Today’s News 10th July 2022

• Former Federal 'Informant' Warned Of Antifa, BLM Infiltrators At Capitol On Jan. 6
  Former Federal ‘Informant’ Warned Of Antifa, BLM Infiltrators At Capitol On Jan. 6

  Authored by Joseph M. Hanneman via The Epoch Times (emphasis ours),

  The man whose posting on social media warned authorities that agent provocateurs from Antifa and Black Lives Matter would be at the U.S. Capitol dressed as Trump supporters on Jan. 6, 2021, is a self-described government informant tied to former deputy attorney general Rod Rosenstein.

  

  Rosenstein warned about a “soft coup” against then-President Donald Trump in fall 2020.

  On Jan. 4, 2021, an account under the name @JohnHereToHelp posted on Twitter that Antifa and BLM agitators were being bussed from Baltimore to Washington to cause trouble at the Capitol on the day of Trump’s speech at the Ellipse.

  “Pantifa/BLM, Balt./DC branches, are already bussing people in to disturb Jan. 6,” the post read. “Orders [were] given to dress like ‘MAGA,’ blend in [and] cause trouble, especially around cameras. At night, arson has been ordered. All to be blamed on Trump supporters attending. Please be careful.”

  The post caught the attention of an assistant commander in the Intelligence and Counterterrorism Branch of the United States Park Police, who forwarded it to officials at the U.S. Capitol Police, the D.C. Metropolitan Police Department, the Department of Homeland Security, and other agencies.

  The now-suspended Twitter account belonged to Ryan Dark White, also known as Jon McGreevey.

  McGreevey has described himself in court papers and interviews as a former Department of Justice informant who supplied information on corruption in the federal government, law enforcement, and the Trump administration.

  He once used the name Ryan White as a cover but now identifies as McGreevey. He is running for federal office in Maryland.

  JohnHereToHelp’s original post was shared more than 6,000 times before it hit the radar of the Park Police.

  At the time, McGreevey had more than 120,000 followers on Twitter, according to an archived version of his page stored at the Wayback Machine.

  Twitter later suspended his account.

  “There are multiple replies to this comment that says BLM/Antifa will wear MAGA hats backwards, wear camo, and attempt to blend in with MAGA crowd,” the Park Police official wrote to his colleagues on January 5, 2021.

  The Wayback Machine archive of White’s post shows nearly 600 replies, but the replies are not visible from links on the website.

  Infiltrator Warning

  The emails, part of a trove of documents obtained in 2021 through a Freedom of Information Act lawsuit by Judicial Watch, show that federal law enforcement knew that infiltrators could be among the crowds at the Capitol.

  They also back up anecdotal reports of BLM and Antifa activists from Oregon, Maryland, and other states causing disruption and committing vandalism on Jan. 6.

  Trump supporters tangled with alleged Antifa provocateurs in several spots on Jan. 6, including the Lower West Terrace of the Capitol.

  Victoria White of Rochester, Minnesota, scuffled with a man attempting to break an arched window adjacent to the Capitol’s tunnel entrance.

  As the tightly-packed crowd chanted “[expletive] Antifa,” White wrestled for control of the red wooden club wielded by the man, who wore a green helmet with Trump stickers.

  “I’m like, ‘We don’t do that. We don’t do that. Trump supporters, we don’t do that,’” White told The Epoch Times in an interview for an upcoming documentary, “The Real Story of January 6,” on Epoch TV.

  “And then there’s other people [who said] ‘No, we’re all on the same team.’ I’m like, ‘No. No, we’re not.’

  

  “Who brings something like that to a Trump rally, let alone to break out the Capitol windows?” White said. “That’s not us. That’s not what patriot Americans do. We don’t do that stuff.”

  After another man got control of the club and began smashing the window, White helped pull him down before she was pulled away by other bystanders.

  Members of the crowd vented anger at the vandals. “We are not Antifa!” one protester shouted. A man with a green stocking cap pulled over his MAGA hat pulled what appeared to be a stereo speaker from a backpack, spurring more howls of protest from the crowd.

  At the same window, the crowd shouted at a man dressed all in black. “No, no, Antifa!” a woman yelled from the crowd. “Antifa’s breaking the windows! Antifa’s breaking the windows!”

  While conducting a live stream on January 6, independent journalist Tayler Hansen recognized a protester in a gas mask from her appearance at riots in Portland, Oregon.

  “I recognize you from Portland,” Hansen told the woman as she quickly turned away from the camera.

  “So you’ve got Antifa here, too. You have Antifa and Trump supporters within the same vicinity here for the same thing. This is absolutely [expletive] crazy.”

  Read more here…

  Tyler Durden
  Sat, 07/09/2022 – 23:30

• Which Countries Are Dominating Space?
  Which Countries Are Dominating Space?

  Believe it or not, there is a lot of stuff in space. In fact, our atmosphere is filled with more than 11,000 objects that have been launched since the foray into space began.

  The Space Race started during the Cold War, and early on the Soviet Union dominated when it came to the amount of devices and objects launched into our atmosphere. But, as Visual Capitalist’s Avery Koop details below, a few years ago, the U.S. took back that title with Elon Musk’s SpaceX helping lead the charge.

  This visual, using data from Our World in Data, breaks down the amount of objects launched into space by country over time.

  

  What Gets Launched Into Space?

  What are the objects being sent into our atmosphere and why are they so important? Here’s a look at just a few:

  • Satellites

  • Crewed spacecraft

  • Probes

  • Space station flight equipment

  Probes and landers like the Mars Rover, for example, have helped scientists explore other planets. Satellites provide us with everyday necessities like cell phone service, far reaching television signals, satellite imagery, and GPS.

  As of late 2021, there were around 4,852 operational satellites in orbit—2,944 belonging to the United States. Here’s a quick look at what the U.S. uses its satellites for:

  • Commercial: 2,516

  • Military: 230

  • Government: 168

  • Civil: 30

  Many satellites in orbit, however, are no longer functional. In fact, there is a lot of junk in space—according to NASA, there are over 27,000 pieces of space debris in orbit.

  The Space Race, by Country

  The venture into outer space began during the Cold War when the USSR launched the first satellite, Sputnik 1 in 1957. After this, the U.S. and Soviet Union entered a definitive competition between technological advancements and scientific exploration into space—an extension of the battle between political ideologies.

  Few countries have come close in matching either the U.S. or Russia so far. Here’s a look at the cumulative number of objects different countries have launched into orbit and beyond.

  

   

  One important disclaimer here is that not all of these countries have orbital launch capabilities, meaning that although the satellite in space may belong to a certain country, that doesn’t mean that it was launched by said country. For example, the UK’s first launch in 1971 was out of Australia and France’s first launch took place in Algeria in 1965.

   

  In total, around 86 countries have attempted some kind of entry into space. However, as of 2022, only 11 countries have the ability to send objects into space using their own launch vehicles, and only three—the U.S., Russia, and China—have ever launched people into outer space.

  The Future of Space

  With corporations beginning to take the lead in this new frontier, the landscape of space launches is changing. In 2019 Starlink, a constellation of satellites which provides 36 countries with internet access, was launched. With over 2,200 Starlink satellites in the sky and counting, SpaceX’s ultimate goal is global internet coverage; China is planning a similar venture.

  Beyond useful satellites and scientific exploration, other potential space industries are emerging.

  As one example, the business of commercial space tourism is no longer a futuristic concept. In late 2021, famous billionaire and founder of Virgin Galactic, Richard Branson flew briefly into space on a private flight. Jeff Bezos, having founded Blue Origin, followed shortly after.

  Today, both Blue Origin and Virgin Galactic are licensed by the Federal Aviation Administration for passenger space travel. However, if you want to be launched into space, it will cost you around $250,000-$500,000.

  Tyler Durden
  Sat, 07/09/2022 – 23:00

• Uvalde Mayor Disputes Report That Says Officer Had Early Chance To Shoot Gunman
  Uvalde Mayor Disputes Report That Says Officer Had Early Chance To Shoot Gunman

  Authored by Zachary Stieber via The Epoch Times (emphasis ours),

  The mayor of Uvalde, Texas, is disputing a report that said a police officer had an opportunity to shoot the man who entered an elementary school in the town in May before he entered the school.

  “No Uvalde police department officer saw the shooter on May 24 prior to him entering the school. No Uvalde police officers had any opportunity to take a shot at the gunman,” Mayor Don McLaughlin said in a statement to news outlets.

  

  Experts with the Advanced Law Enforcement Rapid Response Training (ALERRT) Center at Texas State University said in a report published July 6 that an officer with the Uvalde Police Department “observed the suspect carrying a rifle outside the west hall entry” to the building he eventually entered at Robb Elementary School.

  “The officer, armed with a rifle, asked his supervisor for permission to shoot the suspect. However, the supervisor either did not hear or responded too late. The officer turned to get confirmation from his supervisor and when he turned back to address the suspect, he had entered the west hallway unabated,” the report said.

  The revelation was cited in an officer statement relayed to the experts by an unnamed officer who has been part of the investigation into the law enforcement response to the shooting, which left 19 students and two teachers dead.

  McLaughlin, though, said the officer did not spot the shooter.

  “A Uvalde Police Department officer saw someone outside, but was unsure of who he saw and observed children in the area as well. Ultimately, it was a coach with children on the playground, not the shooter,” he said.

  ALERRT did not respond to a request for comment, nor did the Uvalde Police Department (UPD).

  

  Other Details

  Ricardo Rios, chief deputy of the Zavala County Sheriff’s Office, previously said that multiple officers could have fired at the shooter but chose not to because there were kids playing nearby and they feared striking the kids.

  The experts at ALERRT, which trains officers around the nation in how to respond effectively to active shooter situations, said that the officer who observed the shooter outside “was justified in using deadly force to stop the attacker,” noting Texas penal code says an individual is justified in using such force when they reasonably believe it would stop murder and other serious crimes.

  “In this instance, the UPD officer would have heard gunshots and/or reports of gunshots and observed an individual approaching the school building armed with a rifle. A reasonable officer would conclude in this case, based upon the totality of the circumstances, that use of deadly force was warranted,” the report stated.

  The officer was approximately 148 yards from the door to the building that the shooter eventually used to enter. That distance “is well within the effective range” of an AR-15, the type of gun the officer was armed with, the experts said.

  “The officer did comment that he was concerned that if he missed his shot, the rounds could have penetrated the school and injured students. We also note that current State of Texas standards for patrol rifle qualifications do not require officers to fire their rifles from more than 100 yards away from the target. It is, therefore, possible that the officer had never fired his rifle at a target that was that far away,” they also said. “Ultimately, the decision to use deadly force always lies with the officer who will use the force. If the officer was not confident that he could both hit his target and of his backdrop if he missed, he should not have fired.”

  Zero Hedge
  Sat, 07/09/2022 – 22:30

• Mapped: Average Wind Speead Across The US
  Mapped: Average Wind Speead Across The US

  Wind energy is a hot topic in North America and around the world as a decarbonization tool, but full utilization requires a lot of wind.

  This graphic from the team at the Woodwell Climate Research Center maps the average wind speed of the continental U.S. based on NOAA data from 2021.

  

  Zooming in, you can examine North America’s wind regions and patterns in great detail.

  Clearly visible is the concentration of high wind speeds in the Great Plains (known as the Prairies in Canada), which has the greatest potential for wind power. You can also follow westerly winds traveling through the North American Cordillera of mountains, including the Rocky Mountains and Cascades.

  Meanwhile, the Eastern U.S. and Canada have significantly lower average wind speeds, especially in the American South. That’s despite hurricanes with extremely high winds occasionally moving northward along the Eastern Seaboard towards the North Atlantic.

  Tyler Durden
  Sat, 07/09/2022 – 22:00

• Shinzo Abe's Murder Suspect Claims Motive Of His Attack
  Shinzo Abe’s Murder Suspect Claims Motive Of His Attack

  Authored by Aldgra Fredly via The Epoch Times (emphasis ours),

  The man who allegedly shot dead former Japanese Prime Minister Shinzo Abe on Friday had a military background but denied that his motive was related to Abe’s political beliefs.

  

  Tetsuya Yamagami, 41, was unemployed and had served in the Maritime Self-Defense Force (MSDF) for three years until 2005, according to police.

  He was arrested in the Japanese city of Nara where he allegedly shot Abe, who was delivering a campaign speech ahead of the July 10 upper house election.

  Yamagami, when apprehended, admitted his intention to kill Abe whom he believed was connected to a religious organization that had bankrupted his family, The Asahi Shimbun reported, citing investigative sources.

  “My family joined that religion and our life became harder after donating money to the organization,” Yamagami was quoted as saying by the sources.

  The suspect told investigators that he initially targeted the organization’s leader, “but it was difficult,” so he decided to change target.

  “I took aim at Abe since I believed that he was tied [to the organization]. I wanted to kill him,” he said. Yamagami also admitted that he attempted to make explosives.

  An unnamed source, who was identified as Yamagami’s relative in the report, said the suspect’s family “fell apart” because of the religious group, and that he was “convinced that Yamagami suffered damage from the organization.”

  The suspect used a handmade gun measuring 40 centimeters in length and 20 centimeters in height. Police also found similar guns, explosives, and cylindrical objects during searches at Yamagami’s apartment in Nara.

  Yamagami had previously worked as a dispatched staff worker for multiple companies after resigning from MSDF. He started working at a manufacturing company in the Kansai region in 2020 but left in May for health reasons.

  Abe’s Murder

  Abe, Japan’s longest-serving prime minister, was delivering a speech for a Liberal Democratic Party of Japan candidate’s election campaign ahead of upcoming elections when, at around 11:30 a.m., two shots rang out.

  

  A reporter for public broadcaster NHK, who was at the scene, said she heard what sounded like two consecutive gunshots and then saw Abe bleeding.

  Footage aired by the station captured the moment he fell on the street, after which several security guards ran toward him. He was holding his chest.

  The 67-year-old former prime minister was airlifted to a hospital after the shooting and later pronounced dead.

  

  Police reported that Abe died as a result of blood loss. An autopsy revealed that Abe had been shot twice in the upper left arm and neck, as well as another neck wound, the cause of which was unknown, Kyodo News reported.

  Speaking before Abe’s death was announced, Japanese Prime Minister Fumio Kishida condemned the shooting.

  “This attack is an act of brutality that happened during the elections—the very foundation of our democracy—and is absolutely unforgivable,” he said.

  Abe served as Japan’s Prime Minister and as the president of Japan’s Liberal Democratic Party from 2006 to 2007 and again from 2012 to 2020.

  His latest term was due to end in September 2021 but he resigned in August 2020, citing concerns over his health. He later shared that he had a relapse of ulcerative colitis, an intestinal disease.

  Tyler Durden
  Sat, 07/09/2022 – 21:30

• All Macau Casinos Will Shut Down Monday As COVID Outbreak Worsens
  All Macau Casinos Will Shut Down Monday As COVID Outbreak Worsens

  The world’s largest gambling hub, Macau, will shutter almost all casinos and non-essential businesses for a week from Monday as an outbreak of COVID-19 spreads across the autonomous region on the south coast of China. 

  AFP quotes Macau’s top city official Andre Cheong in a press conference Saturday who said the gambling hub would enter “static management” between July 11-18, during which casinos will be closed. Only essential businesses like supermarkets, gas stations, and pharmacies will remain open.

  The measure comes as Macau on Saturday reported 71 new COVID infections. A total of 1,374 infections have been recorded since June 18, a low number though high enough for the city to implement mainland China’s strict zero-COVID policy.  

  Last week, authorities closed Macau’s most popular casino, the Grand Lisboa, after 13 infections were reported at the casino/resort complex. 

  Macau is the largest casino hub in the world and trumps Las Vegas. More than half the city’s GDP is derived from the gambling industry, and casinos employ 20% of the population. The curb will deal a hard blow to the town because of the economic impact of enforcing harsh lockdowns and mass testing. 

  The zero-COVID policies (especially locking down Shanghai for two months) have triggered an economic slowdown in the world’s second-largest economy after President Xi Jinping made clear weeks ago that “COVID zero” isn’t going anywhere. Probabilities are waning that Beijing’s 2022 growth target of 5.5% can be achieved because of the lingering threat of new lockdowns. 

  Last week, Bloomberg reported Beijing has opted to unleash a massive 1.5 trillion yuan ($220 billion) of “special” local bonds in the second half of the year for infrastructure spending to offset the downturn. 

  And how will Macau gaming stocks react to the news this weekend — well — we suspect very negatively following an index of casino stocks in the town has failed to find support around a 2015/16 low which points to more downside. 

  

  US casino companies operating in Macau are Wynn Macau Ltd, Sands China Ltd, and MGM China Holdings Ltd, which will likely see lower shares on the news come Monday. 

  “Beyond the virus, the casino industry’s facing other challenges, including a new law that significantly increases government control over operations and Beijing’s crackdown on high-rolling gamblers to curb capital outflow,” Bloomberg adds. 

  The lockdown policy of #CCP has devastated Macau’s economy, no tourist visit and all shops have to be closed.The channel for Chinese to launder money through casinos in Macau has also been completely closed. #Macau has no future under rule of CCP. #TakeDownTheCCP pic.twitter.com/YFjKs7mOuY

  — Meeno (澳喜特战旅) (@Meeno17043089) July 9, 2022

  Is the lockdown more about COVID or ratcheting down on capital outflows?   

  https://platform.twitter.com/widgets.js

  Tyler Durden
  Sat, 07/09/2022 – 21:00

• Biden’s Selling Of Oil From Reserve To Hunter Biden-Tied Chinese Firm 'Impeachable': Republicans
  Biden’s Selling Of Oil From Reserve To Hunter Biden-Tied Chinese Firm ‘Impeachable’: Republicans

  Authored by Eva Fu via The Epoch Times (emphasis ours),

  

  The Biden administration’s move to sell nearly 1 million barrels of oil reserves to China “defies all common sense” and is benefiting U.S. adversaries at the cost of national interests, said Republican lawmakers, with some calling the action “impeachable.”

  The Department of Energy in April sold 950,000 barrels of Strategic Petroleum Reserve to Unipec America, the U.S. arm of China’s largest trading company Unipec, which is wholly owned by China Petrochemical Corporation, also known as Sinopec.

  Sinopec is a state-run Chinese oil and gas enterprise based in Beijing that has been tied to President Joe Biden’s second son, Hunter Biden, whose foreign business transactions have fueled growing scrutiny.

  The sale, though little noticed at the time, is drawing heavy backlash from Republican lawmakers. As the U.S. Strategic Petroleum Reserve (SPR), the world’s largest emergency supply of crude oil, tank to a historic low while Americans nationwide feel the pinch of soaring gas and diesel prices, such a move runs counter to American interests and is putting national security at risk, the officials said.

  “The Biden Administration should not be sending our reserves, which we need for our country, to China. It is foolish and defies all common sense,” Sen. Marco Rubio (R-Fla.), who in June introduced a bill to ban oil export to China, told The Epoch Times.

  Reps. Troy Nehls (R-Texas) and Mike Loychik (R-Ohio) described the Biden administration’s sale of oil to China as “impeachable.”

  “While you are paying FIVE DOLLARS a gallon at the pump and struggling to pay your electricity bill, Biden just sold one million barrels of our reserved oil to China so his family can make a buck. This is impeachable,” Nehls said on Twitter.

  Hunter Biden Ties

  The Unipec contract was worth $98.135 million, an April 21 report by the Department of Energy shows. Unipec was one of 12 companies that won contracts of the Department of Energy’s second emergency sale, totaling 30 million barrels.

  The department described the action as a step to “address the pain Americans are feeling at the pump” and “lower costs for Americans into the future.”

  

  Sinopec is connected to Hunter through BHR Partners, a private equity firm that Hunter helped to set up. The firm invested a combined 10 billion yuan (roughly $1.5 billion) in 2014 in Sinopec.

  Hunter was an unpaid board member of BHR until April 2020 and held a 10 percent stake in the company as recently as last May, although it’s unclear if he has divested.

  “He has been working to unwind his investment,” White House press secretary Jen Psaki told reporters in February when asked about his business shares.

  Besides Unipec, contract awardees also include U.S. oil giants such as ExxonMobil and Chevron, along with three Swiss-based companies. Nine of the companies won bids in a third round of sale of 40 million crude oil barrels in late May.

  ‘Utterly Failed This Country’

  Over 5 million barrels of oil from the emergency reserve were exported to Europe and Asia in June, with at least one shipment to China, according to a Reuters report.

  The national average gas price is down to $4.721 per gallon for Friday, falling 5.8 percent from the $5.016 peak in mid-June, according to AAA. But the price point is still more than 50 percent higher from the same time a year ago.

  “The Biden Administration’s energy policies have utterly failed this country,” Rep. Andy Biggs (R-Ariz.) told The Epoch Times. “From the Administration’s unwillingness to unleash American energy to shipping our limited reserves to adversaries with ties to Hunter Biden, their decisions have ended American energy independence.”

  “Gas prices sit at historic highs, inflation continues to climb to unprecedented levels, and this Administration continues to deflect their failures and blame everyone but themselves,” Biggs said. “The Biden Administration doesn’t have solutions because they don’t realize they’re the problem.”

  Amid oil price hikes, Biden has accused oil companies of profiteering and demanded gas stations to “[b]ring down the price you are charging at the pump.”

  When asked on July 8 about whether the Biden administration was aware that some of the oil from the SPR could end up going overseas, White House Press Secretary Karine Jean-Pierre said that the Department of Energy “can’t dictate what oil companies do with the oil they purchase or where they ship it to sell.”

  “When it comes to the oil, it is something that oil companies decide. We cannot control what oil companies do with their oil,” she said. “You should ask the oil companies about where they are sending the oil they purchase and why. That is not something that we can answer from here.”

  Read more here…

  Tyler Durden
  Sat, 07/09/2022 – 20:30

• Taibbi: The Financial Bubble Era Comes Full Circle
  Taibbi: The Financial Bubble Era Comes Full Circle

  Authored by Matt Taibbi via TK News (emphasis ours),

  Subscribers have noticed that it’s been quiet on this site for a while. This is because I spent much of the last month researching the #CryptoCrash, and the last week and a half engaged in an increasingly maddening search for a civilized and respectful way to write about one particular actor: Circle Internet Financial, makers of USDC, at $55 billion the second-biggest stablecoin in the world.

  I’m giving up the hunt for “civilized and respectful.” That dog lived a long life, but it now must be taken out and shot. I’ve dealt with many frustrating institutions, from Bank of America to the press office of the FSB, but none produced such headaches. They’re the mother of all black boxes, and God help anyone invested in them.

  

  Trouble started with one question. On April 12, Circle announced it had raised $400 million with investments from BlackRock, Fidelity, Marshall Wace and Fin Capital, noting BlackRock and Circle had entered into a “broader strategic partnership” that would include “exploring capital market applications for USDC” that would “drive the next evolution of Circle’s growth.” This would involve the establishment of a new, BlackRock-managed, government money market fund, the Circle Reserve Fund, through which BlackRock would become “a primary asset manager of USDC cash reserves.”

  Sources called with concerns. The fund’s registration statement says “shares are only available for purchase by Circle Internet Financial, LLC.” Not only is this unusual — one legal expert I spoke with said he’d “never seen such a fund… available for sale solely to a single entity” — but it raised a potentially troublesome issue for USDC holders. If Circle is to be the sole counterparty to a reserve fund, that would mean reserves would belong to the company, not its users. This could raise the same issue that recently dogged its partner, the digital exchange Coinbase, when it revealed in an SEC filing that “In the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.”

  The firm insisted “your funds are safe with Coinbase,” but as noted in another story coming out today, the damage was done, and the news triggered market mayhem. Coinbase isn’t the same kind of company as Circle, but the issue of bankruptcy remoteness is relevant to both. It’s at the core of the whole dilemma of the cryptocurrency markets. Certainly the question of who actually owns and controls reserve assets exists, or seems to exist. Here Circle is unlike some competitors, whose user agreements specifically spell out that reserves are, say, “fully backed by US dollars held by Paxos Trust Company, LLC,” or “custodied pursuant to the Custody Agreement entered into by and between you and Gemini Trust Company, LLC.” Those describe trust agreements, which are truly bankruptcy remote.

  Circle’s BlackRock fund suggested a different arrangement. Also, the new fund would be “permitted to invest up to one-third of its total assets in reverse repurchase agreements.” Would Circle be making use of that provision?

  After 2008, we learned some firms really hated being boring old depository banks, because regulators didn’t allow them to do anything really risky with giant sums of customer cash they held that could easily earn huge returns at scale. It’s like walking into a casino with a trillion dollars in chips and being barred from all the really fun tables. This is how the so-called “London Whale” episode took place. A wing of JP Morgan Chase called the Chief Investment Office, whose ostensible purpose was to reduce risk at the company, started to make enormous returns of $400 million or more on trades its officers didn’t feel were directional bets at all, but hedges. The company felt these trades were only sort of risky. “We believed that what we were doing at the time was consistent with [American accounting practices],” is how one executive later described their attitude.

  Then those “hedges” turned into giant suckholes of loss, and instead of unwinding them, the bank doubled down, and next thing you knew, they had a $12 billion bomb crater and Elizabeth Warren was screaming at an eye-rolling Jamie Dimon on television.

  After 2008, remember, Chase had the reputation of being Wall Street’s “good bank,” or at least the non-stupid one, with the New York Times even describing Dimon as Barack Obama’s “favorite banker.” But the London Whale episode revealed the company’s extreme impatience with the idea that they owed it to anybody, either regulators or depositors, to refrain from engaging in certain types of risky behavior. This impatience was written all over executives’ faces at subsequent Senate hearings.

  The big tell, always, is when finance executives start giving what one analyst described to me as “nuanced answers to yes and no questions.” In the Whale episode, Michigan Senator Carl Levin had to ask repeatedly if the bank had lied when it said in a public conference call that the chief banking regulator, the OCC, was getting data about those infamous trades on a “regular and recurring basis.” Chase Vice Chairman Douglas Braunstein kept talking around the question, first saying “I believed it to be a true statement at the time” that the bank was being “fully transparent” with regulators, then hedging again and again and again, before finally conceding, “They did not get the detailed positions regularly.”

  Getting back to Circle, I reached out with simple questions. Do USDC holders bear bankruptcy risk, or not? Will they be making money lending their reserves or not? The firm at first was solicitous and seemed anxious to educate about their company structure. Then the answers became contradictory. Then they became “nuanced.” Finally there was so much spin, the company’s name began to make unpleasantly ironic sense.

  For instance, Circle “is not a trust,” but believes it holds funds in trust; USDC both is and is not a virtual currency (it may be a “stored value product”); and in the unlikely event of a bankruptcy, USDC holders would be “shielded from Circle creditors,” although nothing is bullet-proof and of course there’s risk. How are USDC holders shielded from Circle creditors and “separated from a bankruptcy estate”? According to the firm, customers first of all are guarded “per the protections afforded under state money transmission laws.”

  Without being cheeky, this is a little like saying the DMV is making sure you’re driving safely. Moreover, Circle is only regulated in the states where Circle has licenses, and the firm has obtained licenses only in those states were licenses are required (what happens to USDC holders in Wisconsin, Minnesota, and Wyoming, for instance?). Beyond that, by their own public admission, “not all states in which we are licensed regulate virtual currency activity as money transmission.”

  Regarding the BlackRock fund’s provision allowing them to borrow up to a third of the reserves, I learned that government money market funds typically do not borrow, but also that the company would enjoy access to the Fed and its repo borrowing program.

  The dealbreaker came after reading Circle’s User Agreement, which contains the following passage:

  Circle is not a fiduciary, and Circle does not provide any trust or fiduciary services to any User in the course of such User visiting, accessing, or using the Circle website or services. 

  I had reason to be surprised to learn that Circle is not a fiduciary and does not provide any trust or fiduciary services. When I expressed that surprise to a Circle spokesperson, recalling certain recent communications involving the exact word, “fiduciary,” their response was:

  The paragraph cited from the Circle Account User Agreement refers to Circle’s custody of supported digital assets in a Circle-hosted wallet, and does not relate to USDC reserves management.

  Answers don’t get much more “nuanced” than this. The company was now saying Circle is not a fiduciary, and does not provide any trust or fiduciary services to anyone visiting, accessing, or using the Circle website or services, unless those services involve the company’s management of USDC reserves. In that case, the firm does believe it has a fiduciary responsibility with respect to reserve funds, as required by state law, ostensibly in those states where Circle both has a license and virtual currency is regulated as money transmission.

  Asked where exactly its reserves are right now, the company replied:

  As we have shared publicly, the cash portion of the reserve is held with a number of banking partners, including Silvergate Bank, Signature Bank and New York Community Bank. The US Treasury bills are purchased by BlackRock, and are held in custody at BNYMellon. We have not published a detailed breakdown of how much cash is held with which bank partner. We are working with many leading banks to onboard them and add them to our group of partners.  

  This is a non-answer. Circle discloses where some of its reserves are, but not all, and not how much of what is where. Now, Circle separately features a Yield program, which offers guaranteed returns. These were never as high as Terra’s preposterous and obviously Ponzoid 20% guaranteed returns, which quickly attracted $60 billion that vanished even more quickly, but the program exists nonetheless, at one time offering 12-month yields as high as 10.75%.

  In the time it’s taken to write this piece the guaranteed return has dropped from 6% to 1% to 0.5%. In characteristic fashion, Circle’s web page on the subject contains both the incorrect statement, “Circle Yield’s interest rates offer superior returns compared to traditional fixed-income investments” like 1 month CDs and 8-week T-bills — this is no longer true — and the correct statement, “In comparison to traditional fixed-income investments, products like Circle Yield can offer superior returns.”

  The company maintains that the program is relatively small, that there “is currently less than $300M in loan volume outstanding for the Circle Yield program,” and “no ‘exposure,’ as we are over-collateralized at 125%.” (It is “over-collateralized” by plummeting Bitcoin). All the same, the company began this past Tuesday, July 5 to allow customers with active loans to withdraw funds from Circle Yield before the conclusion of those loans, with no penalty, until August 2, 2022 at 11:59PM ET. Asked why they did this, the firm said:

  There is currently much uncertainty in the digital asset lending and borrowing markets. Circle Yield is a regulated, 125% overcollareralized, fixed-term product, offered to businesses only, and has performed as designed during these turbulent times, with borrower margin calls being met in a timely fashion to sustain the 125% overcollaterlization. However, we recognize that our customers might wish to withdraw their assets entirely from these markets at this extraordinary time… We have made a one-time change to the legal product structure to enable all our customers to withdraw their funds if they so wish during this time of uncertainty.

  Make of that what you will. Meanwhile, the firm also believes federal bankruptcy laws should protect USDC holders, but this belief depends on the notion, which Circle states for the record, that “USDC reserves are held in segregated accounts for the benefit of USDC holders, not Circle,” and “USDC reserve funds are held for the benefit of USDC token holders,” because “Circle does not and will not use USDC holders’ money to run its business or pay its debts.”

  If Circle does not and will not use USDC holders’ money to run its business, how is it projecting to earn $438 million in revenues from its USDC reserves this year, and over $2.188 billion next year? Again, is USDC a utility-like product content to earn little caring for giant piles of money, or more like a profiteering financial firm that earns money creatively leveraging up its assets? This raises another question that first came up last year. If Circle is holding its reserves in segregated accounts strictly for the benefit of customers, why was it, at least at one time, keeping a not-insignificant portion of its reserves in commercial paper and instruments like Yankee CDs?

  Last summer, after Allaire announced plans to go public via a $4.5 billion SPAC deal, Coinbase said that all of its USDC holdings were “backed by a dollar in a bank account.” As Bloomberg wrote, the promise “was important for the stablecoin, which unlike Bitcoin has a set price and can be redeemed by users for regular currency.”

  However, after being contacted in August by Bloomberg reporter Joe Light, Coinbase president Emilie Choi began issuing a series of amended statements on Twitter, for instance: “We know that a lot of customers get USDC on Coinbase, and we previously said that every USDC is ‘backed by a dollar in a bank account.’ Our language could have been clearer here.”

  Circle then said that it had been backed entirely by cash until March, 2021, when it began to buy U.S. Treasuries to “accommodate the coin’s rapid growth,” as Bloomberg wrote. In fact, the very first time that Circle made a major disclosure in describing its reserve assets, releasing in July of 2021 an attestation by what one former regulator chucklingly called a “grownup” auditor Grant Thornton, it turned out only 61% of its reserves were in cash, with a surprisingly high amount held in riskier or less liquid investments like corporate bonds and commercial paper:

  

  A spokesperson for the company also said that, as the news outlet put it, “the coin’s reserves moved to a broader portfolio of investments in May 2021.” In other words, by a seemingly extraordinary coincidence, Circle only branched out into riskier investments in the exact month before its first major audit-like disclosure, and just before Bloomberg ran a story saying that the “backed by a dollar in a bank account” representation was “not true.”

  The response was brutal. “You can’t market a product with falsities,” Columbia Law School lecturer Lev Menand told Light. Such companies “say trust us and that’s all well and good until there’s a problem,” was how Georgetown professor Adam Levitin put it.

  Circle from there began to make new gestures toward transparency, publishing regular attestations from Grant Thornton, each of which appeared to show moves away from riskier holdings and toward cash and short-term treasuries. For example, in July, 2021, Grant Thornton attested that 47% of the assets backing USDC were cash and cash equivalents, while 16% were in corporate bonds, and 8% were in commercial paper. Within a month the auditor was saying 100% of Circle’s reserves were “cash and cash equivalents,” although “Circle Internet Financial, LLC’s management is responsible for its assertions.” Then in early December, when Allaire testified before congress, he said (emphasis mine):

  The dollar-denominated reserves backing USDC are held conservatively in the care, custody and control of the U.S. regulated banking system. These are strictly held in cash and short-duration U.S. treasuries and we have consistently reported on the status of these reserves and their sufficiency to meet demands for USDC outstanding with third party attestations from a leading global accounting firm.

  Strictly speaking, this wasn’t true. Circle had indeed reported on its reserves, but hadn’t done so in detail until that spring of 2021, when it announced a sudden move into riskier investments. The Grant Thornton attestations soon after began dropping the detailed breakdowns from its reports, and moreover tweaked its language from saying reserve accounts were “correctly stated” to “fairly stated.” These reports include the curious lines, “Circle Internet Financial LLC’s management is responsible for its assertion,” and “Individuals who acquire and utilize USDC tokens and other crypto assets are responsible for informing themselves of the general risks and uncertainties.” The firm in its most recent “report” used the word “opinion” four times and “audit” zero times. Grant Thornton did not respond to requests for clarification as to whether or not they consider these reports audits, though the company, Circle, considers itself audited.

  Circle’s rep has always been as the good crypto, not a target of armies of short-sellers like Tether. As far back as 2018, it made news by ostensibly seeking to become the “first cryptocurrency company to obtain a banking license,” and the company over the years has emphasized that it is “focused on providing even greater transparency, quality and scale for USDC reserves,” because “trust and transparency are our ultimate goals.” Four years after it first declared its intention to be the first coin with a bank license we’re still reading headlines like, “Circle Will Apply for U.S. Crypto Bank Charter in ‘Near Future,’” in the hopes now of becoming the fourth stablecoin to get licensed. The company does not believe current law allows it to become a bank, but similar companies didn’t seem to have had a problem.

  None of this has dented Circle’s momentum or reputation. In fact, in mid-February, Circle and its partner, Bob Diamond’s Concord Acquisition Corporation, announced they were doubling the size of their SPAC (click here for a TK video refresher on what a SPAC is). The February agreement set the value of the new Concord-Circle deal at a whopping $9 billion, with a big chunk of that value, they said, coming from the booming success of USDC in the marketplace:

  The new agreement… reflects improvements in Circle’s financial outlook and competitive position – particularly the growth and market share of USDC, one of the fastest growing dollar digital currencies. USDC’s circulation has more than doubled… reaching $52.5 billion as of February 16, 2022.

  Diamond is perhaps best known for bringing American-style huge CEO compensation to Europe, and for stepping down as Barclays chief after Britain levied a then-record $92.7 million fine for manipulating the LIBOR interest rate benchmark. Less-well-remembered is his role in the largest bankruptcy in history, Lehman Brothers, an episode I wrote about in The Divide. After Barclays acquired the shipwrecked firm for pennies in September of 2008, the bank’s creditors sued, claiming Barclays absconded with between $4 and $7.6 billion in funds owed to them through a variety of schemes. The creditors mostly lost that case, which was eventually settled for $1.28 billion. This is relevant because the question of whether or not USDC reserves are truly bankruptcy remote is central to this story. Asked about this, Circle replied, “We are delighted by the support and involvement of all of our shareholders.”

  Meanwhile, the players from the Circle side have their own history. Jeremy Allaire and at least one other future Circle officer were accused in 2002 of making misleadingly positive statements about a failing product called Spectra while selling “over $53,000,000.00” of stock in their company, Allaire Corporation, in the first three quarters of 2000. In August of 2000, Allaire was asked about an annual goal of 100% growth, and reportedly said, “We definitely think that is achievable.” A month later, the company announced a substantial third quarter loss, and its share price dropped 40% in three days, prompting the action.

  Massachusetts District Judge William Young used remarkably strong language to reject a motion to dismiss the suit, saying, “It is difficult to conceive of a complaint pled with more particularity than the one presented,” and “in many respects, if this complaint is not specific enough, no complaint is.” He added:

  Essentially, the Plaintiffs invested in a company which promised to build the best mousetrap ever. When it was done, the mousetrap was ugly, did not catch mice, and, as word got out, people stopped buying.

  The case was eventually settled for $12 million, without an admission of wrongdoing. In conversations with former regulators, some raised a question as to whether or not the Allaire Corporation case might prevent Circle officers from ever obtaining a banking license, given that charters are only given to persons of “good character and responsibility.” Opinions on the matter were very mixed. However, it was certainly not a non-issue.

  “Any case involving alleged fraud will be a matter of great concern to the banking regulators,” said former FDIC General Counsel Mike Krimminger. “If there were a settlement with no admission of guilt, there might be explanation that could be acceptable to regulators, but it will still be a real concern that could be fatal to an application.”

  In any case, when asked this week why that old story shouldn’t make investors in a different, newer mousetrap nervous, a Circle spokesperson replied:

  The case settled without any finding of wrongdoing… The defendants disputed the factual allegations, and as with the vast majority of securities class actions, the case settled. The factual allegations were never tested in court, and there is really nothing more to say about this 20 year old case.

  In 2008, when reporters and investigators began pulling at the threads of terms like “fully hedged” or “triple-A tranche,” they often found there was almost no way to stop pulling, even if they wanted to. In fact, by the time people stopped pulling, the entire global financial system was basically a pile of string. It may very well be that the same experience awaits anyone who pulls at threads like “100% backed” or “secure wallet” or other such catch-phrases from any one of dozens of crypto companies. In other words, these issues may not be unique to Circle. But make no mistake: this is the definition of an “opaque ledger.” If every crypto company will struggle this badly to answer basic questions like Where’s your money? or What’s your risk?, the storm hasn’t even started yet.

  * * *

  TK News by Matt Taibbi is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

  Tyler Durden
  Sat, 07/09/2022 – 19:30

• White House Says Tesla Supercharger Network To Allow Other EVs 
  White House Says Tesla Supercharger Network To Allow Other EVs 

  A memo from the White House states Tesla’s Supercharger network will open to non-Tesla electric vehicles.

  “Later this year, Tesla will begin production of new Supercharger equipment that will enable non-Tesla EV drivers in North America to use Tesla Superchargers,” according to the memo.

  In the U.S., there are over 1,400 Supercharger stations located in all 50 U.S. states and Puerto Rico. The memo did not mention how much Tesla will invest in adapting its fast-charging network to non-Tesla EVs, though it stated: 

  “Tesla is expanding production capacity of power electronics components that convert alternating current to direct current, charging cabinets, posts and cables.” 

  

  Tesla’s vehicles use a “proprietary connector,” meaning the charging cord isn’t compatible with non-Tesla EVs. It’s unclear how Tesla plans to open the Supercharger network to non-Tesla EVs, but Elon Musk previously spoke about offering adapters. 

  Besides charging adaptors, non-Tesla EVs will likely have to download Tesla’s smartphone app to access the Supercharger network and pay for a charge. 

  It was only until April when the Biden administration finally acted Tesla existed after Musk complained they were ignoring him. Senior White House officials spoke with Musk and other top automotive leaders about EVs and charging infrastructure.

  The $1 trillion infrastructure program signed into law by the Biden administration calls for $5 billion to be plowed into a new EV infrastructure over five years to build a national network of 500,000 electric vehicle chargers.

  Tyler Durden
  Sat, 07/09/2022 – 19:00

• Chinese Communist Party Threat Is "Massive": FBI & MI5 Directors
  Chinese Communist Party Threat Is “Massive”: FBI & MI5 Directors

  Authored by Andrew Thornebrooke via The Epoch Times (emphasis ours),

  Leaders from the British and American domestic intelligence agencies delivered a rare joint statement on July 6, warning that the Chinese Communist Party (CCP) is the greatest threat to the international order.

  “The most game-changing challenge we face comes from the Chinese Communist Party,” said MI5 Director General Ken McCallum.

  “It’s covertly applying pressure across the globe. This might feel abstract. But it’s real and it’s pressing. We need to talk about it. We need to act.”

  

  McCallum described the CCP’s aggression as a “massive shared challenge” between the UK and the United States. He said that the communist regime is organizing the whole of China’s state apparatus to systematically undermine the West and steal advanced technologies.

  

  “The CCP adopts a whole-of-state approach in which businesses and individuals are forced by law to cooperate with the Party,” McCallum said.

  “In our free societies, we can do better. By building trusted partnerships across our national systems and, as symbolized today, internationally.”

  CCP Is the ‘Biggest Long-Term Threat’

  FBI Director Christopher Wray said that the CCP is the greatest challenge to the international order, which seeks to undermine the United States, its allies, and partners.

  “We consistently see that it’s the Chinese government that poses the biggest long-term threat to our economic and national security, and by ‘our,’ I mean both of our nations, along with our allies in Europe and elsewhere,” he said.

  McCallum said the purpose of the statement was not to demonize the Chinese people nor cut off China’s businesses from the rest of the world, but designed to specifically address the many threats posed by the CCP. These included covert theft, forced technology transfers, research exploitation, and cyberattacks that targeted virtually every sector of society, he added.

  “The scale of ambition is huge,” McCallum said. “And it’s not really a secret. Any number of public strategic plans, such as Made in China 2025, show the intent plainly.”

  “[They are] Seeking to bend our economy, our society, our attitudes to suit the Chinese Communist Party’s interests. To set standards and norms that would enable it to dominate the international order. This should make us sit up and notice.”

  The UK government, like others throughout the world, has been the target of high-profile espionage campaigns by the CCP. Earlier this year, MI5 issued a warning that a Chinese spy had cultivated extensive ties throughout parliament, including through fundraising. Likewise, the UK also expelled several Chinese spies who posed as journalists.

  The incidents served to underscore what McCallum presented as a harsh truth: that the West’s economic liberalism had failed to result in greater freedom and transparency in China.

  “The widespread Western assumption that growing prosperity within China and increasing connectivity with the West would automatically lead to greater political freedom has, I’m afraid, been shown to be plain wrong,” McCallum said.

  “But the Chinese Communist Party is interested in our democratic, media, and legal systems. Not to emulate them, sadly, but to use them for its gain.”

  Read more here…

  Tyler Durden
  Sat, 07/09/2022 – 18:30

• Twitter Just Lost Its Last Chance To Remain Relevant
  Twitter Just Lost Its Last Chance To Remain Relevant

  After months of drama, it would appear the fate of social media giant Twitter has been decided, and the result is an inevitable path to the internet graveyard.

  Many people will question the notion that Twitter could ever actually bite the dust, but they are probably unfamiliar with the company’s dismal performance as of late.  The reality is, Elon Musk’s potential buyout was their last chance to stay afloat; now that Musk has exited the deal, they face a continued and steady decline into irrelevance like many other Big Tech companies before them.  

  While it’s possible that Musk’s decision is merely a play for a reduced sale price, it’s probably safe to assume there is not going to be a purchase anytime soon.  This sets a chain of events in motion that bode very poor for Twitter given their track record the past couple of years, but first let’s consider the current situation.

  

  While the initial argument from Twitter execs will be that Musk “waived” his rights to change the original deal and thus he is required to buy regardless, his waiver does not extend to his rights to review Twitter’s claims about their user base.  The deal itself was predicated on Twitter giving honest assessments of the percentage of users that are actually bots (fake accounts).  Twitter initially claimed that bots only made up around 5% of users; it would appear that Musk has discovered this to be false, and this is the position his lawyers have asserted through the SEC.

  If it turns out that a large portion of Twitter is actually fake, then Musk surely has grounds to terminate the deal.  A waiver against changing the deal does not negate the original requirements of the deal according to his legal council, and this makes perfect sense.  

  But why is Twitter so desperate to force Musk to buy when they were so resistant before, to the point that they were willing to use a “poison pill” maneuver to dilute his shares and prevent him from gaining a majority of holdings?  Why are they so insistent when most of the company was up in arms only a month ago, frothing and raging over the chance that free speech might become policy on the platform?  We have to look at the company’s financial health before Musk’s purchase announcement as well as what is likely to happen now that he has dumped it.  

  In truth, Musk could have saved the company from a slow but accelerating implosion.  Twitter’s stock has been a relatively poor performer for a few years.  In 2020 at the onset of the covid pandemic, it saw a massive jump along with most other Big Tech companies on the assumption that user rates would increase along with the covid lockdowns.  This did not really happen.

  In Fall of 2021 their stock value began to falter, with the price plunging by more that 50% just before Elon Musk announced his majority share interest.  

  In April, Twitter admitted that the company “might” have been overcounting its users.  People with multiple accounts had those accounts linked together, but Twitter was still counting them as separate users.  They indicated that up to 2 million users were created through secondary accounts (which means there are probably many millions more that they have not found or admitted to).  On top of this and the bot issues, Twitter user base was in decline anyway.

  In 2019, Twitter abandoned its original method of counting users and moved to a new metric which “discounted the loss of bot accounts.”  This spurs the question that is now at the core of Musk abandoning the sale:  How many users on Twitter are actually fake?

  In February, despite the change in its metrics, Twitter announced its user numbers had still fallen short.  On top of this, the company suffered a net income loss of $1.4 billion in 2020 and a loss of $221 million in 2021.  After stock declines, the only thing left for Twitter was user growth, and they didn’t have it.  

  Musk’s possible purchase of the company lifted share prices at a time when the platform was nearing the edge of the Big Tech abyss – The moment when a website goes the way of Myspace.  With their reputation in the gutter after consistent censorship of conservatives and alternative media sources, the alienation of their user base was becoming a real problem.  The platform was now known as nothing more than a “blue checkmark” cult hangout for the extreme political left; in other words, not an inviting place for anyone without pronouns in their bio.  Musk moving in revitalized public interest in the company, if only for a short time.  

  Despite their rabid distaste for free speech, Twitter needed Musk.  In order to meet Musk’s demands for user data, they dumped their entire server in his lap, maybe to bury him in so much information that sifting through it would take too long to discover anything out of order.  The mainstream media actually crowed about the tactic, applauding Twitter’s action as a way to stick it to Musk.

  However, they did not seem to consider the implications of ALL of Twitter’s data now in the hands of outside interests.  If there is fraud at Twitter against its shareholders, then it will eventually be known.  Maybe this is all that Musk wanted in the first place.  

  What happens next in terms of the deal is unclear.  No doubt court proceedings will go on for years, but Twitter likely doesn’t have that much time.  Musk dropping out of the sale will result in an immediate drop in stock price and perhaps even a violent devaluation.  The question among shareholders will be this:  “What did Musk discover in his analysis of Twitter user accounts?  Did he find an immense number of bots?”

  People will err on the side of caution and sell their shares while they can.  

  It’s a lose/lose situation for Twitter, because as they push the issue in court there will be discovery.  In discovery all the data will be laid bare, and if Twitter is actually a hollow company with huge fake user numbers then the public is going to hear about it.  Their share prices will collapse even further, there will be an SEC investigation and many lawsuits.  Even if large corporate interests like Blackrock or Vanguard stepped in to shore up stock prices, none of these companies have the social influence to encourage wider buying from individual investors.  They would have to take increasing losses to save a company that cannot be saved.     

  The result could be the expedited death of the platform.

  Whether or not you like Elon Musk is not important.  What’s important is the exposure of one of the biggest social media conglomerates in the world to incredible scrutiny.  Twitter’s web influence has been waning for some time, but they still hold a measure of power over the flow of information within our culture.  Perhaps a reckoning is at hand, and maybe the public will get a peek behind the curtain of the Big Tech empire to see how things REALLY operate.  

  Tyler Durden
  Sat, 07/09/2022 – 18:00

• There's Still Over $40BN In Cargo On Container Ships Waiting Offshore
  There’s Still Over $40BN In Cargo On Container Ships Waiting Offshore

  By Greg Miller of FreightWaves

  Anchorages continue to fill with waiting container ships off East and Gulf Coast ports, where vessel queues have now far outgrown those off the West Coast. Along all three coasts combined, the number of waiting container vessels remains exceptionally high.

  

  There were 125 container ships waiting off North American ports on Friday morning, according to an analysis of ship-tracking data from MarineTraffic and queue numbers from California.

  

  That’s down 16% from 150 waiting ships in January, when West Coast congestion peaked, but up 36% from 92 ships a month ago.

  The ship queue off Los Angeles/Long Beach garnered the most headlines over the past year, yet the congestion epicenter has shifted: As of Friday, only 36% of waiting ships were off West Coast ports, with 64% off the East and Gulf Coast ports. Savannah, Georgia, now has the largest ship queue in North America.

  Container ships waiting off U.S. and British Columbia ports on Friday had a combined capacity of 1,037,164 twenty-foot equivalent units (TEUs).

  How much cargo value is in all those boxes? On a purely back-of-the-envelope basis, assuming 90% utilization (some estimates are higher) and an average cargo value per import TEU of $43,899 (the average value of cargo imported by Los Angeles in 2020, likely conservative given inflation), the estimated value of cargo waiting offshore on Friday exceeded $40 billion.

  Volumes shift to the east

  Project44 tracks monthly arriving TEU capacity to West Coast versus East Coast ports. It found that June capacity heading to the East Coast was up 83% year on year and up 177% compared to June 2020. East Coast-bound capacity is now on par with West Coast-bound capacity, which has dropped almost 40% since its January peak. Project44 attributed the shift to importer fears of West Coast port labor disruptions.

  

  East/Gulf Coast queues

  As of Friday morning, MarineTraffic data showed 36 container vessels offshore of Tybee Island, Georgia, awaiting berths in Savannah. The ships had a total capacity of 343,085 TEUs (average ship size: 9,350 TEUs).

  A proprietary FreightWaves SONAR index of bookings data shows that growth in inbound volumes to Savannah versus the index date (January 2019) is significantly higher than the national average.

  

  Waiting time for a berth in Savannah is now 10-12 days, according to an operational update this week by Hapag-Lloyd. The carrier put yard utilization in Savannah at 89%.

  The second-largest East Coast queue is off New York/New Jersey. On Friday morning, there were 20 vessels waiting with an aggregate capacity of 180,908 TEUs (average size: 9,045 TEUs).

  Hapag-Lloyd said waiting time for berths in New York/New Jersey was “running upwards of 20 days depending on the terminal.” Yard utilization was 92% at Maher, 75% at GCT Bayonne and 72% at APM Terminals, added Hapag-Lloyd.

  On the Gulf Coast, 20 ships were waiting off Houston with aggregate capacity of 121,196 TEUs (average size: 6,060 TEUs). According to Hapag-Lloyd, utilization at Houston’s Barbours Cut terminal was at 86%, and “terminals continue to experience equipment shortages for chassis due to longer street dwells.”

  

  Elsewhere on the East and Gulf coasts, two ships were waiting off Virginia, and another two off New Orleans.

  West Coast queues

  According to the Friday 7 a.m. queuing list from the Marine Exchange of Southern California, 24 container ships were waiting for berths in Los Angeles/Long Beach, with a total capacity of 208,903 TEUs (average size: 8,704 TEUs).

  This backlog is down sharply from a high of 109 ships on Jan. 9, but it’s still the second-largest ship queue in North America. The Los Angeles/Long Beach ship count has been hovering around its current level since late May, and is still up slightly year on year.

  

  Elsewhere on the West Coast, 10 ships were waiting for berths in Oakland, according to Friday 7 a.m. queueing list from the Marine Exchange of the San Francisco Bay Region. These ships had total capacity of 79,712 TEUs (average size: 7,971 TEUs).

  Finally, an additional eight vessels were awaiting berths in Vancouver, British Columbia, with a further three off Seattle/Tacoma.

  Tyler Durden
  Sat, 07/09/2022 – 17:30

• "Facts Should Still Matter": Peter Schiff Defends His Puerto Rican Bank After Regulators Shut It Down
  “Facts Should Still Matter”: Peter Schiff Defends His Puerto Rican Bank After Regulators Shut It Down

  We noted on Friday that Peter Schiff was fighting desperately to try and sell his Puerto-Rico based bank, Euro Pacific Bank International, after it was shut down by regulators. 

  Later in the day, Schiff released a statement, vowing to work with regulators and also urging media outlets who may have covered the news by insinuating that his bank was found of wrongdoing to correct the record. 

  “In its order made public last week, OCIF, alleged that the Bank had violated capital requirements and had failed to satisfy other regulatory obligations. In the best interest of depositors and bank employees, I intend to cooperate expeditiously and transparently with the OCIF Commissioner to bring the bank fully into compliance and to meet all the financial and regulatory obligations that we may have overlooked,” Schiff wrote on Friday.

  “We commit to working with OCIF to institute controls and rigorous due diligence going forward to avoid these errors in the future.”

  

  He also took aim at media outlets, many of whom he blamed for the bank’s troubles to begin with:

  However, in recent days many press outlets have falsely reported that the Euro Pacific Bank International (EUBI), of which I am sole shareholder and Director, has been found by OCIF to have intentionally, or negligently, accepted deposits from money launderers or tax evaders, and that their cease and desist order was related to those crimes. Prior press reports have similarly relied on innuendo to suggest such criminal wrongdoing. These news reports are in direct contradiction to the OCIF Commissioner’s public statements that her actions had nothing to do with tax evasion or money laundering.

  Schiff wrote: “We ask all reporters and media organizations who have misreported that such wrongdoing has been charged to retract and correct such misreporting immediately — and to do so conspicuously, informing readers of the errors and the corrections.”

  “Facts should still matter, innuendo is no substitute,” he said. 

  Recall Schiff has said several times over that he has a buyer for Euro Pacific International Bank Inc., but that a provisional cease-and-desist order from regulators stands in his way to selling the bank

  Back in November, the bank had submitted a plan for Emergent Technology & Payments to acquire all of the bank’s shares. The Puerto Rico Office of the Commissioner of Financial Institutions, or OCIF weighed the financials of Austrian payment processor Qenta Payment CEE, which Emergent also purchased earlier in the year. 

  Emergent agreed to buy the bank despite a widely publicized global tax-evasion investigation that has been taking place since 2020. Emergent would have put in $7 million to help recapitalize the bank. Schiff maintains that the investigation turned up nothing. 

  Schiff had initially thought the sale would consummate, telling Bloomberg: “All of a sudden they decide, ‘Nope, this deal is gone. We’re going to take this bank and put it into a receivership and expose it to millions of dollars of losses unnecessarily.’ And, at the end of the day, the depositors may end up, you know, losing some money right now.”

  OCIF says it has been warning the bank since 2021 that it was in  “crass noncompliance with the minimum capital requirements.”

  “The investigation found nothing. The bank didn’t help people launder money or evade taxes. So why is it getting shut down?” Schiff concluded. 

  Schiff says he has put $10 million of his personal funds into Euro Pacific since its inception in 2017. 

  Tyler Durden
  Sat, 07/09/2022 – 17:00

• China Rebuts Weaponization Of Space Program Claim By NASA Administrator
  China Rebuts Weaponization Of Space Program Claim By NASA Administrator

  Authored by Mary Hong via The Epoch Times,

  NASA Administrator Bill Nelson has warned that China is using its space program to attempt to take over the moon, a claim the Chinese regime denies.

  

  Nelson told German outlet Bild on July 2, “We must be very concerned that China is landing on the moon and saying: It’s ours now and you stay out.”

  The purpose of China’s space program, Nelson said, “is a military space program,” and its accomplishments are built on technology theft.

  The Chinese regime has denied Nelson’s allegations.

  “This is not the first time that the NASA administrator has lashed out at China in disregard of facts,” said Chinese foreign ministry spokesman Zhao Lijian.

  “China always advocates the peaceful use of outer space, opposes the weaponization of and arms race in outer space,” he added.

  However, experts told the Chinese language edition of The Epoch Times that the theft of space technology is common by the Chinese Communist Party, and that the space program itself is part of the Strategic Support Force of the military.

  Technology Plagiarism

  Nelson warned about the space race with China in a Congress hearing on May 17. In particular, he warned about China’s aggression in outer space and the cyber security risks posed by technology theft. He said, “They are pretty good at stealing.”

  Yue Changzhi is an electronics engineer retired from the No. 2 Institute of the Ministry of Aerospace Industry of China.

  She told The Epoch Times that she has no doubt that Beijing advanced its aerospace technology by relying on stealing.

  She said that the thefts started in the 1960s when she was hired at the ministry. Her task was in the development of missiles and anti-missile systems in the electronic department.

  “It was the early time when the Ministry of Aerospace Industry was just established. Plagiarism has been its approach, that is, to make a copy of things invented by others with a slight change in appearance,” Yue said.

  

  The Yutu-2 moon rover, taken by the Chang’e-4 lunar probe on the far side of the moon. Picture released on Jan. 11, 2019. (China National Space Administration [CNSA] via CNS/AFP/China OUT)

  Military Ambition

  Nelson issued a statement on May 19, 2021 after China released the first photos from the Zhurong Mars rover.

  “Congratulations to the China National Space Administration on receiving the first images from the Zhurong Mars rover!” Nelson said.

  However, in this year’s Congress hearing Nelson warned that it is “incumbent upon us to take cyber security very very seriously … with regard to the government but the private sector as well.”

  When asked what military purposes China could pursue in space, Nelson bluntly answered: “Well, what do you think is happening on the Chinese space station? They learn there how to destroy other people’s satellites,” reported Bild.

  Commentator Wang He pointed out that the Chinese aerospace program was built in affiliation with the People’s Liberation Army (PLA).

  He explained that satellite launch centers such as Jiuquan and Taiyuan are both under the control of the military. Both centers are located at the testing and training base of the PLA’s Strategic Support Force.

  He further emphasized that in recent years, the regime manipulated its claim “to utilize outer space for peaceful purposes, promote mankind’s civilization and social progress,” as a cover for seeking international collaboration for the purpose of stealing technologies.

  He said, “The so-called Chinese private companies involved in the international collaboration are still under the control of the Communist Party.”

  In other words, they are “the front companies,” He stated.

  Tyler Durden
  Sat, 07/09/2022 – 16:30

• Are We There Yet? What Do Payrolls Tell Us About The Timing Of The Next Recession
  Are We There Yet? What Do Payrolls Tell Us About The Timing Of The Next Recession

  Yesterday we explained why contrary to the widespread praise for the Friday payrolls report, a closer look at the data below the surface revealed a far weaker labor market than the one trumpeted by the Biden administration, not least of all because while the Establishment Survey hinted a continued strong jobs growth (with +372K payrolls in June, over a 100K more than the 268K median estimate), the Household Survey contrasted with a far weaker picture, indicating 315K jobs lost, and zero actual growth in employment since March…

  

  … a bizarre differential of nearly 1.5 million jobs between the two surveys since March…

  

  … and one which is increasingly manifesting itself in loss of full and part-time jobs at the expense of multiple jobholders (see “Something Snaps In The US Labor Market: Full, Part-Time Workers Plunge As Multiple Jobholders Soar” for details.)

  Still, while one can debate the nuances in the data, pro-admin economists and permabulls will argue that whether the 372K print is up or down by a few hundred thousand, is irrelevant: after all, there is no way the US economy can slide into a recession with such (still) solid labor market gains, right? And the latest jobs report certainly does not change anything for the Fed: after all, there is neither enough job weakness nor wage deceleration for Powell to shift course.

  In other words, we can’t have a recession with unemployment so low and payrolls so strong.

  But is that true? Well, as Piper Sandler’s Nancy Lazar counters, neither is a leading indicator – they’re at best coincident – and unemployment always bottoms out just before recessions (especially since the continued slowdown in wage growth indicates the return of lower-paid jobs, and raises the odds we do not have a wage-price spiral but instead see price-slowdown).

  Overnight, DB’s Jim Reid also chimed in, echoing our caution and writing that “we have to be careful of today’s big +372k payroll print as the figure can seem a bit of a random number generator” yet even so, he notes that through history a recession usually has a negative print in the first month of it being declared, which then carries on for the vast majority of the subsequent year.

  While this clearly hasn’t happened yet, there are two key caveats: as Reid explains, the problem for forecasters and markets is that

  1. the recession is declared retrospectively, so it’s usually too late to wait for official confirmation, and by the time the negative prints arrive it will be time to start forecasting the end of the recession, and…
  2. history suggests little evidence of a gradual decline in payrolls in the months leading up to recession.

  Indeed, it may come as a shock to macrotourists who claim we need to see a gradual decline into the red for a recession to emerge, but as Reid’s chart of the day shows, the median payroll 10 months before a recession is the same as the final month before a recession with little sign of a trend in the months between!

  

  In other words, confirming what Piper Sanlder said above, payrolls in themselves give no advance warning, and if anything give false positives because while they remain in the green, the economy has already contracted.

  Still, as Reid concludes, it is striking how strong job growth has been in recent months as we recover from the pandemic. This will likely be under more pressure soon as the lagged effect of inflation and the Fed hiking cycle kick in, but for now it remains historically very strong.

  As such, the timing of the eventual recession (outside of the technical definition) will be closely tied to when payrolls go negative and appear likely to stay there. And while we are not there yet, the DB strategist warns that “it looks inevitable that we will be, over the next 12 months.”

  Tyler Durden
  Sat, 07/09/2022 – 16:00

• Bon Voyager: The Biggest Crypto News From The First Week Of July
  Bon Voyager: The Biggest Crypto News From The First Week Of July

  By Donovan Choy of Bankless

  Voyager Digital Goes Bankrupt

  “The company is well capitalized and in a good position to weather this market cycle and protect customer assets.” — Voyager Digital press release, June 14th 2022.

  That did not age well. CeFi firm Voyager Digital filed for bankruptcy this week.

  The publicly traded crypto bank got caught up making huge uncollateralized loans of $660M to “too-big-to-fail” crypto hedge fund 3AC, which was in turn making its own leveraged risky trades all over the place.

  Voyager customers were in effect lending to 3AC in a game of musical chairs, and the music came to a screeching default halt to the tune of 15250 BTC and 350M USDC.

  Now, Voyager has a remaining $110M in assets on hand, plus $1.3B in assets.

  The bankruptcy filing means that Voyager customers will likely not receive their assets back in full.

  Here’s the company’s rough plan to make customers “whole”:

  Voyager customers will receive a combination of some cryptoassets, a share of Voyager’s $660M claim against 3AC (now also bankrupt btw), a bunch of VGX “loyalty” tokens for “boosting rewards” on crypto deposits, and VOYG shares — upon which trading has been halted on the Toronto Stock Exchange.

  Something tells me Voyager users won’t be overly keen on receiving shares of a sunken ship.

  Here’s how the rest of the pieces in the 3AC pandemic contagion puzzle lay:

  • 3AC has filed for Chapter 15 bankruptcy in a New York court in a bid to protects its remaining assets from a legal grab
  • Nexo is making moves to acquire the Coinbase-backed Vauld, another struggling crypto lender that halted withdrawals last week 
  • Facing $80M in losses from its 3AC loan, FTX acquires BlockFi this week for $240M. Its valuation at its peak was ~$4B+. (oof)
  • Genesis Trading is facing hundreds of millions of dollars in losses from its exposure to 3AC.
  • Finally, Celsius has completely paid down its WBTC loan on its Maker vault and gotten all its collateral ($440M) back.

  The only lenders Celsius has paid back: @AaveAave @MakerDAO @compoundfinance

  Smart contracts have a higher liquidation preference than any paper agreement

  DeFi protects you from Celsius https://t.co/lA68IAI4Bp

  — Leighton (@lay2000lbs) July 7, 2022

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  * * *

  Aave proposes GHO stablecoin

  Aave’s latest governance proposal is taking DeFi by storm. The DeFi giant is proposing GHO, an overcollateralized USD-pegged stablecoin that lenders can mint against supplied collateral — similar to Maker’s DAI.

  Why GHO? The business strategy is to capture stablecoin market share through “organic adoption via L2s.” Aave V3 is currently deployed across six chains, including Polygon and Ethereum L2s Arbitrum and Optimism. GHO will also serve as a revenue generator for Aave, as 100% of interest paid on GHO loans by borrowers will be sent to the DAO.

  Obviously, this is huge. Aave is the second largest DeFi protocol by TVL after Maker. An Aave stablecoin would place both protocols in direct competition. For every one GHO in Aave means one less DAI in Aave.

  Aave’s massive lending market across multiple chains gives its stablecoin a big advantage in getting off the ground, thanks to its many existing stakeholders and deep liquidity. Aave is tapping well on both of these strengths.

  For example: GHO is designed to be highly incentive-compatible with existing AAVE token holders. Aave Safety Module stakers (stkAAVE) can mint GHO at a discounted rate, and sell them on other DeFi protocols for arbitrage profits, driving utility to the AAVE token. This means AAVE holders have a significant interest in seeing GHO passed.

  Anxious rumblings are already rumbling on the Maker forums. Aave leaders are doing their best to soothe concerns.

  

  Voting hasn’t begun yet, but keep your eyes peeled for this one. Here are some other salient details:

  • GHO is designed to have a fixed stable borrowing interest rate which “the DAO will be able to decide… and change over time through a governance process,” similar to how MKR holders decide on the mechanics (stability fee, debt ceiling, DAI savings rate) that govern DAI.
  • Only intermediaries known as “facilitators” can mint and burn GHO. Who these facilitators will be, their minting limits, and types of collateral they can accept against minting (see chart) will be decided by the DAO.
  • E-Mode is a stabilizing factor that ensures users access GHO with a 1:1 rate
  • Portal will let users transfer GHO by simple message passing, thereby bypassing bridging risks.

  * * *

  Facebook and Reddit NFTs

  We’re launching NFTs on Facebook! Excited to share what I’ve been working on with the world. pic.twitter.com/TaV66zRanV

  — Navdeep Singh (@navdeep_ua) June 29, 2022

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  Facebook announced this week that it was testing support for Ethereum and Polygon NFTs on its platform, with Solana and Flow to come. This comes about two months after its sister company Instagram did the same.

  Reddit also announced the launch of its own limited edition collection of “Collectible Avatars” that users can display on their profile pictures, designed by artists that were carefully curated by Reddit. These aren’t quite NFTs in the traditional sense. Reddit lets you play dress-up with the way they look, but they are stored on the Polygon chain.

  GM @0xPolygon Fam!@Reddit is launching its NFT Marketplace on @0xPolygon!

  Goal : #Top3 by impact – BTC,ETH, Polygon; nothing less, nothing more.

  Never stop building! WAGMI!https://t.co/VhSMEl2wJd

  — Sandeep | Polygon 💜🔝3️⃣ (@sandeepnailwal) July 7, 2022

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  * * *

  Crypto smartphones are here (again)

  Layer-1 blockchains are coming for a slice of the smartphone market.

  Solana announced last week Saga, an AndroidOS phone that comes with tools to securely store and trade digital assets. You can track even tracks its sales on-chain and it seems to have stagnated at 2.6K preorders for the $1000 device.

  ⚡️⚡️.@solana launch #web3-focused smartphone Saga to improve crypto-mobile relationship

  “This is something that I fundamentally believe the industry needs to do,” Yakovenko said. “We didn’t see a single crypto feature at the Apple developer conference 13 years.#p2esecrethub pic.twitter.com/UxTKoNY1JL

  — P2E Secret Hub (@P2E_SecretHub) July 4, 2022

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  While the demand for a crypto smartphone may not be overwhelming, Solana has played the move as the opening bell of a long arc of Web3 integration into mobile phone software and hardware.

  Polygon is also launching its own “metaverse phone.” Unlike Solana though, this is in partnership with the Taiwanese tech juggernaut HTC. 

  Mass adoption of Web3 will happen on mobile and @0xPolygon is preparing for it.

  Our strategy is not to make our own devices. Instead, we will integrate with existing manufacturers.

  Today, we are proud to announce the first major integration.

  Onwards. 🔥https://t.co/sGCfTm6v7P

  — Mihailo Bjelic (@MihailoBjelic) July 4, 2022

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  These are not the first forays crypto has made into the smartphone sector. Most notably, Sirin Labs launched the Finney smartphone all the way back in 2019, but sales were low and the project ebbed thereafter. Let’s hope this generation of crypto smartphones fares better.

  * * *

  Web3 News Roundup

  Aztec Connect launch

  Aztec Connect is the “VPN for Ethereum,” according to creators Aztec. It’s a private roll-up that lets you execute DeFi transactions on Ethereum dapps with complete privacy. It drops this week and major protocols like Curve and Lido are already deployed.

  Today we launched Aztec Connect, the VPN for Ethereum.

  I just used it to get some $stETH on mainnet Curve for $1.50 in fees, with complete privacy.

  Fully private DeFi, with huge cost savings.

  Why I think our private rollup is ridiculously bullish for Ethereum: pic.twitter.com/v75YXt0glU

  — jonwu.(🗽, 🍎) (@jonwu_) July 7, 2022

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  * * *

  EU crypto regulation

  This week saw the EU finalize MiCA (Markets-in-Crypto-Assets), a base legal framework to regulating crypto.

  The good news: They’re leaving PoW mining alone, NFTs and DeFi are (mostly) out of the scope of MiCA.

  The bad: Stablecoins get hit hard:

  … MiCA will protect consumers by requesting stablecoins issuers to build up a sufficiently liquid reserve, with a 1/1 ratio and partly in the form of deposits. Every so-called “stablecoin” holder will be offered a claim at any time and free of charge by the issuer, and the rules governing the operation of the reserve will also provide for an adequate minimum liquidity…

  The development of asset-referenced tokens (ARTs) based on a non-European currency, as a widely used means of payment, will be constrained to preserve our monetary sovereignty. Issuers of ARTs will need to have a registered office in the EU to ensure the proper supervision and monitoring of offers to the public of asset-referenced tokens.

  * * *

  Sepolia merge

  The Ethereum Sepolia test network merged successfully. Two down (Ropsten, Sepolia), one to go (Goerli).

  BREAKING – Ethereum completes another successful test of The Merge on Sepolia 🐼

  Goerli next.

  Mainnet after.

  Don’t sleep. pic.twitter.com/YeQfghmm5O

  — bankless.eth (@BanklessHQ) July 6, 2022

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  * * *

  Immutable X update

  If you have ETH on an L2 that you’d like to spend in the real world, you’d babe to offramp it by sending ETH from L2 to a centralized exchange, requesting a withdrawal, and waiting few days before you could spend it.

  Immutable X is streamlining this process in one step — with no gas fees!

  Caveat: It’s only for ETH for now, and for the UK, EU and select US states.

  1/ Major update! $ETH offramp is now available to any developer building an @Immutable X powered platform

  Developers can enable their users to sell L2 $ETH and have the proceeds deposited directly to their bank accounts. https://t.co/DmiyWV8wYy

  Continue below👇 pic.twitter.com/Uhm214oy2E

  — Immutable | $IMX ⓧ (@Immutable) July 5, 2022

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  Tyler Durden
  Sat, 07/09/2022 – 15:30

• Goldman: 'Defensive Rotation' From Stocks To Bonds Will Make Gold Shine Again
  Goldman: ‘Defensive Rotation’ From Stocks To Bonds Will Make Gold Shine Again

  A week ago, we laid out why Goldman Sachs’ had increased its target price for gold to $2500, suggesting pressure on the precious metal would ease as China’s “negative wealth effect” eased.

  Since then prices for precious metals have tumbled…

  

  So what will be the catalysts for gold to shine again?

  In his latest note, Goldman’s Mikhail Sprogis explains that for gold investment demand to build momentum there needs to be a defensive rotation out of equities into bonds.

  Sprogis view gold prices through a ‘Fear and Wealth’ framework, where ‘Fear’ drives investment demand in DMs and ‘Wealth’ drives consumer demand in major EM gold consumers.

  US recession risk and central bank (CB) policy tend to be the best proxies for Fear, while the dollar GDP of gold consumers is the best way to track the Wealth effect.

  Thus, so far this year gold investment demand remains split between hawkish CBs who are committed to bringing inflation down, a negative force for gold prices, and high recession worries, a positive force.

  The future direction of gold investment demand will be determined by the interplay of Fed hawkishness and recession fears, in Goldman’s view.

  • If recession fears persist while the pace of Fed hikes slows down due to a normalization of inflation, then gold investment demand should finally manage to build a bullish momentum. We observed a similar dynamic at the start of the year, when growth and inflation worries emerged but it was unclear how hawkish the CBs’ response would be.

  • If, however, recession fears were to moderate due to a resilience of US growth while sticky inflation forces the Fed to continue to hike, then we are likely to see a material rotation out of gold ETFs.

  This dual nature of gold investment demand can be seen in the relationship between gold ETF flows and flows into bonds and equity funds.

  

  Flows into gold ETFs tend to be positively linked to inflows into safe bond funds and negatively correlated to flows into risky equity funds.

  

  Goldman concludes:

  All in all, we believe that the moderation of inflation rates can shift the market focus from continued tightening and towards recession risk.

  This should be positive for gold, in our view, as it would relieve pressure from the continued rising dollar and rates but keep the support from high recession fears.

  We therefore expect gold to begin to perform as the market sees more credible indications that the Fed hiking pace is moderating and there is a rotation out of equities into bonds.

  As a reminder, Baupost’s Seth Klarman said in his latest note to investors that:

  “I’m a fan of gold. I think gold’s valuable in a crisis.”

  “The market has come to believe in an omniscient Federal Reserve, and it’s no such thing. These guys don’t really know what they’re doing in any deep way. It’s a giant financial experiment, and we’re at the mercy of their experiment that maybe is right now in the process of going wrong, so God help us.”

  It seems The Fed’s omniscience is about to be tested…

  Tyler Durden
  Sat, 07/09/2022 – 15:00

• Sri Lanka President To Quit After Palace Stormed By Angry Protesters
  Sri Lanka President To Quit After Palace Stormed By Angry Protesters

  Update (1455ET): Sri Lankan President Gotabaya Rajapaksa announced he would step down late Saturday night after thousands of protesters rushed his official residence and offices earlier in the day. 

  Rajapaksa has taken refuge in an undisclosed location, some have pointed out, possibly on a naval ship. 

  Parliament Speaker Mahinda Yapa Abeywardena told the nation in a televised announcement late Saturday that Rajapaksa will resign Wednesday “to ensure a peaceful transition.” 

  Sri Lankan Prime Minister Ranil Wickremesinghe tweeted he will resign as well:

  “To ensure the continuation of the Government including the safety of all citizens I accept the best recommendation of the Party Leaders today, to make way for an All-Party Government … To facilitate this I will resign as Prime Minister.”

  To ensure the continuation of the Government including the safety of all citizens I accept the best recommendation of the Party Leaders today, to make way for an All-Party Government.

  To facilitate this I will resign as Prime Minister.

  — Ranil Wickremesinghe (@RW_UNP) July 9, 2022

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  The Sri Lankan constitution says if Rajapaksa and Wickremesinghe both resign, the parliament speaker will assume power for one month. 

  Footage circulating on social media show tens of thousands of demonstrators swarming the presidential palace. 

  

  Social unrest comes as the country has suffered runaway inflation and shortages of food and fuel after depleting foreign exchange reserves. 

  * * * 

  Thousands of protesters stormed Sri Lankan President Gotabaya Rajapaksa’s official residence as part of an anti-government demonstration calling for his resignation following the country’s economic collapse.

  Demonstrators marched to Sri Lanka’s commercial capital of Colombo early Saturday. They jumped security fences surrounding the residence and overran the president’s security forces. Rajapaksa was evacuated from the palace around 1000 local time, his secretary Gamini Senarath told Bloomberg.

  “The president was escorted to safety,” a senior defense source told AFP. “He is still the president, he is being protected by a military unit.”

  Alleged footage of the president fleeing on a naval ship. 

  🇱🇰 BREAKING NEWS🇱🇰

  Footage emerges said to be of President Rajapakse fleeing Sri Lanka aboard a Navy Vessel. pic.twitter.com/yvaYv5uGvB

  — UNN (@UnityNewsNet) July 9, 2022

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  Footage uploaded to social media platforms from the president’s residence shows thousands of protesters surrounding the palace and then charging inside. 

  Colombo, Sri Lanka right now. The Presidential Palace has been stormed, President Gotabaya Rajapaksa is said to have fled. Unbelievable scenes. Live reports on @IndiaToday: https://t.co/p6JV6FzCub pic.twitter.com/8zlJdBfN2P

  — Shiv Aroor (@ShivAroor) July 9, 2022

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  BREAKING: Sri Lanka protestors have stormed the presidential palace pic.twitter.com/wMLTBymtot

  — Insider Paper (@TheInsiderPaper) July 9, 2022

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  Protesters enjoying Sri Lanka’s absconding President’s swimming pool! No dictator should remain in illusion that the power is for ever, and when the end comes, it is always violent and nasty. pic.twitter.com/T3ePbkA0gM

  — Ashok Swain (@ashoswai) July 9, 2022

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  🚨Breaking: Sri Lanka President Gotabaya Rajapaksa flees after he declared the nation as total bankrupt. The moment after that the citizens surrounded the presidential palace and waived black flag along with Sri Lankan🇱🇰. There are no news yet on the whereabouts of President. pic.twitter.com/PGyev8lFxs

  — Real Mac Report (@RealMacReport) July 9, 2022

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  Protestors inside President’s House #SriLanka #SriLankaProtests pic.twitter.com/c1waEZ5zMM

  — Jamila Husain (@Jamz5251) July 9, 2022

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  Prime Minister Ranil Wickremesinghe held emergency talks with party leaders before the parliament speaker during the unrest to decide what was next in resolving the worsening socio-economic crisis in the country of 22 million people. 

  Lawmakers asked Rajapaksa to relinquish his power to allow a new leader with a parliament majority to regain control and find a swift resolution to high inflation and shortages that have angered people for months. 

  The debt-laden economy of the tiny South Asian nation has “completely collapsed” as it lacks foreign exchange reserves to import essential items such as food and fuel. Shortages have materialized as the government began rationing goods last month. 

  Even though the government has held talks with the IMF, India, China, and Japan for new credit lines and even spoke with Russia about purchasing heavily discounted crude, the country entered a terminal phase where social unrest is spiraling out of control. 

  Visual Capitalist’s Avery Koop details several reasons for this crisis and the economic turmoil has sparked unrest over the last several months. This visual breaks down some of the elements that led to Sri Lanka’s current situation.

  

  The Sri Lankan crisis carries the potential for an Arab Spring-style eruption across other countries that could quickly morph into an “Everywhere Spring” as people worldwide are angered by high inflation and shortage of food and fuel. This eruption in unrest could eclipse the revolution seen in 2011 that spread across the Arabic-speaking world due to high food prices.

  Everyone’s favorite permabear, SocGen’s Albert Edwards, first warned about the consequences of central banks injecting record amounts of money into the global economy in late 2020 and how it could spark soaring food prices, similar to 2011, where social unrest and revolutions were seen in many Arab countries. 

  

  Edwards’ prediction appears to be playing out. It could be much worse than a decade ago as much of the world experiences economic hardships and what some believe could be the emergence of stagflation.  

  Could the fall of Sri Lanka signal that weak, heavily indebted countries worldwide are about to fall like dominos? 

  Tyler Durden
  Sat, 07/09/2022 – 14:55

• Unpacking Three New Washington Energy Policy Missteps
  Unpacking Three New Washington Energy Policy Missteps

  Authored by Kevin O’Scannlain via RealClear Energy,

  If the last two years have taught us anything, it is the importance of planning ahead and encouraging new investments in energy – whether it’s oil and natural gas, solar and wind, or a mixture of all of the above. With global populations expected to rise from nearly 8 billion today to almost 10 billion in 2050, energy demands are only projected to grow and policymakers ought to be ready to utilize American abundance.

  

  Further complicating the real-world picture: Putin’s unjust war that has led to Russian oil and natural gas supplies going offline; global supply chain and labor challenges lingering from Covid-19; and chronic underinvestment in energy infrastructure many say is encouraged by hostile Biden administration policies.

  Government trackers recorded gasoline prices heading down ahead of the holiday weekend, but they still remain high. In this low-supply/high-cost environment, it is dispiriting to see Washington policymakers – from federal agencies to Congress to the White House – ask for increased energy production while making moves to undermine our industry. One Forbes writer called the White House’s posture “confused.”

  More here:

  We so often see the President saying one thing in public as his appointees in the federal bureaucracy are doing the opposite. … Mr. Biden has frequently called for the domestic industry to produce more oil and gas, refine more gasoline and ramp up exports of liquefied natural gas to Europe, while his agencies continue to hold up permitting, issue restrictive new regulations, and issue rulings that directly inhibit companies’ ability to get their business done.

  Despite the Fourth of July holiday, the administration worked overtime last weekend, sending mixed messages or considering new policies that won’t help. Here they are, along with how to fix each one.

  Mistake #1: Delaying and Minimizing a New 5-Year Offshore Oil and Natural Gas Leasing Program 

  Past 5:00 p.m. on the Friday evening of a holiday weekend, the administration’s long-awaited draft plan for a 5-year program for development along the Outer Continental Shelf finally was released to the public. Incredibly, the plan contemplates holding zero to 10 auctions in the Gulf of Mexico over the next five years, plus the possibility of one in Alaska’s Cook Inlet. Leaving open the possibility of no offshore lease sales puts U.S. producers at a disadvantage on the global stage, puts our economic and national security at risk (look no further than Europe), and could put upward pressure on prices due to lack of supply. 

  Solution #1: The Department of the Interior (DOI) should lift developmental restrictions on federal lands and waters. They should scrap any talk of conducting zero lease sales deep into the 2020s. They should issue a robust 5-year programfor the Outer Continental Shelf (OCS) and hold mandated quarterly onshore lease sales with equitable terms. Additionally, DOI should reinstate canceled sales and valid leases on federal lands and waters. 

  There is an environmental argument for production, too. Even DOI states that “global emissions are only incrementally higher with new leasing compared to no new sales,” according to Axios – and a previous 2016 government analysis suggested U.S. greenhouse gas emissions could actually increase slightly in the absence of new OCS leasing.

  Mistake #2: Considering New Obstacles to Drilling in America’s Most Productive Oil-Producing Region

  The Environmental Protection Agency (EPA) last week announced it may soon rule that parts of the Permian Basin – which accounts for 44 percent of total U.S. daily oil production – are in “non-attainment” status under the agency’s ozone regulations. 

  Solution #2: Given the obstacles to global supply we’ve already discussed above, President Biden should simply issue an order instructing EPA to stand down. Through methane-reduction efforts like The Environmental Partnership and others, oil and natural gas industry is already making headway to advance a lower-carbon future. 

  Instead of unproductive and burdensome regulatory ideas like this one, Congress and the administration should expand and extend Section 45Q tax credits for carbon capture, utilization, and storage development and create a new tax credit for hydrogen produced from all sources.

  Mistake #3: Asking Gasoline Station Owners to Adjust to Market Forces Outside Their Control

  On Saturday, President Biden used his online bully pulpit to tweet the following: “My message to the companies running gas stations and setting prices at the pump is simple: this is a time of war and global peril. Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.” While the sentiments may come from a good place, the understanding of the market fundamentals is off-base.

  Solution #3: More American oil production is the answer – and federal policies that support it are necessary. Look no further than API’s new 10-in-22 plan. 

  Finally, when it comes to retail fuel sales, less than 1 percent of all convenience stores that sell gasoline are owned by major oil companies. Virtually all gasoline stations are independently owned – not owned by major oil companies – and of those, about 60 percent are owned by individuals. 

  Retail stations set prices to be competitive in their local market. They must factor the need to pay for the next delivery of gasoline (i.e., replacement costs) into the price they set. If supply is seen as dropping relative to demand, this can place upward pressure on price and can be factored into the retailer’s pricing decision. While gasoline prices have historically been close to prices paid at the distribution terminal supplied by refiners, the price at the pump also reflects local market conditions.

  Local conditions and competition can be key contributing forces to timing price changes, and attempting to use federal pressure to alter local market outcomes is a fundamental misunderstanding of them.

  Bottom line: As energy demand outpaces supply, geopolitical tensions continue to rise, and supply chain issues continue to plague U.S. producers, policymakers should do everything they can to encourage and incentivize all energy development – not restrict access to American oil and natural gas.

  *  *  *

  Kevin O’Scannlain is API’s vice president of Upstream Policy. Before coming to API, Kevin served in the White House as Special Assistant to the President in two different roles, and as Deputy Solicitor for Energy & Minerals at the U.S. Department of the Interior. Prior to that, he was an attorney for Chevron, DLA Piper LLP, and the U.S. Senate. O’Scannlain is a graduate of the College of the Holy Cross and Notre Dame Law School. 

  Tyler Durden
  Sat, 07/09/2022 – 14:30

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