Connexion
Authored by 'El Sultan Bitcoin' via Bitcoin Magazine,
The Bitcoin halving event, a pivotal occurrence, is scheduled for April, 19 2024. This quadrennial event will reduce the block subsidy for Bitcoin miners from 6.25 BTC to 3.125 BTC, thereby halving the reward that miners receive for their efforts.
Such events have historically led to profound shifts in the mining landscape, potentially influencing various economic and operational facets of Bitcoin mining.
After the halving, the immediate impact is a considerable decrease in miner revenue due to the reduced block subsidy. This could lead to a decline in the hashrate as less efficient miners may turn unprofitable and exit the network. Luxor’s Hashrate Index Research Team projects about 3-7% of Bitcoin’s hashrate could go offline if Bitcoin’s price maintains its current level. However, if prices fall, up to 16% of the hashrate could become economically unviable, depending on the trajectory of Bitcoin prices and transaction fees post-halving.
The hashrate, a critical security measure for Bitcoin, might adjust along with difficulty levels to align with the new economic realities. Luxor’s analysis suggests different scenarios where the network's hashrate could end up ranging from 639 EH/s to 674 EH/s by year's end, reflecting adjustments to the new earning potential post-halving.
Post-halving, the profitability of different ASIC models will become crucial as the mining reward drops. Lower rewards mean that only the most efficient machines will be able to operate profitably if the price of Bitcoin does not see a significant increase. For instance, according to Luxor’s projections, next-generation ASICs like the S19 XP and M30S++ might have breakeven power costs ranging from $0.07/kWh to $0.15/kWh, depending on post-Halving hashprice.
This shift in profitability will likely lead to a repricing of ASIC machines. Historical data suggests that ASIC prices are highly correlated with hashprice; therefore, the anticipated reduction in hashprice will prompt a downward adjustment in ASIC values. This will particularly impact older and less efficient models, potentially accelerating their phase-out from the market.
To combat reduced profitability, miners are increasingly turning to custom ASIC firmware to improve the efficiency of their hardware. Firmware like LuxOS and BraiinsOS can enhance the performance of machines by optimizing their power usage and hashrate output, thus lowering the breakeven point for electricity costs. For example, underclocking an S19 with custom firmware could extend its operational viability by reducing its power draw, thereby maintaining profitability even at lower hashprices.
Public miners, in particular, are adopting custom firmware to boost the efficiency of their fleets. Companies like CleanSpark and Marathon have reported using custom solutions to enhance their operational efficiencies. This trend is expected to grow as more miners seek to maximize their output and minimize costs in the face of decreasing block rewards.
The 2024 Bitcoin Halving is set to reshape the mining landscape significantly, just as previous halvings have. While the exact outcomes are uncertain, the event will undoubtedly present both challenges and opportunities. Miners who plan strategically, taking into account both economic forecasts and operational efficiencies, will be better positioned to navigate the post-halving environment.
For those in the Bitcoin mining industry, staying informed and adaptable will be key to leveraging the halving event as an opportunity rather than a setback. With the right preparations, particularly in ASIC management and firmware optimization, miners can continue to thrive even under tightened economic conditions.
On Wednesday night, against the backdrop of the war in Gaza expanding to Lebanon and Syria, ZeroHedge held a debate to discuss the war in the Middle East.
Debating that question and more at last night’s ZeroHedge debate were talk show host Dennis Prager and Newsweek opinion editor Batya Ungar-Sargon vs. Young Turks founder Cenk Uygur and libertarian Dave Smith. The event was masterfully moderated by Saagar Enjeti, founder of Breaking Points.
Key themes included the morality of Israel's invasion and the broader historical and political context that led to it, historical narratives - including grievances, perceptions of historical rights to land, and the impact of these narratives on current attitudes and policies, and future prospects of potential solutions and the feasibility of peace in the region.
Summarizing the participants' general positions:
Dennis Prager: Argues that the root of the conflict is the non-acceptance of a Jewish state by Israel's neighbors. He emphasizes that if Israel disarmed, it would lead to genocide against Jews, drawing a parallel between the hostility Israel faces and historical antisemitism.
Cenk Uygur (The Young Turks): Criticizes the conduct of Israel in the conflict, pointing to the high number of Palestinian casualties and the broader humanitarian impact. He challenges the portrayal of Hamas and Palestinian resistance, comparing it to historical resistance movements against oppression.
Batya Ungar-Sargon: Focuses on whether Israel's actions since the invasion were just and suggests that while the devastation is immense, Israel's military actions are justified as self-defense against a terrorist group (Hamas) embedded within civilian areas.
Dave Smith: Discusses the complexities of the situation, suggesting that simplistic narratives about good vs. evil do not capture the realities of the conflict. He stresses that both Israelis and Palestinians include individuals who desire peace and those who pursue more extreme outcomes.
The feedback was overwhelmingly positive, and we agree - it's worth a watch.
Thank you, It was an interesting, informative, and civil debate.
— Freedom Florida, Free America (@Randrenn) April 18, 2024
Everyone should watch this debate
— djbowzer (@djbowzer) April 17, 2024
For those who missed it last night, here are some highlights:
Were the Palestinians actually "offered a state"?
Prager and Smith debated what transpired during the Camp David Accords of 2000 between Bill Clinton, Ehud Barak of Israel, and Yasser Arafat of the Palestinian Authority. The event is commonly used to depict the unwillingness of Palestinians to make necessary compromises for the right to establish their own state.
ZH middle-east war debate highlights:
— zerohedge (@zerohedge) April 18, 2024
Were the Palestinians actually "offered a state"?
Prager and Smith debated what transpired during the Camp David Accords of 2000 between Bill Clinton, Ehud Barak of Israel, and Yasser Arafat of the Palestinian Authority. The event is… pic.twitter.com/EpH3N7rMPn
Israel has a "superior" culture to the Middle East?
Does Israel’s comparatively freer society and more prosperous society grant it moral authority over the war in Gaza? Prager pressed the issue to Smith and Uygur: “How’s this that none of you like to talk about? There are 2 million Palestinians in Israel.”
ZH middle-east war debate highlights:
— zerohedge (@zerohedge) April 18, 2024
Israel has a "superior" culture to the Middle East?
Does Israel’s comparatively freer society and more prosperous society grant it moral authority over the war in Gaza? Prager pressed the issue to Smith and Uygur: “How’s this that none of… pic.twitter.com/DvHsSz7ioh
Smith says there have been atrocities on both sides:
“The internet has a permanent memory” pic.twitter.com/vfN4yjRtm2
— Dave Smith (@ComicDaveSmith) April 18, 2024
Cenk vows a tax strike if the US goes to war with Iran!
As the Iran debate heated up, Cenk Uygur said enough is enough when it comes to Middle Eastern wars, making the firm claim that he will refuse to pay taxes if the U.S. “tries to send one of our guys into the Middle East” to “die for Netanyahu.”
ZH middle-east war debate highlights:
— zerohedge (@zerohedge) April 18, 2024
Cenk vows a tax strike if the US goes to war with Iran
As the Iran debate heated up, Cenk Uygur said enough is enough when it comes to Middle Eastern wars, making the firm claim that he will refuse to pay taxes if the U.S. “tries to send… pic.twitter.com/frztg5JBTg
Netanyahu covertly funded Hamas
Smith challenged Prager and Ungar-Sargon on Netanyahu’s covert campaign to fund Hamas for the purpose of undermining a Palestinian state. Both pro-Israel candidates acknowledged the veracity of such reports but claimed Netanyahu “didn’t know” it would lead to October 7.
Prager then went on to claim that Israel does not commit atrocities (outside of wartime). “That is a libel of Israel and it’s dishonest!” he said when Smith stated that both sides have affected “ungodly” atrocities.
ZH middle-east war debate highlights:
— zerohedge (@zerohedge) April 18, 2024
Netanyahu covertly funded Hamas
Smith challenged Prager and Ungar-Sargon on Netanyahu’s covert campaign to fund Hamas for the purpose of undermining a Palestinian state. Both pro-Israel candidates acknowledged the veracity of such… pic.twitter.com/25CMjFOiKU
— Dave Smith (@ComicDaveSmith) April 18, 2024
Watch the full debate below:
By Irina Slav of OilPrice.com
Crude oil exports from Iran hit the highest level in six years during the first quarter of the year, data from Vortexa cited by the Financial Times has shown.
The daily average over the period stood at 1.56 million barrels, almost all of which was sent to China, earning Tehran some $35 billion.
“The Iranians have mastered the art of sanctions circumvention,” Fernando Ferreira, head of geopolitical risk service at Rapidan Energy Group, told the FT. “If the Biden administration is really going to have an impact, it has to shift the focus to China.”
The news comes as the EU and the United States prepare new sanctions against Iran in a bid to convince Israel to not retaliate against Tehran after the latter’s drone and missile attack on Israeli military targets last weekend.
Iran’s oil industry would be the no-brainer target for new sanctions as suggested by U.S. Treasury Secretary Janet Yellen.
"Clearly, Iran is continuing to export some oil. There may be more that we could do. I don't want to preview our actual sanctions activities, but certainly, that remains in focus as a possible area that we could address," Yellen said earlier this week as quoted by Reuters.
Analysts, however, have told the FT that the Biden administration is reluctant to tighten the sanction noose too much as this would inevitably lead to an increase in oil prices that a president running for re-election cannot really afford in an election year.
Iran is producing record amounts of oil, enabling it to pay for missiles, drones and whatnot, as Biden refuses to enforce Trump's sanctions against Iran oil exports afraid an oil price spike would further crush his approval rating pic.twitter.com/eeX0OnwYBA
— zerohedge (@zerohedge) April 15, 2024
That’s especially relevant in light of the fact that the federal government would hardly be able to repeat the SPR release from 2022 to tame prices at the pump as the reserve sits at the lowest level in 40 years after that 2022 release.
Also, any heavy-handed action against Iran’s oil exports would affect relations with China, which is virtually the only outlet for Iranian crude. That crude, according to the FT, covers a tenth of China’s total oil imports.
By Benjamin Picton of Rabobank
Treasury yields fell yesterday for the first time this week. The 2-year was down 5.5bps to 4.93%, while Brent crude gave up 3% to be sitting well below the $90/bbl again. Crude is sending some interesting signals. It rose every day in the week of Israel’s suspected attack on an Iranian compound in Syria that killed a senior Quds Force commander. Last week crude vacillated between gains and losses as markets awaited the Iranian response and this week, having ‘bought the rumour’ a fortnight ago, markets appear content to ‘sell the fact’.
That’s not to say that there isn’t another geopolitical shoe yet to drop. It seems very likely that there is. Axios reports that the Israeli war cabinet considered giving the IDF the green light to retaliate on Monday, despite urgings from the White House and the G7 for Israel to do nothing. According to Axios, the decision to strike back is already made, only the timing and the scale remains in question. Israel must now run the calculus on how to extract a price from Iran without overplaying its hand and sparking a multi-front war. Iran has threatened that any attack by Israel could be met with a response that is 10x the scale of the weekend attacks and involving more sophisticated weaponry. Clearly, the stakes are high.
Nevertheless, the price action seems to suggest that markets are untroubled by these reports. Commentary in recent days has variously swung between imminent WWIII (unlikely) and “it’s all just for show” (naïve). The entreaties from G7 leaders for Israel to ‘turn the other cheek’ reveal the extent to which Israel’s position is mis-read in the broader West. The post-protestant instinct of European and American leaders to ‘take the win’ on shooting down the vast majority of Iran’s deadly projectiles is at odds with the Israeli viewpoint.
Israel is THE Jewish state. Bibi - and several members of his war cabinet - are old-covenant kinds of guys. “An eye for an eye and a tooth for a tooth” is more than just a millennia-old theological disposition, it is a security imperative for a country attempting to maintain strategic deterrence while surrounded by foes.
So where does that leave markets? Highly irrational in some respects. Risk premia is being rapidly priced out of the energy complex, despite G7 sanctions on Iran, the threat of interruption in the Strait of Hormuz, and news overnight of new US sanctions on Venezuelan oil. Bear-steepening of the Treasuries curve suggests that markets are much more attuned to the ‘game of basis points’ being played in inflation and policy rate projections, rather than the ‘game of pointing missiles at bases’ being played in the Middle East.
To wit, Fed speakers Bowman and Mester have followed up on Powell’s delayed rate cuts admission of a day ago. Mester – usually a hawk – rolled out the back catalogue by saying that the Fed “need[s] to see more data to be sure of [the] inflation path”. Bowman – a definite hawk – said that “progress on inflation may have stalled” and that “time will tell if policy is sufficiently restrictive.”
That last line makes it sounds as if Bowman doesn’t believe policy is sufficiently restrictive. Is she resigned to the idea of the FOMC erring by keeping the Fed Funds rate unchanged while they cross their fingers and toes that three months of rising inflation is just a bump in the road? Perhaps she’s wise to be wary of assurances that “it’s transitory!”
The Fed isn’t the only central bank with difficult decisions ahead. CPI inflation reports for the UK and New Zealand both threw up concerns yesterday, particularly on the trajectory for services inflation.
New Zealand CPI for Q1 came in at 0.6% q-o-q and 4% y-o-y, which is above the RBNZ’s 3.8% forecast. The services component rose from 4.7% y-o-y to 5.3%, while non-tradable inflation (i.e. inflation generated within the country) rose on a quarterly basis from 1.3% to 1.6%. That means that all of the heavy lifting on the headline rate was done by a larger-than-expected fall in tradeable inflation (-0.7% vs expectations of -0.2% q-o-q) that might actually be transitory, given lag effects for energy and freight prices.
Over in the UK the headline inflation rate fell from 3.4% y-o-y to 3.2% in March. The consensus of the Bloomberg survey was for 3.1%, so this was definitely a miss. The median estimate of surveyed economists on the services component was 5.8%, but the actual result came in at 6%, just one-tick lower than the previous month. Our resident BOE watcher, Stefan Koopman, says that this result – taken in conjunction with the prior day’s labour market data – pretty much rules out a rate cut in May. Stefan expects the BOE to cut in August, with two follow-up cuts later in 2024.
Aussie labor market data released earlier today saw some mean-reversion in the headline employment figures. According to the ABS, Australia shed 6,600 jobs in March after gaining 117,600 in February. Rabobank had been expecting 10,000 jobs to be lost - which puts us equal closest to the pin amongst forecasters - but despite a 1-tick rise, the unemployment rate of 3.8% remained below our forecast (and below the market consensus) because of a fall in participation. All-in-all, it was another strong result for the Aussie labour market that does nothing for the view that Australia will be cutting rates imminently.
Herein lies a developing theme. Stronger-than-expected domestic inflation pressures driven by stronger-than-expected labor market outcomes. Is this likely to change? Not if politicians have anything to do with it. Labor demand in the West is being stoked by fiscal expansion as governments scramble to catch up with China on industrial policy.
Overnight Joe Biden announced a tripling of the 7.5% tariff on Chinese steel and aluminium imports and Mario Draghi gave a speech arguing that “radical change is what is needed”; making the case for Europe to respond to Sino-US protectionism with coordinated industrial policy of its own. According to Draghi, failure to do so will inevitably lead to (further) loss of industry to offshore competitors who provide cheaper energy, lower regulatory burdens and state-subsidies.
Even in small, open economies like Australia the fortress mentality is developing. Prime Minister Anthony Albanese’s ‘A Future Made in Australia’ strategy will be a centrepiece of the upcoming May budget, with new government support for green energy, minerals processing and defence. Treasurer Chalmers says that the budget will contain “significant new public investments”, but that there will also be a heavy emphasis on attracting private investment. That sounds similar to Draghi’s contention that government will call the tune, but the private capital will need to be mobilized to cover the investment gap (see Erik-Jan van Harn’s recent report on France’s over-stretched public finances here).
So, real production is back in vogue, and the workers of developed countries who had their middle-class status offshored by 40-years of neoliberalism are vindicated. But talking is much easier than doing, especially when you lack the infrastructure, the expertise or the labor supply to re-industrialize. If the West is serious about responding to security threats and hostile trade practices with ‘an eye for an eye’ in an environment of real constraints, hard decisions will need to be made on how to allocate scarce labour and capital. THAT will be a huge departure from the pre-Covid paradigm.
Let's start with these five most recent headlines that show why defense spending needs to increase in a world evolving into a multi-polar state marked by conflict and uncertainty:
World Stumbles Into "More Dangerous Decade" As Defense Spending Soars, Says Military Think Tank
Germany Reportedly Goes On Military Spending Spree To Hit NATO Spending Minimums For First Time
Lockheed Martin Wins $17BN Interceptor Contract To Protect US Homeland
German Tank Builder Says "New Decade Of Security Policy Begins" As Defense Bull Market Roars
Saab CEO Micael Johansson, who spoke with Bloomberg TV on the sidelines of the European Defence & Security summit in Brussels on Wednesday, expanded more on the risks of escalating conflict in Eastern Europe and the Middle East and how uncertainty will drive defense spending higher.
Bloomberg's Oliver Crook asked Saab CEO Johansson: "I just want to start with the sort of latest developments that we saw from Iran and Israel and the attacks. Do you think that that is going to encourage even more spending, or do you think it changes things in the defense industry, or is this more of the kind of story that we've been seeing unfold?"
Johansson responded, "Well I think it's um the political focus on what sort of where the threat environments is in the world will of course change a bit. I'm more worried that the the focus on the war in Ukraine will sort of disappear and that uh that wouldn't be good."
"I think all tensions, all threat environments, and the political tensions that happen now will definitely drive defense spending. It's hard to say whether this sort of what's happening in the Middle East now will ultimately result in even more defense spending. But I think right now, the focus on Ukraine versus the Middle East is worrying me," he continued.
Crook then asked: "It's hard to get exact figures on this, but I saw some reporting saying that you know - much has been made as Israel's very successfully shooting down these 300 drones and missiles - though the cost approximate associated with that was sort of $600 million. And I saw that's 2 million per drone - and the economics of that if you have a prolonged conflict doesn't really work. So, as a defense company, how do you think about this? How do you solve that problem?"
Before Johansson responds, let's introduce readers to Saab, a Swedish aerospace and defense company that supplies NATO countries and allies with missiles and bombs. Some of those weapons include anti-ship missiles, anti-drone missiles, and anti-tank missiles.
Back to Johansson's response: "You have to take them out with the systems you have, but over time this will change. I think it'll become more efficient, and we're all putting research into this."
He also reiterates that Europe must boost its military-industrial complex manufacturing capacity to reduce its reliance on weapon imports from outside the EU.
Here's the interview.
Early this year, military think tank International Institute of Strategic Studies said global defense spending jumped 9% to a record $2.2 trillion in 2023, driven mostly by heightened geopolitical tensions caused by the Russia-Ukraine conflict.
In March, former Allied Commander at NATO, Adm. James Stavridis, told Goldman Sachs' Allison Nathan, "In my career, I've never seen a higher level of maritime risk than I do today. That owes first and foremost to the return of great power competition, which we thought was basically over when the Soviet Union collapsed."
And now, risks of further escalation between Israel and Iran have driven global defense stocks to fresh record highs.
Johansson is correct. The defense industry is in a bull market. War = moar money for the military-industrial complex.
Authored by Jonathan Miltmore via The Epoch Times (emphasis ours),
It’s safe to say that diversity, equity, and inclusion (DEI) is one of the more controversial ideas of our time (and a multibillion-dollar industry).
Some, such as Elon Musk, argue that DEI—which, definitionally speaking, means addressing structural inequalities in society—constitutes blatant racism. Others contend that DEI is simply about creating more equitable and harmonious workplaces and offers clear financial benefits to companies as well.
“Study after study has proved that diverse companies perform better than their more homogeneous counterparts,” Inc. reported in 2023. “Companies that don’t foster an inclusive environment or prioritize diversity initiatives do so at their own peril.”
“Proved” is a heavy (and inaccurate) word here, but Inc. isn’t wrong about the abundance of evidence showing that DEI initiatives make companies more profitable. Between 2015 and 2023, McKinsey & Co., a multinational strategy and management consulting firm, released four separate studies showing that DEI initiatives boost corporate earnings. Unfortunately for DEI advocates, the research appears to be bunk.
A new study published in Econ Journal Watch, a semiannual peer-reviewed academic journal, shows that researchers were unable to replicate the results of all four McKinsey studies.
“Our results indicate that despite the imprimatur often given to McKinsey’s 2015, 2018, 2020, and 2023 studies, McKinsey’s studies neither conceptually ... nor empirically ... support the argument that large US public firms can expect on average to deliver improved financial performance if they increase the racial/ethnic diversity of their executives,” professors John R.M. Hand and Jeremiah Green found.
This is not the only research that shows that DEI initiatives are not the panacea for corporate earnings that supporters claim them to be. Writing in the Harvard Business Review, Robin J. Ely, a professor of business administration at Harvard, and David A. Thomas, president of Morehouse College, pointed out that “the rallying cries for more diversity in companies” are not supported “by robust research findings.”
Ms. Ely and Mr. Thomas said, “We say this as scholars who were among the first to demonstrate the potential benefits of more race and gender heterogeneity in organizations.”
The idea that all these studies showing clear financial benefits to DEI are rubbish might be shocking to some readers, but it’s a familiar academic pattern. For more than a decade, scholars and media have publicly worried about the “replication crisis” in science. It turns out that an astonishing number of findings in various fields—from psychology and economics to sociology, medicine, and beyond—fail to hold up when other researchers attempt to replicate the findings, as Vox has explained.
None of this is to say that diversity and inclusion are inherently bad, of course.
I value diversity and am an inclusive person, and I encourage others to be the same. It’s the means that we choose to achieve diversity and inclusion that is the problem, as well as that word wedged in between them: equity. To many, advancing social equity is a paramount value. Because of this, many support illiberal means (in the classical sense) to achieve this end—including supporting policies that actively discriminate on the basis of race.
Coleman Hughes, a fellow at the Manhattan Institute and author of “The End of Race Politics,” recently appeared on “The View” and offered a better approach.
“My argument is that we should try our very best to treat people without regard to race, both in our personal lives and our public policy,” Mr. Hughes told the hosts (who accused him of being “co-opted” by the right).
He is right to say that this is the North Star that we should be aiming for: the equal treatment of all people regardless of race or class.
The great orator and abolitionist Frederick Douglass saw that such a view is the true path to progress.
“In a composite nation like ours, as before the law, there should be no rich, no poor, no high, no low, no white, no black, but common country, common citizenship, equal rights, and a common destiny,” Mr. Douglass noted in a speech in 1867.
The ethos of DEI runs counter to this, which is precisely why both the concept and the industry should be scrapped. A good place to start would be to dispense with the fiction that DEI programs are a rainbow leading to a pot of gold in corporate profits.
Originally published by the Washington Examiner
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.
President Biden has unveiled the administration's promised new sanctions on Iran targeting the country's drone, steel and automotive industries, which is 'punishment' in response to the unprecedented Saturday overnight Iranian ballistic missile and drone attack against Israel.
Biden's Thursday statement presented the sanctions as part of his vow to help defend Israel and all about "holding Iran accountable". Biden touted that during the weekend attack, "Together with our allies and partners, the United States defended Israel."
"The sanctions target leaders and entities connected to the Islamic Revolutionary Guard Corps, Iran’s Defense Ministry, and the Iranian government’s missile and drone program that enabled this brazen assault," he said, also emphasizing that G7 partners are committed to "acting collectively to increase economic pressure on Iran."
This is toward restricting "Iran's destabilizing military programs" and to utilize sanctions "that further degrade Iran’s military industries." But at the same time US have officials have reportedly been warning Israel behind the scenes that it should not pursue a military strike against Iran.
Other Western allies, including Germany and the UK, have taken the US stance of wanting to cool any potential escalation which could spiral to major regional war. Prime Minister Netanyahu on Wednesday said he was receiving "all kinds of suggestions and advice," but Israel will nevertheless "make our own decisions, and the State of Israel will do everything necessary to defend itself."
A fresh Thursday statement from US Treasury said the new Iran sanctions are being coordinated with Britain, particularly measures which target the Islamic Republic's drone program.
"We're using Treasury's economic tools to degrade and disrupt key aspects of Iran's malign activity, including its UAV program and the revenue the regime generates to support its terrorism," said Treasury Secretary Janet Yellen. According to details revealed thus far the sanctions target 16 individuals and two entities overseeing Iran's drone production, per Axios:
But so far it doesn't look like new sanctions on Iranian oil are on the table, which will no doubt result in further Republican anger that Biden has been more worried about gasoline prices (and his own re-election chances) than Israel's security.
In the background is also the last September decision of the White House to release some $6 billion in Iranian oil revenue in exchange for the release of some hostages that were held in Iranian prisons. Critics point out that Biden could hit Tehran's military funding where it really hurts, but is intentionally turning a blind eye - specifically regarding China's massive and ongoing purchases of Iranian oil.
I don't think the word "oil" is in there | #OOTT https://t.co/iHrMZbbKwO
— Javier Blas (@JavierBlas) April 18, 2024
The Wall Street Journal also took a swipe at the administration this week:
Treasury Secretary Janet Yellen said Tuesday that "all options" are on the table to disrupt Iran’s terror financing. Great, and we hope this means the Administration will welcome the 383-11 vote in the House Monday to expand sanctions against Chinese financial institutions that buy Iranian oil.
It's no secret the White House has been reluctant to stiffen sanctions against Iranian oil lest prices rise before the November election. The Administration has looked the other way as Chinese “teapot” refineries have imported an increasing amount of Iranian crude at a discount.
Meanwhile Iran's oil exports are at a six-year high, as FT points out: "Iran is exporting more oil than at any time for the past six years, giving its economy a $35bn-a-year boost even as western countries discuss stepping up sanctions in response to its attack on Israel."
The awkward political dance by the administration is basically summed up in this:
Iran is producing record amounts of oil, enabling it to pay for missiles, drones and whatnot, as Biden refuses to enforce Trump's sanctions against Iran oil exports afraid an oil price spike would further crush his approval rating pic.twitter.com/eeX0OnwYBA
— zerohedge (@zerohedge) April 15, 2024
Yellen alluded to "all options" on Tuesday, and yet Thursday's formal announcements on anti-Iran sanctions curiously leave out anything regarding oil. "Clearly, Iran is continuing to export some oil. There may be more that we could do. I don't want to preview our actual sanctions activities, but certainly, that remains in focus as a possible area that we could address," Yellen had said.
But Republicans are expected to do something about this, in the form of stuffing Iran oil sanctions into the House foreign aid package that House Speaker Mike Johnson is looking to bring to a vote. Senator James Risch of Idaho was cited in Bloomberg as saying "The pot’s boiling right now" as there are "discussions in the two houses to include some of those kinds of things in this package that will hopefully pass out of the House."
Dozens of Google employees just learned they can't treat corporate offices like a college campus. On Wednesday, the Alphabet subsidiary rushed to fire 28 employees who were part of Tuesday sit-in protests against the company's provision of artificial intelligence and cloud services to the State of Israel.
The protests were organized by a group called No Tech for Apartheid, which had declared Tuesday a "day of action" at Google. At issue: Google's Project Nimbus -- a $1.2 billion cloud and AI contract with Israel -- and the Israeli Defense Forces' use of Google Photos in Gaza, "which has led to the arrest, imprisonment, and torture of thousands of Palestinians with little to no evidence," the group said. "It’s clear that the Israeli military will use any technology available to them for genocidal means."
Instant karma: @Google employees held a sit-in protest of the Big Tech company's business with Israel.
— Kyle Becker (@kylenabecker) April 18, 2024
They were arrested and fired.
Life comes at you fast!pic.twitter.com/rJiysqtPsk
Last week, Israel's +972 Magazine, citing Israeli intelligence officers, reported on the Israeli Defense Forces' expansive use of AI in its war on Gaza in a system called Lavender. “Human personnel often served only as a ‘rubber stamp’ for the machine’s decisions,” one source said, typically spending only 20 seconds reviewing AI-selected targets "just to make sure the Lavender-marked target is male." The intel sources said that, particularly during the early days, the majority of the resulting dead were "women and children or people who were not involved in the fighting."
Tuesday's protests were staged in Google's Sunnyvale, California, Seattle and New York City offices. They including livestreamed sit-ins lasting about 10 hours. The protesters weren't just hanging around in hallways or lobbies: In Sunnyvale, they took over the personal office of Google Cloud CEO Thomas Kurian, and wrote a list of demands on his whiteboard. Police were eventually called, and nine employees were arrested for trespassing.
In a statement, Google laid out its rationale for bringing the hammer down:
“Physically impeding other employees’ work and preventing them from accessing our facilities is a clear violation of our policies, and completely unacceptable behavior. After refusing multiple requests to leave the premises, law enforcement was engaged to remove them to ensure office safety.
We have so far concluded individual investigations that resulted in the termination of employment for 28 employees, and will continue to investigate and take action as needed.”
No Tech for Apartheid condemned the terminations. “This flagrant act of retaliation is a clear indication that Google values its $1.2 billion contract with the genocidal Israeli government and military more than its own workers—the ones who create real value for executives and shareholders,” the group said in a statement.
Last month, Google axed this engineer who interrupted a speech being delivered by an Israeli-based Google executive at a tech conference in New York City:
“I refuse to build technology that powers genocide.”
— Middle East Eye (@MiddleEastEye) March 5, 2024
A Pro-Palestine Google Cloud engineer disrupted Barak Regev, Google Israel managing director During a tech conference held in New York City.
The worker protested Project Nimbus, a contract to sell technology that could be… pic.twitter.com/pjWF3koatp
While labor laws generally give a green light to employee strikes and other disruptive actions aimed at things like wages and work conditions, protesting an employer's choice of customer is something else altogether. However, talking to Bloomberg, San Francisco University labor professor John Logan attempted a tortured argument on the Google protesters' behalf.
“Tech workers are not like other kinds of workers,” he said. “You can make an argument in this case that having some sort of say or control or ability to protest about how their work product is being used is actually a sort of key issue.”
Google begs to differ, and on Wednesday offered a warning to its remaining employees: "The overwhelming majority of our employees do the right thing. If you’re one of the few who are tempted to think we’re going to overlook conduct that violates our policies, think again."
Authored by Simon White, Bloomberg macro strategist,
The impulse from central-bank reserves in the US, or the change in their change on a monthly basis, points to further short-term resistance for stocks.
The Federal Reserve’s quantitative tightening program is ongoing, but bank reserves still remain almost $400 billion higher than when the Fed began QT in June 2022, even as the total size of the Fed’s balance sheet steadily contracts.
The “Treasury pivot,” its decision to pivot issuance towards bills, was instrumental in allowing risk assets to rally in the face of tight monetary policy, by allowing money market funds to finance the government using reserves it had parked at the Fed’s reverse repo facility.
But for risk assets such as stocks, their shorter-term performance is not just related to by how much reserves are rising, it’s by how much they are accelerating. The chart below shows the impulse in reserves - the one-month change of their one-month change - tracks the one-month change of the S&P. The impulse has been weakening, consistent with the headwinds stocks have been encountering.
The headwinds are likely to continue. In the short term, reserves have fallen due to tax payments. The Treasury’s account at the Fed has risen over $240 billion to $906 billion since last week as taxes came in, with increases in the account removing reserves from the system. The Treasury aims to keep the account around $750 billion, so it should fall again as the Treasury spends the money, re-injecting reserves back into the system.
Nonetheless, reserves are likely to be increasingly challenged as the RRP falls. The facility this week hit its lowest levels in almost two years, to a low of $327 billion. Some of that is tax related, but key is that bill yields, e.g. six and 12-month maturities, are rising again as the amount of interest rate cuts expected from the Fed diminishes. This makes bills more attractive for MMFs, who then pull money out of the RRP to buy them.
Not only will that incrementally make the liquidity backdrop for stocks less friendly this year, it also means funding risks are rising again. In this changing environment, it is prudent for investors to heighten their vigilance.
One week ago, when Japan's PM Kishida visited the White House and unwittingly sparked the latest Beltway fashion scandal, when Jeff Bezos' current wife appeared dressed as a middle-aged stripper to the dinner honoring the Japanese delegation, sparking online outrage among the commentariat who said Sánchez’s state dinner look was “totally inappropriate,” “embarrassing” and “the trashiest thing” to ever be seen at the black tie White House gala...
Jeff Bezos and Lauren Sanchez arrive hand-in-hand at the state dinner for Japan at the White House. Bezos didn’t answer when asked if he’d be donating to Biden’s campaign. pic.twitter.com/Vw7sTF2Bse
— Judy Kurtz (@JudyKurtz) April 10, 2024
... we said that even though the yen was plunging, it would be virtually impossible for Japan's Ministry of Finance to step in and prop up the imploding currency amid all the official celebrations, as an FX intervention during an official state dinner would look rather impolite and thus, highly un-Japanese.
Luminaries including Clinton, Bezos, Cook, Dimon arriving at White House for black-tie state dinner with Japan's PM Kishida
— zerohedge (@zerohedge) April 10, 2024
Poor Japanese MOF can't intervene in FX while this is taking place or it will get really awkward
However, now that the Japanese state visit is long over, the probability that Tokyo will step in and prop up the collapsing currency any given moment is soaring, especially since overnight the G-7 appears to have reached a tacit "Plaza Accord" lite, one where the US has given a quiet agreement to Japan and Korea to step in and intervene in the FX market to prop up their currencies.
According to Reuters, the United States, Japan and South Korea agreed to "consult closely" on foreign exchange markets in their first trilateral finance dialogue on Wednesday, acknowledging concerns from Tokyo and Seoul over their currencies' recent sharp declines.
The trilateral gathering, attended by Treasury Secretary Janet Yellen, Japanese Finance Minister Shunichi Suzuki and South Korean Finance Minister Choi Sang-mok, was held on the sidelines of the International Monetary Fund and Group of 20 (G20) finance leaders' meetings this week in Washington. Suzuki told reporters he also met Yellen bilaterally on Wednesday and explained Tokyo's readiness to take appropriate action against excessive yen moves, without elaborating.
Japan's top currency diplomat Masato Kanda, who is also in Washington, said authorities would not rule out any options in dealing with excessive yen moves. He declined to comment, when asked about the possibility of coordinated intervention to slow the dollar's ascent against other currencies, including the yen.
The rare warning from the three countries' finance chiefs came as receding expectations of a near-term U.S. interest rate cut pushed the yen to 34-year lows, keeping markets on alert on the chance of an intervention by Japan to prop up the currency.
"We will continue to cooperate to promote sustainable economic growth, financial stability, as well as orderly and well-functioning financial markets," according to a joint statement released after the trilateral meeting.
"We will also continue to consult closely on foreign exchange market developments in line with our existing G20 commitments, while acknowledging serious concerns of Japan and the Republic of Korea about the recent sharp depreciation of the Japanese yen and the Korean won," it said.
The dollar quickly slid to an intraday low of 154.18 yen after the statement, off the 34-year high of 154.79 yen hit on Tuesday, but it has since regained virtually all of the drop as markets continue to make a mockery of Japan, and even this latest green light by the G7 to step in and intervene to keep the dollar weaker, an outcome which is now in the benefit of not only the rest of the world but the US as well.
And indeed, Washington's acknowledgement of the currency concerns from Tokyo and Seoul may lay the groundwork for intervention, analysts said.
"While I don't see a statement like this being enough to boost the yen and avoid an intervention, the language used there is pretty strong and I wouldn't be surprised to see some concrete moves come out of Japan before the week is out," said Helen Given, a currency trader at Monex USA.
"In the last few intervention cycles, American authorities - most notably Janet Yellen - issued statements acknowledging Japan's motivations and providing verbal support," said Karl Schamotta, chief market strategist at Corpay.
"From a strategic perspective, currency intervention is far more likely to succeed when delivered through a coordinated international effort. Unilateral moves are helpful in mitigating volatility, but aren't up to the task of reversing the yen's long rate differential-driven slide," Schamotta added.
Hitting the nail on the head, Keiichi Iguchi, senior strategist at Resona Holdings, said that "the US has effectively given the nod to Japan to intervene on the yen if needed," adding that the market had assumed before heading to the G-20 that any intervention would be alone, but now there is speculation that a coordinated intervention is a possibility. That would be more effective and larger than a single intervention. Such intervention would be by Japan and South Korea intervening to buy their respective currencies at similar times.
Iguchi concludes that if what’s happened with the views of the US, Japan, and South Korea finance ministers at the G-20 spread further, this could slow the speed of dollar appreciation
Bloomberg's Vassilis Karamanis writes that "the factor that invites a fresh outlook on intervention is that it may not be unilateral anymore. Japan’s currency chief Masato Kanda said earlier that G-7 members had reaffirmed that excessive moves in the FX market were harmful for economies. In essence, this leaves the door open to members to intervene in markets under certain circumstances. This isn’t breaking news for the market as we got similar headlines Wednesday, but it’s all the more reason for us to focus on spot and volatility correlation to assess just how concerned traders are when it comes to intervention in the Japanese currency."
Finance leaders of the G7 advanced nations agreed to a Japanese proposal to reaffirm their commitment that excessive volatility and disorderly moves in the currency market were undesirable, Kanda told reporters after the G7 gathering.
In recent months, Japan and South Korea have seen their currencies slide against the dollar in recent weeks due largely to reduced bets of near-term cuts to elevated U.S. interest rates. Increasingly ineffectual verbal warnings by Japanese authorities have failed to keep traders from pushing the yen down near 155 to the dollar, a level seen as Tokyo's line-in-the-sand that heightens the chance of intervention.
Meanwhile, Bank of Korea Governor Rhee Chang-yong said on Wednesday authorities have the resources and tools to smooth out any volatile moves in the country's currency, signaling readiness to intervene in the market to shore up the won.
"Our exchange rate deviated a little bit from what could be justified by market fundamentals," Rhee said in an IMF seminar.
Finance leaders of the G20 major economies have a long-standing agreement that excessive exchange-rate volatility and disorderly currency moves are undesirable. Tokyo has argued this G20 agreement gives it freedom to intervene in the currency market to counter excessive yen moves.
Still, intervention could be costly and there is no guarantee it could reverse the current strong-dollar tide, which is driven by the big gap between U.S. and near-zero Japanese interest rates.
"I'm not sure whether Tokyo would intervene just because the dollar breaks past 155 yen," said Masafumi Yamamoto, chief FX strategist at Japan's Mizuo Securities.
"Authorities probably feel that solo intervention won't have a lasting effect when a strong U.S. economy is pushing back the timing of a Fed rate cut and driving up the dollar," he said.
Others were skeptical an intervention is imminent. Bloomberg analyst Ven Ram writes that a joint intervention along the lines we saw in 1998 when the US authorities waded into the markets, together with Japanese officials, seems unlikely for now. The statement from the Treasury letterhead had this crucial sentence:
“We will continue to cooperate to promote sustainable economic growth, financial stability, as well as orderly and well-functioning financial markets. We will also continue to consult closely on foreign exchange market developments in line with our existing G20 commitments, while acknowledging serious concerns of Japan and the Republic of Korea about the recent sharp depreciation of the Japanese yen and the Korean won.”
Here’s how Ram interpreted that language:
Back in June 1998, the US and Japan shored up the yen in coordinated intervention, sending the dollar crashing by 4.5% in just one day, so while the markets seem to be interpreting the latest joint statement to mean that there is perhaps approval for coordinated currency intervention, Ram sees it as an admission that the US isn’t interested in joining any such effort.
While Japan and Korean combining efforts to rescue their currencies would have a huge, though temporary, effect on sentiment, it won’t be nearly as dramatic if the US were involved. And since the prospect of an imminent intervention from Japan doesn’t look so compelling, that's why the dollar is just down mildly today.
Still, even Japan may have no choice but to do it alone: Morgan Stanley FX analyst Daniel Blake published an overnight note according to which potential currency intervention rises as the yen approaches a key threshold of 155 against rises as a yen weaker than that level poses risk for Japanese stocks, and also exacerbates momentum reversal in Japanese stocks.
We give the last word to Bloomberg's Paul Dobson who echoed the above sentiment and said that Janet Yellen acknowledged the “serious” concerns expressed by Japan and South Korea over sharp declines in their currencies, offering a green light for them to intervene if necessary. The reason is simple: the US also doesn't want a super-strong, rapidly-appreciating dollar, while its global peers would prefer a little bit more stability for their depreciating currencies.
True, it’s not such a bad thing for the US if it has enhanced purchasing power — for starters, it should help it conquer inflation. But nobody wants other nations to be able to undercut them with way cheaper products and manufacturing for too long.
Imagine if China let the yuan go where the market would like it to be all at once— there’d probably be some pretty hasty protests or retribution.
And it’s worth noting that most larger Asian economies have plenty of firepower if they do need to push back against the dollar, having built up currency reserves for just such an eventuality. That could come in handy, because if the Fed does stay on hold for a lot longer (or starts to hike again) they may well be called on. Perhaps it’s also not such a bad thing for the US
Bottom line, however, is that with Biden still going full debt throttle on the US economy to demonstrate just how amazing Bidenomics is, even if it costs the US $1 trillion in debt every 100 days to maintain this growth illusion and is sowing the seeds of the next financial crisis as even the IMF warned (see IMF Warns Biden's Fiscal Profligacy Poses "Significant Risks" To Global Economy 'In Great Election Year'), any truly aggressive shorting of the US Dollar will likely wait to have until Trump wins the elections at which point the deep state bureaucrats will have no choice but to admit just how ugly the US economic picture really is, and the USD craters.
Iran's leadership has always strongly asserted that it is not pursuing the development of nuclear weapons, but instead has long sought a peaceful nuclear energy program. Various Ayatollahs over the decades have even declared the atomic bomb to be 'unIslamic' and against the teachings of the Koran.
But that could change, Iran's military now says, should Israel launch an attack against the Islamic Republic following last Saturday's own Iran strike on Israel which was retaliation for the Damascus embassy attack of April 1st.
The commander of Iran's Nuclear Centers Protection and Security Corps of the IRGC, Brigadier General Ahmad Haghtalab, has warned that any aggression against Iran could trigger a review of the country's nuclear stance.
"If Israel attempts to use the threat of attacking our country's nuclear centers as a means to pressure Iran, it is possible and conceivable that the Islamic Republic may reconsider its nuclear doctrine and policies, potentially deviating from previously announced stances," Haghtalab was cited in Tasnim news agency as saying.
"From the very beginning, Iran was ready to counter threats from Israel. Thanks to the use of passive defense plans, as well as the most modern weapons, thanks to the dispersal of nuclear facilities throughout Iran, we are ready to counter any threat from Israel to our nuclear facilities," Haghtalab said.
Iran has long endured suspected Israeli sabotage attacks against its nuclear facilities, especially massive cyberattacks that in some cases crippled operations systems. There have also been several 'mystery' explosions at these locations over the years.
"The International Atomic Energy Agency, the UN’s nuclear watchdog, has repeatedly expressed concerns about Iran’s expansive nuclear program," FT comments. "Tehran has for three years been enriching uranium at levels close to weapons grade."
FT in commenting on the fresh nuclear posture warning from Iran's military leadership has published a map of Iran's nuclear facilities...
Yesterday, an interview was published by Sky News in which a former Israeli Mossad intelligence chief declared that as part of Israel's retaliation currently being mulled by the Netanyahu government, striking Iranian nuclear facilities "is on the table."
The former director of the spy agency, named Zohar Palti, described that he has "no doubt" that PM Netanyahu could "attack sensitive facilities" in Iran as some cabinet ministers are urging it. Palti further said the question of deciding the timing of Israel's retaliation operation is "still ongoing" and that some officials are urging Netanyahu to attack "as soon as possible." However, others in Tuesday's war cabinet meeting argued for getting international backing first, especially from Western partners.
Submitted by QTR's Fringe Finance
Friend of Fringe Finance Lawrence Lepard released his most recent investor letter this week. He gets little coverage in the mainstream media, which, in my opinion, makes him someone worth listening to twice as closely.
Larry was kind enough to allow me to share his thoughts heading into Q2 2024. The letter has been edited ever-so-slightly for formatting, grammar and visuals.
QUARTERLY OVERVIEW
Globally, the stock markets continued their 45-degree angle rise during the first quarter. Crude oil, and commodities broadly, also had a stair-step rise consistently during the quarter. Gold and silver and the miners were an interesting dichotomy. Bullion prices were flat to slightly down in January and February, and the miners were clobbered during those early months of Q1. However, in March the price of gold broke through the long-standing $2,070 ceiling and the miners responded, driving the Fund up by 25.4%. Gold miner indices were down 17% in the first two months before the March move.
Note that the gold mining stocks still have not provided any leverage to the price of gold. In fact, in the first quarter they did not even keep pace with the increase in the price of gold. With gold up 8.1% in the quarter, the gold mining indices were up 2%. Typically, gold miners provide 2x to 3x leverage in terms of returns; so with gold up 8%, the miners would typically have been up 16% to 24%. This supports our thesis that the miners are still undervalued and are going to mean revert with a vengeance as this bull market in gold continues. The gold mining shares have a long way to go before they reflect fair value.
THE MARKETS SPEAK: GOLD BREAKS OUT
We have been waiting for a conclusive Federal Reserve loosening of financial conditions (monetary expansion) to light a fire under our Fund’s assets. While we have seen some hints that the Fed is going in that direction, they are sending mixed signals. In our view, the big story in Q1 was that the markets said, “OK, we have seen enough, we know what’s coming, so let’s get going.”
In the first quarter, the price of gold definitively broke out from its long-term price cap of ~$2,070 per ounce. Gold’s price had bumped up against this cap four times over the past four years. Notably, gold topped out at $1,900 in 2011 before starting a multi-year correction. Breaking through a top that had been in place for over a decade is a big deal.
And it was not just gold. The other sound money assets have participated too. Bitcoin started the year at $42,802 and hit an all-time high of $72,740 in early March (up 67% in the Quarter!). Silver also broke through long-term resistance, although it has much further to go to hit an all-time high.
Markets reflect current conditions, but more importantly, they price in future expectations. We strongly believe that more investors are waking up to the monetary trap that the Fed has placed itself in. Consider, there have been three crises in the last 18 months that the sound money assets are reacting to:
• October 2022 – UK Gilt crisis…the Bank of England printing
• March 2023 – Silicon Valley Bank / Regional Bank Crisis….FDIC guarantees all deposits and Fed prints with the BTFP
• October 2023 – 10-year U.S. Treasury yield abruptly goes above 5%.....Fed begins Dovish talk, signals rate hike cycle over and soft pivots
Gold, Silver and Bitcoin are reacting to both that recent intervention plus front running the next round of money printing or monetary accommodation that will occur in the coming crisis (and given the debt load, the next crisis could be massive). This move in sound money assets is different.
This is best demonstrated in the chart below which shows the price of gold compared to the “real yield” on the U.S. 10 Year bond (inverted). Note that the “real yield” is the yield on the 10-year U.S. Treasury bond minus the current expectation for average inflation rates over the next 10 years. For example, today the 10 year treasuries are yielding about 4.5%, and 10-year inflation swaps are priced at ~2.5%, reflecting the expectation that inflation will average 2.5% for the next ten years. (we don’t think it will). This leads to a “real yield” of 2% as shown in the chart below.
One of the long-standing relationships in finance is that when real yields are higher, gold is less attractive. Gold pays no yield, but it protects against debasement. When real yields are positive or trending positive, gold suffers. When real yields are negative or trending negative, gold does well. Note the tight correlation from 2006 to 2020 in the chart below.
Now, the important point is to look at what happened starting in 2022. Due to the Federal Reserve’s rate hiking campaign, real yields have gone up substantially and YET, gold went up! In our opinion this is a huge clue. Something is different. We believe the gold market is sniffing out the global debt and fiscal problems that are present in the United States and that it is anticipating future monetary debasement.
Given this dramatic de-coupling of the price of gold from the underlying trend in real yields/interest rates, we cannot help but wonder: have conditions changed such that the Fed is impotent and interest rates no longer have such a strong impact on the price of gold? If so, this is another way in which this decade is beginning to look more like the 1970’s, where gold actually went up IN SPITE of higher rates of interest because inflation expectations drove gold higher.
NARRATIVE SHIFT
The change in the gold price behavior, when compared to real interest rates, demonstrates the economic conversation is changing. Broadly speaking, the narrative is shifting, and the mainstream financial world and investment markets are waking up to what we have been saying for years, to wit:
The FT article above refers to the UK Gilt crisis which occurred in the Fall of 2022 when Liz Truss proposed tax cuts and spending increases. This immediately led to a severe sell-off in the UK Gilt (bond) market and severe weakness in the British Pound. Prime Minister Truss (via the Bank of England) was forced to reverse these policies in order to stop the market rout, and she also lost her job.
CBO Director Phillip Swagel, who made the comment in the article, has good company. Fed Chair Powell has said several times that the U.S. Government’s Fiscal path is not sustainable. Many highly intelligent investors including Dalio, Druckenmiller, El Erian, Fink, Singer and Tudor Jones have said the same.
The entire world is coming to understand that the Fed is trapped and will soon be forced into additional monetary accommodation. The U.S. Government’s Fiscal situation is out of control, and people and investors are losing trust. Many people sense that something is wrong, and they are moving to protect themselves. Remember that the faith in the dollar, as opposed to gold, is based upon trust in the U.S.
Government. As the schedule below shows, the government is not doing too well in the trust department.
We wondered who the 20% were and then we were reminded that the government employs about 20% of the population.
Perhaps this is why we see news stories like this:
USA Today reports Costco’s CFO telling investors: “When we load them on the site, they are typically gone within a few hours, and we limit them to two per member.” Costco is now expanding into silver coin sales as well. (h/t Dan Oliver, Myrmikan for the quote).
U.S. FISCAL SITUATION GOES CRITICAL
Perhaps all of the awareness that we described above is because it is very hard to ignore the math and the recent headlines like the one below from March 4, 2024:
Now it is unfair to annualize this because there is some lumpiness in the monthly data; however, with 365 days in a year this implies a deficit of $3.65 Trillion/year. In the first Federal fiscal quarter that ended December 31, 2023, the deficit was $500 Billion implying a $2.0 Trillion annual deficit. Q2, which ended March 3, was just reported, and the deficit was $600 Billion. For the first half of fiscal 2024 the U.S. Federal Government recorded a $1.1 Trillion dollar deficit. Clearly, the current run rate is much higher.
Keep in mind that this is all with a relatively healthy economy and stock market. If the debt were to continue to grow at this rate, it would be comparable to a starting debt of $34 Trillion on December 31, 2023. It (a deficit run rate of $3.65T) would imply an annualized growth rate of 10.7% in the total debt burden. Annual debt growth of 10.7% compares very unfavorably to estimated GDP growth of 2.0-2.5%. GDP funds the interest payments on the debt and this is why the math is unrelenting. Something has to give. And by the way, the trend in this does not look good, the Biden Administration just proposed a spending budget of $7.3 Trillion for fiscal 2025 which represents a 13% increase in spending. Keep in mind that tax revenues in fiscal 2023 were only $4.4 Trillion. Where are they going to find the money?
As we showed in our last Quarterly Letter the growth in Federal Debt is stunning.
The debt growth is a problem for a number of reasons, not the least of which is the increase in the interest costs for the U.S. Federal Government. As the chart below shows the Federal Government is already paying interest at a run rate of $1.1 Trillion per year, and unless the Fed cuts the short- term interest rates by 150 bps (see yellow line), that interest bill will swell to $1.6 Trillion per year by December of 2024. There is nothing in the chart below which suggests that this monetary system is stable or sustainable.
We were absolutely stunned when we saw this next chart with two significant pieces of data. First, the quarterly issuance of Treasury securities is almost back at the peak COVID levels, yet they say we are not in emergency conditions. Secondly, the pale blue line shows the percentage of securities issued in short-term bills (under one year in duration) which has swelled enormously. The United States is having a hard time selling the longer duration notes and bonds, and very notably, this is the historical pattern of countries suffering from a sovereign debt crisis. They are increasingly forced to finance their debt on a short-term basis because no one will buy their bonds for a longer duration due to the inflation risk.
FED WATCH: PARTY ON GARTH!
The Federal Reserve is clearly trapped. In the Fall of 2023, the U.S. 10-Year Bond yield shot up through 5%. This caused the Fed to panic and they jawboned the yield back down to under 4%. They also indicated via their dot plot that most participants saw three rate cuts coming in 2024 (75 bps). In our year end letter we prematurely called this a pivot. The problem is that the data has not helped their case. A higher stock market, strong employment figures (probably cooked) and solid economic growth combined with worse inflation data mean they now have a predicament. The numbers suggest that they are going to have a hard time attaining their 2% inflation target, and yet the chart of US interest payments on the previous page suggests that if they do not cut short-term rates, interest expense is going to soar.
It truly is a case of damned if they do cut rates and damned if they don’t. So what happens? We thought there was a lot of information in the following AP Release:
April 3 – AP (Christopher Rugaber): “Federal Reserve officials will likely reduce their benchmark interest rate later this year, Chair Jerome Powell said…, despite recent reports showing that the U.S. economy is still strong and that U.S. inflation picked up in January and February. ‘The recent data do not … materially change the overall picture,’ Powell said…, ‘which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2% on a sometimes bumpy path.’ Most Fed officials ‘see it as likely to be appropriate’ to start cutting their key rate ‘at some point this year,’ he added… Powell also sought to dispel any notion that the Fed’s interest-rate decisions might be affected by this year’s presidential election campaign.”
It seems Powell is going to try to “split the baby” and claim that inflation is under control as justification to cut rates. While we could be wrong, we are beginning to think that Fed Policy does NOT matter anymore. If the Fed doesn’t cut rates, something blows up and then we get a massive rate reduction and the big print. If Powell does cut rates, he keeps the game going but at the cost of higher inflation. The markets have taken away the car keys from the reckless teenager: The Fed.
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Another forward-looking clue came from the Fed’s Press Conference on March 20, 2024. Powell said that they were prepared to reduce Quantitative Tightening (QT) in order to make sure there was enough money in the system. He even referred to the 2019 Repo market blow out. We believe he has been listening to Lori Logan, the Dallas Fed Governor who is very familiar with the monetary plumbing and recognizes that the math does not work. Presently, the Fed is reducing its balance sheet by $60 Billion per month via QT, and the consensus is that they will cut that amount in half soon.
Above we mentioned the big print, and there is one development which occurred during the quarter that we think is a very important signal or clue about what is to come.
On March 5, 2024, the International Swaps and Derivatives Association, Inc. (“ISDA”) wrote the Fed, FDIC, and OCC, to implement targeted reforms to the supplementary leverage ratio (the “SLR”). ISDA wrote: “To facilitate participation by banks in U.S. Treasury markets— including clearing U.S. Treasury security transactions for clients—the Agencies should revise the SLR to permanently exclude on balance sheet U.S. Treasuries from total leverage exposure, consistent with the scope of the temporary exclusion for U.S. Treasuries that the Agencies implemented in 2020.”
In plain English – the ISDA is recommending a permanent structure for the banks to perpetually fund US Treasury issuance and U.S. Deficits. They did this exact same thing in response to COVID in order to allow the banks to buy Treasuries in unlimited quantities. It is an emergency measure that was implemented when the U.S. Treasury market became illiquid in March, 2020. This is a huge deal because it basically amounts to QE infinity. The Banks would have unlimited ability to purchase Treasury debt. Complete debt monetization “Banana Republic” style. Remember, it has not happened yet, but the ISDA is owned and controlled by the banks. It is pretty clear that this letter is a trial balloon.
Despite the Fed’s so-called hawkish stance, the supply of base money is still growing. (as our friend Lyn Alden educated us, this is due to the draw-down on the Fed’s reverse repo facility). Our friend, and excellent Macro Analyst Tavi Costa highlighted this issue in the following Tweet.
Our conclusion: the Fed and its banks, sooner or later, will provide more monetary accommodation or the entire debt structure will collapse. That is just math. Now, they will do everything they can to mask it, deny it, or create programs that they claim are not “money printing” (as they claimed that the 2023 Bank Term Funding Program was not money printing (it was). But, they will have to print money or else the system will collapse. The gold and bitcoin prices demonstrate that the markets know this.
Part 2 of Larry's letter, including his thoughts on gold miners, China, Russia, and gold replacing Treasuries as the neutral reserve asset, can be read here.
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Joe Biden has always been a prolific liar and plagiarist, but on Wednesday he took things to another level.
While attempting to disparage former President Donald Trump for 'skipping out' on a 2018 visit to a military cemetery outside Paris (when in fact the Navy made a 'bad-weather' call), Biden claimed that his uncle, 2nd Lt. Ambrose J. "Bozey" Finnegan Jr., was shot down in World War II and eaten by cannibals.
"He was a hell of an athlete, they tell me, when he was a kid. He flew those single-engine planes as reconnaissance over war zones, and he got shot down in New Guinea. They never found the body because there used to be, there were a lot of cannibals, for real, in that part of New Guinea," Biden said during a Wednesday stop in Pittsburgh - an account which appears in the official transcript of his remarks.
"They never recovered his body, but the government went back when I went down there and they checked and found some parts of the plane," Biden continued.
Except that's total bullshit of course
As Jonathan Turley points out, there was a survivor who gave a detailed account of how Finnegan and another man remained in the plane as it sank. What's more, Bozey's plane was not shot down - it was a Douglas A-20 Havoc with two Pratt & Whitney R-985 Wasp Junior 9-cylinder radial engines. The plane had mechanical problems when it crashed near New Guinea and simply sank into the ocean.
“On May 14, 1944, an A-20 havoc (serial number 42-86768), with a crew of three and one passenger, departed Momote Airfield, Los Negros Island, for a courier flight to Nadzab Airfield, New Guinea. For unknown reasons, this plane was forced to ditch in the ocean off the north coast of New Guinea. Both engines failed at low altitude, and the aircraft’s nose hit the water hard. Three men failed to emerge from the sinking wreck and were lost in the crash. One crew member survived and was rescued by a passing barge. An aerial search the next day found no trace of the missing aircraft or the lost crew members.”
D Day was June 6, 1944... and he says his uncles joined the military on D Day. Ambrose died on May 14, 1944.
— Charles R. Smith🔹 (@softwarnet) April 17, 2024
Ambrose was not a pilot, & he was not shot down. He was a courier - a passenger on an A-20 bomber that ditched at sea with engine troubles.https://t.co/MwYZejvQXg
What's more, Biden repeated it more than once! Watch:
Biden has a new story: Uncle Bosey got shot down in a plane and was possibly eaten by African cannibals. pic.twitter.com/9cSP29GSxx
— End Wokeness (@EndWokeness) April 17, 2024
OMFG. Biden just repeated the story that his Uncle Bosey was shot down and then likely eaten by cannibals during WWII.
— End Wokeness (@EndWokeness) April 17, 2024
This is the 2nd time he said this today. pic.twitter.com/PyLkeRiMoJ
So for those keeping track:
- Not shot down
- Not a single engine plane
- Not eaten by cannibals
All of which was has been in the public domain for decades. And not one reporter following him around pushed back on what could have been googled within seconds.
From the military records related to Ambrose Biden's death:
— Zach Parkinson (@AZachParkinson) April 17, 2024
"Subject plane became lost and was forced to make a crash landing due to lack of fuel."
"2nd Lt. Ambrose was a passenger on an A-20 ... on a courier mission." pic.twitter.com/FKmoN8UcAP
And according to AP - Biden was simply "off on details."
He said his uncle was *EATEN BY CANNIBALS* and the best AP can muster is "Biden is off on details..."
— ⚡David Angelo⚡ (@MrDavidAngelo) April 18, 2024
😂😂😂😂😂 https://t.co/HVIh7eRWnK
Look at them go. pic.twitter.com/5XJ9E5eZ6n
— Stephen L. Miller (@redsteeze) April 18, 2024
Meanwhile, Biden has falsely claimed at least 13 times that his uncle Frank won the Purple Heart, and said that he (Biden) was picked twice to attend the Naval Academy, when no supporting evidence exists.
In 2021, Biden told Jewish leaders that he remembered "spending time at" and "going to" Pittsburgh's Tree of Life synagogue in 2018 after 11 people were murdered in a mass shooting - which also never happened. The White House covered by later claiming he was thinking about a 2019 phone call with the synagogue's rabbi.
After the collapse in housing starts and permits in March, it is no surprise that existing home sales disappointed in the same month, dropping 4.3% MoM (-4.1% exp) after surging 9.5% in February. That is the biggest drop since Nov 2022.
Sales were down almost 10% from a year earlier on an unadjusted basis, as sales of both single-family homes and condominiums and co-ops dropped.
Source: Bloomberg
This dragged total existing home sales SAAR back down to 4.19mm...
Source: Bloomberg
"Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves," said NAR Chief Economist Lawrence Yun.
"There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market."
...and it's about to get worse...
Source: Bloomberg
Total housing inventory registered at the end of March was 1.11 million units, up 4.7% from February and 14.4% from one year ago (970,000). Unsold inventory sits at a 3.2-month supply at the current sales pace, up from 2.9 months in February and 2.7 months in March 2023.
“More inventory is always welcomed in the current environment,” Yun said.
“It’s a great time to list with ongoing multiple offers on mid-priced properties and, overall, home prices continuing to rise.”
All price levels saw sales decline except $1mm+...
The median selling price increased 4.8% from a year ago to $393,500, the highest for any March on record.
Source: Bloomberg
...and existing home prices are about to top new home prices...
Source: Bloomberg
First-time buyers made up 32% of purchases in March, up from 26% a month earlier.
Authored by Paul Sperry via RealClear Wire,
The ‘whistleblower’ who sparked Donald Trump’s first impeachment was deeply involved in the political maneuverings behind Biden-family business schemes in Ukraine that Trump wanted probed, newly obtained emails from former Vice President Joe Biden’s office reveal.
In 2019, then-National Intelligence Council analyst Eric Ciaramella touched off a political firestorm when he anonymously accused Trump of linking military aid for Ukraine to a demand for an investigation into alleged Biden corruption in that country.
But four years earlier, while working as a national security analyst attached to then-Vice President Joe Biden’s office, Ciaramella was a close adviser when Biden threatened to cut off U.S. aid to Ukraine unless it fired its top prosecutor, Viktor Shokin, who was investigating Ukraine-based Burisma Holdings. At the time, the corruption-riddled energy giant was paying Biden’s son Hunter millions of dollars.
Those payments – along with other evidence tying Joe Biden to his family’s business dealings – received little attention in 2019 as Ciaramella accused Trump of a corrupt quid pro quo. Neither did subsequent evidence indicating that Hunter Biden’s associates had identified Shokin as a “key target.” These matters are now part of the House impeachment inquiry into President Biden.
“It now seems there was material evidence that would have been used at the impeachment trial [to exonerate Trump],” said George Washington University law professor Jonathan Turley, who has testified as an expert witness in the ongoing Biden impeachment inquiry. “Trump was alleging there was a conflict of interest with the Bidens, and the evidence could have challenged Biden’s account and established his son’s interest in the Shokin firing.”
Ciaramella’s role – including high-level discussions with top Biden aides and Ukrainian prosecutors – is only now coming to light thanks to the recent release of White House emails and photos from the National Archives.
The emails show Ciaramella expressed shock – “Yikes” is what he wrote – at Biden’s move to withhold the $1 billion in aid from Kyiv, which represented a sudden shift in U.S. policy. They also show he was drawn into White House communications over how to control adverse publicity from Hunter taking a lucrative seat on Burisma’s board.
Yet there is no evidence Ciaramella raised alarms about the questionable Biden business activities he witnessed firsthand, which is in sharp contrast to 2019. In that instance, he was galvanized into action after being told by White House colleague Alexander Vindman of an “improper” phone call between President Trump and Ukrainian President Volodymyr Zelensky. During the call, Trump solicited Zelensky’s help in investigating Burisma and Hunter Biden’s role in the company.
Some former congressional investigators say Ciaramella effectively helped cover up a scandal far worse than what Trump was impeached over. What’s more, he failed to disclose that he had a potential conflict of interest stemming from his connection to the matter Trump asked Zelensky to probe when he lodged his complaint against Trump. RealClearInvestigations was the first to identify the then-33-year-old Ciaramella as the anonymous impeachment “whistleblower,” something major media continue to keep under tight wraps.
Ciaramella worked under CIA Director John Brennan when President Obama made Biden his point man on Ukraine in 2014, the same year Burisma hired Hunter. The next year, the CIA detailed Ciaramella, a longtime advocate for aid to Ukraine, to the White House, where he worked closely with Biden and his staff as a top adviser on key Ukrainian policies. After Biden left office, he stayed on at the GOP White House until mid-2017 even though he’s a Democrat, working as a Ukrainian and Russian analyst on Trump’s National Security Council. Co-workers there accused him of trying to sabotage Trump, including allegedly leaking sensitive information to the press.
RealClearInvestigations has reviewed more than 2,000 pages of newly disclosed archived emails from the former vice president’s office related to Ukraine, of which more than 160 contained references to Ciaramella. They reveal that his role advising Biden’s office potentially intersects with the current impeachment inquiry in several areas. Chiefly, Ciaramella focused on aid to Ukraine and anti-corruption reforms in the country. In that capacity, he:
Former Obama-Biden administration officials have confirmed in recent closed-door congressional testimony that Ciaramella was a key part of Biden’s process for making policy in Ukraine. In 2016, for instance, a White House photo shows him taking notes at a White House meeting Biden held with then-Ukrainian Prime Minister Arseniy Yatsenyuk to discuss Ukraine’s anti-corruption reforms and other issues.
Ciaramella also worked directly with top Obama and Biden administration diplomats on Ukraine, including senior State Department official Victoria Nuland. “Eric was regularly the clearing authority to get me into the White House for interagency meetings on Ukraine,” Nuland revealed in a 2020 Senate deposition. Asked if she ever discussed Ukraine policy and Shokin with Ciaramella, Nuland testified: “Of course, I did. He was part of the interagency process. He was also on my negotiating team for the six, seven rounds of negotiations I did with the Russians on [the disputed Ukraine region] Donbas.”
Ciaramella was directly involved in talks concerning the massive U.S. aid package to Ukraine that Biden conditioned on the removal of Shokin, who at the time had seized the assets of the corrupt Burisma oligarch employing Hunter Biden. He also arranged and participated in White House talks with Ukrainian prosecutors visiting from Shokin’s office.
White House visitor logs confirm Ciaramella escorted Shokin’s deputy prosecutor, David Sakvarelidze, into the White House for a January 2016 meeting. A White House agenda for the meeting lists Ciaramella as “point of contact” for the Ukrainian delegation. He also checked in Andriy Telizhenko, the Ukrainian Embassy official who says they discussed Burisma and Hunter Biden during the meeting and struggled to understand why his U.S. counterparts were suddenly hostile to Shokin after praising him in earlier talks.
Emails from the time show Ciaramella appeared surprised to hear about the linkage between the $1 billion loan to Ukraine and the dismissal of Shokin. Though Biden maintains he insisted Kyiv oust Shokin because he was too soft on weeding out fraud in entities that included Burisma, Ciaramella suggested he didn’t share the view that Shokin was corrupt. “We were super impressed with the group,” Ciaramella added, “and we had a two-hour discussion of their priorities and the obstacles they face.”
On Jan. 21, U.S. Ambassador to Ukraine Geoffrey Pyatt emailed Ciaramella and other White House aides an article from the Ukrainian press – “U.S. loan guarantee conditional on Shokin’s dismissal.”
“Yikes. I don’t recall this coming up in our meeting with them,” Ciaramella replied, referring to the White House meeting he hosted with top Ukrainian prosecutors.
But in a closed-door 2020 deposition before the Senate, Pyatt sounded skeptical that Ciaramella was in the dark about the decision. “I think you have to ask Eric what he meant by ‘Yikes,’” Pyatt told Senate investigators. He said that he believed conditioning the loan guarantee on Shokin’s removal “obviously came up in those meetings” hosted by Ciaramella, suggesting that Biden’s aide knew of the quid pro quo before Pyatt circulated the article about it from the Ukrainian press.
The day before he hosted the Ukraine prosecutors, Ciaramella received an agenda from a State Department official that asked him to “note the importance of appointing a new PG [Prosecutor General], reiterating that Shokin is an obstacle to reform,” according to emails. The agenda also called on Ciaramella to “ask the del [Ukrainian delegation] what high-level cases are on the docket for prosecution,” which raises suspicions in some quarters that Biden’s advisers were fishing for information about Shokin’s plans for prosecuting Burisma oligarchs, something Hunter Biden had been asked to find out.
In a Jan. 21 email, Pyatt told Ciaramella to “buckle in” because, as he later explained to Senate investigators, the deal was a “difficult issue” and “there was going to be political controversy around this [news].”
The former ambassador demurred when asked if conditioning the $1 billion on Shokin’s firing was Biden’s idea or came from his office. “It was the – our interagency policy,” he testified, adding, “I don’t remember when the vice president would have weighed in on this.”
However, Pyatt allowed that it was a sudden change in policy. “At the beginning,” he said, “it was not our expectation that Shokin’s removal would be necessary.” Indeed, an Oct. 1, 2015, memo summarizing the recommendation of the Interagency Policy Committee on Ukraine stated, “Ukraine has made sufficient progress on its [anti-corruption] reform agenda to justify a third [loan] guarantee.” Ciaramella was a member of the IPC task force, which monitored Shokin’s office. The next month, moreover, the task force drafted a loan guarantee agreement that did not call for Shokin’s removal. Then, in December, Joe Biden flew to Kyiv to demand his ouster.
If what Ciaramella expressed in his email (which he knew would be part of archived White House records) was a genuine reaction, it appears that Vice President Biden went against the recommendation of one of his top NSC advisers on Ukraine. If Ciaramella were genuinely alarmed, he might have blown the whistle on his boss like he did on Trump, but he stayed mum. If, on the other hand, Ciaramella were a party to the quid-pro-quo discussions, as Pyatt suggests, then he had “a direct conflict,” noted Derek Harvey, the former congressional investigator involved in the first impeachment. Either way, Ciaramella clearly found himself in the middle of a major controversy.
Just weeks prior, White House photos indicate that Ciaramella traveled with Biden on the same December 2015 Air Force Two flight the vice president took to Kyiv to threaten Ukrainian President Petro Poroshenko to ax Shokin. Republicans have accused Biden of pushing Shokin’s ouster to block scrutiny of his son’s actions.
“Biden called an audible and changed U.S. policy toward Ukraine to benefit his son on the plane ride to Ukraine,” House Oversight Committee Chair James Comer said, and “later bragged about withholding a U.S. loan guarantee if Ukraine did not fire the prosecutor [Shokin].”
Biden and his supporters have repeatedly claimed Shokin had to go because he wasn’t cracking down on corruption and that everyone else in the administration, as well as Europe, agreed Shokin should be fired. This remains the prevailing narrative in major U.S. media. But around that time, Shokin had conducted a raid of Burisma oligarch Mykola Zlochevsky’s home, seizing his house, cars, and other assets.
IRS Special Agent Joseph Ziegler, who examined Hunter’s emails as part of his investigation of Hunter for tax evasion, said Shokin was identified as a “key target” in emails exchanged between Hunter and Burisma officials in November 2015 – the month before Biden traveled to Ukraine to demand Shokin’s removal. Just days before Biden arrived in Kyiv in early December 2015 to demand Shokin’s ouster, Hunter allegedly called his father from Dubai following a meeting there with Burisma official Vadym Pozharskyi, who asked him to pressure his father to shut down Shokin’s investigation. Vice President Biden was familiar with Pozharskyi, having met with him in April 2015 during a dinner at the Cafe Milano in D.C. arranged by Hunter.
“The unstated goal was to have the Ukrainian prosecutor removed in an effort to close the criminal case against [Burisma founder] Zlochevsky,” Ziegler said in recent testimony before the House impeachment inquiry. After Shokin was pushed out of office, the Burisma investigation dried up.
Ciaramella tried to marshal a defense for Biden in the whistleblower complaint he sent to Rep. Adam Schiff in August 2019. He listed among Trump’s concerns at the time of the fateful July phone call “that former Vice President Biden had pressured Poroshenko in 2016 to fire Shokin in order to quash a purported criminal probe into Burisma Holdings.” But Ciaramella attempted to pour cold water on the notion by referencing a Bloomberg News article that quoted a “former senior Ukrainian prosecutor” who falsely claimed “that Mr. Shokin in fact was not investigating Burisma at the time of his removal in 2016.”
White House emails reveal that Ciaramella was looped into messages sent by Biden’s communications team, who were concerned that Hunter Biden taking a position on corrupt Burisma’s board created unseemly optics and undercut their boss’ mission to clean up corruption in Ukraine.
In a Dec. 8, 2015, email, for example, Biden’s communications director Kate Bedingfield copied Ciaramella on a link to a New York Times article headlined, “The Knotty Ties Between Joe Biden, His Son and Ukraine.” Bedingfield is quoted in the story, authored by James Risen, denying Hunter had traveled with his father to Ukraine in an attempt to downplay his influence. She also said Ukrainian officials never raised his position on the Burisma board with Biden as an issue of concern. Risen got spun, however, on the issue of compensation for Hunter, reporting that it was “not out of the ordinary.”
At the time, Burisma was paying Hunter, who had no energy sector experience, $1 million a year just for lending his name to its board. It turns out that Hunter never traveled to Ukraine for a single meeting in the five years he sat on Burisma’s board. Republicans suspect Biden got the prosecutor ousted to keep the money flowing from Burisma to the Biden family.
Career State Department officials led by George Kent, who was stationed in Ukraine at the time, tried to get Biden’s aides to raise the issue of potential family conflicts with the vice president. Despite their concerns, Biden never asked his son to step down from the Burisma board, which would have made all questions go away. And despite Kent and other officials identifying Burisma founder Zlochevsky by name as a corrupt actor in Ukraine, Biden himself never publicly called Zlochevsky out as corrupt while Hunter served on his board and pocketed millions in payments from him. For all his talk of fighting corruption in Ukraine, Biden failed to distance himself from one of the most corrupt oligarchs in the country.
Harvey, who served as the staff investigator for the Republican side of the House Intelligence Committee during the 2019 Trump impeachment hearings, said: “The [Biden] impeachment inquiry should compel Ciaramella to testify since we now know he was involved in communications about Biden using the $1 billion in aid to extort Ukraine into firing Shokin.”
Harvey said Ciaramella would make a valuable material witness against Biden in the probe, which centers on whether Biden used his White House clout or political influence on behalf of his son’s foreign paymasters. White House photos indicate Ciaramella took notes during his meetings with Biden, his staff, and Ukrainian officials – materials that lawmakers could subpoena along with his testimony.
Another former staff investigator noted that Ciaramella is no longer protected by federal whistleblower laws. He has left the government and now works as a senior fellow focusing on Ukraine and Russia for the Carnegie Endowment for International Peace in Washington, where he is consulting with White House officials and pushing for billions more in U.S. aid for Ukraine – including “a Marshall Plan for the Ukrainian military.” Through a spokesperson, Ciaramella declined to comment.
“None of the whistleblower protections apply to this particular situation,” said Jason Foster, former chief investigative counsel for the Senate Judiciary Committee and a whistleblower expert. He also noted that the Whistleblower Protection Act doesn’t shield whistleblowers from any other conduct they might have been involved in, including their own conduct. Nor does it give them a legal right to anonymity.
A spokeswoman for the House Oversight Committee, which is leading the Biden impeachment inquiry, declined to say whether Ciaramella is on the witness list. “I don’t have anything for you on this at this time,” said House Oversight Communications Director Jessica Collins. However, Comer has publicly described the “whistleblower” impeachment of Trump as a “cover-up” operation for the alleged Biden blackmail scheme in Ukraine involving U.S. aid and the Burisma corruption probe.
What Ciaramella witnessed and what he documented in notes he took during high-level Biden-Ukraine meetings could now be relevant to the active impeachment inquiry of President Biden. The House may have little choice but to hold the kind of hearings the Democrats blocked during the earlier impeachment by keeping Ciaramella’s identity – and his own potential conflict – secret.
As the catalyst for Trump’s impeachment, Ciaramella could now be a reluctant witness for Biden’s.
China's smartphone market has stumbled into a downturn as economic woes turn consumers cautious. At the same time, consumers are ditching Apple's new iPhone 15 and have embraced domestic brands.
Huawei Technologies Co. is one of those domestic brands that gained popularity with Chinese consumers last fall when it released its 'Made-in-China' Mate 60, which helped erode Apple's market dominance in high-end handsets.
Now, Huawei has announced, first published on its corporate WeChat account, that the company plans to release a new smartphone called the "Pura 70" to compete with iPhone 15 models.
On April 18, 2012, Huawei's first P series mobile phone was launched. Over the past twelve years, hundreds of millions of consumers have captured countless wonderful moments with P series mobile phones. With everyone's company and support, HUAWEI P series has been fully upgraded to HUAWEI Pura, starting again with a new attitude! Today, we launched the "HUAWEI Pura 70 Series Pioneer Plan". Pura 70 Ultra and Pura 70 Pro will go on sale at 10:08 Pioneer. Everyone is welcome to try it!
Here are the starting prices for the Pura lineup:
The iPhone 15 in China starts at around 5,999 yuan, while the iPhone 15 Pro Max starts at 9,999 yuan - yet a sign Huawei is directly challenging Apple.
According to Bloomberg, the Pura lineup has a domestic Kirin 9010 chipset. This comes after Chinese state media lauded the made-in-China Kirin 9000s inside the Mate 60 Pro in the fall that circumvented Biden's chip bans.
Huawei's resurgence in the world's largest smartphone market is a troubling sign as Apple's dominance wanes.
Authored by Simon White, Bloomberg macro strategist,
The risk of a squeeze in US funding markets is increasing as the yield curve bear steepens, i.e. longer-term yields rise more than short-term ones. More attractive bill yields and climbing interest-payment costs on government debt are depleting reserves and reducing their velocity, increasing the chance of a disorderly upswing in funding rates, as well as posing a risk to the stock market.
The bond market intimidates everybody, in the oft-cited words of Bill Clinton’s chief strategist James Carville. That description is apt today as rising yields reverberate across the financial system. Funding risks are intensifying again, increasing the chance of a rate-volatility driven correction in stocks.
Concerns about funding issues have been in abeyance for most of this year, but it is time to sit up and take notice again as the backdrop becomes more pernicious. The bear steepening of the yield curve is a double whammy, accelerating the rate of reserve depletion through a declining reverse repo facility (RRP) and rising government interest payments.
The curve has been bear steepening in the 3-12 month versus 10-year sectors as inflation fears drive term premium higher, with the measure now close to levels last seen in 2008 (using tradeable forward OIS rates rather than “academic” term premium).
A bear steepening is particularly problematic in the current set-up.
First note that the RRP has been hugely important in keeping risk assets supported despite the fastest rate-hiking cycle for decades and ongoing QT.
The Treasury’s decision to pivot issuance toward short-term bills allowed money market funds (MMFs) to tap the more than $2.5 trillion liquidity idling in the RRP to fund the government. That prevented enormous public issuance crowding out other assets, and allowed the rally in stocks and bonds to continue.
But the RRP falling and eventually going to zero is a harbinger total reserves overall are potentially nearing their so-called lowest comfortable level — with estimates for the LCLoR ranging from about $2.5 to $3 trillion — where abrupt and acute funding problems become more likely. This week the domestic RRP fell as low as $327 billion, and is now at $440 billion, the lowest levels it has reached since June 2021, taking the sum of reserves and the RRP to just over $4 trillion.
The RRP has been declining as six-month and 12-month bill yields have been rising in response to the market reducing the number of rate cuts expected from the Fed, making bills more attractive to MMFs relative to the RRP facility.
Some of the RRP’s recent fall has also likely been driven by seasonal tax payments. But that should not mask the clear downwards trend in the facility and its rising volatility. It would not be the first time that a telegraphed non-risk becomes a real risk precisely because peoples’ guards are down.
That’s potentially the case today. As I noted in a column earlier this year, a portent of previous funding episodes was a sharp drop in funding volumes immediately preceding a rapid rise in them, similar to a tsunami wave. As the chart below shows, when the total amount of reserves + RRP declines, volumes in fed funds (i.e. reserves) tend to also decline.
Further falls in fed funds volumes would be a sign that funding problems are potentially fomenting.
Rising longer-term yields are the other side of the coin in the bear steepening. The US government’s interest-rate bill is climbing rapidly, and is now over $1 trillion on an annual basis. This is set to grow much higher.
The 10-year yield gives us a near real-time barometer for the US’s annual interest expense. The recent rise in yields projects the expense will soon double to almost 5% of total debt outstanding, or over $1.7 trillion - i.e. about the GDP of Australia each year in interest.
Here lies the rub: to pay that interest, the government needs to tax and borrow. But that is an ever-greater drain on reserves and their velocity, accentuating the effects of the Fed’s ongoing QT program.
You might ask why that is the case given the interest is paid to bond holders and is therefore re-injected into the economy?
But that’s unlikely to be so for two reasons.
The first is that the corporate and household sectors, the two most likely to spend interest back in the domestic economy, together only account for about 10% of UST holdings. The much larger financial and foreign sectors are more likely to save the proceeds, or spend them abroad.
Second, reserves that end up as savings are of lower velocity, especially if they were originally higher-velocity bank deposits used to pay taxes. The more that interest payments percolate through the system, the more they end up with holders who have an increasingly lower propensity to spend them.
Thus a bear steepening squeezes the RRP and outstanding reserves — as well as their velocity — in a pincer movement, increasing the risk of a funding episode.
The last such major squeeze was in September 2019. It’s notable that in the days running up to that, the yield curve was bear steepening (in fact, it was in the top 1% of eight-day rises for the 2s10s curve going back 2000).
The bear steepening therefore means we should once again be vigilant to funding risks, and keep a close eye on the Funding Stress Trigger shown below.
The signal is inactive at the moment and the SOFR rate is currently well-behaved, but that can change quickly. In the last two major funding flare ups in 2018 and 2019, there were very few signs of what was to come, with the signal triggering only a few days before rates started to spike higher.
Funding stress would also be likely to increase rate volatility, which in turn would lead to higher stock-index correlation. That means a higher VIX, increasing the likelihood of a market correction as the stock perpetual motion machine shudders to a halt.
The potential risks, of course, may not come to pass, and funding markets continue to operate smoothly. But there are enough ex ante reasons to justify heightening one’s senses. The bond market may be intimidating, but a bear-steepening yield curve in the current market set-up is especially menacing, and should be watched closely.
Authored by Jack Phillips via The Epoch Times (emphasis ours),
A juror who was excused from serving on the Manhattan trial of former President Donald Trump provided details about the questions potential jurors were asked.
Kara McGee told media outlets outside the courtroom on Tuesday that she was dismissed but said she believes she could be impartial, adding still that it would be “very difficult for anyone really in this country to not come to this without prior opinions.”
“We all have prior opinions on the defendant, unless you’ve been living in a cardbox,” she said, adding that she was excused because of her job in the cybersecurity sector.
Regarding her personal feelings on President Trump, the woman said, “I’m not a fan.” The main reason why, she said, is because of how she believed he handled the COVID-19 pandemic response.
But Ms. McGee provided some insight on the questions that were asked of the jurors.
“One of which is: Do you have opinions about the ability for a former sitting president to be tried in a court of law? Which I think the way people answered that showed how they felt about case,” she said. “The other one was: Do you have any opinions about legal limits for campaign finance donation amounts? Which I believe was another one that was kinda meant to gauge feelings about the particular case,” she added.
As of Wednesday morning, seven jurors have been selected with five more slots remaining. The judge has indicated that he will choose about six extra jurors to serve as backups.
This is one of the prospective jurors who assured us she could be unbiased in the Trump trial.
— Viva Frei (@thevivafrei) April 17, 2024
She was dismissed due to scheduling conflicts. But she said this, while also assuring the court that she could have remained objective and unbiased. pic.twitter.com/2D4cp2WdBc
Responding to the jury-selection process, President Trump wrote on Wednesday: “I thought STRIKES were supposed to be ‘unlimited’ when we were picking our jury? I was then told we only had 10, not nearly enough when we were purposely given the 2nd Worst Venue in the Country. Don’t worry, we have the First Worst also, as the Witch Hunt continues!”
The former president is on trial for allegedly falsifying payments that were made during the 2016 campaign meant to bury potentially negative stories about him. Prosecutors say that he delivered $130,000 to former lawyer Michael Cohen to deal with a story about an alleged affair with adult actress Stormy Daniels, whose real name is Stephanie Clifford, which the former president has denied.
In court papers, President Trump’s lawyers have argued that the payments were legitimate expenses. He’s pleaded not guilty to the charges, which are felonies, and said it’s an attempt to denigrate his 2024 presidential chances.
Before entering the court on Tuesday, President Trump described the judge, Juan Merchan, as a “Trump-hating” official who “shouldn’t be on this case.” Earlier, he said that the judge is “conflicted” because his daughter works as a consultant for the Democratic Party and has had high-profile clients including Vice President Kamala Harris.
“It’s a trial that is being looked upon and looked at all over the world ... they’re looking at, analyzing it. Every legal pundit, every legal scholar said this trial is a disgrace,” the former president added.
The judge has refused to recuse himself in the case. On Monday, Judge Merchan again said he wouldn’t recuse himself and added that the matter will not be considered again until an appeals court renders a decision.
Also Monday, Judge Merchan told President Trump that he has to show up in court every day it’s in session, adding that “there will be an arrest” if he doesn’t. It means that the former president will not be able to hold many campaign events, including in many key battleground states, for the next several weeks.
The former president visited a New York City bodega where a man was stabbed to death, with the aides saying he chose the store because it has been the site of a violent attack on an employee, a case that resulted in public criticism for the Democratic district attorney, Alvin Bragg, now prosecuting him.
The visit was President Trump’s first campaign appearance since his criminal hush money trial began, making the presumptive GOP nominee the first former president in U.S. history to stand criminal trial.
“They want law and order ... every week they’re being robbed,” the former president said of businesses in New York, as he tried to compare his prosecution with what happens on New York streets. “You know where the crime is? It’s in the bodegas.”
“Papito Trump is coming. Yeah!” said one passerby ahead of the former president’s arrival. Another woman who spoke to The Associated Press said that the former president “speaks the truth,” making reference to illegal immigration. “I think that he will make a difference,” she added.
“I love this city,” the former president told reporters after emerging from the store. “We’re going to straighten New York out.”
The Associated Press contributed to this report.
In the real world labor market, 2024 has been a shitshow of layoffs...
1. Everybuddy: 100% of workforce
2. Wisense: 100% of workforce
3. CodeSee: 100% of workforce
4. Twig: 100% of workforce
5. Twitch: 35% of workforce
6. Roomba: 31% of workforce
7. Bumble: 30% of workforce
8. Farfetch: 25% of workforce
9. Away: 25% of workforce
10. Hasbro: 20% of workforce
11. LA Times: 20% of workforce
12. Wint Wealth: 20% of workforce
13. Finder: 17% of workforce
14. Spotify: 17% of workforce
15. Buzzfeed: 16% of workforce
16. Levi's: 15% of workforce
17. Xerox: 15% of workforce
18. Qualtrics: 14% of workforce
19. Wayfair: 13% of workforce
20. Duolingo: 10% of workforce
21. Rivian: 10% of workforce
22. Washington Post: 10% of workforce
23. Snap: 10% of workforce
24. eBay: 9% of workforce
25. Sony Interactive: 8% of workforce
26. Expedia: 8% of workforce
27. Business Insider: 8% of workforce
28. Instacart: 7% of workforce
29. Paypal: 7% of workforce
30. Okta: 7% of workforce
31. Charles Schwab: 6% of workforce
32. Docusign: 6% of workforce
33. Riskified: 6% of workforce
34. EA: 5% of workforce
35. Motional: 5% of workforce
36. Mozilla: 5% of workforce
37. Vacasa: 5% of workforce
38. CISCO: 5% of workforce
39. UPS: 2% of workforce
40. Nike: 2% of workforce
41. Blackrock: 3% of workforce
42. Paramount: 3% of workforce
43. Citigroup: 20,000 employees
44. ThyssenKrupp: 5,000 employees
45. Best Buy: 3,500 employees
46. Barry Callebaut: 2,500 employees
47. Outback Steakhouse: 1,000
48. Northrop Grumman: 1,000 employees
49. Pixar: 1,300 employees
50. Perrigo: 500 employees
51. Tesla: 10% of workforce
But, according to the government-supplied data...
The number of Americans filing for jobless benefits for the first time last week was unchanged at 212k (SA), basically flat since September of last year, and claims ticked modestly lower on an NSA basis...
Source: Bloomberg
California and Oregon saw the biggest increase in claims last week while New Jersey saw a huge decline...
The funny (and we use that term loosely) thing is that last week saw New Jersey initial claims soar higher...
Just how much of this state-by-state data is simply pure seasonals with some 'fudge' factor... Here's New Jersey showing the jump and pump in early April every year...
Jim Bianco took to X to express his disbelief also:
How is this statistically possible?
Five of the last six weeks, the exact same number.
Effectively the same number in the last 11 weeks, except for the holiday weeks (President's Day and Easter).
Consider:
The US is a $28 trillion economy. It has 160 million workers.
Initial claims for unemployment insurance are state programs, with 50 state rules, hundreds of offices, and 50 websites to file.
Weather, seasonality, holidays, and economic vibrations drive the number of people filing claims from week to week.
Yet this measure is so stable that it does not vary by even 1,000 applications a week.
Just the number of applications incorrectly filed out every week should cause it to vary more than this.
Continuing Claims remains muted (elevate but muted) at 1.812mm Americans. It is now practically unchanged since August 2023...
Source: Bloomberg
But, here's the thing... WARNs are soaring... and Challenger-Grey just announced that March saw the most job cuts (90,309) since January 2023...but government-supplied data on initial jobless claims continues to smoothly tick along near record lows...
Source: Bloomberg
Ah, Bidenomics!!
If Trump wins in November, will all this data suddenly be 'allowed' to reflect reality?
Authored by Bob Goodlatte & Mark Udall via RealClear Wire,
When the U.S. House passed the Reforming Intelligence and Securing America Act (RISAA), which reauthorizes the FISA Section 702 surveillance authority, it overlooked something big – an amendment that would drive the greatest expansion of government surveillance authority in recent history. The Senate has time to correct this and restore balance between the needs of national security and the safeguarding of Americans’ civil liberties.
Section 702 of the Foreign Intelligence Surveillance Act is a legal authority enacted by Congress to enable the surveillance of foreign threats located abroad. But it has increasingly become a means of surveilling Americans located within the United States whose communications are often caught up in the government’s global trawl of data. Section 702 authority has been used millions of times in recent years to query, or target, Americans’ communications. In the House, reformers proposed an amendment to add a warrant requirement before the government can query a U.S. person’s data. That amendment, which failed in a tie vote, was the primary focus of debate on the bill.
As RISAA comes to the Senate, attention is now being cast on another amendment – one from the House Permanent Select Committee on Intelligence (HPSCI) that many have come to call the “Everyone’s a Spy” provision. This measure was portrayed as a “narrow” definitional change to the law concerning electronic communications service providers – big telecom and Internet companies – which obligated them to cooperate with NSA surveillance. These big companies can be compelled to spy for the government, and then be subject to gag orders, forbidding them from telling customers they have been surveilled.
The new expanded definition of the Everyone’s a Spy provision is much broader than what many members of Congress thought. It would give the government the right to similarly compel millions of small businesses that provide Wi-Fi, or have access to routers or other ordinary communications equipment, to act as the government’s partners in surveillance. They, too, would be bound not to tell their customers about this surveillance.
The HPSCI amendment achieves this by including any service provider who has access to equipment that transmits communications. After critics complained that digital loungers in hotel lobbies and coffeehouses would have their data hoovered up by the government, the authors of this amendment provided carve-outs for hotels, restaurants, dwellings, and community centers. This was a good PR move. But this measure still applies to most everyone – owners and operators of any facilities (other than the exempted categories) that house equipment used to store or carry data.
If this became law, millions of American small business owners would have a legal obligation to hand over data that runs through their equipment. These small businesses could be forced to give the NSA direct access to their equipment, or else they might just copy messages en masse and turn them over. And when they’re done with doing their part in mass surveillance, these small businesses would then be placed under a gag order to hide their activities from their customers.
Small businesses are just waking up to what is about to be done to them by the Everyone’s a Spy amendment. Customers are sure to be outraged when they learn that the businesses they patronize are potentially spying on them. All U.S. business might suffer, as this law is sure to also widen the wedge between the United States and European Union on the contentious issue of spying and data privacy. Meanwhile, U.S. consumers and businesses would have no legal way to resist these intrusions. It is easy to see why Sen. Ron Wyden of Oregon (pictured) calls this expansion of government surveillance “terrifying.”
The intelligence community is pressing the Senate to act before this authority lapses on April 19. But the agencies have already secured permission from the FISA Court to continue conducting Section 702 surveillance in its current form until April 2025. So the Senate has plenty of time to act with deliberation. It can boldly strike this toxic Everyone’s a Spy amendment. And considering the popularity of adding a warrant requirement for searching for and accessing Americans’ communications caught up in Section 702 databases, it should do that as well.
Bob Goodlatte represented Virginia’s 6th District as a Republican in Congress from 1993 to 2019 and chaired the House Judiciary Committee. He is a senior policy adviser to the Project for Privacy and Surveillance Accountability.
US equity futures are higher after four consecutive days of selling, although that is the same pattern we have seen all week as futures initially rise only to dump later in the day. As of 7:40am, S&P futures are up 0.3% while tech stocks were set to outperform, pushing the Nasdaq 0.4% higher after TSMC delivered a better-than-projected revenue outlook. An index of global chip stocks and AI poster child Nvidia fell into a technical correction amid the recent selloff, with Evercore ISI analyst Julian Emanuel thinking this is only the start, with the downdraft in stocks only starting and set to continue through the rest of 2024. The dollar steadied, while US Treasuries pared an earlier gain to trade flat. In Europe, major markets are higher with Spain/France leading and Germany lagging. Commodities are mixed: oil is falling further; precious and base metals are higher. Reports from Netflix and L’Oreal are due after the close of their respective markets. Investors will also be parsing initial US jobless data, the latest Leading Index and Existing Home Sales data, as well as speakers from a raft of central banks.
In premarket trading, semis are rebounding from yesterday’s post ASML selloff (MD +1.0%, NVDA +1.4% and MU +2.5%) after Taiwan’s TSMC, the main chipmaker for Nvidia and Apple, reported sales guidance that was better than expected and it stuck by plans to spend up to $32 billion over the course of this year, shoring up expectations for a sustained increase in AI demand. Also on the chip sector front, Micron Technology shares are up 1.5% in premarket trading after Bloomberg reported that the largest maker of US computer memory-chips is poised to get more than $6 billion in grants from the Commerce Department to help pay for domestic factory projects. MegaCap Tech are also mostly higher: AAPL +32bp and AMZN +23bp. Here are the other notable premarket movers:
In the last week, investors have been unwinding gains from a record rally in the first quarter as they come to grips with an overlever, overheating US economy and stubborn inflation that’s forced them to recalibrate rate bets. Money markets signal just two rate cuts by the Fed this year, starting in September, down from 7 at the start of the year, after a fresh round of hot inflation sent Treasury yields soaring to 2024 highs. Offsetting disappointment about the speed of rate cuts, though, investors are more optimistic about growth and the potential feedthrough to corporate profits, according to Peter Oppenheimer, global equity strategy chief at Goldman Sachs.
“Growth is fine, but we’re not likely to get the boost in terms of lower rates that the markets had expected,” Oppenheimer said in an interview with Bloomberg TV. “That’s causing some indigestion, so earnings will really be crucial here.”
Overnight, Loretta Mester became the latest Fed official to warn it shouldn’t rush to cut rates. Meanwhile, Michelle Bowman said progress on inflation may have stalled and questioned the degree to which monetary policy is restraining the economy.
Elsewhere, Joe Biden ramped up his campaign rhetoric, calling China “xenophobic” and highlighting its economic woes, as he sought to make the case for US economic strength.
In Europe, the Stoxx 600 rises 0.4% as investors weighed a slate of upbeat corporate earnings reports against concerns around higher-for-longer interest rates. The utilities sub-index leads gains while energy stocks fall the most. In company news, engineering company ABB hit another record high after it posted strong first-quarter earnings. Here are some of the biggest European movers Thursday:
Earlier in the session, Asia’s stock benchmark rebounded after a six-day selloff, as sentiment stabilized with the region’s currencies regaining some footing. The MSCI Asia Pacific Index rose as much as 1.1% but pared the gain to 0.6%, set for its best day since April 9. Tencent, Samsung Electronics and BHP Group were among the biggest contributors to the advance. Chip stocks were in focus as TSMC delivered a better-than-projected revenue outlook and stuck with plans to spend as much as $32 billion in 2024. Shares in Hong Kong were among the region’s best performers. Benchmarks in mainland China extended their advance to the second day following a clarification from the country’s securities regulator over delisting rules.
In FX, the Bloomberg Dollar Spot Index is down 0.1%, falling for a second day. The dollar has jumped about 4% this year, outperforming all major currencies, as reduced prospects for Fed rate cuts feed greenback strength and higher US yields. Separately, the Bloomberg Asia Dollar Index edged higher, supporting investor appetite toward the region. The yen was steady following a joint statement from US Treasury Secretary Janet Yellen alongside the finance ministers of Japan and South Korea that noted “serious concerns” about the depreciation of the two Asian currencies. A global gauge of emerging-market currencies gained for a second day, suggesting some stability after hitting a 2024 low earlier this week.
In rates, treasuries erased an earlier gain US 10-year yields unchanged at 4.58%, near Wednesday’s low, trailing gilts by 1.5bp in the sector; curve spreads remain within 1bp of Wednesday’s close, inverted 2s10s around -35bp. Gilts outperform their German counterparts. $23b 5-year TIPS sale at 1pm New York time is week’s final coupon auction.
In commodities, oil prices added to Wednesday’s drop, with WTI down another 0.6% to trade near $82 a barrel, weighed by weaker Chinese industrial data and a swelling in US crude inventories, while gold rose. Spot gold rises 0.8% to around $2,379/oz.
Bitcoin was back above $62k after briefly dipping below $60k yesterday, while Ethereum finds support around $3k. Binance converted the entire pool of assets held in an emergency fund for users into USDC stablecoin. The fund serves as a backstop for customers in “extreme situations”, according to Bloomberg.
Looking at today's calendar, US session includes weekly jobless claims data, a packed Fed speaker slate and 5-year TIPS new-issue auction. US economic data slate includes April Philadelphia Fed business outlook and weekly jobless claims (8:30am), March Leading index and existing home sales (10am). Fed speakers include Bowman (9:05am, 9:15am), Williams (9:15am), Bostic (11am, 5:45pm) and Collins (12pm)
Market Snapshot
Top Overnight News
A more detailed look at global markets courtesy of Newsquawk
APAC stocks traded mostly higher after gradually shrugging off headwinds from the tech-led selling in the US. ASX 200 was led by the mining industry after BHP's encouraging quarterly production update. Nikkei 225 recovered all of its opening losses and returned to above the 38,000 level. Hang Seng and Shanghai Comp. conformed to the positive mood but with upside capped in the mainland by US-China trade frictions after President Biden called for an increase in tariffs on Chinese metals.
Top Asian News
European bourses, Stoxx600 (+0.3%) are mostly, but modestly firmer. Initially futures were lifted following strong TSMC results/guidance, though equities have tilted slightly lower in recent trade. European sectors are mixed, having initially held a positive tilt; Energy underperforms, given the slump in oil prices following bearish crude inventory data and geopolitical updates. Utilities is found at the top of the pile. US Equity Futures (ES +0.1%, NQ +0.2%, RTY +0.1%) are incrementally firmer, though ultimately resides around the unchanged mark; TSMC (-2.2%) beat on Q1 expectations and notes of strong AI demand, name was initially firmer in the pre-market but has since trimmed markedly and fallen into the red.
Top European news
FX
Fixed Income
Commodities
Geopolitics: Middle East
Geopolitics: Other
US Event Calendar
Central Bank Speakers
DB's Jim Reid concludes the overnight wrap
I’m struggling at the moment. For the last 2-3 weeks all that I can hear in my head is Beyonce’s latest single (a number one around the world over the last few weeks) which if you haven’t heard is an irritatingly catchy country-style song. In quiet (and busy moments) all I have going on in my mind is a jaunty “It’s a real-life boogie and a real-life hoedown....” with the next line containing parental advisory lyrics so I can’t print! I need something to dislodge it before it drives me crazy and/or infiltrates my research.
Markets have been doing the “Do-si-do” this week as initial recoveries have given way to sell-offs as rates and concerns over events in the Middle East dominate, while weaker tech sentiment was a major driver yesterday as the day progressed. This morning we've seen more flipping as Asia is higher again. Before that, yesterday saw the S&P 500 peak at +0.5% near the open but closed -0.58% lower and with it lost ground for a 4th consecutive session, which last happened in early January. Moreover, the index has now shed over 3% over these last four sessions, which is the first time that’s happened since October 23, the same day that the 10yr Treasury yield moved above 5% intraday. To be fair, there was a recovery for bonds, but that was partly a risk-off move into safe havens, which pushed the 10yr Treasury yield (-8.0bps) down from its 5-month high the previous day to 4.59%. Lower oil which we'll discuss below also helped. Yields are another couple of basis points lower across the curve in Asia.
At the close, the S&P 500 had fallen by -4.42% from its all-time high at the end of March, which is more than double the largest pullback it had seen during its remarkable +27% rally that started in late October. The latest decline yesterday was led by tech stocks, with the NASDAQ down -1.15%, and the Magnificent 7 down -1.23%. Chipmakers in particular underperformed as the producer of chipmaking equipment ASML (-6.68%) reported a sizeable decline in orders in Q1. This saw the Philadelphia semiconductor index (-3.25%) fall to its lowest level in nearly two months, with Nvidia down -3.87% in sympathy. Small-cap stocks were still affected as well though, with the Russell 2000 (-0.99%) falling to a two-month low. T he main exception to this pattern came from Europe, where the STOXX 600 (+0.06%) stabilised after its worst daily performance in nine months. The index did close when the US equity market had only dipped to flat, but Euro STOXX futures have edged back into positive territory this morning after a strong Asia session with S&P (+0.30%) and Nasdaq (+0.43%) futures also rebounding again.
Overnight in Japan, we heard from the BoJ’s currency chief Kanda, who confirmed the central bank’s commitment on the yen. Kanda pushed back against a stronger dollar, stating that excessive currency moves harm the economy. Moreover, US Treasury Secretary Yellen acknowledged Japan’s worries over a sharp yen depreciation in a joint statement with her counterparts in Japan and South Korea after a trilateral meeting that suggested the US would give a green light to intervention in both currencies. The yen stabilised off the back of these comments and is now up +0.07% against the dollar as I type. The offshore Chinese yuan also held steady after the People’s Bank of China emphasised its commitment to preventing exchange rate overshoot in a strong dollar environment. Against this backdrop, Asian equities are mostly in the green. As I type, the Nikkei 225 is up +0.49%, the Hang Seng +1.16%, the Korean Kospi +1.71%, and in China, the CSI 300 and Shanghai Comp are up +0.61% and +0.55% respectively. Elsewhere, Australian unemployment came in at 3.8% (vs 3.9% expected), but the downside surprise was largely offset by an otherwise mixed jobs report.
The bond rally we discussed above has been helped by the latest decline in oil prices, with Brent Crude (-3.03%) closing at a 3-week low of $87.29/bbl, which came as the latest EIA report showed US crude inventories at their highest level in 9 months. And in Europe, natural gas futures also fell back after their recent advance, with a decline of -6.43% on the day. So a wild ride in commodities this week.
The decline in oil prices played out even as uncertainty remains over the direction of the conflict in the Middle East. Yesterday, Israeli PM Netanyahu met with UK Foreign Secretary Cameron and German Foreign Minister Baerbock yesterday, but he also said that “I want to make it clear - we will make our own decisions, and the State of Israel will do everything necessary to defend itself." The comments raised the prospect that some sort of response would still happen, and Cameron said that “It’s right to have made our views clear about what should happen next, but it’s clear the Israelis are making a decision to act”.
Back in Europe, the decline in yields was more modest with yields on 10yr bunds (-2.1bps), gilts (-3.7bps) and OATs (-2.8bps) all seeing moderate dips. The moves were more muted at the front-end, at +0.6bps for 2yr bunds and -1.0bps for 2yr gilts. In part, that reflected continued concerns about sticky inflation following the UK’s latest inflation data, which showed that headline CPI only fell back to +3.2% in March (vs. +3.1% expected), whilst core CPI was also a tenth above expectations at +4.2%.
That led investors to dial back the likelihood of a June rate cut by the Bank of England to less than 25% intra-day from 38% the previous day, though this rose back to 35% in part thanks to fairly dovish comments from Governor Bailey. He noted that with the latest inflation data “we are actually pretty much on track” with what the BoE projected back in February. Our UK Economist Sanjay Raja has pushed back his expectation of the first cut from May to June but still sees an additional 50bps this year split between September and December. The terminal rate of 3% will be hit in H1 2026. See his report here for the full explanation. Meanwhile, there was little change in ECB pricing with ECB commentary continuing to point to a rate cut at the next meeting in June. Bundesbank President Nagel, one of the more hawkish ECB voices, said that “a rate cut in June has become more likely” although “there are still some caveats”.
Finally, the IMF published their latest Fiscal Monitor yesterday, which projected that government debt would continue to rise globally over the years ahead. Their forecasts for general government gross debt saw an increase globally from 93.2% of GDP in 2023 to 98.8% by 2029. For the United States, it saw debt rising from 122.1% in 2023 to 133.9% in 2029.
To the day ahead now, and US data releases include the weekly initial jobless claims, the Philadelphia Fed’s business outlook for April, the Conference Board’s leading index for March, and existing home sales for March. From central banks, we’ll hear from ECB Vice President de Guindos, the ECB’s Nagel, Centeno, Simkus and Vujcic, the Fed’s Bowman, Williams, and Bostic, along with the BoE’s Greene.
Tonight's TIC data held few surprises and nothing of significant note, but it got us thinking...
For the 9th month of the last 11, China's Treasury holdings declined in February (the latest TIC data), dropping by $22.7BN. Additionally, it has now been 24 of the last 28 months that China's Treasury holdings have declined, now back at practically its lowest level since June 2009...
Source: Bloomberg
While we are acutely aware of the fact that 'correlation is not causation', one would find it hard to argue that the practically perfect concomitance of China's Treasury holdings and the yield of the US 10Y Treasury note over the past three years makes us wonder (in our out-loud voices), if - away from The QT, The FedSpeak, the macro-economy, the geopolitical crises, the AI-hype, the growth scares - if it's not just all a well-managed (slow and steady) liquidation of China's (still massive) US Treasury holdings...
Source: Bloomberg
It's hard to argue they don't have an incentive to a) de-dollarize, and b) not liquidate it all at once, shooting themselves in the face.
While the de-dollarizing has been steady in Treasury-land (enabled by a vast sea of liquid other players), things have been a little more 'obvious' in the alternative currency space - i.e gold.
The 2015 jump in the chart below was when China suddenly admitted to its gold holdings (well some of them we assume) after no disclosure since 2009. Since then both China and Russia (the gold line below), have been hoarding the precious metal while dumping Treasuries...
Source: Bloomberg
And in case you wondered, it's not just China and Russia, world reserve Treasury holdings are 'relatively' flat (based on Fed's custody data) while according to The IMF, the world's sovereign nations have been buying gold with both hands and feet...
Source: Bloomberg
...happy to take whatever retail-ETF-sellers are offering into their physical vaults...
Source: Bloomberg
Finally, as we note in the chart, this all started to 'escalate quickly' when Washington really started to weaponize the dollar.
Assuming that all the US gold is still in Fort Knox (and assuming that China and Russia are honest about their holdings), the world's 'other superpowers' are rapidly catching up to the US' holdings...
Source: Bloomberg
Who could have seen that coming?
Authored by Charles Hugh Smith via OfTwoMinds blog,
That real harm will result from the use of AI tools is a given.
AI is like the powerful character in an action movie who looks invincible until they turn around, revealing a fatal spear embedded in their back. The spear in AI's back is the American legal system, which has been issuing free passes to tech companies and platforms for decades on the idea that limiting innovation will hurt economic growth, so we'd best let tech companies run with few restrictions.
The issuance of free passes to Tech monopolies / cartels and platforms may be ending. Letting Big Tech run with few restrictions has led to the smothering of innovation as tech monopolies do what every monopoly excels at, which is buy up potential competitors, suppress competition, pursue regulatory capture via lobbying and spend freely on deceptive PR.
Now anti-trust regulators are finally looking at the uncompetitive wastelands created by Big Tech and recognizing the union-busting tactics of quasi-monopolies like Starbucks and Amazon. The bloom might be off the Big Tech / Monopoly rose.
Enter AI, which offers the thrilling prospect of trillions of dollars in additional profits for purveyors of AI and all those companies which use their AI tools.
The American legal system deals with new technologies much as a reptile digests a meal--slowly. I get email from readers about defending the Constitution, something we all support. I am not an attorney, but my impression of Constitutional law is that it is a tediously complex thicket of case law that must be carefully picked through before we can even begin to understand exactly what we're defending: every issue anyone might be concerned about has already accumulated an immense load of rulings and arguments.
This is American jurisprudence: advocacy goes to trial and ruling are issued, some as rulings that will pertain to all future cases and some that will not. The law advances in new fields such as AI as positions are argued before judges / juries and then reviewed by higher courts as losers appeal judgments / rulings.
A great many things we might think are novel have long been settled. Isn't the Selective Service Act a form of involuntary servitude? Nope, that's been settled long ago. The government's right to draft you to fight in a war of choice is unquestionably the law of the land.
AI has certain novel features which have yet to be decided by the processes of advocacy, rulings and appeals. In general, corporations selling / giving away AI tools are claiming these tools incur no liability to the issuers of the tools because they're akin to software that, for example, adds HTML coding to plain text: a tool that performs a process.
This strikes me as incomplete. It seems to me that AI, by its very name and nature, is making implicit claims of utility far beyond mere processing of data or text: AI is called AI because it is adding intellectual value to data or text.
All the disclaimers in the world cannot dissolve this implicit claim of utility that adds value. Since I'm not an attorney, I'm not able to put this in proper legal terms; I am using the terminology of philosophy. But the law is a system based on philosophic principles, and so the language of philosophy plays a key role in broadly applicable legal rulings.
Now let's consider a real-world example. A patient receives a mid-diagnosis and suffers as a direct result of the mis-diagnosis. In our system of law, somebody or some entity is liable for the consequences of the error, and must pay restitution to those harmed by the error.
As fact-finding proceeds, it turns out an AI tool was used in the initial scanning of the patient's data. The company that created the AI tool will naturally claim that the tool was intended only to be used under the supervision of a human professional, and there were no claims made as to the accuracy of the AI tool's output.
This is a specious argument, as the clear intent of the AI tool is to replace human expertise as a means of lowering the costs of diagnosis by accelerating the process and increasing the accuracy of the diagnosis.
Clearly, the tool was designed for exactly this purpose, and therefore deficiencies in its performance that contributed to the mis-diagnosis--for example, the fact that the AI tool rated the diagnostic result with a high probability of accuracy--are the responsibility of the company that issued the AI tool.
Should the court find the AI company 1% liable for the misdiagnosis, the principle of joint and several liability means the monetary settlement falls on whichever parties can pay the settlement. Should the other parties found liable be unable to pay a $10 million settlement, then the AI company might end up paying $9 million of the $10 million settlement, despite their apparently limited liability.
Off the top of my head, I can foresee dozens of similar examples in which an AI tool can be found partially liable for misrepresentations, errors of omission, unauthorized use of confidential intellectual property, and so on, in what can easily become an endless profusion of liability claims.
If the bloom is off the rose of Big Tech, the likelihood of a court assigning liability to those issuing AI tools increases proportionately. If the ruling is upheld by an appeals court, it will generally enter case law and become the basis for similar lawsuits assigning liability to those entities issuing AI tools.
That real harm will result from the use of AI tools is a given. The idea that those issuing these tools should be given a free pass because "we really didn't mean that you could use the tools to reduce human labor and increase accuracy" does not pass the sniff test, nor will it negate advocacy claiming that these tools implicitly make claims about utility that incur liability.
Use an AI tool, get sued. The Wild West of AI's claims of zero liability will soon enter the meat grinder of jurisprudence, and implicit claims of utility will be more than enough to incur liability in a court of law--as they should.
The legal spear in AI's back could prove fatal. A 1% error rate and 1% liability will add up fast.
* * *
The United States Embassy on Tuesday filed two assurances with the British Foreign Office saying it would not seek the death penalty against imprisoned WikiLeaks publisher Julian Assange and would allow Assange “the ability to raise and seek to reply upon at trial … the rights and protections given under the First Amendment,” according to the U.S. diplomatic note.
Assange’s wife Stella Assange said the note “makes no undertaking to withdraw the prosecution’s previous assertion that Julian has no First Amendment rights because he is not a U.S citizen. Instead,” she said, “the US has limited itself to blatant weasel words claiming that Julian can ‘seek to raise’ the First Amendment if extradited.”
The note contains a hollow statement, namely, that Assange can try to raise the First Amendment at trial (and at sentencing), but the U.S. Department of Justice can’t guarantee he would get those rights, which is precisely what it must do under British extradition law based on the European Convention on Human Rights.
The U.S. Department of Justice is legally restricted to assure a free speech guarantee to Assange equivalent to Article 10 of the European Convention, which the British court is bound to follow. But without that assurance, Assange should be freed according to a British Crown Prosecution Service comment on extraditions.
In USAID v. Alliance for Open Society, the U.S. Supreme Court ruled in 2020 that non-U.S. citizens outside the U.S. don’t possess constitutional rights. Both former C.I.A. Director Mike Pompeo and Gordon Kromberg, Assange’s U.S. prosecutor, have said Assange does not have First Amendment protection.
Because of the separation of powers in the United States, the executive branch’s Justice Department can’t guarantee to the British courts what the U.S. judicial branch decides about the rights of a non-U.S. citizen in court, said Marjorie Cohn, law professor and former president of the National Lawyers’ Guild.
“Let’s assume that … the Biden administration, does give assurances that he would be able to raise the First Amendment and that the [High] Court found that those were significant assurances,” Cohn told Consortium News' webcast CN Live! last month.
“That really doesn’t mean anything, because one of the things that the British courts don’t understand is the U.S. doctrine of separation of powers,” she said. “The prosecutors can give all the assurances they want, but the judiciary, another [one] .. of these three branches of government in the U.S., doesn’t have to abide by the executive branch claim or assurance,” Cohn said.
In other words, whether Assange can rely on the First Amendment in his defense in a U.S. court is up to that court not Kromberg or the Department of Justice, which issued the assurance on Tuesday. “The United States has issued a non-assurance in relation to the First Amendment,” said Stella Assange.
Assange Can Challenge Assurances
Assange’s legal team now has the right to challenge the credibility and validity of the U.S. assurances filed on Tuesday. The U.S. would then have a right to reply to Assange’s legal submissions to the court, which will hold a hearing on May 20 to determine whether or not to accept the U.S. assurances.
If the court does, Assange can be put on a plane to the U.S. theoretically that day. If not Assange would be granted a full appeal against the Home Office’s 2022 order to extradite him. Assange is wanted in the U.S. on 17 charges under the 1917 Espionage Act and one on conspiracy to commit computer intrusion. He faces up to 175 years in a U.S. dungeon.
“The diplomatic note does nothing to relieve our family’s extreme distress about his future — his grim expectation of spending the rest of his life in isolation in US prison for publishing award-winning journalism,” Stella Assange said.
BREAKING:
— Stella Assange #FreeAssangeNOW (@Stella_Assange) April 16, 2024
“The United States has issued a non-assurance in relation to the First Amendment, and a standard assurance in relation to the death penalty. It makes no undertaking to withdraw the prosecution's previous assertion that Julian has no First Amendment rights because he… pic.twitter.com/lu7bkw0M5u
In its 66-page ruling on March 26, the two High Court judges wrote Kromberg wouldn’t have said Assange would be without First Amendment rights at trial “unless that was a tenable argument that the prosecution was entitled to deploy with a real prospect of success.”
“If such an argument were to succeed it would (at least arguably) cause the applicant [Assange] prejudice on the grounds of his non-US citizenship (and hence, on the grounds of his nationality),” the judges said. They added:
“The applicant wishes to argue, at any trial in the United States, that his actions were protected by the First Amendment. He contends that if he is given First Amendment rights, the prosecution will be stopped. The First Amendment is therefore of central importance to his defence to the extradition charge.”
This is the statement Stella Assange put out on X Tuesday at 11:36 am EDT...
“The United States has issued a non-assurance in relation to the First Amendment, and a standard assurance in relation to the death penalty. It makes no undertaking to withdraw the prosecution’s previous assertion that Julian has no First Amendment rights because he is not a U.S citizen. Instead, the US has limited itself to blatant weasel words claiming that Julian can ‘seek to raise’ the First Amendment if extradited. The diplomatic note does nothing to relieve our family’s extreme distress about his future — his grim expectation of spending the rest of his life in isolation in US prison for publishing award-winning journalism. The Biden Administration must drop this dangerous prosecution before it is too late.”
Commodity prices provide a real-time snapshot of the global economy through spot prices, which are essentially high-frequency data about the current supply and demand environment. These prices are key components in measuring inflation, which has shown signs of easing over the past year. However, a recent surge in the Bloomberg Commodity Index and signs of a reacceleration in US inflation data are troubling for Fed chair Powell.
HSBC's Paul Bloxham and Jamie Culling asked clients in a note: "Have commodity prices past the trough?"
Their answer, very simply, "It seems likely."
"Global commodity prices have picked up in recent weeks and could be past the trough," the analysts said, noting an emerging "weak" upward global industrial cycle has materialized. They continued:
On the demand side, 'green shoots' in the global industrial cycle are becoming more apparent. On the supply-side, geopolitical factors are playing an increasingly disruptive role in the ongoing 'super-squeeze.'
At a deeper level, real commodity prices have already fallen back to their long-run average – that is, the relative prices of commodities to other goods and services are now not unusually high.
So, even if commodity prices only rise in line with other prices from here, they would be passed their trough.
The analysts warned their new machine learning commodity cycle tool is forecasting a "Weak Bull" run, indicating, "If the trough has passed, the recent disinflationary force from falling commodity prices may be done. Central bank observers should take note."
The timing of HSBC's "Weak Bull" commodity run comes as inflation is reaccelerating in the US. Last week's March CPI data dump showed a stronger-than-expected 3.5% YoY print, an uptick from the 3.2% YoY rise in February.
Summing up the latest inflation report...
The hot inflation print has pushed rate traders to price in the first 25bps of cuts between September and November. Initially, rate traders were pricing in March cuts.
Hotter-than-expected inflation puts upward pressure on rates and borrowing costs with higher risks of derailing Biden's reelection odds as Bidenomics fails.
The reacceleration of inflation has Larry MacDonald of The Bear Traps Report warning, "We're only one event away from a 1970-style stagflation explosion."
Could the return of the mid-70s inflation storm result from an escalation of the Israel-Iran war where Brent crude soars past $100bbl?
Authored by Katabella Roberts via The Epoch Times (emphasis ours),
Los Angeles Mayor Karen Bass has suggested that “more fortunate” residents help fund housing for the homeless as part of a new campaign to tackle the city’s ongoing homelessness crisis.
Ms. Bass, a Democrat, announced the “LA4LA campaign,” which she said would speed up the creation of affordable housing for homeless individuals, during her State of the City address on April 15.
The mayor called on “fortunate Angelenos”—including business leaders, philanthropic organizations, and others—to help the city “acquire more properties, lower the cost of capital, and speed up housing” for the homeless population under the new program.
However, Ms. Bass didn’t provide further details regarding the specifics of the campaign, such as how much money business leaders and organizations should donate or how exactly the campaign will work.
“We have brought the public sector together and now we must prevail on the humanity and generosity of the private sector,” the mayor said. “LA4LA can be a Sea Change for Los Angeles–an unprecedented partnership to confront this emergency … an example of disrupting the status quo to build a new system to save lives.
“We will not hide people. Instead, we will house people,” she continued. “This means committing to the goal of preventing and ending homelessness—not hiding—not managing—but ending homelessness—with a new strategy and a new system that urgently lifts people from the street, and that surrounds them with the support and housing they need to never go back.”
During her address, the mayor touted her efforts to move homeless Angelenos out of short-term housing, including hotels and motel rooms, and into apartments under her “Inside Safe” program.
That program, which initially launched in December 2022 when Ms. Bass declared a state of emergency on homelessness, has seen roughly 2,500 homeless individuals taken off the street and placed into interim housing, according to the mayor’s office.
A total of 440 people have also been placed into permanent housing under the program, as per her office.
However, roughly 613 of those who took part in the program have returned to homelessness, according to the Los Angeles Homeless Services Authority. Another 42 have been incarcerated, and 38 have died, as per the agency.
Ms. Bass said Inside Safe is “our proactive rejection of a status quo that left unhoused Angelenos to wait–and die–outside, in encampments until permanent housing was built.”
Still, the mayor acknowledged that more than 46,000 people in Los Angeles currently have no home and stressed that motel rooms rented out on a nightly basis are increasingly adding up at a time when the city is already struggling under a burgeoning budget deficit.
Los Angeles is currently facing a projected $467 million shortfall, driven by increased spending and lower-than-expected revenues.
Ms. Bass noted that the homelessness crisis—along with the continued opioid crisis that is fueling fentanyl overdose deaths—has affected residents of Los Angeles both mentally and financially, forcing them to “pay the cost of the thousands and thousands of fire, paramedic and police calls.”
The ongoing issues plaguing the city are also driving away business and tourism, she noted, highlighting the fact that many companies are fleeing the city out of safety concerns.
“I just will not accept this–and our city cannot afford to accept this. That is why we are disrupting, challenging, and rebuilding the system. Inside Safe and our overall approach is evolving and will continue to evolve,” the mayor said.
International Man: According to a recent study by Investopedia, the classic middle-class American Dream now costs over $3.4 million.
That’s the estimated lifetime cost of marriage, two children, cars, homes, healthcare, education, and retirement. It’s now entirely out of reach for many Americans.
What do you make of this? How did this happen?
Doug Casey: The fact is, despite the fact that his standard of living has been slipping over the past 50 years, the average American today lives much better and longer than a king during pre-industrial times. There were never any guarantees that Americans would live in the lap of luxury for their entire lives.
We got to this high standard of living for two reasons. One, people tended to produce more than they consumed and saved the difference. And two, technology has been improving at almost the rate of Moore’s law for the last 200 years.
However, there’s no guarantee that either of these fonts of progress will continue, especially since savings are being wiped out by the destruction of the dollar. A lack of savings means there won’t be a capital pool to finance further advances in technology.
But there are other serious things at work, termites eating away at the foundations of civilization. It’s become customary for Americans to think that it’s okay for some people to live their entire lives without producing at all and to live at the expense of others. A lot of the country is on welfare. And many more are buried in consumer debt, which means they’re either living off the capital others have saved in the past, or they’re mortgaging their own futures.
On top of that, since about 1980, the main export of the US hasn’t been Boeings or soybeans; it’s been dollars. Foreigners have accepted those paper dollars in exchange for real wealth. They’re really just another form of debt. At some point—soon—they’ll repatriate them in exchange for titles to land and companies.
Capital is also being destroyed by the constant wars that the US fights against trivial countries on the other side of the world.
The fact is that our institutions, from corporations to academia to government, have become corrupt, ineffectual, and bloated. The Second Law of Thermodynamics tells us that, in the physical world, things inevitably degenerate over time. That’s also true in the world of human action. In general, as any institution gets old, it winds down. That’s true of the US, and it’s apparent to everyone—at least anyone outside of the Washington Beltway.
International Man: As the American middle class continues to shrink, it seems the “New American Dream” is to merely get by and make ends meet.
People will have to rent instead of own. They may not be able to afford kids, pets, ribeye steaks, or retirement. They’ll have to take on a lot more debt.
The “New American Dream” looks more like the WEF’s “you’ll own nothing and be happy.”
What’s your take?
Doug Casey: It’s rather shocking that in a traditionally middle-class society like the US, that the “one percenters”—typically those wired to the State and major corporations—now own about one-third of the total wealth.
What’s even more shocking is that the bottom half of society only owns 2% of the country’s wealth. That kind of an imbalance makes for instability. No wonder it’s said that the average guy can’t lay his hands on even $500 cash if there’s an emergency. No wonder a criminal like Klaus Schwab can promote his “You’ll own nothing and be happy” meme and not be hung from a lamp pole— a lot of people now feel they’d be better off in that kind of world.
Increasingly, the wealth of the country is owned by corporations and their top management. It used to be said that “What’s good for General Motors is good for America.” I used to believe that because General Motors actually created cars, and that was good. But we’ve devolved. GM and other major corporations have become defacto arms of the State. Taxes, staggering regulations, subsidies, and bailouts have destroyed free-market capitalism.
The capitalist system in the US is long gone. We’ve devolved into classical Mussolini-style fascism, which is to say, State corporatism, where corporations and the State work hand-in-glove.
It’s euphemistically called a public-private “partnership.” The people in government and the people in top corporate levels scratch each other’s backs and reinforce each other’s positions. They feed each other power and money. This makes for a highly politicized society, where connections, not production, are what count.
For instance, in the last election, $14 billion was spent on campaign spending to get the hoi polloi to vote for one party or another. But only a fifth of that money came from small donors—the rest from the wealthy and corporations. Of course, the rich are getting richer, and the poor are getting poorer as our highly politicized society degenerates.
International Man: Many people look back on how they viewed the future and how it was portrayed in movies. Many thought we would have flying cars by now, among other futuristic luxuries.
Instead, we have a declining standard of living, and people look back on the good old days.
Where do you think this trend is headed?
Doug Casey: We’re heading in the wrong direction at an accelerating rate because there’s been a breakdown of moral fiber in society. People, in general, no longer understand what’s right and what’s wrong—or what’s good and what’s evil. They’re taking less responsibility for their individual lives and what happens around them.
We’ve gone from a high-trust society, where you didn’t need to lock your car or your front door, to a low-trust society, where everybody is constantly observed, and security is of critical importance.
At the same time, the country has generally gone from having low time preferences and being future-oriented to high time preferences; “I want it all, and I want it now.” They’re not as future-oriented as they once were.
Going back to the question of moral fiber breakdown, the economic observer Thorstein Veblen coined the phrase “conspicuous consumption.” People wanted to show off expensive cars and clothes to advertise to other people that they were more successful. But now, because of all the debt in society, anyone can have a nice car. And nobody even cares about nice clothes anymore; everybody wears the equivalent of T-shirts and jeans.
The trend setters have moved from owning and displaying frivolous goods to displaying frivolous ideas—like Wokeism. Everybody is adopting those ideas, to show that they’re hip, in-the-know, and part of the cognoscenti. In the past, adopting the conspicuous consumption lifestyles of their betters would only make them poor. Adopting these degenerate ideas makes them stupid and immoral—which is much worse.
International Man: What advice do you have for struggling middle-class people who are about to be kicked down to the lower class?
Doug Casey: First and most important, don’t go to college unless you need a STEM degree—Science, Technology, Engineering, or Math.
Going to college today does nothing but misallocate four critically important years of your life, permanently indebt you, and corrupt your mind with the idiotic ideas that Marxist professors and administrations cram down students’ throats. Educate yourself. Read constantly.
Next, work to become self-employed, not to “get a job.” You don’t want to rely on a job that somebody else gives you. And save your money—but don’t save in fiat dollars. Save in gold. When you have sufficient savings, learn to speculate and invest.
International Man: As you’ve noted, The Greater Depression is a period in which there will be a significant decline in the general standard of living.
Is there any way to make lemonade out of these lemons?
Doug Casey: We’re well into what I’ve long called The Greater Depression. But I’d point out that most of the real wealth in the world will still exist - it’s just going to be owned by different people.
The opportunity will exist for nimble entrepreneurs and speculators to do well, even as most people’s standard of living drops. But the big question is: For how long will the societal trend that we’re now on continue going down?
When Rome collapsed over a period of several hundred years, living well and peaceably got harder and harder as Europe entered the Dark Ages. Even if you had a lot of money, it really didn’t do you that much good. That’s why it’s important to preserve what’s left of the idea of America.
* * *
Unfortunately, there’s little any individual can practically do to change the trajectory of this trend in motion. The best you can do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation. Most people have no idea what really happens when a currency collapses, let alone how to prepare… How will you protect your savings in the event of a currency crisis? This just-released video will show you exactly how. Click here to watch it now.
Some food for thought from George Orwell's '1984'...
Does anything really ever change? (emphasis ours)
The primary aim of modern warfare is to use up the products of the machine without raising the general standard of living.
Ever since the end of the nineteenth century, the problem of what to do with the surplus of consumption goods has been latent in industrial society. From the moment when the machine first made its appearance it was clear to all thinking people that the need for human drudgery, and therefore to a great extent for human inequality, had disappeared. If the machine were used deliberately for that end, hunger, overwork, dirt, illiteracy, and disease could be eliminated within a few generations. And in fact, without being used for any such purpose, but by a sort of automatic process — by producing wealth which it was sometimes impossible not to distribute — the machine did raise the living standards of the average human being very greatly over a period of about fifty years at the end of the nineteenth and the beginning of the twentieth centuries.
But it was also clear that an all-round increase in wealth threatened the destruction — indeed, in some sense was the destruction — of a hierarchical society. In a world in which everyone worked short hours, had enough to eat, lived in a house with a bathroom and a refrigerator, and possessed a motor-car or even an aeroplane, the most obvious and perhaps the most important form of inequality would already have disappeared. If it once became general, wealth would confer no distinction. It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste.
But in practice such a society could not long remain stable.
For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realize that the privileged minority had no function, and they would sweep it away.
In the long run, a hierarchical society was only possible on a basis of poverty and ignorance.
To return to the agricultural past, as some thinkers about the beginning of the twentieth century dreamed of doing, was not a practicable solution. It conflicted with the tendency towards mechanization which had become quasi-instinctive throughout almost the whole world, and moreover, any country which remained industrially backward was helpless in a military sense and was bound to be dominated, directly or indirectly, by its more advanced rivals.
Nor was it a satisfactory solution to keep the masses in poverty by restricting the output of goods. This happened to a great extent during the final phase of capitalism, roughly between 1920 and 1940.
The economy of many countries was allowed to stagnate, land went out of cultivation, capital equipment was not added to, great blocks of the population were prevented from working and kept half alive by State charity. But this, too, entailed military weakness, and since the privations it inflicted were obviously unnecessary, it made opposition inevitable.
The problem was how to keep the wheels of industry turning without increasing the real wealth of the world. Goods must be produced, but they must not be distributed. And in practice the only way of achieving this was by continuous warfare.
The essential act of war is destruction, not necessarily of human lives, but of the products of human labour.
War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent.
Even when weapons of war are not actually destroyed, their manufacture is still a convenient way of expending labour power without producing anything that can be consumed. A Floating Fortress, for example, has locked up in it the labour that would build several hundred cargo-ships. Ultimately it is scrapped as obsolete, never having brought any material benefit to anybody, and with further enormous labours another Floating Fortress is built.
In principle the war effort is always so planned as to eat up any surplus that might exist after meeting the bare needs of the population. In practice the needs of the population are always underestimated, with the result that there is a chronic shortage of half the necessities of life; but this is looked on as an advantage.
It is deliberate policy to keep even the favoured groups somewhere near the brink of hardship, because a general state of scarcity increases the importance of small privileges and thus magnifies the distinction between one group and another.
By the standards of the early twentieth century, even a member of the Inner Party lives an austere, laborious kind of life. Nevertheless, the few luxuries that he does enjoy his large, well-appointed flat, the better texture of his clothes, the better quality of his food and drink and tobacco, his two or three servants, his private motor-car or helicopter—set him in a different world from a member of the Outer Party, and the members of the Outer Party have a similar advantage in comparison with the submerged masses whom we call ’the proles’. The social atmosphere is that of a besieged city, where the possession of a lump of horseflesh makes the difference between wealth and poverty.
And at the same time the consciousness of being at war, and therefore in danger, makes the handing-over of all power to a small caste seem the natural, unavoidable condition of survival...
...
...war is waged by each ruling group against its own subjects, and the object of the war is not to make or prevent conquests of territory, but to keep the structure of society intact.
The very word 'war', therefore, has become misleading. It would probably be accurate to say that by becoming continuous war has ceased to exist.
...
War is Peace.
In short - the purpose of war is to keep the ruling class in power while the lower classes remain powerless.
Authored by Paul Joseph Watson via Modernity.news,
MSNBC’s Joy Reid suggested that the politically-motivated prosecution of Donald Trump is a “wonderfully poetic” form of racial revenge.
Reid made the comments after jury selection began for Trump’s criminal trial in New York, where he is charged with falsifying business records to conceal a hush-money payment to porn star Stormy Daniels before the 2016 election.
“For me, there is something wonderfully poetic about the fact that the first person to criminally prosecute Donald Trump is a black Harvard grad,” Reid said Tuesday on MSNBC.
“And a black woman is doing the same exact thing in Georgia. And a black woman forced you to pay a $175 million dollar fine,” she added.
Joy Reid: "For me, there is something wonderfully poetic about the fact that the first person to criminally prosecute Donald Trump is a black Harvard grad. And a black woman is doing the same exact thing in Georgia. And a black woman forced you to pay a $175 million dollar fine.… pic.twitter.com/Yo0S6lvZ7V
— TheBlaze (@theblaze) April 16, 2024
“Donald Trump is being held to account by the very multicultural, multiracial democracy that he’s trying to dismantle,” Reid boasted. “Go DEI. My DEIs are bringing it home.”
In other words, over and above whether Trump is guilty or innocent of what he is being charged with, the fact that black people are involved is some kind of righteous revenge.
Reid is essentially saying the quiet part out loud, that the prosecution of Trump is being driven by deranged, race-obsessed leftists and not by the actual evidence.
“It was always about racial vengeance but it’s nice when they say it out loud,” commented Auron McIntyre.
It was always about racial vengeance but it’s nice when they say it out loud https://t.co/FmcVp9ukLU
— Auron MacIntyre (@AuronMacintyre) April 16, 2024
As we previously highlighted, following news of the death of OJ Simpson, a CNN commentator and former Obama advisor suggested that the infamous ‘not guilty’ verdict was a victory for African-Americans because of slavery and the fact Simpson was charged with killing two white people.
They’re really not hiding it anymore.
* * *
Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.
Senate Democrats pulled DHS Secretary Alejandro Mayorkas's ass out of the fire on Wednesday, voting to dismiss two articles of impeachment and shutting down the possibility of a lengthy Senate trial which would shine a spotlight on the border crisis he helped to create.
Wednesday's decision marked the first time in 225 years since the Senate voted to immediately dismiss impeachment charges approved by the House vs. holding a floor trial or referring the matter to a special counsel for review.
"The charges brought against Secretary Mayorkas fail to meet the high standards of high crimes and misdemeanors. To validate this gross abuse by the House would be a grave mistake and could set a dangerous precedent for the future," warned Senate Majority Leader Chuck Schumer (D-NY), who said that the House had sent over "the least legitimate, least substantive and most politicized impeachment trial ever in the history of the United States."
Mayorkas was recently revealed to have been on the board of a Soros-funded organization that's been encouraging illegal immigrants to vote for President Biden this fall.
Schumer, who isn't affected by the flood of illegal migrants that are devastating low-income Americans, moved to quash the two impeachment charges immediately after first-term Sen. Eric Schmitt (R-MO) objected to Schumer's unanimous consent request to give senators time to debate the trial procedure and to consider resolutions brought by Sens. Mike Lee (R-UT) and Ted Cruz (R-TX) to either hold a full trial or send the impeachment to a special committee for review.
Schmitt was protesting Schumer’s plan to eventually move to dismiss the impeachment after defeating the motions to hold a trial or refer it to committee.
Cruz tried to block Schumer’s move to dismiss the charges by offering a motion to send the Senate into a private session to debate the constitutionality of the impeachment, but Democrats voted it down.
Republicans offered several other motions to delay Schumer’s bid to avoid a trial, including motions to adjourn the proceedings to a later date and to table the Democratic leader’s objections. All those efforts failed on party-line votes. -The Hill
The Senate voted along party lines, ruling that the articles of impeachment were unconstitutional because they did not meet the standard of high crimes and misdemeanors - with Sen. Lisa Murkowski (R-AK) voting 'present' on the first article, rather than joining her Republican colleagues who voted against the articles being unconstitutional.
In February, Mayorkas became the first cabinet official impeached by the House in over 150 years.
If Sec. Mayorkas will not be held accountable for refusing to follow federal law, why should ANY American be accountable for refusing to follow federal law?
— Greg Abbott (@GregAbbott_TX) April 17, 2024
The Senate sets a double standard for Americans.
You will reap what you sow. https://t.co/FX6B3u6QqC
Authored by Ryan Morgan via The Epoch Times,
A federal judge has ruled Meta Platforms, Inc. CEO Mark Zuckerberg will not face personal liability in 25 legal complaints alleging his social media platforms, Facebook and Instagram, have harmed children.
Meta is facing dozens of separate legal complaints alleging the company failed to sufficiently warn adolescent users about the potentially addictive nature of their social media platforms. Those various complaints were consolidated into a multi-district litigation (MDL) currently being handled by the U.S. District Court for the Northern District of California. Twenty-five of the complaints sought to hold Mr. Zuckerberg personally liable for the harm allegedly caused by his social media platforms, but U.S. District Judge Yvonne Gonzalez Rogers issued a ruling on Monday granting his motion to dismiss the cases.
Plaintiffs in the cases had argued that Mr. Zuckerberg had a specific duty to disclose to users the potentially addictive nature of his platforms due to his public stature as the head of Meta and his public statements. The plaintiffs asserted Mr. Zuckerberg repeated partial representations of Meta’s safety practices through numerous public appearances. The plaintiffs argued Mr. Zuckerberg’s alleged failure to make more fulsome public claims about his company made him liable for fraudulent and negligent misrepresentation by omission.
But Judge Rogers said the plaintiffs could not rely on Mr. Zuckerberg’s comparative knowledge about Meta’s products to establish he personally owed such a duty to each plaintiff.
Such a ruling, she said, would create “a duty to disclose for any individual recognizable to the public.”
“The Court will not countenance such a novel approach here,” she wrote.
Judge Rogers ultimately dismissed plaintiffs’ claims of fraudulent misrepresentation by omission or nondisclosure under Arizona, Colorado, Connecticut, Georgia, Maryland, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and Wisconsin state laws. She further dismissed plaintiffs’ claims of negligent misrepresentation by omission that was cited under the laws of Arizona, Connecticut, Colorado, New York, Pennsylvania, South Carolina, Texas, Virginia, and Wisconsin.
Judge Rogers’ decision clears Mr. Zuckerberg of personal liability in these cases for the time being. In her Monday decision, the federal judge granted the plaintiffs a limited opportunity to revise their claims against the billionaire social media mogul.
“Given the insufficient briefing, the Court cannot conclude that plaintiffs’ nascent theory of corporate officer liability is fatally flawed,” Judge Rogers wrote.
The federal judge said the plaintiffs in the 25 complaints that sought to hold Mr. Zuckerberg personally liable could file one consolidated addendum revising their existing allegations and laying out any additional allegations they may try to assert against Mr. Zuckerberg in his role as Meta CEO.
While Mr. Zuckerberg is currently clear of any personal liability in the MDL lawsuit, his company remains a defendant in the ongoing litigation.
In addition to naming Meta Platform’s Inc. as a defendant, the plaintiffs’ claims also seek to hold Meta’s payment processing wing Meta Payments Inc. liable. WhatsApp, an instant messaging and calling application owned by Meta is also listed as a separate defendant in the case.
The sprawling litigation goes beyond Meta to target other apps that are not owned by Mr. Zuckerberg.
TikTok and its Chinese parent company ByteDance are also listed as defendants, as are Alphabet (which operates the Google search engine and YouTube), Snap Inc. (which operates Snapchat), the Discord instant messaging and call service, and the online gaming platform Roblox.
The lawsuits say the children suffered physical, mental, and emotional harm from social media use, including anxiety, depression, and even suicide. The various complaints seek damages and a halt to harmful practices allegedly adopted by the defendant technology companies.
The IMF said the the quiet part out loud today (admittedly wrapped in 100s of pages of PhD-ese) in their benchmark Fiscal Monitor this morning: pointing out that America's recent economic performance is partially the result of the country's unsustainable borrowing, and that the US' massive fiscal deficits have stoked inflation and pose "significant risks" for the global economy.
“The exceptional recent performance of the United States is certainly impressive and a major driver of global growth, but it reflects strong demand factors as well, including a fiscal stance that is out of line with long-term fiscal sustainability,” the IMF wrote in its latest World Economic Outlook. They added that: "Fiscal policy developments in major economies, notably in the United States, have implications for global financing conditions."
The IMF said the US had exhibited “remarkably large fiscal slippages”, with the fiscal deficit hitting 8.8 per cent of GDP last year - more than double the 4.1 per cent deficit figure recorded for 2022, calculating that 'Bidenomics' (and its Inflation Reduction Act) had contributed 0.5 percentage points to core inflation (due to its fiscal profligacy).
Who could have seen that coming?
The fund further said in its Fiscal Monitor report that it expected the US to record a deficit of 7.1 per cent next year - more than three times the average for other advanced economies. It also raised concerns over Chinese government debt as Beijing copes with weak demand and a housing crisis.
The US and China were among four countries the fund named that "critically need to take policy action to address fundamental imbalances between spending and revenues."
The others were the UK and Italy.
Rampant spending by the US and China in particular could "have profound effects for the global economy and pose significant risks for baseline fiscal projections in other economies," the IMF said.
Furthermore, The IMF (rather too honestly) noted that things could get even worse as it's a massive election year and politicans like to spend money they don't have to buy votes (well, that's our translation of their findings that deficits in election years tend to exceed forecasts by 0.4 percentage points of GDP, compared to non-election years).
"The risks of fiscal slippages are particularly acute given that 2024 is what is being called the 'Great Election Year': 88 economies or economic areas representing more than half of the world’s population and GDP have already held or will hold elections during the year," says The IMF.
"Support for increased government spending has grown across the political spectrum over the past several decades, making this year especially challenging, as empirical evidence shows that fiscal policy tends to be looser, and slippages larger, during election years."
Finally, we note that IMF chief economist Pierre-Olivier Gourinchas warned that the US's fiscal position was "of particular concern", suggesting it could complicate the Fed's attempts to return inflation to its 2% goal.
“It raises short-term risks to the disinflation process, as well as longer-term fiscal and financial stability risks for the global economy,” he said.
“Something will have to give.”
"Something" indeed, Monsieur!
Authored by James Rickards via DailyReckoning.com,
So-called artificial intelligence (AI) is taking the world by storm. Meanwhile, gold has shot up like a rocket over the past couple of months.
In mid-February, gold was trading at $1,990. Two months later, gold is trading above $2,400 — a $410 gain in just two months.
So here’s a question:
Is there a connection between AI and gold?
It seems like an odd question.
But as it turns out, the answer is yes. And surprisingly, there has been for decades. It involves the Cold War between the U.S. and the Soviet Union.
In the early 1980s, the KGB was deeply concerned about the possibility of a nuclear first strike by the United States. At the time, Yuri Andropov was head of the KGB.
Andropov’s fear of a nuclear first strike by the U.S. was based in part on the 1980 election of Ronald Reagan and Reagan’s plan to install Pershing II intermediate-range missiles in Europe.
Those missiles could be armed with nuclear warheads and could strike the Soviet Union within minutes of being launched. This put Soviet nuclear forces on a hair-trigger alert. They adopted a “launch on warning” posture.
This means that as soon as credible evidence of a planned first strike was discovered, the Soviet Union would launch its own first strike to avoid destruction of its forces.
The irony was that the U.S. had no actual plans to launch a first strike, but the Soviet Union didn’t know that. Reagan’s speeches about the “evil empire” did nothing to calm Soviet concerns.
In response, the Soviets developed a primitive (by today’s standards) AI system called VRYAN. That’s a Russian acronym for: sudden nuclear missile attack.
VRYAN took about 40,000 military, economic and political inputs and computed the relative strength of the Soviet Union compared with the United States expressed as a percentage output. The model used a value of 100% for equivalence of the USSR to the U.S.
The Soviet leadership was comfortable that the U.S. would not launch a nuclear first strike if the USSR could maintain a value of 60%, although they viewed 70% as providing a more comfortable margin.
A VRYAN output of 40% was considered the critical threshold at which the U.S. might feel it could launch a first strike with acceptable risk that the Soviets would not be able to mount a successful second strike.
VRYAN output values were in steady decline in the dangerous period from 1981–1984 (in 1984, the VRYAN output had declined to 45%).
The VRYAN AI system relied on by the KGB and the Soviet Politburo was an important factor in the Soviet decision in 1981 to vastly increase intelligence collections aimed at detecting U.S. preparations for a first strike.
This intelligence collection effort was complicated to the point of extreme danger by the fact that the U.S. and NATO were conducting a war game in late 1983, code-named Able Archer 83. This war game was to practice a nuclear strike on the Soviet Union.
It turned out that the U.S. was rehearsing a nuclear first strike at the same exact time that the KGB was looking for evidence of a nuclear first strike. Able Archer 83 provided the KGB with more than enough reason to suspect the U.S. was indeed preparing for a first strike under cover of a war game.
VRYAN’s AI output on relative U.S. strength was compounded by massive U.S. intelligence failures regarding Soviet intentions. U.S. intelligence analysts assumed that the future would resemble the past, and that Soviet alerts were really propaganda designed to halt the U.S. deployment of Pershing II intermediate-range nuclear missiles in Europe.
U.S. intelligence analysts were also guilty of what’s called mirror imaging: the belief that because you know your own intentions, your opponents must share your view. In this case, the U.S. assumed that because they had no intention to launch a first strike, the Soviets must have understood that intention and would therefore have no cause for concern.
In fact, the Soviets had the opposite view based in part on VRYAN AI output.
The world came extremely close to World War III and a nuclear holocaust as a result of this sequence of events and misperception of intentions. It was only when one U.S. general decided not to escalate in the face of Soviet first strike preparations that both sides deescalated, and the crisis eventually receded.
The information above wasn’t fully understood by either side at the time of the escalation. On the U.S. side, it wasn’t until the 1990 publication of a study entitled The Soviet War Scare by the President’s Foreign Intelligence Advisory Board (PFIAB) that something like the full story was revealed.
This study was originally classified above TOP SECRET. Most citizens assume that TOP SECRET is the highest level of classification. But there are secret access codes that limit circulation of certain documents even among those cleared with TOP SECRET access.
In the case of The Soviet War Scare, those restrictions had the code names UMBRA, GAMMA, ININTEL, NOFORN, NOCONTRACT, ORCON. I can’t discuss my own TOP SECRET clearances, but I can inform you that very few intelligence operatives would have been able to view the PFIAB report based on those restrictions.
So what does all this have to do with gold?
Buried inside The Soviet War Scare was this passage about the U.S. assessment of KGB collection requirements related to a potential nuclear war:
VRYAN Collection Requirements – Throughout the early 1980s, VRYAN requirements were the No. 1 (and urgent) collection priority for Soviet intelligence… They were tasked to collect:… monitoring of the flow of money and gold on Wall Street as well as the movement of high-grade jewelry, collections of rare paintings and similar items. (This was regarded as useful geostrategic information.) (Emphasis added)
And there it is! The U.S. assessed that the KGB tracked the movement of gold as a leading indicator of nuclear attack.
I didn’t find this completely surprising. From 2004–2010, I was co-director of a CIA effort called Project Prophesy that looked at capital markets activity as an early warning of an enemy attack.
Gold was one of the valuable assets that was on our list of items to track. The idea was that if a general or political leader had advance information about an attack, they’d convert their wealth to gold in safekeeping in order to financially survive the fallout.
The bottom line is that this intelligence reporting and AI system are not ancient history. Today, the world is closer to nuclear war than at any time since the Able Archer scare in 1983. Gold is once again on the move, having risen from $1,830 per ounce on Oct. 5, 2023, to over $2,400 today. That’s a 31% gain in six months.
Is this a coincidence? Hardly. A close correlation of huge gains in gold with serious threats of nuclear war is exactly what one should expect.
Unfortunately, those threats of nuclear war are not going away soon. One need only look at the Iranian attack on Israel this past weekend and the possibilities of further escalation.
There are also situations in Ukraine, Russia, NATO, Gaza, the Red Sea and the Suez Canal revealing that the world is a more dangerous place than it has been for decades.
That’s bad news for the world but good news for gold investors. The rally we’ve seen in the past six months is just getting started.
A volatile day for markets (relatively speaking) with crude and crypto the high- low-lights.
Goldman's trading desk (Lee Coppersmith) noted that for the first time all year, it feels like the market is starting to question the strong growth narrative on the back of weaker earnings this AM: ASML -8% spilling into all Semis; JBHT a bellwether transport -7.5% and KNX -3.5% cut their forecast; Industrial REITs (GSSIREID) -3.2% on back of a neg print in the space. All of this weighing on the Momo trade (GSPRHIM) -2%.
Stocks were sliding early on after the cash open but at around 1055ET the following headline hit: STRIKING IRAN'S NUCLEAR FACILITIES 'ON THE TABLE', SAYS EX-MOSSAD INTELLIGENCE CHIEF - SKY NEWS which took stocks down aggressively.
But that was reversed higher as oil prices plunged...
Source: Bloomberg
Oil was drifting lower early on amid a larger crude stockpile build but then Maduro and SPR headlines hit and the price plummeted to three-week lows...
Who could have seen that coming?
Oil got the message. How long before stock algos realize the SPR drain is coming
— zerohedge (@zerohedge) April 17, 2024
Then around 1440ET stocks went vertical.. because, frankly, no idea at all... and then reversed it just as fast! An almost perfect redux of what we saw yesterday around the same time...
Notably, the driver for that spike was a sudden surge in 0-DTE call-buying...
That did not last long - just like yesterday, and by the close Equities were back near the lows of the day with Nasdaq and Small Caps the biggest laggards. The S&P was down around 0.5% on the day and The Dow was unable to hold unchanged...
The bounce in stocks - thanks to plunging crude prices - rescued stocks critical CTA thresholds that should remain on everyone's radar: medium term threshold = 4880 (~2.7% below spot). Goldman warns this would trigger >$50bn in SPX supply over 1 month. As a reminder, the short-term CTA sell threshold was 5,135 yesterday.
One more thing before we leave equity-land, VIX ended the day unchanged, while stocks were down quite notably - are we finally seeing some call-unwinds?
Source: Bloomberg
Oddly, gold also started to tumble around the same time as oil plunged...
Source: Bloomberg
Treasuries were very well bid today with a strong 20Y auction further emboldening buyers this afternoon. The belly of the curve outperformed, with 5Y -9bps, 2Y and 30Y -5bps...
Source: Bloomberg
The 2Y Yield thoroughly rejected 5.00% for now...
Source: Bloomberg
While yields tumbled, rate-cut expectations were basically unchanged...
Source: Bloomberg
One thing of note is that 2025 rate-cut expectations increased modestly today (SOFRZ4Z5), but remain very much more hawkish than a month ago...
Source: Bloomberg
...and it merely reversed yesterday's record volume capitulation move...
Source: Bloomberg
The dollar dropped for the first time in six days - its biggest drop since March 7th...
Source: Bloomberg
But the big move on the day... was in crypto which puked hard along with stocks, losing its $60k handle briefly before bouncing back a bit...
Source: Bloomberg
Ethereum outperformed bitcoin on the day, erasing most of its big relative puke last Friday/Saturday...
Source: Bloomberg
Finally, as we detailed earlier, the market has seen more Hindenburg Omens than in any year since the peak of the
Source: Bloomberg
'Probably nothing!'
Monica Cornejo, an assistant professor of interpersonal communication, was forcibly removed from a Cornell University event this week after disrupting a speech by conservative commentator Ann Coulter. She is only the latest faculty member to seek to prevent others from hearing opposing views. The question now is what Cornell will do about her conduct.
To its credit, Cornell resolved to reinvite Coulter to speak after a prior event was disrupted by protesters.
On March 13, Cornell Provost Michael Kotlikoff stated that:
“Having been deeply troubled by an invited speaker at Cornell (any speaker) being shouted down and unable to present their views, I agreed that there could be few more powerful demonstrations of Cornell’s commitment to free expression than to have Ms. Coulter return to campus and present her views.”
Kotlikoff should be commended for taking a principled stance in favor of free speech.
The question, however, is how he will handle Cornejo. In a 36-second video posted by The College Fix officers indicate that she is under arrest for “disorderly conduct.”
According to the site, she repeatedly responded “don’t touch me — do not touch me,” and tells them “I am a faculty member.”
(I could not make out the last reported statement on the tape itself).
Assistant professor at Cornell was removed for repeatedly interrupting a speech by Ann Coulter. pic.twitter.com/g9sht1JUy2
— Citizen Free Press (@CitizenFreePres) April 17, 2024
Cornejo is described in media reports as “one of the first undocumented tenure-track faculty members at Cornell.”
She was interrupting a speech by Coulter titled “Immigration: The Conspiracy To End America.”
Her bio states that
“Dr. Monica Cornejo is an Assistant Professor in Interpersonal Communication in the Department of Communication at the College of Agriculture and Life Sciences. Dr. Cornejo’s research uses qualitative and quantitative methodologies to examine the structural barriers that lead to inequities among undocumented immigrants, how undocumented immigrants draw on communication identity management and advocacy strategies to challenge those barriers, and how those strategies relate to undocumented immigrants’ health and wellbeing.
…Dr. Cornejo focuses on teaching students about different ways in which interpersonal communication can reduce or create disparities and inequities in the United States (e.g., discrimination towards sexual orientation minorities and immigrant communities), as well as the strategies members of minoritized communities (and allies, co-conspirators, families) utilize to challenge the disparities and inequities that position minoritized group members in a second-class position.”
I have previously written that universities must draw a clear distinction between free speech and this type of disruptive conduct. Cornejo has every right to protest outside of the event. However, preventing others from speaking or hearing opposing views is not free speech. It is the antithesis of free speech. It will continue until universities show the courage to discipline faculty or students engaging in such conduct.
The removal of Cornejo showed a commitment to free speech by the school. Often schools remain passive or enforce a heckler’s veto in such cases.
Yet, removal alone is not sufficient.
Protesters will often plan a series of disruptions to effectively shutdown an event. Moreover, the university stated publicly that it wanted to show that such an event could occur on campus without disruption. This faculty member defied that policy and elected to heckle and disrupt the event.
She is not the first.
Years ago, many of us were shocked by the conduct of University of Missouri communications professor Melissa Click who directed a mob against a student journalist covering a Black Lives Matter event. Yet, Click was hired by Gonzaga University. Since that time, we have seen a steady stream of professors joining students in shouting down, committing property damage, participating in riots, verbally attacking students, or even taking violent action in protests.
Blocking others from speaking is not the exercise of free speech. It is the very antithesis of free speech. Nevertheless, faculty have supported such claims. CUNY Law Dean Mary Lu Bilek showed how far this trend has gone. When conservative law professor Josh Blackman was stopped from speaking about “the importance of free speech,” Bilek insisted that disrupting the speech on free speech was free speech. (Bilek later cancelled herself and resigned). Even student newspapers have declared opposing speech to be outside of the protections of free speech.
At Fresno State University public health professor Dr. Gregory Thatcher, recruited students to destroy pro-life messages.
At the University of California Santa Barbara, professors actually rallied around feminist studies associate professor Mireille Miller-Young, who physically assaulted pro-life advocates and tore down their display. Despite pleading guilty to criminal assault, she was not fired and received overwhelming support from the students and faculty. She was later honored as a model for women advocates.
At Hunter College in New York, Professor Shellyne Rodríguez was shown trashing a pro-life display of students.
She was captured on a videotape telling the students that “you’re not educating s–t […] This is f–king propaganda. What are you going to do, like, anti-trans next? This is bulls–t. This is violent. You’re triggering my students.”
Unlike the professor, the students remained calm and respectful. One even said “sorry” to the accusation that being pro-life was triggering for her students.
Rodríguez continued to rave, stating, “No you’re not — because you can’t even have a f–king baby. So you don’t even know what that is. Get this s–t the f–k out of here.” In an Instagram post, she is then shown trashing the table.
Hunter College, however, did not consider this unhinged attack to be sufficient to terminate Rodríguez.
It was only after she later chased reporters with a machete that the college fired Rodríguez. She was then hired by another college.
Another recent example comes from the State University of New York at Albany, where sociology professor Renee Overdyke shut down a pro-life display and then resisted arrest. One student is heard screaming, “She’s a [expletive] professor.”
That of course is the point. She is a professor and was teaching these students that they do not have to allow others to speak if they oppose their viewpoints.
In watching their faculty engage in such conduct, one can understand why students believe that they have license to prevent others from speaking on campus. The only way to change that view is to suspend, fire, or expel those who seek to prevent others hearing opposing views by disrupting events. Again, the universities must show equal commitment in protecting their right to protest outside of events.
Yet, disrupting a class or event from within these spaces is a denial of the essential commitment of higher education to the free exchange of ideas.
Update (1530ET):
"I have serious concerns about the safety of the 787 and 777 aircraft, and I'm willing to take on professional risk to talk about them," Boeing whistleblower Sam Salehpour said in his opening statement on Capitol Hill today at the second Senate committee investigating the plane manufacturer's safety problems. He said when he raised concerns about the 787 Dreamliner, he was "ignored" by the company and "told not to create delays. I was told, frankly, to shut up."
Salehpour warned that the 787 Dreamliner fuselage was improperly put together and that the company "rushed to address the bottlenecks in production." The result, he warned, is "premature fatigue failure" on these planes. He noted, "They are putting out defective airplanes."
"If something happens to me, I am at peace because I feel like coming forward, I will be saving a lot of lives," he added.
"I want to make clear that I have raised these issues over 3 years. I was ignored. I was told not to create delays. I was told, frankly, to shut up."
— MSNBC (@MSNBC) April 17, 2024
WATCH: Boeing Whistleblower Sam Salehpour testifies Wednesday in front of Congress. pic.twitter.com/BSnkD6Itfq
Boeing did not have any witnesses at the hearing, but a spokesperson for the company told The Hill the company "understands the important oversight responsibilities of the Subcommittee and we are cooperating with this inquiry. We have offered to provide documents, testimony, and technical briefings, and are in discussions with the Subcommittee regarding next steps."
Sen. Richard Blumenthal (D-Conn.), the committee chair, thanked the whistleblower for "speaking truth to power in the best sense of that word. Thank you for facing down one of the most powerful companies in the world."
Blumenthal added, "We intend to uncover what has enabled the culture of safety disregard to exist, so that we can change it for good."
In early March, the last Boeing whistleblower was found dead in his car from a "self-inflicted wound."
* * *
Update (1113ET):
The second Senate hearing on Boeing is about to begin (1115 ET). Lawmakers will hear whistleblower allegations about significant safety lapses in Boeing's manufacturing of the 787 Dreamliner.
* * *
Update (0955ET):
Boeing faces two hearings on Capitol Hill today:
First: Senate Commerce Committee
US Senator Maria Cantwell (D-Wash.), Chair of the Senate Committee on Commerce, Science and Transportation, will convene a full committee hearing titled "FAA Organization Designation Authorization (ODA) Expert Panel Report" on Wednesday, April 17, 2024, at 10:00 AM EDT. This hearing will review the findings and recommendations from the Organization Designation Authorization (ODA) Expert Review Panel's final report. The landmark Aircraft Certification, Safety, and Accountability Act required the FAA to convene an independent expert panel to review the safety management processes and culture of ODA holders like Boeing and make recommendations to address any safety deficiencies.
Watch Live:
The whistleblower hearing begins at 1115 ET.
* * *
The Senate Commerce Committee, which oversees the Federal Aviation Administration and Boeing, will kick off today's first hearing at 1000 ET. This will feature a panel of aviation experts who recently released a report criticizing Boeing's "inadequate" and "confusing" safety culture and has called for significant changes.
The report states, "The procedures and training are complex and in a constant state of change, creating employee confusion, especially among different work sites and employee groups." The experts noted "a lack of awareness of safety-related metrics" across all levels of the company.
Sen. Tammy Duckworth (D-Ill.), chair of the Senate Commerce Aviation subcommittee, said Tuesday that the Federal Aviation Administration "needs to look at what Boeing does, not just what it says it's doing."
Duckworth, who will attend the first of today's two hearings, said there is a real possibility that the FAA "is willing to use its "civil enforcement authority when appropriate" against Boeing.
The second hearing (beginning at 1115 ET) will feature a Boeing quality engineer turned whistleblower who will testify before the Senate Homeland Security Committee's Permanent Subcommittee on Investigations about the alleged poor manufacturing quality of the 787 Dreamliner.
The whistleblower is Sam Salehpour, a quality engineer at Boeing. In a report released last week, he told The New York Times about large sections of the 787's fuselage that were improperly connected and could break down over time.
"The entire fleet worldwide, as far as I'm concerned right now, needs attention," Salehpour told NBC News, adding, "The attention is that you need to check your gaps and make sure that you don't have the potential for premature failure."
"The is going to surface some really shocking allegations about failures and safety practices and culture and light and retaliation that should shock the conscience of corporations as well as Americans," subcommittee Chair Richard Blumenthal (D-Conn.) told The Hill.
Blumenthal added, "The whistleblower will have the guts to show up, and I'm hoping that Dave Calhoun will as well at some point."
Meanwhile, Boeing CEO David Calhoun plans to step down at the end of this year. He has repeatedly stated that he wants to improve manufacturing quality and safety culture. Calhoun has not publicly said if he will attend the hearings today.
There was something odd about the latest Beige book (which was prepared based on information collected on or before April 8, 2024, so before the latest CPI print): if accurate, it would suggest that the rosy economic picture painted by the White House is woefully incorrect, whether on purpose or not (spoiler alert: it is on purpose).
Reading the Beige Book, we find that contrary to the official GDP print which claims the economy is cruising at a brisk 3%, ten out of twelve Districts experienced "either slight or modest" economic growth, while the other two reported no changes in activity.
What is more concerning for the economy where spending amounts for 70% of all economic growth, the Beige Book found that consumer spending "barely increased" overall, but reports were quite mixed across Districts and spending categories:
Next, we turn to employment, where contrary to the BLS claims that jobs are soaring month after month (even if they are all part-time workers, mostly going to illegal aliens), the Beige Book found that employment rose at a slight pace overall, with nine Districts reporting very slow to modest increases, and the remaining three Districts reporting no changes in employment.
Not surprisingly, most Districts noted increases in labor supply - which makes sense in a country where 10 million Biden voters illegals have entered in the past year. Yet despite the improvements in "labor supply", many Districts described persistent shortages of qualified applicants for certain positions, including machinists, trades workers, and hospitality workers. Guess you can only have so many gardeners and construction workers. Several Districts reported improved retention of employees, and others pointed to staff reductions at some firms.
There's more: contrary to the surging wages of the post-covid era, the Beige Book found that Multiple Districts said that annual wage growth rates had recently returned to their historical averages. On balance, contacts expected that labor demand and supply would remain relatively stable, with modest further job gains and continued moderation of wage growth back to pre-pandemic levels.
Last but not least, the Beige Book commented on inflation and found that price increases were modest, on average, running at about the same pace as in the last report, as disruptions in the Red Sea and the collapse of Baltimore's Key Bridge caused some shipping delays but so far did not lead to widespread price increases. Movements in raw materials prices were mixed, but six Districts noted moderate increases in energy prices. Another widely known fact: several Districts reported sharp increases in insurance rates, for both businesses and homeowners.
Most ominously, another frequent comment was that firms' ability to pass cost increases on to consumers had weakened considerably in recent months, resulting in smaller profit margins. That's hardly the stuff soft- or no-landings are made of.
Inflation also caused strain at nonprofit entities, resulting in service reductions in some cases.
On balance, contacts expected that inflation would hold steady at a slow pace moving forward. At the same time, contacts in a few Districts—mostly manufacturers—perceived upside risks to near-term inflation in both input prices and output prices.
Turning to the specific regional Feds, we found these summaries notable:
More in the full beige book
Israeli emergency authorities are reporting that casualties from a suicide drone attack on a northern Israeli village have risen to at least 18 people wounded.
Hezbollah took responsibility for launching the suicide drone which ultimately scored a direct hit on a community center, with Israeli media noting that air warning sirens failed to sound during the attack. However, Hezbollah claimed it was targeting a building used by the Israeli military.
According to Times of Israel, "The victims were taken to Galilee Medical Center in Nahariya. which said that one victim was listed in critical condition and two others were seriously wounded."
"Another four people were listed in moderate condition, while the remaining victims were lightly hurt, the hospital added," the report indicates. Public broadcaster Kan published dramatic footage showing the small drone slam into a building, erupting into a large fireball...
הפגיעה בערב אל עראמשה: 6 נפצעו, בהם אחד באורח קשה, אחד בינוני והיתר במצב קל | תיעוד רגעי הפגיעה
— כאן חדשות (@kann_news) April 17, 2024
(מיכל וסרמן) pic.twitter.com/U4GEoU4i2S
The IDF says it is investigating why the crucial air raid warning systems failed during the attack, only apparently turning on in the aftermath of the strike.
Israel's military further said it immediately retaliated by striking Hezbollah launch positions in southern Israel, as has been typical in what's become a daily tit-for-tat and intensifying cross-border fire.
Also on Wednesday, the IDF conducted strikes on the southern Lebanese town of Aita al-Shaabb, as well as aerial attacks on Yarin and Naquora.
Footage from another angle captures a clearer picture of the suicide drone sent by Hezbollah...
Additional footage shows the Hezbollah explosive-laden drone striking the community center in Arab al-Aramshe, wounding seven people. pic.twitter.com/DEE13pxE26
— Emanuel (Mannie) Fabian (@manniefabian) April 17, 2024
Hezbollah earlier in the week 'congratulated' Iran following the Saturday overnight massive missile and drone attack on Israel, saying in a statement: "Hezbollah extends its blessings and congratulations to the leadership of the Islamic Republic of Iran and its people for the effective and unprecedented attack targeting the unjust aggressor … [We praise] the brave and wise decision to respond firmly to the Zionist aggression against the Iranian consulate in Damascus."
At this moment some 80,000 residents of northern Israel still remain unable to access and live in their homes, given that six months ago northern Israeli communities close to the border were ordered evacuated due to the daily threat of rocket and drone attack from Hezbollah.
It's widely believed that Hezbollah sources their more sophisticated drones from Iran, which has long supplied the bulk of the Shia paramilitary group's missile arsenal as well. Iran has also supplied the Houthis in Yemen, which have effectively closed the Red Sea to commercial shipping through constant attacks.
Since Nayib Bukele became president of El Salvador, El Salvador has been in American media and global political discussion more than ever. While much of the attention focuses on Bukele’s mass incarceration of gang members and a decline in homicide of over 70%, Bukele has also drawn attention to his favoritism towards Bitcoin and how he has pushed El Salvador to embrace cryptocurrency.
Most dramatically, Bukele has proposed- fantasized?- about creating a volcano-powered haven called Bitcoin City, that would serve as an international tax haven. Bukele has also made Bitcoin recognized as a legal currency in El Salvador. The country has also begun its own sovereign reserve of Bitcoin and Bukele claims the move has been profitable for the country
But even when a president is a passionate advocate for Bitcoin, demand for gold still exists and exerts an inexorable pressure on public policy.
First, while El Salvador struggled with extraordinarily high crime rates and economic turmoil in the 21st century, it sold off the vast majority of its gold holdings towards the end of 2014. But since then it has maintained its commitment to its current gold reserves. Bukele may talk about crypto as the future but it seems he and his administration realize it would be reckless to actually move away from gold reserves that can help support a country’s currency and economy.
But more directly, El Salvador is acknowledging the importance of gold by planning to ditch a landmark 2017 law that banned industrial gold mining. The law was passed under pressure by international green groups and an alliance of Central American environmentalists. But given the enduring value of gold- it’s estimated that El Salvador gold reserves are worth billions– the Bukele administration has been making moves to alter the law and create an office to facilitate mining in El Salvador.
Bitcoin, and cryptocurrency, is an intriguing phenomena but are in important ways different from traditional inflation and catastrophe. For instance, the use of most cryptocurrencies has high transaction costs, compared to trading metal coinage or bullion. The use of cryptocurrency also requires functional Internet and technical expertise. Finally, the most prominent cryptocurrency, Bitcoin, is not truly fungible. Gold, as an element, is fungible. An ounce of gold is identical to another ounce of gold. Paper currency is theoretically fungible, one dollar bill is equal to any other dollar bill.
(The assumption of actual fungibility may be violated in criminal investigations when law enforcement agencies track serial numbers.)
Bitcoin is not truly fungible as many have pointed out, including the Mises Institute. Because all Bitcoin transactions are public records, anyone can trace the path of any individual Bitcoin.
This has led to demand for “virgin Bitcoins” that have never been used in any transaction and are unconnected on the blockchain to any history. This sets Bitcoin apart from gold, while gold is fungible or can be made fungible (for instance melting down jewelry), older gold can actually be more valuable such as when gold coins possess numismatic value or gold heirlooms possess historic value.
The future of gold in Latin America is uncertain but it sure looks bright.
Missouri Attorney General Andrew Bailey announced on Wednesday that the state has filed for a temporary restraining order (TRO) to block the Biden administration's "illegal student loan plan," referred to by a coalition of states as "Plan B," which was implemented shortly after a previous attempt ("Plan A") was deemed illegal by the Supreme Court.
"Plan B" aims to forgive student loans under different statutory provisions, but faces similar legal challenges as plan A - primarily surrounding the authority to enact such broad debt cancellation without clear congressional authorization.
"From the moment the Supreme Court ruled in Biden v. Nebraska, President Biden made clear he would ‘stop at nothing’ to evade the decision," reads the TRO request. "Although the challenged rule, by its own text, was not supposed to take effect until this July, Defendants decided to start implementing it early and have already illegally cancelled billions of dollars in loans."
"Defendants make almost no attempt to meaningfully distinguish their Plan B from their patently unlawful Plan A," the filing continues.
Shortly after Biden announced the SAVE plan earlier this month, 11 states sued, arguing that it's yet another unlawful attempt to force Americans who incurred no college debt to shoulder the bill for those who did. According to the Committee for a Responsible Federal Budget, Plan B would add up to $750 billion to the US budget deficit.
The plan itself has five major components. It would:
Cancel accumulated interest for borrowers with balances higher than what they initially borrowed, capped at $20,000 for those in standard repayment and uncapped but restricted to individuals making less than $120,000 annually or couples making under $240,000 enrolled in an income-driven repayment (IDR) plan.
Automatically cancel loans for borrowers in standard repayment who would be eligible for cancellation had they applied for programs such as Public Service Loan Forgiveness (PSLF) or the new IDR program, Saving on a Valuable Education (SAVE).
Automatically cancel loans for borrowers who have been repaying undergraduate loans for over 20 years or graduate loans for over 25 years.
Cancel debt of those who attended low-financial-value programs, including those that failed accountability measures or were deemed ineligible for federal student aid programs.
Forgive debt of borrowers who are “facing hardships” or are likely to default on their loan payments.
According to AG Bailey, the plan is a "brazen attempt to curry favor with some citizens by forcing others to shoulder their debts."
Now, Missouri wants a judge to block Plan B until the lawsuit plays out.
🚨NEW: We have filed a motion to BLOCK President Biden's latest illegal student loan plan immediately.
— Attorney General Andrew Bailey (@AGAndrewBailey) April 17, 2024
Read more about it here: https://t.co/FMedyvEr7i https://t.co/QwZ4hLFjvA
The states argue that Plan B violates principles of separation of powers and exceeds the statutory authority granted by Congress. They also argue that it is arbitrary and capricious and fails to follow proper statutory procedures.
"Just ten days after the Supreme Court struck down Defendants’ first attempt at mass debt cancellation as patently illegal, Defendants rolled out their Plan B," reads the new filing. "This newest plan relies on a different statute, but it clocks in at the same price tag and again seeks to shortchange the legislative process on a political topic that is highly salient."
According to the TRO request, "Defendants’ Plan B suffers from all the same flaws that led the Supreme Court to strike down their Plan A," and "Because Defendants’ Plan B carries the same price tag and covers the exact same topic as their first attempt at mass debt cancellation, it triggers the 'major questions doctrine,' just like the Supreme Court held their first plan did."
The filing also discusses the significant economic implications of the plan - suggesting that it will have substantial effects on state revenues and the student loan market. Several states have already claimed that they are injured by the plan due to its impact on state-owned financial institutions and the alteration of competitive landscapes in the student loan market.
As such, the plaintiffs ask that the court issue a stay, or TRO, to halt the implication of Plan B.
The Constitution is clear: Congress has the power of the purse, not the President.
— Attorney General Andrew Bailey (@AGAndrewBailey) April 9, 2024
Joe Biden cannot unilaterally “cancel” hundreds of millions of dollars in student loan debt and force everyday Americans to pick up the tab.
Authored by Paul Joseph Watson via Modernity.news,
New NPR CEO Katherine Maher gave a Ted Talk during which she asserted that “truth” is a “distraction” which is “getting in the way of getting things done.”
Calls are growing for NPR to have its government funding withdrawn after a series of tweets by Maher were uncovered in which she supported far-left causes, including endorsing racial reparations and making claims that the planet is “burning.”
But the content of the Ted Talk she gave is raising even more eyebrows.
Maher ludicrously suggested during the speech that far-left Wikipedia had a model “which actually works really well” in determining “what the truth really is.”
Acknowledging that Wikipedia writers are “not focused on the truth, they’re focused on something else, which is the best of what we can know right now,” Maher suggested the “truth” was not a priority.
NPR’s CEO Katherine Maher on the truth:
— Ian Miles Cheong (@stillgray) April 17, 2024
“Our reverence for the truth might be a distraction that’s getting in the way of finding common ground and getting things done.”
Reposting this because the original poster deleted the video. pic.twitter.com/h9kqJWV3p3
“In fact, our reverence for the truth might be a distraction that’s getting in the way of finding common ground and getting things done,” she said.
Maher went on to claim “there are many different truths” based on the feelings, environment and perception of different individuals.
In other words, there is no objective truth and the truth is whatever left-wing journalists and biased Wikipedia editors say it is.
Elon Musk has blasted NPR in recent days, asserting that the network has “become a hard left propaganda machine that tolerates no dissent.”
That was in response to comments by award-winning veteran senior NPR editor Uri Berliner, who was suspended after sharing concerns about the state of the mainstream media.
NPR has become a hard left propaganda machine that tolerates no dissent https://t.co/Pcpg1Wubtk
— Elon Musk (@elonmusk) April 16, 2024
Berliner lamented the “declining ratings” and “sorry levels of trust,” calling on the legacy press to go back to square one “with the basic building blocks of journalism.”
[ZH: Berliner just resigned, explaining that "I cannot work in a newsroom where I am disparaged by a new CEO whose divisive views confirm the very problems at NPR I cite in my Free Press essay."]
Musk also highlighted how Maher (who puts pronouns in her bio) has a history of working for corrupt, globalist institutions.
Interesting https://t.co/hQJTsYDx5v
— Elon Musk (@elonmusk) April 15, 2024
“While NPR often claims that public funding accounts for only a small portion of its budget, the outlet’s parent company, the Corporation for Public Broadcasting, received $525 million this year, $126 million of which went to public radio stations. Because much of NPR’s public funding is indirect, channelled through member fees paid by local stations, it is able to claim financial independence,” reports Unherd.
Last year, Twitter placed a label on NPR’s account describing the outlet as “State-affiliated media,” with owner Elon Musk commenting that the description “seems accurate.”
* * *
Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.
This weekend marked a major escalation in the long-running conflict between Israel and Iran, with the latter launching what some called a "performative" barrage of missiles at Israel amid the backdrop of the Israel-Hamas conflict.
Iran says the matter is "concluded" (for now) but remains "in a state of readiness" to deliver a "massive and harsh response" if Israel launches the "tiniest invasion," while Israel's former chief of Mossad, Zohar Palti, warned that striking Iranian nuclear facilities "is on the table."
The UK, France, and Germany have sent top-ranking diplomats to Israel in order to urge de-escalation of the crisis, while the Biden administration is also said to be not be on board with Israel directly striking back on the Islamic Republic. PM Netanyahu, however, said 'we will make our own decisions' on security.
Meanwhile, there is no hope in sight for any resolution on the ongoing conflict between Israel and Hamas in Palestine where an unprecedented humanitarian crisis has erupted.
On April 17th, ZeroHedge hosted a debate on the issue: participants discussed everything from how the Biden administration should (or should not) respond, to whether Israel's actions in Gaza, Syria and Lebanon are morally justified vs. the actions of Hamas.
Watch the full debate below:
— zerohedge (@zerohedge) April 17, 2024
With yields surging yesterday to a 2024 high in a move which sent stocks sliding for a 3rd consecutive day, a dump which extended today as more CTA selling kicked in, but unlike yesterday it is now also manifesting in a flight to bond safety which has pushed yields sharply lower, moments ago the Treasury sold $13BN in 19-Year 10-month reopening of 20Y Treasury cusip TZ1 in what was a stellar auction.
The high yield of 4.818% was 28bps higher than March's 4.542% ad the highest since October's record high 5.257%, but it also stopped through the 4.843% When Issued by 2.5bps, the biggest stop through since Jan 2023.
The bid to cover was also impressive, rising from 2.79 to 2.82, the highest since June 2023 and clearly well above the six-auction average.
The internals also impressed with Indirects awarded 74.7%, up from 73.5% last month and the highest since February 2023. And with Directs awarded 16.2%, just below the 18.3% six-auction average, dealers were left holding just 9.1%, the lowest since June 2023.
Overall this was a stellar auction, and one which pushed 10Y yields to session lows of 4.58%, down nearly 10bps on the day, before giving up some of the gains.
First it was Michael Hartnett, warning that the "Explosion In Gold Shows Investors Are Preparing For The Endgame", now it's Bloomberg's turn.
According to BBG Markets Live reporter Mark Cranfield, the resilience of precious metals in the face of rising bond yields and a strong US dollar suggests investors are hedging against currency debasements. Central banks adding to their gold holdings in recent months only supports that view.
As Cranfield correctly notes, there is nothing better to concentrate the mind of conservative investors than being fearful that whichever currency they hold isn’t being wholeheartedly defended by its lender of last resort. Indeed, there is more than a hint of a competitive devaluation cycle going on in the developed and emerging worlds.
This week has seen a flurry of verbal intervention rounds to support currencies from policymakers, but traders can see through the smokescreen. There is almost no appetite to deplete central bank reserves, especially when Jerome Powell says the Fed can take its time to lower rates, which will keep the US dollar underpinned.
Gold is even defying the trend of falling ETF holdings (although as shown in the chart below, there is no mystery why gold decoupled from gold ETFs in the middle of 2022 amid a record central bank buying bonanza).
Finally, the Bloomberg commentator observes that there is an icing on the cake for lovers of precious metals when geopolitical angst stays in the forefront of daily news summaries. Gold and silver are portable. They may be a bit heavy to carry, but everybody knows what they are and what they are worth when you show them a coin or a bar. And in case they get too heavy, there is always bitcoin...
Authored by Simon White, Bloomberg macro strategist,
A technical sell signal for the Nasdaq has hit levels not seen since the tech bubble.
However, it should be taken in the context of a still supportive economic backdrop, with buoyant excess liquidity and low near-term recession risk.
The Hindenburg Omen compares the percentage of stocks in a stock index making new 52-week lows versus 52-week highs.
When both are rising above a certain threshold, and we are near a one-year high in the index, the signal activates.
For the Nasdaq, more omens have triggered so far this year than in any calendar year since the 2000 tech-driven top.
As the chart shows, previous rises in the number of omens have coincided with the Nasdaq selling off or moving sideways.
But before traders hit the sell button, there are some caveats to take into account.
First of all, it’s obviously unwise to base an investment strategy around one signal, especially one with such a small sample size. Indeed, there has been one instance where the annual number of omens exceeds today’s value, in the mid 1990s, but this happened in the midst of that decade’s potent bull rally.
Secondly, there are currently no omens for the NYSE. Stock markets within a country tend to move similarly, and the Nasdaq does not stand out as being more overbought than e.g. the NYSE index (the NYA).
Thirdly, the US economy is doing OK and near-term recession risk is low. Furthermore, excess liquidity continues to be supportive for risk assets.
Still, it would be remiss to ignore the notable short-term risks in equities, which the Hindenburg Omens are potentially drawing attention to.
Hedged portfolios, taking advantage of still relatively cheap hedges (e.g. a 10% OTM put on the Nasdaq 100 expiring in December is ~2.6%), are better placed to weather short-term attendant risks.
On Wednesday Russian missiles slammed into the northern Ukrainian city of Chernihiv, killing at least 17 people and wounding scores more, according to local officials. The attack came during a busy time of the day in a downtown district.
President Volodymyr Zelensky in the wake of the deadly strikes, which involved at least three missiles hitting targets, lashed out at the West for failing to provide more vital anti-air defenses and missiles. "This would not have happened if Ukraine had received enough air defense equipment and if the world’s determination to counter Russian terror was also sufficient," he stated.
The wording of the statement strongly suggested his view that allies' determination is not sufficient, despite tens of billions already spent by the West. "Terrorists can destroy lives only when they first manage to intimidate those who are able to stop terror and protect life," he added.
Later in the day, Ukraine emergency authorities reported that over 60 civilians were injured in the attack, in addition to the at least 17 dead - a casualty toll which could rise.
In prior statements published Tuesday, Zelensky commented on last week's Russian attack which destroyed the largest power-generating plant in the Kyiv region. He described that his military had run out of missiles to mount an adequate defense.
"There were 11 missiles flying. We destroyed the first seven, and four (remaining) destroyed Trypillia. Why? Because there were zero missiles. We ran out of missiles to defend Trypillia," he told PBS.
He and his top officials have of late accused the West of turning a "blind eye" at a moment they are simultaneously focusing on Israel's defense against Iran. Reuters has said there remains the possibility that at this rate Ukraine could run out of effective anti-air measures altogether:
Reuters was not able to independently verify the account. Zelenskiy has earlier warned that Ukraine has already had to make tough choices about what to protect and said his country could run out of defensive missiles entirely if Russian attacks continued apace.
Destroyed in 11 March strike, Trypilska thermal power plant was the biggest energy facility near Kyiv and was built to have a capacity of 1,800 megawatts, more than the pre-war needs of Ukraine's biggest city. Other stations and imports have filled the gap for now but residents have been urged to save power.
Ukraine has further in observation of the weekend Iran attack on Israel asked why the US won't also intercept inbound missiles over Ukraine like it did for Israel.
This has become a talking point also picked up by some European allies. NBC reports:
The United States and its partners helped Israel, so why — Ukraine is asking — won’t they help protect us from Russian attacks?
It "looks extremely strange," Ukrainian presidential adviser Mykhailo Podolyak told NBC News in an interview on Tuesday.
"How does the civilian population of Ukraine or the civilian infrastructure of Ukraine differ from the civilian population of Israel from a humanistic point of view?" he asked bluntly.
Zelensky wants to know why Israel, a non NATO member, enjoyed unbridled support for their skies, unlike Ukraine pic.twitter.com/TklHXrmUm9
— The_Real_Fly (@The_Real_Fly) April 15, 2024
Zelensky himself in a Monday night address described, "European skies could have received the same level of protection long ago if Ukraine had received similar full support from its partners in intercepting drones and missiles."
"We can now see how unity can work," Zelensky added, while also expressing frustration that the West rushed to directly intervene in Israel's defense but not Ukraine's. This big difference of course is that Russia is a known nuclear power, and much more formidable, while Iran is not.
Authored by Lisa Schiffren via The College Fix,
A tenured professor is suspended throughout the rest of the semester after writing an essay celebrating Hamas’ attack on Israel.
“McCarthyism is real. I’ve been relieved of teaching responsibilities,” Hobart and William Smith Colleges Professor Jodi Dean wrote Saturday on X. “Don’t stop talking about Palestine.”
“The images from October 7 of paragliders evading Israeli air defenses were for many of us exhilarating,” the New York political scientist wrote the week prior in a blog post for Verso Books.
She wrote further:
Here were moments of freedom, that defeated Zionist expectations of submission to occupation and siege. In them, we witnessed seemingly impossible acts of bravery and defiance in the face of the certain knowledge of the devastation that would follow (that Israel practices asymmetric warfare and responds with disproportionate force is no secret).
Who could not feel energized seeing oppressed people bulldozing the fences enclosing them, taking to the skies in escape, and flying freely through the air?
Mark Gearan, the president of HWS Colleges, wrote, in a letter to the college community, “I deeply regret that as a result of Professor Dean’s comments, there now may be students on our campus who feel threatened in or outside the classroom.”
“Not only am I in complete disagreement with Professor Dean, I find her comments repugnant, condemn them unequivocally, and want to make clear that these are her personal views and not those of our institution. One of my priorities as president is to build an intellectually vibrant and relationship-rich campus community,” President Gearan wrote.
“The Colleges recognize and affirm the importance of free dialogue on ideas,” he wrote.
“We have worked tirelessly to create an environment where we can discuss hard issues upon which we may disagree. But we can never and will never condone or praise violence, particularly when that violence is directed at individuals based on their religion, race or national origin.”
The Chronicle of Higher Education reported that a follow up message from the provost, Sarah Kirk, explained that “the colleges are obligated under Title VI, a federal antidiscrimination law, to investigate potential ‘hostile environments’ involving national origin, shared ancestry, or other protected classes.’”
Some defended the professor’s right to speak freely, even if disagreeing with her views, according to The Chronicle.
Princeton University Professor Robert George “said that while he found the views Dean expressed in her article appalling, the colleges’ response seemed to conflict with their own endorsement of the American Association of University Professors’ principles on academic freedom, which are included in the faculty handbook.”
“None of the unprotected categories of speech are relevant here,” the conservative professor said. “Jodi Dean did not threaten anybody. She did not harass anybody. She did not engage in defamation or accuse somebody of a crime falsely.”
However, Cornell University law Professor William Jacobson had different views.
“You endorse the academic boycott of Israel depriving Israelis and American students and scholars who want to study in or with Israelis of their academic freedom,” Jacobson wrote on X, responding to a post from Professor Dean. “You’re not just a ghoulish depraved communist supporter of Islamist terrorism, you’re an academic freedom fraud.”
You endorse the academic boycott of Israel depriving Israelis and American students and scholars who want to study in or with Israelis of their academic freedom. You're not just a ghoulish depraved communist supporter of Islamist terrorism, you're an academic freedom fraud.…
— William A. Jacobson (@wajacobson) April 14, 2024
The news outlet also reported Dean will continue to be paid.
She also “has access to her office, and can continue to do research. [The spokesperson] rejected any suggestion that Dean’s academic freedom had been violated, and added that the professor had made comments similar to the controversial essay at a campus lecture on March 28.”
Update (1216ET):
Alaska Air resumed departures around noon after an hour-long ground stop for all departure flights nationwide.
The Wall Street Journal says the ground stop was due to a "technology problem that cropped up during a system upgrade."
Even though the ground stop has been lifted, Alaska Air passengers can expect delays throughout the afternoon.
* * *
Update (1120ET):
Phil LeBeau reports on CNBC television that an earlier malfunction of Alaska Airlines' IT system, which calculates planes' weight and balance, triggered a nationwide ground stop.
For all those pilots out there, weight and balance are critical before running up the pre-flight checklist.
* * *
Shares of Alaska Airlines are tumbling in New York after the Federal Aviation Administration's Air Traffic Control System Command Center says all of the carrier's mainline and subcarrier flights (excluding SkyWest Airlines) are placed on a "ground stop."
Here's the advisory from the FAA:
Alaska Airlines shares tumbled on the news. Still up on the session.
The FAA did not explain the reasoning behind the ground stop.
*This is a developing story.
For much of the past year, we had joked that behind the facade of western Democratic ideals, was a cold hard truth: the price of oil must not be allowed to go up in an election year. This was obvious in Biden's "kid gloves" treatment of Iran's regime, it was obvious when the US implemented "sanctions" on Russian oil that were breached within months with zero enforcement, it was also obvious when the US president became best friends with Venezuela's dictator Nicolas Maduro last October when, in exchange for a few thousands barrels of Venezuela's oil, the US lifted sanctions on the person that for years was one of western "democracies" biggest enemies.
Biden Lifts Sanctions On Venezuela Dictator Maduro In Exchange For Oil https://t.co/3VH2WoumCu
— zerohedge (@zerohedge) October 19, 2023
Of course, there had to be some at least optical quid-pro-quo in exchange for the Biden detente so that the US president doesn't look not just senile but also totally stupid and incompetent, and sure enough Maduro agreed that he will hold "free elections" only to renege a few weeks later, while also rubbing Biden's face in Maduro's sudden leverage over the US president as we reported on various occasions:
Biden courts Maduro to get a few hundred thousands barrels of oil so his record low approval doesn't drop even more, and now an emboldened Maduro is preparing to annex most of the sovereign state of Guayana https://t.co/75USHVR9WT
— zerohedge (@zerohedge) November 30, 2023
*VENEZUELA'S MADURO SAYS HE PLANS A VISIT TO RUSSIA SOON
— zerohedge (@zerohedge) January 29, 2024
Just rubbing it in Biden's face now
*VENEZUELA HAS NAMES OF CIA AGENTS WHO ARE CONSPIRING: CONGRESS PRESIDENT JORGE RODRIGUEZ
— zerohedge (@zerohedge) January 25, 2024
Biden's outreach to his new BFF Maduro is working out just great
*VENEZUELA TO SUSPEND REPATRIATION FLIGHTS IF SANCTIONS INCREASE
— zerohedge (@zerohedge) January 30, 2024
Maduro now giving conditions to Biden
And so, nearly half a year later after Biden's shocking detente with Venezuela's strongman, and having become the butt of all jokes, Bloomberg reports that Joe Biden’s administration intends to reimpose oil sanctions on Venezuela, ending a six-month reprieve, if Nicolas Maduro’s regime does not take steps in the next two days to honor an agreement to allow a fairer vote in elections scheduled for July.
The US plans to allow a Treasury Department license permitting oil and gas production to expire without renewal on Thursday, according to people familiar with the plan, who asked not to be identified without permission to speak publicly, if Venezuela fails to act.
The report goes on to note that the Biden administration has been trying to buy as much time as possible before finalizing the decision in hopes for an unlikely breakthrough that could change its plan, although that has clearly not happened.
Reimposing sanctions would end a brief respite that had foreign oil executives flocking to the South American nation. Renewed sanctions would set back Maduro’s efforts to restart Venezuela’s economy, which requires significant foreign investment to rebuild the country’s decaying oil infrastructure. Sanctioning the nation’s limited production will bear little immediate impact on the global oil market. But over the medium- to long-term, the lack of investment from Chevron Corp. and other outside investors could ultimately see Venezuela’s oil output decline.
Cracking down on the oil flowing from the country also threatens to drive rising US gasoline prices even higher. That poses a threat to Biden, who has struggled to calm voter anxiety over persistently high inflation in the US in an election in which the state of the economy is taking center stage.
But why now? Why would Biden's handlers lose so much foreign policy credibility over the past 6 months, just to U-turn now and go back to square one? Well, as Bloomberg notes, if the license expires, "US actions would be taken to ease the impact on Americans and the US oil market."
Actions like what? Well, the same actions Pizza afficionado and White House senior adviser John Podesta said yesterday were on the docket unless oil prices drop, namely draining even more SPR oil.
"The president did it (release oil from SPR) before ... and I think he wants to keep the price of gasoline affordable and he will do what he can to make sure that happens," Podesta said at the BNEF Summit in New York. He stopped short of saying there would be a release from the SPR any time soon.
Of course he did, knowing the political outcry that would follow. But if the White House has a trigger, say an uncooperative Maduro to point the finger to, then an SPR drain is all but guaranteed.
Meanwhile, it was back when oil was $73 when various idiots made fun of us for pointing out that the SPR will never be refilled, aside for the occasional barrel here and there, injected purely for theatrical purposes.
WTI is $73 now https://t.co/lqzYBr9S9Q
— Joe Weisenthal (@TheStalwart) November 16, 2023
We wonder what these upward-failing hacks will say when in its last days, the Biden admin's parting gift to the US will be to fully drain the SPR.
Authored by Simon White, Bloomberg macro strategist,
Equity, fixed-income, credit, commodity and even FX volatility are beginning to rise in unison.
The proximate cause may have been rising geopolitical tensions, but the underlying conditions were there long before, and cross-asset volatility is likely to stay elevated.
Volatility across the board had been trending down since October.
But recently it has been rising, particularly over the last week as tensions in the Middle East worsened.
Underlying conditions have favored a rise in volatility for a while.
First, the VIX has been exceptionally low versus other assets’ volatility.
In recent weeks, call skew has been falling relative to put skew, which is typically consistent with a rise in the VIX. Furthermore, index correlation is about as low as it can go, and any rise would take equity volatility higher with it, especially as the volatility of individual stocks has been rising. There has also been a recent surge in option volume on the VIX, with the VVIX (vol of vol index) also rising sharply.
Second, the MOVE index of fixed-income volatility has been falling despite the latent risk of resurgent price growth.
There was an eerie calm in bond markets, not reflective of the inflationary backdrop, which was finally punctured after last week’s higher-than-expected CPI print. Moreover, higher rate volatility leads to higher equity volatility through the vector of index correlation.
Third, the volatility of many metals was very low until very recently.
Gold and copper looked like they were coiling for a bigger move, with both metals rising since March. Silver has been posting some wild moves, and becoming more cocoa-like in its recent behavior.
FX vol has been a perennial laggard in the vol stakes, but even it has shown some life in the last few days. Higher rates volatility should feed through into FX volatility.
The recent spurt higher in cross-asset volatility has been driven by geopolitical concerns, but even if they fade, the genie is out of the bottle, and volatility across assets is primed to stay elevated for the time being.
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