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[Markets] Week ahead: Fed policy meeting, UK inflation, ILO unemployment, retail sales Investors will keep a close tab on whether Jerome Powell will stick with the Fed's dovish stance as optimism in America’s economy grows. Published:6/13/2021 5:32:46 AM
[Markets] "It Won't Be Pleasant" - Mark Carney Unveils Dystopian New World To Combat Climate 'Crisis' "It Won't Be Pleasant" - Mark Carney Unveils Dystopian New World To Combat Climate 'Crisis'

Authored by Peter Foster via NationalPost.com,

What Carney ultimately wants is a technocratic dictatorship justified by climate alarmism...

In his book Value(s): Building a Better World for All, Mark Carney, former governor both of the Bank of Canada and the Bank of England, claims that western society is morally rotten, and that it has been corrupted by capitalism, which has brought about a “climate emergency” that threatens life on earth. This, he claims, requires rigid controls on personal freedom, industry and corporate funding.

Carney’s views are important because he is UN Special Envoy on Climate Action and Finance. He is also an adviser both to British Prime Minister Boris Johnson on the next big climate conference in Glasgow, and to Canadian Prime Minister Justin Trudeau.

Since the advent of the COVID pandemic, Carney has been front and centre in the promotion of a political agenda known as the “Great Reset,” or the “Green New Deal,” or “Building Back Better.” All are predicated on the claim that COVID, and its disruption of the global economy, provides a once-in-a-lifetime opportunity not just to regulate climate, but to frame a more fair, more diverse, more inclusive, more safe and more woke world.

Carney draws inspiration from, among others, Marx, Engels and Lenin, but the agenda he promotes differs from Marxism in two key respects. First, the private sector is not to be expropriated but made a “partner” in reshaping the economy and society. Second, it does not make a promise to make the lives of ordinary people better, but worse. Carney’s Brave New World will be one of severely constrained choice, less flying, less meat, more inconvenience and more poverty: “Assets will be stranded, used gasoline powered cars will be unsaleable, inefficient properties will be unrentable,” he promises.

The agenda’s objectives are in fact already being enforced, not primarily by legislation but by the application of non-governmental — that is, non-democratic — pressure on the corporate sector via the ever-expanding dictates of ESG (environmental, social and corporate governance) and by “sustainable finance,” which is designed to starve non-compliant companies of funds, thus rendering them, as Carney puts it, “climate roadkill.” What ESG actually represents is corporate ideological compulsion. It is a key instrument of “stakeholder capitalism.”

Carney’s Agenda is promoted by the United Nations and other international bureaucracies and a vast and ever-growing array of non-governmental organizations and fora, especially the World Economic Forum (WEF), where Carney is a trustee. Also, perhaps most surprisingly, by its corporate victims. No one wants to become climate roadkill.

Carney clearly feels himself to be a man of destiny. “When I worked at the Bank of England,” he writes in Value(s), “I would remind myself each morning of Marcus Aurelius’ phrase ‘arise to do the work of humankind’.” One is reminded of French aristocrat and social reformer Henri de Saint-Simon, the “grand seigneur sans-culotte,” who ordered his valet to wake him with similar words: “Remember, monsieur le comte, that you have great things to do.”

That is not the only thing Carney has in common with Saint-Simon, who believed that society should be ruled by savants such as himself; an alliance of engineers and other technocratic intellectuals, along with bankers. Carney is very much a banker technocrat, not merely at ease gliding along the corridors of global bureaucratic power, but expert at framing arguments that support an ever-expanding role for his class.

His expansive pretensions first appeared at the Bank of Canada. If the economy is like a game of ice hockey, then central bankers should, ideally, be like Zamboni drivers, whose job is to keep the ice flat (Carney had in fact been a goalie during his academic years at both Harvard and Oxford). At the Bank of Canada, he often seemed like the Zamboni driver who thought he was Wayne Gretzky. He could never resist lecturing private businesses to stop sitting on “dead money,” or telling them they were too timid in the international arena, or advising consumers that they were spending too little, or borrowing too much. He promoted “macroprudence,” the idea that regulators, in their panoptic wisdom, would focus on the forest, not the trees. Now, he wants to establish himself as an intellectual.

Carney has a lot to put straight with the world. According to his new book, and the related BBC Reith Lectures that Carney delivered last year, the three great crises of credit (2008–09 version), COVID and climate are all rooted in a single problem: People in general, and markets in particular, are not as wise, moral or far-seeing as Mark Carney. He sums up this failing as the “Tragedy of the Horizon,” a phrase he concocted for a speech ahead of the 2015 Paris climate conference.

However, Carney is sophistic when it comes to the alleged moral shortcomings of capitalism. It has been one of the most tedious tropes of the left since at least The Communist Manifesto that the rise of commerce would drive out all that is virtuous in society, leaving nothing but the “cash nexus” of trade. One of Carney’s favourite philosophers is Harvard’s Michael Sandel, who produces endless trivial examples suggesting that we have moved from a “market economy” to a “market society.”

“Should sex be up for sale?” Carney thunders, following Sandel. “Should there be a market in the right to have children? Why not auction the right to opt out of military service? Why shouldn’t universities sell admission to raise money for worthy causes?” But the very fact that people reflexively feel uneasy about — or outright reject — such notions entirely disproves his point. People do not believe that everything is, or should be, for sale.

Carney notes the long debate, going back to classical times, on the nature of commercial value. This was theoretically resolved by the “marginalist revolution,” which put paid to the “paradox of value” that puzzled over the (usually) low price of useful water and the (usually) high price of useless diamonds. The marginalists pointed out that commercial value isn’t determined by usefulness or labour input. It is inevitably subjective, based on personal preferences and available resources. There is no paradox. Someone dying of thirst in the middle of the desert might be more than willing to offer a bucket of diamonds for a bucket of water.

Mark Carney is a UN Special Envoy on Climate Action. PHOTO BY TOLGA AKMEN/POOL VIA REUTERS/FILE

However, market valuations are essentially different from moral values, a distinction Carney continually muddles. He misrepresents the marginalist/subjectivist perspective, claiming that it implies that anything not commercially priced is not considered valuable. “Market value,” he writes, “is taken to represent intrinsic value, and if a good or activity is not in the market, it is not valued.” But who holds such an idiotic view? Nobody “prices” their family, children, friends, community spirit or the beauties of nature, although there is certainly lots of calculation going on in the background. Carney constantly berates “market fundamentalist” straw men who employ “standard economic reasoning” and who believe that people are rational and markets perfect.

He incorrectly claims that Adam Smith — in his first great book, The Theory of Moral Sentiments— said that a sense of morality was “not inherent.” In fact, Smith believed that we are born with such a sense, which is then fine-tuned by the society in which we grow up. However, Carney — like all leftists — leans towards the blank slate, nurture-over-nature perspective because it suggests that human nature might be beneficially reformed under the right (that is, left) social arrangements.

Carney believes our moral sentiments started going astray around the time of the publication of Smith’s better-known book, The Wealth of Nations, in 1776, when the Industrial Revolution was beginning to take off. He rightly suggests that one should read both books to gain a full appreciation of Smith’s insights, but he seems to have missed the significance of Smith’s putdown of “whining and melancholy moralists,” his cynicism about “insidious and crafty” politicians, and his thoroughgoing skepticism about those who would “trade for the public good” (that is, the ESG crowd). Moreover, Smith noted that the greatest corrupter of moral sentiments was not commerce but “faction and fanaticism,” that is, politics and religion, which come together in the toxic stew of climate alarmism and ESG.

ESG used to be called Corporate Social Responsibility, or CSR. The Nobel economist Milton Friedman warned against its subversive nature 50 years ago. He noted that taking on externally dictated “social responsibilities” beyond those directly related to a company’s business opened the floodgates to endless pressure and interference. The big questions are responsibility to whom? And for what?

Carney also typically misrepresents Friedman, suggesting that he claimed that shareholders should rank “uber alles,” and to the exclusion of other legitimate stakeholders such as employees and local communities. Carney claims that “At times, large positive gains could accrue to society if small sacrifices were made on behalf of shareholders.” But by what right would management “sacrifice” shareholders, and who would decide which sacrifices should be made?

Carney admits that the “integrated reporting” required by ESG is a morass: “ESG ratings consider hundreds of metrics, with many of them qualitative in nature… Putting values to work is hard work, but as with virtue, it should become easier with sustained practice.” No need to ask whose version of values and virtue is to prevail.

*  *  *

Despite his thorough castigation of market society, Carney somehow also believes this “corroded” society is clamouring to make great personal sacrifices for draconian climate actions and the UN’s Sustainable Development Goals.

Carney has been a prime pusher of “net-zero,” the notion that climate-related human emissions must be entirely eradicated, buried or offset by 2050 if the world is to avoid climate Armageddon. He claims that net-zero is “highly valued by society.” In reality, the vast mass of people have no clue what it entails; when Carney talks about this version of “society,” he is talking about a small, radical element of it.

Carney peddles the non-sequitur that because the world wasn’t ready for COVID, this confirms that the world is being short-sighted about climate catastrophe. But COVID is an obvious reality; an existential climate catastrophe is a hypothesis (frequently promoted — admittedly with great success — by those with agendas). He claims that “A good introduction to this subject can be found in journalist David Wallace-Wells’ The Uninhabitable Earth,” a work heavily criticized even by prominent climate-change scientists for its factual errors and exaggerations. Indeed, even its author admitted its tendentious purpose.

Carney also commends the knowledge and wisdom of Swedish teenager Greta Thunberg: “The power of Greta Thunberg’s message lies in the way she drives home both the cold logic of climate physics and the fundamental unfairness of the climate crisis.”

Anybody who cites an anxious 17-year-old as an authority on climate science and moral philosophy should be an object of deep suspicion, but then, according to Carney, climate science is easy. Greta’s “basic calculations” are ones that she could “easily master and powerfully project.” (Carney says he once gave Greta a tour of the Bank of England’s gold vaults. One wonders if she also offered up tips on monetary policy.) But then, in early 2020, Greta demonstrated her complete disconnect from reality when, at the WEF in Davos, she called for an immediate cessation of emissions, which would tank the world economy and potentially kill millions. Even Carney admits deviating from her wisdom on that point.

Far from demonstrating a firm knowledge of the climate system himself, Carney cites scary but misleading statistics. “Since the 1980s,” he writes, “the number of registered weather-related loss events has tripled, and the inflation-adjusted losses have increased fivefold. Consistent with the accelerated pace of climate change, the cost of weather-related insurance losses has increased eightfold in real terms over the past decade to an annual average of $60 billion.”

I asked Professor Roger Pielke, Jr., an expert on climate and economics at the University of Colorado, to comment. He replied “(Carney) has confused economics with weather. The increase in losses he describes is well understood to occur for two main reasons: more wealth and property exposed to loss and better accounting of those losses. To assess trends in extreme weather one should look at weather data, not economic loss data.”

Among Mark Carney’s current responsibilities since leaving the Bank of England as its governor is advising Prime Minister Justin Trudeau. PHOTO BY SEAN KILPATRICK/THE CANADIAN PRESS/FILE

Carney’s confusion is hardly innocent since his Agenda depends on incessantly claiming that “What had been biblical is becoming commonplace.”

Fortunately, Carney has been making claims about worsening weather for long enough that we can assess some of his predictions. In his recent book Unsettled: What Climate Science Tells Us, What It Doesn’t, and Why It Matters, Steven Koonin, former undersecretary for science at the Obama-era U.S. Energy Department, cites the speech Carney made to Lloyd’s of London before the Paris climate conference in 2015. The speech was designed to frighten the insurance industry into divestment from fossil fuels, on the basis that many oil and gas reserves would be “stranded” as we exhaust our allowable carbon “budget.” Carney pointed out that the previous U.K. winter had been the “wettest since the time of King George III.” He went on to say, “forecasts suggest we can expect at least a further 10% increase in rainfall during future winters.” For support he cited the U.K. Met Office’s forecast for the next five years. It turned out to be dead wrong. The six winters after 2014 averaged 39-per-cent less rainfall than the 2014 record. Meanwhile a Met Office report in 2018 acknowledged that the “largest source of variability in U.K. extreme rainfalls during the winter months was the North Atlantic Oscillation mode of natural variability, not a changing climate.”

“(I)t’s surprising,” notes Koonin, “that someone with a PhD in economics and experience with the unpredictability of financial markets and economies as a whole doesn’t show a greater respect for the perils of prediction — and more caution in depending upon models.”

During his BBC Reith Lectures last year, on the topic of “How We Get What We Value,” Carney received few challenges from his handpicked questioners, but a couple came from eminent historian Niall Ferguson. Ferguson asked Carney why, in his discussion of the climate issue, he made no reference to Bjorn Lomborg (a much more knowledgeable Scandinavian than Greta), and in particular to Lomborg’s book, False Alarm, in which Lomborg establishes — using “official” science — that there is no existential climate crisis, that adapting to climate change is manageable, and that the kinds of policies promoted by Carney are likely to be far more costly than any impact from extreme weather.

Carney of course hadn’t read that book, but he dismissed Lomborg by saying that “it’s 15 or 20 years ago when he first came out with his ‘Don’t worry about the climate.’ How’s that working out for us?” But Lomborg never said “Don’t worry about the climate,” he just suggested that we had to put risks into perspective. Meanwhile Lomborg’s non-alarmist thesis is working out much better than that of doomsayers such as Carney.

This offhand rejection of someone as widely respected as Lomborg exposes the hypocrisy of Carney’s statement in Value(s) that “experts need to listen to all sides…All of us as individuals have a responsibility to be more open and to engage respectfully with different views if we want constructive political debates and to make progress on important issues.” Except, climate-catastrophe dissenters don’t make it into the debate. There can be zero diversity of views on net-zero.

Ferguson put another thorny question to Carney at that Reith lecture: He pointed out that since the 2015 Paris agreement, China had been responsible for almost half the increase in global carbon emissions, and it was building more coal capacity in the current year than existed in the entire United States. What did China’s promises of net-zero by 2060 mean, Ferguson asked, if it was “actually leading the pollution charge”? Carney’s non response was that China is the largest manufacturer of zero-emission cars, and the leading producer of renewable energy.

Koonin notes in his book that Carney “is probably the single most influential figure in driving investors and financial institutions around the world to focus on changes in climate and human influences upon it…. So it’s important to pay close attention to what he says.”

*  *  *

Mark Carney cries crocodile tears at the possible viability of the Marxist perspective in today’s political environment. But if there is one sure sign of a Marxist, it’s a belief that capitalism is — or is about to be – in “crisis.” His new book has an appendix on Marx’s theory of surplus value: that all profits are wrung from the hides of labour. He also cites Marx’s collaborator, Friedrich Engels. In particular he notes “Engels’ pause,” the one period in capitalist history, early in the 19th century, when workers may not have shared the increases in productivity brought about by industrialization.

Carney projects that the “Fourth Industrial Revolution” (a phenomenon much invoked by the WEF) might bring about a similar period, thus providing a source of political unrest. “(I)t could be generations before the gains of the Fourth Industrial Revolution are widely shared,” he writes. “In the interim, there could be a long period of technological unemployment, sharply rising inequalities and intensifying social unrest… If this world of surplus labour comes to pass, Marx and Engels could again become relevant.”

He rather seems to hope so.

Carney claims powerful parallels between Marx’s time and our own. “Substitute platforms for textile mills, machine learning for the steam engine, and Twitter for the telegraph, and current dynamics echo those of that era. Then, Karl Marx was scribbling the Communist Manifesto in the reading room of the British Library. Today, radical viral blogs and tweets voice similar outrage.”

In fact, Marx wrote The Communist Manifesto, based on a tract by Engels, in Brussels, not at the British Library, but it’s more important to remember where Marx’s misguided and immutable outrage led: to a disastrous economic and political model that generated poverty and mass murder on an unprecedented scale. Meanwhile “outrage” is surely a dubious basis for policy. The outraged are certainly a useful constituency for those seeking power, however, which brings us to the influence on Carney of the man who first tried to put Marxism into practice.

When it comes to the COVID crisis, writes Carney, “We are living Lenin’s observation that there are ‘decades when nothing happens and weeks when decades happen’.” Strange that Carney would cite one of the most ruthless murderers in history for this rather bland insight, but then Carney’s Agenda is not without its own parallels to Lenin (minus, one presumes, the precondition of rampant bloodshed).

Although Vladimir Lenin didn’t know much about business or economics, he declared that “’Communism is Soviet power plus the electrification of the whole country.” Carney’s plan is global. “We need,” he claims, “to electrify everything and turn electricity generation green.” The problem is that wind- and solar-powered electricity needs both hefty government subsidies and fossil-fuel backup for when the wind doesn’t blow and the sun doesn’t shine. Green electricity is inflexible, expensive and disruptive to grids.

Carney cites Joseph Schumpeter’s concept of “creative destruction,” but his own version involves not the metaphorical and benign process of market innovation making old technologies redundant, but a deliberate suppression of viable technologies to make way for less reliable and less economic alternatives.

When Lenin wrecked the Russian economy after brutally seizing power in 1917, he was forced to backtrack and allow some private enterprise to prevent people starving. However, he assured his radical comrades that he would retain control of “the commanding heights” of heavy industry. Carney’s plan is to control the global economy by seizing the commanding heights of finance, not by nationalization but by exerting non-democratic pressure to divest from, and stop funding, fossil fuels. The private sector is to become a partner in imposing its own bondage. This will be do-it-yourself totalitarianism. Indeed, companies in our one-party ESG state are already pleading like show-trial defendants, making suicidal net-zero commitments, lest banks cut them off.

Left: A portrait of Karl Marx. Top right: Vladimir Lenin makes a speech in Red Square on the first anniversary of the Bolshevik Revolution. Below right: Teenage Swedish climate activist Greta Thunberg delivers brief remarkssurrounded by other student environmental advocates in 2019. Mark Carney draws on all three in his agenda to address the “climate emergency,” writes Peter Foster. PHOTO BY FILE; HULTON-DEUTSCH COLLECTION/CORBIS/CORBIS VIA GETTY IMAGES; SARAH SILBIGER/GETTY IMAGES/FILE

To further that end, Carney has helped to start a key organization, the Network for Greening the Financial System (NGFS), a collection of central banks and regulators. He has also signed up an ever-growing constituency of activist policy wonks who peddle emissions measurement and certification, eco audits and ESG rankings. This agenda is inevitably appealing to transnational organizations such as the International Energy Agency (IEA), the IMF, the World Bank and the OECD, whose empires are all lucratively intertwined with the global governance thrust. In May, the IEA issued a report calling for an immediate end to fossil fuel investment to get to net-zero.

Part of Carney’s strategy is to force “voluntary” standards on banking and industry, then have governments make those standards compulsory. The major accounting firms appear keen to promote the possibility of endless auditing extensions, under which the relatively straightforward metric of money is to be replaced by the infinitely malleable concepts of “purpose” and “impact.”

Carney has also helped turn the accounting screw though “carbon disclosure.” Companies are pressured to make explicit the kind of damage they might suffer if the alarmists’ worst nightmares are realized. Such disclosure is a variant on that famous loaded question “When did you stop beating your spouse?” Instead, carbon disclosure asks the climate equivalent of “If you were to beat your spouse, what sort of injuries might he/she suffer?” Companies must also disclose their plans to deal with the presumed crisis. No company dares to say “We do not believe your apocalyptic forecasts.” They meekly regurgitate the required climate porn about floods and droughts and hurricanes, and make elaborate fingers-crossed emissions-reductions commitments. This in turn leads them into arrangements such as buying emissions offsets, a complex scheme analogous to the medieval Catholic Church’s sale of indulgences. Carbon markets have inevitably led to a surge in work for offset generators, certifiers and auditors. Carney projects this market could be worth $100 billion.

Ironically, earlier this year Carney found himself tangled in the murky metrics of offsets. In 2020, he was appointed a vice chairman with Toronto-based Brookfield Asset Management, where he is in charge of “impact investing.” As historian Tammy Nemeth points out in her critical study of the “Transnational Progressive Movement,” of which Carney is a leading light: “(I)t is perhaps ethically murky for someone who is actively working within the UN and advising two different governments on how to change national and global financial rules to be working for a company that will be a direct beneficiary of those rule changes.” Still, who better to lead your company through a minefield than the person who planted the mines?

Except that Carney was hoist with his own petard when he claimed that Brookfield, which has major investments in fossil fuels and pipelines, was already “net-zero” due to emissions “avoided” as a result of its investing in renewable energy. Carney’s claim produced instant refutation and accusations of greenwashing. The Financial Times called it a “major stumble.” A representative of CDP (formerly the Carbon Disclosure Project) castigated those who attempt to hide “dirty coal issues.” Carney subsequently issued a qualified mea culpa on Twitter: “I have always been — and will continue to be — a strong advocate for net zero science-based targets, and I also recognize that avoided emissions do not count towards them.”

*  *  *

H. L. Mencken observed that “The urge to save humanity is almost always a false-front for the urge to rule.” So, just how big a threat is the agenda of Mark Carney and his fellow “transnational progressives”?

In his book, Value(s), Carney lays out rationalizations and autocratic pretensions, although he is less forthcoming about his motivations. He writes that “Leaders need to renounce power for its own sake and discern the power of service.” Mencken would be amused.

The shambolic response to COVID of many governments, not least in Canada, and the distinctly unsettled nature of pandemic “science,” have not done much for the credibility of either governments or experts. The Carney-backed agenda is not predicated on working through democratic institutions but on circumventing them. Still, he is also reported to have more conventional political aspirations, namely to join the federal Liberal party and rise within it, very possibly to prime minister. (Carney recently gave a speech at the Liberal national convention, where he pledged his full support.)

He thus has a rather ill-fitting section in Value(s) on “How Canada Can Build Value for All.” It reads like a Liberal party stump speech. According to Carney “We (in Canada) routinely transcend the limitations of our size to model values and policies for other countries.” It’s the old chestnut that no progressive Canadian leader ever seems to tire of: The world needs more Canada.

Carney is a classic example of what Friedrich Hayek called the “fatal conceit” of constructivist rationalism: the belief that the largely spontaneous institutions of the market order should be rejected in favour of more deliberately planned arrangements. Carney is undoubtedly an intelligent man, but Hayek stressed that the thing that intelligent people tend most to overestimate is the power of intelligence — particularly if they happen to be socialists.

Carney is also of the class that philosopher Karl Popper described as “enemies” of an “open society.” Popper noted that social upheavals tend to bring forth prophets who claim to understand the forces shaping the future, and promise salvation if they are given absolute power. Such was Plato’s model — in response to the upheavals of the Peloponnesian War and the first wave of democracy — of a necessary dictatorship in which the rulers lived as communists, using a specially bred military to control a cattle-like populace. Similarly, Marx’s communism was a response to the turmoil of the Industrial Revolution.

Considering the squalor of Manchester in the 1840s, one might forgive Marx and Engels for thinking a radical response was in order. But given the success of capitalism and the horrors of autocratic systems in the intervening period, it takes considerable chutzpah to be promoting net-zero totalitarianism.

Still, Carney claims that great crises demand great plans. He cites Timothy Geithner, secretary of the U.S. Treasury under president Obama, saying “plan beats no plan.” But Geithner was talking about the very real and immediate 2008–09 financial crisis. Carney’s climate plan is much closer to the notion of Soviet central long-term planning. Clearly, when it came to the subsequent welfare of the Russian people, “no plan” would certainly have beaten “plan.”

What Carney ultimately wants, like Saint-Simon, is a technocratic dictatorship justified by climate alarmism. He suggests that “governments can delegate certain aspects of the calibration of specific instruments… to Carbon Councils in order to improve the predictability, credibility and impact of climate policies.” These carbon councils will be able to demand that national governments “comply or explain” when they inevitably fall short of targets. How these commissars will bring governments into line is unclear, although Nobel economist William Nordhaus has suggested “Climate Clubs” that will punish recalcitrants with punitive tariffs.

The threat of punishment will clearly be necessary because governments are doing little more than hypocritical tinkering on climate policy. China and India are hardly even playing lip service to the “climate emergency.” Nevertheless, according to Carney “political technology” is needed to “build a broad consensus around the right goals.” No question of debating the goals, or the science, just building a consensus to support them.

Carney is a man on a mission to change global society. “Business as usual” — the most hated phrase in the socialist lexicon — is “ultimately catastrophic,” he writes. There is too much “misplaced acceptance of the status quo.” But somehow the new socialism will not be socialism as usual. This time it’s different. We can because we must. The threat is too great to permit any argument. It’s surprising that as he was picking out choice quotes from Lenin for his book, Carney missed this one: “No more opposition now, comrades! The time has come to put an end to opposition, to put the lid on it. We have had enough opposition!”

Tyler Durden Sat, 06/12/2021 - 23:30
Published:6/12/2021 10:56:24 PM
[Markets] Visualizing The Biggest Companies In The World In 2021 Visualizing The Biggest Companies In The World In 2021

Since the COVID-19 crash, global equity markets have seen a strong recovery. The 100 biggest companies in the world were worth a record-breaking $31.7 trillion as of March 31 2021, up 48% year-over-year. As a point of comparison, the combined GDP of the U.S. and China was $35.7 trillion in 2020.

In today’s graphic, Visual Capitalist's Jenna Ross uses PwC data to show the world’s biggest businesses by market capitalization, as well as the countries and sectors they are from.

The Top 100, Ranked

PwC ranked the largest publicly-traded companies by their market capitalization in U.S. dollars. It’s also worth noting that sector classification is based on the FTSE Russell Industry Classification Benchmark, and a company’s location is based on where its headquarters are located.

Within the ranking, there was a wide disparity in value. Apple was worth over $2 trillion, more than 16 times that of Anheuser-Busch (AB InBev), which took the 100th spot at $128 billion.

In total, 59 companies were headquartered in the United States, making up 65% of the top 100’s total market capitalization. China and its regions was the second most common location for company headquarters, with 14 companies on the list.

Risers and Fallers

What are some of the notable changes to the biggest companies in the world compared to last year’s ranking?

Tesla’s market capitalization surged by an eye-watering 565%, temporarily making Elon Musk the richest person in the world. Food delivery platform Meituan and PayPal benefited from growing e-commerce popularity with their market capitalizations growing by 221% and 151% respectively.

Tech companies TSMC and ASML Holdings were also among the top 10 risers, thanks to a shortage of semiconductor chips and growing demand.

On the other end of the scale, Swiss companies Nestlé, Novartis, and Roche Holding were all among the bottom 10 companies by market capitalization growth. China Mobile was the only company to decline with a -12% change. The company was delisted from the New York Stock Exchange as a result of an executive order issued by former president Donald Trump, and recently announced its intention to list on the Shanghai Stock Exchange.

A Sector View

Across the 100 biggest companies in the world, some sectors had higher weightings.

Technology had the highest market capitalization and was also the most common sector, with Big Tech dominating the top 10. Companies in the consumer discretionary, financials, and health care sectors also had a strong representation in the ranking.

Despite having only five companies on the list, the energy sector amounted to almost 10% of the top 100’s market capitalization, mostly due to Saudi Aramco’s whopping valuation.

An Uncertain Recovery

From near market lows on March 31, 2020, all sectors saw increases in their market capitalization. However, top 100 companies in some sectors outperformed their respective industry index, while others did not.

Basic materials and industrials, both cyclical sectors, were high performers in the top 100 and outperformed their respective industry indexes. Technology companies also outperformed, and accounted for $255 billion or 31% of all shareholder distributions by the top 100, far more than any other sector. Apple alone spent $73 billion on share buybacks and $14 billion in dividends in the 2020 calendar year.

On the other hand, the worst-performing sectors in the top 100 were health care, utilities, and energy. While the index performance for health care and utilities was also relatively poor, the wider energy sector performed fairly well.

It’s perhaps not surprising that all sectors saw positive returns since their low levels in March 2020, buoyed by fiscal stimulus and central bank policies. As countries begin to reopen, will the value of the biggest companies in the world continue to climb?

Tyler Durden Sat, 06/12/2021 - 23:00
Published:6/12/2021 10:26:28 PM
[Markets] Trump Huddles With GOP Congress Members To Plan How To Flip House In 2022 Trump Huddles With GOP Congress Members To Plan How To Flip House In 2022

Authored by Zachary Stieber via The Epoch Times,

About a dozen Republicans in the House of Representatives met with former President Donald Trump this week, going over the border crisis and how the GOP plans to flip the lower chamber in 2022.

Then-President Donald Trump speaks to media before departing on Marine One en route to Ohio and Texas, from the White House South Lawn in Washington on Aug. 7, 2019. (Charlotte Cuthbertson/The Epoch Times)

Leaders of the Republican Study Committee, which bills itself as the largest conservative caucus in the House, went to Florida to meet with the former president.

The committee said the meeting included a discussion of “the challenges facing our nation.”

“From securing our border to combatting soaring inflation and the deficit, #RSC is fighting for working families. Thank you President Trump, for developing an agenda that puts Americans first!” it said, sharing photographs of Trump with members.

“It was so great meeting with President Trump last night to discuss a number of conservative priorities. From border security and election integrity to inflation and beyond,” said Rep. Kat Cammack (R-Fla.).

Rep. Jim Banks (R-Ind.), chairman of the committee, told the New York Post that most of the nearly two-hour meeting was about the work the panel is doing to fight for what he described as “the Trump agenda.”

“We talked about our election integrity bill, The Save Democracy Act, which he was very supportive of, and we talked about what we’ve done to define immigration moving forward,” he said.

Republicans flipped 15 House seats, primarily from Democrats, in the 2020 presidential election. The GOP remains in the minority, with an eight-seat deficit, but is confident it can take back control of the chamber in the 2022 midterms, though Democrats believe they’ll retain control.

Rep. Jim Banks (R-Ind.) on Capitol Hill in Washington on March 27, 2019. (York Du/NTD)

“We believe we take back the majority by focusing on the Trump agenda, and President Trump plays a big role in that,” Banks said.

“He’s obviously planning to go out and hit the road and campaign for candidates who share our vision, and we were excited to talk to him about that.”

“We have arrived at an understanding with a broad unity within the Republican Study Committee and recognizing that the Trump agenda is the winning agenda, we will win back the majority in ’22 and the White House in 2024 so Republicans can run on the Trump agenda,” he added to Breitbart News, explaining that the platform includes tough immigration policies, legislation to rein in Big Tech, and election integrity bills like the Save Democracy Act.

Trump has not publicly commented on the meeting, nor has his spokesman, Jason Miller. But Trump will soon be more visible after largely staying out of the spotlight after leaving the presidency because of how much he opposes the President Joe Biden and House Speaker Nancy Pelosi (D-Calif.) agenda, Banks said.

“He feels like he has a duty to get back out and hold on, hold the rallies, engage with the American people and weigh in on how disastrous the Biden-Pelosi agenda is for our country,” he said. “So I think we’re getting … we’re gonna be seeing a lot more of him. And I think that’s good for Republicans. It’s good for … it’s good for America.”

Tyler Durden Sat, 06/12/2021 - 22:30
Published:6/12/2021 9:57:29 PM
[Markets] Pentagon Announces $150 Million In Defense Aid To Ukraine For Bolstering Borders With Russia Pentagon Announces $150 Million In Defense Aid To Ukraine For Bolstering Borders With Russia

Days ahead of the June 16 Biden-Putin summit in Geneva, the Pentagon announced a $150 million defense allocation for Ukraine to help "bolster its borders against Russia." 

A Friday Defense Department statement detailed that the large package for the Ukraine Security Assistance Initiative includes "training, equipment, and advisory efforts to help Ukraine’s forces preserve the country’s territorial integrity, secure its borders, and improve interoperability with NATO."

Via Reuters: Prior Ukrainian army parade in Kyiv with U.S.-supplied Javelin anti-tank missiles.

The statement further notes that it will fund "counter-artillery radars, counter-unmanned aerial systems, secure communications gear, electronic warfare and military medical evacuation equipment, and training and equipment to improve the operational safety and capacity of Ukrainian Air Force bases."

It's being made available through the State Department's foreign military financing budget, and was previously approved by Congress on a conditional basis for fiscal year 2021, based on whether Ukraine would meet "progress" on ongoing anti-corruption efforts and reforms. 

On this front, the Pentagon said it "was able to certify that Ukraine has made sufficient progress on defense reforms this year," according to press secretary John Kirby.

Meanwhile, leaders in Kiev have continued their recent renewed push to be fast-tracked for NATO membership, and all of this will no doubt add to already soaring tensions going into the Biden-Putin meeting. 

The White House indicated on Saturday morning that President Biden plans to appear in a solo press conference following this upcoming week's meeting with Putin in Switzerland, instead of the usual joint presser that's more typical of such bilateral summits, saying it's necessary for the US President to interact with a "free press" - though we fail to see how that wouldn't be the case if it also included Putin. 

"We expect this meeting to be candid and straightforward and a solo press conference is the appropriate format to clearly communicate with the free press the topics that were raised in the meeting—both in terms of areas where we may agree and in areas where we have significant concerns," a White House official said.

Tyler Durden Sat, 06/12/2021 - 22:00
Published:6/12/2021 9:30:30 PM
[Markets] Group Of Seven Illustrates Existential Global Problem Not Solution Group Of Seven Illustrates Existential Global Problem Not Solution

Via The Strategic Culture Foundation,

The G7 represents much about the world order that is totally unsustainable: elite wealth promoting false conflicts among nations instead of implementing genuine cooperation and peace.

Posing as problem-solvers of the globe’s ills, the leaders of the so-called Group of Seven (G7) nations are gathered in an English seaside resort this weekend for an annual summit. It’s a spectacle that has lost any illusion of luster. Indeed, the gathering of such an elitist and effete group looks ridiculous against the backdrop of urgent global needs for cooperation and development.

A fawning media headline hailed the forum as “democracy’s most exclusive club”. How’s that for an absurd contradiction that inadvertently speaks of grotesque reality?

It is US President Joe Biden’s first overseas trip since he entered the White House nearly five months ago. He will be convening with counterparts from Britain, France, Germany, Italy, Canada and Japan, as well as leaders of the European Union.

The G7 forum has existed since 1976 and it is a fair question to ask what has it ever achieved in terms of actually helping global development? The forum has become something of an anachronism that no longer reflects the realities of a world that has changed significantly from nearly half a century ago.

The G7 nations claim to represent over 70 percent of the world’s wealth. Yet in economic output terms, the group currently accounts for only about 30 percent. The imbalance speaks of shameful structural inequality and therefore the so-called advanced group is really an emblematic sign of the problem that Western capitalism creates, not solves.

There is a palpable sense of embarrassing spectacle. Posing as “great and good” the politicians in Cornwall look “impotent and frivolous”. In the past year, the world has been hit by a pandemic and most of the globe’s 7.7 billion population remains unvaccinated while the United States and Britain have hoarded their supplies of vaccines. Biden comes to the summit “pledging” that the US will soon donate 500 million doses of anti-Covid-19 shots to the rest of the world. That offer has been dismissed as a “drop in the bucket” given the billions of people needing immunization.

Yet the American president and his “elite” allies are posing as saviors of the world, a world that they have largely ignored.

If G7 leaders had any genuine intention of global development, they would seek to work with other major nations instead of demarcating the world into artificial camps under misleading labels of “democracies” and “autocracies”. The latter pejorative term has been applied to China and Russia. Both of these nations have done much more in getting vaccines to other countries, only to be disparaged by Western opponents for having alleged cynical interests in using “vaccine diplomacy”.

The elitism and divisiveness that underlies the concept of G7 is something that should be repudiated as a relic of a bygone era.

Today, China is the world’s biggest economy, according to some reckoning. Or at least the second biggest after the United States. China has overtaken the US as the largest trade partner for the European Union. Why isn’t its leader, President Xi Jinping, attending the forum in England this weekend?

Apologists would say because the group has “shared values” of “democracy” and “human rights” which China does not possess. Sorry, but that sounds like lame excuses for making gratuitous global divisions. The real reason is that the G7 is an instrument for asserting American hegemony and trying to exclude perceived rivals.

The arbitrariness of the G7 is an indication that it is a political construct for partisan objectives.

Back in 2008, the group abruptly became the G8 after the admission of Russia to the fold. That was during the leadership of Boris Yeltsin whom the United States was trying to co-opt as part of its global hegemony. When Vladimir Putin succeeded Yeltsin and charted a more independent geopolitical course, then Russia fell out of favor with the Americans and their Western partners. In 2014, the Ukraine crisis engendered by Western meddling provided the pretext for ejecting Russia from the club. Not that Moscow gives a fig about that.

But the point is the arbitrariness and anomalies that make up the G7.

It’s a petty theater to showcase Western elite concerns rather than the democratic concerns of humanity. For his part, President Biden wants to demonstrate that “America is back” after four years of policy chaos under his predecessor Donald Trump. In doing so, Biden is trying to corral Western partners to adopt a more hostile stance towards China and Russia. He is due to meet with the Russian leader on June 16 in Geneva, and the G7 has been used as a platform for Biden to espouse belligerence towards Russia. What’s that got to do with solving a pandemic crisis, addressing climate change, or promoting global development to improve the lives of billions of poor? Precisely, none.

For British Prime Minister Boris Johnson, he gets the chance to play a “world statesman” (instead of the buffoon that he really is) who is supposedly rebranding his nation as “Global Britain” following the ragged and bitter departure from the European Union.

It’s easy to dismiss the Group of Seven as a useless talking shop for pompous politicians. Yes, it is that of course. Nevertheless, the manifest consequences are serious enough and should focus global efforts to seek real solutions, rather than indulge in vain distractions. What the group signifies is the apartheid world that Western capitalism creates: massive inequality and the futile destructiveness of foisting divisive relations onto the rest of the world that leads to conflict and ultimately war.

With bitter irony one of the subjects on the agenda this weekend is “sustainable development”. The G7 represents much about the world order that is totally unsustainable: elite wealth promoting false conflicts among nations instead of implementing genuine cooperation and peace.

Tyler Durden Sat, 06/12/2021 - 21:30
Published:6/12/2021 9:00:00 PM
[Markets] Bank of America: Everyone Knows The Fed Will Stop Tapering As Soon As The S&P Drops 10% Bank of America: Everyone Knows The Fed Will Stop Tapering As Soon As The S&P Drops 10%

There has been much discussion and fierce debate whether the current blast of inflation is permanent, or as the recent sharp drop in bond yields and breakevens despite ever higher CPI prints, which are now annualizing 8.3% or the highest since 1092...

... and which we discussed on Friday in "Here's Why The "Reflation" Trade Is Collapsing", the market is already fading the current spike in prices in anticipation of deflation. This is, in fact, the $64 trillion question.

But what if the market is not actually bothering with timing the inflation peak, nor extrapolating how much longer the current inflationary swell can deflect the deflationary continental drift that has been unleashed by the triple-3Ds of debt, demographics and disruption over the past decade. What if the market is far more pragmatic and is merely pricing in the fact that any upcoming taper will force the Fed to untaper yet again.

That's the argument made by BofA CIO Michael Hartnett who in his latest "flow show" report writes that "nobody knows how to trade inflation, everybody knows how to trade “don’t fight the Fed.”

What does he mean by that?

Well, when looking at stubbornly negative real rates, which DB's Jim Reid discussed on Friday when he pointed out that the current gap between 10yr US yields (1.5%) and US CPI (5.0%) is a whopping 3.5%, the highest since 1980 (In fact, the gap has only been more negative for 10 months in the last 70 years, all of which were in 1974, 1975 or 1980)...

... he said that this is a clear sign that the market views the Fed's taper is nothing more than  “paper tiger” because investors know Fed will stop tapering at first hint of trouble, most likely the moment the S&P drops 10%.

Meanwhile, the market's liquidity addiction remains, even though speculative froth has been hit in stocks & crypto (Chart 3), for now, but it is now swinging back to IG & junk credit (Chart 4).

This means that trader sentiment now is that "it’s a free call option on credit & stocks” until “return-to-office” Sept payroll (released Oct 8th), the taper announcement some time around Jackson Hole in late August, and return of Goldilocks as macro cannot get any hotter  as the (combo of inflation & labor shortages at US small businesses is the highest since 1974.

And yet, to BofA this is not an "all clear" sign; instead, the surging wage growth (which however will reverse in September when extended payroll benefits end), means lower yields are transitory and H2 stagflation means risk-return for stocks (+3-5% vs -10-15%) poor.

There is another 'simple' reason why BofA sees the inflation trade ending: inflation itself. As a reminder, soaring prices are about to crush record profit margins (companies can't pass on the full input cost spike to consumers even if they tried), and as the chart below shows, global EPS peaked around +40% YoY in April according to BofA Global EPS Model (driven by China FCI, Asia exports, global PMI, US yield curve).

Additionally, not only is the Fed's monetary stimulus about to be tapered: fiscal stimulus has also peaked (infrastructure hopes for $2tn down to $1tn)...

... and jump in inflation (headline up 8.4% annualized in past 3 months = 9th fastest since WW2 – Chart 8) will reduce purchasing power and spending (US homebuilding stocks an excellent example of market anticipating inflation negatively impacting spending on real estate).

As Hartnett concludes it is "little wonder “peak CPI” since WW2 has led to 67bps drop in Treasury yields in following 3-months (Table 1); so Q3 should see defensives outperform cyclicals."

Finally for those who are still unconvinced and believe there is much more to the inflation is here to stay vs inflation is transitory argument, the BofA CIO says that there is a quick and dirty way to determine the temporal nature of inflation, and it has to do with jobs and wages after the current "Biden benefits" run out.

Consider that last week we learned US unemployment claims dropped to 385k, closing in on pre-COVID average of 300k; while small company job offerings are off-the-charts. However, that's all about to reverse: by end-June 21 states (representing 27% of labor market) will opt out of extended unemployment benefits (by Sept 5th benefits end in all 50 states).

So putting those variables together, Hartnett concludes that "if July/Aug payrolls show jobs ?, Average Hourly Eearnings ? stay-of-execution for Goldilocks; but if jobs ?, AHE ? = inflation here to stay."

Tyler Durden Sat, 06/12/2021 - 21:00
Published:6/12/2021 8:26:50 PM
[Markets] Real Interest Rates Suggest It's A Good Time To Buy And Hold Gold Real Interest Rates Suggest It's A Good Time To Buy And Hold Gold

Authored by Mike Shedlock via MishTalk.com,

Let's investigate the relationship between real interest rates and the price of gold.

Real means inflation adjusted. 

I calculated the real interest rate by subtracting year-over-year CPI from the current 3-month T-bill yield. 

One could also use the Fed Funds Rate or 1-month T-Bill rate as the yields are all about the same. 

The following chart puts the negative interest rate theory to the test,

Real Interest Rate vs Price of Gold 

The chart above shows the monthly gold close, not monthly highs. That explains why the 1980 top does not show.

Synopsis

Gold took off in the stagflation years then collapsed from $850 to $250 an ounce with inflation every step of the way.

Note that between 1980 and 2000, the Fed kept real interest rates in positive territory except for one minor and brief moment.

In response to the DotCom bust, housing bust,  and Covid-19 recessions, rates have been generally negative.

The first question mark around 2006, gold kept rising despite positive rates, but that is if one believes the CPI. If one factors in housing, real rates were indeed quite negative.

One might also argue the chart reflects anticipation of the financial stress of a housing collapse.

The second question mark pertains to ECB president Mario Draghi's statement "We will do whatever it takes to save the Euro and believe me, it will be enough".  

Simultaneously, in the US, expectations there was endless speculation about Fed normalization, ending QE, Tapering, hiking rates, etc. 

People actually believed the Fed would do all those things and that made for a rough spell as gold fell from over $1900 an ounce to around $1100.

Timing vs Magnitude

Real interest rates suggest nothing about magnitude of the move. Rather, it's a directional indicator. 

It goes along with what I have stated previously about faith in central banks. 

When the Fed has positive real rates, gold tends to do poorly. 

Real interest rates approached 7% in early 1980's. If that happened now, the 3-month T-bill would yield an astonishing 12%. 

How likely is that?

*  *  *

Like these reports? I hope so, and if you do, please Subscribe to MishTalk Email Alerts. Subscribers get an email alert of each post as they happen.

Tyler Durden Sat, 06/12/2021 - 20:30
Published:6/12/2021 7:55:29 PM
[Markets] Thor Industries Now Has $14 Billion Order Backlog Amid Booming Demand For RVs  Thor Industries Now Has $14 Billion Order Backlog Amid Booming Demand For RVs 

About two months after we discussed recreational vehicles are "on pace for a blowout year" and "sales just hit an all-time high," we got the latest confirmation from Thor Industries CEO Bob Martin. He spoke with Jim Cramer on "Mad Money" earlier this week about the manufacturer's massive order backlog. 

Thor Industries — Airstream, Heartland RV, Jayco, Livin Lite RV, and others — first began to experience an uptick in sales after lockdowns ended in May and June 2020. Without a vaccine, people were too afraid to fly or stay in hotels or resorts, so they bought campers and traveled. The RV industry also saw a lot of first-time buyers, especially with the millennial generation. 

The RV boom has left many dealers with limited inventory or even empty lots. Thor's backlog of orders is a whopping $14.32 billion as of late April, the company's latest filing said. That's up 32.5% from $10.81 billion at the end of January and up 550% from a year ago.

Martin told Cramer in an interview on Tuesday evening that the company is "pretty much sold out for the next year" with new RV inventory already headed to customers instead of sitting on dealers' lots. 

"We have backlogs that are full of retail orders, so those will hit the dealer's lot and then leave, and so we're still not able to build inventory at our dealer's lots," he said.

Without the ability to build inventory at dealer lots, one would suspect an RV shortage for Thor brands is developing. 

The virus pandemic rewired people's brains as they became more in touch with the outdoors and explored small towns and parks rather than big cities and resorts. 

"Right now, we see this as a long-term trend, and if we get people in at an entry-level price and entry-level product, they grow throughout their lifetime," he said. "People trade every 3 to 5 years, but right now we're seeing it a little bit quicker, and we see this for a long runway."

At the moment, the company's North American supplies are quickly dwindling to about 75,000 RVs last quarter, down from 106,000 in 2020, and well below 132,500 in 2019. 

This seems like an RV shortage is in the making, which suggests that used RV prices should increase in price. 

Tyler Durden Sat, 06/12/2021 - 20:00
Published:6/12/2021 7:25:17 PM
[Markets] A "Slippery, Bootlicking A.G."? MSM Goes Silent As Garland Sides With Barr's 'Controversial' Positions A "Slippery, Bootlicking A.G."? MSM Goes Silent As Garland Sides With Barr's 'Controversial' Positions

The media has caught a not-so-curious case of amnesia when it comes to Attorney General Merrick Garland - who's been royally pissing off Biden supporters after the DOJ has shown an increased tendency to side with the Trump administration in legal wranglings that were considered 'bombshell' controversies under AG Barr.

Unpacking the hypocrisy is legal scholar Jonathan Turley, who notes the MSM's glaring double standards:

Authored by Jonathan Turley via jonathanturley.org (emphasis ours)

When Joe Biden nominated Merrick Garland to be attorney general, many — including me — heralded Garland as an honorable, apolitical judge who would follow the law. He was not, the Washington Post editors insisted, “a lackey who will serve as the president’s personal attorney” like Donald Trump‘s AGs. Garland has indeed followed the law, but some are not thrilled by where it has taken him.

President Biden’s Department of Justice (DOJ) has adopted some of the same positions taken by the Trump administration that a host of legal and media experts once denounced. This week, the DOJ sought to replace itself as the defendant in a lawsuit against Trump brought by writer E. Jean Carroll, who alleges that Trump raped her. The week before, it sought to dismiss a Black Lives Matter lawsuit over the clearing of Lafayette Park during a June 2020 protest.

This time last year, both positions were cited by legal and media experts as grotesque examples of then-Attorney General Bill Barr’s political bias. Now, those same experts are silent as Garland takes the same positions Barr took in federal court.

Garland is free, of course, to reject prior legal positions of Barr, but he has reached the same conclusion as his predecessor on several points of law thus far. In yet another adherence to Trump-era policy, the DOJ will defend opposing the ability of Puerto Ricans to receive social security disability benefits before the Supreme Court. Likewise, Garland agreed with Barr that a DOJ memo finding no legal basis for an obstruction charge against Trump should not be released to the public in its entirety.

Is Garland a Trumpist mole, part of some “deep state” resistance to his own president? Or is the more likely alternative that some in the media and many others in politics or the law knowingly distorted past legal controversies to use those as political fodder against Trump?

The general lack of media criticism — or even coverage — has never been more striking than with the latest filing in the Carroll case. In November 2019, Carroll sued Trump, claiming he defamed her when he denied sexually assaulting her. She alleges that Trump raped her in a Manhattan department store dressing room in the 1990s.

The Biden administration has told the United States Court of Appeals for the Second Circuit that it — rather than Trump — should be the defendant because his comments were made as part of his official capacity as president. Said the Biden DOJ: “Courts have thus consistently and repeatedly held that allegedly defamatory statements made in that context are within the scope of elected officials’ employment — including when the statements were prompted by press inquiries about the official’s private life.”

That is the identical position taken by then-AG Barr last year.

A district court rejected that effort, and the Trump administration appealed. While I disagree with the treatment of any such statements as part of a president’s official duties, I stated at the time that there was support for the position in the governing federal statute and case law.

However, some media outlets featured an array of experts who denounced Barr’s legal move. Vanity Fair was typical of the coverage with a column titled “Bill Barr Sinks To New Low, Uses Justice Department To Try To Kill Trump’s Rape Defamation Suit.” In it, writer Bess Levin explained that the move proved that Barr was “willing not just to do [Trump’s] dirty work but to do it completely out in the open and without a scintilla of shame.” Citing the DOJ effort to replace Trump as a party in the suit, Levin declared that experts confirmed that “this special arrangement is wholly unique to Trump and his slippery, bootlicking A.G.” She cited University of Texas law professor and CNN legal analyst Steve Vladeck and an array of other experts cited in a New York Times article. The Times wrote how “some current and former Justice Department lawyers, speaking on the condition of anonymity, echoed Mr. Vladeck’s concerns, saying they were stunned that the department had been asked to defend Trump in Ms. Carroll’s case.”

One would expect that these same media outlets and experts would denounce Garland now as another “slippery, bootlicking A.G.” doing Trump dirty work. But … no.

The same is true with the Biden DOJ ‘s recent filing in the BLM lawsuit. Last year news stories stated as fact that Barr ordered Lafayette Park to be cleared of protesters to make way for Trump’s controversial photo op before St. John’s Church. From the outset, the Trump/Barr conspiracy claim had little support, and soon there were reports contradicting it. As I explained in my testimony to Congress on the protest, the plan to clear the park area to establish a wider perimeter was due to an extreme level of violence by protesters over the preceding two days, including the injury of a high number of federal officers. The violence was so great that Trump had to be moved to a bunker. (An IG investigation debunked the conspiracy theory). None of that mattered. Viewers on CNN, MSNBC, and other news outlets wanted to hear that it was all a conspiracy. Experts like Vladeck continued to claim that Barr ordered federal officers “to forcibly clear protestors in Lafayette Park to achieve a photo op for Trump.”

Now the Biden administration is arguing that the BLM case should be dismissed. Moreover, it is advancing the same position as Barr’s DOJ that “Presidential security is a paramount government interest that weighs heavily in the Fourth Amendment balance.” The DOJ’s counsel, John Martin, added that “federal officers do not violate First Amendment rights by moving protesters a few blocks, even if the protesters are predominantly peaceful.”

The Biden administration is not reluctant to change positions in litigation when it disagrees with the prior administration. However, in these cases the Biden administration insists that Barr was right on the law, even if it disagrees with Trump’s statements themselves. That would likely come as a surprise to many viewers of CNN or MSNBC.

Reasonable people can disagree about such legal disputes — but the point of much of the past coverage was that there was no real dispute, just raw political abuse by Barr.

As we watch the anger and divisions growing in our nation, we need to be honest about the role that media coverage continues to play in our age of rage. It is little surprise that many are enraged when legal experts state as a fact that the Justice Department is acting without legal basis; that makes for undeniably good ratings. Now that the ratings have receded, however, the law has again emerged — with the Biden administration in full agreement with its predecessor’s legal arguments.

Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University. You can find his updates on Twitter @JonathanTurley.

Tyler Durden Sat, 06/12/2021 - 19:30
Published:6/12/2021 6:55:32 PM
[Markets] Visualizing The History Of US Inflation Over 100 Years Visualizing The History Of US Inflation Over 100 Years

Is inflation rising?

The consumer price index (CPI), an index used as a proxy for inflation in consumer prices, offers some answers. In 2020, inflation dropped to 1.4%, the lowest rate since 2015. By comparison, inflation sits around 5.0% as of June 2021.

Given how the economic shock of COVID-19 depressed prices, rising price levels make sense. However, as Visual Capitalist's Dorothy Neufeld notes, other variables, such as a growing money supply and rising raw materials costs, could factor into rising inflation.

To show current price levels in context, this Markets in a Minute chart from New York Life Investments shows the history of inflation over 100 years.

U.S. Inflation: Early History

Between the founding of the U.S. in 1776 to the year 1914, one thing was for sure - wartime periods were met with high inflation.

At the time, the U.S. operated under a classical Gold Standard regime, with the dollar’s value tied to gold. During the Civil War and World War I, the U.S. went off the Gold Standard in order to print money and finance the war. When this occurred, it triggered inflationary episodes, with prices rising upwards of 20% in 1918.

However, when the government returned to a modified Gold Standard, deflationary periods followed, leading prices to effectively stabilize, on average, leading up to World War II.

The Move to Bretton Woods

Like post-World War I, the Great Depression of the 1930s coincided with deflationary pressures on prices. Due to the rigidity of the monetary system at the time, countries had difficulty increasing money supply to help boost their economy. Many countries exited the Gold Standard during this time, and by 1933 the U.S. abandoned it completely.

A decade later, with the Bretton Woods Agreement in 1944, global currency exchange values pegged to the dollar, while the dollar was pegged to gold. The U.S. held the majority of gold reserves, and the global reserve currency transitioned from the sterling pound to the dollar.

1970’s Regime Change

By 1971, the ability for gold to cover the supply of U.S. dollars in circulation became an increasing concern.

Leading up to this point, a surplus of money supply was created due to military expenses, foreign aid, and others. In response, President Richard Nixon abandoned the Bretton Woods Agreement in 1971 for a floating exchange, known as the “Nixon shock”. Under a floating exchange regime, rates fluctuate based on supply and demand relative to other currencies.

A few years later, oil shocks of 1973 and 1974 led inflation to soar past 12%. By 1979, inflation surged in excess of 13%.

The Volcker Era

In 1979, Federal Reserve Chair Paul Volcker was sworn in, and he introduced stark changes to combat inflation that differed from previous regimes.

Instead of managing inflation through interest rates, which the Federal Reserve had done previously, inflation would be managed through controlling the money supply. If the money supply was limited, this would cause interest rates to increase.

While interest rates jumped to 20% in 1980, by 1983 inflation dropped below 4% as the economy recovered from the recession of 1982, and oil prices rose more moderately. Over the last four decades, inflation levels have remained relatively stable since the measures of the Volcker era were put in place.

Fluctuating Prices Over History

Throughout U.S. history. there have been periods of high inflation.

As the chart below illustrates, at least four distinct periods of high inflation have emerged between 1800 and 2010. The GDP deflator measurement shown accounts for the price change of all of an economy’s goods and services, as opposed to the CPI index which is a fixed basket of goods.

It is measured as GDP Price Deflator = (Nominal GDP ÷ Real GDP) × 100.

According to this measure, inflation hit its highest levels in the 1910s, averaging nearly 8% annually over the decade. Between 1914 and 1918 money supply doubled to finance war efforts, compared to a 25% increase in GDP during this period.

U.S. Inflation: Present Day

As the U.S. economy reopens, consumer demand has strengthened.

Meanwhile, supply bottlenecks, from semiconductor chips to lumber, are causing strains on automotive and tech industries. While this points towards increasing inflation, some suggest that it may be temporary, as prices were depressed in 2020.

At the same time, the Federal Reserve is following an “average inflation targeting” regime, which means that if a previous inflation shortfall occurred in the previous year, it would allow for higher inflationary periods to make up for them. As the last decade has been characterized by low inflation and low interest rates, any prolonged period of inflation will likely have pronounced effects on investors and financial markets.

Tyler Durden Sat, 06/12/2021 - 19:00
Published:6/12/2021 6:27:35 PM
[Markets] Seattle Police Crack Down On Shoplifting, 53 Arrested In One Day Seattle Police Crack Down On Shoplifting, 53 Arrested In One Day

By John Sexton of HotAir

Last year there was a proposal circulating in the Seattle City Council to consider making drug abuse and mental disorders a defense against most misdemeanor crimes. In essence, that would have been a green light for an army of homeless shoplifters to steal at will knowing they’d face no chance of being punished. But it appears Seattle police have decided to do something about aggressive shoplifters. This Wednesday they arrested 53 shoplifters in 9 separate stores:

“These are organized groups that hit retailers with the sole purpose of stealing to either resell them or use them as currency for other things,” said Sgt. Randy Huserik, public information officer for the Seattle Police Department…

Huserik said large retailers and grocery stores have been losing thousands of dollars in merchandise due to ongoing problems with organized theft groups. He said some places are still struggling to recover from the pandemic.

“Not only does that impact the store itself with their losses and their bottom line, but the every-day people who walk into those stores that are buying things from those stores because of the losses those stores are sustaining, they have to raise their prices and then that impacts everybody,” said Huserik.

These cases will now be passed of to King County Prosecutor. Hopefully their office will follow through and put some of these people in prison.

Most big retailers have a policy of not chasing shoplifters through the store. This case from a Staples store in Seattle shows what can go wrong if workers get too aggressive pursuing thieves:

[Elizabeth] Pratt was shopping at the Staples in Burien in August 2018 when a teenager suddenly rushed past her, knocking the then 85-year-old to the ground.

According to reports filed by King County Sheriff’s Deputies, the collision happened as the juvenile suspect was “running from employees.” Pratt and her attorneys believe Staples workers should have let the suspected shoplifter go.

Mike Kelly, of Gehrke Baker Doull Kelly Attorneys at Law in Des Moines, said “over-pursuing, or overly aggressively pursuing shoplifters” to the point where “non-involved, innocent business invitees or shoppers” can be injured fails to protect the public. Kelly believes Staples employees failed in their duty to protect Pratt the day she broke her hip.

There’s video of this incident and it was clearly the shoplifter who knocked over Mrs. Pratt. But because a store employee was trying to get to him before he could leave the store is being sued. To ensure employees don’t get aggressive, many stores let them know they can be fired for even trying to stop a shoplifter.

But those policies designed to avoid lawsuits mean retailers are often at the mercy of local police to try to discourage this behavior. And in some locations, that just doesn’t happen. Last tear I wrote about the absolute looting of drug stores in San Francisco. All workers could do as people walked out with armloads of merchandise was make sarcastic comments. A number of Walgreens locations were shut down in San Francisco because they had been stripped bare.

In Seattle, retailers have complained for years about the lack of attention to this problem. Last February KOMO News did a story about it:

One complaint is that shoplifters are sometimes set free hours after being arrested. Mindy Longanecker with the Seattle City Attorney’s Office said the laws around holding people in custody prior to a trial are set by the state, not local prosecutors.

“If you are upset with those laws, that is out of our hands,” Longanecker said. “That is in the hands of the Legislature.”

Another perception is that shoplifting simply doesn’t get prosecuted. Officials said it depends on the facts of the case, but the reality is that trials are expensive.

“There is something of a cost-benefit analysis, particularly if this person is not a prolific offender, whether or not we prosecute,” Longanecker said.

In short, prosecuting someone over $100 theft doesn’t make a lot of sense, but what if that person is actually stealing that much day after day from a number retailers? At some point the legal system has to put a stop to it if for no other reason than to send a message.

So it’s good to see Seattle PD making an effort to do something about this, but given the other problems Seattle has dealing with homeless people and repeat offenders it’s going to take a lot more than a one day effort to really see any change.

Tyler Durden Sat, 06/12/2021 - 18:30
Published:6/12/2021 5:55:17 PM
[Markets] Mexican Drug Cartel Unveils "Grupo Elite" Special Forces Unit Hunting Rivals Mexican Drug Cartel Unveils "Grupo Elite" Special Forces Unit Hunting Rivals

Drug cartels such as the powerful Jalisco New Generation Cartel, or CJNG, have upgraded their arsenals with an elite special forces unit, according to atlas.news

CJNG released a video of their "Grupo Elite" otherwise known as special forces team, "outfitted with signal jammers and heavily modified rifles," said atlas.news. The video also shows the unit in what appears to be a bulletproof vehicle. 

CJNG released the video (watch here) on the prospects of expanding their control into Naucalpan de Juárez, a city located just northwest of Mexico City in the neighboring State of Mexico. They appear to be threatening local drug lord Nestor Arturo Lopez Arellano, otherwise known as "El 20."

In the video, a Sicario says, "Citizens of Naucalpan. We are already here for one sole objective. And that's for all the cheap and dirty scumbags, the sons of bitches who are collecting fees, and extorting. You're charging a tariff with citizens who work honestly. As well with public transportation workers. This message goes out to you Nestor Arturo Lopez Arellano."

He continued his saying, "We're going to be stationed here in Naucalpan. Regardless of where you choose to run away. We will be right behind you. Because you made the mistake of getting involved with the monster of numerous heads. We respect citizens who work for society. We respect the authorities who do their jobs honestly. But the policemen who are on your side. That have sold themselves out for a miserable sum of money," adding that "They've sold out to stop protecting the honest workers of society. We haven't come here to extort anyone. Much less to keep this fucking drug corridor. We've all come here to take you out. So that the citizens of Naucalpan can be allowed to work without worries." - atlas.news

Last year, CJNG released a video displaying a convoy of armored vehicles with dozens of combat-uniformed gunmen.

CJNG — which is known for kidnappings, torture, and murders across Mexico and the US, has been blamed for the fentanyl crisis

Tyler Durden Sat, 06/12/2021 - 18:00
Published:6/12/2021 5:25:14 PM
[Markets] Inflation Is Starting To Get Really Crazy... And It Is Worse Than You Think Inflation Is Starting To Get Really Crazy... And It Is Worse Than You Think

Authored by Michael Snyder via The Economic Collapse blog,

Inflation is making headlines all over the country, but the mainstream media is not being honest about the true severity of the crisis.  We are being told that the official rate of inflation is still in single digits, but what we aren’t being told is that the way inflation is calculated has changed dramatically over the years.  In fact, according to Forbes “the government has changed the way it calculates inflation more than 20 times” over the past 30 years.  The rate of inflation directly affects so many other things in our system, and the government would like to keep that number as low as possible.  So they tinkered and tinkered with the formula until they got it just where they wanted it.

But even with the highly modified formula that they are now using, the rate of inflation still rose at the fastest pace in almost 13 years last month…

The consumer price index, which represents a basket including food, energy, groceries, housing costs and sales across a spectrum of goods, rose 5% from a year earlier. Economists surveyed by Dow Jones had been expecting a gain of 4.7%.

The reading represented the biggest CPI gain since the 5.3% increase in August 2008, just before the financial crisis sent the U.S. spiraling into the worst recession since the Great Depression.

We all remember what happened in the months following August 2008.

Hopefully we will not have a repeat of that.

Of course the truth is that consumer prices are not just rising at a 5 percent rate in the United States right now.

According to John Williams of shadowstats.com, if the rate of inflation was still calculated the way that it was back in 1990, it would be above 8 percent right now.

And if the rate of inflation was still calculated the way that it was back in 1980, it would currently be sitting at about 13 percent.

But 5 percent inflation sure sounds a whole lot better than 13 percent, doesn’t it?

One thing that I am keeping a very close eye on is food inflation.  Earlier today, I came across a story from one CBS affiliate in which they used the term “sticker shock” to describe what consumers are now experiencing at the grocery store…

You may have noticed a significant jump in prices at the grocery store.

More and more grocery shoppers are experiencing sticker shock every day. The price of food — especially meat, fruit and vegetables — is going up.

If prices were increasing at just a 5 percent annual rate, that wouldn’t be a big deal.

Sadly, the reality is much worse than that, and that is especially true for meat prices.  According to one deli owner, the true rate of inflation for meat prices is “probably closer” to 20 or 30 percent…

Jeff Cohen, a deli owner and meat wholesaler, said those factors are making the price of meat out of control.

“They said on national news it’s 10 percent. But that’s not true. it’s probably closer 20, 30 percent,” Cohen said.

We will continue to get a lot of happy talk from the Biden administration and from the Federal Reserve, but this is becoming a real national crisis.

When CBS News interviewed one shopper in Maryland, she said that she is now spending about twice as much on groceries as she did before…

Abby Walter said she started noticing her grocery bill creeping up earlier this year. Prior to January, the Maryland resident had typically spent about $75 a week on groceries. Now her bill is averaging about $150 or even more.

I still remember when I could get an entire shopping cart of food for just 25 dollars.

Now if I can get an entire cart of food for less than 200 dollars, I consider that to be a monumental achievement.

I try really hard to take advantage of sales and make every dollar stretch as far as I can.  But these days some of the sale prices are higher than the old regular prices.

As global commodity prices have exploded higher in recent months, companies have been forced to pass those increases along to consumers, but they are attempting to use language that will not cause widespread alarm…

If you ask Pampers maker Procter & Gamble Co., it’s not raising prices, it’s “taking pricing.” Rival Unilever, known for Dove soap and Axe body spray, says it’s been “very active with pricing.” The prize for creativity — so far at least — has been home-improvement retailer Lowe’s Cos., whose finance chief told investors Wednesday that it was “elevating our pricing ecosystem.”

What in the world is a “pricing ecosystem”?

I would love to have a representative from Lowe’s define that for me.

Executives from General Mills are also using language that borders on the absurd

Then there’s cereal maker General Mills Inc., whose jargon includes arcane phrases like “strategic revenue management” and “holistic margin management,” which is not language you’d ever find on the back of a box of Lucky Charms. The company uses those terms so often, in fact, that its CEO now just refers to them by the acronyms SRM and HMM.

Why can’t they just say that they are “raising prices”?

These days, I cringe whenever I go down the cereal aisle.  It is hard for me to believe that cereal prices are so high now, but I know that they will eventually get a whole lot higher.

We have way too many dollars chasing way too few goods and services, and instead of taking emergency measures to get inflation under control our leaders seem intent on making things even worse.

The Biden administration wanted to spend 2 trillion dollars on infrastructure, but a group of U.S. Senators is currently working on a “compromise deal” that would only provide 1.2 trillion dollars in new infrastructure spending.

This is on top of the trillions upon trillions of dollars that we have already borrowed and spent during this crisis.

We can’t do this anymore.

It is complete and utter insanity.

But our politicians in Washington don’t seem to care.  They are going to continue to borrow and spend giant mountains of money that we do not have, and the Federal Reserve is going to continue to shovel enormous gobs of cash into the financial system.

So more inflation is on the way, and the standard of living for most Americans is going to continue to go down.

*  *  *

Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.

Tyler Durden Sat, 06/12/2021 - 17:30
Published:6/12/2021 4:54:47 PM
[Markets] Ford's Electric F-150 Lightning Reservations Pass 100,000 Ford's Electric F-150 Lightning Reservations Pass 100,000

While Tesla's Cybertruck was revealed far in advance of Ford's F-150 Lightning electric pickup, the Lightning has several things going for it.

First, it actually appears to exist, and is planned to roll off the assembly line in Spring 2022 - unlike the Cybertruck, the current status of which is up in the air. Second, the Ford F-150 Lightning now has 100,000 reservations in just the 3 short weeks since its introduction. 

Emma Bergg, Ford spokeswoman, told the Detroit Free Press on Thursday: "We're super excited about the demand. Reservations are getting added all the time."

 

The Lightning was released 3 weeks ago and packs 563 horsepower and 775 lb.-ft. of torque. In the first 48 hours after its release, the company received 44,500 pre-orders. President Biden was at the truck's release last month and even gave the Lightning a test drive and some free press. "This sucker is quick," Biden said, after taking off in the truck on a closed course. 

By comparison, since 2019, Tesla's Cybertruck has accumulated over 1 million reservations. 

Tesla's official website doesn't denote an expected delivery date. As of May, it was expected that the Cybertruck would begin production in "late 2021". 

Ford, meanwhile, is taking $100 refundable deposits for the Lightning and the truck starts at $39,974.

Tyler Durden Sat, 06/12/2021 - 17:00
Published:6/12/2021 4:24:33 PM
[Markets] Venezuela Says US Sanctions Blocking COVID Vaccines: 'Global Health System' As Geopolitical Weapon Venezuela Says US Sanctions Blocking COVID Vaccines: 'Global Health System' As Geopolitical Weapon

Authored by Brett Wilkins via via CommonDreams.org,

Venezuelan Vice President Delcy Rodríguez has accused the US-backed international financial system of blocking the country's access to Covid-19 vaccines under the COVAX program, even though Venezuela has paid all but $10 million of the $120 million it owes.

Appearing in a televised address, Rodríguez said Venezuela was unable to pay the remaining $10 million because it was being blocked from transferring funds to the Switzerland-based GAVI Vaccine Alliance, which directs COVAX. "The financial system that also hides behind the U.S. lobby has the power to block resources that can be used to immunize the population of Venezuela," she said.

Via Reuters

Venezuelan Foreign Minister Jorge Arreaza tweeted a letter from COVAX stating that it "received notification from UBS Bank" that four payments, totaling just over $4.6 million, were "blocked and under investigation."

Arreaza said that "Venezuela has paid all of its commitments," adding that "the bank has arbitrarily blocked" the country's final payments and calling the situation "a crime."

The vice president and foreign minister's remarks follow accusations from Venezuelan President Nicolás Maduro last week that "organizations of US imperialism" are engaged in an effort to stop vaccine producers from selling doses to the country.

"Venezuela might be the only country in the world that is subject to a persecution against its right to freely purchase vaccines," said Maduro, according to Venezuelanalysis. "Venezuela is besieged so that it cannot buy vaccines."

A mural in Caracas symbolically shows Venezuela and Russia uniting to defeat the coronavirus, with the caption: "We will beat Covid-19 together." Image: AFP via Getty

Successive US administrations have targeted Venezuela with economic sanctions that critics say have devastated the nation's once-thriving economy and have caused tremendous suffering for the poor and working-class people whose dramatic uplift was once hailed as the great success of the Bolivarian Revolution launched under the late President Hugo Chávez. 

According to a 2019 report from the Center for Economic and Policy Research, a progressive think tank based in Washington, D.C., as many as 40,000 Venezuelans have died due to sanctions, which have made it much more difficult for millions of people to obtain food, medicine, and other necessities. 

Maduro also denounced the World Health Organization (WHO) for its role in delaying vaccine delivery to Venezuela. The president had expected "many millions" of the Covid-19 jabs to be delivered in July and August. "The COVAX system owes a debt to Venezuela," asserted Maduro. "We made a deposit in April and we are waiting for the vaccines."

That $64 million deposit to GAVI came after a rare deal between the Maduro administration and Juan Guaidó, the coup leader recognized by the United States and dozens of other nations as Venezuela's legitimate head of state despite never having been elected.

Adept at circumventing US interference in its affairs, Venezuela turned to China, Russia, and Cuba to launch its mass vaccination program, which aims to inoculate 70% of the population this year. Earlier this month, the country reached a deal to buy and locally manufacture the Russian EpiVacCorona vaccine. Venezuela has also already acquired about three million doses of the Russian Sputnik V and Chinese Sinopharm jabs, and last month began clinical trials on Cuba's Adbala vaccine.

Compared to other nations in the region, Venezuela has reported a very low rate of coronavirus infections and deaths. According to Johns Hopkins University's Coronavirus Resource Center, there have been nearly 248,000 reported cases and 2,781 deaths in the country of 28.5 million people during the ongoing pandemic. Neighboring Colombia, with just over 50 million people, has reported more than 3.6 million cases and over 94,000 deaths.

Tyler Durden Sat, 06/12/2021 - 16:30
Published:6/12/2021 3:55:19 PM
[Markets] Business in the Age of COVID-19: How tech companies are bringing workers back to the office: Slowly and with ‘social’ incentives Millions of tech workers are slowly making the migration back to offices as millions become fully vaccinated and states lift restrictions. But many of those returning may not recognize their new digs.
Published:6/12/2021 3:55:18 PM
[Markets] Gluten-Free Generation: Children With Celiac Disease Doubles In 25-Years  Gluten-Free Generation: Children With Celiac Disease Doubles In 25-Years 

According to a new study, the rising prevalence of celiac disease in Europe is absolutely astonishing and has more than doubled over the last 25 years. 

Researchers at Marche Polytechnic University in Ancona, Italy, found that celiac disease, sometimes called celiac sprue or gluten-sensitive enteropathy, an immune reaction to eating gluten, a protein found in wheat, barley, and rye, can cause painful damage to small intestines over time, doubled in school children compared to a similar study by the same group 25 years ago.

Approximately 7,760 children aged from five to 11 in eight provinces of Italy were given a blood test to see if they had specific gene mutations which predispose them to celiac disease. If they tested positive, the researchers checked them for antibodies to gluten. Researchers concluded the overall prevalence of the autoimmune disease in Italian children was 1.6%, much higher than the global average of around one percent. 

"Our study showed that prevalence of celiac disease in schoolchildren has doubled over the past 25 years when compared to figures reported by our team in a similar school age group," said lead-author Elena Lionetti, a professor at the university. "Our sentiment is that there are more cases of celiac disease than in the past, and that we could not discover them without a screening strategy."

Lionetti continued: 

"At the moment, 70% of celiac disease patients are going undiagnosed, and this study shows that significantly more could be identified, and at an earlier stage, if screening were carried out in childhood with non-invasive screening tests. Diagnosis and avoiding gluten could potentially prevent damage to the villi (finger-like projections that line the gut), which can lead to malabsorption of nutrients and long-term conditions such as growth problems, fatigue, and osteoporosis (a fragile bone condition).

"The study has shown that screening is an effective tool for diagnosing celiac disease in children which could potentially help avoid a lot of unnecessary suffering from what can be a hard-to-detect condition."

StudyFinds noted around one percent of the US population, or 3 million people have celiac disease. Similar to Europe, celiac disease continues to increase among Western populations. 

People with the autoimmune disorder may not be aware they have the disease as intestinal damage from gluten causes fatigue, brain fog, diarrhea, bloating, weight loss, and anemia. 

Other studies have shown "celiac disease can increase the risk of dying prematurely." 

A simple solution to see if you have a gluten intolerance or even celiac disease is to get a food allergy test covered under most insurance plans. 

In recent years, better access to gluten-free foods has made it easier for people with the autoimmune disease to eat better food.

It appears gluten-filled Western diets are poisoning the youth. 

Tyler Durden Sat, 06/12/2021 - 16:00
Published:6/12/2021 3:04:55 PM
[Markets] Brett Arends's ROI: Public pensions lose on hedge funds — again Exotic, exclusive financial instruments are performing worse than a basic portfolio anyone can buy
Published:6/12/2021 3:04:55 PM
[Markets] Baltimore City Responds After Dozens Of Businesses Threaten Not To Pay Taxes Baltimore City Responds After Dozens Of Businesses Threaten Not To Pay Taxes

This weekend, the Baltimore Police Department (BPD) closed down multiple city streets around the Inner Harbor, in a stretch called "Fells Point," after dozens of local businesses threatened the new city government, run by Mayor Brandon Scott, to not pay taxes because they're "fed up and frustrated" with the outburst of violence. 

Last week, 37 restaurants and small businesses sent a letter to the mayor's office titled "Letter to City Leaders From Fells Point Business Leaders." They threatened to stop paying city taxes and other fees until "basic and essential municipal services are restored." This comes as Madam State's Attorney Marilyn Mosby halted petty crimes during the pandemic and made such a measure permanent - the idea was to decrease violent crime, but that seems to have severely backfired.

What's happened in the historic bar strict is absolute mayhem at night, transformed into a dangerous area where violent and rowdy crowds have ruined the once pleasant atmosphere along with multiple shootings. 

So this weekend, BPD closed down streets around Fells Point, which includes parts of Aliceanna, Thames, and Bond streets.

In addition, Maryland State Police will conduct sobriety checkpoints in Fells Point. 

Local news WJZ13's Mike Hellgren tweets a couple of images of the increased police presence across Fells Point.

One of the 37 concerned business owners on the list is Bill Packo, who owns Barley's Backyard and has been operating in Fells Point for three decades. He spoke with WJZ13 about the out of control violence and public drunkenness:

"It's a shame. What they're letting happen to Fells Point is what they let happen in the Inner Harbor, and now it has made its way here," Packo said. "There's alcohol being sold by individuals out there, drugs, and clearly we all know about the shootings that took place last weekend. But there needs to be some control out there. There is none whatsoever."

BPD's mobile police command was spotted outside another shop in the bar district. It looks very dystopic. 

Meanwhile, Scott, who was newly elected, skipped out on the virtual community town hall meeting on Thursday at 7 p.m that was to address the issues in Fells Point. 

Packo called out Scott for not attending the meeting: 

"It's an embarrassment to the city. It's an embarrassment to the mayor no matter what the schedule was," he said.

Again, as we've said before, the chaos in Fells Point comes as the city descends into what could be the most violent period ever. Mosby has halted police officers going after petty crimes that have inadvertently backfired. Another liberal-run town with good intentions in policies not exactly panning out as they thought. 

Local news WMAR2's Eddie Kadhim interviewed a man who summed up the city's response in Fells Point: 

Another man said the violent crime in low-income neighborhoods is just spilling over into the downtown area. 

Tyler Durden Sat, 06/12/2021 - 15:00
Published:6/12/2021 2:26:07 PM
[Markets] Answering The "$64 Trillion Question": A New Theory Of Inflation Answering The "$64 Trillion Question": A New Theory Of Inflation

By Michael Every, Elwin de Groot and Philip Marey of Rabobank

A structural inflation framework outlook

Summary

  • This special report looks at the ‘hot topic’ of ‘hot’ inflation, and asks if it is really back to stay 

  • Inflation is crucial for financial markets, but we lack an accurate economic theory of what causes it, leading to inaccurate modelling and policy/forecasting errors

  • We draw a broader framework of the eight structural factors currently driving global inflation: a ‘bullwhip’ effect; the Fed; fiscal policy; speculators; psychology; Chinese demand; labour vs. capital; and the role of global supply chains/the distribution of production

  • We then look at how these factors can combine, and show which of them are the ‘prime-movers’ if global inflation is to return

  • This approach shows that understanding the global inflation outlook is currently more about (geo)politics/geoeconomics than it is about just economics or econometrics

  • We conclude that when encompassing this logic, the range of potential future inflation outcomes --and market reactions-- varies hugely. Indeed, this is only to be expected given the implied structural, not cyclical, changes involved

Inflation in inflations

The topic of inflation is very much on the mind of markets and businesses. Despite a dip in recent weeks, Google Trends shows the highest global interest in the topic since the Global Financial Crisis of 2008 (Figure 1).

One can see why inflation is a topic of discussion: it is supremely important in determining the valuation of tens of trillions of USD in global financial assets, from stocks to bonds to property to currencies. Moreover, after decades of slumber, its future direction is unclear.

Some key measures of inflation are at multi-year or multi-decade highs: US CPI, ex- food and energy, on a rolling 3-month annuali\ed basis hit 5.6% in April, the highest since 1991; the US Michigan consumer sentiment survey year-ahead inflation expectations index rose to 4.6% in May, the highest level since August 2008 (Figure 2); the 10-year US breakeven inflation rate (a proxy for investor expectations) has also moved to 2013 levels (Figure 3); gold has started to climb since May; and despite recent dips in some commodities, the FAO’s global price index was the highest since 2014 in April (Figure 4).

However, not all inflation indicators are moving in the same direction. Benchmark US 10-year Treasury yields are still around 1.55% rather than pushing to 2.00%; and Bitcoin, taken as a proxy inflation hedge, has also seen its price tumble (Figure 5).

In short, will current high inflation prove “transitory”, as central banks tell us, or “sticky”, as consumer surveys suggest, or could it even break higher – or much lower? This is the proverbial ‘$64 trillion question’ given the scale of assets involved.

If we could, we would

The problem is, we seem universally incapable of answering it by forecasting inflation correctly!

Figures 6 and 7 show the large forecast errors on inflation in the low-inflation and politically predictable Eurozone, as just one example. Figure 8 shows the market forecast of what the Fed was expected to do on interest rates in response to presumed inflation: it suggests that both markets and the Fed are flying blind - or very unlucky!

…but we can’t

This inaccuracy is rooted in the fact that in an ergodic sense, there is no one accepted, robust theory of how inflation actually works. (Indeed, what do we even mean by inflation - RPI/CPI/PPI? Headline/core? Goods, services, or assets?) For a smattering of examples of  the lack of agreement, and in strictly chronological order:

  • The Classical World said inflation was due to debasing the coinage – but this is of little value under today’s fiat money system;

  • Say said it is about supply, which creates its own demand and does not allow for gluts – but this is clearly not an observable outcome;

  • Marx said it is about money supply, cost-plus mark-ups, the Labour Theory of Value, and financialisation – but his teleological predictions failed;

  • George said it was about land prices – but this overlooks too many other factors;

  • Kondratiev said it was about long waves of technological development – but this cannot be modelled;

  • Keynes said it was about demand – but Keynesian inflation models are often very wrong;

  • Austrians said it was about debt creation – but that one cannot model the economy at all;

  • Post-Keynesians said it was a mixture of many factors, including the political – and also can’t be modelled;

  • Monetarists said it is about money creation – but monetarist inflation models are usually wrong;

  • Minsky said it was about debt creation and politics – and while we are moving closer this being modelled, markets and central banks are not there yet; and

  • Demographers argue it plays a key role – but it is hard to forecast, slow to play out – but then hits tipping points

True, there are many areas of overlap in those different theories. Marx’s “fictitious capital” going into asset inflation, not productive investment, sounds Austrian; his “high prices caused by an over-issue of inconvertible paper money” sounds monetarist; polar opposites like Keynes and Friedman agree that inflation can be a stealth tax; and even rivals Minsky and the Austrians share many assumptions about the dangers of credit bubbles.

However, there is no unified view of all the intersecting structural causes of inflation that can be modelled - and this is before we include issues such as productivity, and whether an economy is open or closed to international trade - China joining the WTO clearly had an impact on inflation that traditional models failed to incorporate.

Structural, not cyclical

Consequently, while supply vs. demand is a simple truth, inflation is a multi-faceted, multi-disciplinary, structural phenomena.

One can still forecast near-term cyclical changes in inflation with some degree of accuracy, just as for any economic variable with a relatively low level of month-to-month volatility. However, to make accurate long-run forecasts must involve understanding all the structural drivers, and how these can change over time.

Here, existing market models fall short. As former Fed Governor Tarullo revealed in October 2017: “Central bankers are steering the economy without the benefit of a reliable theory of what drives inflation.”

Indeed, inflation stayed low through the 1950s and 1960s – then surged in the late 1960s and 1970s, proving one set of official inflation models wrong. Inflation was proudly on target in the early 2000s, as we proclaimed ‘an end to boom and bust’ – right before the Global Financial Crisis, which ushered in a new world of inflation persistently below target.

As we shall explore, perhaps we stand at another such structural juncture at present.

Framework, not a theory; scenarios, not a model

Crucially, this report does not pretend to offer a new holistic theory of inflation, or the belief that we can model it.

Instead, we aim to describe what we believe to be the eight most important structural factors currently driving inflation (Figure 9) as a form of framework. These are: the ‘Bullwhip’ Effect; the Fed; fiscal policy; market positioning; psychology; Chinese demand; labour vs. capital; and the role of global supply chains/the distribution of production.

We will explore each of these in turn ahead, and will then look at all the permutations of their various interactions, before showing which of the eight matter most, and so could potentially drive a return to global inflation.

In short, only one combination of the three key factors leads in that direction – and while unlikely, this is now at least more plausible than at any time in the past four decades.

However, as shall also be shown, even having just a few inflation factors does not mean it is easy to make macroeconomic forecast or model. Rather, we will outline just how wide the range of potential global inflation outcomes, and market reactions, still is.

1) Bullwhip Effect

Covid-19 and the recent Suez Canal blockage again exposed the weaknesses of our globalized system of production and international trade. Optimized ‘Just In Time’ supply chains are vulnerable to major disruption, just as they were to pre-Covid trade tensions.

All have caused severe dislocations in demand, supply, and logistics. In turn, these are causing severe price fluctuations, as can be seen in commodity markets and gauges of producer prices. These are not new market phenomena, but the current scale is extraordinary. The  key questions are: i) how long these fluctuations will last; and ii) whether there is now also a structural component. To answer, we need to understand what is exactly going on: enter the ‘Bullwhip Effect’.

Asymmetric information

In a nut-shell, this occurs when there is an unexpected change in final (downstream) demand, which causes increasingly sharp variations in demand and supply as we move up the supply chain. Think of orders placed by consumers at a retailer, who in turn buys from a  wholesaler, who obtains the product from a manufacturer, and so on (Figure 10).

The main cause of these variations is asymmetric information within the supply chain. As no one can entirely foresee the final demand situation downstream, there will be a tendency to rely on the information provided by the nearest customer in the chain. If that information is further limited to simply ‘orders placed’ by direct customers, rather than a reflection of the true state of actual final demand all the way down the stream, this is likely to cause a cascade of demand forecasting errors all the way back upstream.

Of course, some of these errors could cancel each other out. Yet when there is a bias to exaggerate orders, perceived demand is likely to be amplified the further we travel up the supply chain. In particular, over-ordering is expected to take place when: i) current inventories are low; ii) prices are low and/or are expected to rise; or iii) the customer is expecting to be rationed by his or her suppliers (i.e. not all orders are likely to be fulfilled). Over-ordering tends to raise prices and, again, more so upstream than in the downstream part of the supply chain.

An additional element is the logistics process: transport can be a major source of additional volatility. Bear in mind that it takes time (and therefore money) to move goods from A to B, and in the meantime they are of ‘out of view’ of the production chain, while transport costs can be volatile due to sharp fluctuation in global energy prices.

Although information sharing and electronic data exchange solutions may help to offset some of these Bullwhip issues, it is also clear that a complex global supply-chain with limited infrastructure/transport alternatives raises the risks of asymmetric information issues and logistical chokepoints.

A recent World Bank Report points out only a handful of sectors truly drove the expansion of Global Value Chains (GVCs) over 1995-2011: machinery, transport, and electrical and optical equipment. However, many businesses are finding out that even a single, seemingly-innocuous product can nowadays often be the result of manufacturing and assembly in multiple countries. Indeed, even those wishing to buy a garden shed or deckchair --let alone a semiconductor-- are facing long delays and/or price hikes.

So how does the Bullwhip Effect work in practice? Here’s a short narrative of what happened since Covid-19 struck:

  • In early 2020, China went into lockdown and closed a swathe of its factories, leading to a big drop in exports. This was aggravated by Europe and the US also locking down from February-March onwards, causing a significant drop in global trade;
  • In Q2, China began to reopen, and by mid-2020 its exports had rebounded. Weak demand kept global trade subdued, however;
  • As Chinese demand recovered into end-2020, US and EU exports did the same. Western households also bought more (imported) goods and fewer (local) services, pushing demand for freight up. Higher commodity prices, i.e., oil, and a misallocation of containers in Asia also saw shipping costs move sharply higher;
  • By early-2021, vaccine roll-out was starting, but many countries faced rising infections. In the US, the Democrats won Georgia’s two senate seats, potentially opening the door for massive fiscal stimulus, with a USD1.9 trillion package quickly passed. Demand for goods soared again, even though global logistics were not ready for the extra load, creating a further feedback loop; and
  • In March, the Suez canal was blocked for 6 days, creating a domino effect on global trade, and further exacerbating the above problems.

We can illustrate parts of this Bullwhip Effect using German data, firstly because it is a key exporter of manufactured goods, and plays a key role in global value chains. From Q4 2020, orders started to outstrip output, and this gap consistently widened as time progressed; by March, growth of orders for German machinery hit 30% y/y (Figure 12).

To illustrate what this does to prices, we show the assessment of inventory levels (Figure 13) and selling price expectations (Figure 14). These clearly illustrate inventories dropped off from 2020 onwards, and were seen as insufficient from the start of 2021. Even more telling is that this effect becomes more pronounced the further you travel up the supply chain. (Assuming basic metals and chemicals are upstream, fabricated metals, machinery, and wholesale are midstream, and retail is downstream). This in turn is translating into the sharpest increases in selling price expectations in the sectors most upstream. In other words, the Bullwhip Effect in practice. So what next?

First, past price rises are still working through the supply chain; and given EU and US consumer demand is likely to recover as lockdown restrictions are eased --and if more fiscal stimulus is passed-- the Bullwhip may have more sting in it yet. Indeed, producer prices upstream are likely to filter downstream, so broadening upward price pressures, even if this is a lagging cyclical phenomena rather than a structural one.

However, as long as there are still large parts of the world grappling with the virus, we should expect logistics disruptions to play a significant role, suggesting firms will over order ‘just in case’. The closure of Shenzhen’s Yantian port, one of China’s busiest, is an example.

Moreover, global trade flows may continue to face other disruptions, with larger ripple effects. Consider the accident at Taiwan’s Kaohsiung port (14th busiest in the world); protests at US ports; cyberattacks on a key US oil pipeline and major meat producers; and, potentially, the Russian threat to the neutrality of civilian airspace.

Meanwhile, geopolitics --which we will explore as part of the final factor driving inflation-- presents a potential risk of the Bullwhip Effect becoming more embedded in markets.

2) The Fed

It goes without saying that the central role of the Fed as either enabler or disabler of inflationary pressures cannot be overstated.

For the Fed, the inflationary impact of reopening the economy does not come as a surprise. The central bank sees this as a temporary or “transitory” phenomenon which will fade once the economy is back to normal after Covid-19. In its eyes, during the reopening of the economy, mismatches between demand and supply are difficult to avoid. What’s more, restarted supply chains have trouble to keep up with pent-up demand. To add to the distortions, fiscal policy --more on which after this-- is boosting personal consumer spending, while at the same time holding back labour supply through generous federal unemployment benefits (see section 7: Labour vs. Capital).
Overall, the official view is that these mismatches between supply and demand in the markets for goods, services, and labour are causing upward pressure on wages and prices.

In contrast to the Fed, markets and consumers are alarmed by the economic data and stories about supply bottlenecks, both from the Bullwhip Effect already covered, and the bigger picture geopolitical angle (which will be covered in section 8).

These all come at the same time as the base effects that are pushing up year-on-year readings of inflation. Indeed, since we are now comparing the price level of a reopening economy with the price level of an economy in lockdown, we are getting high inflation numbers. On top of that, the demand-supply mismatches, visible in month-on-month data, are pushing up the year-on-year inflation rates even further. No wonder inflation expectations are rising and that bond investors are requiring a higher compensation for inflation.

The Fed is pushing back against these expectations by repeatedly stressing the transitory nature of both the base effects and the supply bottlenecks caused by reopening the economy. After all, central bankers think it is crucial to keep long-term inflation expectations in check, because that is supposed to stabilize inflation at central bank target rates.

The standard example of what could go wrong is a wage-price spiral, in which consumers demand higher wages because they expect higher prices. In turn, the higher wages will push prices up further, etc. (Again, see section 7).

Fed speakers are right in explaining the transitory nature of base effects and supply bottlenecks caused by reopening.

 

However, we fear they are not paying enough attention to the permanent shifts that are taking place in the global economy. For example, the strained geopolitics of recent years is leading to a rethinking of supply chains. This could have an inflationary impact that stretches beyond transitory. The recent reactions of most Fed speakers suggest that they do not spend a lot of time trying to understand such structural changes, and are still focused on inequality within the US.

Worryingly, this means that any permanent impact of these changes will take them by surprise. It could very well be the case that the current monetary policy pursued by the Fed turns out to be far too accommodative, and its reaction function delayed.

The Fed decided last year to change its monetary policy framework by shifting to ‘flexible average inflation targeting’ (FAIT). Instead of pre-emptive rate hikes to stabilize inflation near target, they are now willing to let inflation overshoot in order to make up for past undershoots. In other words, the Fed has moved into an extreme position, doubling down on the assumption that the Phillips curve is flat (after years of thinking it wasn’t).

The current rate projections of the FOMC imply not a single rate hike before 2024. This means that the Fed will be even more “behind the curve” than other central banks when the permanent shifts in the global economy become visible in the inflation data.

What’s more, the US is the country with the most expansive fiscal policy among the OECD, adding to the inflation risk (see the next section). At present, the Fed expects inflation to come down after “transitory” factors fade. However, if the structural changes on the supply side and the demand impulses from fiscal policy cause inflation to remain elevated, the Fed will be caught off guard – and we all know how destabilising for markets this can be.

Crucially, we are seeing the risk of the Fed being behind the curve on inflation for the first time since the 1970s.

The Summer of Taper Talk

In the meantime, we are heading for a summer of ‘taper talk’. The minutes of the FOMC meeting on April 27-28 revealed that a number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.

Since the FOMC meeting, we have had a very disappointing and then a somewhat disappointing Employment Report, but also a CPI report massively stronger than market expectations, so that much awaited taper talk may be coming soon. Many participants highlighted the importance of the Committee clearly communicating its assessment of progress toward its longer-run goals well in advance of the time when it could be judged substantial enough to warrant a change in the pace of asset purchases.

We think if unemployment falls to 4.5% in Q4, as projected by the FOMC, we could see a formal announcement of tapering then.

Since Powell has promised to warn us well in advance, we could get a signal in Q3. This time schedule underlines it is about time the FOMC started to talk about what they actually mean by ‘substantial further progress’. The potential risks if they don’t are clear from inflation history.

3) Fiscal Stimulus

Once deeply-unfashionable fiscal policy is now very much on trend – and this has huge potential inflation consequences. See here for a recent summary and comparison of relative G20 Covid fiscal packages: but the scale of proposed stimulus ahead in the US makes it the central global inflation focus for markets.

US President Biden has already passed the $1.9trn American Rescue Plan, a Covid relief package to support the economy through to September. It contained: $400bn in one-time direct payments of $1,400; enhanced federal unemployment benefits of $300 per week through September 6 (now being rolled back in some states); $350bn to state and local governments; and an expansion of the child tax credit from $2,000 to $3,000. Following on, Biden has presented three other huge fiscal proposals.

The American Jobs Plan offers $2.3trn in spending on social and physical infrastructure out to 2030. The largest item is transportation, including electric vehicles, bridges, highways, roads, public transit, and passenger and freight trains. The plan also supports manufacturing, including US production of semiconductors, as well as green energy, buildings, and utilities; R&D and training; upgrading and building new public schools; and large-scale home- and community-based care for the disabled and elderly.

The American Families Plan proposes an additional $1.8trn on health care, child care, and poverty reduction.

The fiscal 2022 budget (starting 1 October) proposes federal spending of $6.0trn compared to $4.4trn in 2019, even though the economy should be fully re-opened. Spending is also projected to keep rising to $8.2trn by end-2031 – double what it was before 2017, and 33% above 2022’s level. As such, federal debt will exceed the historical post-WW2 peak within a few years and hit 117% of GDP by end-2031, vs. around 100% of GDP now. In short, we are in a new structural paradigm on the political will for higher federal expenditure.

On taxation, the White House initially proposed to raise the corporate rate to 28% from 21%, double capital gains to 39.6%, increase top income tax to 39.66%, let the Trump tax cuts lapse when they expire, and ramp up IRS enforcement. Notably, all of the taxed groups have a lower marginal propensity to consume than those who would see higher federal spending, so this redistribution of income would benefit consumer demand.

Remarkably, the economic projections in the budget do not expect a surge in US growth from all this federal spending.

 

Real GDP growth is seen averaging 2% y/y through to 2031, compared to 2.3% from 2010-19. Moreover, inflation is expected to stay moderate at just 2.3% y/y despite the current evidence suggesting that such a surge in fiscal stimulus into a log-jammed logistical network would produce a more pronounced Bullwhip Effect.

 

The key issue now is if these measures can pass

Congress. The Democrats’ preference for using Budget Reconciliation to get bills through the 50-50 Senate, with the Vice-President holding the decisive vote, has been complicated by the Senate parliamentarian. The issue is also putting pressure on relations between progressives and centrists in the Democrat Party: Senator Manchin in particular has repeatedly said he does not believe reconciliation is appropriate, and prefers bipartisan legislation.

Therefore it remains to be seen how much of this fiscal agenda will materialize before the mid-term elections in November 2022, which could then change the Congressional balance of power. For markets, this is a critical issue – but it requires political, not econometric forecasting skills!

4) Market Positioning

A further factor playing into inflation fears, and arguably both reacting and driving it, is the role of financial markets and their positioning.

Commodities are one of the best performing asset class year-to-date, registering gains of 21% to 29% depending on which index you look at (Figure 20). The commodity rally has been broad-based in nature, sparking widespread inflation fears. Unsurprisingly, commodity futures returns are positively correlated with the US CPI index, which is also currently spiking, and especially energy markets, given the high pass-through cost to consumers. As such, investors and large asset managers are increasing commodity index exposure to mitigate inflation risks across their portfolios with nearly $9bn of inflows or “new” money into the commodity ETF space alone (Figure 21).

These figures are only what is publicly available, but the trend is clear: commodities are back in vogue as an asset class. Indeed, the true sum of investor inflows is likely multiplies of what is shown here when considering the less transparent investment vehicles such as privately managed accounts and hedge funds.

In fact, assets under management at commodity index funds (ETFs and mutual funds) remain significantly below the highs from the early 2010s, suggesting we are still in the early stages of a strategic rotation. This potential buying pressure is likely to keep a strong bid under commodity prices, creating a positive feedback loop with inflation fears.

Admittedly, we have seen some hedge funds and large speculators scale back “long” positions in recent data. However, there are key  distinctions amongst the different group of large commodity speculators as it relates to their trading behaviour and motivations. The scaling back in positions seen so far has been more related to systematic and even discretionary “long/short” traders. These flows typically have little to do with inflation, and more to do with momentum, trend, and carry signals on the systematic side, or on commodity-specific fundamentals for discretionary traders - which remain bullish in many cases.

On the other hand, we have the phenomenon of commodity index investors, a distinct class of speculators who were dormant up until recently. This category of investors is comprised mostly of institutional money such as pension funds and large asset managers, who are investing in “long-only” commodity indices for the specific goal of mitigating inflation risks to their portfolios.

As such, their investment dollars tend to be much “stickier” than other groups of traders, who are constantly moving in and out of markets. These inflation-based flows have remained very strong, and late May saw a record inflow of over $1bn (Figure 22). This could soon see the reduction in positioning from the “long/short” crowd reversed, leading them into forced buy-back positions at higher prices – something we may already be seeing in grains markets aside from weather-related developments.

5) Psychology

Very high --or low-- inflation can exacerbate socio-political problems, as many of the inflation quotes on the first page underline: it is an intensely political issue. Moreover, it can even produce a change in national psychology.

The German Weimar Republic and its early 1920’s hyperinflation serves as an infamous example that still leads Germans to fear inflation  and lean towards ‘sound money’ and fiscal prudence. Of course, we can remember things wrong: this focus on inflation overlooks the subsequent, deliberate crushing Weimar deflation of 1929/the early 1930s, which was more clearly the path leading to Nazism.

Current socio-political tensions and rising populism are widely recognised by politicians and central banks alike. A period of sustained high inflation that hits the poorest in society the hardest should be extremely concerning.

Fortunately, most OECD economies have not seen sustained high inflation for a generation, e.g., CPI (or RPI) was last above 5% in the US and Japan in the early 1980s; in France, in the mid-1980s; and in the UK, in the early 1990s (Figure 23).

However, this is also a problem. To have been an adult (21 or over) with working experience of high inflation one would today have to be aged over 60 in the US and Japan; over 55 in France; and over 50 in the UK. Even in China, an emerging market which has seen more recent bursts of inflation, one would have to be aged over 30.

Anyone younger working in markets or at central banks has spent their career without serious inflation. Or, to put it another way, they are experienced in fighting a phony war rather than a real one. As such, one must ask if OECD markets are psychologically prepared for higher inflation, were it to occur.

On one level, this means inflation is less likely, as it is simply not ‘on our radar’: we don’t expect to see it last.

Yet equally, after decades of low inflation, it is unclear what a sustained reversal might do to business and consumer behaviour, if seen.

In emerging markets with persistent inflation problems, such as Argentina or Turkey, there are preferences for hoarding hard assets or hard currencies; indexing rents to the USD; repaying loans or accounts outstanding slowly, as the real value of debt deflates; spending money as soon as one has it; and against long-term business lending or planning.

In Western asset markets such as residential property, one can also witness the assumption that “prices always go up”, and what that does to consumer behaviour. Should we see that dive-in-and-hold attitude flow back to a broader basket of goods and services, it would be deeply concerning. It would also exacerbate the Bullwhip Effect already mentioned.

As already shown, breaking the entrenched (Keynesian) inflation psychology that had developed in the West over the late 1960s and 1970s required a period of exceptionally high nominal rates under the Volcker Fed, and major structural economic reforms that deregulated the economy. Today, there is no social or political appetite for either – if anything quite the opposite is true as we shift away from raw globalisation. So how could we fight it, if we had to?

That again leaves one wondering exactly what businesses and consumers would do if they began to suspect that those in charge of inflation were abdicating that responsibility. The huge shift of interest towards crypto assets, rather than productive investment, may be part of the answer – and not a happy one.

Of course, both Fed Chair Powell and US Treasury Secretary Yellen are old enough to recall the Volcker Fed and what preceded it. "I came of age and studied economics in the 1970s and I remember what that terrible period was like," Yellen told Congress in testimony. "No one wants to see that happen again." Moreover, an influential, growing slice of the OECD population --pensioners-- would stand to lose out hugely from high inflation.

Yet while it is good to have leadership able to recognise the damage from high inflation, it remains to be seen if just not wanting to see a repeat of the 1970s is enough: most so when key structural assumptions are changing, and the US Treasury is --accurately-- using 1970s terminology like “labour vs. capital”.

6) China Demand

Though many tried, it has long been impossible to discuss global inflation without also discussing China. This was true in 2004, when Chinese nominal GDP was $2.2trn and its export engine was driving the global cost of manufactured goods down to the “China price”; and it is even truer today when the still-growing $15.4trn Chinese economy is an even larger exporter – and an importer of many commodities at a time of rising commodity price inflation.

Of most immediate cyclical concern is the risk of Chinese PPI (rising 6.8% y/y) feeding through into CPI (0.9% y/y) and hence on into imported inflation around the world. However, China has seen previous cycles of PPI-CPI divergence, and they have not so far proved to be inflation events for global markets as much as margin crushing ones for Chinese firms (Figure 24). They may well be again.

From a structural perspective, we must also focus on Chinese imports. There has been a surge in commodity import volumes in 2021: is this really demand-pull, translating into global cost-push inflation, and so meaning central banks are wrong to think the inflation we are now seeing is “transitory”? Is China now inflationary not deflationary?

In the agri space, this is our long-held view, and has been exacerbated by problems like African Swine Fever. China’s May 2021 soybean volumes are up 36% over May 2019; wheat 262%; corn 339%; barley 80%; and edible oils 76%. This is clearly inflationary for the rest of the world, if maintained. However, how about the broader commodity picture?

First, the import volume picture is almost as extreme across a range of hard commodities, but also including the likes of pulp/paper (Figure 26). This is happening despite the fact that GDP growth --looking past the distortions of 2020-- is still on a declining trend (Figure 27), and as the shift to a services economy continues, so China should logically be moving towards lower commodity intensity. So where are these commodity imports actually going, and is this surge in import demand sustainable? They are questions of the highest global importance.

Inventory data for key hard commodities, while rising, are generally below previous peaks (Figure 28), which suggests imports are finding final demand – although the reliability of such numbers has been called into question in the past, most notably with the ‘rehypothecated’ copper scandal in 2014.

Chinese steel production vs. the iron ore inventory held at ports also does not suggest excess stocks are being built up (Figure 29).

Rather than ask what each individual commodity is doing, the key question in terms of global inflation then becomes where this Chinese demand is being seen – and the answer appears to be three-fold: construction, exports, and speculation.

Construction area was up 10.9% y/y on a 3-month average in April (Figure 30), the highest reading since late 2014. On exports the picture is also obvious (Figure 31) and is arguably responsible for much of the demand for pulp/paper, rubber, and plastics, etc. However, from an inflationary perspective if these goods were being made elsewhere, there would still be the same commodity demand – just more geographically dispersed.

Finally we have speculation, which is not reserved to US funds. Chinese authorities have recently intensified a campaign to prevent such activity pushing commodity prices higher. The government has vowed “severe punishment” for speculators and “spreading fake news”, and stated it will show "zero tolerance” for monopolies in spot and futures markets, as well as any hoarding. These announcements saw an initial knee-jerk move lower in many commodity prices on Chinese exchanges.

However, unless GDP growth --and construction-- slow, which does not appear politically palatable to Beijing, then ultimately demand for commodities, and speculation to chase it, are likely to return again.

Of course, high prices themselves could destroy demand. Anecdotally, copper prices (up 47% since the start of 2020 and 23% since the start of 2021) are causing significant problems for many related firms in China.

A related factor is the currency. The PBOC has made clear it is not willing to allow CNY to appreciate to dampen imported commodity inflation: indeed, this would arguably exacerbate it as demand would be able to stay high. Conversely, a weaker currency would help cap demand via higher prices – but would be deflationary for the world and suggest a de facto ‘speed limit’ for Chinese growth: it is unlikely that the PBOC would be prepared to flag that.

In short, cyclical fears of a China-to-global inflation pass-through are overstated; but unless we see a shift towards lower Chinese growth, its increasing commodity appetite still risks a structural shift higher in cost-push inflation outside the agri sector, as well as within it.

7) Labour (vs. Capital)

For years, markets expected inflation and bond yields to rise: and for many years we said those forecasts would be wrong – and were consistently right. This is because the political-economy Marxist/Post- Keynesian/Minsky view of the importance of the bargaining power of labour is not incorporated into inflation models. They look at an expansion of money supply, or credit, or QE, and assume it will filter through to wages. An atomized workforce in a globalised, financialised economy says it will not – and Covid-19 has only increased these pressures.

However, when the US Treasury Secretary is talking about labour vs. capital(!), Western governments about ‘Building Back Better’, and central banks are focused not just on inflation and unemployment, but inequality, we might potentially be on the cusp of a structural break that would have enormous implications. On the other hand, cost-push inflation pressures will collapse under their own weight if wages don’t follow. This all makes the wage outlook crucial.

Nonetheless, most of these data are being affected by temporary factors such as composition effects. Many low-paying service jobs were shed or furloughed during Covid-19, for instance, which pushed average pay up, and most so in the more timely and ‘market relevant’ metrics, such as average hourly earnings (AHE) in the US, or average weekly earnings (AWE) in the UK.

Further out, this composition effect may start to act as a drag on wages. Once employment in service industries fully recovers, the increased relative weight of these wages will pull down the average again. This even holds when wages for these workers exceed their pre-pandemic trend.

On which note, wage inflation will first appear to rise sharply over the next few months due to these effects, adding to an already combustible mix of inflationary signals. Yet this will happen regardless of the underlying strength of the labour market (see Figures 32 and 33). In the UK, for example, y/y wage growth could spike to as high as 7% before falling back as these effects fizzle out.

Meanwhile, in many countries customers are coming back to shops, restaurants and other establishments faster than employers are able to add staff at prevailing wages (Figure 34). In the US, employers are competing with generous unemployment benefits in some states, while health and childcare issues may also be keeping people out of the workforce. In Europe, employees are shielded by the security of furlough schemes. Australia has just begun to phase these out; the UK will do so from July to September.

Importantly, these are temporary factors, suggesting no real motivation for employers to pay structurally higher wages than previously, and they would be better off offering one-offs or sign-on bonuses instead: anecdotally, this is exactly what is happening: some US states are paying ‘return to work bonuses’ of up to USD2,000; US restaurants are offering adjusted hours and gift cards; and UK restaurants are giving finders’ fees of GBP2,000 for workers who bring a friend to fill an empty position.

Of course, leisure/hospitality wages are far lower than in other sectors, and we therefore think it is unlikely that there will be a spill-over. Indeed, the opposite didn’t happen in March-April 2020: even as 7m US leisure/hospitality jobs were lost this had no effect on wages in construction, manufacturing, or other services. In short, US job vacancies are rising to new record highs (Figure 35), but this reflects a resumption from locked-down services activities rather than an overall extremely-tight labour market that can drive up wage expectations.

However, this does not mean there are no such risks ahead. First, the labour market is likely to heal far faster than after the GFC. Due to extensive state support measures, ‘scarring’ effects aren’t as extreme, and most furloughed workers will eventually be reintegrated into the labour market. Indeed, even as measures of unemployment are being depressed by the drop in participation rates, surveys suggest the recovery to pre-pandemic unemployment rates will be rapid. We currently forecast US unemployment to be below 4% in late-2022, and Euro area unemployment should stabilize at 8.5% before it eventually starts declining too (Figure 36).

Admittedly, the NAIRU --the unemployment rate trigger for higher wage inflation-- hasn’t been a useful forecasting tool for years, for reasons we already covered. However, pre-Covid there had already been signs of wage inflation beginning to reappear. Indeed, one of the few iterations of the US Phillips Curve that actually has a slope (Figure 37) suggests if the recovery in prime-age US employment continues to progress at a solid pace, real pay growth will remain positive. Likewise, in the Eurozone, the cyclical component of wage growth may also become more relevant once things have normalized.

But then we come to wild card: politics, and the structural changes it may bring.

The back-to-work bonuses being seen in the UK and US may not be structural wage-inflationary – but they are a clear indication of just how much wage-inflation the ‘Built Back Better’, full-employment economy aimed for by proponents of fiscal stimulus, or MMT, would imply.

Is this where we are heading under the present seemingly irresistible force of a labour-friendly zeitgeist and massive fiscal stimulus? If so, there will be huge obstacles from -- and equally huge implications for-- global supply chains, the last inflation factor to be covered.

Or will globalisation prove the more immovable object, with white collar middle class jobs sent abroad now that remote working has become normalised, as some believe may occur?

In short, if forecasting inflation requires forecasting wages, then forecasting wages requires being able to forecast the outcome of political-economy. No model is able to do so – but the risks of a structural break towards labor and away from capital, while low, appear higher now than at any point in the past four decades. That alone makes it even more imperative to look at the wage/earnings data – and political developments.

8) Supply Chains

Supply chains are vitally important in any inflation framework for three reasons: one deflationary, and two inflationary:

1) DEFLATION: The easier supply chains can move off-shore in response to rising wages, the lower the ceiling for wages is. In short, labour’s power is limited by free trade. This uncomfortable truth is one of the key reasons global inflation forecasts have been so wrong for so long.

2) INFLATION: The Bullwhip Effect. On 2 June, Elon Musk tweeted: “Our biggest challenge is supply chain, especially microcontroller chips. Never seen anything like it. Fear of running out is causing every company to overorder – like the toilet paper shortage, but at epic scale. That said, it’s obv not a long-term issue.” However, production is not expected to be able to match demand for several years, with a flow-through effect to everything from PCs and cars to toasters.

3) INFLATION: The above may now be helping the political tide turn away from parts of free trade. Indeed, where semiconductor plants are to be built is now a deeply geopolitical issue.

The US-China trade war, followed by the Covid crisis and the obvious shortfalls of PPE, ventilators, and vaccines (and then the Suez Canal blockage), has seen growing official recognition that ‘just in time’ production needs to shift to a more ‘resilient’, ’just in case’ model. The deepening US-China Cold War makes this ideological for some as well.

Yet even for those who do not wish to be involved in this issue, supply chains are intimately linked to any plans to ‘Build Back Better’ and/or for Green transitions, which are now common. For example:

  • The UK, with its post-Brexit aim of Green “Levelling Up”;

  • The EU, where the Commission’s 2021 Trade Policy Review said: “A stronger and more resilient EU requires joined up internal and external action, across multiple policy areas, aligning and using all trade tools in support of EU interests and policy objectives.” In this case, ensuring quality EU jobs, even by subsiding EU green exports – and, as soon as 2023, introducing ‘Green tariffs’ on iron, steel, aluminium, cement, and fertilizer;

  • Japan, which is using public funds to incentivise firms to come home from China and which has just announced a “national project” to boost semiconductor production;

  • China, whose “Dual Circulation” policy aims to retain industry, attract new FDI with its market size, develop domestic R&D, and to win the high-end of the global value chain – including semiconductors; and most importantly

  • The US, where to the surprise of some, the Biden White House has taken some of the trade rhetoric of the Trump administration much further.

Cynics will point out talk - like imports - is cheap. However, the shift towards fiscal policy is clear; many Western politicians recognise not just their leadership, but the liberal world order is under pressure; and this all now being linked to ‘Green’ is significant. It holds the promise of securing our safety, and higher economic growth, better employment, and a commanding position in an uncertain future of climate, social, and geopolitical change, which echoes the 1950’s Space Race. Everyone wants to produce the industrial goods of the future, like electric vehicles, batteries, and solar panels.

Yet it should also be obvious that it is not possible for the US, China, the EU, Japan, the UK, etc., to all ‘Build Back Better’ with Green domestic production without global decoupling; nor for all to be net exporters. As such, this threatens a new (or rather, old) global paradigm: instead of businesses seeking the lowest cost production anywhere, they may have to seek sustainable production --with social and national security parameters-- closer to/at home. Geospatially, this means no more hub-and-spokes focus, but a distributed, multi-modal approach around economic centres of gravity able to bend Green rules of trade/regulation to their advantage.

Of course, globalised businesses will not like this, and most are so far ignoring missives from their governments to bring supply chains and jobs home. However, a mixture of carrots (fiscal incentives) and sticks (tariffs and/or non-tariff barriers) could move production, as we already see.

Yet things are even more complicated than that. Even if a factory is opened in the US, the Bullwhip Effect shows it can be rendered useless without a reliable supply of all the intermediate goods and raw materials needed for final assembly. China has built this at home and along the Belt and Road Initiative (BRI) to coax foreign production to agglomerate there. 75% of global solar panels are now made in China, for example, and it intends to dominate Green production.

Indeed, new US electric car battery plant would need lithium, nickel, cobalt, and copper – but can supply be assured? Consider the potential for China to disrupt crucial rare-earth mineral exports required for electronic goods production (Figure 38); and what is happening with US restrictions on much-needed high-tech exports to China.

The US or Europe would arguably need to replicate what China has done all the way down the supply chain --in a zero-sum game-- to ensure true ‘resiliency’. On that note, the June 2021 G7 summit will include a commitment to a Green (democratic) alternative to China’s BRI.

In short, our commodity-price inflation sits alongside a global ‘race for resources’ that mirrors the late 19th century – when mercantilism (and empire) was fashionable. That implies huge structural shifts in supply chains - and a flow-through to labor markets.

Into this mix we also see flux over reserve currencies, central bank digital currencies (CBDC), and payments systems. China has already launched a pilot CBDC; and the ECB has argued a CBDC might facilitate digital “dollarisation” (or “yuanisation”?) in weaker economies, while strengthening the global status of the currency in which the CBDC is denominated. The ECB openly flags concerns over domestic and cross-border payments being dominated by non-domestic providers, where “individuals and merchants alike would be vulnerable to a small number of dominant providers with strong market power”.

This all presents the tail-risk of a global bifurcation of technology, production, payment systems, currencies, and supply chains - and labour markets. Moreover, if we do move in that direction, it will not be a gradual, linear process like a series of snowballs to be dodged: it will be a tipping-point to a rapidly exponential process, like an avalanche.

Of course, none of this may come to pass: but that does not mean that the zero-sum game goes away. Somebody will still get to ‘Build Back Better’ with domestic production; somebody will produce the Green goods required; somebody will have reserve currency status globally; and somebody will have the easier access to raw materials and logistics supply chains required to do all of the above. Yet it may not be all the same economy or currency.

As we will now show, global inflation will depend on how this all plays out, alongside the other seven factors previously listed.

Whipping into a (new) shape

We have just shown the eight primary factors we see driving global inflation. What we now need to do is look at how they interact.

Let’s begin by making a simple assumption: that each of the factors can have a binary state that is either inflationary (1) or deflationary (0). As such, there are 64 potential combinations. That can’t be modelled, and we won’t try. But we can weigh up which factors have logical prime-mover status --or ‘primacy’-- over the others. This can help us complete an inflation framework.

Let’s take factor #7 (Labour) and factor #2 (The Fed). Both are crucial to any understanding of inflation pressures. If labour is in a strong bargaining position, e.g., if supply chains are being on-shored, then higher inflation would appear. Likewise, if the Fed were to fall behind the curve on rates, inflation would rise.

However, can a tight labour market prevent the Fed from raising rates and bringing inflation --and wage inflation-- down? No, as Volcker showed in the early 1980s. The Fed may opt NOT to act on rates, but it cannot be prevented from doing so by unions - unless US politics changes completely. In short, the Fed has primacy over labour.

Let’s look at factor #6 (China) against factor #5 (Market Positioning). Market positioning can push commodity prices higher, and so can China. But if China stopped buying, prices would fall and market positioning would shift. On the other hand, if markets kept pushing prices higher China may not like it, but it would not necessarily have to stop buying. In reality, it would probably do to markets what markets can’t do to China: regulation. So China has primacy.

Another example is factor #8 (Supply Chains) against factor #1 (Bullwhip Effect). Both are inflationary, but one is prime. A shift to a new supply-chain system might replicate a Bullwhip Effect to begin with: but after that it would help prevent one from happening. The opposite does not hold true. So supply chains have primacy over inflation trends.

How about factor #3 (Fiscal policy) and #2 (The Fed) – there is a prospective clash of the titans! Again, only one matters most. If we were to see loose fiscal policy, monetary policy can be tightened in response to reduce inflation pressures. On the other hand, Congress could not keep spending or cutting taxes to compensate for rising rates - unless US politics changes completely. As such, the Fed still holds primacy.

Then we come to perhaps the most interesting one: factor #8 (Supply Chains) against #2 (The Fed.)

Imagine we see the tail-risk supply-chain shift scenario unfold: Western unemployment tumbles, and broad wage inflation matches that being seen in the return-to-work bonuses of the furloughed US and UK services sectors.

The Fed cannot encourage firms to offshore - but it can stop some of those jobs from being created by raising rates and slowing the economy and/or pushing the dollar higher. So returning supply chains cannot force the Fed not to act – unless US politics changes completely, as under a new Bretton Woods with capital controls, for example. As such, the Fed once again has primacy.

Meanwhile, what the Fed ‘has’ to do because of supply-chains is unclear. It is possible to run a trade surplus without high inflation as Germany, Japan, and China all show – but it seems unlikely the US can shift economic structure to this degree.

Table 1 uses the prime-mover lens to show only two factors emerge as truly crucial for global inflation: the Fed, and supply chains

This doesn’t mean US fiscal policy is not vital it also is. But more so is what the Fed does in response; and if the White House starts to shift global supply chains.

Figure 39, on the next page, is an adjusted version of Figure 9 that better reflects the relative importance of each of the eight interacting factors we have covered so far.

Does this give us an inflation forecast? Again – no! One has to forecast what Congress will do, what the Fed will do in response – and what the White House does on supply chains. That is two political forecasts and a monetary one that is more political too. What can say from the framework, however, is that the inflation outlook shifts enormously depending on these projected outcomes. Indeed, we can draw up 4 scenarios focusing on the most important factors of Fed, fiscal, and supply chains:

1) If the Fed stays behind the curve, the White House can’t pass a fiscal package, and nothing is done on supply chains, then inflation is likely to rise near term due to the Bullwhip (and other factors) - but this would mean lower real wages, and the risks of a drop in spending and then a return to low-flation/deflation.

2) If the Fed stays behind the curve, but the White House can pass a fiscal package, and nothing is done on supply chains, then inflation will spike much higher near term due to the exacerbation of the Bullwhip Effect. However, labour’s bargaining power will remain limited, and there would then be larger real income declines and then deflationary pressure.

3) If the Fed stays behind the curve, and the White House passes a fiscal package, and this is accompanied by an aggressive plan to shift global supply chains, things get complicated. Near term, we would see much higher inflation and a bullwhip to end all bullwhips. Provided that market positioning and consumer/business psychology did not shift too far from our past low-flation norms, however, after far more than “transitory” price hikes, inflation could stabilise at a higher than previous level, but with local supply meeting local demand in a more ‘decoupled’ economy. (In short, a partial reversing of the global economic paradigm of the past four decades.) This would be an earthquake for markets, of course.

4) If the above scenario played out but markets speculated, consumers and business hoarded as in emerging markets, unions pushed for huge pay rises, and China also snapped up key commodities, then we would risk returning to the inflation of the 1970s. However, this is by far the least likely of these four outcomes.

Meanwhile, the implications vary for the EU and China (and the rest of the world). US inflation, or deflation, would flow through to them. Yet scenario 3 would be deflationary for net exporters to the US (see Figures 40-43 as a summary).

NB In the Figures above, green denominates that a factor is overall deflationary, and red denominates it is overall inflationary. The key two/three factors (the Fed, fiscal policy, and supply chains) are highlighted to underline their relative importance.

On the right side one sees the indicative near and longer term inflation outcomes for the US, EU, and China, as well as the trade impact. The latter is indicative that without a shift in supply chains, fiscal stimulus flows to production abroad and not at home so ‘Build Back Better’ is built elsewhere.

NB Figure 42 shows that while each factor for inflation is generally red or green, a shift towards fiscal and monetary stimulus, and a supply chain shift could not help but strengthen the power of labour vs. capital. However, the extent to which supply grows faster than demand, and productivity, would then be key.

At the same time, Figure 43 underlines just how destabilising all factors shifting back in an inflationary direction at once would be!

‘Whipping’ markets around

Crucially, in each of the four given scenarios, inflation rises near term – which we already see around us; and more so with each additional inflation factor that flips red.

In scenarios 1 and 2, inflation falls back again subsequently because labour does not have any bargaining power, and extra demand is met by offshore rather than onshore supply. This is “transitory” inflation – yet it means significant pain for consumers and businesses. The difference between no fiscal stimulus and fiscal stimulus is also hugely significant near-term, with scenario 2 pushing inflation much higher with a much larger Bullwhip Effect (and so real wages lower).

Yet it is only a shift in supply chains --‘Made in America/Buy American’ policy, and/or US, EU, or UK tariffs on others’ Green goods-- in tandem with fiscal and monetary stimulus that sees a sharp move higher in inflation near term, and a structural long-term shift higher. At that point, should labour power and mass psychology also change in an inflationary direction, as in scenario 4, then even a partial mirroring of the 1970’s experience is theoretically possible.

In terms of the potential impact on bond yields and the US Dollar, we therefore have the following hypothetical outcomes – and one can see how wide a range there is:

Conclusion

  • What we hope to have shown in this report is that:

  • Inflation is vital to understand – but no economic theory captures it well enough to model accurately;

  • As a result, an inflation framework works better than a model;

  • Right now, we are stuck with high inflation due to a Bullwhip Effect, which economic models do not factor into their projections;

  • There are currently seven other major factors in our inflation framework, of which 2/3 are the most important from a structural perspective (the Fed, global supply chains, and fiscal policy);

  • Predicting what these key factors will do is not within the purview of any economic or econometric forecast – but is rather a political/geopolitical call (most so for the latter two);

  • How one projects the various outcomes of these key swing factors has enormous implications for both near term and long term inflation;

  • We could logically see moderate, high, or very high inflation, and/or deflation afterwards, depending on how this all plays out.

If this implied volatility fails to satisfy a market looking for a simple, cyclical answer to its $64 trillion structural inflation question, then one needs to get cracking.

First, on understanding political economy at a national level - which would have predicted the recent structural change in the Fed’s reaction function; and second, on understanding geopolitics/geoeconomics/great power theory at an international level - which would have predicted the current Cold War, and the ensuing push for supply-chain decoupling.

We could also have just looked at history, and noticed how inflation never remains in the nice, stable range we would like it to for too long - because underlying social and economic structures don’t stay the same, even if our models do!

Or, we can take an even bigger picture view than that:

“It’s hard to build models of inflation that don't lead to a multiverse. It’s not impossible, so I think there’s still certainly research that needs to be done. But most models of inflation do lead to a multiverse, and evidence for inflation will be pushing us in the direction of taking [the idea of a] multiverse seriously.” Alan H. Guth

Tyler Durden Sat, 06/12/2021 - 14:31
Published:6/12/2021 1:53:47 PM
[Markets] MarketWatch Options Trader: Momentum in the stock market is building toward a breakout Also, options trading volume pops on a takeout rumor.
Published:6/12/2021 1:53:47 PM
[Markets] Citadel Settles Suit Alleging Former Senior Trader Shared Its Algorithmic "Secret Sauce" Citadel Settles Suit Alleging Former Senior Trader Shared Its Algorithmic "Secret Sauce"

Citadel has reached a settlement with the British hedge fund it accused of trying to plunder one of its senior traders in an effort to get to its algorithmic "secret sauce".

GSA Capital Partners LLC and Citadel announced the settlement late last week after Citadel accused the fund of obtaining "closely guarded" trading strategies when it hired the employee in question, Vedat Cologlu, according to Bloomberg. 

GSA said of the settlement that the two firms “recognize and respect the importance and value of the other’s rights over their confidential information and intellectual property.”

We first documented that Citadel was suing British hedge fund GSA Capital in January of 2020, after GSA attempted to hire Cologlu, allegedly in hopes of accessing the quant secrets at the core of Citadel's "ABC" automated trading strategy. 

Recall, we wrote back in November of 2020 that Citadel was seeking around $40 million over claims that GSA was able to obtain information on the strategy via texts and WhatsApp.

Citadel argued late last year that GSA "can't unsee" and can't forget the information that was taken from Citadel's secret algorithm. Citadel is also moving to try and block GSA from using their trading model. GSA has argued that they found no "secret sauce" from a high-level description of the structure of a trading algorithm. 

David Craig, a lawyer for Citadel Securities, said in late 2020: “GSA’s most senior managers now know where and how Citadel makes hundreds of millions of dollars in annual revenues. They cannot forget that information, or put it out of their minds.”

He noted that only 15 of Citadel's 3,000 employees ever had access to the "strategic logic" of the strategy. One of those employees was Cologlu, a 2007 Wharton grad and self-described "stat arb trader", who helped operate and administer the models whose "returns were notably high given the low level of risk it took on."

Citadel has claimed its "ABC" quant strategy cost more than $100 million to develop. In its lawsuit, Citadel alleged that the UK fund wanted Cologlu to hand over confidential information about the strategy:

GSA asked for sensitive information on his equity-trading including his profits and the speed of the trades. And then Cologlu handed over a plan that Citadel argues was based on its own confidential model, including the way the algorithm made predictions.

And there's good reason for the information to be coveted. Citadel Securities has been wildly profitable: the company posted a record $6.7 billion in revenue in 2020. This was almost double the previous high in 2018. The blockbuster result came after some of its traders moved from Chicago and New York to set up shop in a Palm Beach hotel in late March 2020 as the pandemic upended lives and markets across the globe. The results of the privately-held company were released in presentation to investors as part of a $2.5 billion loan Citadel Securities was seeking.

The Citadel securities trading arm started as a high-frequency market-maker in options before pushing into equities. Today, the firm dominates that realm and has had a very close relationship with the likes of the millennials' favorite trading platform, Robinhood. We documented back in September 2020 that Citadel now controls 41% of all retail trading. 

GSA was spun out of Deutsche Bank AG in 2005 and manages around $7.5 billion. Citadel’s legal filing names GSA founder and majority owner Jonathan Hiscox as a defendant, alongside other officials including the chief technology officer.

Back in January 2020, we noted the full details of Citadel's lawsuit. 

Tyler Durden Sat, 06/12/2021 - 14:00
Published:6/12/2021 1:24:22 PM
[Markets] Outside the Box: A more accurate inflation indicator is painting a bleaker picture for rising prices Investors ought to monitor the Producer Price Index, not the Consumer Price Index, to see how higher prices are filtering through the economy.
Published:6/12/2021 1:24:22 PM
[Markets] China Urges US & Russia To Reduce Their Nuclear Arsenals China Urges US & Russia To Reduce Their Nuclear Arsenals

Authored by Dave DeCamp via AntiWar.com,

Chinese Foreign Minister Wang Yi on Friday called on the US and Russia to reduce their nuclear arsenals during the UN-backed Conference on Disarmament in Geneva.

While Washington is constantly hyping up China’s nuclear arsenal, it is only a fraction of what the US and Russia possess. Estimates on the higher-end put China’s nuclear stockpile at 350 warheads. Russia has about 6,350 warheads, while the US has 5,800.

Despite the numbers, the US complains that Beijing does not want to enter arms control talks. But China has no motivation to do so unless the US and Russia make an effort to reduce their arsenals. Regardless, the US continues to blame the issue on China.

"To date, China has rebuffed US efforts to initiate bilateral talks on risk reduction and strategic stability," Robert Wood, the US ambassador for disarmament, said at the conference.

Besides having way more nuclear weapons than Beijing, the US is also encircling China with military hardware. The US has plans to deploy medium-range missiles near China that were previously banned under the Intermediate-Range Nuclear Forces Treaty, which the US withdrew from in 2019.

Wang took a shot at the US for its plans to further militarize Asia which he characterized as undermining regional stability.

"China opposes the development and deployment of regional and global missile defense systems by a certain country that undermine strategic stability, and China opposes the deployment of land-based intermediate-range ballistic missiles by the same country in the neighborhood of other countries," he said.

Tyler Durden Sat, 06/12/2021 - 13:30
Published:6/12/2021 12:55:29 PM
[Markets] No Vax, No Phone - Pakistan Province Blocks Sim Cards Of The Unvaccinated No Vax, No Phone - Pakistan Province Blocks Sim Cards Of The Unvaccinated

Pakistan is expected to spend more than a billion dollars in the next fiscal year to import COVID-19 vaccines to inoculate around 100 million people. The trouble is, anti-vaccine groups have sprung up around the country and have deterred some from taking the vaccine. In response, one local government in Pakistan has a new weapon in its war chest against vaccine hesitancy: disable the SIM cards of mobile phones of people who decline to get jabbed, according to RT News

Punjab Health Minister Yasmin Rashid decided on Thursday during a meeting with the Punjab provincial government and military officials that anyone who denied the COVID-19 jab will have their SIM cards disabled at "a certain time." 

"We are doing all we can to compel people to get vaccinated… The government cannot allow individuals, who do not want to get vaccinated, to risk lives of those who are already vaccinated," Rashid said. She added that a timeline from when a person denies the jab to SIM card denial would be hashed out once the new measure received formal approval from the National Command and Operation Center, which supervises Pakistan's national response to COVID-19. 

After the meeting, Punjab's Primary and Secondary Health Department tweeted"Mobile SIMS of people not getting vaccinated may be blocked, it was decided in Cabinet meeting under the chair of Minister for Health Dr. Yasmin Rashid at Civil Secretariat. The government will open walk-in vaccination of over 18 years of age group."

There was no word on when the SIM card blocking would begin.

However, provincial officials announced the plan was moving ahead: 

"Final decision has been taken to block the mobile SIM cards of people not getting vaccinated," department spokesman Syed Hammad Raza told Pakistan's Dawn newspaper.

Critics said Punjab's new measure is a dangerous move by the government. 

"This is a regressive step as it affects the right to freedom of speech of citizens. What is required is to raise awareness about vaccinations, and not coercion," Prasanth Sugathan, legal director at India's Software Freedom Law Centre, told The National.

"During the pandemic, mobile phones are important for people to connect with others and to receive information," Sugathan said. 

Besides SIM card bans, those who deny being vaccinated might also be restricted from restaurants, malls, and parks. 

This is absolutely absurd, and imagine if a liberal-run metro area in the US resorted to this no jab, no phone measure - people would lose their minds and likely rebel.  

Tyler Durden Sat, 06/12/2021 - 13:00
Published:6/12/2021 12:24:48 PM
[Markets] The Fed Is Wrong: Inflation Is Sticky The Fed Is Wrong: Inflation Is Sticky

Authored by Charles Hugh Smith via OfTwoMinds blog,

The Fed's god-like powers will be revealed for what they really are: artifice and illusion.

The Fed will be proven catastrophically wrong about inflation for the simple reason that inflation isn't transitory, it's sticky: when prices rise due to real-world scarcities and higher costs, they stay high and then move higher as expectations catch up with reality.

Consider the dynamic of Fed-inflated bubbles raising rents. The house that once sold for $200,000 is sold to a pool of investors for $800,000, and the property taxes, insurance and debt service rise accordingly: even though the house didn't change, thanks to the Fed's bubble, the entire cost structure is higher.

So what happens next? The investors jack the rent up to cover the higher costs. As for refinancing to lower the monthly mortgage payment--that trend has reached the end of the line. As inflation gathers steam, mortgage rates can only go up, not down.

As for getting the county assessment office to lower the valuation on the house--good luck with that. The Ratchet Effect is in full force: assessed values rise easily and decline with great resistance.

So rents stay high even as real estate values decline. Landlords can't drop rents without triggering panic in their lenders, and so they leave units empty and try gimmicks such as "free month rent when you sign a lease," gimmicks which leave the skyhigh rent skyhigh so lenders look at the numbers and are assured that rents are high enough to cover their mortgage payments and other expenses.

Consider the orchard left to die during the drought. The farmer won't be replanting that orchard--it's simply too risky to assume there will be sufficient water in the future and prices will stay high enough to compensate for the heightened risk. So supply drops as marginal producers drop out and survivors avoid risk by not expanding production. Prices stay high.

Consider deglobalization. Having outsourced essential components, U.S. corporations are at the mercy of factors beyond their control: currency arbitrage, suppliers taking advantage of scarcity, other nations tightening the screws on exports of essentials, and so on.

Consider the pool of local restaurants. many have closed, some new ones are opening, but the reality is all those who can't raise prices enough to cover expenses and make a profit will burn through their cash and close. The survivors will raise prices because they have no choice: there is no alternative (TINA) to raising prices except closing down.

85% of local government expenditures are for labor, and labor costs never go down, they only go up: the ratchet Effect. Public unions are under pressure to secure higher wages and benefits, and the inexorable rise in healthcare costs is squeezing local government budgets. What to do? Raise taxes and fees--there is no alternative (TINA). Jack up parking fees and tickets, double or triple fines, slap on new junk fees, raise sales taxes, property taxes, taxes on mobile phone service--raise them all because TINA.

People are awakening to the Federal Reserve's Big Lie, which the Fed assumes will become "truth" if they repeat it often enough: inflation is transitory, blah, blah, blah: wrong, wrong, wrong. People are awakening to the embedded dynamics of inflation and their expectations have already started changing. Those who can't raise prices will close down, those who can will raise prices.

The Fed's trick of substituting debt for income has also reached the end of the line. As the chart below depicts, America has built an illusory castle of "prosperity" by borrowing trillions of dollars as a substitute for earnings from being productive. The costs of all these layers of debt can only rise now that interest rates are near-zero while inflation is at 5% officially and 10% or more by any real-world measure.

There's only so much disposable income left after servicing debt, and the more debt you pile on, the less income there is to spend on goods and services.

This is a longstanding cycle of civilization. As productivity rises, the human population expands up to the carrying capacity of the biosphere. Labor's earnings rise as producers expand production to meet rising demand. Human population and appetites for goodies keep expanding, overshooting sustainable supply while labor expands to the point that it is in oversupply. Wages decline and labor thus loses purchasing power just as prices of essentials soar. Discontent and disorder increase and states and economies fall.

The Fed's god-like powers will be revealed for what they really are: artifice and illusion. The Fed is wrong: inflation isn't transitory, it's sticky, and there's nothing the Fed can do about it. They might as well stand on the shore and order the tide to reverse.

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Tyler Durden Sat, 06/12/2021 - 12:30
Published:6/12/2021 11:54:36 AM
[Markets] ETF Wrap: As AMC’s stock surged, an Invesco ‘reopening’ fund sold shares of the meme because that is how the smart-beta ETF works Every week we highlight the most timely exchange-traded fund news, from new launches to inflows and performance.
Published:6/12/2021 11:54:36 AM
[Markets] Putin Reveals Personal Thoughts On Trump & Biden In Rare NBC Interview Putin Reveals Personal Thoughts On Trump & Biden In Rare NBC Interview

Russian President Vladimir Putin this week sat down for an interview with a US media outlet for the first time in nearly three years. NBC's Keir Simmons talked to Putin for about 90 minutes, and released a teaser segment Friday night. 

Perhaps the most interesting part of the conversation centered on the Russian leader's perspective on American politics and his personal thoughts and comparison of Donald Trump and Joe Biden. Putin called the former president "extraordinary" and "talented" while noting that Biden is "radically different" and is a quintessential "career man" in politics.

"Well even now, I believe that former U.S. president Mr. Trump is an extraordinary individual, talented individual, otherwise he would not have become U.S. President," Putin told Simmons.

"He is a colorful individual. You may like him or not. And, but he didn't come from the US establishment, he had not been part of big time politics before, and some like it some don’t like it but that is a fact."

In contrast, he said of President Biden:

"...President Biden is a career man. He has spent virtually his entire adulthood in politics," Putin said in part. 

"That's a different kind of person, and it is my great hope that yes, there are some advantages, some disadvantages, but there will not be any impulse-based movements, on behalf of the sitting U.S. president."

Also interesting is Putin's response to the March George Stephanopoulos interview with Biden wherein the US President dubbed Putin a "killer" with "no soul". Putin responded in this new NBC clip:

"Over my tenure, I've gotten used to attacks from all kinds of angles and from all kinds of areas under all kinds of pretext, and reasons and of different caliber and fierceness and none of it surprises me." 

Putin called the "killer" label "Hollywood macho."

Putin also took aim at a recent Washington Post report over Russia-Iranian military relations and the transfer of advanced satellite systems. "It’s just fake news," Putin dismissed. "At the very least, I don’t know anything about this kind of thing. Those who are speaking about it probably will maybe know more about it. It’s just nonsense, garbage."

NBC is set to release the full interview footage on Monday, just ahead of Biden and Putin's much anticipated June 16 meeting in Geneva. Both sides have said they don't expect any "breakthroughs" in Geneva. 

Tyler Durden Sat, 06/12/2021 - 12:00
Published:6/12/2021 11:23:09 AM
[Markets] Crypto: Bitcoin is legal tender in El Salvador. What does it mean for the broader crypto market? Some bulls think ‘it could be huge’ Bitcoin is officially legal tender in El Salvador, a country in Central America with a population of 6.5 million and a gross domestic product of about $27 billion, as of 2019.
Published:6/12/2021 11:23:09 AM
[Markets] UK Government Adviser Says Mask Mandates Should Continue "Forever" UK Government Adviser Says Mask Mandates Should Continue "Forever"

Authored by Paul Joseph Watson via Summit News,

A UK government adviser and former Communist Party member Susan Michie says that mask mandates and social distancing should continue “forever” and that people should adopt such behaviour just as they did with wearing seatbelts.

Michie, who is a Professor of Health Psychology at UCL and a leading member of SAGE, said such control measures should become part of people’s “normal” routine behaviour.

"Vaccines are a really important part of pandemic control but it is only one part. [A] test, trace and isolate system, [as well as] border controls, are really essential. And the third thing is people’s behaviour. That is, the behaviour of social distancing, of… making sure there’s good ventilation [when you’re indoors], or if there’s not, wearing face masks, and [keeping up] hand and surface hygiene."

"We will need to keep these going in the long term, and that will be good not only for Covid but also to reduce other [diseases] at a time when the NHS is [struggling]… I think forever, to some extent…"

"I think there’s lots of different behaviours that we have changed in our lives. We now routinely wear seatbelts – we didn’t use to. We now routinely pick up dog poo in the parks – we didn’t use to. When people see that there is a threat and there is something they can do to reduce that [to protect] themselves, their loved ones and their communities, what we have seen over this last year is that people do that."

Michie’s comments once again emphasize how many scientific advisers have become drunk on COVID-19 power and never want to relinquish it.

“Unsurprisingly, Channel 5 News made absolutely no effort to scrutinise these claims. The programme’s presenter raised no objection to the idea that mask-wearing and social distancing could continue “forever”, resorting only to friendly laughter,” writes Michael Curzon.

“Professor Michie’s co-panellist, a fellow scientist at UCL, Dr Shikta Das, said:

“I think Susan has made a very good point here,” adding that the vaccine roll-out has created a “false sense of security”.

She concluded:

“I don’t think we are yet ready to unlock.”

How’s all that for balance!

Perhaps unsurprisingly, Michie is known to be a long-time Communist hardliner and was so zealous in her beliefs she garnered the nickname “Stalin’s nanny.”

Her sentiment echoes that of fellow government adviser Professor Neil Ferguson, who once acknowledged that he was surprised authorities were able to “get away with” the same draconian measures that Communist China imposed at the start of the pandemic.

“[China] is a communist one-party state, we said. We couldn’t get away with [lockdown] in Europe, we thought… and then Italy did it. And we realised we could,” said Ferguson.

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Tyler Durden Sat, 06/12/2021 - 11:30
Published:6/12/2021 10:53:01 AM
[Markets] "This Is Wealth Redistribution": Blackrock And Other Institutional Investors Buying Entire Neighborhoods At Huge Premiums "This Is Wealth Redistribution": Blackrock And Other Institutional Investors Buying Entire Neighborhoods At Huge Premiums

As the real estate market continues to break records, a cabal of institutional investors has been tossing gasoline on the fire - buying up properties hand-over-fist as middle-American renters watch their dreams of home ownership fade at the hands of pension funds and other financial behemoths.

A bidding war broke out for the Amber Pines 124-unit rental-housing community built by D.R. Horton.

"You now have permanent capital competing with a young couple trying to buy a house," according to real estate consultant John Burns, whose firm estimates that in many of the country's hottest markets, roughly one 20% of homes sold are bought by someone who never moves in.

"That’s going to make U.S. housing permanently more expensive," said Burns, who thinks home prices will climb as much as 12% this year, on top of last year's 11% rise.

"Limited housing supply, low rates, a global reach for yield, and what we’re calling the institutionalization of real-estate investors has set the stage for another speculative investor-driven home price bubble," his firm concluded - finding Houston to be a favorite location for investors, who have accounted for 24% of home purchases in the area.

The coronavirus pandemic sparked a race for home-office space and yards. Occupancy rates reached records and rents are rising with home prices. The ecosystem of companies that service, finance and mimic the mega landlords is booming.

Burns counted more than 200 companies and investment firms in the house hunt: computer-assisted flipper Opendoor Technologies Inc., money managers including J.P. Morgan Asset Management and BlackRock Inc., platforms such as Fundrise and Roofstock that buy and arrange for the management of rentals on behalf of individuals and builder LGI Homes Inc., which now reports wholesale home sales to bulk buyers in its quarterly results. -WSJ

In one example, a bidding war broke out over a D.R. Horton complex in Conroe, Texas - after the homebuilder put the entire subdivision up for sale. After a "Who's Who of investors and rental-home firms flocked to the December sale," the winning bid of $32 million came from an online property-investment company, Fundraise LLC, which manages over $1 billion for around 150,000 individuals, according to the Wall Street Journal.

D.R. Horton ended up booking roughly twice what it typically makes selling houses to middle-class homebuyers according to the report.

"We certainly wouldn’t expect every single-family community we sell to sell at a 50% gross margin," said CEO Bill Wheat at a recent investor conference.

What does this mean for the average American family? We'll let Twitter analyst @APhilosophae take it from here in this ominous, yet soberingly accurate thread:

Click on any of the above tweets to continue reading.

Tyler Durden Sat, 06/12/2021 - 11:00
Published:6/12/2021 10:28:32 AM
[Markets] The Wall Street Journal: United, Alaska Air among airlines snapping up unsold Boeing 737 Max inventory as vaccines fuel rebound in air travel A faster-than-expected recovery in domestic air travel is helping Boeing Co. find new homes for unclaimed 737 Max jets whose buyers walked away or collapsed during the pandemic.
Published:6/12/2021 10:28:32 AM
[Markets] Stockman Warns "Buckle Up!", May's Soaring CPI Print Was No 'Transitory' Blip Stockman Warns "Buckle Up!", May's Soaring CPI Print Was No 'Transitory' Blip

Authored by David Stockman via Contra Corner blog,

The Fed’s destructive money-pumping has many victims, but chief among these is the Wall Street financial narrative itself.

It emits not a whiff about the patent absurdity of the Fed’s monthly purchase of $120 billion of treasury and GSE debt under current circumstances; and treats with complete respect and seriousness the juvenile word game known as “thinking about thinking about tapering” by which the clowns in the Eccles Building fearfully attempt to placate the liquidity-intoxicated speculators on Wall Street.

So it’s not surprising that today’s 5.0% CPI reading was made inoperative within minutes after the BLS release by a chorus of financial pundits gumming about “base effects” and ridiculing outliers like soaring used car prices (up 29.7% YoY), which, of course, Bloomberg reporters never see the inside of anyway.

Then again, that’s why we look at the two-year stacked CAGRs, which smooth the ups and downs of the worst lockdown months last spring; and also why we use the 16% trimmed mean CPI, which eliminates the highest 8% and lowest 8% of items in the overall CPI each month (both sets of deleted outliers are different each month).

In the present instance, therefore, off-setting the used car prices in the highest 8% of items during May is the -5.0% YoY drop in health insurance costs (if you believe that BLS whopper) and the -5.3% drop in sporting event prices, which, of course, have been largely zero since last April.

In any event, the 16% trimmed mean CPI for May was up by 4.7% annualized versus the April number and was higher by 2.62% on YoY basis.

Still, the more salient point is that on a two-year stacked basis the plain old CPI—used car prices and all—leaves not a scintilla of doubt: Consumer inflation is accelerating and rapidly.

During the last eight months the growth rate for the two year stack has risen from 1.48% to 2.55% per annum. And we don’t recall a word in May 2019 about that year’s reading being particularly deflationary. It was actually up 1.83% from May 2018.

Per Annum CPI Increase, Two-Year Stack:

  • October 2020: 1.48%;

  • November 2020: 1.59%;

  • December 2020: 1.78%;

  • January 2021: 1.92%;

  • February 2021: 1.99%;

  • March 2021: 2.07%;

  • April 2021: 2.23%;

  • May 2021: 2.55%.

Still, according to the Fed apologists there’s nothing troubling about the above because the Fed is now only trying to hit its 2.00% inflation target “averaged over time”.

Let’s see. Here are the CPI growth rates going back to May 2014. It turns out you have to average back seven years before you have a shortfall from the 2.00% target!

CPI Increase per Annum To May 2021 From:

  • May 2018, 3-Yr, average: 2.31%;

  • May 2017, 4-Yr. average: 2.42%;

  • May 2016, 5-Yr. average: 2.31%;

  • May 2015, 6-Yr. Average:2.10%;

  • May 2014, 7-Yr. Average: 1.81%

You get the scam. These mendacious fools will just keep averaging back in time until the get a number that’s a tad under 2.00%, smack their lips loudly and then pronounce the current inflation to be “transitory”.

And they will also toss out any inflation index that undercuts their MOAAR inflation mantra—like all of the data reported above!

So we will say it again: The CPI is a highly imperfect general price measure owing to its one-sided treatment of quality (hedonic) improvements, wherein some reported prices are adjusted downward for improved product features like airbags and more powerful PCs, put few prices are adjusted upward for the junkie toys, towels, kitchenware, appliances and furniture that comes out of China.

But with the 8% highest and 8% lowest prices dropped out monthly to filter out the short-run noise, the 16% trimmed mean version of the CPI at least purports to be a fixed basket price index, not a variable weight deflator like the Fed’s beloved PCE deflator.

In short, the 16% trimmed mean CPI puts paid to the “transitory” scam. Come hell or high water, this serviceable inflation measure has been rising at 2.00% per annum since the year 2000, and even more than that during the 1990s.

Thus, during the 112 months since the Fed formally adopted inflation targeting in January 2012, it has risen by 2.03% per annum and by 2.15% per annum since January 2000.

Equally significantly, there have been only a handful of times during the 256 monthly readings since January 2000 when the year-over-year measure dropped materially below 2.00%.

YoY Change, 16% Trimmed Mean CPI, 2000-2021

For want of doubt, here is the Fed’s preferred short-ruler—-the core PCE (personal consumption expenditure deflator less food and energy). And the Fed’s case for its insane money-pumping essentially boils down to the dueling information covered by the red bars above and the purple bars below.

As it happens, the one-year change in the core PCE deflator is 3.1% and the stacked two-year gain is 1.99% per annum. That latter is apparently not close enough to 2.00% for government work, meaning that the Fed needs to get more years into its average.

Even then, you have to be trained in the medieval theology of counting angels on the head of a pin to ascertain the purported earth-shaking “shortfall” from target. Compared to April 2021, here are the multi-year CAGRs on an April-to-April basis:

  • 2019-2021: 1.99%;

  • 2018-2021: 1.89%; 

  • 2017-2021: 1.92%;

  • 2016-2012: 1.86%:

  • 2015-2021:1.82%

That’s right. For the five year-pairs shown above, the average CAGR for the core PCE deflator was 1.90%. It seems that “lowflation” amounts to that which you need a magnifying glass to ascertain— 10 basis points of shortfall.

Of course, our monetary bean counters are not done “averaging”, either. If you go back to January 2012 when the Fed officially adopted inflation targeting, the core PCE deflator is up by 1.69% per annum, and since January 2000 it has risen by 1.75% per annum.

So there you have it. For want of 25-31 basis points of annual inflation—-averaging back to the beginning of the current century—you have a camarilla of central bankers giving deer in the headlights an altogether new meaning. That is to say, they are apparently not even thinking about thinking about tapering their massive bond-buying fraud owing to the barely detectable differences between purple and red bars of these dueling charts.

As we said a few days back, would that they had applied the 25th Amendment to the Federal Reserve Board.

These sick puppies are in urgent need of palliative care.

YoY Change In Core PCE Deflator, 2000-2021

They are also in need of a dose of realism, and on that score there are three figures in the May CPI report which tell you all you need to know. To wit, compared to May 2020, durable goods prices were up by 10.3%, nondurables were higher by 7.4% and services less energy gained 2.9%.

In fact, in the recent history of these three figures lays a stinging refutation of the entire “lowflation” scam promulgated by the Fed money printers and their acolytes and shills on Wall Street and in Washington, too.

On this matter, the Donald was right, even if by accident or for the wrong reasons. What we are referring to, of course, is the “Shina” factor.

Beijing’s form of state-controlled printing press capitalism has systematically drivendown the cost of manufactured goods and especially durables by, in effect, draining the rice paddies of China’s great interior and herding its latent industrial work force into spanking new factories which paid wages less than meager. And CapEx costs were rock bottom, too, owing to $50 trillion of central bank-fueled domestic debt and the greatest cheap capital-driven malinvestment spree in human history.

The result was an intense, multi-decade long deflation of manufactured goods as the high labor costs embodied in US and European manufacturers were steadily squeezed out of global prices levels as production shifted to China and its East Asian supply chain.

That impact is patently obvious in the composition of the CPI among the three components which were flashing warning lights in today’s inflation report.

Composition of CPI By Major Components, 2000-2021

In the first place, the core of domestic inflation lies in the 58.8% weight of the CPI consisting of mainly domestically supplied services. The 2.9% YoY gain reported for May for CPI services less energy was essentially par for the course.

That is, during the last 21 years (since January 2000) this component (black line) has risen by 2.71% per annum, and since January 2012 it has gained a similar 2.63% per annum.

Needless to say, if there is any part of the inflation rate that the Fed can most powerfully impact, it is domestically supplied services like health care, education, housing, entertainment, travel and foods services. So where’s the “lowflation” in that part of the CPI basket?

Alas, we don’t have lowflation in services at all, but a stubborn 2.6%-3.0% upward price drift in domestic service components which account for nearly three-fifths of the household budget.

By contrast, the durable goods component (brown line) accounts for 11.1% of the CPI, and it’s been an anchor to the windward for more than two decades. As of May 2021, prices were still 8% below their January 2000 level.

The truth is, the alleged lowflation on the top line CPI has been heavily attributable to the deflationary durable goods sector, but, alas, that era is apparently over. The Chinese rice paddies have been drained on a one-time basis and its labor force is now actually shrinking, while the Donald’s ill-timed tariff barriers have forced production to move to higher cost venues, albeit not necessary the USA of A.

Either way, the anchor to the windward is largely gone, meaning that rising durable goods prices going forward will no-longer weigh as heavily on the CPI.

It should be further noted that during the past two-decades nondurable prices have also held-down the CPI top line—again in large part owing to the “Shina” factor and downward pressures from cheap apparel, footwear, home furnishings and the like.

During the past 21 years, the nondurables component (yellow line) of the CPI rose by 1.99% per annum, which is as close as you please to the target, but was also on anchor on the overall CPI top-line ( purple line) which increased by 2.19% per annum.

Alas, during the period since January 2012, nondurables rose by just 0.63% per annum owing to flat-lining energy and commodity prices, thereby pulling the overall CPI down to 1.80% per annum, where it too fell awry of the Fed’s sacred 2.00% target.

But here’s the thing. A smattering of surging nondurable goods prices in the May 2021 report are a stark reminder that the times they are a changin’.

On a YoY basis, these components suggest that “lowflation” in durables may have passed its sell-by date and that the 7.4% YoY gain in nondurables overall may be lifting, not suppressing, the CPI top-line going forward.

YoY Change In Major Nondurables Components:

  • Energy commodities: +54.5%;

  • Apparel: +5.6%;

  • Home furnishings and supplies: +3.7%;

  • Footwear: +7.1%;

  • Food away from home: +4.0%

  • Household furnishings and operations: +4.6%.

In sum, the chart above captures the one-time history of the Fed’s phony “lowflation” narrative—an aberrant condition that is now fading fast. Sooner or latter they will run out of excuses and back inflation reports to average down. And that, in turn, means tapering of the Fed’s great bond-buying fraud—the lynch pin of the greatest bond and stock bubble in recorded history.

Do we think that will trigger the greatest financial asset value collapse in modern times?

Why, yes, we do!

Tyler Durden Sat, 06/12/2021 - 10:35
Published:6/12/2021 10:01:00 AM
[Markets] Austin Mass Shooting Leaves 13 Hospitalized - Gunman Still At Large Austin Mass Shooting Leaves 13 Hospitalized - Gunman Still At Large

Police on Saturday morning are still searching for the shooter or shooters who opened fire on a crowd along 6th Street at about 1:30am, which is the popular central avenue filled with bars and restaurants that turns to foot traffic only during weekends. 

At least 13 were hospitalized, with two said to be in critical conduction, amid the chaotic scene which appeared "random" and with few concrete details in terms of what happened and who was behind the attack. 

Via Reuters

It appears police were overwhelmed by attempts to save victims, and that the mysterious shooter fled in the confusion and mayhem. Interim Austin Police Chief Joseph Chacon described that "Our officers responded very quickly." He detailed: "They were able to immediately begin life-saving measures for many of these patients, including applications of tourniquets; applications of chest seals and other types of first aid equipment." 

"We do have two patients in critical condition," he added. "We have a total of 11 people transported to one hospital, one was transported to a different hospital and one person reported to an urgent care clinic. So there is a total of 13 shooting victims."

"I'm happy to report no one has died," the police chief said.

But the city is still on edge as the attacker has yet to be apprehended and a large manhunt is underway.

Austin PD is currently seeking the public's help...

NBC noted that police are reviewing all available video footage while interviewing witnesses:

Appealing for witnesses to come forward, Chacon said the motive for the shooting was "unclear," adding that officers were reviewing video footage of the area.

Addressing fears that the shooter may strike again, also given the still unknown motives of what appeared to be a "random" act which wounded many people amid a large crowd, Austin police further said, "At this time, this appears to be an isolated incident," later on Saturday.

The manhunt is still underway, though police are still reporting few leads in terms of the gunman's identity as of early Saturday morning.

Federal agencies are now assisting in the investigation and search for a suspect.

developing...

Tyler Durden Sat, 06/12/2021 - 10:10
Published:6/12/2021 9:22:23 AM
[Markets] Mark Hulbert: How GameStop, AMC and other meme stocks are in control of market volatility Close correlation is another sign that the U.S. market is now riskier.
Published:6/12/2021 8:53:58 AM
[Markets] The Fed: Don’t be fooled by some of the hawkish sounds coming out of the Fed next week The Fed may make some hawkish-sounding statements next week but they remain doves at heart and in practice, economists said Friday.
Published:6/12/2021 8:23:16 AM
[Markets] Bitcoin Is De-dollarization. Ethereum Is DeFi-nancialization Bitcoin Is De-dollarization. Ethereum Is DeFi-nancialization

Authored by Mark Jeftovic via BombThrower.com,

Lately I have been thinking a lot about the difference between Bitcoin and Ethereum while at the same time the world is witnessing the inexorable move to crypto in realtime. Some may question the latter half of that assertion, given that the latest FUD cycle against cryptos has been one of the most intense that I’ve witnessed since getting involved in the space in 2013.

Behind the FUD we see actions. We see Russia dumping dollar assets (can you blame them?).

We hear Munger making almost childishly uninformed remarks on crypto, yet BRK is investing in one of the world’s most crypto friendly banks.

We see El Salvador as the first country in the world to make Bitcoin legal tender.

In my mind this has not only sounded the starting gun on de-dollarization in earnest, it goes beyond that. Back in the late 90‘s people like me were about the age of many of the crypto kids today, and we were talking about the Internet Asteroid headed straight at the telecoms and traditional media.

Today, pretty well everybody is aware of Bitcoin. They may have positive or negative opinions on it, but most people are figuring out that it’s here to stay and there is a spectrum of sentiment around that ranging from enthusiasm to denial. But I don’t get the sense that traditional institutional finance sector sees the other asteroid coming, and it’s coming straight at them.

The new 60/40 portfolio will mean Bitcoin/Ethereum

Or maybe Ethereum/Bitcoin. Whatever your risk tolerance and investment objectives entail. I’ve been listening to the Bankless podcast lately and in more than one episode they’ve said something about Bitcoin as compared to Ethereum that I think is very helpful. It’s really helped me think about the two in terms of construction of a crypto portfolio.

They’ve said, in essence, that Bitcoin is for when you’re bearish on society and Ethereum is for when you’re bullish.

It’s not that I agree with that literally (I don’t), but it really helped me refine the distinction I’ve always had around Bitcoin being the value and Ethereum being the execution in a coming tectonic shift into crypto.

In the olden days, bonds and equities had an inverse correlation. Bonds kept your portfolio afloat when the economy hit a soft patch and stocks went down (yes, in the olden days, stocks could experience bear markets, sometimes for months or even years). Conventional wisdom was to have a portfolio mix between equities and bonds, along some rule of thumb like 60/40 adjusted for your age, risk tolerance, etc.

We’re headed into a world where Bitcoin and Ethereum will fulfil the roles that bonds and equities did traditionally.

The basic thesis of my Crypto Capitalist Letter is that Bitcoin will be on the receiving end of an impending mother-of-all wealth-transfers. Many Bitcoiners think that if Bitcoin is “digital gold” then that means the incoming funds flow will be from the 10 Trillion dollar gold market. I think this is wrong.

Bitcoin’s looming funds inflow isn’t going to come from gold. Maybe some will, maybe some shorter term gold holders will jump ship to Bitcoin in much the same way that this latest down cycle since April has been driven largely by younger coins (weaker hands) selling out. (Overall I think gold and silver will also be on the receiving end of this great transfer).

But Bitcoin’s inflow will come largely from the more than ten times larger bond market. Not gold. Not 10 Trillion. 120 Trillion, of which 20 trillion of it already yields negative returns ( “return free risk”). A simple layer 1 Bitcoin lending program with an institutional level custodian like Gemini or Galaxy (whom we hold in our TCC portfolio) would yield 400 basis points right there, and that’s without even counting the price appreciation.

“The TAM is Everything

But what I didn’t realize until the Bankless panel this week about the current state of DeFi is that there’s another 100 Trillion-plus market, and it’s going to be sending its value in a parallel mother-of-all wealth transfers. That wealth transfer is the flight of assets from the traditional banking system into Ethereum and into DeFi.

In my mind this is what DeFi actually means. Where financialization is the widespread hollowing out of all value and turning it into multiple layers of rehypothecated debt, DeFi is De-Financializing assets.

DeFi is where money gets intelligence and value can compound and where tokenized assets increase their purchasing power over time. It’s where savers are rewarded, instead of penalized and demonized. It’s where capital formation is possible.

Most institutions won’t be making this transformation. The majority of them will gravitate toward the Central Bank Digital Currencies (CBDCs), which as we say in The Crypto Capitalist Manifesto, CBDCs will be specifically constructed to preclude savings, make capital formation impossible and will be a honeypot of dependancy for the masses who allow their economic lives to be bounded by them.

But many of those institutional clients, the ones that see The Great Bifurcation coming, will make this shift, and they’ll bring their capital with them.

“I’m not excited about institutions in DeFi at all, I think they are just not the right users for this. This is about giving individuals financial tools that they’ve never had before such that they don’t have to go to an institution that rips them off”
— Spencer Noon

I see this playing out in real time in the world and in my personal experience, here’s three quick data points

  1. Trying to set up a simple USD/CAD hedge with my bank for the business, something I had already done 10 years ago when the CAD strengthened above the USD. This time it took months of meetings and they want me to put up 170K collateral on a 40K hedge and put on a personal guarantee.

  2. Setting up that same business for EFT transfers for a large client and the bank solemnly informed us “you must possess a fax machine to use this system”. Uhm ok. I’ll see if I can dig one out of the back of my storage locker. Until recently their online FX system also only ran on Internet Explorer (which goes end-of-life next year)

  3. My credit card company, until recently, charged me a fee when I overpaid my balance they owed me money in terms of an “inactivity fee”.

It is this is the type of institutional lethargy that is all tailwind and gasoline for DeFi.

In the case of the forex hedges, I’m now looking at places like Synthetix and hiring a smart contract developer to simply create the hedges for me. The way I envision it, anybody would be able to earn a return on their assets by staking the liquidity pool for USD/CAD, and Canadian businesses with exposure to USD currency weakness would be able to easily hedge for that without pledging their house (if you know anybody who can help me out here, my DM’s are open).

I’m cancelling that credit card and getting set up with one of the many new crypto backed credit cards that give you cash back on every purchase in crypto.

One of the reasons people are skeptical of crypto and fool themselves into thinking it’s some kind of passing fad (“ponzi” or the negligently uninformed “tulips”) is because this is happening so fast. In realtime. (They didn’t read Future Shock back in the 70’s, 80’s or 90’s or if they did, they either forgot about it or didn’t fully understand what it meant).

  • Bitcoin is going to eat the bond market and capture the flight from fiat currencies. It will become that digital gold or bond equivalent in a crypto portfolio.

  • Ethereum is going to demolish the financial institutions and probably be the front line against CBDCs, functionally.

  • CBDCs will be asswipe money. Get it, spend it, use it on disposable stuff (if it’s algorithmically permitted) and that you don’t mind being surveilled buying.

*  *  *

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Tyler Durden Sat, 06/12/2021 - 09:20
Published:6/12/2021 8:23:16 AM
[Markets] Fossil Fuels Aren't Dying, They're Shifting To National And State Backed Companies Fossil Fuels Aren't Dying, They're Shifting To National And State Backed Companies

Despite the activist shareholder battles, calls for ESG changes and just outright negative press about fossil fuels, it looks like rumors of oil's death have been greatly exaggerated. Fossil fuels aren't dying - rather, their output is just being shifted to national and state owned companies. 

Even as the supermajor oil companies shrink in size and adhere to incessant criticism, fossil-fuel demand holds strong, according to Yahoo Finance. Activists have been the busiest they have been in years...

Recent weeks saw Exxon and Chevron rebuked by their own shareholders over climate concerns, while Shell lost a lawsuit in the Hague over the pace of its shift away from oil and gas.

...and this has been a tailwind for national oil companies (NOCs) and state owned players who aren't under the same pressure to play ball with activists. The report notes that "Saudi Aramco and Abu Dhabi National Oil Co. are spending billions to boost their respective output capacities", as is Qatar Petroleum. 

NOC's share of global oil output is expected to rise to 65%, from about 50% today, by 2050. Companies like Exxon and Chevron are keeping output at lows and curtailing future investment in traditional oil and gas infrastructure. 

Patrick Heller, an adviser at the Natural Resource Governance Institute, told Yahoo Finance: “We hear government officials and NOC officials say, ‘We look at the divestment of international oil companies from some projects as an opportunity for us to grow. And I do think that’s potentially really risky.”

Jason Bordoff, director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, thinks that the shift to government owners could wind up doing just the opposite of what activists are intending on doing. 

"A shift in production to major nationally owned companies — such as in Latin America or the Gulf or Russia — carries geopolitical supply risks, while smaller independents have often demonstrated poorer safety and environmental practices,” he said.

And emissions and carbon footprints from NOCs will eventually need to be addressed. 

“NOCs are sort of the biggest keys when it comes to looking at country-level emissions. It’s easy to see how taking action on NOC emissions, especially methane, will yield pretty quick and more effective climate results,” Ratnika Prasad, director of energy strategy at the Environmental Defense Fund, said.

Recall, just days ago we wrote how Saudi and Russian oil producers were actually benefitting from activism in the industry involving Western producers. Wins in the courtroom for activists against Shell, Chevron and Exxon have been a tailwind for Saudi Aramco, Abu Dhabi National Oil Co and Gazprom, we wrote. The pressure for U.S. names to cut carbon emissions faster pushes more business to companies in Saudi Arabia and Russia, and to OPEC, Reuters reported. 

Among the recent wins was a Dutch court ruling that required Shell to "drastically cut emissions". Exxon and Chevron also both activist battles with shareholders who have accused the giants of not being proactive enough in addressing climate change. 

Amrita Sen from consultancy Energy Aspects said: “Oil and gas demand is far from peaking and supplies will be needed, but international oil companies will not be allowed to invest in this environment, meaning national oil companies have to step in.”

The Saudis, meanwhile, don't seem quite as alarmed by the issue of climate change. When The International Energy Agency issued guidance last month to scrap all new oil and gas developments, Saudi Energy Minister Prince Abdulaziz bin Salman responded by stating: 

"It (the IEA report) is a sequel of the La La Land movie. Why should I take it seriously? We (Saudi Arabia) are ... producing oil and gas at low cost and producing renewables. I urge the world to accept this as a reality: that we’re going to be winners of all of these activities."

A spokesperson from Gazprom jabbed: "It looks like the West will have to rely more on what it calls 'hostile regimes' for its supply".

"Western oil majors like Shell have dramatically expanded in the last 50 years" as a result of the West trying to cut reliance on Middle Eastern and Russian oil, Reuters notes. Now these producers must balance a growing chorus of criticisms about climate change with continued output. 

Nick Stansbury at Legal & General, which manages $1.8 trillion, said: "It is vital that the global oil industry aligns its production to the Paris goals. But that must be done in step with policy, changes to the demand side, and the rebuilding of the world’s energy system. Forcing one company to do so in the courts may (if it is effective at all) only result in higher prices and foregone profits."

While Saudi Arabia claims to have targets to cut carbon emissions, it isn't beholden to U.N.-backed targets or activist investors like Western companies are. Gazprom has indicated a shift to natural gas to try and manage its carbon emissions. 

Western names account for about 15% of all output globally, while Russia and OPEC make up about 40%. At the same time, global oil consumption has risen to 100 million barrels per day from 65 million barrels per day in 1990. 

“The same oil and gas will still be produced. Just with lower ESG standards,” one Middle Eastern oil executive concluded.

Tyler Durden Sat, 06/12/2021 - 08:45
Published:6/12/2021 7:58:38 AM
[Markets] Market Snapshot: Here’s what the market wants — and doesn’t want — to hear from Powell at next week’s Fed meeting Transitory, or not transitory? Therein lies the question that the Federal Reserve needs to answer next Wednesday, at the conclusion of the FOMC's two-day gathering.
Published:6/12/2021 7:32:54 AM
[Markets] West Adds Belarus To New Axis Of Evil West Adds Belarus To New Axis Of Evil

Authored by Rick Rozoff via AntiWar.com,

So far this year, and ahead of next week’s NATO summit in Belgium, the commanders of the Pentagon’s Unified Combatant Commands and NATO Secretary General Jens Stoltenberg have denounced and thundered against Russia and China as rivals and adversaries in every part of the world, with Iran and North Korea identified as second-tier threats. All four are treated as nuclear powers, real or imagined. They are the Axis of Evil of 2021, supplanting that of 2001.

In recent weeks a fifth nation has been added: Belarus. The momentum to brand it as such has been mounting since last August when the West supported presidential candidate Sviatlana Tsikhanouskaya against the then-incumbent president, Alexander Lukashenko. It reached a record level after the Belarusian government’s landing of a Ryanair passenger plane with opposition figure Roman Protasevich on board last month. NATO has taken up the refrain with a vengeance, speaking in menacing terms not heard since the depth of the Cold War of a threat posed by "Minsk and Moscow" to Europe and the world. (Fifty years ago it would have been the Free World.)

AFP/Getty Images

Belarus is the only European nation (excluding microstates) except Russia that is not a NATO member or aspiring member, which doesn’t host regular NATO- and U.S.-led war games and which has not supplied troops for NATO operations in Kosovo, Afghanistan, Iraq and elsewhere. In short, it’s bad example that must be made an example of.

On June 9 Sviatlana Tsikhanouskaya spoke by telephone from the Czech Republic, where she now resides, to the U.S. Senate Foreign Relations Committee and urged it to promote sanctions by the U.S. and the European Union against her homeland, which she took the occasion of libeling as "the North Korea of Europe." By her definition Belarus could have been a member of the first as well as the current Axis of Evil.

Belarusian press recently cited Sergei Rachkov, chairman of the International Affairs and National Security Commission of the Council of the Republic of the National Assembly of Belarus, warning that the US and its European NATO allies are intensifying threats to his country and in doing so adding to tensions in Eastern Europe as a whole.

He said that the concerted effort by the West – one which in many ways is ominously evocative of the characterization of and efforts against Serbia/Yugoslavia in the late 1990s – is in large part motivated by the desire to wrest Belarus from its close relationship to Russia, hence eliminating the last remaining buffer between Russia and the thirty-nation military mega-bloc.

Perhaps Rachkov’s most incisive observations are these:

"Of course, this is a geopolitical strategy. Before that, there was a failed scenario of a color revolution. We saw the attempts to disrupt the operation of enterprises, to organize strikes, and draw women and young people into protests. But the consolidation of our society around the head of state has put a stop to these processes, the main purpose of which was to try to change the behavior of Belarus, which has long been an irritant for the West that wants us to play by its rules, with which we conceptually disagree…."

He added that Belarus recently has chosen, in the face of unrelenting and mounting hostility from the US and the European Union, to develop closer relations with China, India and the nations of Southeast Asia, Africa and the Middle East.

Referring to the likes of Sviatlana Tsikhanouskaya calling for punitive and onerous sanctions against their own country and people, the Belarusian official offered this perspective: "By the way, the very phenomenon is strange, if not ugly. I have been working in international relations for a long time, and I do not remember any cases when citizens would advocate a better life for people but in reality use methods that can lead to chaos."

Many people, in fact most in the world, are still living in the era of the first Axis of Evil; in their minds living in 2001. The world of 2021 is far more dangerous, with the very plausible threat of war in Europe that might, that almost certainly would, result in a military showdown between the world’s two major nuclear powers.

Tyler Durden Sat, 06/12/2021 - 08:10
Published:6/12/2021 7:25:14 AM
[Markets] : An inflation storm is coming for the U.S. housing market Some economists suggest the government may be misunderstanding the size of the problem.
Published:6/12/2021 7:25:14 AM
[Markets] Environmentalist Groups File Complaint To Block Tesla's German Gigafactory Construction Environmentalist Groups File Complaint To Block Tesla's German Gigafactory Construction

Tesla is once again under siege...by environmentalists? 

You read it right: Germany environmentalist groups Green League and NABU have now officially filed complaints against the company, looking to block provisional approvals necessary for the construction of Tesla's German Gigafactory.

The planned construction is supposed to be taking place in the district of Gruenheide, Bloomberg and Business Insider report. The write-up says that if the Brandenburg State Office for the Environment fails to act on the complaints, the associations plan on taking it one step further with an emergency petition.

As if the irony of Tesla's planned getting bulldozed by groups looking to preserve the environment wasn't rich enough, the action came after deficiencies were discovered in how Tesla may deal with environmental hazards at its forthcoming plant. "...A recent accident report warned Tesla wasn’t sufficiently prepared with regard to the possibility of exploding gas clouds and the escape of irritant gas in the factory’s paint shop," Bloomberg reported.

We noted back in early May that the factory could be delayed due to legal woes lodged by environmentalists. Since announcing plans for expansion in 2019, Tesla's proposed factory in Berlin has been "torpedoed by environmental regulations, unexploded WW2 bombs and labor laws," according to the The Daily Mail

The "huge construction delays" and "government red tape" means that the facility may not wind up producing any vehicles until next year, the report notes. The facility had previously been scheduled to open on July 1 of this year.

Musk announced plans for the facility back in November 2019 around the same time Tesla's Shanghai factory was coming online. Musk reportedly chose Germany so he could avoid the Brexit-induced administrative hassle that would come with moving into the UK.

To this date, he is still waiting for environmental approval for his plant, despite stating last July: 'Giga Berlin will come together at an impossible-seeming speed.'

Among the environmental roadblocks the company faces are controversies with removing trees and animal habitats, as well as the company having to remove bomb shells from the construction site. 

While physical construction nears an end, a mountain of legal issues remains. Recall, in February, Tesla was ordered by a German court to stop cutting down trees to make space for its factory.

And this isn't the first time this month Tesla has been foe instead of friend with those looking to make environmentally sound decisions. Recall, we noted just hours ago that Tesla had been dropped from a sustainability ETF in Australia specifically, among other reasons, due to environmental concerns surrounding the building of its Gigafactory in Germany. Australian fund manager BetaShares dropped Tesla because of "ethical failures" on the part of Tesla.

“Tesla is still definitely a carbon leader…but it has fallen foul of our [environmental, social and governance] screens which resulted in its removal,” the fund's CIO told Business Insider.

He continued: “During May last year at the height of the COVID pandemic, Tesla reopened its factory in Fremont, California, despite the orders of the local authorities, resulting in quite a large number of COVID cases. New reports have indicated that there was a significantly larger outbreak than was previously reported, so we have numbers from one to 50 COVID cases related to the factory.”

The investment officer said he had been mulling the move "for a while" and finally dumped its $60 million stake after “new evidence came to light” and “controversies and reputation issues” arose.

The fund also took exception with Tesla's environmental impact in Germany, where it is building a Gigafactory. 

Crous noted: “German media reports that Tesla’s factory in Brandenburg will consume about 3.6 million cubic metres of water per year, which is roughly around 30% of the total water in the region. Some experts believe this will lead to restrictions on drinking water.”

Tyler Durden Sat, 06/12/2021 - 07:35
Published:6/12/2021 6:52:11 AM
[Markets] Tony Blair Suggests Unvaccinated Brits Should Remain Under Lockdown Restrictions Tony Blair Suggests Unvaccinated Brits Should Remain Under Lockdown Restrictions

Authored by Paul Joseph Watson via Summit News,

Former British Prime Minister Tony Blair implied that those who choose not to be vaccinated should be discriminated against by remaining under lockdown restrictions if the UK’s June 21st “freedom day” is to be accomplished.

During an interview with ITV News, Blair was asked if he would delay the June 21st deadline, when all social distancing, mask mandates and other lockdown rules are supposed to come to an end.

Blair said that if the data suggested the June 21st date was at risk, the government should “look again at distinguishing between those people who are vaccinated and those people who aren’t because it really makes no sense to treat the two groups as if they’re the same.”

The former Labour leader then attempted to offer a rebuttal to those who would describe this as discrimination, but only succeeded in affirming that he is advocating for discrimination against the unvaccinated.

“If someone simply chooses not to get vaccinated, I mean frankly that’s their choice, you’re not discriminating against them, they’ve chosen not to do it,” said Blair.

In other words, Blair is suggesting that people who haven’t taken the vaccine should be punished by remaining under lockdown rules while the rest of the population gets their freedoms back.

Blair’s agenda in advocating discrimination against the unvaccinated isn’t surprising given that he has been aggressively pushing the use of vaccine passports for almost a year.

Back in January, Blair asserted that Britain should take the lead in presiding over a global vaccine passport system.

“It’s going to be a new world altogether,” Blair proclaimed, adding “The sooner we grasp that and start to put in place the decisions [needed for a] deep impact over the coming years the better.”

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Tyler Durden Sat, 06/12/2021 - 07:00
Published:6/12/2021 6:21:27 AM
[Markets] Who's Ready for a Stock Market Crash? 5 Reasons a Big Drop May Be Imminent A sizable stock market decline is inevitable. But that also means opportunity is right around the corner. Published:6/12/2021 5:21:39 AM
[Markets] Victor Davis Hanson: This Isn't Your Father's Left-Wing Revolution Victor Davis Hanson: This Isn't Your Father's Left-Wing Revolution

Authored by Victor Davis Hanson,

Starry-eyed radicals in the 1960s and 1970s dreamed that they either were going to take over America or destroy it.

One of their favorite mottos was "Change it or lose it," even as protests focused on drugs, music, race, class, sex, fashion -- almost anything and everything.

Sixties radicals tutored America on long hair; wire-rim eyeglasses; who was a drag, a square, a bummer; and who was hip, cool, groovy, mellow and far out. Most of these silly revolutionaries were not unhinged Weathermen killers or SDS would-be communists, but just adolescents along for the good-time ride.

With the end of the draft in 1972, the winding down of the Vietnam War, the oil embargoes and a worsening economy, the '60s revolution withered away. Cynics claimed the revolution was mostly about middle-class students with long hair kicking back during the peak of the postwar boom, indulging their appetites and ensuring they would not end up in Vietnam.

It is not even true that the '60s at least ensured needed reform. The civil rights movement and equal rights for women and gays were already birthed before the hippies, as were folk songs and early rock music.

Instead, what the '60s revolution did was accelerate these trends -- but also radicalize, manipulate and coarsen them.

The grasping "yuppies" of the 1980s were the natural successors to let-it-all-hang-out "hippies." The '60s were at heart a narcissistic free-for-all, when "freedom" often entailed self-indulgence and avoiding responsibility.

By 1981, the Reagan revolution finished off the dead-enders of the Woodstock generation. Most eventually grew up. They rebooted their self-centered drug, sex and party impulses to fixations on money, status and material things.

Sixties protestors mainlined divorce, abortion on demand, promiscuity, drug use and one-parent homes. But by the late 1970s and the 1980s, most veteran cultural revolutionaries had gotten married, were raising a family, bought a house, got a job and made money.

This time around, their offspring's left-wing assault is different -- and far more ominous.

The woke grandchildren of the former outsiders are now more ruthless systematic insiders. The woke and wired new establishment knows how to use money and power to rebirth America as something the founders and most current Americans never envisioned.

Name one mainline institution that the woke left does not now control -- and warp. The media? The campus? Silicon Valley? Professional sports? The corporate boardroom? Foundations? The K-12 educational establishment? The military hierarchy? The government deep state? The FBI top echelon?

The left absorbed them all. But this time around, members of the left really believe that "by any means necessary" is no mere slogan. Instead, it is a model of how to disrupt or destroy American customs, traditions and values.

Woke revolutionaries are not panhandlers, street people or Grateful Dead groupies. They are not even a few nutty and murderous Symbionese Liberation Army terrorists fighting against "the Man."

They are "the Man."

Our 21st century revolutionaries are multibillionaires with flip-flops, tie-dye T-shirts and nose rings, but with the absolute power and desire to censor how half the country communicates -- or cancel them entirely.

They don't flock to campus free-speech areas; they are the campus administrators who ban free speech.

They don't picket outside the Pentagon; they are inside the Pentagon.

They don't chant "eat the rich"; they are the rich who eat at Napa Valley's French Laundry.

They don't protest "uptight" values, because they are more intolerant and puritanical than any Victorian.

They don't believe in racial quotas based on "proportional representation," because they are racists who demand underrepresentation of "bad" racial groups and overrepresentation of "good" groups. The color of our skin is their gospel, not the content of our character.

They are top-down revolutionaries. None of their agendas, from open borders and changing the Constitution to critical race theory and banning clean-burning fossil fuels, are ever favored among a majority of the population.

Their guiding principle is "never let a crisis go to waste." Only in times of a pandemic, a national quarantine or volatile racial relations can the new upscale leftist revolutionaries use fear to push through policies that no one in calm times could stomach.

Our revolutionaries hate dissent. They destroy any who question their media-spun hoaxes.

Truth is their enemy, and fear is their weapon.

Sixties paranoid revolutionaries warned about George Orwell's "1984," but our revolutionaries are "1984."

While this elitist leftist revolution is more dangerous than its sloppy '60s predecessor, it is also more vulnerable, given its obnoxious, top-heavy apparatus -- but only if the proverbial "people" finally say to their madness, "Enough is enough."

Tyler Durden Fri, 06/11/2021 - 23:40
Published:6/11/2021 10:49:28 PM
[Markets] The War Over Genetic Privacy Is Just Beginning The War Over Genetic Privacy Is Just Beginning

Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute,

When you upload your DNA, you’re potentially becoming a genetic informant on the rest of your family.”

- Law professor Elizabeth Joh

“Guilt by association” has taken on new connotations in the technological age.

All of those fascinating, genealogical searches that allow you to trace your family tree by way of a DNA sample can now be used against you and those you love.

As of 2019, more than 26 million people had added their DNA to ancestry databases. It’s estimated those databases could top 100 million profiles within the year, thanks to the aggressive marketing of companies such as Ancestry and 23andMe.

It’s a tempting proposition: provide some mega-corporation with a spit sample or a cheek swab, and in return, you get to learn everything about who you are, where you came from, and who is part of your extended your family.

The possibilities are endless.

You could be the fourth cousin once removed of Queen Elizabeth II of England. Or the illegitimate grandchild of an oil tycoon. Or the sibling of a serial killer.

Without even realizing it, by submitting your DNA to an ancestry database, you’re giving the police access to the genetic makeup, relationships and health profiles of every relative—past, present and future—in your family, whether or not they ever agreed to be part of such a database.

After all, a DNA print reveals everything about “who we are, where we come from, and who we will be.”

It’s what police like to refer to a “modern fingerprint.”

Whereas fingerprint technology created a watershed moment for police in their ability to “crack” a case, DNA technology is now being hailed by law enforcement agencies as the magic bullet in crime solving.

Indeed, police have begun using ancestry databases to solve cold cases that have remained unsolved for decades.

For instance, in 2018, former police officer Joseph DeAngelo was flagged as the notorious “Golden State Killer” through the use of genetic genealogy, which allows police to match up an unknown suspect’s crime scene DNA with that of any family members in a genealogy database. Police were able to identify DeAngelo using the DNA of a distant cousin found in a public DNA database. Once police narrowed the suspect list to DeAngelo, they tracked him—snatched up a tissue he had tossed in a trash can—and used his DNA on the tissue to connect him to a rash of rapes and murders from the 1970s and ‘80s.

Although DeAngelo was the first public arrest made using forensic genealogy, police have identified more than 150 suspects since then. Most recently, police relied on genetic genealogy to nab the killer of a 15-year-old girl who was stabbed to death nearly 50 years ago.

Who wouldn’t want to get psychopaths and serial rapists off the streets and safely behind bars, right? At least, that’s the argument being used by law enforcement to support their unrestricted access to these genealogy databases.

“In the interest of public safety, don’t you want to make it easy for people to be caught? Police really want to do their job. They’re not after you. They just want to make you safe,” insists Colleen Fitzpatrick, a co-founder of the DNA Doe Project, which identifies unknown bodies and helps find suspects in old crimes.

Except it’s not just psychopaths and serial rapists who get caught up in the investigative dragnet.

Anyone who comes up as a possible DNA match—including distant family members—suddenly becomes part of a circle of suspects that must be tracked, investigated and ruled out.

Although a number of states had forbidden police from using government databases to track family members of suspects, the genealogy websites provided a loophole that proved irresistible to law enforcement.

Hoping to close that loophole, a few states have started introducing legislation to restrict when and how police use these genealogical databases, with Maryland requiring that they can only be used for serious violent crimes such as murder and rape, only after they exhaust other investigatory methods, and only under the supervision of a judge.

Yet the debate over genetic privacy—and when one’s DNA becomes a public commodity outside the protection of the Fourth Amendment’s prohibition on warrantless searches and seizures—is really only beginning.

Certainly, it’s just a matter of time before the government gets hold of our DNA, either through mandatory programs carried out in connection with law enforcement and corporate America, by warrantlessly accessing our familial DNA shared with genealogical services such as Ancestry and 23andMe, or through the collection of our “shed” or “touch” DNA.

According to research published in the journal Science, more than 60 percent of Americans who have some European ancestry can be identified using DNA databases, even if they have not submitted their own DNA. According to law professor Natalie Ram, one genealogy profile can lead to as many as 300 other people.

That’s just on the commercial side.

All 50 states now maintain their own DNA databases, although the protocols for collection differ from state to state. Increasingly, many of the data from local databanks are being uploaded to CODIS (Combined DNA Index System), the FBI’s massive DNA database, which has become a de facto way to identify and track the American people from birth to death.

Even hospitals have gotten in on the game by taking and storing newborn babies’ DNA, often without their parents’ knowledge or consent. It’s part of the government’s mandatory genetic screening of newborns. In many states, the DNA is stored indefinitely.

What this means for those being born today is inclusion in a government database that contains intimate information about who they are, their ancestry, and what awaits them in the future, including their inclinations to be followers, leaders or troublemakers.

Get ready, folks, because the government— helped along by Congress (which adopted legislation allowing police to collect and test DNA immediately following arrests), President Trump (who signed the Rapid DNA Act into law), the courts (which have ruled that police can routinely take DNA samples from people who are arrested but not yet convicted of a crime), and local police agencies (which are chomping at the bit to acquire this new crime-fighting gadget)—has embarked on a diabolical campaign to create a nation of suspects predicated on a massive national DNA database.

Referred to as “magic boxes,” Rapid DNA machines—portable, about the size of a desktop printer, highly unregulated, far from fool-proof, and so fast that they can produce DNA profiles in less than two hours—allow police to go on fishing expeditions for any hint of possible misconduct using DNA samples.

Journalist Heather Murphy explains: “As police agencies build out their local DNA databases, they are collecting DNA not only from people who have been charged with major crimes but also, increasingly, from people who are merely deemed suspicious, permanently linking their genetic identities to criminal databases.”

The ramifications of these DNA databases are far-reaching.

At a minimum, they will do away with any semblance of privacy or anonymity. The lucrative possibilities for hackers and commercial entities looking to profit off one’s biological record are endless.

Moreover, while much of the public debate, legislative efforts and legal challenges in recent years have focused on the protocols surrounding when police can legally collect a suspect’s DNA (with or without a search warrant and whether upon arrest or conviction), the question of how to handle “shed” or “touch” DNA has largely slipped through without much debate or opposition.

As scientist Leslie A. Pray notes:

We all shed DNA, leaving traces of our identity practically everywhere we go. Forensic scientists use DNA left behind on cigarette butts, phones, handles, keyboards, cups, and numerous other objects, not to mention the genetic content found in drops of bodily fluid, like blood and semen. In fact, the garbage you leave for curbside pickup is a potential gold mine of this sort of material. All of this shed or so-called abandoned DNA is free for the taking by local police investigators hoping to crack unsolvable cases. Or, if the future scenario depicted at the beginning of this article is any indication, shed DNA is also free for inclusion in a secret universal DNA databank.

What this means is that if you have the misfortune to leave your DNA traces anywhere a crime has been committed, you’ve already got a file somewhere in some state or federal database—albeit it may be a file without a name. As Heather Murphy warns in the New York Times: “The science-fiction future, in which police can swiftly identify robbers and murderers from discarded soda cans and cigarette butts, has arrived…  Genetic fingerprinting is set to become as routine as the old-fashioned kind.

Even old samples taken from crime scenes and “cold” cases are being unearthed and mined for their DNA profiles.

Today, helped along by robotics and automation, DNA processing, analysis and reporting takes far less time and can bring forth all manner of information, right down to a person’s eye color and relatives. Incredibly, one company specializes in creating “mug shots” for police based on DNA samples from unknown “suspects” which are then compared to individuals with similar genetic profiles.

If you haven’t yet connected the dots, let me point the way.

Having already used surveillance technology to render the entire American populace potential suspects, DNA technology in the hands of government will complete our transition to a suspect society in which we are all merely waiting to be matched up with a crime.

No longer can we consider ourselves innocent until proven guilty.

Now we are all suspects in a DNA lineup until circumstances and science say otherwise.

Suspect Society, meet the American police state.

Every dystopian sci-fi film we’ve ever seen is suddenly converging into this present moment in a dangerous trifecta between science, technology and a government that wants to be all-seeing, all-knowing and all-powerful.

By tapping into your phone lines and cell phone communications, the government knows what you say. By uploading all of your emails, opening your mail, and reading your Facebook posts and text messages, the government knows what you write. By monitoring your movements with the use of license plate readers, surveillance cameras and other tracking devices, the government knows where you go.

By churning through all of the detritus of your life—what you read, where you go, what you say—the government can predict what you will do. By mapping the synapses in your brain, scientists—and in turn, the government—will soon know what you remember.

And by accessing your DNA, the government will soon know everything else about you that they don’t already know: your family chart, your ancestry, what you look like, your health history, your inclination to follow orders or chart your own course, etc.

Of course, none of these technologies are foolproof.

Nor are they immune from tampering, hacking or user bias.

Nevertheless, they have become a convenient tool in the hands of government agents to render null and void the Constitution’s requirements of privacy and its prohibitions against unreasonable searches and seizures.

What this amounts to is a scenario in which we have little to no defense of against charges of wrongdoing, especially when “convicted” by technology, and even less protection against the government sweeping up our DNA in much the same way it sweeps up our phone calls, emails and text messages.

With the entire governmental system shifting into a pre-crime mode aimed at detecting and pursuing those who “might” commit a crime before they have an inkling, let alone an opportunity, to do so, it’s not so far-fetched to imagine a scenario in which government agents (FBI, local police, etc.) target potential criminals based on their genetic disposition to be a “troublemaker” or their relationship to past dissenters.

Equally disconcerting: if scientists can, using DNA, track salmon across hundreds of square miles of streams and rivers, how easy will it be for government agents to not only know everywhere we’ve been and how long we were at each place but collect our easily shed DNA and add it to the government’s already burgeoning database?

Not to be overlooked, DNA evidence is not infallible: it can be wrong, either through human error, tampering, or even outright fabrication, and it happens more often than we are told. The danger, warns scientist Dan Frumkin, is that crime scenes can be engineered with fabricated DNA.

Now if you happen to be the kind of person who trusts the government implicitly and refuses to believe it would ever do anything illegal or immoral, then the prospect of government officials—police, especially—using fake DNA samples to influence the outcome of a case might seem outlandish.

Yet as history shows, the probability of our government acting in a way that is not only illegal but immoral becomes less a question of “if” and more a question of “when.”

With technology, the courts, the corporations and Congress conspiring to invade our privacy on a cellular level, suddenly the landscape becomes that much more dystopian.

As I make clear in my book Battlefield America: The War on the American People, this is the slippery slope toward a dystopian world in which there is nowhere to run and nowhere to hide.

Tyler Durden Fri, 06/11/2021 - 23:00
Published:6/11/2021 10:19:16 PM
[Markets] : ‘I have these really deep beliefs about stability and survival’: Anna Sale, host of ‘Death, Sex and Money’ podcast, on our evolving relationship to money When you admit that where you are is the result of choices you've made and choices that you’ve had no control over, it's a little easier to talk about money'
Published:6/11/2021 9:50:23 PM
[Markets] Firework Shortage Could Ruin Fourth Of July  Firework Shortage Could Ruin Fourth Of July 

Microchips, lumber, gas, steel, base metals, chicken, ketchup, and chlorine have been some of the latest shortages due to tangled supply chains because of the virus pandemic.

A little less than a month from now, Americans will be celebrating the Fourth of July with backyard barbecues, drinking Budweiser, and, of course, how could we forget, launching Chinese-made fireworks. 

Due to food inflation and shortages of some products, Americans will be paying an arm and a leg for items at supermarkets. But what may anger them the most is the shortage of fireworks, according to ABC 13, who spoke with multiple vendors. 

Firework stores across Texas are urging customers to shop now then wait till the very last week or even the last day because of delays in container freight from China to West Coast ports. 

Vendors are saying container shipments of artillery shells, such as mortars, from China are in short supply because of port congestion. They warned customers this would lead to higher prices. 

"There is going to be an increase in the process just because shipping has doubled since last year," said Cele Rasmussen, a fireworks vendor.

Peak shipping season has arrived at West Coast ports as congestion could result in firework shipments not arriving in time. This is terrible news for US consumers because 94% of US imported fireworks are derived from China. 

Google searches for "firework shortage" have already hit 17-year highs. 

Some Americans may not hear fireworks this hear but rather noisy cicadas. 

Tyler Durden Fri, 06/11/2021 - 22:40
Published:6/11/2021 9:50:23 PM
[Markets] PG&E Warns Of More Blackouts As California Wildfire Season Begins  PG&E Warns Of More Blackouts As California Wildfire Season Begins 

It has been an arid spring in California, and that's causing alarm with Pacific Gas and Electric Co. executives who have said this week they will need more frequent power cuts to customers in Northern California to prevent wildfires. 

PG&E's chief risk officer Sumeet Singh told WSJ that California's dry weather conditions could result in more rolling blackouts this year than last year. The company has trimmed trees away from powerlines and inspected the grid as the wildfire season began earlier this month. 

June is typically the month the wildfire season in California begins. The state is already battling an extreme drought, and the first heat wave of the season hit last week. The risks of another heat wave are increasing for next week. 

The hottest and most fire-prone months are nearing as a second heat wave of the season could arrive as early as next week. 

How the season turns out may depend on the immediate climate in the state. Extreme heat and drought are several factors that may produce dry fuels and eventually spark fires. 

"The fuel moisture levels ... are about a month or two months ahead of schedule," Strenfel told Sacramento Bee. "They're at a state where they're typically this dry in mid-July, and we're seeing them in June. We're a month ahead of schedule, if not two months, in terms of fire danger."

Singh told WSJ, "the big, big variable that's unpredictable here is the wind. But in all the forecasts that we've done, we do not see ourselves getting back to the same kind of [power shut-off] events like we saw in 2019."

Already, Gov. Gavin Newsom declared 41 of the state's 58 counties are in a drought, with much of the state in an "extreme drought" and portions in an "exceptional drought."  

The 2020 California fire season, the worst on record, burned more than 4 million acres, is still fresh in everyone's mind. Newsom has allocated millions of dollars in new funding to thwart fires this year. 

The 2021 wildfire season could be more severe than last year, which means PG&E may have to issue more powercuts to thwart fires. 

Tyler Durden Fri, 06/11/2021 - 22:00
Published:6/11/2021 9:19:06 PM
[Markets] How Fanatics Took Over The World How Fanatics Took Over The World

Authored by Jeffrey Tucker via DailyReckoning.com,

Early in the pandemic, I had been furiously writing articles about lockdowns. My phone rang with a call from a man named Dr. Rajeev Venkayya. He is the head of a vaccine company but introduced himself as former head of pandemic policy for the Gates Foundation.

Now I was listening.

I did not know it then, but I’ve since learned from Michael Lewis’s (mostly terrible) book The Premonition that Venkayya was, in fact, the founding father of lockdowns. While working for George W. Bush’s White House in 2005, he headed a bioterrorism study group. From his perch of influence – serving an apocalyptic president — he was the driving force for a dramatic change in U.S. policy during pandemics.

He literally unleashed hell.

That was 15 years ago. At the time, I wrote about the changes I was witnessing, worrying that new White House guidelines (never voted on by Congress) allowed the government to put Americans in quarantine while closing their schools, businesses, and churches shuttered, all in the name of disease containment.

I never believed it would happen in real life; surely there would be public revolt. Little did I know, we were in for a wild ride…

The Man Who Lit the Match

Last year, Venkayya and I had a 30-minute conversation; actually, it was mostly an argument. He was convinced that lockdown was the only way to deal with a virus. I countered that it was wrecking rights, destroying businesses, and disturbing public health. He said it was our only choice because we had to wait for a vaccine. I spoke about natural immunity, which he called brutal. So on it went.

The more interesting question I had at the time was why this certified Big Shot was wasting his time trying to convince a poor scribbler like me. What possible reason could there be?

The answer, I now realized, is that from February to April 2020, I was one of the few people (along with a team of researchers) who openly and aggressively opposed what was happening.

There was a hint of insecurity and even fear in Venkayya’s voice. He saw the awesome thing he had unleashed all over the world and was anxious to tamp down any hint of opposition. He was trying to silence me. He and others were determined to crush all dissent.

This is how it has been for the better part of the last 15 months, with social media and YouTube deleting videos that dissent from lockdowns. It’s been censorship from the beginning.

For all the problems with Lewis’s book, and there are plenty, he gets this whole backstory right. Bush came to his bioterrorism people and demanded some huge plan to deal with some imagined calamity. When Bush saw the conventional plan — make a threat assessment, distribute therapeutics, work toward a vaccine — he was furious.

“This is bulls**t,” the president yelled.

“We need a whole-of-society plan. What are you going to do about foreign borders? And travel? And commerce?”

Hey, if the president wants a plan, he’ll get a plan.

“We want to use all instruments of national power to confront this threat,” Venkayya reports having told colleagues.

“We were going to invent pandemic planning.”

This was October 2005, the birth of the lockdown idea.

Dr. Venkayya began to fish around for people who could come up with the domestic equivalent of Operation Desert Storm to deal with a new virus. He found no serious epidemiologists to help. They were too smart to buy into it. He eventually bumped into the real lockdown innovator working at Sandia National Laboratories in New Mexico.

Cranks, Computers, and Cooties

His name was Robert Glass, a computer scientist with no medical training, much less knowledge, about viruses. Glass, in turn, was inspired by a science fair project that his 14-year-old daughter was working on.

She theorized (like the cooties game from grade school) that if school kids could space themselves out more or even not be at school at all, they would stop making each other sick. Glass ran with the idea and banged out a model of disease control based on stay-at-home orders, travel restrictions, business closures, and forced human separation.

Crazy right? No one in public health agreed with him but like any classic crank, this convinced Glass even more. I asked myself, “Why didn’t these epidemiologists figure it out?” They didn’t figure it out because they didn’t have tools that were focused on the problem. They had tools to understand the movement of infectious diseases without the purpose of trying to stop them.

Genius, right? Glass imagined himself to be smarter than 100 years of experience in public health. One guy with a fancy computer would solve everything! Well, he managed to convince some people, including another person hanging around the White House named Carter Mecher, who became Glass’s apostle.

Please consider the following quotation from Dr. Mecher in Lewis’s book: “If you got everyone and locked each of them in their own room and didn’t let them talk to anyone, you would not have any disease.”

At last, an intellectual has a plan to abolish disease — and human life as we know it too! As preposterous and terrifying as this is — a whole society not only in jail but solitary confinement — it sums up the whole of Mecher’s view of disease. It’s also completely wrong.

Pathogens are part of our world; they are generated by human contact. We pass them onto each other as the price for civilization, but we also evolved immune systems to deal with them. That’s 9th-grade biology, but Mecher didn’t have a clue.

Fanatics Win the Day

Jump forward to March 12, 2020. Who exercised the major influence over the decision to close schools, even though it was known at that time that SARS-CoV-2 posed almost risk to people under the age of 20? There was even evidence that they did not spread COVID-19 to adults in any serious way.

Didn’t matter. Mecher’s models — developed with Glass and others — kept spitting out a conclusion that shutting down schools would drop virus transmission by 80%. I’ve read his memos from this period — some of them still not public — and what you observe is not science but ideological fanaticism in play.

Based on the timestamp and length of the emails, he was clearly not sleeping much. Essentially he was Lenin on the eve of the Bolshevik Revolution. How did he get his way?

There were three key elements: public fear, media and expert acquiescence, and the baked-in reality that school closures had been part of “pandemic planning” for the better part of 15 years. Essentially, the lockdowners, over the course of 15 years, had worn out the opposition. Lavish funding, attrition of wisdom within public health, and ideological fanaticism prevailed.

Figuring out how our expectations for normal life were so violently foiled, how our happy lives were brutally crushed, will consume serious intellectuals for many years. But at least we now have a first draft of history.

As with almost every revolution in history, a small minority of crazy people with a cause prevailed over the humane rationality of multitudes. When people catch on, the fires of vengeance will burn very hot.

The task now is to rebuild a civilized life that is no longer so fragile as to allow insane people to lay waste to all that humanity has worked so hard to build.

Tyler Durden Fri, 06/11/2021 - 21:40
Published:6/11/2021 8:49:51 PM
[Markets] Connecticut To Enact Highway Fee For Trucks Connecticut To Enact Highway Fee For Trucks

By John Gallagher of FreightWaves,

Connecticut Gov. Ned Lamont is expected to sign a bill passed this week by state lawmakers that, beginning January 2023, will impose a tax of up to 17.5 cents per mile on heavy trucks that use Connecticut’s roadways. The tax,, which trucks would be required to pay in addition to federal fuel taxes, is estimated to generate $45 million in revenue in FY23 and $90 million annually thereafter, and would go toward repairing roads and bridges.

“This small fee on large tractor trailers that are doing 20,000 times the amount of damage as a passenger vehicle is a responsible way to address part of that crisis,” commented state Rep. Roland Lemar, a Democrat.

Most Republicans in the legislature, however, including Rep. Devin Carney, opposed the bill. “I think it’s going to raise costs on food, on things like heating oil, clothing, gasoline — I just think it’s a trickle-down tax that’s very regressive,” Carney said. Joseph Sculley, president of the Motor Transport Association of Connecticut, said that the tax will add a financial burden on in-state trucking companies while out-of-state companies will avoid paying by rerouting around the state.

“One of our members estimated it is going to cost him an additional $200,000 per year, and if he can’t pass the cost down, whether through a line-item fee or by increasing his overall rates, he’ll be out of business,” Sculley told FreightWaves.

In addition, Sculley said, state lawmakers have admitted that the program would be administered using an honor system and that it would not be a priority for roadside law enforcement. “I told every member of the legislature that 20 states have tried it and gave up because they couldn’t make it work.”

According to the Congressional Budget Office (CBO), four states — Kentucky, New Mexico, New York and Oregon — are levying some form of vehicle-miles-traveled (VMT) fee on commercial trucks. Kentucky charges a flat rate of about 3 cents per mile, and the other three charge rates that vary by trucks’ weight, ranging from about 1 to 29 cents per mile, notes a CBO report.

The Connecticut proposal places trucks in 28 weight categories. The rate charged per mile ranges from 2.5 cents for trucks weighing 26,000-28,000 pounds to 17.5 cents for trucks weighing 80,001 pounds and over. The bill requires each carrier to apply to the state’s Department of Revenue Services (DRS) for a highway user tax permit, and would prohibit carriers from operating their trucks in the state without one. Any fees would have to be paid to DRS each month.

Tyler Durden Fri, 06/11/2021 - 21:00
Published:6/11/2021 8:18:29 PM
[Markets] Dow Jones Futures: Apple Vs. Microsoft Vs. Google; How To Be A Big Stock Market Winner Apple, Microsoft and Google are in bases, but which is the most promising? To be a big stock market winner, be a small loser. Published:6/11/2021 7:49:53 PM
[Markets] Kim Jong Un Calls K-Pop A "Vicious Cancer": Prescribes 15-Years Hard Labor If Caught With It Kim Jong Un Calls K-Pop A "Vicious Cancer": Prescribes 15-Years Hard Labor If Caught With It

Apparently Kim Jong Un has gone full culture warrior in attempts to "protect" the North from a K-Pop invasion, calling South Korea's pop culture style which has in past years gone global a "vicious cancer" which is corrupting the youth, but is still increasingly making inroads into the DPRK. A new state media quote this week indicated his belief that it would make North Korea "crumble like a damp wall."

These latest statements in the war on K-Pop come after months of Kim himself or other officials in state media ranting against the corrupting "attire, hairstyles, speeches, behaviors" which comes from outside influence, especially from South Korean music and film, and is threatening to induce changes in the "ideological and mental state" of the country's youth.

Months ago Kim also ordered that authorities across all provinces to "mercilessly" combat increasing "capitalist tendencies" and all external forms of cultural influence. 

Multiple international reports are now highlighting a law which was passed last December, but is receiving much more attention in light of the K-Pop comments, given it means a citizen could literally face 15 years of hard labor if they're found to be in possession of South Korean popular entertainment:

It calls for five to 15 years in labor camps for people who watch or possess South Korean entertainment, according to lawmakers in Seoul who were briefed by government intelligence officials, and internal North Korean documents smuggled out by Daily NK, a Seoul-based website. The previous maximum punishment for such crimes was five years of hard labor.

And worse, "dealing" has been made a capital offense...

Those who put material in the hands of North Koreans can face even stiffer punishments, including the death penalty. The new law also calls for up to two years of hard labor for those who "speak, write or sing in South Korean style."

Despite the obvious absurdity and somewhat comic nature of the bizarre law and spectacle of the ongoing "crackdown" - which sounds like it's a write-up in The Onion, it strongly suggests that Pyongyang is legitimately worried at this point about maintaining ideological control over the population.

There appears to be a growing craving for outside media consumption, also as technology has made it easier to either share things digitally, or easily hide small thumb drives. 

On the one hand media smuggled from outside might present the DPRK population with more attractive images of life elsewhere away from under the thumb of the totalitarian regime, while at the same time undoing official North propaganda which depicts South Korea as a "living hell".

Tyler Durden Fri, 06/11/2021 - 20:40
Published:6/11/2021 7:49:53 PM
[Markets] Western Companies "Shocked" After China Rushes Through Anti-Sanctions Law Western Companies "Shocked" After China Rushes Through Anti-Sanctions Law

There should be little doubt that the timing is intentional: China on Thursday passed its sweeping new law to 'safeguard' Chinese businesses and entities from Western and especially US sanctions, just hours ahead of President Joe Biden sitting down with G-7 leaders in Cornwall to argue for a common stance on curtailing China's influence. AFP observes: "China's quick rollout of a law against foreign sanctions has left European and American companies shocked and facing 'irreconcilable' compliance issues, two top business groups said Friday, despite Beijing saying the move would unlikely impact investment."

The Anti-Foreign Sanctions Law, as we described earlier, is designed shield Chinese entities and institutions from "the unilateral and discriminatory measures imposed by foreign countries" and ultimately the "long arm jurisdiction" of the United States.  

It effectively enables the Chinese government to sanction all who comply with US/EU sanctions by drawing a bright red line, forcing entities to choose whether to comply to Washington's side or Beijing's side. Upon its introduction early this week in the National People's Congress there were few details given, other than vowing that "if Chinese entities are hit with unjustified sanctions, the proposed law is supposed to crystallize actionable countermeasures against the foreign governments and institutions…expecting the legal effort to make up for losses that Chinese entities would suffer."

With the law's passage, details have been revealed as follows:

Countermeasures in the Chinese law include "refusal to issue visas, denial of entry, deportation... and sealing, seizing, and freezing property of individuals or businesses that adhere to foreign sanctions against Chinese businesses or officials," according to the text published by the standing committee of the National People's Congress, China's top legislature.

Thus it "answers" current US tactics in a serious escalation: whereas Washington currently often seeks to punish third party entities or countries for direct or even indirect dealings with a sanctioned regime (the cases of Venezuela and Iran are clear examples, or even European companies which worked on the Russia-to-Germany Nord Stream 2 pipeline), Beijing has now given itself the 'legal authority' to do the same. 

The foreign ministry announced upon the law's passage: "The law aims to firmly safeguard the sovereign dignity and core interests of the country and oppose Western hegemony and power politics," according to state media. And a Global Times op-ed asserted: "It will act as a powerful deterrent against countries imposing sanctions," and further: "We will not hesitate to fight back against forces that arrogantly challenge us and will continue to enrich our legal toolbox."

And here's more on how it will coerce companies into "choosing" to conform to US or Chinese law, which could have devastating fallout down the line for Western companies operating in China:

The restrictions can apply to family members of individuals who fall foul of Beijing.

The law also allows the country's courts to punish companies that comply with foreign laws, and says that businesses or people in China do not need to comply with foreign restrictions.

Meanwhile, as the G-7 continues in the UK, Beijing officials blasted what they called "small circle diplomacy". 

The Chinese Communist Party's chief diplomat Yang Jiechi told Antony Blinken in a phone call ahead of the summit that "genuine multilateralism is not pseudo-multilateralism based on the interests of small circles" in denunciation of what's being seen as an "anti-China" meeting.

Tyler Durden Fri, 06/11/2021 - 20:00
Published:6/11/2021 7:18:19 PM
[Markets] Media Converges On The Narrative That UFOs May Be Russian/Chinese Threat Media Converges On The Narrative That UFOs May Be Russian/Chinese Threat

Authored by Caitlin Johnstone via Medium.com,

So in case you haven’t been keeping up it’s been pretty thoroughly confirmed that the US government’s highly anticipated UFO report due this month won’t contain any significant revelations and certainly won’t verify anyone’s ideas about these phenomena being extraterrestrial in origin, but it absolutely will contain fearmongering that UFOs could be evidence that the US has fallen dangerously behind Russian and Chinese technological development in the cold war arms race.

Unknown US officials have done a print media tour speaking to the press on condition of anonymity (of course), with first The New York Times reporting their statements about the contents of the UFO report and then CNN and The Washington Post. Each of these outlets reported the same thing: the US government doesn’t know what these things are but is very concerned they constitute evidence that Russia and/or China have somehow managed to technologically leapfrog US military development by light years. All three mention these two nations explicitly.

This narrative was then picked up by cable news, with MSNBC inviting former CIA director and defense secretary Leon Panetta on to explain to their audience that the US government should assume UFOs are Russian or Chinese in origin until that possibility has been exhausted.

“Is it your assumption that it is Russia or China testing some crazy technology that we somehow don’t have, or are we sort of over-assuming the abilities of China and Russia and that the only other explanation is that if it is not us ourselves then it is something otherworldly?” MSNBC’s Chuck Todd asked Panetta.

I believe a lot of this stuff probably could be countries like Russia, like China, like others, who are using now drones, using the kind of sophisticated weaponry that could very well be involved in a lot of these sightings,” Panetta replied.

“I think that’s the area to go to very frankly in order to identify what’s happening.”

“It sounds like you think we should exhaust that out, exhaust that hypothesis first before you start dealing with other hypotheses,” Todd said.

Yeah, absolutely,” said Panetta, who for the record is every bit as much of a tyrannicalthuggish imperialist cold warrior as any other CIA director.

This UFOs-as-Chinese/Russian-threat narrative has quickly been picked up and thrust into mainstream orthodoxy by all the major branches of the mass media, from Fox News to Reuters to The Guardian to Today to the BBC to USA Today. Whenever you see the imperial media converge to this extent upon a single narrative, that’s the Official Narrative of the empire. We can expect to see a lot more of this going forward.

Interestingly, the only mass media segment I’ve seen on this topic since the New York Times story broke which doesn’t promote the UFOs-as-Chinese/Russian-threat narrative is a guest appearance on Tucker Carlson Tonight by Lue Elizondo, the military intelligence veteran who got the ball rolling on the new UFO narrative which emerged in 2017. Elizondo goes out of his way to tell Carlson (who himself has been promoting the idea that UFOs may be a foreign adversarial threat with cartoonish melodrama) that there’s no way these could be Russian or Chinese aircraft.

Elizondo, who seems to favor the UFOs-as-extraterrestrials narrative, argues that there are extensive records of military encounters with these phenomena stretching back seventy years, which rules out China since it could barely keep its head above water back then and rules out Russia because it shared its UFO knowledge with the US after the collapse of the Soviet Union.

I don’t know what’s going on with that last bit; I see no reason to trust that an American spook is acting in good faith on such an easily manipulated topic, but it is entirely possible that Elizondo set out on this road out of a sincere desire for government disclosure on UFOs and is now trying to regain control of the narrative now that he sees the cold war arms race direction it has taken.

Chris Melon, another major player in the new UFO narrative, recently complained on Twitter that “some important information was not shared” with the public in the UFO report. So who knows, maybe the initiators of this new UFO narrative were acting in good faith and their efforts were just swiftly hijacked by forces beyond their control to advance preexisting cold war agendas.

Regardless of whether or not that’s true, it was always inevitable that this strange new rabbit hole of UFOs going mainstream was going to lead to more cold war propaganda. I’ve been interacting a bit with the online UFO community for the first time ever, and it seems like they’re mostly decent people with good intentions and a lot of hope for this new governmental investigation. But it also seems like they’re largely a community which mostly just talks to itself and is only just beginning to meet the cold harsh light of day that is the impenetrable depravity of the US war machine.

The US government is pure swamp; you can’t use the swamp to fix the swamp. Democrats were never going to use a Special Counsel to remove Trump, Trump was never going to take down the Deep State, and the US government isn’t going to investigate itself and tell everyone that aliens are real.

If there are indeed extraterrestrials and they are indeed flying around our world in strange aircraft, we are more likely to get the truth about this from the extraterrestrials themselves than from the US military. The war machine only does killing and destruction; it’s not going to suddenly develop an interest in truth and transparency. The sooner UFO enthusiasts realize this the better.

*  *  *

The best way to get around the internet censors and make sure you see the stuff I publish is to subscribe to the mailing list for at my website or on Substack, which will get you an email notification for everything I publish. My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, following me on FacebookTwitterSoundcloud or YouTube, or throwing some money into my tip jar on Ko-fiPatreon or Paypal. If you want to read more you can buy my books. Everyone, racist platforms excluded, has my permission to republish, use or translate any part of this work (or anything else I’ve written) in any way they like free of charge. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here.

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Tyler Durden Fri, 06/11/2021 - 19:40
Published:6/11/2021 6:48:11 PM
[Markets] "Wholly-Owned Subsidiary Of The Gun Lobby": Newsom Attacks Federal Judge Who Ruled In Favor Of Gun Rights "Wholly-Owned Subsidiary Of The Gun Lobby": Newsom Attacks Federal Judge Who Ruled In Favor Of Gun Rights

Authored by Jonathan Turley,

Remember when networks and legal experts (correctly) denounced President Donald Trump for his attacks on judges who ruled against him?

Two years ago, I ran a column noting that Democrats were adopting the same attacks on conservative judges but the media was entirely silent.

Now,  California Gov. Gavin Newsom and Democrats are lambasting a federal judge who ruled in favor of gun rights in a recent decision — accusing him of being in the pocket of the NRA and a danger to the country.  The response to Newsom’s attack from all of those same media and legal experts has ranged from outright support to conspicuous silence.

We recently wrote about the decision of U.S. District Judge Roger Benitez to strike down the ban on “assault weapons.”  In Miller v. Bonta, Benitez found that the ban on weapons like the AR-15 are based on both a misunderstanding of the weapons and a misinterpretation of the Constitution.  I previously discussed many of the same issues surrounding the AR-15 which remains one of the most popular weapons in the United States

The recent decision led to a barrage of personal attacks from Newsom, state Attorney General Rob Bonta and legal experts.  Newsom called Benitez a “stone-cold ideologue” who writes “press releases on behalf of the gun lobby.”  He warned that everyone needs to “call this federal judge out” because “he will continue to do damage.”

Benitez has indeed ruled for gun owners in the past.  However, he was upheld in that decision (which is still on appeal). In 2017, he struck down the state’s nearly two-decade-old ban on the sales and purchases of magazines holding more than 10 bullets. As recently discussed, the Ninth Circuit upheld his decision, which is now scheduled to be reheard by an 11-member panel. These cases have a very strong chance for review before the Supreme Court given the division across the country and the 6-3 conservative majority on the Court.

One can have good-faith reasons to disagree with both decisions.  Indeed, I am all in favor of passionate and pointed analysis of judicial rulings. Moreover, there are occasions where a judge’s personal bias is an issue.  Despite previously praising Judge Emmet Sullivan, I wrote columns that later criticized him for what appeared bias in his handling of the Flynn case. This is not such a case. Newsom is attacking this judge because he ruled in favor of gun rights arguments that are supported by many judges, lawyers, and citizens. These arguments have never been rejected by the Supreme Court. Indeed, he was relying on strong case law in favor of the Second Amendment claims raised by the litigants.

It is the strikingly different response to the attacks on the judge that caught my attention. As discussed in the earlier column, legal experts expressed outrage over attacks by Trump of judges as “Obama judges” or “political judges” during his term. There was however no push back on Democratic members denouncing “Trump judges” and “Trump Justices.”  Esquire magazine published a column denouncing judges who ruled against ObamaCare, declaring that the Republican arguments “don’t need to make sense. They just need the right judges — and they’re everywhere in the federal judicial system.” One Nation article explained how Trump jurists “swarming our judicial system . . . will linger, like an infected wound poisoning the body politic.” CNN ran headlines about “Republican-appointed judges” supporting the ObamaCare challenge, while Democratic members of Congress denounced federal judges ruling for the Trump administration as examples of why new judges must be appointed by Democrats.

Benitez ruled on arguments that have long been discussed by many of us as raising serious questions over the constitutionality of these laws. Again, one can disagree with the arguments but they are not fringe or fanciful positions. Indeed, Newsom’s demand for an appeal may be great news for the gun rights groups. Liberal states and cities have repeatedly pushed appeals that resulted in magnifying their losses. The District of Columbia is a great example of such poor choices in triggering the decisions in Heller. Later the Supreme Court expanded on its pro-gun rights case law in  McDonald v. City of Chicago. The Supreme Court just took up a new major gun rights case out of New York.

Benitez and his family fled communist Cuba and remains a powerful American success story.  He was able to get through law school as a first generation American. Benitez was confirmed 98-1 and had the strong support of Sen. Dianne Feinstein and other Democrats. (Only Sen. Dick Durban voted against him). Feinstein rejected the negative review of the ABA based on his “temperament” and noted that her own inquiries found that lawyers “say he is a man of the highest ethical standard, that he has superb demeanor, intelligence, pragmatism, and fairness. And the chief public defender notes that he has good judicial temperament and is courteous to his employees and the attorneys who appear before him.”

Newsom’s attack omits that Benitez was upheld by other judges in his earlier decision. That does not mean that the opinion is manifestly right (Indeed, it is being appealed). However, the opinion advanced well-established arguments and authority in reaching its conclusion. A majority on the Supreme Court would likely agree with much of the opinion. It is not about him. It is about the law.  That is why I criticized Trump for his attacks on judges and why we should be equally critical of Newsom and Democratic leaders doing the same thing now.

Tyler Durden Fri, 06/11/2021 - 19:00
Published:6/11/2021 6:17:52 PM
[Markets] Market Extra: How oil soaring to $100 a barrel could be bad for this boom-bust sector and the economy Bond investors fear a return of wildcatting and other risky moves by energy companies if oil prices continue to shoot higher during the COVID recovery.
Published:6/11/2021 6:17:52 PM
[Markets] Former ADT Tech Sentenced To Prison After Spying On Naked Women And Couples Having Sex Former ADT Tech Sentenced To Prison After Spying On Naked Women And Couples Having Sex

A former ADT security technician was sentenced to four years and four months in federal prison for repeatedly hacking into customers' video feeds in North Texas and spying on attractive women and couples engaging in sexual activity inside their homes, according to CBS Dallas.

Tesforo Aviles (via the Daily Mail)

Telesforo Aviles, 35, pleaded guilty to computer fraud in January - admitting to adding his personal email address to customers' "ADT Pulse" accounts, which gave him real-time access to video feeds from their homes. In some instances he claimed he needed to add himself temporarily to "test" the system, while in other cases he added himself without customer knowledge.

According to plea papers, Aviles watched numerous videos of naked women and couples engaging in sexual activity, which he admitted he would view for sexual gratification.

Aviles accessed roughly 200 customer accounts over 9,600 times without their consent.

"This deliberate and calculated invasion of privacy is arguably more harmfrul than if I had installed no security system and my house had been burglarized," said one female victim in a statement to the court. "This sick and corrupt individual's actions will have a lasting emotional and mental toll on me."

"This defendant, entrusted with safeguarding customers’ homes, instead intruded on their most intimate moments," Acting US Attorney Perak Shah said in January.

Aviles faced up to five years in prison.

Unfortunately for the victims, they couldn't opt-out of Aviles' intrusions like Amazon Sidewalk customers. You never know who's on the other end.

Tyler Durden Fri, 06/11/2021 - 18:40
Published:6/11/2021 5:49:24 PM
[Markets] Cuba's Central Bank Suspends Deposits In Dollars, Citing US Economic War Cuba's Central Bank Suspends Deposits In Dollars, Citing US Economic War

On Thursday the state-run Central Bank of Cuba (BCC) announced that it's suspending all deposits in US dollars due to what it called America's "economic blockade" of the country's banking system. 

"Given the obstacles imposed by the US economic blockade for the Cuban banking system to depositing abroad cash in US dollars collected in the country, the decision has been made to temporarily stop the acceptance of bills in that currency by the Cuban banking and finance system," national media cited the bank as saying.

The decision will go into effect starting June 21, and for now it appears indefinite with no end date for the restrictive measures being issued.

Continued US punitive measures which have greatly weakened the Cuban peso created distortions between public and black market rates of late, a disparity which has hit state employees who are paid out in the national currency the hardest

"This comes as the U.S. dollar in Cuba’s black market has soared in recent months to about 70 Cuban pesos, about triple the official exchange rate of 24 pesos," The Miami Herald reports. 

"The Cuban peso weakened significantly against the dollar after the island eliminated a confusing dual-currency system that maintained one currency valued at parity to the dollar and another much weaker currency," the report added.

Central Bank Vice President Yamile Berra Cires further cited as part of the rationale for the drastic move that some two dozen banks had halted business with the island in the wake of the prior Trump administration's tightened US sanctions. She said the move is necessary to protect the local financial system. 

But as CNN's Havana bureau chief Patrick Oppmann notes, the change also comes "just months after Cuba effectively dollarized stores. Now the Cuban gov’t seems to be trying to ditch the dollar as inflation has driven down the value of the Cuban peso."

Tyler Durden Fri, 06/11/2021 - 18:00
Published:6/11/2021 5:17:44 PM
[Markets] Here's Why It Will be Wise to Put Your Money on Quality ETFs Here we highlight some Quality ETFs that can be promising bets amid current market volatility. Published:6/11/2021 4:49:49 PM
[Markets] Two Big Problems Are Plaguing Our Economy, New Small Business Survey Reveals Two Big Problems Are Plaguing Our Economy, New Small Business Survey Reveals

Authored by Brad Polumbo via The Foundation for Economic Education,

With pandemic restrictions finally being wound down around the country, the economy should be roaring back to life. But we’ve seen much more muted job growth than expected, and we have a record-breaking 9.3 million unfilled job openings while millions of Americans languish on unemployment welfare. What’s going on?

Well, a new small business survey reveals two key problems plaguing our economy.

The National Federation of Independent Businesses regularly surveys the thousands of small businesses whose interests it represents. Released this week, its latest polling offers yet more proof that a labor shortage is restraining economic recovery.

A record-high 48 percent of business owners said they had jobs they couldn’t fill. 

“The labor shortage is holding back growth for small businesses across the country,” NFIB economist Bill Dunkelberg said.

“If small business owners could hire more workers to take care of customers, sales would be higher and getting closer to pre-COVID levels.” 

The source of this labor shortage, at least in large part, is the continued availability in dozens of states of unemployment welfare benefits that pay more than working a job. 

Per Forbes, the average unemployed person can earn the equivalent of $17/hour staying on the welfare rolls under the current “temporary” expanded pandemic benefits (assuming a 40-hour workweek). Thus, many workers are disincentivized to return to work, even for jobs that pay $15/hour! 

That small businesses across the country are experiencing an acute labor shortage should be no surprise given such dysfunctional government policy. But it's a huge issue for our economy. 

Meanwhile, surging price inflation is also a key cause for concern. 

In the new survey, small businesses report big increases in their supply costs. As a result, roughly 40 percent said they are increasing their prices—the highest response to this question since 1981. The rising prices are a major concern for business owners, and one reason why their optimism on the near future fell in this month’s survey.  

“Inflation on Main Street is rampant and small business owners are uncertain about future business conditions,” Dunkelberg added.

Where’s the inflation coming from? It’s complicated, but here’s the short answer: reckless federal money-printing. 

“Nearly one-quarter of the money in circulation has been created since January 2020,” FEE economist Peter Jacobsen recently explained. But printing more money doesn’t mean we actually have more stuff, and “if more dollars chase the exact same goods, prices will rise.” 

From a labor shortage to inflation, our economic recovery faces some serious roadblocks. While the federal government may have intended to help along our resurgence, both hurdles can ultimately be traced back to failed policies in Washington, DC.

*  *  *

Like this story? Click here to sign up for the FEE Daily and get free-market news and analysis like this from Policy Correspondent Brad Polumbo in your inbox every weekday. 

Tyler Durden Fri, 06/11/2021 - 17:40
Published:6/11/2021 4:49:49 PM
[Markets] GLOBAL MARKETS-Stocks set record highs as bond yields slide European shares, the S&P 500 and an index of global stock performance scaled new peaks while yields on U.S., Japanese and European government debt fell on Friday as investors embraced the easy monetary policies of major central banks. Investor sentiment rose in Europe after the European Central Bank raised its growth and inflation projections on Thursday, and also renewed a pledge to keep stimulus flowing. The MSCI all-country world equity index, a benchmark that tracks shares in 50 countries, set a new intraday high and record close at 719.52, up 0.2% in a late-day surge that also lifted the S&P 500 to an all-time close. Published:6/11/2021 4:18:10 PM
[Markets] Vaya Con Crypto – When The Levee Breaks Vaya Con Crypto – When The Levee Breaks

Authored by Tom Luongo via Gold, Goats, 'n Guns blog,

I’m not much of a Led Zeppelin fan. In fact, I have an unnatural animus towards Led Zeppelin. Outside of Houses of the Holy and “Fool in the Rain” and “Misty Mountain Hop” I pretty much don’t have anything good to say about them.

That’s weird coming from someone of my demographic — Gen X, white suburban male who grew up on a steady diet of what’s today “Classic Rock” radio.

That said, I admit that part of this animus toward Zep is unfair because it comes from the insanity of my friends’ obsession with them to the exclusion of nearly all other types and kinds of music when we were teenagers getting our artistic imprint on. The music and stories we ingest during those pivotal years become foundations for who we are as adults.

Zeppelin for these Gen-Xers is like The Beatles are for some Boomers, the pinnacle of music to proselytize to the masses. Let’s call it worshipping at the Altar of Physical Graffiti.

And that’s, of course, not true, but it is to them. FYI, not a big Beatles guy either.

So much of how we interact with things in this life are a reflection of the people who introduce us to those things and their reactions to our reactions to them. We are mimetic creatures in many ways, mirroring or rejecting the desires of those around us.

The emotions from these encounters are real and lasting. If the interactions were negative, in my case of Zeppelin very negative, then that simply clouds your judgment of the thing until you are willing to confront your own motivations head on.

And in my experience that is the one thing people are the most dishonest about… their own motivations.

In the case of teenage males arguing about the music that becomes the basis for the soundtrack of their lives, it’s not hard to see where this leads.

Now in the innocuous case of my antipathy to Led Zeppelin I know exactly where it comes from and as I’ve gotten older nothing has changed. If ‘The Ocean’ comes out of a speaker, I stop and become an entranced lunatic, air drumming and doing the ‘White Man’s Overbite.’ And if “Stairway to Heaven” comes on I immediately reach for my Frank Zappa version to keep from going postal.

I bring all of this up because today it seems there are thousands of professionals and not-so-professionals out there who approach bitcoin the same way I approach Zeppelin. And it’s doing no one, especially them, any good whatsoever.

Because bitcoin a real thing. It is now truly a phenomenon that deserves serious discussion not knee jerk reactions, especially from those millions look to for advice on how to deal with their money.

I’ve railed against the Only Gold Bugs in the past multiple times, but this anger at bitcoin is much deeper than their frustration and/or projection. This is a pathology that precludes any rational discussion of what’s going on with crypto and it’s turning the entire financial and political commentariat into a bunch of noradrenaline poo-flinging morons.

Part of this is the fault of social media, certainly, since the only effective way to communicate on a platform like Twitter is through snark and schadenfreude. I’m as guilty of this as anyone.

Vegas Baby?

I was at the Bitcoin 2021 conference in Miami this past weekend and the commentary surrounding it has been, well, shockingly bad, to say the least. We have momentous events happening in crypto. Some good, some bad. However, what I find fascinating — if not a bit alarming — is that every opinion concerning these events are couched in nothing but existential terms.

There are existential threats surrounding bitcoin but most of the people espousing opinions on it are not the ones threatened by bitcoin or its opponents.

The permabears, embarrassed after an historic run from $3000 to $64,000, chuckle gleefully about a 50% pullback no reasonable bitcoin bull would ever argue against happening. The arguments that come out are laughably naïve if not ignorant.

In the immortal words of Dean Wormer, “Fat, drunk and stupid is no way to go through life, son.” Most of them come from the U.S. and Europe, making their irrational hatred of bitcoin truly a first world problem.

Everyone wants to be the first to have that novel insight, be the one who scoops everyone else to gain some pathetic little bit of street cred in cyberspace that they rush to their phone to put out there for the world to see just how little they’ve actually thought about what’s going on.

Doomscroll through Bitcoin Twitter and you’ll see most everyone turn into some version of Flounder.

While I was at Bitcoin 2021 the thing I kept saying was never in my wildest dreams did I ever think I would see anything like this in association with bitcoin. We were so far away from my first reading the white paper and downloading an early wallet/miner that simply taking a step back and soaking in what was happening around me was overwhelming.

And, in many ways, meaningful.

Because what I was truly blown away by wasn’t the spectacle, it was the fact that the ethos of bitcoin was still intact amidst all the Vegas. That same ethos that drew me to it out of curiosity in 2010 is alive today in the people who are directing its future.

Back then I wrote:

How successful can this be? I have no earthly idea and could care less. For me watching the rate at which new ideas are spawned when people are motivated to produce solutions to ancient problems is what is important…

…I see Bitcoin as a metaphor for the Web itself. It is what happens when people of common tastes are able to find each other over vast distance to find their niche in the division of labor. Synthesizing cryptography, programming and monetary theory into a unique offering could not have happened without the Web; itself that which subverts attempts at control as a natural consequence of its own structure. Any success Bitcoin enjoys exists as a means to an end (improving how humans interact via mutual exchange), not the end itself (adoption in the marketplace). All knowledge is fractal; each new exploration implying a completely new host of questions that need answers… and right now we need answers.

Moral Turpitude?

The focus at the conference this year wasn’t on, “Hey, isn’t it great we’re all rich thanks to bitcoin.” The focus was on the basic morality of bitcoin. That sound money and property rights, those pesky things libertarians are derided for advocating all the time, have the opportunity to break the cycle of violence, corruption and thievery inherent in the fiat currency system.

That was my initial impression of the conference from the moment Miami Mayor Suarez took the stage to welcome us and that’s what I left with two days later. I spoke with my friend Jay Fratt about this on his podcast in detail, making the point that bitcoin itself seems to be on its own a better communicator of libertarian principles of individual sovereignty and responsibility than any of us ever have. Just by being and developing bitcoin is teaching people that radical individualism leads to a strong sense of community, property and family through its immutability and the prospect of a future where work isn’t stolen through inflation.

It’s not about inflation or the Quantity Theory of Money. It’s not about what The Davos Crowd has planned for us next week. It’s about fully expressing one’s potential within a division of labor that is constructive not extractive. The hamster wheel of paying all of your profit (and then some) to some envious or ignorant jackass through inflation stops and you can actually get off of it.

You can go from looking down at your feet to avoid the next obstacle and lift your eyes to the horizon and seeing you home and family flourish.

The point made over and over by the speakers and many in the audience was that it didn’t matter what some central banker thought of bitcoin or what some lame duck politician whistling past their own graveyard thought of it.

As each block is confirmed and the network grows stronger their power to tax and spend, thieve through inflation and bribe others to commit violence to enforce their will grows that much weaker.

And yet, so many I talk to about bitcoin simply want to make light of this because some overzealous bitcoiner harassed them on Twitter or made bad arguments to them when they first encountered it. Every time the price drops or some irrelevant power broker says something stunningly ignorant they point at us and say, “Have fun going back to being poor.” They’ll never allow you to get free of them.

Well, of course they won’t allow it, if you want something you don’t ask permission. Again, bitcoin fixes this fundamental process by reorienting your perspective through action.

The Song Can’t Stay the Same

And that is what is so disturbing about the so-called No-coiners. They actually help tyrants like Elizabeth Warren build the systems to stop bitcoin and crypto in general from freeing all of us from what they know impoverishes and disenfranchises billions of people.

Nowhere is this more common than the ridiculous statements surrounding the historic decision by El Salvador to pass legislation this week making bitcoin legal tender in the country. The same people decrying bitcoin in 2013 at $100 are now today at $36,000 missing the basic point that countries like El Salvador, the victims of dollar diplomacy and dollar imperialism, have for the first time in history a money that can help them attract capital and build wealth that can’t be taken away from them because of a decision made in the board room at the Mariner-Eccles building.

All across Central and South America, Africa, Southeast and Central Asia billions of people have access to an asset that can reverse the dynamic of tyranny we all say we’re against but refuse to entertain the possibility of their success at doing so. Again, for those that do that your real white privilege is showing.

They ignore the ability of Lightning Network to keep local transaction fees to a level commensurate with what the local economy can bear. They ignore the gross incompetence of powerful people, plain for all of us to see, instead hanging on their every word like it’s fait accompli true. Newsflash:

And now imagine just how angry and committed they are to a better life rather than continuing to wallow in apathy and pain. Have we all become so hard-hearted and cynical that we no longer value this basic truth?

I’ve said many times that hope is the most negative of emotions, because hope is all you have when you have nothing else. Well, these people have more than hope, they have an answer to a fundamental problem, how to preserve their past work in a money that isn’t their enemy.

That is what is rising today threatening to overflow the levees erected around our futures. El Salvador may be the beginning of the break.

And that is the conversation we should be having not the silly games of snark that masks the discomfort we feel from refusing to confront our own motivations. How many more countries are ready for this? How many more people will make their weak and corrupt governments irrelevant in the coming years?

Because bitcoin isn’t Led Zeppelin. What music a person likes and doesn’t like is a personal choice. There is no objectively good or bad music from the individual’s perspective. Bitcoin, however, is a tool, and like all tools it has a function that it alone is best at performing. It is technology not art.

My antipathy to Zeppelin doesn’t negate one whit the influence they’ve had on millions of people to help them navigate a cruel and indifferent world. For that I owe them a debt of immense gratitude. My rejection of Zeppelin doesn’t negate your love of their music.

In the same way your hatred of bitcoin doesn’t negate what it is, what it represents and what it’s capable of.

The moral case for bitcoin stems from this basic fact. It is changing the fate of millions today and potentially billions tomorrow. Whether it succeeds in the long run is irrelevant. It has already changed the world for the better.

*  *  *

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Tyler Durden Fri, 06/11/2021 - 17:00
Published:6/11/2021 4:18:10 PM
[Markets] NewsWatch: Inflation scare? Look at this chart before freaking out Inflation is on the rise in America, but if rising prices were likely to persist, contrary to the Federal Reserve's expectations, the data would be painting a different picture. one economist argued Friday.
Published:6/11/2021 4:18:10 PM
[Markets] US STOCKS-Wall Street ekes out gains to close languid week U.S. stocks closed modestly higher at the end of a torpid week marked with few market-moving catalysts and persistent concerns over whether current inflation spikes could linger and cause the U.S. Federal Reserve to tighten its dovish policy sooner than expected. The Nasdaq gained the most among the three major indexes, while the bellwether S&P 500 squeaked its way to a second straight record closing high. Published:6/11/2021 3:47:03 PM
[Markets] Watch: Arkansas State Trooper Flips Pregnant Woman's SUV As She Looks For A Safe Place To Pull Over Watch: Arkansas State Trooper Flips Pregnant Woman's SUV As She Looks For A Safe Place To Pull Over

An Arkansas State Police trooper is being sued after running out of patience while trying to initiate a traffic stop, and eventually flipping over a pregnant woman's vehicle during a traffic stop on a major highway.

Dashcam video of the incident was released this week showing the driver, Nicole Harper, traveling down I-67 when Senior Cpl. Rodney Dunn tried to pull her over for speeding. Instead of pulling over, she continued down the highway, moving over to the right lane and slowing down with her hazard lights on.

While the woman claims she was looking for a safe place to pull over, the officer ran out of patience. In the video the Arkansas State Police trooper is seen using a PIT maneuver "which caused Harper’s car to crash into the concrete median and flip," according to Fox 16. 

“In my head I was going to lose the baby,” Harper told Fox 16. The video shows the officer asking her: “Why didn’t you stop?” 

She responded: “Because I didn’t feel it was safe.”

The officer then says, "well this is where you ended up.”

“I thought it would be safe to wait until the exit,” the driver pleads. The officer responds: “no ma’am, you pull over when law enforcement stops you.”?

Jalopnik noted that "Dunn gave Harper all of two minutes before he nudged her car" and that the driver was "less than a mile from the nearest exit with a wide shoulder."

In the interim, Harper did just what the Arkansas State Police’s Driver License Study Guide says you are supposed to do when being pulled over. “What to do When You Are Stopped,” number one says to use, “emergency flashers to indicate to the officer that you are seeking a safe place to stop,” Fox 16 reported.

“I did slow down, I turned on my hazards, I thought I was doing the right thing,” Harper said.?

Tyler Durden Fri, 06/11/2021 - 16:40
Published:6/11/2021 3:47:03 PM
[Markets] Bond Yields Plunge Most In A Year, Dollar Spikes As Inflation Soars Bond Yields Plunge Most In A Year, Dollar Spikes As Inflation Soars

On the week, the major stock indices were mixed with The Dow lower, S&P unch-ish, and Small Caps and Big-Tech leading...

The flip-flopping rotation between big-tech and small caps continued all week...

Growth won the week as traders rotated back from value stocks...

Source: Bloomberg

Meme stocks also roller-coastered this week...

Source: Bloomberg

Banks notably underperformed the market this week as yields tumbled...

Source: Bloomberg

Healthcare stocks outperformed as financials lagged...

Source: Bloomberg

VIX closed with a 15 handle for the first time since before the pandemic...

Source: Bloomberg

But, the big story of the week was the collapse in Treasury yields (in the face of a soaring CPI print) as bond shorts were increasingly squeezed...

Source: Bloomberg

Bond shorts this week...

This week saw 10Y Yields drop 10bps - the biggest weekly drop since last June (4th weekly drop in a row)...

Source: Bloomberg

The Treasury yield curve also flattened by the most since last June this week...

Source: Bloomberg

And breakevens saw their biggest weekly drop since April 2020...

Source: Bloomberg

The dollar screamed higher today... erasing all the losses from last Friday's payrolls plunge...

Source: Bloomberg

Cryptos ended the week mixed with Ether notably underperforming Bitcoin...

Source: Bloomberg

ETH/BTC saw a big drop on the week (second biggest weekly drop in ETH relative to BTC since Jul 2019)...

Source: Bloomberg

The dollar's spike today slammed gold to the week's biggest loser in commodity-land as crude managed gains...

Source: Bloomberg

Is it time for copper crash or gold run? Or are yields completely off base still?

Source: Bloomberg

And finally, The Fed's balance sheet reached $8 trillion this week for the first time ever - basically a double since the start of the pandemic panic-response...

Source: Bloomberg

And the balance sheet keeps expanding despite the collapse of COVID...

Source: Bloomberg

Tyler Durden Fri, 06/11/2021 - 16:00
Published:6/11/2021 3:17:08 PM
[Markets] S&P 500 notches another record high as stocks eke out gains S&P 500 notches another record high as stocks eke out gains Published:6/11/2021 3:17:08 PM
[Markets] S&P 500 ends week at record as investors brush off inflation rise Stocks ended a choppy session in positive territory Friday, with the S&P 500 logging its second consecutive record close a day after a hotter-than-expected rise in the May consumer-price index. The Dow Jones Industrial Average rose around 15 points, or less than 0.1%, to close near 34,480, according to preliminary figures. The S&P 500 rose around 8 points, or 0.2%, end near 4,248, while the Nasdaq Composite gained around 49 points, or 0.4%, to finish near 14,069. The Dow lost ground for the week Published:6/11/2021 3:17:08 PM
[Markets] : Two vaccinated Royal Caribbean cruise passengers test positive for COVID-19 The entire ship was vaccinated prior to setting sail --- the two positive tests were breakthrough infections of COVID-19.
Published:6/11/2021 3:17:08 PM
[Markets] Oil prices are the highest in more than 2 years after climbing for a third week Oil prices are the highest in more than 2 years after climbing for a third week Published:6/11/2021 2:46:43 PM
[Markets] : Consumers find shortages and higher prices as COVID-impacted supply chains shift for recovery Companies have reported low levels of inventory, pallets and other items.
Published:6/11/2021 2:46:42 PM
[Markets] Chief Economist: Real Inflation Is Now In The Double Digits And Pain Is Coming Chief Economist: Real Inflation Is Now In The Double Digits And Pain Is Coming

By Joseph Carson, former chief economist at Alliance Bernstein

Today's Consumer Inflation Cycle Comes With Yesteryear Denial, Problems & Consequences

Consumer price inflation is experiencing its most significant increases in decades. Yet, reported inflation does not capture the full scale and breadth of experienced inflation. I never thought the US would experience rampant inflation again, but based on the 1970s price measurement methods, the US experienced double-digit inflation in the past twelve months.

Today's Inflation Cycle

In May, the consumer price index (CPI) rose 0.6%, pushing the twelve-month increase to 5%, the most significant increase since 2008. Core CPI rose 0.7%, lifting the twelve-month increase to 3.8%, the largest increase in almost three decades. As substantial and broad as the gains in reported inflation are, it's essential to the point that experienced inflation is significantly higher.

Over the last several decades, reported inflation has seen substantive measurement changes. For example, government statisticians now employ an arbitrary and non-market price for owner's rent, removing actual housing prices from the calculation. Other substantive changes in the CPI occurred in the mid-1990s following the Congress-sponsored Boskin report, which purportedly shaved 50 to 100 basis points off of reported core CPI each year.

Adjusting reported inflation for those exclusions or changes would result in double-digit gains in both headline and core CPI for the past twelve months. What's worse, knowing consumer prices are running at a double-digit pace, or not knowing actual inflation is that high?

Denying that the current inflation cycle is nothing more than a base effect and is, therefore, "transitory" brings back memories of the 1970s. In the 1970s, Federal Reserve Chair Arthur Burns denied that monetary policy played a role in the inflation cycle. Mr. Burns argued that higher inflation was due to idiosyncratic factors, such as food shortages and the OPEC oil embargo.

The Fed Chair demanded that the Fed staff strip out the volatile food and energy components to prove his point, thereby creating what is now called the core inflation index. That proved to be a policy blunder as it allowed Mr. Burns to maintain an easy money policy that fueled the most significant and most extended inflation cycle in the post-war period.

In recent decades, regional branches of the Federal Reserve have created new price conventions (e.g., median cpi, trimmed cpi). These price measures are misleading as they eliminate the tails in the distribution of prices. And during price cycles, the price tail for items rising a lot is much larger in scale than those at the bottom.

Once inflation cycles start, they gain momentum on their own. That is because price cycles force changes in firms' pricing, ordering, inventory policies, and workers' wage demands.

Significant tightening in monetary policy breaks inflation cycles. It took the Fed Chairs of Volcker and Greenspan an entire decade, lifting official rates far above inflation to break the 1970s inflation, and in 1994 it took Greenspan a full twelve months to suppress a potential cyclical jump in inflation.

Today's inflation cycle creates many problems for the current generation of policymakers.

  • First, how can you use justify changing monetary policy for an inflation problem you say doesn't exist?
  • Second, if policymakers decide they need to raise real interest rates, what price measure do they use as a benchmark?
  • Third, how does the Fed drive real interest rates higher when they own a third of the Treasury market.

Inflation cycles end badly, even when everyone is aware of the problem. Investors are the biggest fans of the "doing nothing" approach of the current generation of policymakers. Yet, if past inflation cycles are a guide to the future, investors will soon become the Fed's loudest critics.

Tyler Durden Fri, 06/11/2021 - 15:42
Published:6/11/2021 2:46:42 PM
[Markets] ‘Markets are very sanguine about the future inflation prospects’: Research Affiliates CIO Chris Brightman, CIO at Research Affiliates, joins Yahoo Finance to discuss the outlook on the rotation out of growth into value stocks, inflationary pressures, and the global minimum tax. Published:6/11/2021 2:16:50 PM
[Markets] House Democrats have just introduced 5 antitrust bills aimed at curbing Big Tech House Democrats have just introduced 5 antitrust bills aimed at curbing Big Tech Published:6/11/2021 2:16:50 PM
[Markets] UK To Extend Lockdown One Month As Indian Variant Spooks Officials Into Vaccine Scramble UK To Extend Lockdown One Month As Indian Variant Spooks Officials Into Vaccine Scramble

UK Prime Minister Boris Johnson is set to delay the country's "freedom day" from lockdowns by just under one month - from June 21 to July 19 - after the 'Delta variant' COVID-19 strain from India exploded 240% in one week, as was first reported by The Sun, and later confirmed by the Financial Times via comments by England's Chief Medical Officer, Chris Whitley, who requested the delay.

Under plans drawn up to be announced on Monday, a two-week review will be included meaning Covid restrictions could be dropped on July 5 if hospitalisations stay down.

But multiple sources told the Sun the chances of lifting restrictions as planned on June 21 were close to zero - in a massive blow to Wembley hosting of the Euros.

Group games will have a 25 per cent stadium cap - 22,500 fans - with that hopefully rising to around 45,000 for the Semis and the July 11 Final.

Via The Sun

Freedom loving Brits are livid at the prospect...

Downing Street was reportedly spooked after cases of the Indian variant began to spike last week - as Public Health England says infections have risen from 12,431 last week to 42,323 - a jump of 240%. The new variant is 2/3 more likely to spread via close contacts, as cases have more than tripled in the last 11 days. Doubling rates for the Delta variant were as high as 4.5 days in some parts of England, with 96% of new cases attributed to the new strain.

According to the Financial Times, "Whitty told the prime minister a four-week delay was vital to avoid a situation in which restrictions are lifted prematurely, only to have to be restored later," news that comes as the UK records its highest weekly rate of COVID-19 cases since early March, with 45,895 new infections reported in the past week.

That said, according to Downing street, "no decisions have been taken" regarding lifting restrictions on June 21, and Johnson may relax guidance on the size of weddings even if he maintains other restrictions into July.

Vaccine push

"It is now critical we double jab everyone as quickly as possible," said one UK official, per the Times, while one Cabinet Office insider said "A delay [to lifting the final restrictions] is the only sensible course of action. It’s our working assumption. The latest modelling is dire and it would be suicide to go ahead with a full easing."

And as The Sun notes:

Just six per cent of all Delta variant infections were in people who had both jabs.

More than half of the 42 deaths due to the mutation were in unvaccinated Brits.

Dr Jenny Harries, Chief Executive of the UK Health Security Agency, said: “With numbers of Delta variant cases on the rise across the country, vaccination is our best defence.

If you are eligible, we urge you to come forward and be vaccinated.

Remember that two doses provide significantly more protection than a single dose."

According to the report, the delay will be used to determine if the vaccine rollout coincides with a reduction - or at least no surge - in hospitalizations, as millions of people receive both jabs.

Of course, this will make lockdown proponents giddy as school girls.

Tyler Durden Fri, 06/11/2021 - 15:03
Published:6/11/2021 2:16:50 PM
[Markets] CityWatch: Rocking back from COVID’s ashes: Live music, silenced by the pandemic, is finally a New York thing again  You might have heard that rock ’n’ roll will never die. Did you really expect a pandemic to kill it?
Published:6/11/2021 2:16:49 PM
[Markets] Why has all the chatter around meme stocks suddenly grown quiet? Why has all the chatter around meme stocks suddenly grown quiet? Published:6/11/2021 1:46:25 PM
[Markets] Ex-Credit Suisse Bond Trader "Savant" Made Millions With Risky, Concentrated Bets Ex-Credit Suisse Bond Trader "Savant" Made Millions With Risky, Concentrated Bets

Earlier this week, we joked about a Bloomberg story claiming a 30-year-old Credit Suisse credit-trading wunderkind was being cut adrift by the bank amid a bout of "de-risking" inspired by the twin blowups caused by Greensill and Archegos, which might cost the bank up to $10 billion.

When the trader, Moroccan-born Hamza Lemssouguer, was poached by Citadel (to join the company's hedge fund division as a portfolio manager for a new credit fund), Credit Suisse managed to keep him from leaving with the promise that the firm would seed a new fund for him under its asset management division. Unfortunately for him, the 30-year-old trading superstar, who was in high school when Lehman collapsed, decided to listen.

Hamza Lemssouguer

Six months later, Bloomberg reports that the door to Citadel is now closed, and that Lemssouguer is pressing ahead with his fund. However, he won't be receiving any money or support from his former employer, which has essentially cut him adrift, according to Bloomberg, which published a lengthy story about Lemssouguer's situation.

But at the chastened Credit Suisse, which has lurched from one crisis to the next this year, Lemssouguer apparently became a risk too great. The bank on Wednesday canceled plans for the young star’s fund, cutting him loose to pursue his ambition without its money or backing. The episode stands as a marker of the bank’s abrupt change in attitude after embarrassing debacles stemming from Archegos Capital Management and Greensill Capital spiraled into billions of dollars in losses for the firm.

In the story, Bloomberg recounts how this 'star trader' rose from a Goldman Sachs intern to a key player in Credit Suisse's junk-bond trading operation who had a reputation for skirting the rules. According to Bloomberg, several complaints alleging insider trading were filed to various international security-market regulators, but Lemssouguer never faced any formal punishment.

For what it's worth, the complaints don't sound like much, having mostly been filed by counterparties who lost money to Lemssouguer. Perhaps this is why they were never taken seriously by Credit Suisse. Or perhaps it's why the bank decided to cut the trader adrift. Bloomberg didn't say.

In 2019, at least three rivals and trading customers made complaints against him to the U.K.’s financial watchdog, alleging insider trading and price manipulation, according to people familiar with the matter. One of those complaints came from a hedge fund that lost money on a bet which paid off handsomely for Credit Suisse, while another came from a firm that actually made money on the trade, the people said.

Although Credit Suisse didn’t receive any formal queries from the U.K.’s Financial Conduct Authority after the complaints, some clients informally raised concerns about Lemssouguer’s tactics with contacts working at the bank, one of the people said. Those complaints weren’t escalated by the clients, the person said.

It’s not clear if the U.K. regulator looked into the complaints against Lemssouguer. The FCA will typically acknowledge any complaint to parties who file them, but may not always provide any information on how it is handling the complaint. The FCA declined to comment.

According to BBG, Lemssouguer, praised in some of CS's marketing materials as a "savant" when it comes to managing risk, generated most of his outsize profits with a relatively straightforward strategy: He placed big, concentrated bets on the debt of distressed companies, then collected a massive premium when prices improved as the companies improved. Some accused Lemssouguer of trading on inside information, particularly regarding one trade involving the bonds of Lowell Group.

While we're unsure whether that makes him a risk-management "savant", or just lucky.

It’s easy to understand why Credit Suisse wanted the trader back: he ranked as one of the firm’s top performers, helping the bank’s European high-yield desk generate about $220 million in 2020 by making outsize bets in risky junk bonds, distressed debt and illiquid securities, according to people familiar with the matter. That’s about 5.5% of the bank’s total fixed income trading revenues.

In recent marketing materials, Credit Suisse described the youthful trader as a savant of the junk-bond market who generated historic profits as he wagered on the fortunes of troubled European businesses.

"His ability to understand the psychology and risk tolerance across market participants and assess liquidity in that context led to some of the most profitable years in the trading desk’s history," according to a presentation advertising his new credit fund seen by Bloomberg News. "He was instrumental in the visibility and risk-taking capacity of the group and introduced rigorous investment and risk-management processes."

Lemssouguer had started to meet prospective investors for his new fund, named Arini after a type of parrot he used to breed in Morocco, in 2021 and planned to raise as much as $500MM for the debut fund. However, now it's unclear how much he has actually raised, since Credit Suisse has pulled the seed money it promised.

But the whole incident with the trader might be a learning opportunity for others: a bird in the hand is sometimes worth two in the bush.

Tyler Durden Fri, 06/11/2021 - 14:41
Published:6/11/2021 1:46:25 PM
[Markets] : House Democrats just introduced 5 antitrust bills aimed at reining in Big Tech House members on Friday introduced five antitrust bills --- including one that would force Amazon.com Inc. and others to essentially split into two companies or shed their private-label products --- in the most aggressive action yet by federal lawmakers to rein in the market influence of Big Tech.
Published:6/11/2021 1:46:25 PM
[Markets] Dow Slips, Small Caps Lead Upside, Nasdaq Holds Gain; These Biotech Stocks Make Notable Moves The Dow Jones traded slightly lower in today's market after paring an earlier gain. Over the past hour, the indexes traded near their lows. Published:6/11/2021 1:17:46 PM
[Markets] "Shot Themselves In The Foot" - AMC 'Messiah' Mudrick Battered By Bad Options Bet "Shot Themselves In The Foot" - AMC 'Messiah' Mudrick Battered By Bad Options Bet

On June 1st, Mudrick Capital went from hero to zero in the eyes of Reddit's Wall Street Bets rebels as the hedge fund scooped up $230 million in newly issued stock at an above market price ($27.12), prompting Redditors to herald the fund as the company's savior and sparking a bullish move in the stock - now that the firm was (marginally) better capitalized.

Just a few short hours later, a Bloomberg headline knocked the firm off their ivory tower to the moon as Redditors described them as “losers,” “scum bags” and “a large waving pile of s—t with no future," after the fund exited all of their equity position at $32 (a heroic trade making over $40 million in hours that upset the buy-and-hold frenzied WSB crowd). One Reddit post summed up their attitude to the fund's quick profit... “Mudrick didn’t stab AMC in the back…They shot themselves in the foot.”

That is where the story ended for many...

But now, as The Wall Street Journal reports, things didn't work out quite as well as Mudrick hoped and Redditors will get some schadenfreude payback...

It turns out that inside Mudrick, executives were growing apprehensive and the firm’s risk committee met on the evening of June 1 and decided to exit all debt and derivative positions the following day (only the cash equity position had been exited prior).

However, as WSJ notes, that was one day too late.

Jason Mudrick

As it happens that among that set of derivatives positions, Mr. Mudrick had sold call options on AMC stock, producing immediate income to offset some potential losses if the theater chain did face problems (or as some might say 'picking up pennies in front a steamroller'). The derivatives gave buyers the option to buy AMC shares from Mudrick Capital for about $40 (viewed as a seeming improbability when the stock was trading below $10).

In overnight trading, AMC started to accelerate above $40... and within minutes of the open the next day had screamed up above $70 - sparking a massive surge in the price of those 'sold' call options, leaving Mudrick with a major loss...

The loss on the sold options, it turns out, was big enough to not only erase the gains, it left the previously heroic-looking trader looking like the biggest loser.

WSJ reports that Mudrick Capital made a 5% return on the debt it sold but after accounting for its options trade, the fund took a net loss of about 5.4% on AMC.

Mr. Mudrick’s fund is still up about 12% for the year, one of the people said. Meanwhile, investors who bought AMC stock at the start of the year and held on have gained about 2000%.

We can only imagine the reaction the WSB crowd once they find out about this.

Tyler Durden Fri, 06/11/2021 - 14:06
Published:6/11/2021 1:17:46 PM
[Markets] Retirement Weekly: To Roth or not to Roth? A new study challenges conventional thinking on Roth conversions
Published:6/11/2021 1:17:46 PM
[Markets] Consumer sentiment rebounds in June led by views of wealthier Americans After hitting a pandemic high in April, and falling precipitously in May, consumer sentiment rebounded in June, according to a University of Michigan survey. Published:6/11/2021 12:47:21 PM
[Markets] Outside the Box: Stock investors now have come to a cliff in the road — and options are limited Fundamental things haven't applied to the U.S. market but that seems about to change.
Published:6/11/2021 12:47:21 PM
[Markets] Peakish Growth? The 10Y Yield Decline Is More Signal Than Noise Peakish Growth? The 10Y Yield Decline Is More Signal Than Noise

Authored by Samuel Rines, Chief Economist at Avalon Advsiors,

“For a climber, saying that you are stopping by Everest is like saying that you are stopping by to see God.”

- Roland Smith, Peak

  • The pace of GDP growth is likely to peak in Q2. That makes sense given the amount fiscal stimulus in the first few months.

  • But it is the pace of deceleration that matters more, and that remains an open question.

  • This is interest because the pace will affect inflation, yields, and the Fed.

  • At the moment, it looks “peakish” from GDP expectations to Fed hike timing to CPI forecasts.

Lots of Lines… But Useful

It is a messy chart. But it communicates the point of growth being peakish for the moment and the deceleration in the future. For the second quarter, the growth expectations may be a touch high given the lagging labor market recovery (more on that topic below). That should spill into the third quarter as individuals return to work.

But the story is really about the fourth quarter and the beginning of 2022. Those estimates remain well above the longer term “potential growth” of the U.S. That is somewhere around 2.25%. This summer will continue to see eye-popping GDP and growth statistics as the economy reopens. But the question is what happens after that.

Lots of Churn

There has been a tremendous amount of commentary and headlines surrounding the JOLTS report with much of the focus on the number of job openings soaring. But what might be more important for understanding the labor market dynamics at work here is how many people are quitting their jobs. There is an incredible amount of churn in the U.S. labor force. That 3.1% quit rate represents just under 4 million people.

One side-effect of rising wages is to incentivize job switching. It may turn out that the wage gains were largely captured by quitters and switchers - not necessarily those coming back to the workforce. The churn helps explain the lack of an uptick in labor force participation while hires have moved above pre-covid levels.
How does this tie into the narrative around GDP? With this type of dynamism and job openings, it increases the likelihood of exceedingly strong growth this summer.The question of the pace of deceleration becomes a fourth quarter and 2022 question.

CPI Should Normalize

Then there is inflation.

The above chart is similar to the GDP chart only the retreat toward normality is quicker. Again, all of this makes sense. Inflation pressures are expected to be transitory. But the question is - again - the rapidity of the retreat. After all, the “base effects” that are helping make inflation look horrid today will be completely the opposite in 2022. Simply, the deceleration of inflation could be one of the more surprising features of late 2021 and 2022.

All in 2023

Why is any of the above important? All of the above complicates the Fed’s decision-making. Not to mention, the dynamics of the deceleration will also affect yields - particularly longer duration. For the moment, markets believe 2023 is the year of the hike. Expectations for 2021 and 2022 have receded. Maybe it was all the “talking about talking about taper” talk that moved expectations for a hike higher. Oddly, taper talk (and eventual tapering) would have the effect of pushing down growth and inflation expectations. And therefore yields.



And that is the odd part of all of the above. GDP is going to decelerate with inflation (probably) following suit to even greater extent. All of this while the Fed is talking about talking about tapering their asset purchases. Maybe the decline in the 10-year yield is more signal than noise. With seemingly everything looking peakish, it is worth contemplating what the otherside might look like.

*  *  *

Here Is the sign-up page, and here is the archive.

Tyler Durden Fri, 06/11/2021 - 13:40
Published:6/11/2021 12:47:21 PM
[Markets] Biden "Not Going To Hold Back" In Expected Tense Putin Meeting: White House Biden "Not Going To Hold Back" In Expected Tense Putin Meeting: White House

Authored by Dave DeCamp via AntiWar.com,

The US continues to downplay expectations for the upcoming summit between President Biden and Russian President Vladimir Putin that is scheduled for June 16th in Geneva.

The meeting comes as US-Russia relations are at their lowest point since the Cold War. Despite the dangerous path the two largest nuclear powers are on, the Biden administration doesn’t seem interested in any diplomatic breakthroughs.

Via Sputnik/Reuters

"We’re not expecting to have a huge outcome from this," White House Press Secretary Jen Psaki said of the summit in an interview with ABC. Psaki made it clear that Biden will take a confrontational approach to the meeting. "He’s going to be straightforward, he’s going to be candid, he’s not going to hold back," she said.

President Biden also made his hostile approach known in comments on Wednesday from the UK. "I’m heading to the G-7, then to the NATO ministerial, and then to meet with Mr. Putin to let him know what I want him to know," he said.

Earlier this year, Biden agreed that he believed Putin was a "killer" who has "no soul." Besides the rhetoric, the Biden administration has slapped sanctions on Russia, supported Ukraine during a tense stand-off over Crimea and Donbas, and has sent warships into the Black Sea.

In the meantime...

Former President Donald Trump on Thursday wished President Biden luck in his upcoming meeting with Russian President Vladimir Putin — and also encouraged him to stay awake.

"Good luck to Biden in dealing with President Putin—don’t fall asleep during the meeting, and please give him my warmest regards!" Trump said in an emailed statement.

One area Biden has said he could work with Russia on is nuclear arms control. But besides agreeing to extend New START, the Biden administration hasn’t taken any steps to foster new treaties.

Last month, the US told Russia it would not rejoin Open Skies after Moscow’s attempts to salvage the mutual surveillance treaty that the Trump administration withdrew from in 2020.

Tyler Durden Fri, 06/11/2021 - 13:00
Published:6/11/2021 12:16:01 PM
[Markets] Economic Report: Consumer sentiment rebounds in June led by views of wealthier Americans After hitting a pandemic high in April, and falling precipitously in May, consumer sentiment rebounded in June, according to a University of Michigan survey.
Published:6/11/2021 12:16:01 PM
[Markets] GLOBAL MARKETS-Stocks hover near record highs as bond yields slide The dollar rose and key U.S., European and global stock indexes hovered near record highs on Friday as investors embraced the easy monetary policies of major central banks and their message that rising inflation will be transitory. Also boosting sentiment in Europe was the European Central Bank on Thursday raising its growth and inflation projections, while it again pledged a steady flow of stimulus for now. The ECB's projections pushed the pan-regional STOXX Europe 600 index up 0.68% to an intraday high and record close at 457.64. Published:6/11/2021 11:46:10 AM
[Markets] Buy This, Not That: Dreaming of renting an RV for your next great road trip? Here’s exactly how to do it right From where to go, to how to rent a recreational vehicle, trailer or camper van, RV pros share their best travel advice.
Published:6/11/2021 11:46:10 AM
[Markets] "The Carry/Theta Bills Are Crushing" - Here's Why The "Reflation" Trade Is Collapsing "The Carry/Theta Bills Are Crushing" - Here's Why The "Reflation" Trade Is Collapsing

One day before the "most important CPI print in history", we showed the latest JPM Treasury Client survey and pointed out that "there were virtually no traders left to short Treasurys, with all bears already on board" as net short interest had hit an all time high. As a result, even a red hot CPI had been fully priced in by now, and the result would be sharply lower yields as we got another massive short squeeze, this time in rates.

Well, with 10Y yields tumbling to March lows and breakevens in freefall over the past 48 hours, that's precisely what happened, and since not even yesterday's scorching inflation print managed to spark some bearish rate sentiment, the market was promptly overrun with speculation that the reflation trade is now largely finished as "inflation has peaked", an argument which was further bolstered by today's drop in UMich 1Yr and 5-10Yr inflation expectations.

Commenting on this shift in market sentiment, Nomura's Charlie McElligott writes that the liquidation of “Reflation” and “Hawkish Fed” trades clearly accelerated into crescendo yesterday, "as despite another really strong US Core CPI print yesterday, the “transitory” nature of a large part of the gains (“Used Vehicles” being 1/3 of the seasonally-adjusted increase, and as a function of supply-chain and semiconductor shortage issues), as well as still-stagnant Wages (AHE YoY cratering with MoM utterly sideways) and most critically, an incredibly disappointing Labor market, all lends further credibility to the Fed’s “slow-play” stance and forces a positioning-cleanse of insanely crowded “Short UST” positioning—which critically, hasn’t been returning for months now."

And even though evidence is mounting on the "not transitory" side as Bank of America showed yesterday, the Nomura quant says that there is little-to-no willingness to hold out another few months to confirm- or deny- whether inflation is indeed “transitory or not,” because the Carry- and/or Theta- bill is bleeding many of these trades out of existence, with many expressions now losing-money since March entry.

Some places where the collapse of the reflation is most obvious are the following:

  • Eurodollar downside plays (1Y midcurve puts / put spreads) continue to see liquidations in 0en (July), 0eq (Aug) and as of yesterday, now 0eu (Sep) as hike premium is taken out of the market—while many of these expressions were funded by selling ED$ Calls, which have exploded higher in Value in pure “pain-trade” fashion
  • Curve Caps- (curve steepener options) and High-Strike Payers- being unwound at an accelerated pace
  • UST 10Y Treasury (nominal) yields are on-pace for the largest weekly decline in a year as crowded shorts are stopped-out; recall, the CTA Trend model shows that now, 2w, 1m and 3m model windows are all now strong “Long” signals, while as a further qualifier of the magnitude of the algo buying in TY yesterday, our “trade imbalance” analysis shows that the cumulative buy imbalance in 10Y futures was the 2nd largest since July 2019, and 99.7%ile (only second to the buying on 2/26/21)
  • 10Y UST Breakevens continue their collapse despite higher Crude Oil, -28bps at the lows yesterday from the May 12th highs (ironically, the release of the prior month’s “inflation shock” April CPI print)

So does this mean that the reflation trade is over even though prices are soaring so much, a record number of Americans are putting off home, car, durable purchasing plans?

Well, as McElligott says, "gun to my head, I’d say that without a “tighter” Labor market to stoke the flames again, 1) “Reflation” is out of gas into this “Goldilocks 2.0” economic backdrop inflection and will continue to moderate on further positioning-cleanse, 2) UST long-end / Duration simply will not be able hold a sell-off and 3) Real Yields will not be able to move higher."

Why?  Because as the Nomura quant elaborates, "this is not simply because the fundamental case for “Reflation” growing tired due to the misalignment of increasingly “transitory” inflation inputs doing much of the heavy-lifting alone, vs still lagging Labor and stagnant Wages" but also "the “flows” are simply overwhelming here—not just 1) the aforementioned stop-out from “Short USTs,” “Reflation” and “Hawkish Fed” bets from the Leveraged community, but 2) Real $ buying from Asset Managers who have been underweight Duration / long Cash; 3) buying from Bank Treasury desks beyond-stuffed on record Deposits continues one-way; 4) Pension rotation back into fixed-income / duration on return to ~100% “funded” ratios….as all are working together to flip recent supply / demand trend."

The Nomura strategist also notes that further “Reflation” push-back from clients grew louder over the course of Thursday, "with a multitude of convos making the case that by the time that we do begin to see “Labor tightening” (say, after unemployment benefits run out), many believe that this will then be offset the later we push into ’21 by the following mix:"

  • A fading impulse from the “reopening / pent-up demand” phenomenon
  • A (disinflationary) push from Retailers to discount into said fading demand from the initial “renormalization impulse”
  • Price-inputs like used-vehicles—which have done a lot of the Core CPI “heavy lifting”—will increasingly moderate (resolve supply-chain / semi-shortage issues) in-time;
  • And all as the infamous inflation “base-effect” then too will begin to cut the other way and provide “drag” (CPI troughed in May 2020—so here on out, base-effect is likely a incrementally growing headwind)

To this we would also add the global economic "grand-daddy" signal of all: China's collapsing credit impulse which as we showed last month, just went negative, and is about to unleash a global deflationary shockwave:

"Net-net", McElligott says, "the conversations from clients yesterday voiced a turn towards the idea that we are nearing a “best (of the reflation impulse) is behind us” attitude shift now into “Goldilocks,” and speak to preference to move away from hard “directional” trades like “Reflation,” and instead accelerate into “Short Vol / Carry / Roll” types of trades, built-upon a dovish-Fed now having further “air-cover” to delay and “slow-play” tapering / tightening and squelch Volatility for another few months."

Meanwhile, thanks to the stabilization in Bonds/Duration/“Bull-Flattening” in Curves, we get heavy a knock-on effect into Equities thematic / risk-premia space, as the impulse rotation and rebalancing over the past year into the new Momentum-trade of “From Duration to Reflation” (bullish economically-sensitive “Cyclical Value” / Leveraged Balance-Sheet / High-Beta and bearish duration / bond proxy “Secular Growth” / “Min Vol” / “Quality”) received a robust jolt of reversal of “leaders / laggards”

Thus, “new” Equities Momentum was rocked yesterday, with “Long-Term Momentum Factor “-2.3% on day, as the YTD Winners got spanked on this pivot back into economic “Goldilocks” while YTD laggards / source of funds “Secular Growth” Nasdaq / Tech saw a resurgence on the bond rally:

  • “Reflation” Winners over the past 1Y / YTD hit lower: “10Yr Yield Sensitive Factor” (-2.8% on the day), “Growth Nowcast (-2.1%), “Cyclical Value” (-1.5%), “Leverage” (-1.2%), “Short Interest” (-0.7%) and “Defensive Value” (-0.5%) all dragging
  • “Reflation” Losers rallied (with USTs / Duration): “Low Risk Factor” (+1.5%), “Size (Big-Small)” (+1.5%), “Hedge Fund Crowding” (+1.5%), “HF L/S” (+1.4%), “(Fed) Liquidity Beneficiaries” (+1.1%)
  • Critically, “Vol Control” strategies likely kept the market held with a latent bid despite the “reverse rotation” under the surface, as the absolute destruction in rVol (1m realized at 9.8 / 6.5%ile, 3m realized 11.9 / 0.6%ile) continues to feed the EPIC mechanical exposure adding

Finally, the Nomura quant observes that the vol-control exposure add notionals are stunning: a whopping +$16.8Billion was added on the day (98.1%ile), +$33.1B on the past week (95%ile) and a staggering +$40.7BN over the past 2w period (91.2%ile)!

So with rates flatlining and unlikely to move higher, sparking a VaR shock/equity selloff, is the market party back on full force?

Perhaps, but we first need to get through next week when as observed previously, we get a critical Quad-witch Op-Ex, when a massive amount of market stabilizing dealer Gamma- and Delta roll-off - 80% of SPX / SPY Net Delta and 84% of QQQ Net Delta rolling-off front-month - potentially becoming a source of de-risking flows (which threatens the loss of an exceedingly large portion of this currently “insulation,” which could then see an evolution towards “accelerant” flow into new, wider price-distribution/range.

And as previously-stated (in "4 Reasons Why The Market Doldrums End With Next Friday's Op-Ex"), from a “Vol Control” perspective, buying could grind to a relative halt over the next two weeks without a further repricing (lower) in realized Vol, while instead the potential sums of exposure to sell into wider daily market move potentials jumps precipitously.

So for those looking for a pullback window, keep a close eye on and around next week’s Op-Ex cycle turn, as all of the abovementioned flows are likely digested... even though as McElligott concludes, "clients will happily “buy that dip” when it happens, on account of a “passive / dovish Fed” further emboldening “short Vol” environment and re-risking."

Tyler Durden Fri, 06/11/2021 - 12:40
Published:6/11/2021 11:46:10 AM
[Markets] Merkel's Last G-7 Summit Marred By COVID Outbreak At Hotel Housing German Delegation Merkel's Last G-7 Summit Marred By COVID Outbreak At Hotel Housing German Delegation

As leaders of the world's wealthiest countries prepared to meet for the G-7 summit beginning Friday, the German delegation (led by Chancellor Angela Merkel) experienced a close call as one of the hotels where they were scheduled to say reported a fresh COVID-19 outbreak.

According to Bloomberg, members of Merkel's security detail were already checked in at the Pedn Olva hotel in the host town of St. Ives when local staffers tested positive.

The Chancellor is still expected to attend the G-7 Summit in Cornwall, though Bloomberg's sources wouldn't say where she's expected to stay, or how her delegation responded to the outbreak. A spokesperson for No. 10 Downing Street confirmed to the press that Merkel is still expected. The summit kicked off at around 1100 local time in the region along the southwestern coast of England.

Merkel received her first jab a few weeks back, but is not yet fully vaccinated. Given a recent spike in British COVID-19 cases, some Germans questioned whether it would be wise for Merkel to attend in person. PM Johnson is now reportedly mulling delaying the final stage of the pandemic lockdowns.

Germany's public health officials have yet to remove the UK from the country's list of high-risk countries. Any other travelers to the UK must quarantine for two weeks after returning to Germany.

According to Merkel, the biggest "concern" for German public health officials is the "Delta" variant, the new name for the mutant strain first discovered in India that helped to drive that country's recent outbreak. The Delta variant has been found to be circulating in the UK, where public health officials are closely monitoring the situation.

But this is the last G-7 Summit for Merkel before she finally retires after 16 years in power.

Tyler Durden Fri, 06/11/2021 - 12:04
Published:6/11/2021 11:15:54 AM
[Markets] FDA says millions of J&J COVID-19 vaccine doses need to be discarded FDA says millions of J&J COVID-19 vaccine doses need to be discarded Published:6/11/2021 10:47:07 AM
[Markets] : ‘She is an enabler who refuses to admit it’: My mother sold her house to my brother and offered me 10% of the proceeds. Is that fair? 'My brother continues to be coddled by our mother. He's over 30 with no job, and my mother is still paying his bills, and even doing his laundry.'
Published:6/11/2021 10:47:07 AM
[Markets] It's "Permanent" Not "Temporary" - Dollar's Purchasing Power Plunged At Fastest Pace Since 1982 It's "Permanent" Not "Temporary" - Dollar's Purchasing Power Plunged At Fastest Pace Since 1982

Authored by Wolf Richter via WolfStreet.com,

...and it’s a lot worse than it appears.

The Consumer Price Index jumped 0.6% in May, after having jumped 0.8% in April, and 0.6% in March – all three the steepest month-to-month jumps since 2009, according to the Bureau of Labor Statistics today. For the three months combined, CPI has jumped by 2.0%, or by an “annualized” pace of 8.1%. This current three-month pace of inflation as measured by CPI has nothing to do with the now infamous “Base Effect,” which I discussed in early April in preparation for these crazy times; the Base Effect applies only to year-over-year comparisons.

On a year-over-year basis, including the Base Effect, but also including the low readings last fall which reduce the 12-month rate, CPI rose 5.0%, the largest year-over year increase since 2008.

In terms of the politically incorrect way of calling consumer price inflation: The purchasing power of the consumer dollar – everything denominated in dollars for consumers, including their labor – has dropped by 0.8% in May, according to the BLS, and by 2.4% over the past three months, the biggest three-month plunge in purchasing power since 1982:

On an annualized basis, the three-month drop in purchasing power amounted to a drop of 9.5%, and this eliminates the Base Effect which only applies to year-over-year comparisons.

That plunge in purchasing power is “permanent” not “temporary.”

Yup, the current plunge in purchasing power is permanent. And the plunge in purchasing power in the future is also permanent.

The only thing that might make a small portion of it “temporary” is if there is a period of consumer price deflation, which has happened for only a few quarters in my entire life, for example in the last few months of 2008, which is indicated in the chart above. So I’m not getting my hopes up.

The rest of the time, we’ve had lots of decline in purchasing power. And that has proven to be rock-solid “permanent,” and we never got that lost purchasing power back.

Durable Goods inflation exploded by 10.3% from a year ago.

And it jumped by 3.0% in May from April, the biggest month-to-month jump since 1980. The problem is across the board, but the biggest biggie is used vehicles.

Used Vehicle CPI exploded by nearly 30% year-over-year, and by 7.3% just in May. I have long been fuming about and dissecting the reasons behind this price surge, based on data from the auto industry. And it is now seriously showing up in used-vehicle CPI.

This chart shows the actual CPI as a price index, not the year-over-year percentage change of that index. This eliminates the issue of the Base Effect.

But “hedonic quality adjustments” over the years have held down the CPI for used vehicles, producing this astonishing chart above, where the index in 2020 was below where it had been 20 years earlier, even as in the real world, used vehicles got a lot more expensive. Only the scary-crazy price spikes in May and April pushed the index above its level 20 years ago.

These hedonic quality adjustments are applied to account for improvements in vehicles over the years, such going from a three-speed automatic transmission to a 10-speed electronically controlled transmission. The price increases theoretically associated with “quality improvements” are removed from the CPI.

In theory, CPI attempts to measure price changes of the same item over time; and when the price change is based on improvements, it is not inflation because you’re getting more as you pay more.

In practice, this has led to a consistent, purposeful, politically convenient, and bipartisan understatement of inflation as measured by CPI.

New Vehicle CPI repressed by hedonic quality adjustments. The adjustments have practically eliminated the appearance of inflation as measured by CPI in new vehicles, even though new vehicles have gotten a lot more expensive, with the cheapest cars disappearing from the automakers’ lineups.

Nevertheless, year-over-year new vehicle prices rose 3.3%, the biggest increase since 2012, despite vigorous hedonic quality adjustments. Note how the index used to rise into the mid-1990s, at which point the hedonic quality adjustments were applied and forced the index back down:

For a dose of reality, data from the auto industry shows that the “average transaction price” (ATP) of new vehicles sold to retail customers in May jumped to $38,255. The ATP is a function of the price of new vehicles sold and of the mix of new vehicles sold. Based on data provided by J.D. Power, the ATP has jumped by 28% over the past seven years since 2014. Note the huge jump since June 2020:

Services CPI jumped 3.1% year-over-year, held down by fake homeownership cost index.

About two-thirds of the overall CPI is for services. They include the biggest biggie of all: housing – more on that in a moment. They also include healthcare, insurance, education, subscriptions for services such as broadband, cellphone, streaming, etc.

The CPI for services rose by 3.1% year-over-year and jumped by 0.5% in May. Over the past three months, the CPI for services rose 1.3%, for an annualized increase of 5.2%.

The actual plunge in purchasing power is even worse.

Housing costs – rent and homeownership costs combined – account for about one-third of overall CPI – it’s the biggest category in CPI.

The rent component of CPI, called “rent of primary residence” (=7.7% of total CPI in May) has been rising month after month this year at a constant 0.2%, including in May, and is up 2.2% over the 12-month period.

The homeownership component, called “Owners’ equivalent rent of residences” (=23.8% of overall CPI in May), ticked up just 0.3% for the month and a mind-bendingly low 2.1% for the 12-month period, despite the explosion of home prices over the past 12 months.

The reason this homeownership component completely misses the red-hot inflation in housing – the loss of the dollar’s purchasing power with regards to homes – is that it’s based on surveys of homeowners’ estimates of how much their home would rent for. It is a measure of rent, as guessed by the homeowner (red line in the chart below).

The Case-Shiller Home Price Index is a more realistic house-price inflation measure. It’s based on the sales-pairs method, measuring the price changes over time for the same housesoared by 13.2% year-over year, the red-hottest increase since December 2005 (purple line):

The loss of purchasing power is “permanent.”

So, hedonic quality adjustments for durable goods, such as new and used vehicles, plus the elegant fiction of “Owners’ equivalent rent of residences” for housing costs, plus some other CPI reduction methods, such as “substitution,” see to it that the actual loss of purchasing power of the consumer dollar – and of labor that is paid in dollars – is far worse than even these very ugly inflation data released today.

And this loss of purchasing power is permanent. It won’t suddenly come back, except fractionally during these minor bouts of deflation we get every now and then.

What’s “temporary” is the pace of the loss of purchasing power, in the sense that it changes every month.

For sure, the spike in used vehicle prices cannot go on infinitely. At some point it will have to back off. But then other prices will spike, such as airline tickets, hotel bookings, restaurant meals, or insurance.

Inflation is a game of whack-a-mole. One pops up as another backs off. So it could very well be that CPI inflation may be 4% next May, down from 5% now, and we’ll be celebrating that the 5% was “temporary,” and was replaced by 4%, hahahaha. But the purchasing power of the dollar that is lost every month is lost permanently.

*  *  *

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Tyler Durden Fri, 06/11/2021 - 11:44
Published:6/11/2021 10:47:07 AM
[Markets] FTSE 100 nears pre-pandemic high FTSE 100 nears pre-pandemic high Published:6/11/2021 10:16:17 AM
[Markets] The Hangover Arrives: Explosive Inflation Leads To Record Collapse In Home, Car Purchase Plans The Hangover Arrives: Explosive Inflation Leads To Record Collapse In Home, Car Purchase Plans

For the past several months we have warned about the pernicious effects soaring prices are having on both corporations ("Buckle Up! Inflation Is Here!") and consumers (""This Is Not Transitory": Hyperinflation Fears Are Soaring Across America"), prompting even otherwise boring sellside research to get  (hyper) exciting, with Deutsche Bank (which warned this week that "Inflation Is About To Explode "Leaving Global Economies Sitting On A Time Bomb"") and Bank of America (which "Just Threw Up All Over The Fed's "Transitory" Argument") now openly saying that the Fed is wrong, and the US is facing a non-transitory, and far higher inflation.

But none of this has spooked the Fed into conceding - or believing - that inflation is anything more than transitory. And maybe just this once, the Fed has a point because all else equal, by which we mean lack of rising wages, the best cure to higher prices is, well... higher prices.

Presenting Exhibit A: two weeks ago, we observed that anticipating an end to Biden's stimmy bonanza end and that soon they will have to live again within their means, Americans' buying intentions (6 months from today) as measured by the Conference Board, had cratered across the 3 major spending categories: homes, automobiles and major household appliances.

The drop was so massive, it amounted to the biggest one-month drop in intentions to purchase appliances...

... and homes...

This confirms what we noted earlier, namely a record divergence between crashing homebuyer confidence (due to record home prices) and soaring homebuilder confidence (also due to record home prices). Guess which one will matter in the end.

Fast forward to today when we just got Exhibit B: the June UMichigan Sentiment Survey.

While there was some good news here, in that inflation expectations for both the 1-year and 5-10 lookahead periods dropped slightly...

... what we found more concerning is what chief economist, Richard Curtin said, namely that since "Rising inflation remained a top concern of consumers", the spontaneous references to market prices for homes, vehicles, and household durables fell to their worst level since the all-time record in November 1974.

And as Curtin adds, "these unfavorable perceptions of market prices reduced overall buying attitudes for vehicles and homes to their lowest point since 1982. These declines were especially sharp among those with incomes in the top third, who account for more than half of the dollar volume of retail sales."

This can be seen in the following chart showing records across the board for "bad buying conditions" due to high prices for houses, durable goods and autos. In other words, due to soarking prices is America is going on a buyers' strike.

This, for better or worse, screams not only stagflation but also permanently higher prices, as Curting elaborates:

... in the emergence from the pandemic, consumers are temporarily less sensitive to prices due to pent-up demand and record savings as well as improved job and income prospects. The acceptance of price increases as due to the pandemic, makes inflationary psychology more likely to gain a foothold if the exit is lengthy.

The problem: sooner or laters the stimmies will end, but prices by then will already be fixed higher, and good luck trying to pull them down.

While expansive monetary and fiscal policies are still warranted, the accompanying rise in inflation will cause uneven distributional impacts. Those impacts have already been noticed in June among the elderly and lower income households. A shift in the Fed's policy language could douse any incipient inflationary psychology, it would be no surprise to consumers, as two-thirds already expect higher interest rates in the year ahead.

Oh, and for those saying wage hikes may be permanent we have some bad news: employers know very well that the extended unemployment benefits bonanza ends in September at which point millions of currently unemployed workers will flood back into the labor force sending wages sharply lower, and is why instead of raising base pay, most potential employers offer one-time bonuses, which - as the name implies - are one-time. As for higher wage pressures, well... just wait until October when everything reverses, Uncle Sam is no longer a better paying competitor to the US private sector, and wages slump.

What does that mean for the economy? Well, all those producers and retailers who got used to bumper demand and pushed their prices sharply and not so sharply higher, will face a stark choice: either drag prices right back down, or sell far fewer goods and services. That, or just await the next bailout.

One thing is certain: six months from today, the US economy will be far, far uglier.

Tyler Durden Fri, 06/11/2021 - 11:03
Published:6/11/2021 10:16:17 AM
[Markets] Need to Know: Is this the Manchin rally? Bonds are rising and stocks at record high as spending expectations wane You wouldn't expect stocks and bonds to rise after a hotter-than-forecast inflation reading in a market that has been obsessed with the I-word, yet that's what happened on Thursday.
Published:6/11/2021 10:16:17 AM
[Markets] U.S. consumer sentiment on the rise in June U.S. consumer sentiment on the rise in June Published:6/11/2021 9:50:16 AM
[Markets] Dow Jones Reverses Lower As S&P 500 Nears Record High; Tesla Slides; Apple, Microsoft Near New Buy Points The Dow Jones Industrial Average rallied 150 points Friday, as the S&P 500 neared more record highs. Tesla stock slid, while Apple offers a new buy point. Published:6/11/2021 9:50:16 AM
[Markets] State Street Unveils New Crypto Business In Wake Of New Global Regulations State Street Unveils New Crypto Business In Wake Of New Global Regulations

With several global megabanks, including Citigroup, Goldman Sachs and JPMorgan, already announcing plans to launch their own cryptocurrency-focused trading desks or investment products, on Thursday, hours after reports about the Basel Committee's new proposal for how much capital banks must hold in reserve to offset the high risk associated with holding cryptocurrencies, CoinDesk reported that State Street has launched its own crypto division to be led by EVP Nadine Chakar.

According to CoinDesk, State Street said it's expanding its digital platform to include crypto, central bank digital currency, blockchain and tokenization (setting it up as one more potential asset) and will upgrade its existing GlobalLink platform into a multi-asset digital trading system. Chakar will report to Lou Maiuri, the bank’s chief operating officer, State Street said in a press release Thursday.

Back in April, CoinDesk reported that the Boston-based bank (which is one of the biggest bank's in the world thanks to its asset management arm and ETF businesses) was working on a new trading platform for crypto, spending billions of dollars licensing technology via a partnership between the bank’s Currenex trading technology provider and London-based Pure Digital, which develops infrastructure for foreign-exchange trading platforms.

"Digital assets are quickly becoming integrated into the existing framework of financial services, and it is critical we have the tools in place to provide our clients with solutions for both their traditional investment needs as well as their increased digital needs," State Street CEO Ron O’Hanley said in a statement included with the press release.

But before it even started with the platform, State Street was appointed as the fund administrator and transfer agent of the VanEck Bitcoin Trust, an exchange-traded fund whose launch is still pending on an SEC stamp of approval. Apparently, that's how State Street, which has its own custody business focusing on more traditional assets, first got a taste of the crypto business. Now it looks like State Street is playing "catch-up" in the crypto custody market. “When BNY Mellon entered the crypto custody space, that pretty much forced State Street to get involved,” the source said. In February, BNY Mellon announced it is starting a digital custody unit later this year.

An with the new Basel rules looking like a slam dunk for crypto, could the long-awaited 'institutional adoption' flood finally be picking up speed?

Tyler Durden Fri, 06/11/2021 - 10:42
Published:6/11/2021 9:50:16 AM
[Markets] Market Snapshot: Stocks struggle to hold gains after S&P 500 pushes further into record territory U.S. stocks struggle to hold gains Friday after the S&P 500 initially extended a push into record territory a day after data showed inflation continues to run hot.
Published:6/11/2021 9:50:16 AM
[Markets] S&P 500 pushes further into record territory early Friday S&P 500 pushes further into record territory early Friday Published:6/11/2021 9:15:33 AM
[Markets] Dispatches from a Pandemic: The softball field and bowling alley are replacing the office water cooler 'We will all be incredibly rusty no doubt, and play terrible. But that’s not the most important part.'
Published:6/11/2021 9:15:33 AM
[Markets] 'Hope' Sparks Bounce In UMich Sentiment, Fears Of Soaring Prices At 47 Year Highs 'Hope' Sparks Bounce In UMich Sentiment, Fears Of Soaring Prices At 47 Year Highs

Following May's disappointing drop in sentiment, analysts were confident that UMich Sentiment is set to rebound in today's preliminary June data and it did, handily beating expectations (86.4 vs 84.4 exp vs 82.9 prior). The jump was driven by a big jump in 'hope' (from 78.8 to 83.8) while current conditions rose less than expected...

Source: Bloomberg

Democrats' confidence rebounded in these early June data, but Republicans' hope fell further...

Source: Bloomberg

Perhaps the most watched aspect of the survey is inflation expectations, which notably moderated...

Source: Bloomberg

Which quite frankly makes absolutely no sense given that spontaneous references to market prices for homes, vehicles, and household durables fell to their worst level since the all-time record in November 1974...

These unfavorable perceptions of market prices reduced overall buying attitudes for vehicles and homes to their lowest point since 1982.

Finally, we come back to the record spread between homebuilder confidence and homebuyer confidence as The Fed's interventions have priced more and more and more Americans out of the 'Dream' they were promised...

Source: Bloomberg

...as Blackrock et al. buy up everything in sight.

Tyler Durden Fri, 06/11/2021 - 10:09
Published:6/11/2021 9:15:33 AM
[Markets] Dow Jones Rallies Briefly As S&P 500 Nears Record High; Tesla Slides; Apple, Microsoft Near New Buy Points The Dow Jones Industrial Average rallied 150 points Friday, as the S&P 500 neared more record highs. Tesla stock slid, while Apple offers a new buy point. Published:6/11/2021 9:15:33 AM
[Markets] Going Plaid: Tesla Reveals Another Model S Nearly 8 Years After Revealing The Original Model S Going Plaid: Tesla Reveals Another Model S Nearly 8 Years After Revealing The Original Model S

Now that Tesla has successfully repackaged the Model 3 and delivered it as the Model Y, it's time for a new "model": repackaging the 8 year old Model S and re-selling it as the Model S "Plaid" edition.

Tesla held its delivery event for the vehicle last night and announced its intention to deliver a massive 25 vehicles, expanding to several hundred cars per week, according to TechCrunch. The vehicle is said to go 0 to 60 in 1.99 seconds and is said to produce 1,020 horsepower with a top speed of 200 miles per hour. The car's motor goes up to 20,000 RPM. 

After taking a lap around a track in a Plaid Model S, Musk lurched his way onto the stage and mumbled his way through a presentation that noted the vehicle "features a new battery pack design, an improved heat pump, carbon over-wrapped rotors on the motors and a new record for drag coefficient of 0.208". 

Musk said: “This is nine years since we delivered the first Model S, the first car produced here in Fremont, so almost a decade, and I think we’ve really taken it to a whole new level with Plaid.”

“Some of you may know that our product plan is stolen from Spaceballs, we’ve gone Plaid speed," Musk said, misquoting Spaceballs and laughing nervously like a high schooler trying to entertain an uninterested prom date.

"So…why make this really fast car, that’s crazy fast and everything, and I think there is something that’s quite important to the future of sustainable energy, which is that we’ve got to show that an electric car is the best car, hands down. It’s gotta be clear, like, man, sustainable energy cars can be the fastest cars, can be the safest cars, can be the most kick ass cars in every way.”

The car also features a yoke steering wheel and an improved GPU. The car's software is said to learn from the driver's behavior. “It’ll just keep minimizing the amount of input that you need to do until the car just read your mind,” Musk nervously joked on stage.

There wasn't much mentioned about the car's battery, as @CoverDrive12 noted...

Others on social media weren't quite impressed with the presentation...

And finally, some were just left to note Elon's change in appearance over the years.

But to truly get a sense of Musk's affect during the presentation, it's best to just take in the video of the event, which you can watch here:

Tyler Durden Fri, 06/11/2021 - 09:25
Published:6/11/2021 8:45:12 AM
[Markets] Weekend Sip: This ‘rosé’ mezcal takes its inspiration from French wine Mexican distiller Sombra introduces a version aged in Bordeaux barrels
Published:6/11/2021 8:45:12 AM
[Markets] Stock market news live updates: Stock futures extend gains despite strong inflation data Stock futures traded little changed Thursday evening as investors looked beyond a hotter-than-expected report on inflation. Published:6/11/2021 8:15:02 AM
[Markets] Governor Abbot: Texas Will Build Its Own Border Walls Governor Abbot: Texas Will Build Its Own Border Walls

Authored by Steve Watson via Summit News,

Texas governor Greg Abbott announced Thursday that the state will begin erecting its own border barriers because the Biden administration is failing “to do its job” on the border and protect Americans from lawlessness.

In an interview with Breitbart News, Abbott said Texas “will immediately begin building border barriers in areas where migrants can easily cross the Rio Grande border with Mexico.”

“The influx across the border is out of control, and the Biden administration has shown that [it] is not going to step up and do its job,” Abbott said, adding “And amidst reports of even more people coming in across the border, we know we have to step up and do more.”

Abbott was attending a a border summit in Del Rio, Texas where he noted that the city is “is suffering from some of the largest increases” of undocumented migrants.

“They’re seeing a lot of very bad dangerous people come across the border. People that they are afraid of encountering, people who are causing damage to their fences, their livestock, their crops, their neighborhoods, and their homes,” Abbott urged.

“Bad things are happening around here, and so they need help from the state to help them address this exploding crisis,” the governor further explained.

“What people have seen in videos across the country seems to be the Biden Administration welcoming these people to the United States,” Abbott coninued, adding “We won’t be sending that message.”

“If you come to Texas, you’re subject to being arrested. You’re not going to have a pathway to roam the country. You’re going to have a pathway directly into a jail cell,” the governor warned.

“We want to be very aggressive in working with local officials and begin making mass arrests,” Abbott stated, adding “In working in collaboration with a large number of counties — that means we’re going to be arresting a lot more people.”

The governor also noted that the state will be sourcing more jail facilities and potentially building additional jail space.

Abbott concluded that “The immigration issue and the border issue is not just the number one issue of Texas, it’s the number one issue in America. And so all of these other governors, they hear the same concerns that we hear about in Texas.”

New US Customs and Border Protection figures published Wednesday, reveal that border agents apprehended over 180,000 would-be illegals in May, up from 178,600+ in April, 173,300+ in March, and 101,100+ in February.

The CBP has calculated that detentions for this fiscal year to date have already more than doubled on figures from a year ago, despite the fact that June, July, August and September have yet to be accounted for.

Senator Ted Cruz highlighted the latest figures:

Meanwhile, the White House press secretary again avoided questions on the ever worsening border crisis, blaming the Trump administration, and attempting to reverse the question on reporters by asking them “Should we send some kids who are 10 back at a certain point? Is that what you’re asking me?”

Watch:

The cackling Vice President also snapped at a reporter Thursday who asked when she will bother to visit the border:

Harris spewed her sociopathic “I’m not finished” line and still couldn’t stop laughing.

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Tyler Durden Fri, 06/11/2021 - 09:05
Published:6/11/2021 8:15:02 AM
[Markets] Bond Report: 10-year Treasury yield holds near 3-month low, below 1.50% Yields for U.S. government debt on Friday were drifting lower again and are near lows not seen since early March, as fixed-income investors deem recent inflation data as supporting the thesis that rising prices will prove a temporary phenomenon.
Published:6/11/2021 8:15:02 AM
[Markets] European investors display no fear of U.S. inflation spike European investors display no fear of U.S. inflation spike Published:6/11/2021 7:50:11 AM
[Markets] Market Extra: U.S. public sector pension funding improved during the pandemic year Municipal budgets have been resilient and stock-market returns have been on fire
Published:6/11/2021 7:50:11 AM
[Markets] Hunter Biden Was Middleman Between Ukrainians And Democratic Lobbyists Currently Under Investigation Hunter Biden Was Middleman Between Ukrainians And Democratic Lobbyists Currently Under Investigation

The smartest guy Joe Biden knows, Hunter Biden, acted as a middleman between Ukrainian energy giant Burisma and two Democratic lobbyists currently under investigation for failing to disclose their work for the scandal-plagued company, according to the Washington Free Beacon's Chuck Ross.

Biden and colleagues at the private equity firm Rosemont Seneca helped Burisma Holdings hire Blue Star Strategies, a firm owned by former Clinton administration officials Sally Painter and Karen Tramontano. Biden's emails show he played a bigger role than anyone had known in arranging Blue Star's consulting work for Burisma. Neither Biden nor the Blue Star founders registered their work under the Lobbying Disclosure Act or the Foreign Agents Registration Act.

Biden's work as a middleman could also explain why federal prosecutors began scrutinizing Blue Star's work for Burisma. Republicans have scrutinized Biden over his work for the company, one of Ukraine's largest natural gas producers, as well as with various Chinese companies. Federal prosecutors are also investigating Biden over his tax affairs and foreign business dealings. -Free Beacon

According to Politico, federal prosecutors began investigating whether Blue Star during its probe into Hunter's taxes, and have been looking into whether the company violated foreign agent laws by failing to disclose their work for Burisma - including meeting with US government officials to advocate on behalf of the Ukrainian company whose president.

Putting the pieces together... last December we learned from diplomatic memos that then-Vice President Joe Biden's office was warned in 2015 that the Ukrainian oligarch who hired his son, Hunter, was deemed corrupt - and that the US Justice Department had gathered evidence to support that conclusion, according to Just The News.

"I assume all have the DoJ background on Zlochevsky," wrote former US Ambassador Geoffrey Pyatt in Kiev in a 2015 letter to Biden's top advisers, referring to Burisma Holdings founder Mykola Zlochevsky.

"The short unclas version (in non lawyer language) is that US and UK were cooperating on a case to seize his corrupt assets overseas (which had passed through the US)," Pyatt added, noting that the asset forfeiture case against the Ukrainian billionaire "fell apart" when individuals in the Ukrainian prosecutor general's office "acted to thwart the UK case."

The memos, released last week by Senate committees investigating Hunter Biden, also reveal that the US Justice Department was involved in the 2014 asset forfeiture brought against Zlochevsky in the UK, right as Hunter Biden was hired to sit on the board of Burisma.

Multiple State officials have attested to the awkward appearance of conflict of interest posed by Hunter's position on the board as the United States led efforts to fight corruption in Ukraine. In a September, 2015 speech, Pyatt railed against Ukrainian prosecutors for thwarting the UK asset forfeiture case against Zlochevsky.

Pyatt was recently deposed by investigators for the Senate Finance Committee and the Senate Homeland Security and Government Affairs Committee about the Ukraine controversy. Though his staff had reported an alleged Burisma bribe and believed the Bidens' conduct in Ukraine created an apparent conflict, Pyatt said he never felt compelled to raise such concerns with the vice president.

"So you never gave thought of raising a concern to the Vice President about this board position his son had?" a Senate investigator asked Pyatt during the deposition back in September.

"No," the ambassador answered. "He's the Vice President of the United States, and it would have been wildly out of place for me to raise something like that, especially insofar as it had zero impact on the work that I was doing." -Just The News

What's more, Hunter's partner Devon Archer also served on the board of Burisma starting in May 2014 - where the pair was "tasked with finding investment projects for Burisma in the United States and Europe and boosting the company's reputation." The two earned over $80,000 per month to serve.

Burisma hired Blue Star in late 2015 to try to kill bribery investigations into Burisma's owner, Mykola Zlochevsky, a former minister of ecology and natural resources. Zlochevsky was under investigation in the United Kingdom for allegedly paying bribes to secure drilling contracts in Ukraine.

Burisma executive Vadym Pozharskyi emailed Biden and his partners on Nov. 2, 2015, with a list of "deliverables" he hoped Blue Star could provide the Ukrainian company. Pozharskyi said he wanted Blue Star to arrange for U.S. officials to express support for Zlochevsky. He said the "ultimate purpose" of the initiative was to shut down cases against Zlochevsky in Ukraine.

Biden responded on Nov. 5, 2015, telling Pozharskyi that he was confident Painter and Tramontano would deliver on the project and that Burisma should sign a contract with Blue Star. -Free Beacon

Meanwhile, let's not forget that according to evidence from Hunter Biden's laptop published by the New York Post, Biden didn't just know about his son's business dealings in Ukraine and elsewhere, he participated in them.

Read the rest of the report here.

Tyler Durden Fri, 06/11/2021 - 08:49
Published:6/11/2021 7:50:11 AM
[Markets] Metals Stocks: Gold edges lower as dollar bounces Gold futures edge lower Friday, losing ground as the U.S. dollar edges higher.
Published:6/11/2021 7:15:14 AM
[Markets] Futures Extend Record Highs As Inflation Fears Fade Futures Extend Record Highs As Inflation Fears Fade

S&P futures - which overnight rolled from the ESM (June) to the ESU (Sept) contract - extended gains on Friday further into record territory as inflation fears receded into the background calming concerns over a possible long-term spike in rising prices, with investors now turning focus to next week's Federal Reserve meeting for more cues on monetary policy. Treasuries were steady, trading at 1.44% - just above the lowest level since March - amid growing (if wrong, according to BofA and DB) confidence inflation will prove transitory, leaving scope for continued central-bank support. S&P 500 E-minis were up 7.25 points, or 0.17 at 06:36 a.m. ET. Dow E-minis were up 77 points, or 0.22%, while Nasdaq 100 E-minis were up 30.25 points, or 0.22%.

After seeing fresh all-time highs on Thursday, US equity futures have largely been traversing sideways, in wake of Thursday’s dovish ECB confab, and surging US inflation, which has not given too much concern to equity or bond investors ahead of next week’s FOMC, since the Fed is likely to look through what it sees as ‘transitory’ price pressures; some analysts disagree, arguing that there is building evidence of more sticky prices, but whether or not this inflation proves to be transitory will only really be resolved in Q3/Q4, so for now, markets are taking the Fed at its word. BofA reported that US equities have seen the first weekly outflows since March, with more outflows out of growth styles than value styles; by sector, inflows were seen in financials, materials, real estate, energy and health care, while outflows were seen in utilities, communications, consumer sectors, and tech.

“It takes a brave investor to fight the Fed but it is becoming increasingly difficult to hold firm as inflation reaches 5% year-on-year,” Lewis Grant, senior global equities manager at Federated Hermes, wrote in a note. A “combination of attractive valuation and price momentum is likely to lead quantitative investors and systematic strategies to increase their allocation” to cheaper parts of the market, he said.

For those who slept for the past 24 hours, on Thursday, the S&P 500 surged to a record high as investors scaled back expectations for early policy tightening by the Fed, with May's consumer price data suggesting that a recent spike in inflation was likely to be transitory. The faster-than-expected 5% CPI surge for May was largely driven by categories associated with economic reopenings - such as cars, commodities and airfares - bolstering the view price pressures may ease later in the year. With the Federal Reserve setting a high bar for reconsidering its dovish stance, the data ended up stoking risk appetite across global markets, especially since recent data has also indicated weakness in the labor market, and the Fed is widely expected to maintain accommodative policy through Jackson Hole.

The MSCI All Country World Index was poised for a fourth weekly advance, and the S&P 500 and Nasdaq were set for mild weekly gains, as a lack of major catalysts and a summer lull in trading saw them move in a tight range.  But weakness in industrial stocks saw the Dow Jones set for a weekly loss, amid doubts over whether President Joe Biden's $2.3 trillion infrastructure spending plan would come to pass. At the same time, sto(n)ks favored by small-time investors were set to close higher for the week, even as a rally appeared to be running out of steam on Thursday. Most of the so-called "meme" stocks rose in premarket trade. Here are some of the biggest U.S. movers today:

  • AMC Entertainment (AMC) gains 3.3% in premarket trading, rebounding from two days of declines, after S&P Global Ratings raised its credit rating on the company, a favorite of traders on Reddit message boards.
  • AI software company Amesite (AMST) rises 89% with over 3 million in shares changing hands in premarket trading.
  • CureVac (CVAC) shares fall 8.4% after a report Germany will drop the company’s Covid-19 shot from its current vaccination campaign.
  • GameStop (GME) gains 6% after posting its biggest decline since March on Thursday. Other meme stocks like Workhorse (WKHS) rises 4.9% and BlackBerry (BB) climbs 2.2%.
  • Precigen (PGEN) jumps 53% in premarket trading after the company announced Thursday that its phase 1b/2a study of AG019 ActoBiotics, a novel therapy designed to address the underlying cause of type 1 diabetes, met primary endpoint.
  • Vertex (VRTX) drops 11% after halting a closely watched effort to develop a therapy for a rare genetic disorder that affects the lungs and liver.
  • Yucaipa Acquisition Corp. (YAC) climbs 3.2% in premarket trading after announcing it will combine with German online retailer Signa Sports United.

European stocks were poised fo a fourth week of gains, pushing deeper into record territory, with the Stoxx 600 up 0.6%, led by the Stoxx Europe 600 Basic Resources Index (SXPP) which rose as much as 1.4%, climbing for a second day, as base metals gain across the board. Diversified miners rose: Rio Tinto +1%, BHP +1.2%, Glencore +2%, Anglo American +1.3% (those four stocks account for about 64% of the SXPP). Morgan Stanley analysts said European miners are set to generate FCF of ~$28b in 1H21, equivalent to 14% yield, the highest in over 10 years; “With balance sheets largely de- levered and little apparent appetite for M&A or major growth, capital returns to shareholders could exceed consensus expectations by 38%,” say analysts including Alain Gabriel. Here are some of the biggest European movers today:

  • Grifols shares climb as much as 16%, the most since May 2006, after U.S. competitor Vertex halted a closely watched effort to develop a therapy for liver disease.
  • Orphazyme shares surge in Copenhagen trading, gaining as much as 76%, following a Thursday rally in its ADR, as an experimental drug that it’s helping develop moved potentially closer to hitting the market.
  • K+S shares gain as much as 8% after Stifel upgraded the stock to buy from hold and increased earnings estimates on the back of higher potash price assumptions.
  • Scor shares climb as much as 6.9% after reaching an agreement on a legal dispute with Covea that Deutsche Bank says is a “very big positive.”
  • Sanne shares rise as much as 12% after the asset administration company confirmed a fifth bid from private equity firm Cinven.
  • Frontier Developments shares fall as much as 9.5% following a trading update and the delay of a game. Shore Capital downgrades stock to hold from buy.

Earlier in the session, Asian equities rose, tracking gains in U.S. peers overnight as investors saw key inflation data as leaving scope for ongoing central-bank support. Technology stocks contributed most to gains in the MSCI Asia Pacific Index, with Meituan and TSMC the biggest boosts among individual stocks. Financials dipped after the U.S. benchmark Treasury yield declined overnight to the lowest since March.

“Investors risk complacency in ignoring the highest core CPI inflation since April 1992 and another slide in continuing claims signaling another lower unemployment rate ahead,” Philip Wee, a macro strategist at DBS Group Holdings in Singapore, wrote in a report. “With the FOMC meeting around the corner on 16 June, the risk of profit-taking ahead of the weekend cannot be dismissed.” Vietnam and South Korea led gains among key regional equity gauges. Stocks declined in China after the government asserted sweeping powers to seize assets and block business transactions as part of an effort to hit back against sanctions by the U.S. and its allies.

In rates, Treasuries were marginally cheaper across the curve after a calm Asia session, during which Thursday’s bull-flattening was broadly maintained. Treasury 10-year yields around 1.445%, cheaper by ~1bp vs Thursday’s close; session low 1.427% is richest since March 3; 10-year yields headed for their biggest weekly decline in a year amid signs traders are further unwinding short positions in U.S. government debt despite a jump in consumer prices. Bunds outperformed by 3bp, gilts by 6bp in 10-year sector, narrowing gaps with Treasuries that opened Thursday after the European close.

Friday’s focal points include inflation expectations from University of Michigan consumer sentiment survey, while next week brings FOMC rate decision and 20-year bond reopening.

The key action in rates this week was shorts running for cover, closing positions, and helping to support the rally. The question investors are now asking is whether we are in a new range for yields, given that 10yr yields are now over 30bps narrower vs peaks seen in Q1. Technicians are certainly talking up this thesis; SocGen's techs, for instance, note that the 10yr yields breaking through May's lows suggests the persistence of downward momentum, which could bring 1.41%, 1.35%, 1.32% into focus (action to be capped by 1.55% and 1.63%). Elsewhere, BofA's weekly flow data reports that IG bond funds have now seen inflows in the past 13 weeks, and this week we saw the largest outflow of HY bond funds in three weeks. Additionally, government bonds have this week seen the largest inflows in three weeks, though TIPS funds continue to see inflows, as they have for much of the last six-months.

In FX, the Bloomberg Dollar Spot Index was little changed and Group- of-10 currencies extended a period of trading in tight ranges. The euro was steady and European bond yields fell, tracking a decline in Treasury yields Thursday. The pound inched lower against the dollar even as data confirmed economic growth accelerated in April, as concerns rose over a delay to the U.K.’s planned reopening on June 21. Aussie dollar carried a slight bid and rose to its highest in almost two weeks; Australian 10-year sovereign bonds rose for a fifth straight day to see yields post their biggest weekly drop since March 2020.

Elsewhere, crude oil consolidated above $70 a barrel amid an improving demand outlook. Bitcoin extended its rebound to a third day, trading around $37,000.

Looking at the day ahead now, and one of the main highlights today through the weekend will be the G7 summit that commences today. Otherwise, data releases from the US include the University of Michigan’s preliminary consumer sentiment index for June, while from Europe there’s the UK’s GDP reading for April. Finally, central bank speakers include BoE Governor Bailey and Deputy Governors Ramsden and Cunliffe.

Market Snapshot

  • S&P 500 futures little changed at 4,240.50
  • STOXX Europe 600 up 0.34% to 456.11
  • MXAP up 0.2% to 210.04
  • MXAPJ up 0.3% to 705.54
  • Nikkei little changed at 28,948.73
  • Topix down 0.1% to 1,954.02
  • Hang Seng Index up 0.4% to 28,842.13
  • Shanghai Composite down 0.6% to 3,589.75
  • Sensex up 0.4% to 52,516.39
  • Australia S&P/ASX 200 up 0.1% to 7,312.33
  • Kospi up 0.8% to 3,249.32
  • Brent Futures up 0.19% to $72.66/bbl
  • Gold spot down 0.21% to $1,894.61
  • U.S. Dollar Index little changed at 90.14
  • German 10Y yield fell 2.6 bps to -0.282%
  • Euro little changed at $1.2164

Top Overnight Stories from Bloomberg

  • The ECB needs to keep monetary policy accommodative with the aim of maintaining favorable financing conditions for all economic agents, Bank of France Governor Francois Villeroy de Galhau said on Radio Classique
  • Germany’s economy is poised for a strong upswing in the second half of this year, with activity likely to reach pre-crisis levels as soon as this summer, the Bundesbank said. It sees Europe’s largest economy expanding 3.7% this year and 5.2% in 2022
  • By signaling that there would be no let-up in the ECB’s pandemic debt-buying program on Thursday, ECB President Christine Lagarde helped put aside fears that the central bank is preparing to withdraw unprecedented monetary support -- at least until September.
  • Russia is on course Friday for its second big interest-rate increase in a row after inflation accelerated at the fastest pace in more than four years
  • The head of Poland’s central bank is set to snuff out any final doubts about his pledge to maintain record-low interest rates in the face of soaring inflation when he faces questions from reporters on Friday

A quick look at global markets courtesy of Newsquawk

Asian equity markets traded mixed as the region only partially benefitted from the momentum in the US where the Nasdaq outperformed, and the S&P 500 posted fresh record highs after a dovish ECB more than offset the hot US CPI print to pressure yields, which was conducive for risk appetite. ASX 200 (+0.1%) just about kept afloat with outperformance in gold miners and tech counterbalanced by losses in the largest-weighted financials sector and with a non-committal tone heading into the extended weekend. Nikkei 225 (U/C) mirrored the tentative mood in the domestic currency despite reports Japan is considering lifting the COVID emergency for Tokyo on June 20th and with Toshiba shares pressured on allegations the Co. and government officials had previously conspired to lean on foreign investors to back company management in a key vote, while the KOSPI (+0.8%) was underpinned following the early trade figures which showed Exports rising 40.9% Y/Y during the first ten days of June. Hang Seng (+0.4%) and Shanghai Comp. (-0.6%) were varied with participants tentative before the long weekend due to the Dragon Boat Festival across Greater China on Monday, and after China passed the legislation to counter foreign sanctions. IPO newsflow was also in the spotlight after China’s largest ride-hailing company Didi filed for a US listing which is expected to be the world’s largest IPO in 2021. However, this failed to significantly boost key stakeholders SoftBank (21.5% stake) and Tencent (6.8% stake). Finally, 10yr JGBs extended above the 152.00 level as the global bond bid persisted in the aftermath of the dovish ECB and with yields stateside remaining pressured in which both the US 10yr and 20yr yields declined to three-month lows in which the former briefly dipped beneath 1.4350.

Top Asian News

  • Ride-Hailing Firm Didi Reveals $1.6 Billion Loss Before IPO
  • Evergrande Tycoon Loses $20 Billion as Investors Revolt
  • BlackRock Receives Nod to Start China Mutual Fund Business
  • Hong Kong Bourse Is Recruiting a Dozen New Risk Managers

European cash kicked off the day in the same directionless manner throughout the week but have since adopted a very mild upside bias (Euro Stoxx 50 +0.3%), despite a lack of fresh macro news flow. US equity futures meanwhile remain closer to the flat mark. Back to Europe, the UK’s FTSE 100 (+0.6%) outperforms as its heavyweight mining sector underpins the index amid tailwinds from the rebound in base metal prices. As such the Basic Resources sector resides as the clear outperformer (Glencore +2.7%, Fresnillo +2.5%, Antofagasta +2.1%, BHP+1.8%), whilst the banking sector bears the brunt of the collapse in yields. Overall, European sectors are mostly firmer but it’s difficult to discern a particular theme/bias. In terms of individual movers, Deutsche Bank (-3.7%) sits at the foot of the Stoxx 600, pressured by the yield environment coupled with source reports suggested the ECB has asked the bank several times in recent months to name a successor to chairman Achleitner as the end of his term nears.

Top European News

  • Selfridges Said to Be on Sale for $5.7 Billion After Approach
  • Signa Sports to Go Public in Deal With Ron Burkle‘s SPAC
  • South Africa Sells State Airline to Private-Equity Venture (1)
  • Cinven’s Fifth Bid for Sanne Prompts Board to Start Discussions

In FX, it remains to be seen whether the Dollar can weather any further downside pressure as the global bond revival rages on and the index hovers precariously around the 90.000 handle having failed to glean any real impetus or even traction from the latest US inflation data that surpassed consensus by some distance. Moreover, the Buck got little in the way of support from a back-up in yields following a subdued end to this week’s Treasury refunding, and still looks technically weak in DXY terms between 90.170-89.951 vs Wednesday’s 89.833 w-t-d low and the brief post-CPI spike high at 90.321. Ahead, prelim Michigan sentiment does not offer much hope for a meaningful Greenback recovery, but pre-weekend short covering and position paring may provide a lifeline.

  • AUD/NZD - The Aussie and Kiwi continue to extract most from their US counterpart’s predicament, with the former establishing a firmer base above 0.7750 and latter retesting resistance above 0.7200. However, Aud/Usd may yet be hampered by decent option expiry interest straddling the half round number (1.2 bn from 0.7755 to 0.7740) as volumes thin before Monday’s market holiday to mark the Queen’s birthday.
  • EUR - 1.2200 is still proving to be elusive for the Euro relative to the Dollar, irrespective of reports from sources about 3 GC members wanting to reduce the pace of PEPP buying and divergence on the amount of asset purchases required over the Summer period when turnover is seasonally lower. Perhaps Eur/Usd bulls are taking heed of ECB President Lagarde’s latest statement about monitoring currency developments and/or the proximity of hefty option expiries is prohibiting buyers (2.5 bn rolls off between 1.2190-1.2200). On the flip-side, expiry interest from 1.2155 down to 1.2150 (2.3 bn) should underpin the headline pair and for good measure there is more at the round number below (also 2.3 bn).
  • CAD/GBP/CHF/JPY - No independent direction from BoC’s Lane for the Loonie, so sticking close to 1.2100 against the backdrop of choppy waters in crude and eyeing option expiries stretching from the 1.2080 trough to 1.2085 (1.2 bn) then 1.2090 (1.65 bn) up to 1.2150 (1.3 bn). Meanwhile, the Pound largely shrugged aside UK data and is tracking the Buck and Euro within a 1.4185-52 band and around the 0.8600 axis respectively, and the Franc continues to pivot 0.8950 pre-SNB. Similar constraints for the Yen that is tethered either side of 109.50 and conscious of expiry interest nearby, given downside protection at 109.75-80 (1.2 bn) and the 110.00 strike (1.7 bn) vs a barrier encircling 109.00 (2.3 bn from 109.10 to 108.90).

In commodities, WTI and Brent front-month futures have been uneventful thus far just under the USD 70.50/bbl (69.68-70.52 range) and around USD 72.50.bbl (71.88-72.78 range). The complex was unfazed by the release of the IEA MOMR which - in a slightly unorthodox fashion – noted that demand is set to surpass pre-COVID levels by the end-2022 (as opposed to the typical upgrade/downgrade headlines). The agency also called on OPEC+ to “open the taps” to keep world oil markets adequately supplied, and that production hikes at the current pace set are to be nowhere near the levels needed to prevent further stock draws. Nonetheless, the demand trajectory is still dictated by COVID developments – with reports also noting that the UK could delay its full reopening plans by a month. That being said, the summer period is expected to see demand buoyed by the US driving season, whilst an EU official also notes that EU countries have cleared a plan to ease travel restrictions over the summer. Elsewhere, Iranian nuclear deal talks are poised to resume on June 12th for what would be the sixth round of negotiations. US sources, after the last round wrapped up, poured some cold water over the optimism expressed by the Iranian President. Note – the oil market was briefly in disarray on Thursday as reports that the US lifted sanctions on Iranian oil officials stoked expectations for a return to the nuclear deal and of Iranian oil supply, however, a US official clarified that the Treasury action was routine and had nothing to do with Iran's nuclear deal talks. Spot gold and silver diverge with the former now trundling lower after failing to meaningfully breach and hold above USD 1,900/oz, whilst the latter gleans support from the lower yields and extends gains above USD 28/oz. Over to base metals, LME copper reclaimed a USD 10,000/t handle as sentiment for the red metals seems more constructive post-US CPI, with some potential tailwinds from the rise in iron ore overnight – with Dalian futures bolstered by signs of strong demand and as Chinese port inventory hit a four-month low last week, according to traders.

US Event Calendar

  • 10am: June U. of Mich. Sentiment, est. 84.3, prior 82.9;
  • Current Conditions, est. 91.2, prior 89.4
  • Expectations, est. 78.7, prior 78.8
  • 10am: June U. of Mich. 1 Yr Inflation, est. 4.7%, prior 4.6%; 5-10 Yr Inflation, prior 3.0%

DB's Jim Reid concludes the overnight wrap

There is one piece of inflation that is undoubtedly not transitory and that’s age. Tomorrow I get to within a birdie of a half century. Predictably I’m celebrating by playing in a golf tournament. This time last year around my birthday I started doing weights to improve my club head speed in golf and to try to offset old age. I’m happy to report that 52 weeks of 3-4 times a week and I’ve increased it by around 5mph on my driver and have confused my wife as to why I’ve suddenly got obsessed with having muscles and who I’m trying to impress. A mid-life crisis unfolding in front of you all.

Moving to markets and if this was match play then the inflationists have hit the ball down every fairway, have watched the ball soar onto the green but have then two putted every hole and walked off a bit disappointed. Meanwhile the non-inflationists have hit it in the rough off the tee, chipped out, managed to scrape the ball on to the edge of the green and then repeatedly holed long putts to halve the hole - all with big smiles.

In fact after yesterday’s big CPI beat the very fact that Treasuries rallied very strongly again indicated that something is going on behind the scenes in terms of positioning or with regards to excess liquidity.

However let this statement sink in. In a US economy still suffering from the impact of a global pandemic and still not close to being normalised, the average basket of goods and services in May for the whole economy were +5% above where they were a year before. That’s a stunning sentence in isolation but the market reaction was “meh! Is that all you’ve got”.

In terms of the details, the headline CPI measure increased by +0.6% in May on a monthly basis (vs. +0.5% expected), meaning that the last two months in April and May have been the two strongest months for inflation over the last decade. In turn, that sent the year-on-year number up to +5.0% (vs. +4.7% expected), which marks the fastest pace of price rises we’ve seen since August 2008 and at levels only exceeded for 2 months since the end of 1982. One of the biggest drivers were higher prices for used cars and trucks, which were up +7.3% in May and accounted for around a third of the overall increase, and followed a +10.0% increase in April. Meanwhile the core CPI measure that excludes food and energy rose to +3.8% on a year-on-year basis (vs. +3.5% expected), but the record there was even bigger as you have to go all the way back to June 1992 (29 years ago when I’d just spent my last day at school!) to find the last time that core inflation was that strong. In terms of core, the most we undershot due to the pandemic was around 0.8%. We’ve already overshot the other way by 1.8%. So in terms of make up inflation due to the pandemic the Fed have already achieved this. Next stop is today’s University of Michigan Consumer Confidence release with the all important inflation expectations readings. The 5-10 year one hit 3% last month - the highest since 2013 with 1 year expectations at 4.6% - the highest since April 2011.

Given we think inflation expectations are key to Treasury yields going forward this will be interesting to watch. In terms of the CPI impact on them yesterday, they moved higher immediately after the release, climbing around +4bps to an intraday high of 1.533%, but then swiftly pared back that increase to close -5.9bps lower on the day, at 1.432% - a 10bps intra-day rally. This was the lowest closing level since March 2 and down -30.9bps from late-March’s closing level. To be fair, inflation breakevens were up +3.2bps on the day, but they were more than offset by a -9.0bps decline in real yields, which was the largest one day drop in real yields since late February. But that still marked a big contrast to last month, when real yields rose +4.9bps on the day of the release as investors moved to anticipate a faster withdrawal of monetary stimulus from the Fed.

Speaking of the Fed, their meeting next week will now be the next big focal point for markets, and since the FOMC are currently in a blackout period, we’ll have to wait until that decision on Wednesday before we get their latest thinking. Their last meeting in April actually took place before the two CPI releases we’ve just had, where Fed Chair Powell acknowledged that although “we are likely to see some upward pressure on prices”, in turn they were “likely to be temporary as they are associated with the reopening process.” Let’s see what the line is on Wednesday, but it’ll be fascinating to see the latest forecasts and dot plots, and whether the FOMC’s median dot is still of the view held in March that rates will still be on hold at the end of 2023. The market doesn’t seem at all concerned about the Fed at the moment.

With Fed concerns remaining subdued, US equities rose to fresh all-time highs yesterday, with the S&P 500 (+0.47%) closing at a new record for the first time since May 7. High-growth and defensive industries continued to lead equities higher as yields compressed. Biotech (+2.24%) led the index higher once again, with software (+1.24%) and health care equipment (+1.10%) amongst the best performing industries, whereas cyclicals such as banks (-1.66%), materials (-0.56%) and transportation (-0.43%) all fell back. Banks were the biggest underperformer, pulled down by a flattening yield curve. Small-cap stocks also struggled, with the Russell 2000 down -0.68%, and in Europe the STOXX 600 closed marginally higher with a +0.03% gain. The same sector rotation of health care (+0.98%) and technology (+0.83%) over cyclicals was present in Europe as well, however European banks (+0.33%) remained on the winning side of the ledger but closed before the full treasury rally.

Overnight in Asia markets are trading mixed with the Nikkei (+0.03%) flat while the Hang Seng (+0.39%) and the Kospi (+0.69%) are up. The Shanghai Comp (-0.25%) is down. Meanwhile, futures on the S&P 500 are up +0.05% while those on the Stoxx 50 are up +0.20%.

Back to yesterday, and the other main highlight aside from the CPI release in the US was the latest ECB meeting, where the Governing Council left interest rates unchanged as expected, and said that they would continue to conduct their purchases under the PEPP over the coming quarter “at a significantly higher pace than during the first months of the year”. The move to maintain the pace of purchases came in spite of upgrades to their economic forecasts, with growth this year now expected to come in at +4.6% (vs. +4.0% in March), and 2022 growth at +4.7% (vs. +4.1% in March). They also upgraded their inflation profile over the next couple of years, now seeing HICP at +1.9% in 2021 and 1.5% in 2022 (vs. +1.5% for 2021 and +1.2% for 2022 before). See our economists’ review here.

The market reaction to the ECB was totally overshadowed by the CPI with sovereign bonds more following Treasuries by selling off immediately post the numbers but rallying strongly thereafter. By the close of trade, 10yr yields had moved lower on most of the continent, with those on 10yr bunds (-1.2bps), OATs (-0.7bps) and BTPs (-3.4bps) all falling back.

Elsewhere, there were fresh moves higher for commodities yesterday, which have been one of the forces putting upward pressure on inflation recently. Both Brent Crude (+0.42%) and WTI (+0.47%) oil prices hit a 2-year high of $70.52/bbl and $70.29/bbl respectively, while gold prices reversed their earlier losses following the CPI release to close up +0.53%. Other commodities ended the day higher as well, including corn (+1.19%), wheat (+0.22%), and iron (+3.14%).

Here in the UK, we had a second day in a row where cases were above the 7,000 mark, as we await an announcement on Monday as to what will happen to restrictions in England. It came as the Health Secretary said that the delta variant first discovered in India now accounted to 91% of new cases. Japan’s government is considering lifting the state of emergency in most areas of the country, including Tokyo and Osaka, on June 20 as originally planned. Though some strict measures may remain in place ahead of this Summer’s Olympic games. On the other hand, Chile announced a full lockdown of its capital, Santiago, as the Health ministry announced that there were only 30 ICU beds in the entire city (c.8mn residents) yesterday. Separately on the vaccines, Moderna filed for an Emergency Use Authorization from the US FDA for its vaccine in the 12-17 year old group. If approved, it would join the Pfizer vaccine in having been approved for the over-12s.

Looking at yesterday’s other data, the weekly initial jobless claims from the US for the week through June 5 fell to a post-pandemic low of 376k (vs. 370k expected), marking their 6th consecutive weekly decline. Continuing claims for the week through May 29 were similarly at a post-pandemic low of 3.499m (vs. 3.665m expected). Meanwhile in Europe, French industrial production unexpectedly fell -0.1% in April (vs. +0.6% expected), though Italy’s industrial production for the same month saw much stronger-than-expected growth of +1.8% (vs. +0.3% expected).

To the day ahead now, and one of the main highlights today through the weekend will be the G7 summit that commences today. Otherwise, data releases from the US include the University of Michigan’s preliminary consumer sentiment index for June, while from Europe there’s the UK’s GDP reading for April. Finally, central bank speakers include BoE Governor Bailey and Deputy Governors Ramsden and Cunliffe.

Tyler Durden Fri, 06/11/2021 - 08:09
Published:6/11/2021 7:15:14 AM
[Markets] Futures Movers: Oil rises further above $70 as IEA sees global demand returning to pre-pandemic levels in 2022 Producers will need to increase output to keep up with demand recovery, the International Energy Agency said on Friday.
Published:6/11/2021 6:44:29 AM
[Markets] Three-day string of higher COVID case and death figures halted in U.S. Three-day string of higher COVID case and death figures halted in U.S. Published:6/11/2021 6:44:29 AM
[Markets] Biden & BoJo Set Aside Differences And Reaffirm "Indestructible" Bilateral Relationship Biden & BoJo Set Aside Differences And Reaffirm "Indestructible" Bilateral Relationship

British Prime Minister Boris Johnson treated President Biden to an enthusiastic welcome after he arrived in Cornwall for the president's first trip abroad since his inauguration. Despite worries about lingering differences between the two leaders, Biden & BoJo treated the reporters present to an exuberant press conference where the two leaders waxed poetic about the importance of the bilateral relationship, before holding a ceremonial (but largely hollow) ceremonial re-signing of the Atlantic Charter, a document originally signed by FDR and Winston Churchill.

Biden and his team are big fans of this type of historical regurgitation - as if holding Biden in stark relief to past presidents like FDR or JFK will somehow make him seem more presidential. And it appears BoJo was more than happy to join in the fun. Of course, as the two leaders continued on with nary a mention of the post-Brexit trade tensions that have prompted Biden to speak out against BoJo several times already.

"Prime Minister Johnson and I had a very productive meeting," Biden said after the leaders met at a beach resort ahead of the G-7 meeting in Cornwall, England. “We affirmed the special relationship.” Johnson praised Biden as "a breath of fresh air", and said they had a "wonderful" conversation. Speaking to the BBC, Boris said he would describe the relationship between the UK and US as "indestructible" (preferring that to the term "special relationship", which BoJo denounced as a cliche).

However, as Bloomberg pointed out, this happy front belies growing tensions between the two world leaders. While the body language on display was described by the press as "warm", and the two leaders took pains to emphasize their common ground, tensions have been rising over the UK's split from the EU, and the looming trade dispute that could see a border rise again between Northern Ireland and the UK.

The pair took pains to emphasize their common ground, despite rising tensions behind the scenes over the fallout from the U.K.’s split from the European Union.

In recent days, the Biden administration has been vocal in public and privately with the British government, raising concerns that an escalating trade dispute between the U.K. and the EU could threaten peace in Northern Ireland.

But Biden, who famously describes himself as Irish, did not directly push Johnson to fix the argument with Brussels, when they met face-to-face for the first time on Thursday, according to the U.K. side.

Asked by reporters if the president had told Johnson to “crack on” and reach a solution with the EU, the prime minister replied: “No he didn’t.”

Meanwhile, Foreign Secretary Dominic Raab told Sky News that Johnson and Biden didn’t "linger" on the trade issues during their meeting.

"The prime minister wanted to raise it and be very clear on our position," Raab said. "It is the dogmatic, purist approach that the EU has taken which is the risk to the Good Friday Agreement."

But the notion that they will be able to avoid the issue during the summit in Cornwall seems impossible, since French President Emmanuel Macron has already complained to the press, saying that there is no way the North Ireland protocol will be renegotiated as BoJo tries to strong arm his former European partners. The jocular display from Biden and BoJo is especially surprising considering that Biden has in the past criticized BoJo as a "clone" of President Donald Trump, while also criticizing his support for Brexit. But given that they are true politicians, they put their differences aside for the sake of the camera's. As BBG pointed out, there are still plenty of issues on which the two leaders agree. They were also able to help one another by backing each other's G-7 proposals.

After all, BoJo wants that Amazon tax money just as bad as the next European leader.

Tyler Durden Fri, 06/11/2021 - 07:06
Published:6/11/2021 6:17:21 AM
[Markets] Taibbi: Let the Apes Have Wall Street Taibbi: Let the Apes Have Wall Street

Authored by Matt Taibbi via TK News

On CNBC’s Fast Money last week, anchor Melissa Lee appeared to mention the unmentionable. She was talking with Tim Seymour, CEO of Seymour Asset Management, who made offhand mention of the hedge funds shorting now-infamous stocks like AMC and GameStop. “Look, there are a lot of short sellers out there who have been borrowing stock they didn’t have,” Seymour said.

“Naked shorts, yeah,” said Lee.

You could almost hear a reverse record-scratch over the airwaves. Did a CNBC anchor really say that out loud?

The clip went viral. YouTube exploded with videos with titles like, “CNBC Just ADMITTED Naked Shorts On AMC!” and “CNBC just revealed GME and AMC are illegally naked short sold!” The frolicsome community of retail investors and activists who call themselves “Apes” and hang out in online forums like r/Superstonk and r/wallstreetbets, and who’ve placed the battle over the prices of stocks like AMC and GameStop at the center of one of the more interesting American culture-war developments in decades, rejoiced as one. Here was a representative of CNBC, a frontline agent of the financial establishment, admitting that the hedge funds they’re fighting have been cheating!

The financial press has been on a crusade to keep the GameStop phenomenon out of the front pages since it burst uninvited into the news cycle like flaming shit-comet earlier this year. “Forget GameStop” headlines have become one of the year’s most unstoppable journalism clichés:

GameStop, worth under $5 a share a year ago, rose to an incredible $347.51 on January 27th. The rally was reportedly caused by ordinary folk driven by a thirst for revenge against the financial system, who delighted in conquering billionaire hedge funds who’d put themselves in compromising positions by betting too heavily (and too publicly) against companies like GameStop.

When a fund called Melvin Capital was forced to close out its position in GameStop at a cost of nearly $3 billion, and mainstream mouthpieces ranging from Andrew Ross Sorkin to Nancy Pelosi rushed on TV to express horror and “concern” about what one economist called “a flash mob with money,” there were howls of triumph across the Internet. For a hot second, it looked like a bunch of kids with E*Trade and Robinhood accounts were about to go on an extended brain-eating rampage through the top tax bracket, and the specter of a gang of billionaire gamblers being crushed at their own game was poised to become the funniest thing to happen to the United States since the Gerald Ford presidency.

In an instant, it was over. On January 29th, the Robinhood platform, through which much of the GME buying took place, halted trading in GME under pressure from the Depository Trust Clearing Corporation, the shadowy colossus created in 1973 to centralize the settlement of stock trades. Shares in GameStop plunged from $325 to $53 in a matter of days, inspiring much of Wall Street’s community of Smart People to turn noses skyward as they declared “l’affaire GameStop” dead. Famed “angry investor” and real-life Gordon Gekko Dan Loeb described GameStop as “no different than other manias over time, going back to the Dutch Tulip Bulb Mania in the 17th century.”

“The short squeeze,” agreed Dealbreaker, “is no more.”

The shutdown of trading in GME looked from the outside like the financial community circling wagons in a blatant play to protect their own, and it seemed for a time like the Loebs of the world were going to be right: GameStop was just one of a long line of fleeting manias, whose backers in this case gained nothing but the satisfaction of having moved a few rich jerks to an amusing public freakout. Even that was worth something, but how much, really?

Then, a funny thing happened. The stocks came back. By Friday, June 4th, the day of Lee’s CNBC broadcast, GameStop closed at $248.36, on its way to a high of $337.36 this past Tuesday, not far off the $347.51 it reached at the peak of its news-cyclone earlier this year. As of this writing, it’s up 159% this past month. AMC, meanwhile, was at $49.34 on June 4th, headed past $55.00 this week, up a staggering 406% in just this month. A series of other meme stocks are also rising again, triggering a round of defections within the financial community, as business leaders began inviting the apes over the wall.

Ultimately, it doesn’t matter who’s behind the mercurial surges of stocks like GME. Either way, the chaos is exposing Wall Street for the preposterous collection of circus acts it’s always been, with the naked shorting issue being just one example.

This is an excerpt from today’s subscriber-only post. To read the entire article and get full access to the archives, you can subscribe for $5 a month or $50 a year.

Tyler Durden Fri, 06/11/2021 - 06:30
Published:6/11/2021 5:46:39 AM
[Markets] Germany Rolls Out First Digital EU "Vaccine Passport" Germany Rolls Out First Digital EU "Vaccine Passport"

After the EU unveiled its plans for re-admitting vaccinated tourists from North America and elsewhere last month, the Continent's largest economy, Germany, has officially started rolling out its digital "vaccine passport" on Thursday, the AP report.

What's more, German Health Minister Jens Spahn said Thursday that starting this week, vaccination centers, doctors’ practices, and pharmacies will gradually start giving out digital passes to fully vaccinated people. The CovPass will let users download proof of their coronavirus vaccination status onto a smartphone app, allowing them easy access to restaurants, museums, or other venues that require proof of immunization.

People who have already been fully vaccinated in recent weeks with either get a letter with a QR-code they can scan with their phones, or they can contact their doctors or pharmacies to retroactively get the digital pass, Spahn said.

“The goal is that this certificate can also be used in Helsinki, Amsterdam, or Mallorca,” Spahn told reporters in Berlin. People who have already been fully vaccinated in recent weeks will either get a letter with a QR-code they can scan with their phones, or they can contact their doctors or pharmacies to retroactively get the digital pass. “By doing so, we in the European Union are setting a cross-border standard that doesn’t exist elsewhere in the world yet,” he said, adding that the digital vaccination pass is an important step for the revival of international tourist travel.

The country’s chief public health agency, the Robert Koch Institute, reported Thursday that 47% of the population, or about 39.1MM people, have been vaccinated at least once, while almost 24% or 19.9MM people, are fully vaccinated. On Wednesday, almost 1.3MM people received a vaccine jab, the second-highest daily number since the country started its vaccination campaign late last year.

Tyler Durden Fri, 06/11/2021 - 05:45
Published:6/11/2021 5:15:45 AM
[Markets] Retirement Hacks: Should I roll over my 401(k) when I move to a new job — and if so, how? What to know about rolling over your retirement accounts There are plenty of questions to ask before rolling over your old 401(k)
Published:6/11/2021 5:15:45 AM
[Markets] The Iran Nuclear Deal Won't Happen Any Time Soon The Iran Nuclear Deal Won't Happen Any Time Soon

Authored by Cyril Widdershoven via OilPrice.com,

Global oil markets have been on edge recently due to the continuing JCPOA discussions and the possibility of the U.S. rejoining the deal. While there have been no real breakthroughs in the discussions so far, the possibility of Iranian oil exports coming back online is adding downward pressure to oil prices. Despite this added pressure, international oil benchmark Brent is still firmly above $70, and oil price optimism is only increasing. This optimism is due to the growing global demand for oil and petroleum products and is also driven by warnings from U.S. diplomats that Iranian sanctions are far from over. U.S. Secretary of State Antony Blinken stated to the press that “even in the event of a return to compliance with the JCPOA, hundreds of sanctions will remain in place, including sanctions imposed by the Trump Administration”.

This blunt but clear approach has given analysts confidence that additional Iranian oil volumes will not be entering the market any time soon. When it does enter the market, Iranian oil is almost certainly going to be priced at normal levels as Tehran will need the revenues to fund its failing economy and support IRGC linked projects and proxies. Blinken also stated yesterday to a Senate Foreign Relations Committee that Iran is rapidly developing its nuclear program. To block this, according to the Biden Administration, the U.S. needs to return to the 2015 JCPOA deal. In the view of the Democrats, the Trump sanctions and leaving of the JCPOA have been partly responsible for the current Iranian program.

Republicans, however, are still supporting a hardline approach to Iran, an approach that even some Democrats support. Democrat Senator Bob Menendez, the committee’s chairman, has been a leading opponent of the original JCPOA crafted under Democratic President Barack Obama. Republicans and several Democrats want the new JCPOA discussion to include Iran’s continued pursuit of ballistic missiles and support of proxies.

Before Blinken’s statement about sanctions staying in place, analysts had already suggested that a flood of Iranian oil was unlikely as production levels were constrained, outlets unavailable, and customers uncertain. Also, even if sanctions were lifted, Iran would potentially be part of the OPEC+ export agreement. If that were the case, it would stop a serious oil glut scenario from happening. Saudi Arabia, Abu Dhabi, and Russia would not be interested in destabilizing the oil market by allowing Iran to flood the market.

Washington has reiterated that Iran needs to let the UN atomic agency IAEA continue its monitoring activities, as stated in the agreement valid until June 24, before new talks can begin. Iran’s position on that front was weakened by the recent IAEA report which accused Iran of obstruction and not conforming to the agreement. As long as Iran is not keeping to its promises, the entire JCPOA agreement is at risk. A breakthrough this week as talks resume in Vienna is very unlikely.

Officials of the National Iranian Oil Co claimed that Tehran could restore its crude oil production within a month of sanctions being lifted. Farokh Alikhani, NIOC’s Production Deputy, stated that Iran plans to start with an increase to 3.3 million bpd in one month, followed later on by an increase to 4 million bpd. He believes that the 4 million bpd target could be reached within 3 months of sanctions being lifted. These unrealistic claims will continue to be released by Iranian officials but should not be taken seriously by analysts.

Markets and participants in the JCPOA discussions should acknowledge that there is no room for maneuver right now as long as the Iranian elections are still undecided. On June 18, Iran will officially elect a new president, although the outcome of those elections is a bit of a foregone conclusion. Most diplomats seem unwilling to state that the likely election victory of hardliner Raisi, backed by Ayatollah Khamenei and considered to be a possible successor of the religious leader in the future, will put a potential deal at risk. Raisi could even use a breakthrough in the JCPOA talks to step up his radical and hardline politics.

Dealing with a radical new Iranian regime is a near certainty that no one in Washington, Berlin, London, or Moscow wants to admit to. Raisi backers have made it clear that Iran will not be bound to any further expansion of the JCPOA. The real message is that Tehran just wants to use a possible JCPOA breakthrough as a political advantage. Removal of sanctions will bring in cash, to be used not to expand Iran’s economy but to solidify the Khamenei-Raisi hardliners. Regional analysts are worried that a Biden move to join the agreement would act as a clear sign to Iran that it can proceed with all its current activities. 

The geopolitical threat that the new Iranian regime poses also appears to be being overlooked by analysts. At present, Iranian naval vessels are steaming up to or are already in the Atlantic Ocean, heading to Venezuela for a possible showdown with the U.S. There are already signs that Iran will be transferring fast attack boats to the Venezuelan Navy. Intelligence sources report that a pair of Iranian Navy ships, including a frigate, has rounded the Cape of Good Hope and is believed to be making a high-seas voyage to Venezuela. The flotilla includes the Makran, an oil tanker that was converted into a floating forward staging base. Satellite pictures show that fast attack crafts are stored on the Makran. A potential military confrontation in the Caribbean is the last thing Washington is looking for right now - but it is a threat that can’t be ignored. 

Tyler Durden Fri, 06/11/2021 - 05:00
Published:6/11/2021 4:15:00 AM
[Markets] NerdWallet: Buying an EV is a different game in some ways—how to get the best deal While much of the conventional car-buying advice still applies, with electric cars, a few other steps can save you thousands of dollars.
Published:6/11/2021 4:15:00 AM
[Markets] Container Ship Orders Surge As Firms Race To Add Capacity Container Ship Orders Surge As Firms Race To Add Capacity

About a year ago, shipbreaking was in full swing as the global economy was in tatters. After Western economies injected trillions of dollars in fiscal stimulus, supercharging consumers, maritime traffic between the US and China has been off the charts, resulting in shipping lines adding new capacity. 

The latest spending patterns in the West show things are getting back to normal as consumers are using credit cards and debit cards (where the stimmy checks arrive) to buy items mostly made overseas. They are highly confident about the future and are spending like there is no tomorrow - triggering supply constraints as supply chains remain tangled from the virus pandemic. 

To deal with the resurgent consumer demand, shipping companies are ordering new container ships to increase capacity. 

For the first five months of 2021, orders for new container ships doubled all of 2019 and 2020 orders, according to The Wall Street Journal, citing London-based maritime data provider VesselsValue Ltd. Many of the orders were at shipyards in South Korea and China. 

Container ship orders have been so strong that some yards are shying away from quotes and or even renegotiating existing orders for vessels as the price of metals, such as steel, has more than doubled this year. Thanks to stimmy checks and remote working, Western consumers have been on a purchasing spree of products from overseas, and major retailers such as Amazon, Walmart, and Target, have struggled to restock as supply disruptions continue to plague the world. 

A perfect storm of restocking, supply chain disruptions, major congestion at ports, and freight rates soaring has significantly boosted vessel operators like A.P. Moller-Maersk A/S. 

"They are making bucketloads of money, and when that happens, owners invest in new ships," said Peter Sand, a chief shipping analyst at Denmark-based shipping trade body Bimco. "Orders have doubled so far in 2021, nearly reaching the total tonnage ordered for all of last year. I won't be surprised if there is another wave of ordering."

As we've noted (see: here & here), container rates have more than doubled on the year and could rocket even higher. 

Today's strong orders for vessels follow the downturn in maritime trade over the last several years, forcing some lines to send aged ships to breaking yards. A typical container ship takes 12-16 months to build; some have turned to used vessels where values have been soaring. 

Data from London-based shipping broker Braemar ACM Shipbroking shows ship orders totaling 2.6 million containers (measured by 20-foot equivalent units) are on pace to surpass annual records of 2.8 million containers' worth of capacity ordered in 2007. 

"It's been our busiest period in years, and it's very much about container ships," said a senior executive of South Korea's Hyundai Heavy Industries Co., the world's biggest shipbuilding factory in terms of capacity. "The orders are mostly for bigger ships with all the extras to emit less, which is good for margins. We are almost out of slots to build new ships until late 2023."

"I've never seen such demand in 20 years," this executive said.

In the first five months, 208 container ships worth about $16.3 billion were added to the global order book, compared with 120 ships valued at $8.8 billion in 2020 and 114 vessels worth $6.9 billion in 2019.

While ship orders surge as lines are rushing to add capacity, the slowdown in China's credit impulse is an ominous sign that a global upswing could be fading. 

We urged readers to go over some of our big level (and correct) observations laid out last December in "In Historic Reversal, China's Credit Impulse Just Peaked: What This Means For Global Markets," the latest Chinese credit data means a slowdown in the global economy could materialize later this year or in 2022. 

One final reminder: the credit impulse first reaches assets that are driven primarily by the Chinese economy (Chinese bond yields and industrial metals). Next to be impacted are inflation breakevens and sovereign yields in Western economies. The peak correlation for other growth-sensitive assets such as eurozone banks and AUD/JPY arrives with a bigger lag of around 4-5 quarters. This result, while logical, is quite significant, as it gives us a playbook for the ebb and flows in Chinese credit impulse.

The credit impulse turning negative also comes as the Fed could begin to taper in late 2021/early 2022

Global shipyards receiving a flurry of new orders with build times that take well over a year may prove to be a disastrous investment for some shippers if the global economy slumps due to declining credit impulse and risks of a Fed taper. However, the Fed could unleash Universal Basic Income, and Americans could splurge their stimmy checks every month on worthless Chinese products. 

Tyler Durden Fri, 06/11/2021 - 04:15
Published:6/11/2021 3:43:18 AM
[Markets] Europe Markets: Stocks inch up as investors look for fresh direction after U.S. inflation spike European stocks are posting modest gains, with U.S. stock futures flat, as investors parse fresh U.S. inflation data from Thursday.
Published:6/11/2021 3:43:18 AM
[Markets] FTSE steams ahead as UK economy grows at fastest pace since July 2020 Stock markets in Europe opened mainly higher on Friday as the UK economy grew 2.3% in April. Published:6/11/2021 3:13:48 AM
[Markets] Professor: Historians Will Look Back On Lockdowns As "Most Catastrophic Event Of All Human History" Professor: Historians Will Look Back On Lockdowns As "Most Catastrophic Event Of All Human History"

Authored by Steve Watson via Summit News,

Stanford University professor of medicine Jay Bhattacharya says that in years to come lockdowns will be looked back upon as the most catastrophically harmful policy in “all of history”.

Speaking on The London Telegraph podcast ‘Planet Normal’, Bhattacharya noted that government scientific advisors “remain attached” to the policy of lockdown in spite of the total “failure of this strategy”.

“I do think that future historians will look back on this and say this was the single biggest public health mistake, possibly of all history, in terms of the scope of the harm that it’s caused,” said Bhattacharya.

The epidemiologist added “Every single poor person on the face of the earth has faced some harm, sometimes catastrophic harm, from this lockdown policy.”

“Almost from the very beginning, lockdown was going to have enormous collateral consequences, things that are sometimes hard to see but are nevertheless real,” Bhattacharya added.

He further noted that serious mental and physical illnesses have been basically ignored and “we closed our eyes to them because we were so scared about the virus and so enamoured with this idea that the lockdown could stop the virus.”

Listen:

The professor previously told Newsweek that COVID-19 lockdowns are “the single worst public health mistake in the last 100 years,” adding that “We will be counting the catastrophic health and psychological harms, imposed on nearly every poor person on the face of the earth, for a generation.”

Bhattacharya is one of the co-authors of the Great Barrington Declaration, which has received thousands of signatures from medical and public health scientists.

The declaration states that “lockdown policies are producing devastating effects on short and long-term public health,” citing “worsening cardiovascular disease outcomes, fewer cancer screenings and deteriorating mental health – leading to greater excess mortality in years to come.”

Bhattacharya’s latest comments come as the government is warning that England’s lockdown measures could remain in place beyond the supposed “freedom day” on June 21st despite the fact that for 11 out of the last 12 weeks, deaths have been below the 5 year average.

The effects of lockdown have been devastating, with leading cancer charities in the UK warning that there is a crisis underway with huge numbers of people not receiving referrals or treatment because they’ve been told to stay at home and not to burden the National Health Service.

A major new study by German scientists at Munich University has also found that lockdowns had no effect on reducing the country’s coronavirus infection rate.

“Statisticians at Munich University found “no direct connection” between the German lockdown and falling infection rates in the country,” reports the Telegraph.

The findings add to the mountains of research that already exists suggesting that the ‘cure is worse than the problem’ as regards the COVID pandemic.

As we previously reported, Academics from Duke, Harvard, and Johns Hopkins have concluded that there could be around a million excess deaths over the next two decades as a result of lockdowns.

In October, the World Health Organization’s Regional Director for Europe Hans Kluge said governments should stop enforcing lockdowns, unless as a “last resort,” because the impact on other areas of health and mental well-being is more damaging.

Kluge’s warning matched that of the WHO’s special envoy on COVID-19, Dr David Nabarro, who told the Spectator in an interview that world leaders should stop imposing lockdowns as a reflex reaction because they are making “poor people an awful lot poorer.”

The warnings resonate with numerous other experts who have desperately tried to warn governments that lockdowns will end up killing more people than the virus itself, but have been largely ignored.

Germany’s Minister of Economic Cooperation and Development, Gerd Muller, recently warned that COVID-19 lockdowns will result in “one of the biggest” hunger and poverty crises in history.

“We expect an additional 400,000 deaths from malaria and HIV this year on the African continent alone,” Muller said, adding that “half a million more will die from tuberculosis.”

Muller’s comments arrived months after a leaked study from inside the German Ministry of the Interior revealed that the impact of the country’s lockdown could end up killing more people than the coronavirus due to victims of other serious illnesses not receiving treatment.

Another study found that lockdowns will conservatively “destroy at least seven times more years of human life” than they save.

Professor Richard Sullivan also warned that there will be more excess cancer deaths in the UK than total coronavirus deaths due to people’s access to screenings and treatment being restricted as a result of the lockdown.

His comments were echoed by Peter Nilsson, a Swedish professor of internal medicine and epidemiology at Lund University, who said, “It’s so important to understand that the deaths of COVID-19 will be far less than the deaths caused by societal lockdown when the economy is ruined.”

According to Professor Karol Sikora, an NHS consultant oncologist, there could be 50,000 excess deaths from cancer as a result of routine screenings being suspended during the lockdown in the UK.

A Guardian analysis has found that there have been thousands of excess deaths of people at home in the UK due to the lockdown.

Infectious diseases expert and University of Edinburgh professor Mark Woolhouse acknowledged that the decision to lockdown the UK last March was a “crude measure” that was enacted because “we couldn’t think of anything better to do.”

Woolhouse said the lockdown was a “panic measure” and a “monumental mistake on a global scale,” adding “I believe the harm lockdown is doing to our education, health care access, and broader aspects of our economy and society will turn out to be at least as great as the harm done by COVID-19.”

As we further previously highlighted, a data analyst consortium in South Africa found that the economic consequences of the country’s lockdown will lead to 29 times more people dying than the coronavirus itself.

Experts have also warned that there will be 1.4 million deaths globally from untreated TB infections due to the lockdown.

In addition, a study published in The Lancet that notes “physical distancing, school closures, trade restrictions, and country lockdowns” are worsening global child malnutrition.

Thousands of doctors and scientists are also on record as opposing lockdown measures, warning that they will cause more death than the coronavirus itself.

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Tyler Durden Fri, 06/11/2021 - 03:30
Published:6/11/2021 2:43:13 AM
[Markets] FAO Warns Soaring Food Import Costs Could Induce "Potential Crisis" In Emerging Markets  FAO Warns Soaring Food Import Costs Could Induce "Potential Crisis" In Emerging Markets 

Food prices are absolutely outrageous now, but they appear only to be moving higher as the year progresses. According to a new Food and Agriculture Organization of the United Nations (FAO) report, global food import costs are estimated to jump in 2021 to a record due to increasing commodity and shipping costs. 

FAO's "Food Outlook" report, published Thursday, estimates the global food import bill, including shipping-related costs this year, will be around $1.72 trillion, a 12% rise from its previous high of $1.53 trillion in 2020. 

For readers who are not familiar with the Food Outlook report, it's a bi-annual report that offers a detailed assessment of market supply and demand trends for cereals, vegetable oils, sugar, meat, dairy, and fish. It also dives into the futures markets and logical costs of transporting food. 

Last week, the FAO released its monthly food price index, hitting a 10-year high in May, reflecting sharp gains for cereals, vegetable oils, and sugar.

"The FAO said a separate index of food import values, including freight costs that have also soared, reached a record in March this year, surpassing levels seen during previous food price spikes in 2006-2008 and 2010-2012," Reuters said. 

China's imports of agricultural demand have surged since the virus pandemic as Beijing's attempts to rebuild its pig industry decimated from disease a few years back. 

FAO concludes: "Rising food imports as a share of all imports can be an early warning indicator for potential crises in some areas." 

Back in December, SocGen's market skeptic Albert Edwards shared his thoughts about why he started to panic about soaring food prices. And since that was before food prices began to rocket amid broken supply chains, trillions in fiscal stimulus, and exploding commodity costs, we can only imagine the situation is much worse today for emerging market economies. 

DB's Jim Reid reminds us that emerging markets are more vulnerable to this trend since their consumers spend a far greater share of their income on food than those in the developed world.

FAO's Food Outlook report is more evidence that Fed officials' "transitory" narrative is just malarkey. 

Tyler Durden Fri, 06/11/2021 - 02:45
Published:6/11/2021 2:12:55 AM
[Markets] HRC's Alphonso David has a message for those in power Human Rights Campaign President Alphonso David joins 'Influencers with Andy Serwer' to discuss ways we can address issues of diversity and inclusion. Published:6/11/2021 2:12:55 AM
[Markets] GLOBAL MARKETS-Asia stocks up, U.S. bond yields down as inflation fears ease U.S. bond yields dipped to three-month lows and a broad gauge of Asian shares rose on Friday as investors looked past rising U.S. consumer prices and focused on one off-factors which suggested higher inflation could be short-lived. Some economists say the rise in the U.S. consumer price index reflected short-term adjustments related to the reopening of the economy, and many investors appear confident that the Federal Reserve is deftly handling a rebound in economic growth - even as questions remain about how it defines "transitory". Published:6/11/2021 1:42:44 AM
[Markets] G7: Desperately Seeking Relevancy G7: Desperately Seeking Relevancy

Authored by Pepe Escobar via The Asia Times,

A G7 rebooted as a Sinophobic crusade will have few if any takers due to members' rising dependence on Chinese goods and markets...

The upcoming G7 in Cornwall at first might be seen as the quirky encounter of “America is Back” with “Global Britain”.

The Big Picture though is way more sensitive.

 

Three Summits in a Row – G7, NATO and US-EU – will be paving the way for a much expected cliffhanger: the Putin-Biden summit in Geneva – which certainly won’t be a reset.

The controlling interests behind the hologram that goes by the name of “Joe Biden” have a clear overarching agenda: to regiment industrialized democracies – especially those in Europe – and keep them in lockstep to combat those “authoritarian” threats to US national security, “malignant” Russia and China.

It’s like a throwback to those oh so stable 1970s Cold War days, complete with James Bond fighting foreign devils and Deep Purple subverting communism. Well, the times they are-a-changin’. China is very much aware that now the Global South “accounts for almost two-thirds of the global economy compared to one-third by the West: in the 1970s, it was exactly the opposite.”

For the Global South – that is, the overwhelming majority of the planet – the G7 is largely irrelevant. What matters is the G20.

China, the rising economic superpower, hails from the Global South, and is a leader in the G20. For all their internal troubles, EU players in the G7 – Germany, France and Italy – cannot afford to antagonize Beijing in economic, trade and investment terms.

A G7 rebooted as a Sinophobic crusade will have no takers. Including Japan and special guests at Cornwall: tech powerhouse South Korea, and India and South Africa (both BRICS members), offered the dangling carrot of a possible extended membership.

Washington’s wishful thinking cum P.R. offensive boils down to selling itself as the primus inter pares of the West as a revitalized global leader. Why the Global South is not buying it can be observed, graphically, by what happened for the past eight years. The G7 – and especially the Americans – simply could not respond to China’s wide-ranging, pan-Eurasian trade/development strategy, the Belt and Road Initiative (BRI).

The American “strategy” so far – 24/7 demonization of BRI as a “debt trap” and “forced labor” machine – did not cut it. Now, too little too late, comes a G7 scheme, involving “partners” such as India, to “support”, at least in theory, vague “high-quality projects” across the Global South: that’s the Clean Green Initiative , focused on sustainable development and green transition, to be discussed both at the G7 and the US-EU summits.

Compared to BRI, Clean Green Initiative hardly qualifies as a coherent geopolitical and geoeconomic strategy. BRI has been endorsed and partnered by over 150 nation-states and international bodies – and that includes more than half of the EU’s 27 members.

Facts on the ground tell the story. China and ASEAN are about to strike a “comprehensive strategic partnership” deal. Trade between China and the Central and Eastern European Countries (CCEC), also known as the 17+1 group, including 12 EU nations, continues to increase. The Digital Silk Road, the Health Silk Road and the Polar Silk Road keep advancing.

So what’s left is loud Western rumbling about vague investments in digital technology – perhaps financed by the European Investment Bank, based in Luxembourg – to cut off China’s “authoritarian reach” across the Global South.

The EU-US summit may be launching a “Trade and Technology Council” to coordinate policies on 5G, semiconductors, supply chains, export controls and technology rules and standards. A gentle reminder: the EU-US simply do not control this complex environment. They badly need South Korea, Taiwan and Japan.

Wait a minute, Mr. Taxman

To be fair, the G7 may have rendered a public service to the whole world when their Finance Ministers struck an alleged “historic” deal last Saturday in London on a global, minimal 15% tax on multinational companies (MNCs).

Triumphalism was in order – with endless praise lavished on “justice” and “fiscal solidarity” coupled with really bad news for assorted fiscal paradises.

Well, that’s slightly more complicated.

This tax has been discussed at the highest levels of the OECD in Paris for over a decade now – especially because nation-states are losing at least $427 billion a year in tax-dodging by MNCs and assorted multi-billionaires. In terms of the European scenario that does not even account for the loss of V.A.T. by fraud – something gleefully practiced by Amazon, among others.

So it’s no wonder G7 Finance Ministers had $1.6 trillion-worth Amazon pretty much on their sights. Amazon’s cloud computing division should be treated as a separate entity. In this case the mega-tech group will have to pay more corporate tax in some of its largest European markets – Germany, France, Italy, UK – if the global 15% tax is ratified.

So yes, this is mostly about Big Tech – master experts on fiscal fraud and profiting from tax paradises located even inside Europe, such as Ireland and Luxembourg. The way the EU was built, it allowed fiscal competition between nation-states to fester. To discuss this openly in Brussels remains a virtual taboo. In the official EU list of fiscal paradises, one won’t find Luxembourg, the Netherlands or Malta.

So could this all be just a P.R. coup? It’s possible. The major problem is that at the European Council – where governments of EU member-states discuss their issues – they have been dragging their feet for a long time, and sort of delegated the whole thing to the OECD.

As it stands, details on the 15% tax are still vague – even as the US government stands to become the largest winner, because its MNCs have shifted massive profits all across the planet to avoid US corporate taxes.

Not to mention that nobody knows if, when and how the deal will be globally accepted and implemented: that will be a Sisyphean task. At least it will be discussed, again, at the G20 in Venice in July.

What Germany wants

Without Germany there would not have been real advance on the EU-China Investment Agreement late last year. With a new US administration, the deal is stalled again. Outgoing chancellor Merkel is against China-EU economic decoupling – and so are German industrialists. It will be quite a treat to watch this subplot at the G7.

In a nutshell: Germany wants to keep expanding as a global trading power by using its large industrial base, while the Anglo-Saxons have completely ditched their industrial base to embrace non-productive financialization. And China for its part wants to trade with the whole planet. Guess who’s the odd player out.

Considering the G7 as a de facto gathering of the Hegemon with its hyenas, jackals and chihuahuas, it will also be quite a treat to watch the semantics. What degree of “existential threat” will be ascribed to Beijing – especially because for the interests behind the hologram “Biden” the real priority is the Indo-Pacific?

These interests could not give a damn about a EU yearning for more strategic autonomy. Washington always announces its diktats without even bothering to previously consult Brussels.

So this is what this Triple X of summits – G7, NATO and EU-US – will be all about: the Hegemon pulling all stops to contain/harass the emergence of a rising power by enlisting its satrapies to “fight” and thus preserve the “rules-based international order” it designed over seven decades ago.

History tells is it won’t work. Just two examples: the British and French empires could not stop the rise of the US in the 19th century; and even better, the Anglo-American axis only stopped the simultaneous rise of Germany and Japan by paying the price of two world wars, with the British empire destroyed and Germany back again as the leading power in Europe.

That should give the meeting of “America is Back” and “Global Britain” in Cornwall the status of a mere, quirky historical footnote.

Tyler Durden Fri, 06/11/2021 - 02:00
Published:6/11/2021 1:14:19 AM
[Markets] Asian stocks mostly higher following U.S. inflation jump Shares were mostly higher in Asia on Friday after the S&P 500 index notched another record high despite a surge in U.S. consumer prices in May. Shanghai fell, Tokyo was flat, while shares rose in Hong Kong, Seoul and Sydney. On Thursday, Wall Street logged gains while bond yields mostly fell despite the much-anticipated report showing consumer prices rose 5% in May, the biggest year-over-year increase since 2008 and more than economists had expected. Published:6/11/2021 1:14:19 AM
[Markets] D'Souza: An Orchestrated Hoax D'Souza: An Orchestrated Hoax

Authored by Dinesh D'Souza, op-ed via The Epoch Times,

It can now be said publicly: The massive public campaign to convince and even compel the world to accept the idea that SARS-CoV2, the virus that causes COVID-19, arose naturally from a meat market in Wuhan was a hoax.

The gory details are contained in a bombshell investigative report in the magazine Vanity Fair. This alone is surprising. Vanity Fair is a culture and trends magazine, not noted for this type of serious inquiry. Yet Katherine Eban’s in-depth article is thoroughly researched, with multiple named sources, and written in the style of a detective story.

The first question to ask is: How did we get a scientific and media consensus that SARS-CoV2 originally came from the Wuhan meat market?  The answer is a group letter signed by leading virologists that appeared in the reputable science publication The Lancet. This article dismissed theories that suggested SARS-CoV2 might have come from the Wuhan lab as “conspiracy theories” that had were flatly rejected by the scientific community.

Apparently convinced they had to “listen to the science,” the Lancet statement convinced media around the world to revile public figures, especially politicians such as Sen. Tom Cotton (R-Ark.), for even asking for an investigation into where COVID-19 came from. Cotton was almost universally dubbed a kook for even raising the possibility of “debunked” and “discredited” theories.

Digital media promptly imposed its strict regime of restriction, banning, shadowbanning, and deplatforming of users who were deemed to share such “misinformation.”

Acting on the recommendation of its so-called fact checkers, Facebook took down millions, perhaps tens of millions, of posts supposedly conveying the false notion that SARS-CoV2 might have leaked out from a lab.

But what Vanity Fair exposes is the behind-the-scenes mechanism for how that Lancet statement was produced.

According to the article, it was organized by a zoologist named Peter Daszak, himself involved in U.S. government-funded research aimed at the making of deadly viruses in labs. Daszak has worked in close collaboration with Ralph Baric of the University of North Carolina. Daszak’s group, EcoHealth Alliance, has worked directly with China’s Wuhan laboratories to research coronaviruses, and potentially make them more contagious and more lethal.

Peter Daszak, a member of the World Health Organization team investigating the origins of COVID-19, speaks to media upon arriving at the Wuhan Institute of Virology in Wuhan in China's central Hubei province on Feb. 3, 2021. (Hector Retamal/AFP via Getty Images)

The ostensible purpose of such “gain-of-function” research is to study viruses, to understand them better, and to develop better cures for pandemics that might arise naturally. But of course, such research is very dangerous, because viruses could through accident or negligence be released and cause the very pandemics they are designed to prevent. Alternatively, such research can be exploited for military purposes, because lethal viruses also make for a powerful weapon of biological warfare.

When Daszak learned that a virus was causing global havoc, he moved quickly to line up a group of virologists to declare, without any persuasive evidence whatever, that COVID-19 had a natural origin.

It might seem puzzling why prominent scientists would agree to sign a letter taking a position on something for which there is no valid scientific evidence.

Why would they do this?

The one-word answer is: money.

Figures like Daszak and institutions like EcoHealth Alliance that receive large amounts of government money typically package those funds into sub-grants that are dispersed among researchers and research institutions around the country. Consequently, there’s a large group of virologists who are, in a sense, in Daszak’s back pocket. They have a financial vested interest in doing what he wants, and moreover, they, like Daszak, have a stake in camouflaging the possibility that their type of work caused a global pandemic with millions of deaths and untold ruin in its wake.

Not only did Daszak organize the Lancet statement, but he did so, according to Vanity Fair, “with the intention of concealing his role and creating the impression of scientific immunity.” In an email addressed to Baric, Daszak said, “No need for you to sign the ‘Statement’ Ralph.”

Daszak explained that neither he nor Baric should sign the declaration “so it has some distance from us and therefore doesn’t work in a counterproductive way.”

Daszak added,

“We’ll then put it out in a way that doesn’t link it back to our collaboration so we maximize an independent voice.”

Baric agreed, responding,

“Otherwise it looks self-serving and we lose impact.”

In the end, Baric didn’t sign. Daszak did. And at least six of the others who signed the statement either worked at, or had received funding from, EcoHealth Alliance, according to Vanity Fair.

What we have here is a group of scientists actively involved in cooking up potentially deadly viruses, and possibly involved in a dangerous collaboration with the Wuhan lab that may have helped cause the death of millions, working in concert to create a false public impression of scientific consensus, when they knew perfectly well that there was no such consensus.

Not only did the media and digital media run with it, but, in addition, the Biden administration used the pretext of scientific consensus—the bogus consensus the Lancet helped create—to shut down an ongoing State Department investigation, begun late in the Trump era and spearheaded by Mike Pompeo, into the true origins of COVID-19.

This shutdown was actively promoted by U.S. government agencies and bureaucrats who had no intention of revealing their own role in sponsoring and subsidizing highly dangerous “gain-of-function” research.

The consequences of the COVID-19 deception, jointly promoted by scientists, journalists, digital moguls, and bureaucrats in the U.S. government, all eager to hide their possible role in a 21st century pandemic, are far-reaching. The big lie that COVID-19 arose naturally from a meat-market has stymied a true inquiry into what happened. Now we might never know. Not knowing means that preventing a future epidemic becomes that much more difficult.

Tyler Durden Thu, 06/10/2021 - 23:50
Published:6/10/2021 11:12:37 PM
[Markets] Washington Moves To Make Sensitive Private Data Available For "Minority Report"-Style AI Research Washington Moves To Make Sensitive Private Data Available For "Minority Report"-Style AI Research

Earlier this week, the investigative journalism outfit ProPublica published a story using data gleaned from the tax returns of America's richest individuals to determine exactly how much each of them paid in tax vs. the amount by which their wealth increased in a given year, a number the reporters described as their "true tax" rate.

Needless to say, the story inspired intense conversation online, where rival media organizations were quick to assume that the data was somehow "leaked" to PP. ProPublica was vague in its report, refusing to say or even hint at how it obtained the data, which led one reporter to wonder whether it might have been handed off to PP by academic researchers. It's also worth mentioning that leaking the tax data from inside the IRS would constitute a major federal crime (obtaining it via a third party who had been given the data for some legitimate purpose).

But one thread from Breitbart's John Carney caught our attention due to his observation that the media might be jumping to conclusions. In his estimation, Carney said, it's possible that the data could have been released to academics as part of an officially sanctioned research project gone awry.

Carney wonders: how anonymized can personal data be for certain high-profile individuals like billionaires?

Well, while America ponders the answer to that, WSJ reports that the Biden Administration is launching an initiative Thursday aiming at making sensitive data like this much more easily accessible to researchers. In fact, the new portal envisioned by the administration would also research create an opportunity to improve the ability of US scientists to review the data.

"This is a moment that is calling us to be strengthening our speed and scale" when it comes to advances in AI technology, said National Science Foundation Director Sethuraman Panchanathan: "It is also calling us to make sure that innovation is everywhere," they told WSJ.

America is racing against China to dominate the race for AI, and the government is desperately searching for anything that might give the US an edge. Now, the National Artificial Intelligence Research Resource Task Force, a group of 12 members from academia, government, and industry, is reportedly drafting a strategy for potentially giving researchers access to stores of data about Americans, from demographics to health and driving habits.

The task force was first authorized by Congress last year as part of a sweeping law designed to revamp the governments

One member of the task force told WSJ that researchers need access to this data in order to "investigate a lot of their really great ideas in AI."

Lynne Parker, assistant director of artificial intelligence at the White House Office of Science and Technology Policy, said the task force announced Thursday would aim to give Congress a road map for creating a common research infrastructure the government could offer to outsiders.

"In order to investigate a lot of their really great ideas in AI, they need access to powerful computing infrastructure and they need access to data,” she said. Many researchers, particularly in academia, "simply don’t have access to these computational resources and data, and this is hampering innovation."

One example: The Transportation Department has access to a set of data gathered from vehicle sensors about how people drive, said Erwin Gianchandani, senior adviser at the National Science Foundation and co-chair of the new AI task force.

"Because you have very sensitive data about individuals, there are challenges in being able to make that data available to the broader research community,” he said. On the other hand, if researchers could get access, they could develop innovations designed to make driving safer.

WSJ mentioned that data gathered from police vehicle sensors could be among the data shared, along with "sensitive data" gleaned from medical records and other data sets. The task force is due to issue reports on its research in May and November of next year.

We can't help but wonder what this type of "AI" research will help researchers figure out: will they use it to try and determine individuals who are likely (or even virtually guaranteed) to commit crimes like in "Minority Report."

Tyler Durden Thu, 06/10/2021 - 23:30
Published:6/10/2021 10:49:08 PM
[Markets] This Close US Ally Is Selling China Billions In Military-Related Equipment This Close US Ally Is Selling China Billions In Military-Related Equipment

Authored by Mark Curtis via Consortium News,

The UK government has authorized the sale of £2.6-billion worth of military and civilian equipment with potential military use to China in the past three years, government figures show. Last year saw a tripling in exports to China of "dual use" items defined as "civilian goods with a military purpose."” Some £1.6-billion worth were authorized in 2020, compared to £526-million in 2019.

The increase coincided with the beginning of the coronavirus pandemic in early 2020. The exports have been approved while China is identified by the British government as “an increasing risk to U.K. interests” and "the biggest state-based threat to the U.K.’s economic security."

PM Boris Johnson attending Sun Military Awards in Central London, Feb. 6, 2020, via Flickr

Most British exports were for "dual use" equipment but £53-million worth classified purely as "military" went to China over the three years 2018-20, including components for combat aircraft and military support aircraft. Other items licensed for use by China included military communications equipment and technology for air defense systems. 

The U.K. has banned the sale of "lethal" military equipment to China since the Tiananmen Square massacre of 1989. However, the British exports are likely to benefit China’s air force, which British ministers claim is a growing military threat. Defence Minister Jeremy Quin said in March that "the likes of Russia and China have studied our strengths in the air and begun developing the capabilities to not only counter but surpass us."

Britain is also aiding China’s naval capacity. Ministers approved two export licences in 2019 for components for combat naval vessels that were identified as being for "end use by the [military] Navy."  The previous year, approvals were given to sell components for combat naval vessels and for military radars where China’s navy was also stated to be the end user. Other British exports likely to benefit the Chinese navy have included technology for combat naval vessels and for “military patrol/assault craft.” 

General Nick Carter, the head of the U.K. armed forces, now laments that Beijing commands "the largest maritime surface and sub-surface battle force in the world." The UK military identifies China as posing a particular challenge in the South China Sea, where Beijing is building bases on disputed atolls in the Spratly and Paracel Islands, which are also claimed by other states in the region. In March, Foreign Secretary Dominic Raab said China was a "threat" in the contested sea. 

UK support for the Chinese navy has come not only in the form of military exports. Declassified previously revealed that in 2015, the Royal Navy gave training to a Chinese maritime agency that was closely involved with occupying the disputed islands in the South China Sea. 

However, that support to Beijing took place when cooperation between the countries was increasing. At the time, the UK's then chancellor, George Osborne, spoke of "a golden decade for both of our countries" and of making Britain "China’s best partner in the West."

Six years on, the UK has radically altered its stance towards Beijing as British military planners seek to play a greater military role in Asia. The Royal Navy’s new aircraft carrier is due to test China by sailing through the South China Sea later this year.

'Information Security Equipment'

In addition to supporting the navy and air force, hundreds of licences have been approved by UK ministers for the sale of "information security equipment" and "imaging cameras" to China. 

It is not clear if such exports could aid the Chinese state’s domestic surveillance capabilities since the items are not specified in government documents. The UK's partial arms embargo on China forbids the export of equipment "which might be used for internal repression".

The exports also raise concerns about China’s policy towards Tibet. Beijing considers Tibet to be an "autonomous region" of the country but many Tibetans have demanded an independent state since China invaded the territory in 1950.

December 2013: then UK Prime Minister David Cameron speaking at the Shanghai trade exhibition, via Flickr

Sam Walton, the chief executive of the Free Tibet campaign, said: "The Chinese government will use this military equipment to continue its repression in Tibet, to steal Tibetan homes and erase Tibetan culture. Selling such equipment is not how to stand up for human rights."

He added: "We have seen fine words from this government condemning the repression in Tibet, the Uyghur genocide and the destruction on democracy in Hong Kong. But their actions once again show their words to be worthless. Britain cannot condemn China’s jackboot whilst heeling that same boot."

The UK government’s new military strategy says that China is "a systemic competitor" and that "the significant impact of China’s military modernization and growing international assertiveness within the Indo-Pacific region and beyond will pose an increasing risk to UK interests".

"The fact that China is an authoritarian state, with different values to ours, presents challenges for the UK and our allies," it adds.

Mark Curtis is an author and editor of Declassified UK, an investigative journalism organization that covers Britain’s foreign, military and intelligence policies. He tweets at @markcurtis30. Follow Declassified on twitter at @declassifiedUK.

Tyler Durden Thu, 06/10/2021 - 23:10
Published:6/10/2021 10:12:14 PM
[Markets] New Leak Of Taxpayer Info Is (More) Evidence Of IRS Corruption New Leak Of Taxpayer Info Is (More) Evidence Of IRS Corruption

Authored by Daniel Mitchell via The American Institute for Economic Research,

I sometimes try to go easy on the IRS. After all, our wretched tax system is largely the fault of politicians, who have spent the past 108 years creating a punitive and corrupt set of tax laws.

But there is still plenty of IRS behavior to criticize. Most notably, the tax agency allowed itself to be weaponized by the Obama White House, using its power to persecute and harass organizations associated with the “Tea Party.”

That grotesque abuse of power largely was designed to weaken opposition to Obama’s statist agenda and make it easier for him to win re-election.

Now there’s a new IRS scandal. In hopes of advancing President Biden’s class-warfare agenda, the bureaucrats have leaked confidential taxpayer information to ProPublica, a left-wing website.

Here’s some of what that group posted.

ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. …ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period. We’re going to call this their true tax rate. …those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.

Since I’m a policy wonk, I’ll first point out that ProPublica created a make-believe number. We (thankfully) don’t tax wealth in the United States.

So Elon Musk’s income is completely unrelated to what happened to the value of his Tesla shares. The same is true for Jeff Bezos’ income and the value of his Amazon stock.

And the same thing is true for the rest of us. If our IRA or 401(k) rises in value, that doesn’t mean our taxable income has increased. If our home becomes more valuable, that also doesn’t count as taxable income.

The Wall Street Journal opined on this topic today and made a similar point.

There is no evidence of illegality in the ProPublica story. …ProPublica knows this, so its story tries to invent a scandal by calculating what it calls the “true tax rate” these fellows are paying. This is a phony construct that exists nowhere in the law and compares how much the “wealth” of these individuals increased from 2014 to 2018 compared to how much income tax they paid. …what Americans pay is a tax on income, not wealth.

Some journalists don’t understand this distinction between income and wealth.

Or perhaps they do understand, but pretend otherwise because they see their role as being handmaidens of the Biden Administration.

Consider these excerpts from a column by Binyamin Appelbaum of the New York Times.

Jeff Bezos…added an estimated $99 billion in wealth between 2014 and 2018 but reported only $4.22 billion in taxable income during that period. Warren Buffett, who amassed $24.3 billion in new wealth over those years, reported $125 million in taxable income. …some of the wealthiest people in the United States essentially live under a different system of income taxation from the rest of us.

Mr. Appelbaum is wrong. The rich have a lot more assets than the rest of us, but they operate under the same rules.

If I have an asset that increases in value, that doesn’t count as taxable income. And it isn’t income. It’s merely a change in net wealth.

And the same is true if Bill Gates has an asset that increases in value.

Now that we’ve addressed the policy mistakes, let’s turn our attention to the scandal of IRS misbehavior.

The WSJ‘s editorial addresses the agency’s grotesque actions.

Less than half a year into the Biden Presidency, the Internal Revenue Service is already at the center of an abuse-of-power scandal.

…ProPublica, a website whose journalism promotes progressive causes, published information from what it said are 15 years of the tax returns of Jeff Bezos, Warren Buffett and other rich Americans. …The story arrives amid the Biden Administration’s effort to pass the largest tax increase as a share of the economy since 1968.

The timing here is no coincidence, comrade. …someone leaked confidential IRS information about individuals to serve a political agenda. This is the same tax agency that pursued a vendetta against conservative nonprofit groups during the Obama Administration. Remember Lois Lerner? This is also the same IRS that Democrats now want to infuse with $80 billion more… As part of this effort, Mr. Biden wants the IRS to collect “gross inflows and outflows on all business and personal accounts from financial institutions.” Why? So the information can be leaked to ProPublica?

…Congress should also not trust the IRS with any more power and money than it already has.

And Charles Cooke of National Review also weighs in on the implications of a weaponized and partisan IRS.

We cannot trust the IRS. “Oh, who cares?” you might ask. “The victims are billionaires!” And indeed, they are. But I care. For a start, they’re American citizens, and they’re entitled to the same rights — and protected by the same laws — as everyone else. …Besides, even if one wants to be entirely amoral about it, one should consider that if their information can be spilled onto the Internet, anyone’s can. …A government that is this reckless or sinister with the information of men who are lawyered to the eyeballs is unlikely to worry too much about being reckless or sinister with your information. …The IRS wields an extraordinary amount of power, and there will always be somebody somewhere who thinks that it should be used to advance their favorite political cause. Our refusal to indulge their calls is one of the many things that prevents us from descending into the caprice and chaos of your average banana republic. …Does that bother you? It should.

What’s especially disgusting is that the Biden Administration wants to reward IRS corruption with giant budget increases, bolstered by utterly fraudulent numbers.

Needless to say, that would be a terrible idea (sadly, Republicans in the past have been sympathetic to expanding the size of the tax bureaucracy).

Tyler Durden Thu, 06/10/2021 - 22:30
Published:6/10/2021 9:42:05 PM
[Markets] Dow Jones Futures: Tesla Model S Plaid Event On Tap After S&P 500 Hits High; Google, RH In Buy Zones As Meme Stocks Skid The S&P 500 hit a new high Thursday with several more top stocks flashing buy signals, but it's still a tricky market. Tesla's Model S Plaid event is tonight. Published:6/10/2021 9:11:27 PM
[Markets] Which Countries Have The World's Largest Proven Oil Reserves? Which Countries Have The World's Largest Proven Oil Reserves?

Oil is a natural resource formed by the decay of organic matter over millions of years, and like many other natural resources, it can only be extracted from reserves where it already exists. The only difference between oil and every other natural resource is that oil is well and truly the lifeblood of the global economy.

The world derives over a third of its total energy production from oil, more than any other source by far; and, as Visual Capitalist's Anshool Deshmukh details below, as a result, the countries that control the world’s oil reserves often have disproportionate geopolitical and economic power.

According to the BP Statistical Review of World Energy 2020, 14 countries make up 93.5% of the proven oil reserves globally. The countries on this list span five continents and control anywhere from 25.2 billion barrels of oil to 304 billion barrels of oil.

Proven Oil Reserves, by Country

At the end of 2019, the world had 1.73 trillion barrels of oil reserves. Here are the 14 countries with at least a 1% share of global proven oil reserves:

While these countries are found all over the globe, a few countries have much larger amounts than others. Venezuela is the leading country in terms of oil reserves, with over 304 billion barrels of oil beneath its surface. Saudi Arabia is a close second with 298 billion, and Canada is third with 170 billion barrels of oil reserves.

Oil Reserves vs. Oil Production

A country with large amounts of reserves does not always translate to strong production numbers for petroleum, oil, and by-products. Oil reserves simply serve as an estimate of the amount of economically recoverable crude oil in a particular region. To qualify, these reserves must have the potential of being extracted under current technological constraints.

While countries like the U.S. and Russia are low on the list of oil reserves, they rank highly in terms of oil production. More than 95 million barrels of oil were produced globally every day in 2019, and the U.S., Saudi Arabia, and Russia are among the world’s top oil-producing countries, respectively.

Oil Sands Contributing to Growing Reserves

Venezuela has long been an oil-producing country with heavy economic reliance on oil exports. However, in 2011, Venezuela’s energy and oil ministry announced an unprecedented increase in proven oil reserves as oil sands in the Orinoco Belt territory were certified.

Between 2005 and 2015, Venezuela jumped from fifth in the world to number one as nearly 200 billion barrels of proven oil reserves were identified. As a result, South and Central America’s proven oil reserves more than doubled between 2008 and 2011.

In 2002, Canada’s proven oil reserves jumped from 5 billion to 180 billion barrels based on new oil sands estimates.

Canada accounts for almost 10% of the world’s proven oil reserves at 170 billion barrels, with an estimated 166.3 billion located in Alberta’s oil sands, and the rest found in conventional, offshore, and tight oil formations.

Large Reserves in OPEC Nations

The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental global petroleum and oil distribution agency headquartered in Vienna, Austria.

The majority of countries with the largest oil reserves in the world are members of OPEC. Now composed of 14 member states, OPEC holds nearly 70% of crude oil reserves worldwide.

Most OPEC countries are in the Middle East, the region with the largest oil reserves, holding nearly half of the global share.

Regional Shifts

Though most of the proven oil reserves in the world were historically considered to be centered in the Middle East, in the past three decades their share of global oil reserves has dropped, from over 60% in 1992 to about 48% in 2019.

One of the main reasons for this drop was constant oil production and greater reserves discovered in the Americas. By 2012, Central and South America’s share had more than doubled and has remained just under 20% in the years since.

While oil sands ushered in a new era of global oil reserve domination, as the world shifts away from oil consumption and towards green energy and electrification, these reserves might not matter as much in the future as they once did.

Tyler Durden Thu, 06/10/2021 - 22:10
Published:6/10/2021 9:11:27 PM
[Markets] Scientists Revive 24,000-Year-Old Worm-Like Animal Frozen In Siberia  Scientists Revive 24,000-Year-Old Worm-Like Animal Frozen In Siberia 

Russian scientists have published new research this week that shows a tiny animal called a Bdelloid rotifer can be revived after frozen for tens of thousands of years. 

On Monday, the paper titled "A living bdelloid rotifer from 24,000-year-old Arctic permafrost" was published in Cell.com's "Current Biology" section, which stated the Bdelloid rotifer are some of the toughest multicellular animals of their kind, able to be frozen for thousands of years then revived.  

"We revived animals that saw woolly mammoths," Stas Malavin from the Soil Cryology Laboratory in Russia, one of the co-authors of the study, told The New York Times

These microscopic, multicellular animals can withstand radiation, extreme acidity, low oxygen, dehydration, and starvation for years. 

"They're the world's most resistant animal to just about any form of torture," Matthew Meselson, a molecular biologist at Harvard University, told NYT.

Researchers believed the Bdelloid rotifer could only survive deep freezes for up to a decade until Monday's paper. With radiocarbon dating, researchers were able to date the worm-like animal to 24,000 years old. 

Once thawed, the worm was capable of eating. It was also able to reproduce - which researchers explained it could do without a partner. 

"We know for sure now it can withstand tens of thousands of years of cryptobiosis," Malavin said.

Scientists are still baffled how bdelloid rotifers can protect their cells and organs from a deep freeze and self-fix damaged DNA. The discovery could one day help scientists figure out new technologies that would allow people who are spending hundreds of thousands of dollars for whole body cryopreservation to be revived in the future

Tyler Durden Thu, 06/10/2021 - 21:30
Published:6/10/2021 8:41:50 PM
[Markets] Goldman Requires Workers To Report If They Are Vaccinated Goldman Requires Workers To Report If They Are Vaccinated

Goldman Sachs' bankers dragged themselves back to the office last month, shortly before American workplace safety regulators weighed in on what employers are legally allowed to ask (and not ask) about their vaccination status. As it turns out, vague federal standards will allow Goldman to allow workers to go bare-faced in the office so long as they provided their managers with information confirming they had been vaccinated.

Previously, disclosing vaccination status had been "optional" for employees. That has apparently changed, as Andrew Ross Sorkin's "DealBook" reported Thursday that the bank had sent a memo this week informing employees in the US that they had until noon on Thursday to report their vaccination status.

Bankers can log their vaccination status with the bank's internal app for employees. Since employers can't directly ask for this information, the bank will instead ask workers to fill in the date where they received their shots, along with the maker of their vaccine.

Goldman has also informed employees through the app that their vaccination status may be shared with managers and used for planning purposes.

"Registering your vaccination status allows us to plan for a safer return to the office for all of our people as we continue to abide by local public health measures," said a section of the memo, which was sent to employees who hadn't already reported their vaccination status. A copy of the letter was obtained by the YT.

One of the NYT's "expert" sources explained that Goldman can share vaccination status "with certain individuals if it’s relevant to the individual’s responsibilities, but they can’t share for no reason,," according to Jessica Kuester, who specializes in benefits at the law firm Ogletree Deakins.

Another source who identified himself as the CEO of the "Society for Human Resource Management" said that "it's important to have data to make data-informed decisions..." He acknowledged that some may "grimace" at the idea of employers pushing for information like vaccine status.

Goldman has roughly 20K employees based in the US at its New York headquarters and in other cities such as San Francisco and Dallas.

Companies across the US are trying to find out how many workers are vaccinated ahead of full office reopenings. They have conducted surveys and given out cash rewards, mimicking strategies embraced by state governments, as the Biden Administration scrambles to meet its goal of having 70% of American adults at least partially vaccinated by July 4. Though as things stand, it looks like the US is going to miss that target.

No word yet on whether Goldman workers will receive any kind of compensation for getting vaccinated. But seeing as the bank largely skipped bonus compensation offered to junior employees by other banks, we suspect junior bankers who comply will be doing so mostly out of the goodness of their hearts - and their unwillingness to lose their jobs.

Tyler Durden Thu, 06/10/2021 - 20:50
Published:6/10/2021 8:11:07 PM
[Markets] Next Avenue: Don’t believe these Social Security myths Is it going broke? The authors of 'Social Security Works for Everyone!' dispel some popular misconceptions.
Published:6/10/2021 7:41:00 PM
[Markets] CDC To Hold "Emergency Meeting" After 100s Suffer Heart Inflammation Following COVID Vaccines CDC To Hold "Emergency Meeting" After 100s Suffer Heart Inflammation Following COVID Vaccines

Update (2000ET): The Centers for Disease Control and Prevention announced Thursday that it will convene an "emergency meeting" of its advisers on June 18th to discuss rare but higher-than-expected reports of heart inflammation following doses of the mRNA-based Pfizer and Moderna COVID-19 vaccines.

The new details about myocarditis and pericarditis emerged first in presentations to a panel of independent advisers for the Food and Drug Administration, who are meeting Thursday to discuss how the regulator should approach emergency use authorization for using COVID-19 vaccines in younger children.

As CBS reports, the CDC previously disclosed that reports of heart inflammation were detected mostly in younger men and teenage boys following their second dose, and that there was a "higher number of observed than expected" cases in 16- to 24-year-olds. Last month, the CDC urged providers to "ask about prior COVID-19 vaccination" in patients with symptoms of heart inflammation.

We'll leave the judgment up to someone far more qualified...

Does anyone else not find it odd that after discovering 800 cases in the VAERS database the "emergency" meeting is in 7 days? ... and in the meantime, every public health authority figure is encouraging parents to get their young children vaccinated?

*  *  *

As The Epoch Times' Zachary Stieber detailed earlier, Federal authorities have received over 800 reports of heart inflammation in people who received a COVID-19 vaccine, a health official said Thursday.

The reports of myocarditis or pericarditis were submitted to the Vaccine Adverse Event Reporting System, a passive reporting system run jointly by the Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration, through May 31.

The bulk of the reports described heart inflammation appearing after the second of two doses of either the Pfizer of Moderna vaccines, both of which utilize messenger RNA technology.

Authorities stress that anybody can submit reports through the reporting system but authorities have already verified that 226 of the reports meet the CDC’s working case definition, Dr. Tom Shimabukuro, a deputy director at the agency, said during a presentation of the data. Followup and review are in progress for the rest.

Of the 285 case reports for which the disposition was known at the time of the review, 270 patients had been discharged and 15 were still hospitalized, officials said. Myocarditis typically requires hospital care. No deaths were reported.

A slide on myocarditis reports post-COVID-19 vaccination is shown during the Food and Drug Administration’s Vaccines and Related Biological Products Advisory Committee meeting on June 10, 2021. (FDA/Screenshot via The Epoch Times)

The CDC announced last month that it was investigating reports of heart inflammation in teenagers and young adults who received a COVID-19 vaccine, though it took no definitive action besides saying it would continue reviewing case data.

An advisory committee to the agency, the Advisory Committee on Immunization Practices, said in a little-noticed update published dated May 24 and published on June 1 that data from VAERS showed that in the 30 days following the second dose of mRNA vaccinations, “there was a higher number of observed than expected myocarditis/pericarditis cases in 16–24-year-olds.”

Data from the Vaccine Safety Datalink, an active reporting system that relies on nine healthcare organizations in seven states, did not show higher than expected cases, it added.

“However, analyses suggest that these data need to be carefully followed as more persons in younger age groups are vaccinated,” the advisory committee’s vaccine safety workgroup said in its report.

Israel’s Health Ministry said that same day that it found 275 cases of heart inflammation among the more than 5 million people in the country who received a vaccine between December 2020 and May. An Israeli study found “a probable link” between receiving the second dose of the Pfizer jab “and the appearance of myocarditis among men aged 16 to 30,” the ministry said.

Shimabukuro said the U.S. passive surveillance data “are consistent with the surveillance data that emerged from Israel.”

The figures are also consistent with other case reports and data from the Department of Defense.

The vast majority of the U.S. reports deal with male patients. Approximately 300 preliminary reports indicated the patients suffered chest pain, with nearly as many having elevated cardiac enzymes.

Family members watch as a 12-year-old is inoculated with Pfizer’s vaccine against COVID-19 at Dekalb Pediatric Center in Decatur, Ga., on May 11, 2021. (Chris Aluka Berry/Reuters)

A case report examining myocarditis in seven adolescents following vaccination with Pfizer’s jab, published in Pediatrics, the journal of the American Academy of Pediatrics, this month, said all seven developed the inflammation within 4 days of receiving the second dose, did not have evidence of COVID-19 infection, and did not meet the criteria for MIS-C, a rare disease.

The seven males, between the ages of 14 and 19, all required hospital care but each was eventually discharged.

Authors, who did not respond to requests for comment, said no link has been established between the vaccines and myocarditis and that the benefits of the vaccines outweigh the risks. But they also urged healthcare workers “to consider myocarditis in the evaluation of adolescents and young adults who develop chest pain after COVID-19 vaccination.”

commentary on the study published in the same journal, said “there are some concerns regarding this case series that might suggest a causal relationship and therefore warrant further analysis through established surveillance systems.”

“First, the consistent timing of symptoms in these seven cases after the second vaccination suggests a uniform biological process. Second, the similarities in clinical findings and laboratory characteristics in this series suggest a common etiology. Finally, these cases occurred in the context of a dearth of circulation of common respiratory viruses known to be associated with myocarditis, and thorough diagnostic evaluations did not identify infectious etiologies,” they added.

The expected number of myocarditis/pericarditis cases in those aged 16 or 17, based on background incidence rates and the number of doses administered to that population through May 31, is between two and 19. But based on the VAERS reports, the number is 79.

Likewise, the expected number for cases among young adults between the ages of 18 and 24 is eight to 83. The number based on the reports is 196.

“In the 16- to 17 year-olds and the 18- to 24-year-olds, the observed reports are exceeding the expected based on the known background rates that are published in literature,” Shimabukuro told members of a Food and Drug Administration vaccine advisory committee in the meeting on Thursday, though he cautioned that not all the reports will “turn out to be true myocarditis/pericarditis reports.”

Of note, of these 528 reports after second dose with symptom onset within 30 days, over half of them were in these younger age groups, 12–24 years old, whereas roughly 9 percent of total doses administered were in those age groups, so we “clearly have an imbalance there,” he added later.

A slide on myocarditis reports post-COVID-19 vaccination is shown during the Food and Drug Administration’s Vaccines and Related Biological Products Advisory Committee meeting on June 10, 2021. (FDA/Screenshot via The Epoch Times)

Data from the Vaccine Safety Datalink, which comes from nine healthcare groups that have collectively administered over 8.8 million doses—only some 284,000 of those have been given to 12- to 17-year-olds—did not indicate safety concerns, with just 60 myocarditis or pericarditis events reported through May 29, the doctor continued.

A Food and Drug Administration surveillance system, the Biologics Effectiveness and Safety Initiative, which utilizes claims data from CVS and two other partners, has detected 99 cases of myocarditis/pericarditis in the 42 days following vaccination among some 3.1 million shots given to people between the ages of 12 and 64, the panel was told earlier by an official from the drug regulating agency.

Another 1,260 were reported in people 65 or older through claims data from Medicare claims data.

Neither number raised safety signals, Steve Anderson, director of the FDA’s Office of Biostatistics and Epidemiology said.

Dr. Cody Meissner, chief of the Division of Pediatric Infectious Disease at the Tufts Children’s Hospital, and a member of the panel that heard from Shimabukuro and others, said after the presentations that he was “struck by the fact” that myocarditis “occurs more commonly after the second dose.”

“It’s a pretty specific interval of time, it’s primarily after the mRNA vaccines as far as we know, we know that the consistent age, there’s a lack of alternative explanations even though these patients have been pretty well worked up, and it’s a widespread occurrence because, as you said, Israel has found a pretty similar situation,” he said during the meeting.

He asked Shimabukuro about the rates of blood clots seen in women between the ages of 30 and 49 after vaccination—most of the clots appeared in that population after getting a Johnson & Johnson shot, though officials ultimately lifted a pause, saying the benefits outweighed the risks—and to restate the rate of incidence of myocarditis in adolescents after a jab.

Shimabukuro said that in contrast with the clotting situation, when data showed “strong evidence of a causal relationship fairly early on,” further study is needed on heart inflammation.

“At this point, I think we’re still learning about the rates of myocarditis and pericarditis. We continue to collect more information both in VAERS and continue to get more information in VSD, and I think as gather more information we’ll begin to get a better idea of the post-vaccination rates and hopefully will be able to get more detailed information by age group,” he said.

“It’s still early,” he added, noting that authorization for a vaccine for 12- to -15-year-olds didn’t come until mid-May while immunization of older adolescents largely came later than shots for adults.

“I believe that we will ultimately have sufficient information to answer those questions,” he said.

A general view of the Centers for Disease Control and Prevention (CDC) headquarters in Atlanta, Ga., on Sept. 30, 2014. (Tami Chappell/Reuters)

Another panel member, Dr. Jay Portnoy, director of the Division of Allergy, Asthma, & Immunology at Children’s Mercy Hospitals & Clinics, asked for a comparison between the adverse events in vaccinated versus unvaccinated persons, saying if the adverse event rate was lower in those who are vaccinated, then it would still be worth getting a jab.

Shimabukuro said a risk-benefit assessment would be provided by the CDC’s advisory panel, known as ACIP, on vaccines during a meeting next week.

A CDC spokeswoman also referenced the upcoming meeting, which will take place on June 18, after saying reports of myocarditis remain rare, given that over 300 million doses have been administered in the United States.

“Given the number of COVID-19 vaccine doses administered, these reports are rare. More than 18 million people between ages 12-24 have received at least one dose of COVID-19 vaccine in the United States,” she told The Epoch Times via email.

“CDC continues to recommend COVID-19 vaccination for everyone 12 years and older. Getting vaccinated is the best way to help protect yourself and your family from COVID-19.”

A Pfizer spokesperson told The Epoch Times in an email that the company is aware of federal data indicating “rare reports of myocarditis and pericarditis, predominantly in male adolescents and young adults, after mRNA COVID-19 vaccination.” It noted that federal officials have not concluded that mRNA COVID-19 vaccines cause either condition, before expressing support for an assessment of suspected adverse events.

“With a vast number of people vaccinated to date, the benefit risk profile of our vaccine remains positive,” the spokesperson added.

Moderna did not return an inquiry.

Dr. Monica Gandhi, professor of medicine and associate chief at the University of California, San Francisco, told The Epoch Times in an email that in light of the increased risk of myocarditis above expected rates among young people, especially after the second dose, parents should keep a close eye out for when guidance is issued by federal authorities.

“Possibilities include only vaccinating children without prior infection as there is an association between prior COVID and this adverse effect; giving 1 dose instead of 2 below the age of 20; addressing the dosage of the vaccine (currently at 30 micrograms down to the age of 12, which is the same dose as in adults); and extending the duration between doses 1 and 2 for younger people,” she said.

“I look forward to ACIP guidance on this over the next few weeks.”

Tyler Durden Thu, 06/10/2021 - 20:30
Published:6/10/2021 7:41:00 PM
[Markets] Buchanan: What Is America's Cause In The World? Buchanan: What Is America's Cause In The World?

Authored by Pat Buchanan,

Take away this pudding; it has no theme,” is a comment attributed to Winston Churchill, when a disappointing dessert was put in front of him.

Writers have used Churchill’s remark to describe a foreign policy that lacks coherence or centrality of purpose.

For most of our lifetimes, this has not been true of the United States. The goal of our foreign policy has been understandable and defined.

From 1949-1989, it was Cold War containment of the Soviet Empire and USSR.

Ronald Reagan believed in a “rollback” of communism, once telling an aide that his policy might be summed up as: “We win. They lose.”

At the Cold War’s end, George H. W. Bush said America would now lead mankind in the creation of “a New World Order.”

George W. Bush was going to deny to all “axis of evil” nations — North Korea, Iran, Saddam Hussein’s Iraq — access to the “world’s worst weapons,” with our ultimate goal being “ending tyranny in our world.”

According to the Biden Democrats of today, America’s goal is the preservation of “a rules-based international order,” which is less inspiring than “Remember the Alamo!” or “Remember Pearl Harbor!”

What are the causes that actually animate Americans?

A March survey of 2,000 registered voters, done by the Center for American Progress, reveals that most Republicans still share the foreign policy priorities of Donald J. Trump.

Asked to identify their first three foreign policy priorities from a list of a dozen, two-thirds of Republicans, 65%, gave as their principal concern “Reducing illegal immigration.” And 57% of Republicans put “Protecting jobs for American workers” right behind it. Independents agreed that these should be the top twin goals of U.S. foreign policy.

What does this tell us?

Economic nationalism is alive and well in the GOP, and securing the border remains a central concern of America’s center-right.

In third position, at 31% among Republicans, was “Taking on China’s economic and military aggression.”

Only 9% of Republicans listed “Fighting global poverty and promoting human rights” as top foreign policy priorities. Last among GOP priorities, at 7%, was “Promoting democratic rights and freedoms abroad.”

Indeed, this was the least popular foreign policy option among all voters.

Conclusion:

The priorities of the Bush presidencies and the neocons - democracy crusades, free trade, the New World Order, open borders - have failed to recapture the constituencies they lost in the Trump years.

While “Combating global climate change” rests near the bottom of Republican concerns at 10%, it is the No. 1 priority of Democrats, with 44% listing it first.

When it comes to “Ending US involvement in wars in the Middle East,” that goal ranks 5th among all voters. Democrats, Republicans and independents all support that objective.

Since the last CAP survey in 2019, the greatest change is the reduced concern over “terrorist threats” from al-Qaida and ISIS. Fewer than 1 in 4 voters now view this as a top priority.

As Matthew Petti writes in an analysis of the CAP survey, today, Americans “prioritize getting out of Middle East wars over confronting Middle East adversaries.”

This survey would thus seem to provide public support for the Trump-Biden withdrawal from Afghanistan, and for Biden’s effort to reengage with Iran and renew the 2015 nuclear deal.

Also ranked high among Democrats and independents, but less so among Republicans, is “Improving relationships with allies.”

What does the survey tell us?

Illegal immigration and economic nationalism energize the GOP rank-and-file; climate change does not. There is no enthusiasm in either party for new democracy crusades. And there seems to be no enthusiasm in either party for a clash with Iran, North Korea, Russia or China.

Only 14% of Democrats wish to address China’s “military and economic aggression,” though 31% of Republicans do.

But the overall impression here is one of democratic confusion.

We Americans are all over the lot about what our foreign policy should be and what it should do. One is reminded of an insight from Walter Lippmann about U.S. foreign policy confusion before World War II:

“When a people is divided within itself about the conduct of foreign relations, it is unable to agree on the determination of its true interest. It is unable to prepare adequately for war or safeguard successfully its peace. Thus, it course in foreign affairs depends, in Hamilton’s words, not on reflection and choice, but on accident and force.”

Should we energetically promote democracy worldwide, because it is the right and moral thing to do, though the American people clearly do not see this as America’s cause?

Should we intervene to help Ukraine retrieve Crimea?

Should we fight to prevent China from consolidating rocks, reefs and islets of the East and South China Seas?

Is preserving the independence of Taiwan, which we conceded half a century ago is part of China, worth a war with a nuclear-armed China?

What role should U.S. public opinion play in the shaping of U.S. foreign policy?

Tyler Durden Thu, 06/10/2021 - 19:50
Published:6/10/2021 7:10:48 PM
[Markets] : Rich IPO paydays for Airbnb, DoorDash CEOs lead influential advisory firms to target execs at their first shareholder meetings ISS and Glass Lewis are recommending shareholders withhold their votes from Airbnb Chairman and Chief Executive Brian Chesky and DoorDash Chairman and CEO Tony Xu because of their compensation, the control they wield over the companies they co-founded and other corporate governance issues.
Published:6/10/2021 6:41:07 PM
[Markets] Pentagon Pushes Plans For Afghan Airstrike Capability Even After Troop Exit Pentagon Pushes Plans For Afghan Airstrike Capability Even After Troop Exit

A growing body of indicators point to Biden's vaunted plan for a full Afghan troop exit by Sep.11 being anything but a true and full final "exit". First, as we described earlier the Pentagon is thinking up ways to leave a significant security "footprint" which defense officials say is necessary to protect the sprawling embassy in Kabul. There's also talk of "counterterrorism support" directed from outside the country, which is said to be one among a "range of options" to soon be presented to Defense Secretary Lloyd Austin. 

The Associated Press observed this week that "The number of American troops needed for the overall security missions inside Afghanistan will depend on a variety of requirements, and could range from roughly a couple hundred to a bit less than 1,000, officials said." And of course, the CIA and other foreign intel agencies are scrambling to keep eyes and ears on the ground inside the country. On Wednesday, The New York Times reported the Pentagon is pursuing authorization to conduct airstrikes on the Taliban if it appears a major city like Kabul is about to fall to the group

Via The Drive

This also as the WSJ wrote that "The Taliban are encircling Afghan police and army positions and encroaching on government-held territory, positioning themselves for large-scale offensives against major population centers while waiting for the last American troops to depart Afghanistan."

To prevent this likely scenario of a Taliban takeover of much of the country after the US troop departure, the US Air Force would theoretically initiate Afghan aerial operations from one of its four major bases in the Gulf region, including two in Kuwait, and the others in Qatar and the UAE. This could also include use of drones to combat advancing Taliban insurgents against government areas. 

Acting Air Force Secretary John Roth told a Senate hearing this week: "We have a series of air bases, they will stay for the time being, that’s where your over the horizon capability will come from," according to Defense One. These statements alone will likely be interpreted by Taliban leaders to mean that in reality the US military will never truly "exit" the conflict-torn country.

Some in Congress see the new "options" for intervening post-withdrawal as but a recipe for continued war in America's longest-running occupation...

Also on Tuesday the Pentagon said that its withdrawal efforts were ahead of schedule, already being over 50% accomplished. Prior to the ordered drawdown which the White House announced in April there were at least 2,500 US troops amid a broader 10,000 member NATO force. The Taliban had seen the change as reneging on the Trump deal which had set the full pullout deadline for May 1st, which has come and gone. 

While so far there has not been the predicted large-scale assaults on remaining US troops and bases, there have been hundreds of Taliban attacks on Afghan national forces and civilians across the country.

Tyler Durden Thu, 06/10/2021 - 19:30
Published:6/10/2021 6:41:07 PM
[Markets] U.S. stocks end higher, erasing weekly loss for the S&P 500 The Standard & Poor's 500 index rose 0.5% and is on track for its third straight weekly gain. Published:6/10/2021 6:11:21 PM
[Markets] South Korean Inventor Creates "Third Eye" As A Warning To "Smartphone Zombies" South Korean Inventor Creates "Third Eye" As A Warning To "Smartphone Zombies"

Authored by Paul Joseph Watson via Summit News,

A South Korean designer has created a ‘third eye’ that allows people to constantly look at their cellphones in the street as a warning to “smartphone zombies.”

Paeng Min-wook’s ‘The Third Eye’ is basically a sophisticated robotic eyeball that users strap to their forehead which warns them if they are about to bump into something.

“Paeng’s invention uses a gyro sensor to measure the oblique angle of the user’s neck and an ultrasonic sensor to calculate the distance between the robotic eye and any obstacles. Both sensors are linked to an open-source single-board microcontroller, with battery pack,” reports Reuters.

When the user gets within 2 meters of another object, an audible beep warns them to take evasive action.

The South Korean made it clear that his invention was a “satirical” sideswipe at the dystopian levels of smartphone obsession now seen amongst young people.

“As we cannot take our eyes off from smartphones, the extra eye will be needed in future,” he said.

“By presenting this satirical solution, I hope people would recognize the severity of their gadget addiction and look back at themselves.”

As we document in the video below, smartphone addiction continues to be a source of depression and atomization for young people, many of whom have become dopamine junkies left unable to form actual human bonds in the real world.

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Tyler Durden Thu, 06/10/2021 - 19:10
Published:6/10/2021 6:11:21 PM
[Markets] 5 Signs That America's Raging Inflation Crisis Is Accelerating 5 Signs That America's Raging Inflation Crisis Is Accelerating

Authored by Michael Snyder via The Economic Collapse blog,

The pace at which conditions are changing is catching a lot of people off guard.  Here in the United States, we have been in a low inflation environment for most of the past four decades, and so many Americans don’t even have a frame of reference for what a highly inflationary environment looks like.  But now we are facing an inflation crisis that is unlike anything that we have seen since the Jimmy Carter era in the 1970s.  In response to the COVID pandemic, governments around the world have been borrowing and spending colossal mountains of money, and global central banks have been absolutely flooding their respective financial systems with new cash.  These measures were taken to stimulate the worldwide economy, but in the process a horrific inflation monster has been created, and it will not be tamed easily.  In fact, national governments and global central banks continue to do the very same things that created the horrific inflation monster in the first place.

Moving forward, things look very bleak. 

The following are 5 signs that America’s raging inflation crisis is accelerating…

#1 Inflation tends to hit those at the bottom of the economic food chain the hardest, but at this point even most millionaires say that they are “concerned about inflation”

This is a major worry for most wealthy investors, according to CNBC’s latest millionaire survey. As many as 65% of millionaires are concerned about inflation caused by recent government spending, according to the report. Of those, 34% said they were very concerned.

The survey, conducted online in April and May by Spectrum Group on CNBC’s behalf, had 750 respondents with investable assets of $1 million or more.

#2 The biggest banks in the world are now sounding the alarm about the inflation crisis.  This week, a team of analysts from Deutsche Bank warned that “neglecting inflation leaves global economies sitting on a time bomb”

We worry that inflation will make a comeback. Few still remember how our societies and economies were threatened by high inflation 50 years ago. The most basic laws of economics, the ones that have stood the test of time over a millennium, have not been suspended. An explosive growth in debt financed largely by central banks is likely to lead to higher inflation. We worry that the painful lessons of an inflationary past are being ignored by central bankers, either because they really believe that this time is different, or they have bought into a new paradigm that low interest rates are here to stay, or they are protecting their institutions by not trying to hold back a political steam roller. Whatever the reason, we expect inflationary pressures to re-emerge as the Fed continues with its policy of patience and its stated belief that current pressures are largely transitory. It may take a year longer until 2023 but inflation will re-emerge. And while it is admirable that this patience is due to the fact that the Fed’s priorities are shifting towards social goals, neglecting inflation leaves global economies sitting on a time bomb.

#3 Housing prices continue to soar into the stratosphere in the United States.  These days, investment funds, wealthy individuals and foreigners are all gobbling up homes in anticipation of making huge profits, and this is making things extremely difficult for ordinary home buyers.  Earlier, I found the following message from one exasperated home shopper on a popular discussion forum

It’s crazy. Soon as it hits the market tons of offers.

Mostly Investors and flippers.

Real estate Agent’s telling me things like.

“We’ve got Rich guys as far out as Hawaii buying houses sight unseen. They’ll even buy them in bulk. Anything from dumps to mansions.’

We’ve got Chinese snatching up properties, Bill Gates, Businesses, and like I said flippers. It’s Impossible!

Auction sites along with gov seized properties are flooded with the same types.

Can not compete you’ll be outbid by thousands upon thousand of dollars way above market value.

Any tricks or strategies to buy a house? Anything that may not have all the greedy bastards swarming over them?

A family seriously needing to actually live in a place seems completely s.o.l

It’s not just my area that’s hot right now its everywhere.

Please if anyone has good advice would be appreciated. Thanks

#4 Used car prices have now officially entered “absurd” territory.  This week, we learned that the Used Vehicle Value Index has shot up by 26 percent so far in 2021…

Prices of used vehicles sold at auctions around the US in May spiked by 4.6% from April, by 26% year-to-date, and by 45% from April 2019, according to the Used Vehicle Value Index released today by Manheim, the largest auto auction operator in the US and a unit of Cox Automotive.

I used to recommend buying used vehicles to people because I thought that most of the time you could get a better value, but at this point I am reversing my recommendation.

In this environment, I would strongly encourage everyone to consider buying new vehicles because used vehicles have become so ridiculously expensive.

#5 Food prices continue to surge higher, and I continue to see reports of intermittent shortages around the nation.

Down in Florida, Papa Bee’s Owner Lorie Hamm says that only a limited number of cases of chicken wings are being made available to restaurants in her area, and she also says that the price for such cases has nearly doubled since the start of 2021…

“There’s 300 cases that are allocated for two counties I believe, they were gone in two minutes,” Hamm said.

At the beginning of the year, a case of wings sold for $70-90 a case. Now they are about $150 a case.

When you begin to wildly create new money, this is what happens.  Prices go haywire and shortages tend to occur.

Unfortunately, our leaders don’t seem to have even a basic understanding of the laws of economics, and the pain that we have experienced so far is just the tip of the iceberg.

If they were smart, global authorities would be taking emergency measures to get inflation under control before it is too late.

Of course that is not happening.  Instead, they just continue to feed the monster.

This crisis is going to go from bad to worse, and you should prepare accordingly.

*  *  *

Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.

Tyler Durden Thu, 06/10/2021 - 18:30
Published:6/10/2021 5:40:21 PM
[Markets] IPO Report: Chinese ride-hailing company Didi files for IPO with something U.S. rivals haven’t offered: profit China's largest ride-hailing service, Didi Chuxing, officially filed for a U.S. initial public offering Thursday with an odd inclusion for its sector: actual profit.
Published:6/10/2021 5:40:21 PM
[Markets] The Wall Street Journal: Bipartisan Senate group reaches agreement on infrastructure proposal without tax hikes A bipartisan group of Senators said they had reached an agreement on an infrastructure proposal that would be paid for without tax increases, pitching the plan to other lawmakers and the White House as they try to craft a compromise on the issue.
Published:6/10/2021 5:10:42 PM
[Markets] Medical Journal Describes "Whiteness" As A Parasitic Pathology That Has No Cure Medical Journal Describes "Whiteness" As A Parasitic Pathology That Has No Cure

Authored by Paul Joseph Watson via Summit News,

A research study published in the Journal of the American Psychoanalytic Association describes “whiteness” as a parasitic pathology that has no cure.

Yes, really.

The article, which is entitled ‘On Having Whiteness’, was written by Dr. Donald Moss (who is white), a faculty member of both the New York Psychoanalytic Institute and the San Francisco Center for Psychoanalysis.

Moss asserts that white people have a “particular susceptibility” to the “parasitic” condition, which he says “renders its hosts’ appetites voracious, insatiable, and perverse” and leads them to “terrorize” non-whites.

The nutty academic then frames “whiteness” as a malignant disease that can only be prevented via massive programs of re-education.

“Effective treatment consists of a combination of psychic and social-historical interventions. Such interventions can reasonably aim only to reshape Whiteness’s infiltrated appetites—to reduce their intensity, redistribute their aims, and occasionally turn those aims toward the work of reparation,” he writes.

Even then, Moss laments that there “is no guarantee against regression” and “[t]here is not yet a permanent cure.”

This kind unhinged rhetoric is also being spewed by Moss’ teaching colleagues in schools and universities across American under the guise of Critical Race Theory.

The article once again underscores how the only form of allowed “systemic racism” and discrimination that exists in the west is against white people.

When literally every major cultural institution, government entity, the entertainment industry, academia and the media amplifies this kind of bile, the notion of “white privilege” is laughable.

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Tyler Durden Thu, 06/10/2021 - 17:50
Published:6/10/2021 5:10:42 PM
[Markets] BofA Just Threw Up All Over The Fed's "Transitory" Argument: Here's Why BofA Just Threw Up All Over The Fed's "Transitory" Argument: Here's Why

One look at the recent collapse in 10Y breakeven rates, which have tumbled 24 bps to 2.37% since their May 12 peak despite today's red hot CPI print...

... could convince even the most hard-core bond bears that investors have likely committed to the Fed’s "transitory" inflation narrative, and now subscribe to Powell’s labor market maxim, that a recovery in American jobs is more important than inflation concerns right now (even if other labor market indicators such as job openings hints at much tighter conditions) and that no hikes are coming for a long, long time.

And yet, the evidence of shortages and inflation continues to grow with every passing day, as does the list of reasons to dismiss the problem as purely temporary, although as even BofA economists note in their daily note, "judging from the non-reaction of markets— with 10-year yields dipping back below 1.5% and the stock market near record highs— those arguments are winning the day."

BofA's response was simple: as the bank's chief economist Michelle Meyer said "we don’t buy it", noting that as signs of shortages and inflation continue to arrive, including several warnings this week, "individually the arguments for complacency make sense; collectively they are becoming increasingly unconvincing"; it's also why Meyer continues to believe that "the groundwork for more sustained inflation down the road is building."

She does have a point - after all, just this week, we found that both the small business survey and the “JOLTS” data showed a significant escalation of the shortage problem in May. All of the small business questions around prices, wages and shortages worsened on the month. For example, a net 40% of respondents said they were increasing their prices, marking the highest reading since 1981

Similarly, the JOLTS data lived up to its name, as the job opening rate surged 0.6%, moving further into record territory while a record number of Americans quit their jobs.

But instead of highlighting the inflationary dangers signaled by these indicators, when digging around in the business press, we instead find a growing list of excuses for the shortages and signs of inflation. As you skim through the list below, keep in mind not only the evidence of shortages, but also the fact that average hourly earnings have risen at 7.4% annualized rate in April and May and core CPI inflation is likely even higher. Here, courtesy of Meyer, is the laundry list:

  1. Labor shortages will vanish in the fall when unemployment benefits drop, childcare becomes more available and fear of getting COVID on the job fades.
  2. Bottlenecks in goods production are due to idiosyncratic shocks. They will fade as production picks up and as demand shifts from goods to services.
  3. Bottlenecks in trade will also ease as the impact of past disruptions fades, labor shortages ease and demand for goods stops growing so fast.
  4. The rise in prices is purely temporary and sector specific. It will go away as supply picks up.
  5. Any pick-up in price inflation is by definition temporary because there is still an output gap and sustained price pressure requires closing the gap.
  6. The rise in wages is mainly in low-wage jobs. That is a good thing because it helps close some of the income gap.
  7. The link between wage and price inflation has weakened in recent years. Again, we should celebrate not bemoan the rise in wages.
  8. Any increase in wage growth is by definition temporary because the unemployment rate is still too high to generate sustained wage pressure.
  9. The Michigan measure of inflation expectations has surged, but that is an overreaction to highly visible food and energy price increases and will fade when they fade.
  10. Historically, inflation expectations only rise after there is a sustained period of high actual inflation. The recent rise must be a fluke.
  11. Inflation breakevens have only risen modestly and if there was a real inflation problem the bond market would tell us.
  12. Ignore these rough survey measures of inflation expectations. Surveys of professional economists still see inflation meeting the Fed’s target in the long run.

And then, Meyer points out the coup de grace: "don’t worry about inflation getting too high, the Fed can raise interest rates as much as needed to cool inflation." Sure it can... It can also crash the precious stock market in 15 minutes.

So why is Bank of America worried?

Because, as Meyer correctly notes, there is some truth to all of these arguments, but it is implausible to argue that all of the recent inflation problems are temporary, and most important these “temporary” pressures will probably persist for many months and could become embedded in inflation psychology. This is particularly likely given that monetary and fiscal authorities have demonstrated in word and action that they want a red hot economy and rising inflation in the next few years.

Meyer also disagrees that the Fed can easily put the inflation genie back in the bottle: "we haven’t had sustained high inflation in recent decades, but older history shows that once it gets going it is hard to contain without triggering a recession."

Moreover, the Fed’s current policy strategy makes it even harder, as they are promising to tighten later than normal and only when they are convinced that higher inflation is embedded in the economy.

Meyer's conclusion: while investors fear the day that the Fed signals rate hikes ahead, ironically it would be better for the sustainability of the expansion - not to mention risk assets - if that signal comes a lot earlier than the Fed is currently suggesting, at which point it will be too late...

Tyler Durden Thu, 06/10/2021 - 17:30
Published:6/10/2021 4:45:27 PM
[Markets] Buy This, Not That: You can now save $200 (and get free white glove delivery) on the ‘best luxury mattress’ in America Deal of the Day: How to save up to $250 on three top-rated mattresses on sale right now
Published:6/10/2021 4:45:27 PM
[Markets] Public Health Officials Stumped As Southern States' Vaccination Rate Continues To Drag Public Health Officials Stumped As Southern States' Vaccination Rate Continues To Drag

Less than a week ago, we reported that the US COVID-19 vaccination scheme had fallen dramatically in recent weeks, likely a factor of a drop in new cases combined with an easing of facemask requirements.

And as President Biden scrambles to hit his July 4 target to vaccinate more than 70% of adults, a goal that's looking increasingly remote every day, the NYT reported Thursday morning that there's one region of the country that's seeing vaccination demand fall more sharply than the others: And that's the deep south. It shouldn't come as a surprise. But what's even more surprising according to the NYT's latest reporting, is that public health departments across the region have tried everything they can think of - public health meetings, church clinics, going door-to-door. In the spirit of offering raffle prizes to those who get vaccinated, one state even offered winners of one a spin around a NASCAR track.

But doctors who spoke to the NYT from states like Alabama, Louisiana and Mississippi (all states where fewer than half of adults have gotten even their first jab), warned that the sense of victory that's settled in across the region is premature.

“A lot of people have the sense, ‘Oh, dodged that bullet,’” said Dr. Jeanne Marrazzo, the director of the Division of Infectious Diseases at the University of Alabama at Birmingham. She added, "I don’t think people appreciate that if we let up on the vaccine efforts, we could be right back where we started."

As of last night, the South is home to 8 of the 10 states with the lowest vaccination rates. Several theories have emerged to try and explain this: hesitancy from conservative white people, concerns among some Black residents, longstanding challenges when it comes to health care access and transportation.

"It’s kind of a complex brew, and we’re teasing apart the individual pieces," said Dr. W. Mark Horne, president of the Mississippi State Medical Association. He added: "There’s no magic bullet. There's no perfect solution. There’s no pixie dust we can sprinkle on it."

Currently in the US, everyone over the age of 12 is eligible to be vaccinated. Daily, vaccinations are down to about 1.1MM doses from a peak of more than 3.3MM doses a day in mid-April. Unless the US see a sharp uptick in jabs, Biden is on track to miss his July 4 goal of getting 70% of Americans vaccinated by July 4.

In some parts of the south, it's unclear if that threshold will ever be attainable.

“I certainly don’t expect us to get to 70 percent by Fourth of July. I don’t know that we’ll get to 70 percent in Alabama,” said Dr. Karen Landers, Alabama’s assistant state health officer. “We just have a certain group of people, of all walks of life, that just aren’t going to get vaccinated.”

Unfortunately for countries that are desperate for more jabs, vaccines have a short shelf-life, with a three-month shelf life at refrigeration temperatures, millions of doses of the Johnson & Johnson vaccine are set to expire nationwide this month, prompting some governors to urgently plead that health providers use them soon.

In Alabama, Nick Saban, the championship-winning football coach, urged fans to get vaccinated so they could attend games safely this fa

Across much of the South, vaccine skepticism is pervasive. In Jackson, Miss., Felix Bell Sr., a warehouse supervisor, expressed concern about how quickly the vaccines were developed. He did not plan to get a shot. “At first they said it’s going to take several years,” said Mr. Bell, who said he had previously recovered from Covid-19. “And then all of a sudden, it was ‘Boom.’” He added, “They’ve got to get more information about what happens down the line.”

The big worry right now is that mutant COVID-19 strain's like the fearsome "Delta" mutant first discovered in India could spark another vaccine-resistant strain to take hold and essentially restart thee outbreak.

“If we don’t get our numbers up, we could be where we were last year, sheltering in place,” said William Parker, the president of the Birmingham City Council, who has proposed spending millions of dollars on vaccine incentives and who answered questions about vaccines on Monday as part of an online forum for residents.

Doctors have warned that the low vaccination numbers could make the South vulnerable to another wave of infections. Some polls have suggested that reluctance to accept the vaccine is linked to political affiliation, as Republican voters are more personally resistant to the jab than Democrats. But the big "unknown" right now is whether all this worrying might be for naught. Because as disagreements among doctors have shown, some believe that  antibodies produced by those who have already been infected (which have been found to last longer than earlier studies had suggested) might mean the US has already passed its "herd immunity" threshold.

But there's no way to know for certain until the fall arrives.

Tyler Durden Thu, 06/10/2021 - 16:51
Published:6/10/2021 4:13:36 PM
[Markets] Dow Jones Futures: S&P 500 Hits High With Tesla Model S Plaid Due; Google, RH In Buy Zones As GME, Meme Stocks Skid The S&P 500 hit a new high Thursday with several more top stocks flashing buy signals, but it's still a tricky market. Tesla's Model S Plaid event is tonight. Published:6/10/2021 4:13:36 PM
[Markets] GLOBAL MARKETS-Stocks rally, yields drop as U.S. CPI data calms investors Global stock markets rallied to new highs and bond yields slid on Thursday after a jump in U.S. inflation was viewed as insufficient to alter the Federal Reserve's easy monetary policy stance that rising consumer prices will be transitory. MSCI's global benchmark, the S&P 500 and a pan-European stock index surged after the U.S. Labor Department said the consumer price index in the 12 months ended in May accelerated 5.0%, the biggest year-on-year increase since August 2008. Published:6/10/2021 3:40:15 PM
[Markets] Chinese ride-hailing company Didi files for IPO, reported a profit in Q1 2021 Chinese ride-hailing company Didi files for IPO, reported a profit in Q1 2021 Published:6/10/2021 3:40:15 PM
[Markets] Guatemala's President Says Biden Admin's Unclear Messaging On Illegal Immigration Fueled Border Surge Guatemala's President Says Biden Admin's Unclear Messaging On Illegal Immigration Fueled Border Surge

Authored by Tom Ozimek via The Epoch Times,

Guatemalan President Alejandro Giammattei criticized the Biden administration for unclear messaging on immigration that he said contributed to the border surge.

Then President-elect Alejandro Giammattei speaks during a interview with AFP in Guatemala City, Guatemala, on Aug. 12, 2019. (Johan Ordonez/AFP via Getty Images)

Giammattei told Fox News that, “You can see that humanitarian messages were used here by the coyotes in a distorted manner,” with “coyotes” a term for human smugglers.

“They said that they were going to support family reunification,” Giammattei said, referring to the Biden administration’s policy of allowing unaccompanied minors to enter the United States on humanitarian grounds and of seeking to unite them with family members in the United States.

“So the coyotes came and took the children and teenagers to the United States,” he said.

“And the border filled up. Not only with people from Guatemala, but lots of people.”

“That’s why we have suggested that the messaging be clear,” Giammattei added.

The surge of people migrating from Central American countries has become one of the biggest political challenges to the Biden administration, with Republicans blaming the wave of illegal border crossings on a rollback of Trump-era immigration policies and on messaging that many would-be migrants and human traffickers are interpreting as an invitation to come to the United States.

Border Patrol apprehends illegal immigrants at Penitas, Texas, on May 10, 2021. (Charlotte Cuthbertson/The Epoch Times)

Reuters interviews in April with nearly two dozen migrants and more than a dozen people identifying themselves as smugglers, as well as an examination of hundreds of posts in closed Facebook groups where smugglers advertise their services, shows that many would-be migrants believe that they are welcome to cross the border.

“There’s 100 days of free passage across the border,” a Guatemalan smuggler told Reuters, referring to one prevailing perception.

“Supposedly the president is letting children in,” another told the outlet.

In dozens of interviews with The Associated Press around the same time, migrants said President Joe Biden’s relatively pro-immigration positions influenced their decision to leave their homes and seek entry into the United States.

Human smugglers along the border continue to openly advertise their services on social media, with a recent report from The Epoch Times detailing a number of such ads.

“We have crossings through Lomas de Arena, Chihuahua. We offer camouflage, backpack with food. I’m currently in Chihuahua. Send me [a message to my] inbox or call me at [redacted by The Epoch Times],” one Facebook post said.

Border Patrol apprehends illegal immigrants at Penitas, Texas, on May 10, 2021. (Charlotte Cuthbertson/The Epoch Times)

While the Biden administration has said the border isn’t open and that most asylum-seekers are being turned away at the border, the administration is allowing unaccompanied minors into the country, a policy that may be contributing to the sharp rise in children traveling alone at the border. In March, border agents encountered 18,951 unaccompanied minors, the largest number recorded in a single month since U.S. Customs and Border Protection started publishing the figures in 2009. That number dropped slightly in April to 17,148, and again in May to 14,158.

In his interview on Fox News, which came as Vice President Kamala Harris visited Guatemala to address the “root causes” of migration, Giammattei praised Harris for a speech that warned would-be illegal immigrants not to seek entry into the United States, or they would be turned back at the border.

“The vice president yesterday sent a very clear message because she said, ‘Do not come because we won’t let you in,'” he said, adding, “That’s a clear message.”

“But if you have a lukewarm message, it opens up the possibility that there’s a bad interpretation of it,” he said. “You can say it in good faith. But there are people who will misinterpret it.”

In a separate interview with CBS, Giammattei said he would like to see the United States impose stronger penalties on human smugglers and that he’s ready to extradite “coyotes” to the United States to face charges.

Customs and Border Protection apprehended 180,034 individuals illegally entering the United States in May, slightly higher than the April number.

Tyler Durden Thu, 06/10/2021 - 16:36
Published:6/10/2021 3:40:15 PM
[Markets] Earnings Results: Chewy swings to surprise profit, but warns of labor shortages, supply disruptions Chewy Inc. surprises Wall Street Thursday with a quarterly profit, but says headwinds include labor labor shortages and supply problems leading to running out of items.
Published:6/10/2021 3:40:15 PM
[Markets] US STOCKS-S&P 500 closes at record high as long-term inflation fears abate Wall Street stocks ended firmer on Thursday, with the S&P 500 hitting a record closing high, as economic data appeared to support the Federal Reserve's assertion that the current wave of heightened inflation will be temporary. All three major U.S. stock indexes advanced, with market-leading megacap stocks putting the Nasdaq out front. The Labor Department's consumer price index (CPI) data came in above consensus and added fodder to the debate over whether current price spikes could morph into long-term inflation, despite the Fed's assurances to the contrary. Published:6/10/2021 3:09:35 PM
[Markets] Bonds & Bullion Bid As Meme-Stocks Are Monkey-Hammer'd Bonds & Bullion Bid As Meme-Stocks Are Monkey-Hammer'd

Today's big upside inflation surprise piles on the stagflationary evidence as production expectations remain too optimistic...

Source: Bloomberg

The flip-flopping continues with Small Caps down today and Big-Tech up. The Dow ended unch and S&P modestly higher to a new record close...

The ratio remains rangebound...

The original so-called "Meme Stocks" were monkeyhammered today, biggest drop since March...

Source: Bloomberg

With AMC down hard...

And GME was puked after its earnings call as investors anticipated a 5mm share ATM offering...

And freshly minted member of the meme stocks - CLOV - was also clubbed like a baby seal today...

Overheard on Reddit...

Despite CPI exploding higher, Treasury yields were notably lower on the day, accelerating that dive in the last hours with 10Y leading the drop (on the week -11bps, and the day -4bps)...

Source: Bloomberg

10Y yields broke down once more, taking out the Payrolls spike lows, back to their lowest since March 4th...

Source: Bloomberg

Breakevens were higher today after plunging in recent weeks...

Source: Bloomberg

The dollar ended lower but in a narrow range after some chaos around the CPI print...

Source: Bloomberg

Cryptos were mixed with bitcoin up modestly and ethereum down modestly. Bitcoin tested $38k and found push back....

Source: Bloomberg

Real yields tumbled today (catching up - inversely - to gold)...

Source: Bloomberg

Gold surged higher after the hotter than expected CPI print (echoing the payrolls miss move)...

Source: Bloomberg

WTI managed miraculously to end green today after plunging on Iran sanctions headlines...

Finally, we note the VIX and VVIX (VIX's implied vol) have notably decoupled...

Source: Bloomberg

And the last few times VVIX has been so high relative to VIX, it has not ended well for the market as VIX has tended to push back above 20...

Source: Bloomberg

Tyler Durden Thu, 06/10/2021 - 16:00
Published:6/10/2021 3:09:35 PM
[Markets] The Wall Street Journal: U.S. suspends J&J COVID-19 vaccine shipments as states face surplus of expiring doses The U.S. government has halted new shipments of the Johnson & Johnson Covid-19 vaccine, according to state and federal health officials, one of several steps federal agencies are taking that could help clear a backlog of unused doses before they expire.
Published:6/10/2021 3:09:35 PM
[Markets] GLOBAL MARKETS-Stocks rally, yields drop as U.S. CPI data calms investors Global stocks rallied to new highs and bond yields slid on Thursday after a jump in U.S. inflation was viewed as insufficient to alter the Federal Reserve's easy monetary policy stance that rising consumer prices will be transitory. MSCI's global benchmark, the S&P 500 and a pan-European stock index surged after the U.S. Labor Department said the consumer price index in the 12 months ended in May accelerated 5.0%, the biggest year-on-year increase since August 2008. Published:6/10/2021 2:41:58 PM
[Markets] 'Tentative Infrastructure Deal' Reached By Tiny Group Of Senators Led By Romney 'Tentative Infrastructure Deal' Reached By Tiny Group Of Senators Led By Romney

After talks between President Joe Biden and Sen. Shelly Moore Capito (R-WV) broke down earlier this week, a bipartisan group of 10 senators led by Mitt Romney (R-UT) say they've reached a tentative deal on the the size of an infrastructure deal, as well as how they'd pay for it. 

The deal would spend a fraction of the $4.1 trillion called for by President Biden, and would not require an increase in taxes, according to The Hill, which suggests it may be a "tough sell within the broader Senate Democratic caucus."

That said, members of the bipartisan group warned on Thursday that they still need to run it past the Senate GOP conference and the White House to see if there's a broader buy-in.

"We have a tentative agreement on the pay-fors, yes, but that’s among the five Democrats and the five Republicans. It has not been taken to our respective caucuses or the White House so we’re in the middle of the process. We’re not at the end of the process, not at the beginning but we’re in the middle," said Romney, who added that an overall top-line spending number has also been tentatively agreed upon.

"I believe it’s complete but others may have a different point of view."

Republican Sen. Susan Collins of Maine confirmed that a tentative deal exists, and called it a "significant" sign of progress.

"Among the ten of us there is a tentative agreement on a framework but obviously there’s a long ways to go. I would not say that we have the leaders on board or we have started negotiating with the White House but I think having 10 senators come together and reach an agreement on a framework is significant," she said.

Earlier Thursday, Sen. Majority Leader Mitch McConnell (R-KY) told Fox News that Republicans "haven't given up hope" for a deal.

"We haven't given up hope that we'll be able to reach a deal on something really important for the country that we really need to accomplish, and that is a major infrastructure bill," he said, adding "I think it's clearly possible. We haven't given up on reaching an agreement on infrastructure. ... I think there's a good chance we can get there."

Other members of the bipartisan group weren’t quite willing to say they’ve agreed to the overall spending number until they’ve had a chance to bounce it off more of their colleagues. 

We’re continuing to get input from people. Nothing’s final,” said a senator involved in the talks.

Sen. Shelley Moore Capito (R-W.Va.) said she knew members of the bipartisan group were very close to a deal on the broad outlines of a scaled-down infrastructure spending package and predicted it would be similar to what she offered to Biden in recent weeks.

They were pretty close, I think, the last time I talked to them,” she said. 

“I haven’t seen the details of their report but I think a lot of what they have is a lot of what I had in terms of definitionally what infrastructure is,” she added. -The Hill

According to GOP Negotiator Sen. Bill Cassidy (R-LA), a key difference between last month's package outlined by Senate Republicans and the bipartisan deal is energy provisions sought by Biden.

"This will go back through committees, it will go through Finance [Committee] for the pay-fors, we still have to interact with the president but as far as the group’s concerned, we have a final offer," said Cassidy on Thursday, adding that the next step is to sell the deal to the White House and each party's caucuses.

"We’d have to, again, have our colleagues, whichever party you’re in, buy into it," he said, adding that the group needs to "make sure the White House is OK with it."

According to Cassidy, the Senate group's top-line figure is similar to the $1.25 trillion infrastructure spending package unveiled earlier in the week by the bipartisan House Problem Solvers Caucus, which would provide $762 billion in new spending over eight years.

"The Problem Solvers passed something which [is] pretty similar to ours in terms of top line and with the same categories and roughly the same everything else," he said. "It's all positive."

Tyler Durden Thu, 06/10/2021 - 15:30
Published:6/10/2021 2:41:58 PM
[Markets] Market Extra: ‘Food fight’ in the municipal-bond market as demand devours all supply Supply-demand metrics are so topsy-turvy that the municipal market is turning away customers - with no relief in sight.
Published:6/10/2021 2:41:58 PM
[Markets] There’s a ‘tremendous amount of economic uncertainty out there’: Expert Dennis DeBusschere, Sr. Managing Director of Portfolio Strategy and Quant Research at Evercore ISI , joins Yahoo Finance to discuss the outlook on the market and the latest economic data. Published:6/10/2021 2:09:38 PM
[Markets] Deep Dive: We put 6 more meme stocks’ numbers to the test and the differences are telling Digging deeper into the the meme stock phenomenon, there are big difference between Palantir, Wendy's, Canoo and other companies.
Published:6/10/2021 2:09:38 PM
[Markets] Banks Are So Stuffed With Cash They Tell Companies: No More Deposits Banks Are So Stuffed With Cash They Tell Companies: No More Deposits

Authored by Mike Shedlock via MishTalk.com,

Banks are so overloaded with cash they are losing money on deposits...

No More Cash Please 

Some banks, awash in deposits, are encouraging corporate clients to spend the cash on their businesses or move it elsewhere. It's a strange case of "No More Cash Please".

U.S. companies are holding on to billions of dollars in cash. Their banks aren’t sure what to do with it. Some banks are encouraging corporate customers to consider alternatives. 

Top of mind for many big banks is a rule requiring them to hold capital equivalent to at least 3% of all assets. Worried about the rule’s impact during the pandemic, the Fed changed the calculation in 2020 to ignore deposits the banks held at the central bank, but ended that break this March. Since then, some banks have warned the growing deposits could force them to raise more capital, or say no to deposits.

“Raising capital against deposits and/or turning away deposits are unnatural actions for banks and cannot be good for the system in the long run,” Jennifer Piepszak, then-CFO of JPMorgan Chase & Co., said on a call with analysts in April.

One strategy is reverse tiering, giving clients lower yields for additional deposits. Asking customers to move some funds to another, smaller bank also is an option, said Pete Gilchrist, an executive vice president at Novantas Inc., which advises banks.

In recent months, banks including BNY Mellon have focused on moving clients from deposits into money-market funds. The money-market funds, in turn, need new places to park all that new cash and earn some interest. But rock-bottom interest rates have pushed them into storing it back at the Federal Reserve overnight, in a facility that pays them zero return and had been largely ignored for the past three years. 

Nonsensical QE

Bear in mind that the Fed, via QE has been stuffing banks with cash for a year at a  rate of about $120 billion a month.

Not only do the banks have no use for it, it's starting to cost them money.

The Fed's solution, using the word loosely, is to do reverse Repos draining banks of cash.

Reverse repos topped $500 billion this week, effectively undoing over four months of QE.

The Fed Says This Was Expected 

Wolf Richter also notes Fed’s Reverse Repos Hit $503 Billion. Liquidity Drain Undoing over 4 Months of QE

What really caught my eye was Fed statements as noted by Richter.

New York Fed President John Williams emphasized repeatedly that the reverse repo system “was working really well,” and that there were “really, no concerns about that. We expected that to happen. It’s working exactly as designed."

Amazingly, 

  1. The Fed crams half a trillion dollars down banks' throats.

  2. Banks tell corporations no more deposits because they are losing money on them. Alternatively banks have to raise capital.

  3. So corporations turn to money market funds.

  4. The money market funds do not know what to do with the cash either.

  5. So the Fed is forced to take a half trillion dollars back.

  6. This was expected and is working exactly as designed.

Thank You Fed!

Meanwhile, please note The Fed Says Inflation Is Transitory, It Has a Vested Interest to Lie

Also note How the Fed's Inflation Policies Benefitted the Top 1% In Pictures Part 1

*  *  *

Like these reports? I hope so, and if you do, please Subscribe to MishTalk Email Alerts.

Tyler Durden Thu, 06/10/2021 - 14:55
Published:6/10/2021 2:09:38 PM
[Markets] Check out our new inflation tracker for the latest on the surge in prices Check out our new inflation tracker for the latest on the surge in prices Published:6/10/2021 2:09:38 PM
[Markets] U.S. budget deficit for the first 8 months of the year is a record $2.1 trillion U.S. budget deficit for the first 8 months of the year is a record $2.1 trillion Published:6/10/2021 1:39:01 PM
[Markets] Here is where higher inflation really hurts, says world’s largest asset manager U.S. bond markets may be shrugging off concerns about the spike in the cost of living, but higher prices at the pump, for used cars and at grocery stores inflict a 'direct hit' to lower-income households, warns BlackRock's Rick Rieder, CIO of global fixed income. Published:6/10/2021 1:39:01 PM
[Markets] Economic Report: Inflation is surging. How high will it go? Check out MarketWatch’s new tracker The cost of living --- aka inflation --- has surged to the highest level in more than a decade as the U.S. economy fully reopens. How high will it go? How long will it last? MarketWatch is keeping track. Check out our new inflation monitor.
Published:6/10/2021 1:39:01 PM
[Markets] El Chapo's 'Narco Beauty Queen' Wife Pleads Guilty To Helping Run Drug Empire El Chapo's 'Narco Beauty Queen' Wife Pleads Guilty To Helping Run Drug Empire

Drug kingpin Joaquin "El Chapo" Guzman's wife has pleaded guilty for her role in helping her husband run his multi-billion dollar empire in a Washington federal court on Thursday. 

32-year-old Emma Coronel Aispuro married El Chapo in 2007 and since then is believed to have "aided and abetted" the Sinaloa cartel in importing over 500,000 kilograms of drugs into the United States - mostly cocaine, but also heroin, methamphetamine, and marijuana. For example the Mexico-based drug operation is believed responsible for up to 80% of all cocaine and heroin sold in Chicago in recent years. She further pled guilty to money laundering and charges related to El Chapo's famous 2015 tunnel escape from a top security Mexican prison. 

Via AFP

Coronel Aispuro, who holds dual US-Mexico citizenship "worked closely with the command-and-control structure" according to prosecutors. She was arrested at Dulles International Airport in February after being allowed to travel freely for years. She was even reported to have shown up to the courtroom daily during her husband's three-month-long trial. 

After previously escaping Mexican prisons two times (which authorities believe his wife helped orchestrate) Guzman was arrested after a shootout and extradited from Mexico to the United States, after which he was sentenced to life in prison by a US court, and is now at the federal supermax prison in Florence, Colorado

Coronel and Guzman met when she was 18 and he was nearly 50 while she was competing in beauty pageants. She's since been dubbed 'Narco Princess' and is believed to have an estimated worth of five billion dollars

According to CNN, "In Guzman's trial, a cooperating witness testified that Coronel and others worked together to coordinate details of Guzman's last escape from prison in Mexico and that Coronel would often relay messages from Guzman in prison to others."

With her guilty plea she could potentially face life in prison, but it's expected that she'll come out of it with a significantly lighter sentence, especially if the plea deal is centered on her providing key information that might help US and Mexico authorities disrupt the Sinoloa cartel's multi-billion dollar international criminal enterprise. 

However, details of this long in the works plea deal and what she may have given the federal government remain unknown

Tyler Durden Thu, 06/10/2021 - 14:29
Published:6/10/2021 1:39:01 PM
[Markets] Why not to expect ‘all that much’ from Biden in the G7 summit: Ian Bremmer Ian Bremmer, President of Eurasia Group and GZERO Media, joins Yahoo Finance Live to discuss expectations from Biden’s G7 trip. Published:6/10/2021 1:15:33 PM </