason why is simple. The more debt, the less rate hikes it takes to dish out the equivalent amount of pain. As borrowers are finding out right now…

Another metric to consider is the low starting base. This was wonderfully explained by the most high-profile victim of the current rate hiking cycle, Cathie Wood, who invests other people’s money in tech companies:

Volcker doubled the Fed funds from 10% to 20% in less than a year. Powell’s Fed has increased the funds rate 7-fold in the last year and is pointing to another double from here. Its moves already are more draconian than Volcker’s.

Source: @CathieDWood

As I recently pointed out to the real estate agents trying to sell me a house, central banks have raised interest rates by an order of magnitude. Of course, this is only true because the starting base was so ridiculously low.

From 0.1% to 1% is a ten-fold increase, for example. Which only sounds exciting because 0.1% is so low.

And yet, there is some truth to the story too. People who borrowed at ridiculously low rates do feel that surge as rates rise in multiples. That is especially true for interest-only borrowers. Like companies and governments that never repay their debt, they just keep borrowing more to repay old debt as it comes due.

Anyway, more debt and a low base means that the pain of monetary policy is felt more acutely. Therefore, it doesn’t take as much of a rate hike to pop the bubble.

Now, and this is what Alfonso was getting at, the financial markets are pricing in interest rate hikes to 4% in the US. This would break the cycle of ever lower interest rates popping the bubble in dramatic fashion. It’d be far higher than what popped bubbles in 2018, triggering the worst stock market plunge to that date since the 2008 meltdown.

Alfonso’s real point is that he doesn’t expect interest rates to ever make it anywhere near 4%. He expects something to pop well before then. If it hasn’t done so already.

If something does implode somewhere in the financial system, (or already has done so, and there is no shortage of contenders for what might implode), then central bankers are likely to panic and return to their old playbook. That playbook involves cutting interest rates and quantitative easing (QE – the creation of money out of thin air to buy bonds). The playbook does not involve what has been happening in the recent past – the increasing of rates and quantitative tightening (the opposite of QE).

This would be good for bonds as an investment. Their prices rise as interest rates fall and central banks start buying them up again.

I agree with Alfonso’s analysis. And I think it’s so likely to play out that way that I’m already wondering what happens to inflation in that scenario.

Usually, in a financial crisis, inflation plunges into deflation, which is why central bankers act big to save us all. At least, that’s what they say.

I suspect they are really interested in saving their future and former employers on Wall Street and in the City – that was the originally intended purpose of central banks, after all.

But this is my really important take-away for you from today’s Fortune & Freedom: The motivations for why central bankers take action during a crisis might suddenly matter a lot. That is because they may be forced to choose between saving the financial system and continuing to hike rates because of inflation.

You see, this time, inflation might not come down much when the bubble pops. That is because inflation is being driven, to a great extent, by shortages and disruptions of various sorts.

The irony of this possible future situation is that, if central bankers do decide to take their official job seriously and prioritise inflation over saving their buddies in the local financial district, then they might be hiking rates to no avail. That is why Snoop Dogg could be as effective as Bank of England governor as anyone else.

You can’t fix a supply crisis with tighter monetary policy after all. But you can make it worse…

Tyler Durden Wed, 06/29/2022 - 03:30
Published:6/29/2022 2:51:40 AM
[Markets] Scotland Set to Hold 2nd Independence Referendum As Sturgeon Prepares To Fight Johnson Veto Scotland Set to Hold 2nd Independence Referendum As Sturgeon Prepares To Fight Johnson Veto

Scotland is set to hold its second independence referendum, Scottish first minister Nicola Sturgeon announced Tuesday, while at the same time proposing a future date of October 19, 2023 for her country to hold a new vote on a potential break from the United Kingdom.

Sturgeon's Scottish National Party campaigns on a platform for Scotland to declare independence from the UK, and she's been pushing for another referendum on the question: "Should Scotland be an independent country?" In 2014, the 32 council areas of Scotland voted "no" - with the "No" side winning at 2,001,926 votes over 1,617,989 for "Yes".

Via The Herald

Sturgeon said this week, "??What I am not willing to do, what I will never do, is allow Scottish democracy to be a prisoner of Boris Johnson or any prime minister" - in reference to British constitutional rules that stipulate consent must be gained from the UK prime minister to proceed with the vote. Johnson has been on record as saying he would decline such a request.

She further penned a letter to PM Johnson, saying, "In a voluntary union of nations where the people of one nation have voted in elections to give a mandate for a referendum, it is, in my view, unacceptable democratically that the route to a referendum has to be via the courts rather than by co-operation between the UK and Scottish Governments," Sturgeon said the letter. 

And according to more details via EuroNews:

In a statement to the Scottish Parliament in Edinburgh on Tuesday, Sturgeon said she had written to Boris Johnson indicating she was "ready and willing" to negotiate a so-called Section 30 order with him, which gives the Scottish government temporary powers to hold a referendum. This was how the 2014 independence referendum was held. 

Johnson is likely only to continue to stand firm against granting a section 30 order while watching Scottish politics fragment over the "partisan" push for independence. 

The main opposition party, the Scottish Conservatives, and its leader Douglass Ross has slammed the "pretend poll" in which his party will refuse to take part. "This is becoming a parliament that doesn't get anything done on people's real priorities," Ross said, who represents a region of the Scottish Highlands. 

"A parliament that only exists to further the Scottish National Party's interests... a do-nothing parliament with a first minister obsessed with another referendum at all costs," he added.

Thus the political road and fight to a second vote appears set to be a long haul, after the first was defeated by almost half a million votes in a country with only some 5.5 million people.

Tyler Durden Wed, 06/29/2022 - 02:45
Published:6/29/2022 2:00:39 AM
[Markets] Ukrainian Elite Unit Claims Sabotage Ops Inside Russia Ukrainian Elite Unit Claims Sabotage Ops Inside Russia

Authored by Kyle Anzalone via The Libertarian Institute, 

The Times spoke with an intelligence officer and two sergeants in the Ukrainian special forces elite Shaman battalion who claimed Kiev had conducted covert operations inside Russia. The officers said they successfully carried out raids involving explosions to sow confusion and dissent among Russians. 

One of the special operations officers explained the missions involved sabotage and explosives. "The most interesting missions are working behind enemy lines; planting explosives behind the front lines, beyond the border," he said. The second sergeant indicated the Shaman battalion’s raid behind enemy lines was successful.

He claimed, "The Russians don’t know what happened, they often can’t believe we were there."

The officers gave few details about their operations to The Times. There have been several explosions inside Russia since President Valdimir Putin ordered the invasion of Ukraine on February 24. Kiev has not officially claimed responsibility for any attacks inside of Russia but has hinted it might be behind some of the explosions

During the war in Afghanistan, the "Shaman battalion" fought with US and UK special forces. A senior Ukrainian intelligence official said, "We send them [Shaman battalion] to take on the most difficult tasks because they’re the best and the bravest. They are hugely important to the war effort.”

The sergeants explain how their units have been deployed in several battles inside Russia and Ukraine. However, they say their forces and supplies are diminishing as the fight in Ukraine’s eastern Donbas region drags on. One of the officers told The Times that half of their friends have been killed in recent weeks. 

An intelligence official confirmed that Ukrainian soldier casualties are on the rise. "Ukraine’s casualty rate, far lower than Russia’s in the first weeks of the war, is now approaching parity with the invading force,” he said. 

Tyler Durden Wed, 06/29/2022 - 02:00
Published:6/29/2022 1:41:21 AM
[Markets] Dow Jones Newswires: NIO shares extend losses as Chinese EV maker denies short-seller report Grizzly Research said the Chinese electric-vehicle maker is playing "accounting games to inflate revenue and boost net income margins to meet targets."
Published:6/29/2022 1:41:21 AM
[Markets] Escobar: Behind The Tin Curtain - BRICS+ Vs NATO/G7 Escobar: Behind The Tin Curtain - BRICS+ Vs NATO/G7

Authored by Pepe Escobar via The Cradle,

The west is nostalgically caught up with outdated 'containment' policies, this time against Global South integration. Unfortunately for them, the rest of the world is moving on, together.

Once upon a time, there existed an Iron Curtain which divided the continent of Europe. Coined by former British Prime Minister Winston Churchill, the term was in reference to the then-Soviet Union’s efforts to create a physical and ideological boundary with the west. The latter, for its part, pursued a policy of containment against the spread and influence of communism.

Fast forward to the contemporary era of techno-feudalism, and there now exists what should be called a Tin Curtain, fabricated by the fearful, clueless, collective west, via G7 and NATO: this time, to essentially contain the integration of the Global South.

BRICS against G7

The most recent and significant example of this integration has been the coming out of BRICS+ at last week’s online summit hosted by Beijing. This went far beyond establishing the lineaments of a ‘new G8,’ let alone an alternative to the G7.

Just look at the interlocutors of the five historical BRICS (Brazil, Russia, India, China, South Africa): we find a microcosm of the Global South, encompassing Southeast Asia, Central Asia, West Asia, Africa and South America – truly putting the “Global” in the Global South.

Revealingly, Russian President Vladimir Putin’s clear messages during the Beijing summit, in sharp contrast to G7 propaganda, were actually addressed to the whole Global South:

  • Russia will fulfill its obligations to supply energy and fertilizers.

  • Russia expects a good grain harvest – and to supply up to 50 million tons to world markets.

  • Russia will ensure passage of grain ships into international waters even as Kiev mined Ukrainian ports.

  • The negative situation on Ukrainian grain is artificially inflated.

  • The sharp increase in inflation around the world is the result of the irresponsibility of G7 countries, not Operation Z in Ukraine.

  • The imbalance of world relations has been brewing for a long time and has become an inevitable result of the erosion of international law.

An alternative system

Putin also directly addressed one of the key themes that the BRICS have been discussing in depth since the 2000s — the design and implementation of an international reserve currency.

“The Russian Financial Messaging System is open for connection with banks of the BRICS countries.”

“The Russian MIR payment system is expanding its presence. We are exploring the possibility of creating an international reserve currency based on the basket of BRICS currencies,” the Russian leader said.

This is inevitable after the hysterical western sanctions post-Operation Z; the total de-dollarization imposed upon Moscow; and increasing trade between BRICS nations. For instance, by 2030, a quarter of the planet’s oil demand will come from China and India, with Russia as the major supplier.

The “RIC” in BRICS simply cannot risk being locked out of a G7-dominated financial system. Even tightrope-walking India is starting to catch the drift.

Who speaks for the ‘international community?’

At its current stage, BRICS represent 40 percent of world population, 25 percent of the global economy, 18 percent of world trade, and contribute over 50 percent for world economic growth. All indicators are on the way up.

Sergey Storchak, CEO of Russian bank VEG, framed it quite diplomatically: “If the voices of emerging markets are not being heard in the coming years, we need to think very seriously about setting up a parallel regional system, or maybe a global system.”

A “parallel regional system” is already being actively discussed between the Eurasia Economic Union (EAEU) and China, coordinated by Minister of Integration and Macroeconomics Sergey Glazyev, who has recently authored a stunning manifesto amplifying his ideas about world economic sovereignty.

Developing the ‘developing world’

What happens in the trans-Eurasian financial front will proceed in parallel with a so far little known Chinese development strategy: the Global Development Initiative (GDI), announced by President Xi Jinping at the UN General Assembly last year.

GDI can be seen as a support mechanism of the overarching strategy – which remains the Belt and Road Initiative (BRI), consisting of economic corridors interlinking Eurasia all the way to its western peninsula, Europe.

At the High-level Dialogue on Global Development, part of the BRICS summit, the Global South learned a little more about the GDI, an organization set up in 2015.

In a nutshell, the GDI aims to turbo-charge international development cooperation by supplementing financing to a plethora of bodies, for instance the South-South Cooperation Fund, the International Development Association (IDA), the Asian Development Fund (ADF), and the Global Environment Facility (GEF).

Priorities include “poverty reduction, food security, COVID-19 response and vaccines,” industrialization, and digital infrastructure. Subsequently, a Friends of the GDI group was established in early 2022 and has already attracted over 50 nations.

BRI and GDI should be advancing in tandem, even as Xi himself made it clear during the BRICS summit that “some countries are politicizing and marginalizing the developmental agenda by building up walls and slapping crippling sanctions on others.”

Then again, sustainable development is not exactly the G7’s cup of tea, much less NATO’s.

Seven against the world

The avowed top aim of the G7 summit in Schloss Elmau at the Bavarian Alps is to “project unity” – as in the stalwarts of the collective west (Japan included) united in sustainable and indefinite “support” for the irretrievably failed Ukrainian state.

That’s part of the “struggle against Putin’s imperialism,” but then there’s also “the fight against hunger and poverty, health crisis and climate change,” as German chancellor Scholz told the Bundestag.

In Bavaria, Scholz pushed for a Marshall Plan for Ukraine – a ludicrous concept considering Kiev and its environs might as well be reduced to a puny rump state by the end of 2022. The notion that the G7 may work to “prevent a catastrophic famine,” according to Scholz, reaches a paroxysm of ludicrousness, as the looming famine is a direct consequence of the G7-imposed sanctions hysteria.

The fact that Berlin invited India, Indonesia, South Africa and Senegal as add-ons to the G7, served as additional comic relief.

The Tin Curtain is up

It would be futile to expect from the astonishing collection of mediocrities “united” in Bavaria, under de facto leader of the European Commission (EC), Fuehrer Ursula von der Leyen, any substantial analysis about the breakdown of global supply chains and the reasons that forced Moscow to reduce gas flows to Europe. Instead, they blamed Putin and Xi.

Welcome to the Tin Curtain – a 21st century reinvention of the Intermarium from the Baltic to the Black Sea, masterminded by the Empire of Lies, complete with western Ukraine absorbed by Poland, the Three Baltic Midgets: Bulgaria, Romania, Slovenia, Czechia and even NATO-aspiring Sweden and Finland, all of whom will be protected from “the Russian threat.”

An EU out of control

The role of the EU, lording over Germany, France and Italy inside the G7 is particularly instructive, especially now that Britain is back to the status of an inconsequential island-state.

As many as 60 European ‘directives’ are issued every year. They must be imperatively transposed into internal law of each EU member-state. In most cases, there’s no debate whatsoever.

Then there are more than 10,000 European ‘rulings,’ where ‘experts’ at the European Commission (EC) in Brussels issue ‘recommendations’ to every government, straight out of the neoliberal canon, regarding their expenses, their income and ‘reforms’ (on health care, education, pensions) that must be obeyed.

Thus elections in every single EU member-nation are absolutely meaningless. Heads of national governments – Macron, Scholz, Draghi – are mere executants. No democratic debate is allowed: ‘democracy,’ as with ‘EU values,’ are nothing than smokescreens.

The real government is exercised by a bunch of apparatchiks chosen by compromise between executive powers, acting in a supremely opaque manner.

The EC is totally outside of any sort of control. That’s how a stunning mediocrity like Ursula von der Leyen – previously the worst Minister of Defense of modern Germany – was catapulted upwards to become the current EC Fuhrer, dictating their foreign, energy and even economic policy.

What do they stand for?

From the perspective of the west, the Tin Curtain, for all its ominous Cold War 2.0 overtones, is merely a starter before the main course: hardcore confrontation across Asia-Pacific – renamed “Indo-Pacific” – a carbon copy of the Ukraine racket designed to contain China’s BRI and GDI.

As a countercoup, it’s enlightening to observe how the Chinese foreign ministry now highlights in detail the contrast between BRICS – and BRICS+ – and the imperial AUKUS/Quad/IPEF combo.

BRICS stand for de facto multilateralism; focus on global development; cooperation for economic recovery; and improving global governance.

The US-concocted racket on the other hand, stands for Cold War mentality; exploiting developing countries; ganging up to contain China; and an America-first policy that enshrines the monopolistic “rules-based international order.”

It would be misguided to expect those G7 luminaries gathered in Bavaria to understand the absurdity of imposing a price cap on Russian oil and gas exports, for instance. Were that to really happen, Moscow will have no problems fully cutting energy supply to the G7. And if other nations are excluded, the price of the oil and gas they import would drastically increase.

BRICS paving the way forward

So no wonder the future is ominous. In a stunning interview to Belarus state TV, Russian Foreign Minister Sergei Lavrov summarized how “the west fears honest competition.”

Hence, the apex of cancel culture, and “suppression of everything that contradicts in some way the neoliberal vision and arrangement of the world.” Lavrov also summarized the roadmap ahead, for the benefit of the whole Global South:

“We don’t need a new G8. We already have structures…primarily in Eurasia. The EAEU is actively promoting integration processes with the PRC, aligning China’s Belt and Road Initiative with the Eurasian integration plans. Members of the Association of Southeast Asian Nations are taking a close look at these plans. A number of them are signing free trade zone agreements with the EAEU. The Shanghai Cooperation Organization is also part of these processes… There is one more structure beyond the geographic borders of Eurasia.”

“It is BRICS. This association is relying less and less on the Western style of doing business, and on Western rules for international currency, financial and trade institutions. They prefer more equitable methods that do not make any processes depend on the dominant role of the dollar or some other currency. The G20 fully represents BRICS and five more countries that share the positions of BRICS, while the G7 and its supporters are on the other side of the barricades.”

...

“This is a serious balance. The G20 may deteriorate if the West uses it for fanning up confrontation. The structures I mentioned (SCO, BRICS, ASEAN, EAEU and CIS) rely on consensus, mutual respect and a balance of interests, rather than a demand to accept unipolar world realities.”

Tin Curtain? More like Torn Curtain.

Tyler Durden Wed, 06/29/2022 - 00:05
Published:6/29/2022 12:41:18 AM
[Markets] Dow Jones Newswires: Tepco shares surge as Japan’s heat wave stretches power grid The share-price rise comes as Tokyo's electricity grid is under increasing strain due to higher cooling and air-conditioning demand amid a heat wave.
Published:6/29/2022 12:41:18 AM
[Markets] Gas Prices Squeezing Americans As More Rate Biden's Economy "Poor" Gas Prices Squeezing Americans As More Rate Biden's Economy "Poor"

By Lydia Saad of Gallup

Two-thirds of Americans say recent increases in the price of gas are causing them hardship, which is up from 52% feeling this financial pinch in April. Although more Americans say they are experiencing "moderate" rather than "severe" hardship, the percentage describing the hardship as severe has risen from 14% to 22%.

The latest results are based on a June 1-20 Gallup survey. The 67% experiencing hardship is among the highest levels Gallup has found when asking this question at other times of rising gas prices since 2000. The last time it was at this level was in May 2011.

Americans' reaction to gas prices reflects the relatively sharp increase in pump prices this year, rising by nearly a dollar a gallon in recent months and now averaging close to $5.00 per gallon nationally. Americans were paying just over $2.00 a gallon, on average, at the start of 2021.

Experiencing hardship due to gas prices is, naturally, strongly related to household income.

  • Eight in 10 adults in lower-income households -- those earning less than $40,000 per year -- say the rise in gas prices has caused them financial hardship, with 40% saying it has been severe.

  • Nearly as many households making between $40,000 and $99,999 -- 73% -- report a hardship, although just 20% say it has been severe.

  • Half of households earning $100,000 or more report a hardship due to gas prices, with 12% calling it severe.

Majorities Say Summer Driving and Vacations Being Affected

More than six in 10 Americans say the price of gas has caused them to drive less this summer than they might have otherwise. This exceeds the percentages reporting they were curtailing their driving at other times of high gas prices, including in 2000, 2001, 2004, 2005 and 2018. Gallup did not ask this question during the period of high gas prices in 2008.

Fifty-five percent of Americans also say the price of gas is causing them to alter their summer vacation plans. The one time Gallup asked this previously, in May 2005, 46% reported altering their plans. At the same time, slightly fewer than now, 59%, said rising gas prices were causing financial hardship.

Gallup Economic Confidence Index Now Lowest Since 2009

As gas prices have become more burdensome for Americans, their view of the U.S. economy has continued to dim, as indicated by Gallup's Economic Confidence Index (ECI). The index, which is a summary of Americans' ratings of current economic conditions and outlook for the economy, has sunk 13 points over the past month to -58. The index has a theoretical range from +100 if all respondents describe the economy in positive terms and think it's improving to -100 if all describe it in negative terms and think it's worsening.

Today's -58 ECI score represents a substantially negative skew in public opinion about the economy and is the lowest measured since a -64 reading in February 2009. At the time, the country was still embroiled in the 2007-2009 recession and confidence was starting to recover after hitting the all-time low of -72 in October 2008.

The latest drop in Gallup's ECI score reflects harsher assessments of the economy on both aspects of the index:

  • The percentage of Americans calling current conditions "poor" has risen eight percentage points in June to 54% -- the first time a majority has called conditions poor since 2009. Just 11% say conditions are "good" and 34% "only fair." Less than 1% describe them as "excellent."

  • A striking 85% in June say the economy is getting worse, up from 77% in May and only two points shy of the record high on this, from June 2008.

Perceptions of Nation's Most Important Problem Are Steady

Currently, 40% of U.S. adults mention some aspect of the economy when asked to name the country's chief problem, including 18% mentioning the high cost of living or inflation and 5% citing gas prices explicitly. Another 13% say the economy in general is the top problem, and 1% say it's the "recession" among a handful of other aspects of the economy mentioned by no more than 1% for each.

A unique aspect of Americans' current attitudes about the nation is that their top-of-mind mentions of the economy are not nearly as high as would be expected from their explicit ratings that compose the ECI.

While up sharply from 23% a year ago and 19% in June 2020, current net economic mentions are far below the 70% and higher level seen in 2008 and 2009, when economic confidence was similar to or just slightly worse than today. Fewer name economic problems today than did so between 2010 and 2014, when economic confidence was significantly better than it is now.

The top-named noneconomic problem is the government, cited by 18% of Americans, which ties with inflation as the top-named specific problem overall. The government has consistently ranked among the top two mentions since 2016.

Eight percent this month, up from 1% in May, mention guns or gun control as the most important problem facing the country, reflecting Americans' focus on the issue in the aftermath of mass shootings in Buffalo, New York, and Uvalde, Texas. This is the highest percentage mentioning guns since August 2019, after back-to-back mass shootings in El Paso, Texas, and Dayton, Ohio.

Another 2% this month mention school shootings, bringing overall concern about gun violence to 10%. That is close to the record-high 13% recorded in March 2018, following the Parkland, Florida, high school shooting.

Other noneconomic issues mentioned by at least 3% of Americans include crime (6%), immigration (5%), lack of unity in the country (5%), ethical/moral decline (4%), race relations (3%) and poverty/homelessness (3%).

Tyler Durden Tue, 06/28/2022 - 21:25
Published:6/28/2022 8:30:48 PM
[Markets] Get Woke, Go Broke: Hollywood Is Dying And They Deserve It Get Woke, Go Broke: Hollywood Is Dying And They Deserve It

Hollywood is dying, their various partners are dying, and they brought it on themselves.  The entertainment and corporate news industry has long had a cringe inducing leftist bias, but for many years their propaganda and their motivations remained comparatively subtle.  Then, something happened.  Maybe it was the election of Donald Trump, maybe it was a unified decision within corporate culture to take the mask completely off and reveal the true ugliness underneath, or, maybe it was just pure arrogance.  Whatever the cause, Hollywood and all the related appendages of the tinsel town religion suddenly turned openly militant and the zealotry was palpable.  

This is a dynamic that had been developing for some time, but truly became an international phenomena around 2016 onward.  It's important to note that also around this same time there was a burgeoning revelation among conservatives and many moderates that our popular culture had been overrun by people with an agenda, and they did not have our best intentions at heart.  We had been lax in our vigilance.  Many thought that pop culture was “stuff for children” and that the real fight was in politics.  They were wrong.   

The first group that really took notice and spoke up was video game consumers.  This led to open opposition to leftists hijacking the industry and spreading like a cancer into video games journalism.  And, of course, as soon as people expressed distrust the leftists attacked them as “racists, homophobes, bigots, sexists and misogynists.”  A typical gaslighting response that is all too familiar today.  Known as “Gamergate,” leftists to this day still rabidly froth at the mouth over the mere mention of “integrity in video games journalism.”  Leftists really hate it when you expose them.   

There have been many other moments of exposure since 2016, from the negative reactions to Comicsgate, feminist Ghostbusters, feminist Star Wars, woke Star Trek, woke Dr. Who, woke Batwoman, woke He-Man, woke Lord of the Rings, critical race theory in television, trans, LGBT and CRT propaganda in children's programming, etc.  It's becoming endless.  Around 95% of all popular entertainment contains multiple layers of leftist messaging.  The market is utterly saturated with it.

This kind of overwhelming propaganda is familiar.  It is a methodology used in communist regimes and authoritarian governments throughout the 20th century including the Soviet Union and Mao's China, and it almost slipped right under the noses of the majority of Americans and western nations.  The goal is simple:  Make EVERYTHING political.  

Want to escape the real world for a couple of hours into a fantasy land?  Want to see daring tales of classical heroes and villains?  Want to experience history as it actually happened, or at least very close to the historical record?  Are you looking for an archetypal experience, a mythological exploration of the human mind or the human heart – something that almost anyone could relate to?  Sorry, you're not allowed to escape.  You're not allowed to examine universal ideas and ideals.  Every single story must be told within the narcissistic framework (or prison) of modern political ideology.  Even in stories set a long time ago in a galaxy far far away.

The extreme political left wants you to think about their beliefs and viewpoints all day everyday.  They want you to assume that their ideology is the ONLY ideology.  They want you to assume that the “majority” of the population thinks as they think.  It's called manufacturing consensus.

The problem is, the public is aware of the agenda and they are looking for the subliminal and not-so-subliminal messages.  They see the narratives and they are getting sick and tired of it.  Thus, the mantra of “Get Woke, Go Broke” was born.  

The more the leftists in media double down on inserting their politics into every single product, the more broke they get.  Case in point, the continuing decline of the largest media entities in the world.  

The streaming giant Netflix is now imploding, with a multitude of failed woke projects, the company is dealing with a recent subscriber loss of 200,000 and a projected subscriber loss of over 2 million by next month.  The company actually began to falter last year, despite covid lockdowns in many states that should have encouraged people to buy into streaming services as a means to deal with boredom.  Beyond that, the Netflix stock price collapsed from almost $700 a share to $190 a share in less than six months.   

The company will never openly admit it, but woke programming is mostly to blame.  Netflix released an internal memo to employees last month indicating that they would be producing more content for consumers of differing political views and even suggested that any employee that has a problem with that should quit.  A major problem within woke companies is the attitude of low level, low value and low intelligence employees thinking that they should be in charge.  Now it appears that Netflix is trying to clean house, with hundred of people fired in the past couple of weeks.  But, it's too little too late.       

Disney is another huge example that Get Woke, Go Broke is becoming a social rule.  The company is rife with leftist cultism to the point that it avidly defended the sexualization of children in public schools.  Disney's attacks on Florida and its stated goal of disrupting the legally ratified and widely supported Anti-Grooming Bill has revealed the disgusting underbelly of the conglomerate for all to see.  Disney wants your kids to be exposed to sexual discussions and mentally ill teachers looking for psychological validation.  

When you target people's kids, even the normies start to take notice.  

Disney has now suffered multiple box office flops and streaming network failures, from Ms. Marvel, to Obi-Wan to Lightyear, the media giant is crumbling.  You can only put so many CRT and LGBT messages into your movies before it starts to add up to box office poison.  And, you can't declare fealty to the leftist agenda as a company and then expect the majority of Americans, who are not extreme leftists, to give you their hard earned money.

Disney's stock price has collapsed this past year from $200 down to $90.  The company is currently relying on continued traffic through its theme parks to sustain it, but with gas prices inflating to record highs it is unlikely that park revenues and tourist dollars will continue to levitate.  

One movie that did do extremely well this year from every angle including from a budget standpoint was Top Gun: Maverick.  Tom Cruise's love letter to fans of the original film had a budget of $170 million and has grossed over $1 billion globally so far, crushing every other competing film including Disney's woke film 'Lightyear.'  With zero leftist propaganda injected into the Maverick story and a perfect balance of fan appreciation and nostalgia, proponents of the war against the woke cult have been proven correct.  Audiences want nothing to do with progressive politics in their entertainment.  It is a fact.

What leftists seem to have forgotten is they don't own the consumer.   They can pump out an endless array of woke media, but they can't force the public to buy their products.  We own them.  They are the consumer's bitch.  Activism in entertainment might be viable at times, but the market has spoken when it comes to “woke,” and the market says no. 

Tyler Durden Tue, 06/28/2022 - 21:05
Published:6/28/2022 8:06:40 PM
[Markets] Houseboats Trapped On Lake Mead As Water Levels Fall Closer To "Dead Pool" Status  Houseboats Trapped On Lake Mead As Water Levels Fall Closer To "Dead Pool" Status 

Lake Mead's water levels are plunging so fast that houseboats on the nation's largest reservoir are getting stuck because there's not enough water in some parts. 

One houseboat was stranded for three weeks after the water quickly dropped earlier this month. Thankfully, YouTubers — Sin City Outdoors of Las Vegas and HeavyDSparks of Salt Lake City — came out with a military jet boat and documented when they pulled the beached houseboat back into the water. 

Dave Sparks and his team arrived Thursday and secured permission from the National Park Service to conduct the recovery operation of the houseboat. 

Persistent drought conditions have pushed Lake Mead to the lowest point since the artificial reservoir was filled nearly a century ago. Water levels have been falling this year, down to 1,043 feet above sea level -- and 148 feet from "dead pool," which is the point water would no longer pass through Hoover Dam to supply California, Arizona, and Mexico. 

A graph might not do justice to visualizing just how fast the water level has fallen. So here are three pictures of a sunken speedboat in the lake and the corresponding date. Just in May, the boat was partially submerged. Now there's no water. 

Other YouTubers have headed to Lake Mead as well because they know the apocalyptic scenes of a dried-out lake would generate views. 

Here's more footage of Lake Mead -- maybe the body of water (or whatever is left) should be called Desert Mead. 

"As the lake continues to fall the Lake Mead Marina finds itself in a very serious situation. Can it be moved farther out? Other Marinas have already been closed and some of the harbors look like the apocalypse," YouTuber The Other Me said. 

Some say it could only be a matter of weeks before boat ramps become inaccessible.  

North America's largest artificial reservoir appears to be in deep trouble. 

Tyler Durden Tue, 06/28/2022 - 20:25
Published:6/28/2022 7:45:37 PM
[Markets] : Inflation has hit women more ‘acutely.’ Here’s why. Women’s participation in the labor force dropped early in the pandemic and still hasn’t returned to pre-pandemic levels.
Published:6/28/2022 7:00:40 PM
[Markets] Japanese Businessman Loses Entire City's Personal Data After Passing Out Drunk On A Tuesday Night Japanese Businessman Loses Entire City's Personal Data After Passing Out Drunk On A Tuesday Night

Who hasn't gone all out for the random Tuesday night bender and hit the sake a little too hard after a tough start to the work week? Plenty of us.

When narrowing down that field to the workers who have also passed out on the street and lost a flash drive containing the personal information of nearly 500,000 people, the herd thins out a little bit. 

But according to Vice, that's exactly what happened to one Japanese businessman in his 40s this past week. He ventured out for drinks in Osaka prefecture’s industrial Amagasaki city before waking up, hours later, on the street.

His bag - containing his USB drive with the sensitive information he was carrying around - was missing. The drive was encrypted, the report says, and contained the personal data of Amagasaki’s 465,177 residents.

Photo: Vice

Among the information included about the residents was dates of birth, addresses, bank account numbers, and tax details. The man was working for a company called BIPROGY, who was hired by the local government to seek out who was eligible for tax exemptions. 

The company put out a statement this week, telling the local press: “We deeply apologize to the citizens of Amagasaki, the city of Amagasaki, and all concerned for the inconvenience caused by the loss of important information entrusted to us.”

The drive was eventually found on Friday, but not before angering many of the city's residents. The local city office received more than 30,000 calls in one day related to the incident, the report says. 

And who says there's no happy endings? Vice, citing NHK, said the employee found his bag and the drive "near an apartment building he vaguely recalls passing by during his night out". 

If you think Tuesday's bender was bad, just wait for the weekend...

Tyler Durden Tue, 06/28/2022 - 19:45
Published:6/28/2022 7:00:40 PM
[Markets] Dow Jones Futures: Market Rally Flashes Very Bearish Signal; 5 Stocks To Watch Dow Jones futures tilted higher overnight, along with S&P 500 futures and Nasdaq futures. The stock market rally suffered sharp losses Tuesday, with the Nasdaq and S&P 500 breaking below a key level. Economic reports revived recession and inflation fears. Published:6/28/2022 4:22:35 PM
[Markets] : FDA advisers say the U.S. needs updated COVID-19 boosters to fight omicron A new COVID-19 booster strategy should focus on developing new shots that better protect against omicron and its subvariants.
Published:6/28/2022 4:22:34 PM
[Markets] FDA advisers recommend updating COVID-19 boosters to fight omicron FDA advisers recommend updating COVID-19 boosters to fight omicron Published:6/28/2022 4:22:34 PM
[Markets] NYC Mayor Eric Adams "Shocked" To Find Out "Just How Bad" The City Is NYC Mayor Eric Adams "Shocked" To Find Out "Just How Bad" The City Is

How long has Eric Adams been mayor now? You'd think at some point he would have taken the time to have a tour of his own city, but it looks like that may not have ever been the case - until he rode the subways for 3 hours last week. 

That's because the Mayor was reportedly “shocked” to learn just “how bad [New York City] is," according to exclusive comments he made to the New York Post this week. 3 hours on the subway last week was apparently all it took. 

He said he was taken back by the poor “deployment of resources”. “Let me tell you something: When I started looking into this, I was shocked at how bad this place is,” he later commented to the Post

Adams started to get a glimpse at how poorly run the city was when reviewing plans his first week in office, the report says.

“It was probably the third — third or fourth week in January. I spent a lot of time in the office," he said. “And I started peeling back layers and what it started to unveil to me is how we just had this good shell, but underneath — it’s bad.”

Crime skyrocketed in the final years of deBlasio's tenure as NYC's Mayor. As the Post notes, grand larcenies and auto thefts have skyrocketed 50% and 48% and robberies are up about 40%.

Speaking about the NYPD, Adams commented: “We have not utilized this amazing agency and all our skills.”

“You know, they hold onto this one thing,” he said, criticizing his predecessors like Bill deBlasio, for focusing on a sole project instead of improving the city as a whole. “That’s why when people try to say, ‘OK, Eric, you know, what is your one or two things?,’ I’m saying: To fix this mess!”

Adams said his first initiative would be to crack down on rule breaking in the subways and stop homeless people from living in stations. 

You have to start somewhere, we guess...

Tyler Durden Tue, 06/28/2022 - 17:05
Published:6/28/2022 4:22:34 PM
[Markets] Stocks Hit Fresh Intraday Lows As Nasdaq Falls 2.3%; Energy Stocks Show Strength The Nasdaq composite held a loss of over 2% as stocks fell under pressure. But energy stocks show strength despite a difficult market. Published:6/28/2022 1:25:38 PM
[Markets] Here is what it takes for true contrarian investors to outsmart the stock market Here is what it takes for true contrarian investors to outsmart the stock market Published:6/28/2022 1:25:38 PM
[Markets] Goldman Finally Admits "Large Cuts To Earnings" Are Imminent Goldman Finally Admits "Large Cuts To Earnings" Are Imminent

After months of pretending that it was not wrong all along in the past year with its overly optimistic economic forecasts (based on catastrophically wrong "transitory inflation" models) and its ridiculous S&P price target (as high as 5,100 just a few months ago) distributed by the bank's head of US equity research coverage David Kostin (whose work product is not to be confused with Goldman's far more credible and accurate flow desk research which is only available to ZH professional subs), Goldman finally threw in the towel and after tongue-in-cheek "suggesting" that the S&P would drop to 3,150 in case of a recession as a result of collapsing forward multiples - which of course, will never happen, you see, it's just a hypothetical because Goldman's entire ultra-bullish narrative would come crashing down and make a mockery of all Goldman forecasts, including this one...

... Overnight Goldman also folded on forward earnings, echoing what Morgan Stanley's Michael Wilson has been saying for months, with Goldman strategist Ben Snider writing that consensus forecasts for S&P 500 earnings and margins for 2023 "seem too optimistic and could further pressure equity prices as the 'E' falls, suggesting current P/E multiples are actually higher than they appear."

In "Consensus profit margin forecasts have further to fall" Snider reveals that finally, Goldman's model points to a 70bps EBIT margin decline next year for the typical S&P 500 company in the bank's non-recessionary base case...

... and a 130 bps compression in a recession scenario...

... even as all other analyst estimates show the median stock's EBIT margin expanding by 60 bps to a new record high next year.

What could pressure margins? "Tightening financial conditions, persistent input cost pressures, and slowing revenue growth", etc, etc.

What does this mean? While the answer is pretty clear, Goldman's Chris Hussey narrates as follows, "If our model proves to be correct, we may see large cuts to earnings ahead. Assuming no change in expected revenues, margin compression alone could reduce the median stock's expected 2023 EPS growth from +10% to 0%."

Finally, here is how Goldman suggests you position for the coming earnings crash: " We continue to recommend investors focus on stocks where they can be relatively confident in the forward trajectory of earnings, including firms with stable growth and the Health Care sector, which has grown earnings in each of the last several recessions." Translation: buy energy until such time as the Biden admin sends the US into the 2nd great depression with oil rising above $200, at which point all bets are off.

While there is more in the full Goldman note, we won't bore readers with it - it should be pretty obvious for those who have been reading this website...

... but those hell bent on reading it can find it in the usual place (for professional subscribers).

Tyler Durden Tue, 06/28/2022 - 14:11
Published:6/28/2022 1:25:38 PM
[Markets] Project Syndicate: Green hydrogen is the ultimate answer to high gas prices, climate change, and saber-rattling dictators This zero-emissions energy source promises to democratize green energy for all countries on Earth.
Published:6/28/2022 1:25:38 PM
[Markets] Rabo: The Market Endlessly Wonders How Long Until We Cut Rates And Re-start QE Again Rabo: The Market Endlessly Wonders How Long Until We Cut Rates And Re-start QE Again

By Michael Every of Rabobank

Abby Normal

Dr. Frankenstein: “Igor... May I speak to you for a moment?”

Igor: “Of course.”

Dr. Frankenstein: “Sit down, won't you?”

Igor: “Thank you.”

Dr. Frankenstein: “No, no. Up here.”

Igor: “Thank you.”

Dr. Frankenstein: “Now, that brain that you gave me... was it Hans Delbruck's?”

Igor: “No.”

Dr. Frankenstein: “Ah! Good. Would you mind telling me whose brain I did put in?”

Igor: “Then you won't be angry?”

Dr. Frankenstein: “I will *not* be angry.”

Igor: “Abby someone.”

Dr. Frankenstein: “Abby someone... Abby who?”

Igor: “Abby Normal.”

Dr. Frankenstein: “Abby Normal...”

Igor: “I'm almost sure that was the name.”

Dr. Frankenstein: “Are you saying that I put an abnormal brain into a seven-and-a-half-foot long, gorilla? Is that what you're telling me?”

Young Frankenstein (1974)

If one does not laugh, one cries at another (Abby) normal day in markets.

Normal, as we saw US 10-year yields rise 7bp back to 3.20% and oil rise around 2%.

Normal, as G7 chair Germany welcomed South Africa’s progress on its ‘Just Energy Transition Partnership’ as it implements 'Stage 4' rolling blackouts.

Normal, as Sri Lanka, already allowing civil servants four-day weeks to grow their own food, suspends fuel sales entirely except for emergency services.

Normal, as the US and EU released a joint statement on European Energy Security that talked of “important, necessary, and immediate steps” and recognized “the enormity of the challenge” - and then promised 1.5m “smart thermostats” for an economy with 445m people. The thermostats really don’t need to be smart. All of them will read “it’s freezing!” this winter. Indeed, yesterday’s Bloomberg article ‘Many Winters Are Coming. Start Saving Energy Now’ is worth quoting in detail:

“The European manufacturing sector is crumbling under the weight of sustained high electricity and natural gas prices. With little prospect of relief, another wave of curtailments and closures looms. And that’s before any rationing of natural gas, potentially later this year, in Germany in the event Russia reduces supply even further. In that scenario, many companies will have no choice but to shut down… The months-long crisis that many industrialists pencilled into their plans has morphed into a years-long problem. The prospect of bleeding cash for a few months, perhaps half a year, or even a year, was one thing; losing money indefinitely is another thing entirely.

For example, an aluminium smelter would lose about $200m annually at current forward prices for electricity and carbon dioxide for the next year. And that’s despite elevated prices for the metal in the markets. Aluminium may be an extreme example, but it’s evidence of the pressures faced by industrialists. In private, European executives say they’ll use the forthcoming quarterly reporting season in mid-July to announce more plant closures. The affected industries will be those with the most intensive energy use: fertilizer, base metals and steel, chemical, ceramic, glass and paper. But increasingly food production will be, too. Heated greenhouses and chicken farms face astronomical energy bills.”

Normal, as someone snarked on Twitter about smiling G7 leaders looking like a terrible boy-band, “It took 14 months to go from ‘Build Back Better’ to ‘There Will Be Food Shortages’”.

Normal, as CNN carries the story, ‘‘Give us a plan or give us someone to blame’: Inside a White House consumed by problems Biden can’t fix’, which says, “Instead of managing an economy in the midst of a natural rotation away from recovery and into a stable period of growth, economic officials are analyzing and modelling worst-case scenarios like what the shock of gas prices hitting $200 per barrel may mean for the economy.”

Normal, as the article quotes a Harvard professor who was economic advisor to President Obama claiming, “There’s no playbook for fixing the supply side of the economy. It’s not like in economic policy school they teach you here are the 12 things to do to rapidly fix the supply side in an economy.” Funny how China manages it, and the US/West used to before neoliberalism.

Normal, as the Dallas Fed survey includes the quotes such as:

  • “As a country, we are not looking at the future and establishing relationships with emerging countries like we should to ease the dependency on Chinese products and services. This will hurt us in the long run.”
  • “Everything we buy and sell comes and goes by truck, if we can get a truck at any price. Inflation will continue until the country is self-sufficient in oil and gas. The current political policy may not change until 2024. Therefore, inflation will be our consistent companion for a while, then stagflation!”
  • "We’ll all be lucky to have a job with two more years of this disaster."
  • "You can’t ignore the economic fundamentals leading to a likely recession, and the administration is either stubborn or as paralyzed as a deer in headlights."

Normal, as the US starts to ramp up rare earth production yet hears, “Now that Western governments are saying we need our own supply chains, you think China is just going to say, ‘Thanks for being a great customer for the last 30 years?’… No. They are going to fight to protect their market share.”  Which one can apply to almost every product the US buys from them.

Normal, as the US continues to drain its strategic petroleum reserve, which is now at its lowest level since 1986, and yet energy prices remain sky high, as President Macron tells President Biden the UAE and Saudis cannot pump any more oil. Imagine if there were a major war and the US really needed that oil.

Normal, as Russia attacked a Ukrainian shopping centre, killing at least 13 people.

Normal, as NATO announced it will increase its rapid reaction forces on high readiness from 40,000 to 300,000. Now? In 10 years? Whose troops? Europe is long on pencil-pushers but short on people used to dealing the sharp end of anything else. This hugely expensive action suggests the alliance may be heeding rumours that Moscow may attack the Baltic states, a geopolitical development which could make what we have seen so far look like a sideshow for markets.

Normal, as NATO’s first strategy statement for a decade will apparently designate China as a “systemic challenge”, inflaming Beijing: yet that is still a compromise pushed by France and Germany, who insist on stressing a "willingness to work on areas of common interest", and the Czechs and Hungarians won’t accept "strategic convergence" between China and Russia. Meanwhile, US China expert Matt Pottinger this week noted you cannot turn a great white shark into a bottle-nosed dolphin by treating it sweetly, and that even pre-Covid China refused to cooperate on disease-control efforts without the US making concessions on the South China Sea.

Normal, as China tried to set up a meeting with 10 Pacific Island leaders right before they hold their own meeting on 14 July, which, after Western pushback via the ‘Blue Pacific’ plan, seems far less likely to turn their vast maritime region ‘red’.

Normal, as The Hill carries another withering article asking, ‘Biden’s White House: Are we nearing ‘The Klain Mutiny’?’, noting, “The Biden administration is losing the short game when it comes to US national security, and President Biden’s upcoming July trip to the Middle East is yet another case study in how the White House keeps misfiring and setting the president up for failure. It would be one thing if the administration’s missteps were merely unforced errors, but they are not. They appear to be systemic in nature - they begin with chief of staff Ron Klain and extend to national security adviser Jake Sullivan, Secretary of State Antony Blinken, and Defence Secretary Lloyd Austin.”

It goes on to claim that Klain’s “glaring lack of substantive national security or foreign policy experience, either at a Cabinet or command level, is proving problematic… 17 months into Biden’s presidency, it is clear that Klain, Sullivan, Blinken, and Austin are incapable of prioritizing, let alone apolitically balancing, the two - with US national security (and Biden) paying an unacceptable price…. Biden must recognize he is now a war president and that he must make changes to his national security team to reflect this reality.”

Normal, as Twitter debates Hunter Biden having had his bank account frozen after trying to make payments to escorts with Russian accounts, related snark that “I yearn for simpler times, like when a President’s child secured Chinese trademarks for a business venture”,  and a voicemail emerges of President Biden telling Hunter, “I think you’re clear,” regarding business dealings with a figure dubbed the ‘spy chief of China’ – almost none of which is worthy of mainstream media attention.

Normal, as most of the market endlessly wonders how long until we cut rates and re-start QE again, and this backdrop magically goes away: “Did you hear? We won the war because the Fed cut rates!”

It’s all Abby Normal: give me a sed-a-give until someone with real brains emerges.

Tyler Durden Tue, 06/28/2022 - 11:00
Published:6/28/2022 10:12:47 AM
[Markets] Gains Fade As Stock Market Tries To Extend Uptrend; Consumer Confidence Falls To 16-Month Low After cooling off from two days of big gains Monday, the stock market tried to resume its uptrend Tuesday. The Nasdaq composite climbed as much as 1% but reversed lower to a loss of 0.6%. Its China sales fell 19% due to Covid lockdowns in that country. Published:6/28/2022 10:12:47 AM
[Markets] U.S. consumer confidence falls to 16-month low U.S. consumer confidence falls to 16-month low Published:6/28/2022 9:56:56 AM
[Markets] Ghislaine Maxwell To Be Sentenced Today As More Accusers Get Last Word Ghislaine Maxwell To Be Sentenced Today As More Accusers Get Last Word

Jeffrey Epstein 'Madam' and partner in crime, Ghislaine Maxwell, is set to be sentenced today after being found guilty of participating in a decade-long scheme to lure and groom underage girls for sexual exploitation by Epstein and his associates - at times participating in the abuse herself, according to Bloomberg.

The 60-year-old former socialite, who was arrested two years ago at a New Hampshire hideaway, was convicted in December in what accusers have called long-overdue justice for Epstein's victims.

Prosecutors have recommended 30 to 55 years behind bars - likely a life sentence, while Maxwell has asked for less than six years - arguing that she and her siblings were mentally and physically abused by their father, UK publishing tycoon and suspected Israeli spy, Robert Maxwell. She also argued that she shouldn't bear the brunt of the punishment for Epstein's crimes, since he's dead.

Several victims who weren't part of Maxwell's trial will be allowed to speak during Tuesday's sentencing in a Manhattan courtroom in front of US Circuit Judge Alison Nathan. Maxwell will also be afforded the opportunity to speak, should she so choose.

One of the victims expected to appear is Virginia Giuffre, who accused Prince Andrew of sexually abusing her. Giuffre and Andrew reached a settlement in a civil suit earlier this year, after she claimed Epstein "lent" her out for sexual abuse, a claim Andrew has denied.

"She made the choice to conspire with Epstein for years, working as partners in crime and causing devastating harm to vulnerable victims," argued prosecutor Maurene Comey in the government's sentencing memo. "She should be held accountable for her disturbing role in an extensive child exploitation scheme."

According to former UBS AG banker Justin Paperny, who served 18 months for securities fraud, Maxwell's arguments for leniency will likely fall on deaf ears, especially with several accusers testifying on Tuesday.

"The first thing judges want to know if you plead guilty is if you identify with your victims," he said, adding "In this case, Maxwell said ‘Yeah, there are victims but I didn’t create it. I didn’t do anything wrong. It’s just because I was friends with Epstein. If anything, I’m the victim,’” Paperny said. That attitude “doesn’t sit well with a sentencing judge when there are victims whose lives have been torn and ripped apart by her pedophile friend."

Stay tuned for more...

Tyler Durden Tue, 06/28/2022 - 10:40
Published:6/28/2022 9:56:56 AM
[Markets] The Margin: Rudy Giuliani: being slapped by ShopRite employee felt ‘as if a boulder hit me’ Video footage of the incident has gone viral after a ShopRite employee slapped Giuliani on the back
Published:6/28/2022 9:56:55 AM
[Markets] US STOCKS-Dow, S&P boosted by banks; cautious on consumer confidence data Bank shares boosted the Dow Jones and the S&P 500 indexes on Tuesday as the big four lenders raised dividends following a stress test, but a sharp drop in consumer confidence brought to fore the risks from rising inflation. Wall Street's main indexes started the week on soft footing on worries of rising prices and an aggressive Federal Reserve dominated sentiment. Published:6/28/2022 9:56:55 AM
[Markets] Dow Jones Futures Climb But Nike Slides On Weak Sales Guidance Dow Jones futures rose 200 points Tuesday, looking to rebound from Monday's losses. But Nike stock slid on weak revenue guidance. Published:6/28/2022 7:10:02 AM
[Markets] Earnings Results: Nike’s quarterly profit comes in above Wall Street expectations, $18 billion buyback approved Nike Inc. late Monday reported quarterly earnings above Wall Street expectations and said its board approved a new, $18 billion share buyback program, sending the apparel maker's shares higher in the after-hours session.
Published:6/28/2022 7:10:02 AM
[Markets] Futures, Commodities Jump After China Cuts Quarantine Futures, Commodities Jump After China Cuts Quarantine

US stock futures rebounded from Monday's modest losses and traded near session highs after China reduced quarantine times for inbound travelers by half - to seven days of centralized quarantine and three days of health monitoring at home -  the biggest shift yet in a Covid-19 policy that has left the world’s second-largest economy isolated as it continues to try and eliminate the virus. The move, which fueled optimism about stronger economic growth and boosted appetite for both commodities and risk assets, sent S&P 500 futures and Nasdaq 100 contracts higher by 0.6% each at 7:15 a.m. in New York, setting up heavyweight technology stocks for a rebound. Mining and energy shares led gains in Europe’s Stoxx 600 and an Asian equity index erased losses to climb for a fourth session. 10Y TSY yields extended their move higher rising to 3.25% or about +5bps on the session, while the dollar and bitcoin were flat, and oil and commodity-linked currencies strengthened.

In premarket trading, the biggest mover was Kezar Life Sciences which soared 85% after reporting positive results for its lupus drug. On the other end, Robinhood shares fell 3.2%, paring a rally yesterday sparked by news that FTX is exploring whether to buy the company. In a statement, FTX head Sam Bankman-Fried said he is excited about the firm’s business prospects, but “there are no active M&A conversations with Robinhood." Here are some of the other most notable premarket movers"

  • Playtika (PLTK US) shares rallied 11% in premarket trading after a report that private equity firm Joffre Capital agreed to acquire a majority stake in the gaming company from a Chinese investment group for $21 a share.
  • Nike (NKE US) shares fell 2.3% in US premarket trading, with analysts reducing their price targets after the company gave a downbeat forecast for gross margin and said it was being cautious in its outlook for the China market.
  • Spirit Airlines (SAVE US) shares rise as much as 5% in US premarket trading after JetBlue boosted its all-cash bid in response to an increased offer by rival suitor Frontier in the days before a crucial shareholder vote.
  • Snowflake (SNOW US) rises 3.3% in US premarket trading after Jefferies upgraded the stock to buy from hold, saying its valuation is now “back to reality” and offers a good entry point given the software firm’s long-term targets.
  • Sutro Biopharma (STRO US) shares rise 34% in US premarket trading after the company and Astellas said they will collaborate to advance development of immunostimulatory antibody-drug conjugates, which are a modality for treating tumors and designed to boost anti-cancer activity.
  • State Street (STT US) shares could be in focus after Deutsche Bank downgraded the stock to hold, while lowering EPS estimates and price targets across interest rate sensitive coverage of trust banks and online brokers.
  • US bank stocks may be volatile during Tuesday’s trading session after the lenders announced a wave of dividend increases following last week’s successful stress test results.

Stock rallies have proved fleeting this year as higher borrowing costs to fight inflation restrain economic activity in a range of nations. European Central Bank President Christine Lagarde affirmed plans for an initial quarter-point increase in interest rates in July, but said policy makers are ready to step up action to tackle record inflation if warranted. Some analysts also argue still-bullish earnings estimates are too optimistic. Earnings revisions are a risk with the US economy set to slow next year, though China emerging from Covid strictures could act as a global buffer, according to Lorraine Tan, Morningstar director of equity research.

“You got a US slowdown in 2023 in terms of growth, but you have China hopefully coming out of its lockdowns,” Tan said on Bloomberg Radio.

In Europe, stocks are well bid with most European indexes up over 1%. Euro Stoxx 50 rose as much as 1.2% before drifting off the highs. Miners, energy and auto names outperform. The Stoxx 600 Basic Resources sub-index rises as much as 3.5% led by heavyweights Rio Tinto and Anglo American, as well as Polish copper producer KGHM and Finnish forestry companies Stora Enso and UPM- Kymmene. Iron ore and copper reversed losses after China eased its quarantine rules for new arrivals, while oil gained for a third session amid risks of supply disruptions. Iron ore in Singapore rose more than 4% after being firmly lower earlier in the session, while copper and other base metals also turned higher. Here are the biggest European movers:

  • Luxury stocks climb boosted by an easing of Covid-19 quarantine rules in the key market of China. LVMH shares rise as much as 2.5%, Richemont +3.1%, Kering +3%, Moncler +3%
  • Energy and mining stocks are the best-performing groups in the rising Stoxx Europe 600 index amid commodity gains. Shell shares rise as much as 3.8%, TotalEnergies +2.7%, BP +3.4%, Rio Tinto +4.6%, Glencore +3.9%
  • Banco Santander shares rise as much as 1.8% after a report that the Spanish bank has hired Credit Suisse and Goldman Sachs for its bid to buy Mexico’s Banamex.
  • GN Store Nord shares gain as much as 4.2% after Nordea resumes coverage on the hearing devices company with a buy rating.
  • Swedish Match shares rise as much as 4% as Philip Morris International’s offer document regarding its bid for the company has been approved and registered by the Swedish FSA.
  • Wise shares decline as much as 15%, erasing earlier gains after the fintech firm reported full- year earnings. Citi said the results were “mixed,” with strong revenue growth being offset by lower profitability.
  • UK water stocks decline as JPMorgan says it is turning cautious on the sector on the view that future regulated returns could surprise to the downside, in a note cutting Severn Trent to underweight. Severn Trent shares fall as much as 6%, Pennon -7.7%, United Utilities -2.3%
  • Akzo Nobel falls as much as 4.5% in Amsterdam trading after the paint maker announced the appointment of former Sulzer leader Greg Poux-Guillaumeas chief executive officer, succeeding Thierry Vanlancker.
  • Danske Bank shares fall as much as 4%, as JPMorgan cut its rating on the stock to underweight, saying in a note that risks related to Swedish property will likely create some “speed bumps” for Nordic banks though should be manageable.

In the Bavarian Alps, limiting Russia’s profits from rising energy prices that fuel its war in Ukraine have been among the main topics of discussion at a Group of Seven summit. G-7 leaders agreed that they want ministers to urgently discuss and evaluate how the prices of Russian oil and gas can be curbed.

Earlier in the session, Asian stocks erased earlier losses as China’s move to ease quarantine rules for inbound travelers bolstered sentiment. The MSCI Asia Pacific Index rose as much as 0.6% after falling by a similar magnitude. The benchmark is set for a fourth day of gains, led by the energy and utilities sectors. BHP and Toyota contributed the most to the gauge’s advance, while China’s technology firms were among the biggest losers as a plan by Tencent’s major backer to further cut its stake fueled concern of more profit-taking following a strong rally.   A move by Beijing to cut quarantine times for inbound travelers by half is helping cement gains which have made Chinese shares the world’s best-performing major equity market this month. The nation’s stocks are approaching a bull market even as their recent rise pushes them to overbought levels.

Still, the threat of a sharp slowdown in the world’s largest economy may pose a threat to the outlook. “US recession risk is still there and I think that’ll obviously have impact on global sectors,” Lorraine Tan, director of equity research at Morningstar, said on Bloomberg TV. “Even if we do get some China recovery in 2023, which could be a buffer for this region, it’s not going to offset the US or global recession.”  Most stock benchmarks in the region finished higher following China’s move to ease its travel rules. Main equity measures in Japan, Hong Kong, South Korea and Australia rose while those in Taiwan and India fell. Overall, Asian stocks are on course to complete a monthly decline of about 4%.   

Meanwhile, the People’s Bank of China pledged to keep monetary policy supportive to help the nation’s economy. It signaled that stimulus would likely focus on boosting credit rather than lowering interest rates.

Japanese stocks gained as investors adjusted positions heading into the end of the quarter.  The Topix Index rose 1.1% to 1,907.38 as of the market close in Tokyo, while the Nikkei 225 advanced 0.7% to 27,049.47. Toyota Motor contributed most to the Topix’s gain, increasing 2.2%. Out of 2,170 shares in the index, 1,736 rose and 374 fell, while 60 were unchanged. “As the end of the April-June quarter approaches, there is a tendency for institutional investors to rebalance,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley. “It will be easier to buy into cheap stocks, which is a factor that will support the market in terms of supply and demand.”

India’s benchmark stock gauge ended flat after trading lower for most of the session as investors booked some profits after a three-day rally.  The S&P BSE Sensex closed little changed at 53,177.45 in Mumbai, while the NSE Nifty 50 Index gained 0.1%.  Six of the the 19 sector sub-gauges compiled by BSE Ltd. dropped, led by consumer durables companies, while oil & gas firms were top performers.  ICICI Bank was among the prominent decliners on the Sensex, falling 1%. Out of 30 shares in the Sensex index, 17 rose and 13 fell.

In rates, fixed income sold off as treasuries remained under pressure with the 10Y yield rising as high as 3.26%, following steeper declines for euro-zone and UK bond markets for second straight day and after two ugly US auctions on Monday. Yields across the curve are higher by 2bp-5bp led by the 7-year ahead of the $40 billion auction. In Europe, several 10-year yields are 10bp higher on the day after comments by an ECB official spurred money markets to price in more policy tightening. WI 7Y yield at around 3.32% exceeds 7-year auction stops since March 2010 and compares with 2.777% last month. Monday’s 5-year auction drew a yield more than 3bp higher than its yield in pre-auction trading just before the bidding deadline, a sign dealers underestimated demand. Traders attributed the poor results to factors including short base eroded by last week’s rally, recently elevated market volatility discouraging market-making, and sub-par participation during what is a popular vacation week in the US. Focal points for US session include 7-year note auction at 1pm ET; a 5-year auction Monday produced notably weak demand metrics.

The belly of the German curve underperformed as markets focus  on hawkish comments from ECB officials: 5y bobl yields rose 10 bps near 1.46%, red pack euribors dropped 10-13 ticks and ECB-dated OIS rates priced in 163 basis points of tightening by year end.

In FX, Bloomberg dollar spot index is near flat as the greenback reversed earlier losses versus all of its Group-of-10 peers apart from the yen while commodity currencies were the best performers. The euro rose above $1.06 before paring gains after ECB Governing Council member Martins Kazaks said the central bank should consider a first rate hike of more than a quarter-point if there are signs that high inflation readings are feeding expectations. Money markets ECB raised tightening wagers after his remarks. ECB President Lagarde later affirmed plans for an initial quarter-point increase in interest rates in July but said policy makers are ready to step up action to tackle record inflation if warranted. The ECB is likely to drain cash from the banking system to offset any bond purchases made to restrain borrowing costs for indebted euro-area members, Reuters reported, citing two sources it didn’t identify.

Elsewhere, the pound drifted against the dollar and euro after underperforming Monday, with focus on quarter-end flows, lingering Brexit risks and the UK economic outlook. Scottish First Minister Nicola Sturgeon due to speak later on how she plans to hold a second referendum on Scottish independence by the end of next year. The yen gave up an Asia session gain versus the dollar as US equity futures reversed losses. The Australian dollar rose after China cut its mandatory quarantine period to 10 days from three weeks for inbound visitors in its latest Covid-19 guidance. JPY was the weakest in G-10, drifting below 136 to the USD.

In commodities, oil rose for a third day with global output threats compounding already red-hot markets for physical supplies and as broader financial sentiment improved. Brent crude breached $117 a barrel on Tuesday, but some of the most notable moves in recent days have been in more specialist market gauges. A contract known as the Dated-to-Frontline swap -- an indicator of the strength in the key North Sea market underpinning much of the world’s crude pricing -- hit a record of more than $5 a barrel. The rally comes amid growing supply outages in Libya and Ecuador, exacerbating ongoing market tightness.

Oil prices also rose Tuesday as broader sentiment was boosted by China’s move to cut in half the time new arrivals must spend in isolation, the biggest shift yet in its pandemic policy. Meanwhile, the G-7 tasked ministers to urgently discuss an oil price cap on Russia. 

Finally, the prospect of additional supply from two of OPEC’s key producers also looks limited. On Monday Reuters reported that French President Emmanuel Macron told his US counterpart Joe Biden that the United Arab Emirates and Saudi Arabia are already pumping almost as much as they can.

In the battered metals space, LME nickel rose 2.7%, outperforming peers and leading broad-based gains in the base-metals complex. Spot gold rises roughly $3 to trade near $1,826/oz

Looking to the day ahead now, data releases include the FHFA house price index for April, the advance goods trade balance and preliminary wholesale inventories for May, as well as the Conference Board’s consumer confidence for June and the Richmond Fed’s manufacturing index. From central banks, we’ll hear from ECB President Lagarde, the ECB’s Lane, Elderson and Panetta, the Fed’s Daly, and BoE Deputy Governor Cunliffe. Finally, NATO leaders will be meeting in Madrid.

Market Snapshot

  • S&P 500 futures up 0.5% to 3,922.50
  • STOXX Europe 600 up 0.6% to 417.65
  • MXAP up 0.4% to 162.36
  • MXAPJ up 0.4% to 539.85
  • Nikkei up 0.7% to 27,049.47
  • Topix up 1.1% to 1,907.38
  • Hang Seng Index up 0.9% to 22,418.97
  • Shanghai Composite up 0.9% to 3,409.21
  • Sensex down 0.3% to 52,990.39
  • Australia S&P/ASX 200 up 0.9% to 6,763.64
  • Kospi up 0.8% to 2,422.09
  • German 10Y yield little changed at 1.62%
  • Euro little changed at $1.0587
  • Brent Futures up 1.4% to $116.65/bbl
  • Gold spot up 0.3% to $1,828.78
  • U.S. Dollar Index little changed at 103.89

Top Overnight News from Bloomberg

  • In Tokyo’s financial circles, the trade is known as the widow- maker. The bet is simple: that the Bank of Japan, under growing pressure to stabilize the yen as it sinks to a 24-year low, will have to abandon its 0.25% cap on benchmark bond yields and let them soar, just as they already have in the US, Canada, Europe and across much of the developing world
  • Bank of Italy Governor Ignazio Visco may leave his post in October, paving the way for the appointment of a high profile executive close to Premier Mario Draghi, daily Il Foglio reported
  • NATO is set to label China a “systemic challenge” when it outlines its new policy guidelines this week, while also highlighting Beijing’s deepening partnership with Russia, according to people familiar with the matter
  • The PBOC pledged to keep monetary policy supportive to aid the economy’s recovery, while signaling that stimulus would likely focus on boosting credit rather than lowering interest rates

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks were mixed with the region partially shrugging off the lacklustre handover from the US. ASX 200 was kept afloat with energy leading the gains amongst the commodity-related sectors. Nikkei 225 swung between gains and losses with upside capped by resistance above the 27K level. Hang Seng and Shanghai Comp. were pressured amid weakness in tech and lingering default concerns as Sunac plans discussions on extending a CNY bond and with Evergrande facing a wind-up petition.

Top Asian News

  • China is to cut quarantine time for international travellers, according to state media cited by Reuters.
  • Shanghai Disneyland (DIS) will reopen on June 30th, according to Reuters.
  • PBoC injected CNY 110bln via 7-day reverse repos with the rate at 2.10% for a CNY 100bln net daily injection.
  • China's state planner official said China faces new challenges in stabilising jobs and prices due to COVID and risks from the Ukraine crisis, while the NDRC added they will not resort to flood-like stimulus but will roll out tools in its policy reserve in a timely way to cope with challenges, according to Reuters.
  • China's state planner NDRC says China is to cut gasoline and diesel retail prices by CNY 320/tonne and CNY 310/tonne respectively from June 29th.
  • BoJ may have been saddled with as much as JPY 600bln in unrealised losses on its JGB holdings earlier this month, as a widening gap between domestic and overseas monetary policy pushed yields higher and prices lower, according to Nikkei.

European bourses are firmer as sentiment picked up heading into the cash open amid encouraging Chinese COVID headlines. Sectors are mostly in the green with no clear theme. Base metals and Energy reside as the current winners and commodities feel a boost from China’s COVID updates. Stateside, US equity futures saw a leg higher in tandem with global counterparts, with the RTY narrowly outperforming. Twitter (TWTR) in recent weeks provided Tesla (TSLA) CEO Musk with historical tweet data and access to its so-called fire hose of tweets, according to WSJ sources.

Top European News

  • UK lawmakers voted 295-221 to support the Northern Ireland Protocol bill in the first of many parliamentary tests it will face during the months ahead, according to Reuters.
  • Scotland's First Minister Sturgeon will set out a plan today for holding a second Scottish Independence Referendum, according to BBC News.
  • ECB’s Kazaks Says Worth Looking at Larger Rate Hike in July
  • G-7 Latest: Leaders Want Urgent Evaluation of Energy Price Caps
  • Ex- UBS Staffer Wants Payout for Exposing $10 Billion Swiss Stash
  • SocGen Blames Clifford Chance in $483 Million Gold Suit
  • GSK’s £40 Billion Consumer Arm Picks Citi, UBS as Brokers
  • Russian Industry Faces Code Crisis as Critical Software Pulled

ECB

  • ECB's Lagarde said inflation in the euro area is undesirably high and it is projected to stay that way for some time to comeFragmentation tool, via the ECB.
  • ECB's Kazaks said 25bps in July and 50bps in September is the base case, via Bloomberg TV. Kazaks said it is worth looking at a 50bps hike in July and front-loading hikes might be reasonable. Fragmentation risks should not stand in the way of monetary policy normalisation. If necessary, the ECB will come up with tools to address fragmentation.
  • ECB's Wunsch said he is comfortable with a 50bps hike in September; adds that 200bps of hikes are needed relatively fast, and anti-fragmentation tool should have no limits if market moves are unwarranted, via Reuters.
  • Bank of Italy said Governor Visco's resignation is not on the table, according to a spokesperson cited by Reuters.

Fixed Income

  • Bond reversal continues amidst buoyant risk sentiment, hawkish ECB commentary and supply.
  • Bunds lose two more big figures between 146.80 peak and 144.85 trough, Gilts down to 112.06 from 112.86 at best and 10 year T-note retreats within 117-01/116-14 range

FX

  • DXY regroups on spot month end as yields rally and rebalancing factors offer support - index within 103.750-104.020 range vs Monday's 103.660 low.
  • Euro continues to encounter resistance above 1.0600 via 55 DMA (1.0614 today); Yen undermined by latest bond retreat and renewed risk appetite - Usd/Jpy eyes 136.00 from low 135.00 area and close to 134.50 yesterday.
  • Aussie breaches technical and psychological resistance with encouragement from China lifting or easing more Covid restrictions - Aud/Usd through 10 DMA at 0.6954.
  • Loonie and Norwegian Krona boosted by firm rebound in oil as France fans supply concerns due to limited Saudi and UAE production capacity - Usd/Cad sub-1.2850 and Eur/Nok under 10.3500.
  • Yuan receives another PBoC liquidity boost to compliment positive developments on the pandemic front, but Rand hampered by latest power cut warning issued by SA’s Eskom

Commodities

  • WTI and Brent futures were bolstered in early European hours amid encouragement seen from China's loosening of COVID restrictions.
  • Spot gold is uneventful, around USD 1,825/oz in what has been a sideways session for the bullion since the reopening overnight.
  • Base metals are posting broad gains across the complex - with LME copper back above USD 8,500/t amid China-related optimism.

US Event Calendar

  • 08:30: May Advance Goods Trade Balance, est. -$105b, prior -$105.9b, revised -$106.7b
  • 08:30: May Wholesale Inventories MoM, est. 2.1%, prior 2.2%
    • May Retail Inventories MoM, est. 1.6%, prior 0.7%
  • 09:00: April S&P CS Composite-20 YoY, est. 21.15%, prior 21.17%
  • 09:00: April S&P/CS 20 City MoM SA, est. 1.95%, prior 2.42%
  • 09:00: April FHFA House Price Index MoM, est. 1.4%, prior 1.5%
  • 10:00: June Conf. Board Consumer Confidenc, est. 100.0, prior 106.4
    • Conf. Board Expectations, prior 77.5; Present Situation, prior 149.6
  • 10:00: June Richmond Fed Index, est. -5, prior -9

DB's Jim Reid concludes the overnight wrap

It's been a landmark night in our household as last night was the first time the 4-year-old twins slept without night nappies. So my task this morning after I send this to the publishers is to leave for the office before they all wake up so that any accidents are not my responsibility. Its hopefully the end of a near 7-year stretch of nappies being constantly around in their many different guises and states of unpleasantness. Maybe give it another 30-40 years and they'll be back.

Talking of unpleasantness, as we near the end of what’s generally been an awful H1 for markets, yesterday saw the relief rally from last week stall out, with another bond selloff and an equity performance that fluctuated between gains and losses before the S&P 500 (-0.30%) ended in negative territory.

In terms of the specific moves, sovereign bonds lost ground on both sides of the Atlantic, with yields on 10yr Treasuries up by +7.0bps following their -9.6bps decline from the previous week. That advance was led by real rates (+9.6bps), which look to have been supported by some decent second-tier data releases from the US during May yesterday. The preliminary reading for US durable goods orders surprised on the upside with a +0.7% gain (vs. +0.1% expected). Core capital goods orders also surprised on the upside with a +0.8% advance (vs. +0.2% expected). And pending home sales were unexpectedly up by +0.7% (vs. -4.0% expected). Collectively that gave investors a bit more confidence that growth was still in decent shape last month, which is something that will also offer the Fed more space to continue their campaign of rate hikes into H2. This morning 10yr USTs yields have eased -2.45 bps to 3.17% while 2yr yields (-4 bps) have also moved lower to 3.08%, as we go to press.

Staying at the front end, when it comes to those rate hikes, if you look at Fed funds futures they show that investors are still only expecting them to continue for another 9 months, with the peak rate in March or April 2023 before markets are pricing in at least a full 25bps rate cut by end-2023 from that point. I pointed out in my chart of the day yesterday (link here) that the median time historically from the last hike of the cycle to the first cut was only 4 months, and last time it was only 7 months between the final hike in December 2018 and the next cut in July 2019. So it wouldn’t be historically unusual if Fed funds did follow that pattern whether that fits my view or not.

Over in Europe yesterday there was an even more aggressive rise in yields, with those on 10yr bunds (+10.9bps), OATs (+11.0bps) and BTPs (+9.1bps) all rising on the day as they bounced back from their even larger declines over the previous week. That came as investors pared back their bets on a more dovish ECB that they’d made following the more negative tone last week, and the rate priced in by the December ECB meeting rose by +8.5bps on the day.

For equities, the major indices generally fluctuated between gains and losses through the day. The S&P 500 followed that pattern and ultimately fell -0.30%, which follows its best daily performance in over 2 years on Friday Quarter-end rebalancing flows seem set to drive markets back-and-forth price this week. Even with the decline yesterday, the index is +6.36% higher since its closing low less than a couple of weeks ago. And over in Europe, the STOXX 600 (+0.52%) posted a decent advance, although that masked regional divergences, including losses for the CAC 40 (-0.43%) and the FTSE MIB (-0.86%).

Energy stocks strongly outperformed in the index, supported by a further rise in oil prices that left both Brent crude (+1.74%) and WTI (+1.81%) higher on the day. G7 ministers reportedly agreed to explore a cap on Russian gas and oil exports, with the official mandate expected to be announced today, but it would take time for any mechanism to be developed. The impact on global oil supply is not clear: if Russia retaliates supply could go down, if this enables other third parties to import more Russian oil supply could go up. Elsewhere, political unrest in Libya and Ecuador could simultaneously hit oil supply. In early Asian trading, oil prices continue to move higher, with Brent futures up +1.13% at $116.39/bbl and WTI futures gaining +1% to just above the $110/bbl level.

Asian equity markets are struggling a bit this morning. The Hang Seng (-1.00%) is the largest underperformer amid a weakening in Chinese tech stocks whilst the Nikkei (-0.15%), Shanghai Composite (-0.15%) and CSI (-0.19%) are trading in negative territory in early trade. Elsewhere, the Kospi (-0.05%) is just below the flatline. US stock futures are slipping with contracts on the S&P 500 (-0.12%) and NASDAQ 100 (-0.18%) both slightly lower.

In central bank news, the People’s Bank of China (PBOC) Governor Yi Gang pledged to provide additional monetary support to the economy to recover from Covid outbreaks and lockdowns and other stresses. In a rare interview conducted in English, the central bank chief did caution though that the real interest rate is low thereby indicating limited room for large-scale monetary easing.

Turning to geopolitical developments, the G7 summit continued in Germany yesterday, and in a statement it said they would “further intensify our economic measures against Russia”. Separately, NATO announced that it will increase the number of high readiness forces to over 300,000, with the alliance’s leaders set to gather in Madrid from today. And we’re also expecting a new round of nuclear talks with Iran to take place at some point this week, something Henry mentioned in his latest Mapping Markets out yesterday (link here), which if successful could in time pave the way for Iranian oil to return to the global market.

Finally, whilst there were some decent May data releases from the US, the Dallas Fed’s manufacturing activity index for June fell to a 2-year low of -17.7 (vs. -6.5 expected).

To the day ahead now, and data releases include Germany’s GfK consumer confidence for July, French consumer confidence for June, whilst in the US there’s the FHFA house price index for April, the advance goods trade balance and preliminary wholesale inventories for May, as well as the Conference Board’s consumer confidence for June and the Richmond Fed’s manufacturing index. From central banks, we’ll hear from ECB President Lagarde, the ECB’s Lane, Elderson and Panetta, the Fed’s Daly, and BoE Deputy Governor Cunliffe. Finally, NATO leaders will be meeting in Madrid.

Tyler Durden Tue, 06/28/2022 - 08:00
Published:6/28/2022 7:10:02 AM
[Markets] Stock Market Today - 6/27: Stocks Higher As China Revives Growth Bets; Oil Resumes March Growth bets look set to overtake inflation concerns, at least for the moment, as stock futures react to some rare positive news on Covid from China. Published:6/28/2022 6:45:22 AM
[Markets] Futures Movers: Oil futures rise as supply fears move back into spotlight Oil futures rise Tuesday, lifted as doubts over the ability of Saudi Arabia and U.A.E. to significantly boost output and unrest in Ecuador and Libya put supply worries back in the spotlight.
Published:6/28/2022 6:45:22 AM
[Markets] China Shortens Travel Quarantine In COVID Zero Shift China Shortens Travel Quarantine In COVID Zero Shift

China unexpectedly slashed quarantine times for international travelers, to just one week, which suggests Beijing is easing COVID zero policies. The nationwide relaxation of pandemic restrictions led investors to buy Chinese stocks.

Inbound travelers will only quarantine for ten days, down from three weeks, which shows local authorities are easing draconian curbs on travel and economic activity as they worry about slumping economic growth sparked by restrictive COVID zero policies earlier this year that locked down Beijing and Shanghai for months (Shanghai finally lifted its lockdown measures on May 31). 

"This relaxation sends the signal that the economy comes first ... It is a sign of importance of the economy at this point," Li Changmin, Managing Director at Snowball Wealth in Guangzhou, told Bloomberg

At the peak of the COVID outbreak, many residents in China's largest city, Shanghai, were quarantined in their homes for two months, while international travelers were under "hard quarantines" for three weeks. The strict curbs appear to have suppressed the outbreak, but the tradeoff came at the cost of faltering economic growth. 

The announcement of the shorter quarantine period suggests a potentially more optimistic outlook for the Chinese economy. Bullish price action lifted CSI 300 Index by 1%, led by tourism-related stocks (LVMH shares rose as much as 2.5%, Richemont +3.1%, Kering +3%, Moncler +3%). 

"The reduction of travel restrictions will be positive for the luxury sector, and may boost consumer sentiment and confidence following months of lockdowns in China's biggest cities," Barclays analysts Carole Madjo wrote in a note. 

CSI 300 is up 19% from April's low, nearing bull market territory. 

Jane Foley, a strategist at Rabobank in London, commented that "this news suggests that perhaps the authorities will not be as stringent with Covid controls as has been expected." 

"The news also coincides with reports that the PBOC is pledging to keep monetary policy supportive," Foley pointed out, referring to Governor Yi Gang's latest comment. 

She said, "this suggests a potentially more optimistic outlook for the Chinese economy, which is good news generally for commodity exporters such as Australia and all of China's trading partners." 

Even though the move is the right step in the right direction, Joerg Wuttke, head of the European Chamber of Commerce in China, said, "the country cannot open its borders completely due to relatively low vaccination rates ... This, in conjunction with a slow introduction of mRNA vaccines, means that China may have to maintain a restricted immigration policy beyond the summer of 2023." 

Alvin Tan, head of Asia currency strategy in Singapore for RBC Markets, also said shortening quarantine time for inbound visitors shouldn't be a gamechanger, and "there's nothing to say that it won't be raised tomorrow." 

Tyler Durden Tue, 06/28/2022 - 07:38
Published:6/28/2022 6:45:22 AM
[Markets] G-7 summit ends without details on Russian oil price caps G-7 summit ends without details on Russian oil price caps Published:6/28/2022 6:27:01 AM
[Markets] Mark Hulbert: Being a true contrarian investor and outsmarting Wall Street takes more than just going against the crowd Pick one solid market-sentiment measure to anchor your base case, then follow it.
Published:6/28/2022 6:27:01 AM
[Markets] Why Don't Currencies Trade Like They Used To? Why Don't Currencies Trade Like They Used To?

By Russell Clark of the Capital Flows and Asset Markets substack

To explain how odd currencies have been in recent years, you need to go right back to the beginning of free market trading in currencies. The Thatcher/Reagan revolution ushered in an era of free market pricing in currency markets. When we think about free markets determining the value of an exchange rate, then the exchange rate needs to be set at a level that attracts capital.

To simplify currencies, I think in the long run. Over the long run, if you have two similar countries, but one that is more productive than the other, then you would expect its exchange rate to appreciate. This means we can find currency pairs, where one currency consistency outperforms the other. One my favourites is Canadian Dollar versus Mexican Peso. Both Canada and Mexico are commodity exporters, and both do most of their trade with the US. Canada tends to have better productivity growth than Mexico, so we see that the Canadian dollar appreciates versus the Mexican peso.

A European version of this trade was to be long Norwegian Krone and Short Russian Ruble. Both energy exporters to Europe, one a stable well run, another prone to wars and epic corruption, the Ruble tended to lose value against the Norwegian Krone. However this year has seen the Ruble strengthen against the Krone, despite the use of financial sanctions against Russia. This is greatly at odds with experience of the last 40 years, and leads to many profoundly bearish view on the Ruble.

The Yuan and the Yen also seem to be trading oddly. In 1980s, Japan was the technological powerhouse of the world, while China was still coming to terms with the changes wrought by Deng Xiao Ping. Long Yen, short Yuan was a wonder trade. However, over the last few years, China has had to deal with a range of tariffs and trade restrictions. It has also has what many consider a huge property bubble, while Japan has affordable house prices, and no trade problems with the US. Despite that, the Yuan has traded strongly versus the Yen, at close to 30 year highs, although well off levels seen in 1980s. On a inflation adjusted basis, Yuan is near all time highs, while Yen is near all time lows.

Bearish Yuan and bearish Ruble views are very common in the investment world at the moment. And given the historical experience of the last 40 years, these are sensible views. But the above charts seem to highlight the move from socialism to capitalism is initially bad for the currency, is it logical to assume the move from capitalism to socialism is good for the currency? The biggest negativity for the corporates is that governments would likely seek to maintain real wages at the highest possible level, leading to declining profits.

Currency devaluation was also seen as something to be avoided after the various devaluations of the 1930s seem to entrench deflation during the Great Depression. One thing I particularly like about this analysis, is that it moves the start date of the US shift to free market capitalism from 1980 when Reagan was elected to 1971 when Nixon left the gold standard. Labor finally lost under Reagan when wages were not raised in line with rising commodity prices.

So what am I trying to say? Well the golden age of globalization ran from lets say 1990 through to 2010. This was a period where virtually all governments agreed on the power of markets to price exchange rates and interest rate, and virtually untrammelled corporate power. Devaluation could lead to growth as it would lower costs, and attract capital inflows. The use of negative interest rates in Europe and Japan was an extreme central bank response to try and stimulate growth. However, in 2021 China has made it explicit that the needs of large corporates were suborned to the needs of the state. In particularly Alibaba was crippled so that is lost 70% of its market value.

In essence, currencies were predictable when governments were predictably placing the needs of the capital above the needs of labor. China, and maybe Russia, seem to be placing the needs to labor above the needs of capital. Logically, this does not mean these currencies will devalue when profits or asset values fall. The biggest upshot of this is that deflationary tendencies of currency devaluations has been muted, making inflationary tendencies more likely. Long dated bonds are reacting to this change. Deflationary Japan’s bond market is reacting strongly to this change. The difference in the reaction of the bond market to the dot-com crash is startling.

I suspect many people will have a lot of problems with this theory. The biggest problem people will have is that it introduces politics to currencies, which for the last 40 years has been the domain of free market doctrine. But as a I look over the world, I suspect most people have tired of free market doctrine. And most fund managers are in that small group that has done very well from free market doctrine - and as a group will struggle to understand why people would want anything else. But I suspect fund managers, private equity, central bankers and other financiers are the new coal miners - fighting for a world that no one else wants.

Tyler Durden Tue, 06/28/2022 - 07:20
Published:6/28/2022 6:27:01 AM
[Markets] "Stacks Of Bodies": Horror In Texas As 46 Migrants Found Dead In 18-Wheeler "Stacks Of Bodies": Horror In Texas As 46 Migrants Found Dead In 18-Wheeler

Officials in San Antonio, Texas found 46 bodies in and around an 18-wheeler tractor-trailer, and 16 others were taken to local hospitals in what is presumed to be human trafficking gone wrong.

An ambulance leaves the scene where police said dozens of people were found dead in a semitrailer in a remote area in southwestern San Antonio, Monday, June 27, 2022. (AP Photo/Eric Gay)

Shortly before 6pm on Monday a city worker on a remote road heard a cry for help, according to Police Chief Willian McManus. When officers arrived on scene, they found one body on the ground outside the trailer, which was partially open, according to the Associated Press.

The dead range in age from teens to young adults, and are believed to have succumbed to heat stroke and heat exhaustion, as the trailer had no air conditioning and no water as temperatures exceeded 100 degrees.

Of those taken to the hospital 12 were adults and 4 were children - who Fire Chief Charles Hood said were hot to the touch and dehydrated, while no water was found in the trailer.

Police block the scene where a semitrailer with multiple dead bodies was discovered, Monday, June 27, 2022, in San Antonio. (AP Photo/Eric Gay)

"They were suffering from heat stroke and exhaustion," said Hood. "It was a refrigerated tractor-trailer, but there was no visible working AC unit on that rig."

There were "stacks of bodies" Hood added.

Mayor Ron Nirenberg called the scene "nothing short of a horrific human tragedy."

Since authorities presume that the trailer was part of a human trafficking operation to bring people into the United States illegally, the Department of Homeland Security's Investigations unit has taken point on the case.

Authorities took three people into custody.

Big rigs emerged as a popular smuggling method in the early 1990s amid a surge in U.S. border enforcement in San Diego and El Paso, Texas, which were then the busiest corridors for illegal crossings.

Before that, people paid small fees to mom-and-pop operators to get them across a largely unguarded border. As crossing became exponentially more difficult after the 2001 terror attacks in the U.S., migrants were led through more dangerous terrain and paid thousands of dollars more. -AP

DHS officials released the following statement Monday night:

“On June 27, Homeland Security Investigations (HSI) responded to a call from San Antonio Police Department (SAPD) in reference to an alleged human smuggling event involving a tractor trailer on Quintana Road near Cassin Road. Upon arrival in the scene, HSI confirmed more than 40 deceased individuals.

HSI San Antonio has initiated an investigation with support of SAPD. Details will be released as they are available, the criminal investigation remains ongoing.

HSI continues its enforcement efforts to ensure the safety and well-being of our communities. We will continue to address the serious public safety threat posed by human smuggling organizations and their reckless disregard for the health and safety of those smuggled. To report suspicious activity, we encourage people to call the HSI Tip Line at 1-866-DHS-2ICE. All calls are kept confidential.”

Tyler Durden Tue, 06/28/2022 - 05:45
Published:6/28/2022 5:25:40 AM
[Markets] Stocks Higher, Bank Dividends, Nike, Playtika And Occidental- Five Things To Know Stock futures higher on global growth bets; Morgan Stanley leads bank gains after dividend boost; Nike slides as margin pressures offset Q4 earnings beat; Playtika shares surge on report of Joffre Capital interest and Occidental shares jump as Buffett adds more to stake Published:6/28/2022 5:25:40 AM
[Markets] SEC fines Ernst & Young $100 million for employee cheating SEC fines Ernst & Young $100 million for employee cheating Published:6/28/2022 5:25:40 AM
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