- Why India Is A Ukraine War Winner
Why India Is A Ukraine War Winner
The NATO-triggered war in Ukraine is having far-reaching geopolitical impacts, with winners and losers to be found thousands of miles from the Donbas.
At the South China Morning Post, Alex Lo argues the biggest winner is India, which has “played a masterful balancing act with Russia, the US and China, extracting significant advantages and benefits while offering few concessions.”
First, by pursuing a policy of neutrality on Ukraine, India has reaped an enormous economic benefit, paying bargain prices for oil, fertilizer and various other commodities. The shift in its petroleum sourcing is particularly striking: Since the war, India has gone from importing nearly zero Russian barrels per day to around 800,000.
And so, as other countries self-inflict economic damages by way of trade sanctions, India gets a boost from cheaper fuel. Meanwhile, Russia’s oil revenues are even higher than before the war—a situation that recently prompted a pathetic plea from U.S. Special Envoy for Energy Affairs Amos Hochstein.
This week, Hochstein told a Senate subcommittee that he implored Indian officials, “Don’t go too far, and don’t look like you’re taking advantage of the pain that is being felt in European households and the United States.” One can imagine the Indians’ private, post-meeting laughter.
Meanwhile, with China engaging in tighter security coordination with Russia, the Ukraine war may also help ease India’s border tensions with China, which have periodically erupted into hours-long, gun-free melees. The Chinese “dare not increase border pressure to antagonize Indians at this time,” writes Lo.
Lo provides important historical context to illuminate India’s neutrality on Ukraine:
“Many Indians are far more critical of the US and NATO expansion as the underlying cause of the war in Ukraine. They are historically well-disposed towards Russia, remembering that the Soviets sided with New Delhi throughout the 1950s, at a time when the Western powers backed Islamabad. And Russia, even after the Soviet collapse, continued to be a reliable weapons supplier.”
Eager to keep India from sliding firmly into a Russian security orbit, the U.S. government is crawling to New Delhi with fresh arms deals of its own. Under Secretary of State for Political Affairs Victoria “Yats is the Guy” Nuland visited India in March. Summing up her discussions, Nuland said:
“Besides historical ties, India’s dependence on Russia for defense supplies is crucial. Among the things we talked about is this legacy of security support from the Soviet Union and Russia at a time when the US was less generous with India. Now, of course, times have changed and we are very eager to do more and more on the defense side with India.”
Which points to the fact that India has a formidable rival for the title of “biggest winner” from the Ukraine war: the U.S. military-industrial complex.
Tyler Durden
Mon, 06/13/2022 – 02:45 - Pitchforks Soon In Europe?
Pitchforks Soon In Europe?
by Jorge Vilches for the Saker Blog
Dear Europeans…
For your own children´s sake – on my knees and with my saddened eyes humbly looking downwards – I beg of you to please stop the current self-destructive nonsense dead in its tracks by immediately demanding from your political class to import the bloody Russian oil normally once again as Europe had been doing for dozens of years. The impact that the ban on Russian oil has upon your daily lives now and for years yonder is such that at the very least a Referendum should have been held. But it was not, and without consultation, the EU leadership acted on their own.
Please be advised that the EU un-elected brass simply does not represent you or your needs. They were all voted amongst themselves into their positions like members of a committee in a private country club. If left unchecked, EU politicians will now continue misrepresenting you and, on your behalf — with your hard-earned assets and livelihoods – will keep on picking a most unnecessary and prolonged armed conflict with Russia, eventually forcing upon you a total war scenario where chances play out all very strongly against you, with Russia probably resulting unscathed.
their war
European leaders crave for their war, so they can´t think of a better way to provoke it than by applying ever larger and ´meaner´ sanctions on Russia as if (a) sanctions were effective and (b) as if Europe could win such war (not).
Accordingly, we now have yet another set of spanking new EU “sanctions” in package No. 6 that will eventually backfire flat on Europe´s face – like all the others — such as banning the insurance and financing of oil tankers that carry Russian oil. Accordingly, the EU is now trying its very best to
(1) bankrupt the successful Western oil tanker insurance business by reducing the number of participants
(2) induce higher shipping and insurance costs worldwide by reducing the number of participants
(3) foster the development of yet another Russian import substitution service namely oil tanker insurance & financing
(4) seriously hinder the world´s economy by not allowing deliveries of any oil tankers carrying Russian oil anywhere (EU or non-EU) thus cutting off some 15% of the world´s oil supply from the world market and necessarily sending its price yet higher with yet more EU-induced inflation as if we had not had enough already, please brace for it.
(5) force the construction of a new Russian-Chinese-Indian oil tanker fleet leaving idle part of today´s fleet
(6) tempt Russia to embargo strategic value-chain upstream items with captive consumers cascading into multiple failures thru lack of nat-gas, rare earths, inert gases, potash, sulfur, uranium, palladium, vanadium, cobalt, coke, etc.
Ref #2 https://www.rt.com/business/556904-us-russia-energy-revenue-sanctions/
Ref #3 https://www.rt.com/news/556894-russian-energy-resources-stagflation-difficulties/
Ref #4 https://www.nakedcapitalism.com/2022/06/global-supply-chains-rattled-by-winds-of-war.html
lost war
Russia does not need to fire a single shot or land a single missile on European territories to win such a total war. Think tanks in Europe and elsewhere know this but say nothing. It´d be plenty enough for Russia to just shut off your nat-gas supply, period. And not even to the whole of Europe. It could possibly be to only, say, some limited area in Germany.
But you need not put up with any of this. Europe should already have learned from history books and its generals not to underestimate or discriminate against Russia. Let alone cheat on it repeatedly as Europe has done since the downfall of the former Soviet Union. Yet again, history will not be kind to anyone directly or indirectly involved, including yourselves. Equivalent events took place in Europe not that long ago and winter will not care what was said where or why or by whom. It will just freeze and starve Europeans to death with no mercy. Just ask the Germans: they should remember, or the French, they like history a lot. Russian attrition warfare is most efficient in any territory.
Please do not waste any more precious time with forever failed attempts to find substitutes of any kind. Quite simply it is very easy to prove in a matter of minutes ( see plenty of references below ) that God Almighty has no adequate oil available for you in large enough quantities anywhere on planet Earth other than Russia, let alone deliverable at refineries and processing plants per your own needs and capabilities. You simply cannot dismiss one full third of your oil supplies in one sudden stroke of a pen and assume that nothing important will happen including a very negative direct impact upon the price YOU pay. It´s market dynamics 101 that only a fool would dare to ignore, so innocent masses of humans should not pay for the stupid decisions of some few unelected groupie politicians that know jack about basic technical requirements. This is a live & kicking very tough field engineering for dirty-fingernails folks that don´t talk much, not yadda BS at a Brussels cocktail party with laughs, plenty of drinks, hot air, and photo ops.
bid forms AWOL
And not a single one yet making the scene, go figure… The current EU course of action necessarily calls for the 2022 execution of at least 100 projects related to the Russian oil ban thus allowing for non-Russian oil imports. Probably many more than 100 projects need to be executed if all refineries, processing plants, ports, pipelines, logistics infrastructure, etc., etc. are taken into account. But let´s keep it simple and in round figures. The Schwedt refinery alone will require 11 major projects at the very least already described in a previous article. As Schwedt can no longer export anywhere, large areas of nearby Western Poland will be left without fuels now having to urgently find an equivalent Polish supplier close by (???) if any. Same for Slovakia´s Slovnaft which will now also have to quit exporting – but unlike Schwedt — making it unviable although possibly still operational for domestic markets albeit with a huge new deficit to be paid by …?…?… (!!!). Who or how will Slovnaft export markets be supplied now is a dangerous mystery because of rough geography and unexistent logistics plus a newly required distribution infrastructure. All in all, we are talking hundreds of billions of euros that Europe does not have — and should not print — to be paid back in 40 to 50 years’ time long after (supposedly) fossil fuels have been phased out of the EU. This in and of itself does not make any sense whatsoever, but it does blend in perfectly well with other nonsensical stuff of this surreal non-Russian oil sourcing idea. Banks should logically reject approving any financing of dead-on-arrival projects such as these. Still, be it as it may, pre-feasibility and feasibility studies should right now already be underway “puffing smoke” as engineers say amongst themselves in such circumstances. Yet no headlines announced on anything, no bid forms issued or trans-European call for bids, no joint-ventures, no engineering firms, plans or specs guidelines, no bidding documents, no tentative schedules, no consultants, no commissions or committees, no bid opening and contract award dates: nothing. Of course, one very serious possibility is that the effective EU plan is to keep on buying Russian oil as always but now from third parties instead at a MUCH higher price with kick-backs here and there no? So all of what´s missing would actually be another European fake as the Maastricht Treaty acceptance criteria just to name one. This would at least make EU “sense” no? Can´t make this stuff up…
no diesel so freeze
Europeans: even in theory, there are no viable oil-field reservoirs able to expand their production for the enormous quantity and type of oil blends you need even if they wished to or if geopolitics allowed them. So what would happen then without massive amounts of high-quality diesel fuel that European transportation and industries require?
There is no viable tanker fleet afloat either for such an unexpected and suddenly imposed massive supply-switch project, with complex geo-climatological access and serious sea lanes issues plus seasonal requirements with dedicated facilities yet to be designed, built, permitted, and commissioned, and with terribly limited installed infrastructure at key unloading ports from heavy-duty/heavy traffic roads to cranes and dedicated storage facilities. The same goes for nonexistent in-land logistics for delivery of such yet unknown boutique oil blends with still-to-be-seen minimum quality specs and anywhere near the enormous un-findable quantities as Europe requires no matter how you dice it or slice it or pray for it. None. Zero. Zilch. Nada. Just maybe some “fly-by-night” un-vetted headache providers. You are thus running around in circles with the very serious and certain risk of freezing and starving millions of Europeans to death very soon which Russian oil has solved for you for decades. And whichever narrative you choose, it will always be your own stupid needless fault, not Vladimir Putin´s for Heaven´s sake who is still willing to sell Russia´s oil to you with very important discounts, something which you should not ever take for granted despite Europe´s recent shameless robbery of legitimate Russian savings deposited at Western banks, including personal individual accounts and assets.
So for your own benefit please stop the Russophobia right now, reverse the current unwarranted course 180 degrees, return the money robbed, by your own doing change your leadership ASAP, accept Russia´s territorial claims, accept the decline of Europe and the Western world at large, drop the Anglo-Saxon Brexitology superiority philosophy, guarantee Russia´s existential security and stop the shameful European nonsense now exposed for the world to see.
Otherwise, enter your very own European angry pitchforks with lit torches that will fix this fast. Are you ready?
Ref #5 http://thesaker.is/europes-mad-ban-on-russian-oil/
Ref #6 http://thesaker.is/why-russias-oil-ban-is-impossible/
Ref #7 http://thesaker.is/germans-schwedt-hard-for-russian-oil/
Ref #8 http://thesaker.is/dear-ursula-you-are-dead-wrong/
Ref #9 http://thesaker.is/europe-now-cheats-or-suffers/
Ref #10 http://thesaker.is/for-europe-from-russia-with-love/
Ref #11 https://www.rt.com/business/556870-good-times-over-for-europeans/
pitchforks ready
Not that long ago, the French Revolution was planned and led by the middle classes. And in the very near short term that will be the new game of the game throughout Europe if the EU leadership insists on fighting a-la Don Quixote its inevitable dependency on Russia. Besides, in case you didn´t notice, Russia is winning on all fronts, militarily, geopolitically, logistically, socially, economically, and financially. The Ruble is as strong as it cares to be and Russia is the only world power able to self-sustain independently from what happens in the rest of the world. After many years of trying to accommodate your requirements, Russia simply does not care anymore what the West thinks, does, or threatens to do. It can now beat you at any of the three at any time. Your sanctions work against Europe, not Russia. You must see and feel that for sure, so why do you fake being blind? Or are you “brain-dead” per President Macron?
Russia´s Foreign Affairs Minister Sergei Lavrov nailed it for history: the West is simply not “agreement-capable” with the post-Brexit US-led Anglo-Saxon leadership in charge. Did you not have enough with Victoria Nuland´s loud and clear “ fuck the EU ” audio recording? What else would you need to accept what´s really going on? Maybe having a character such as Volodymyr Zelenskyy ruling the Ukraine? He already is… Why has European leadership now turned so unwarrantedly Russophobic? You do not need to be their friend, but why should you make Russia your enemy even proposing an anti-Russian coalition cartel?
Ref #12 https://www.rt.com/news/556913-yellen-coalition-russian-sanctions/
European infighting
A network is only as strong as its weakest link. As initially explained in the “their war” paragraph, just-in-time fragility will trigger cascading failures throughout Europe in a matter of days, if not hours. So what´s the European game plan for the 21st. century without energy security? Fighting even more yet again amongst yourselves? What will become of Europe without Russia as a business associate and energy provider? Are you aware of how weak European economies and fragile finances currently stand? Did you know that 85% of the world´s population does not belong to NATO?
Hungary et al will continue to receive cheap and excellent Russian Urals blend through the Druzbha South pipeline for a yet undefined period of time. This would mean a wholly unfair competitive environment with tremendous advantages for some few over those fed with new unknown expensive non-Russian oils plus the costs for the corresponding retro-fitting / reconversion downtime (or plain non-performance) kicking them outright out of the market for an unknown period of time possibly bankrupting them and creating extraordinary logistics problems to consumers throughout Europe. Allowing for the Druzbha South pipeline to continue feeding 15% of Europe with excellent Russian oils will provide the perfect comparison standard of practice. And it would reveal the fallacy that Russian oils can be substituted easily and without enormous great pains per Ursula von der Leyden´s historical bad joke: “the EU will make sure to phase out Russian oil in an orderly fashion to allow us and our partners to secure alternative supply routes minimizing the impact on global markets”. It´d be like trying to change your car´s engine oil while cruising at 150 km/hr on a German autobahn.
quantities & qualities
By any means, there are definitely not enough adequate oil blends around to satisfy European requirements without continuous Russian high-quality Urals supply. And also please understand and accept once and for all that a specific oil blend is not just “an oil blend” to be plugged & played anywhere anytime. A very specific refinery or processing plant tune-up needs to be specifically matched with an always constant high-quality oil blend in large enough quantities and for a given desired output such as diesel. No “open architecture” is possible here, that´s just for IT nerds, not for chemical engineering realities. And definetly there are no vendors all lined up happily willing and able to sell you their oil blend in unlimited quantities already fully adapted to whatever plant you may have for whichever desired production output you may need. And also any door-to-door pipeline performs infinitely better than the best batch-delivery system, let alone with un-prepared ports thousands of kilometers away from “beach-front bazaar” vendors.
Should ´climate change´ already agreed goals reduce or further increase worldwide oil production? Which is it, please make up your mind. Furthermore, oil-field production will be very hard to maintain into the near future because of constant shale reservoir depletion, fracking prohibition, ever-increasing labor shortages, rising drilling costs due to worldwide inflation, and temporary or permanent lack of missing components caused by supply chain disruptions.
Ref #13 https://www.rt.com/business/556816-eu-buying-russian-oil/
Ref #14 https://oilprice.com/Energy/Energy-General/The-Biggest-Reshuffle-Of-Oil-Flows-Since-The-1970s.html
no people no project
For decades Europe has streamlined supplies and specifically matched its processing capabilities for the Russian Urals blend which means that now Europeans cannot just suddenly switch to whatever little and bad oil blends are found elsewhere. It just does not work that way. If any of that is attempted, the result will be absolutely disqualifying higher prices and costs plus un-thinkable risks for the whole European economy. Furthermore, Europe will spend a FORTUNE it does not have while simultaneously risking project non-performance of the trouble full reconversion projects required ending up with many half-finished facilities that will not be anywhere ready on time, or ever. And as 95% compliance is not enough to produce a single drop of a processed product (diesel or whatever) this means that under current circumstances and 2022 established deadlines until Europe has 100% modified and retrofitted facilities up and running you really have NOTHING. Additionally, the human resource challenge related to all of the above is insurmountable and probably un-compliable.
Ref #15 https://www.rt.com/business/556600-analysts-warning-russian-oil-embargo/
Tyler Durden
Mon, 06/13/2022 – 02:00 - "The Mashinsky Moment": Celsius Pauses All Withdrawals
“The Mashinsky Moment”: Celsius Pauses All Withdrawals
Submitted by QTR’s Fringe Finance
Most people know I have been extremely critical of Celsius CEO Alex Mashinsky, ever since he participated in a “Gold vs. Crypto” debate with Peter Schiff where he rattled off one alarming statement after the next.
Tonight, it looks as though Celsius has delivered the ultimate piece of bad news for its clients – that they can no longer withdrawal their funds.
Celsius wrote this evening in a “Memo to the Celsius Community”:
Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.
The post continued:
Acting in the interest of our community is our top priority. In service of that commitment and to adhere to our risk management framework, we have activated a clause in our Terms of Use that will allow for this process to take place. Celsius has valuable assets and we are working diligently to meet our obligations.
The company said it is taking the action to “stabilize liquidity and operations”:
We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets. Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers.
We understand that this news is difficult, but we believe that our decision to pause withdrawals, Swap, and transfers between accounts is the most responsible action we can take to protect our community. We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible. There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.
Just days ago, I was on with Palisades Gold Radio last week and reiterated my skepticism of Mashinsky and these types of crypto claims:
“There is shady shit going on in the world crypto. There are Ponzi schemes on top of Ponzi schemes on top of Ponzi schemes. And you don’t need to know dick about crypto – all you need to understand is you have several entities willing to pay people yield on their crypto assets that they deposit. Then you have to understand crypto doesn’t inherently generate a yield. There are some very big, huge, massive air pockets in the world of crypto.”
I continued:
“Until I see someone like Alex Mashinky, who has made in my opinion a number of very irresponsible claims and gold; until a guy like that and his company get a comeuppance I’m not interested in looking at the crypto space.”
QTR’s Fringe Finance is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber: Subscribe now
And again, it was just about six months ago when I wrote an article about some of the absolutely batshit insane statements made by Mashinsky while debating Peter Schiff on the merits of crypto versus gold.
That article was called “Bitcoin: One Hubris-Laden Interview Closer To A Day Of Reckoning” and it wasn’t even a piece I intended on writing.
It was only after I listened to Mashinsky’s “arguments” for crypto during the debate that I felt the need to write it; mainly because I was seriously alarmed by the ease with which Mashinsky appeared to be spreading what I believed to be harmful information to the most susceptible, unsophisticated potential investors.
From my November 2021 criticism of Mashinsky:
Mashinsky led the debate by suggesting a classic fallacy: that bitcoin’s past performance was going to always be indicative of its future results. This is akin to betting “black” at the roulette table after “red” comes out fifty times in a row because it is “due” to come out when, in fact, “black” still has the same 50% chance of coming out as it did on all of the prior spins.
I gave kudos to the Kitco moderator for trying to put a stop to this argument before it started, but this is always the first arrow in the quiver for bitcoin bulls. I have pointed out over and over, there is a reason that the first disclaimer you always see when buying a financial product is: “past performance is not indicative of future results.”
Mashinsky then continues hopping from one logical fallacy and inaccuracy to the next. During a discussion about whether or not all bitcoin margin debt (key word: all) was liquidated during the last bitcoin crash, Peter Schiff points out that the amount of leverage people are using to buy bitcoin is likely still significant and dangerous. Mashinsky argues that he believes all margin debt had been liquidated during the last bitcoin plunge, a ridiculous assertion that had Peter fuming.
The absolute worst and most irresponsible of all of the arguments from Mashinsky came when he suggested to viewers of the debate – many of whom likely lack financial sophistication – that both bitcoin and gold pay a yield.
Of course, what he meant was that they pay a yield on his Celsius platform, but he failed to qualify his statements to make that clear. Neither asset pays a yield in general and Mashinsky knows that.
Days ago, Mashinky blamed short sellers for the plunge in Celsius, which should have been the tell:
“The CEO of crypto lending and staking platform Celsius Alex Mashinsky believes ‘the Sharks of Wall Street’ can smell blood in the water and are causing instability at several crypto projects. Mashinsky attributes recent Celsius (CEL) price falls, the brief Tether (USDT) depegging and collapse of Terra (LUNA) — at least in part — to short sellers on Wall Street,” Cointelegraph wrote last month.
“This is not a coincidence. This is somebody who decided, ‘You know what? I’m going to take down all of Celsius,’” he said during the event.
Recall, I wrote just days ago also discussing Terra/Luna’s collapse.
Now read:
-
Bitcoin: One Hubris-Laden Interview Closer To A Day Of Reckoning
-
Charlie Munger Is Right: China Is Making The U.S. “Look Foolish” On Bitcoin
QTR’s Fringe Finance is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber: Subscribe now
Tyler Durden
Sun, 06/12/2022 – 23:10 -
- China Won't "Hesitate To Start A War" Over Taiwan As Series Of Private Warnings Conveyed To US
China Won’t “Hesitate To Start A War” Over Taiwan As Series Of Private Warnings Conveyed To US
A new report by Bloomberg on Sunday has detailed a series of instances that Chinese officials have privately conveyed to their American counterparts that the Taiwan Strait does not constitute international waters, upping tensions given the Biden administration has been sailing navy warships through the contested waters on a monthly basis.
“The statement disputing the US view of international law has been delivered to the American government by Chinese officials on multiple occasions and at multiple levels, the person said,” Bloomberg writes. “The US and key allies say much of the strait constitutes international waters, and they routinely send naval vessels through the waterway as part of freedom of navigation exercises.”
Image: The Asahi Shimbun via Getty Images The Biden administration is said to be “alarmed” by the private warnings, given that “It’s not clear whether the recent assertions indicate that China will take more steps to confront naval vessels that enter transit the Taiwan Strait,” according to the report. This also suggests China could take a more assertive stance in the South China Sea, where US warships have also been conducting freedom of navigation exercises.
On Friday during the first ever face-to-face meeting between US Secretary of Defense Lloyd Austin and China’s defense minister Wei Fenghe, the latter warned his American counterpart that Beijing will “not hesitate to start a war” if Taiwan declares independence.
Wei had warned Austin that “if anyone dares to split Taiwan from China, the Chinese army will definitely not hesitate to start a war no matter the cost“, defence ministry spokesman Wu Qian quoted the minister as saying during the meeting.
Further Wei vowed that China woujld “smash to smithereens any ‘Taiwan independence’ plot and resolutely uphold the unification of the motherland,” as emphasized in a defense ministry statement issued following the conclusion of the meeting. He “stressed that Taiwan is China’s Taiwan… Using Taiwan to contain China will never prevail,” further according to the statement.
Chinese defence minister Wei Fenghe vows a “fight to the very end” over Taiwan if necessary in latest salvo in war of words with United States over the island https://t.co/enCaVf4XA1 pic.twitter.com/GCEdgGbUxZ
— AFP News Agency (@AFP) June 12, 2022
https://platform.twitter.com/widgets.js
For the US side, Defense Secretary Austin warned the Chinese defense minister in the Friday meeting to “refrain from further destabilizing actions” on Taiwan.
“The Secretary reaffirmed the importance of peace and stability across the Strait, opposition to unilateral changes to the status quo, and called on the PRC to refrain from further destabilizing actions toward Taiwan,” according to the readout.
Tyler Durden
Sun, 06/12/2022 – 23:00 - The January 6th Hearings Real Goal: Stop Trump 2024
The January 6th Hearings Real Goal: Stop Trump 2024
Authored by W.James Antle III via 19fortyfive.com,
Whatever information comes out of the Jan. 6 hearings, the fact-finding is secondary to the political impact. The public event is designed to prevent the country’s current intractable problems from rehabilitating former President Donald Trump and to force other Republicans to either be seen as siding with a violent fringe or distancing themselves from 2020 election views that are widely held by the party’s rank-and-file.
You can either side with the people who attacked the Capitol to prevent, or at least disrupt, the certification of President Joe Biden’s election. Or you must distance yourself from Republicans who are suspicious of the fact that Trump led in several battleground states when they went to bed on election night and then woke up to a Biden lead, in a race defined by COVID protocols, mail-in voting, and ballot harvesting. While Biden’s raw national popular vote edge was solid, the constitutionally relevant Electoral College came down to 43,000 votes in three states.
Still, the images of Jan. 6 were a national disgrace even if you believe some of the “insurrection” talk is a bit overwrought and the plans by some in Trump’s orbit to bridge the vote gap through various fraud claims — with the full encouragement of the 45th president himself — were constitutionally dubious. And the apparent plot of murder Supreme Court Justice Brett Kavanaugh is stark reminder that political violence of any kind cannot be tolerated.
Some Democrats hope to take the next step beyond making voters believe Trump is too reckless and dangerous to return to the White House in 2024 and remove their option to do so. The hope is that Trump can be implicated in the riot to the degree that a 14th Amendment provision designed to bar former Confederate leaders from public office can similarly disqualify him. These dreams did not die with the failure of Trump’s second impeachment to result in a Senate conviction.
This has been tried against other down-ballot Republicans with varying degrees of involvement in the events of Jan. 6. Rep. Lauren Boebert of Colorado has been targeted for possible removal from the ballot in this manner. So have Arizona Reps. Paul Gosar and Andy Biggs. Rep. Madison Cawthorn of North Carolina was also a major focus of these efforts, before Republican primary voters decided to move on from him themselves.
Attempts to use the 14th Amendment and a related 1872 federal law to kick Trumpier Republicans off the ballot or out of office haven’t fared especially well in the courts, though there have been some favorable rulings. By and large, this looks like an extension of the 25th Amendment fantasy liberals and Never Trumpers engaged in, looking for a quick fix for the Orange Man.
If supporters of Al Gore or Hillary Clinton who believed their candidates were the rightful winners of the 2000 and 2016 presidential elections, respectively, had rioted, would participants have been Confederate-style insurrectionists? If you believe, as many Democrats do, that Russia altered vote totals and essentially installed Trump as president, that would appear to warrant a more forceful response than a blog post or sternly worded letter to the editor.
The fact that nobody, or at least different people, would be interested in applying these novel constitutional theories if the circumstances were different tells us what we need to know about the legal seriousness of this campaign. But from a practical standpoint, it also ignores the reason Jan. 6 happened in the first place.
A major factor in why Trump supporters breached the Capitol and revolted while supporters of Gore, Clinton or Stacey Abrams did not is that the most ardent MAGA types believed Trump was a unique political figure who cared about marginalized people like themselves. You do not have to endorse this viewpoint to try to understand that it exists.
Having the bipartisan political establishment conspire to disenfranchise such people by employing obscure constitutional provisions in ways they have never been used before — the 25th Amendment, for instance, has mostly been invoked when a president has surgery, not as a backdoor impeachment mechanism — to remove their preferred candidates from office or the ballot will only further inflame their radicalization. This is, as surely as any bit of social media disinformation or misinformation, is what can lead an otherwise normal person to dress like an animal and defecate on House Speaker Nancy Pelosi’s desk.
Just as Democrats felt about the GOP’s endless Benghazi hearings, the more Jan. 6 investigations are deemed a political cudgel to be used to beat adversaries or push them out of public life, the less anyone will pay attention to whatever facts are uncovered.
Tyler Durden
Sun, 06/12/2022 – 22:30 - Smithfield Foods, Citing "Escalating Costs," To Shutter California Meat-Packing Plant
Smithfield Foods, Citing “Escalating Costs,” To Shutter California Meat-Packing Plant
Meat-packing giant Smithfield Foods announced a 1,800-person pork processing plant in California would shutter operations next year, citing the rising cost of doing business in the liberal-run state.
Smithfield, owned by Hong Kong-based pork conglomerate WH Group Ltd., “will cease all harvest and processing operations in Vernon, California in early 2023,” the company said in a Friday press release.
“Smithfield is taking these steps due to the escalating cost of doing business in California,” the company continued.
WSJ explains the company’s reasoning behind winding down operations at the Vernon plant is due to a multitude of factors, including the cost of energy to power plants is 3.5x higher per head to produce pork than any of its 45 other US plants.
“It’s increasingly challenging to operate efficiently there,” company spokesman Jim Monroe told WSJ. “We’re striving to keep costs down and keep food affordable.”
Monroe also made clear the regulator environment in the state wasn’t favorable for meat processing plants.
Smithfield also said part of the reason it closed the facility was the regulatory environment in the state. Specifically, a state law passed by voters in 2018 and backed by the Humane Society, called Proposition 12. It requires breeding pigs, or sows, to be able to lie down and turn around in spaces in which they are housed, essentially outlawing pork produced using small gestation stalls in most circumstances. -WSJ
Smithfield will also “decrease its sow herd in Utah and is exploring strategic options to exit its farms in Arizona.” The planned shutdown isn’t expected to reduce the supply or increase the costs of pork products at the supermarket.
The announcement’s timing comes as a string of fires and explosions damage major food processing plants across the country. The latest fire hit a huge poultry farm in Minnesota that supplies eggs to top supermarkets.
What’s also concerning is the US hog herd isn’t expected to increase anytime soon as soaring input costs, such as higher feed, diesel, labor, and material costs, have financially strained farmers.
Tyler Durden
Sun, 06/12/2022 – 22:00 - "Panic, Depression… Everyone Who Dies Out There Dies Of Confusion": A Market Of "Devastating Disorientation"
“Panic, Depression… Everyone Who Dies Out There Dies Of Confusion”: A Market Of “Devastating Disorientation”
By Eric Peters, CIO of One River Asset Management
“Reflect frequently upon the instability of things, and how very fast the scenes of nature are shifted,” wrote Marcus Aurelius, last of the Five Good Emperors, in 170 AD. I wandered through the Colosseum after dark, Rome’s oppressive heat slowly fading, Goldman’s European Financials Conference approaching. “Matter is in perpetual flux,” wrote Aurelius, an inspired leader, a stoic philosopher. “Change is always and everywhere at work; it strikes through causes and effects, and leaves nothing fixed and permanent.”
Disorientation:
“People who are lost may experience different types of reactions,” writes William Syrotuck in Analysis of Lost Person Behavior. “They may panic, become depressed, or suffer from woods-shock.” The book is a study of 229 people who were lost in the wilderness. “Most go through some of the stages,” he writes. “If they do not totally exhaust or injure themselves during outright panic, they may eventually get a grip and decide on some plan of action. What they decide to do may appear irrational to a calm observer but does not seem so nearly unreasonable to the lost person who is now totally disoriented.”
“Even people who while lost appeared to use good judgement with no suggestion of overt panic, exhibit woods-shock,” explains Syrotcuk. Of the 229 in his study, 11% died, nearly all in the first 48 hours, mostly attributed to panic and the cascade of catastrophic decisions that follow and compound. “Many persons found mobile and well will seem to converse in a completely normal manner. Only upon close questioning does it become evident that they are unable to remember where they spent the first night, whether they had any water to drink or whether they crossed the river yesterday, or maybe the day before.”
Italian Premier Draghi reminded his former colleagues, moments before this week’s ECB meeting of “signs that there is still spare capacity in the economy.” North-South inflation tension leave the ECB in treacherous territory, searching for a path out. Central bankers told markets that they know precisely how to tame inflation should it arrive. For years, policy was calibrated guard too strongly against deflation. Now Germany’s inflation challenge is more extreme than the 1970s. The tools to tame it are known. The force required is clear. Action is postponed, as the ECB hopes for a rescue.
Climate change is an urgent priority. But policies around ESG were introduced before economies and consumers were provided a sufficiently wide off-ramp away from fossil fuels. Policy is discouraging oil production. US output is well below its highs and oil and gas rig counts, which would normally be in the 1000s at current prices, are sitting at 733. A timely alternative has not been provided. Panicked policies can worsen the disorientation – price caps, soliciting foreign production, and taxing profits of oil producers reduce investment capital, compounding the emergency.
Revolutions are rarely fought on full stomachs. The fear of food shortages is leading to national hoarding policies with hopes of preventing domestic social unrest. The cascading impact on other countries does the exact opposite of its intent, encouraging other nations to close borders and hold larger inventories of agriculture commodities. The solution is found in the problem – more investment and more trade, not less. This is unfamiliar terrain for every living politician. Self-injury is a common consequence of disorientation – food policies embody it.
In the decades since the last great inflation, investors came to rely on an inexorable trend toward rising equity and bond prices. In times of economic stress, the two tended to move in opposite directions, and this rewarded portfolios that were leveraged long. Amplifying this dynamic was a mega macro trend toward globalization, which encouraged investors to structure businesses and portfolios to optimize for higher returns. But all choices incur costs, and the price was an increase in economic and market fragility. It now appears that these mega macro trends are reversing. This is utterly unfamiliar territory.
“The object of life is not to be on the side of the majority,” wrote Marcus Aurelius in 170 AD. I stood on the rebuilt floor of the Colosseum, looking up at the emperor’s podium, now a crumbled mass of travertine, white gulls darting above in the Roman night, as they have through the ages. “…but to escape finding oneself in the ranks of the insane.”
Anecdote
“Everyone who dies out there dies of confusion,” wrote Laurence Gonzales in Deep Survival: Who Lives, Who Dies, and Why. The book explores what separates survivors from the others. Those who die when lost in the wilderness often do so spontaneously, for no clear medical reason. Disorientation is psychologically devastating for those unable to adjust rapidly. Children are often better suited than adults.
“If things don’t go according to plan, revising a robust mental model may be difficult. In an environment that has high objective hazards, the longer it takes to dislodge the imagined world in favor of the real one, the greater the risk,” explains Gonzales. I’ve always found survival stories more useful than economic textbooks and central banker memoirs. It is not that the latter are useless, it’s rather that in markets and business those who fail to steel themselves for extreme adverse events are unlikely to survive them.
Studying survival stories, examining the psychological journeys they reveal, can help us prepare and better position ourselves and teams to endure. My favorite and most terrifying is Into the Land of White Death, by Valerian Albanov. Shackleton’s story of The Endurance is required reading. Into Thin Air by Krakauer is terrific for us climbers. So is The Climb, by Anatoli Boukreev, lead guide on Krakauer’s tragic Everest expedition.
Reading those two in succession reveals how people often experience the same events so differently, particularly in times of crisis, and this can destroy cooperation when it is most needed. I include Moby Dick in the survival genre. Melville’s genius helps us to understand ourselves, our wild ambitions, our undoing.
In bull markets, it is easy to forget that this game is ultimately won by the living. When you’re dead, nothing good can happen. Death is forever.
“The world won’t adapt to me. I must adapt to it,” wrote Gonzales, explaining the critical mindset found in survivors. “To experience humility is the true survivor’s correct response to catastrophe. A survival emergency is a Rorschach test. It will quickly tell you who you are.”
Tyler Durden
Sun, 06/12/2022 – 21:30 - McDonald's Shrinks Menu, Gives Up On Healthier Foods To Drive Profit
McDonald’s Shrinks Menu, Gives Up On Healthier Foods To Drive Profit
McDonald’s trimmed nutritious foods from its menu, such as salads, grilled chicken sandwiches, and fruit and yogurt parfaits, a move to streamline operations and offer faster drive-thru times with less staff.
BTIG LLC analyst Peter Saleh told Bloomberg that healthier foods wouldn’t return to McDonald’s anytime soon, which should increase profitability amid soaring commodity and labor costs.
McDonald’s has lowered drive-thru wait times by 30 seconds since the pandemic because of the menu cut.
“With the shortage of labor, you’re trying to keep your menus as streamlined and as simple as possible,” Saleh said. “For many of these restaurants, their menus get bloated with some of these new items, and then you cut it off to help with speed.”
The new strategy of a “simplified menu enables speed,” said the National Owners Association, a large group of McDonald’s franchisees, told Bloomberg. The group said the key to sales growth in these challenging times of soaring costs and lack of labor is an efficient car lane: “We love fast drive-thrus, happy customers, and happy crews.”
Health-conscious consumers are the biggest loser from McDonald’s new skinny menu. The company said customers’ appetites fuel menu changes:
“Our transition to a limited menu, involving taking dozens of less popular national and regional items off menus, helped simplify operations for our restaurant crew while also improving our customers’ experience.
“We continue to evaluate our menu through this lens to improve order accuracy and speed,” McDonald’s said.
Food industry research firm Datassential found restaurant menus in the last few years have been reduced by more than 10% on average. At least 60% of restaurants in 2021 shrunk their menus, axing appetizer, dessert, and beverage categories. Burger King is another fast-food restaurant chain that recently removed salads.
Tom Cook, a principal at restaurant consultancy King-Casey, said McDonald’s’ healthy options were never a significant revenue driver.
“You always need to have something, some news to drive traffic, particularly these days,” said Cook, who worked with McDonald’s in the mid-2000s to help introduce a handful of new salads, including one with apples. He said the leafy-green entrees were a big deal at the time — even though management knew they’d never rival burgers sales. The goal with salads was to draw in female diners and especially mothers with children, he said.
“Here’s a case of knowing that it’s never going to be popular and sell a lot, but we’re going to make a big story out of it to communicate that we’re healthy,” he said. “It was a very high priority.” Fast forward to today, and “they’re just probably saying, ‘we don’t really need those,'” Cook said. -Bloomberg
Lindsay Moyer, a senior nutritionist at the food/health watchdog Center for Science in the Public Interest, said McDonald’s is taking “a huge step backward” by axing healthy items at 13,000 US locations.
“You have to wonder if McDonald’s has almost given up trying to pretend they have something to offer people who want healthier items,” Moyer said.
Wonder how McDonald’s ESG score will fluctuate after the new unhealthy menu continues making Americans even more obese.
Tyler Durden
Sun, 06/12/2022 – 21:00 - West Virginia Notifies Six Banks They May Be Breaking State’s Fossil Fuel Anti-Boycott Law
West Virginia Notifies Six Banks They May Be Breaking State’s Fossil Fuel Anti-Boycott Law
Authored by Nathan Worcester via The Epoch Times (emphasis ours),
Six banks have been warned by the West Virginia State Treasury that they may be in violation of a new law preventing the state from doing business with financial institutions boycotting energy companies.
Financial institutions that are boycotting energy producing companies have been warned against doing so by West Virginia’s treasury. Pictured is coal miner Matt Wolfe, of Blacksville, W.Va., on April 13, 2017, in Sycamore, Pa. (Photo by Justin Merriman/Getty Images) The office told The Epoch Times it had sent out letters on June 10, but did not share the banks’ names on the record.
Enacted in March 2022, S. 262 directs the state to notify financial institutions that they are slated for placement on the restricted financial institution list 45 days before the document is published.
Those institutions must respond within 30 days of receiving those notification letters to avoid winding up on the list.
In June 2021, Texas passed a similar law barring state agencies from investing in funds boycotting energy companies.
“We felt like we had a clear conflict of interest,” said West Virginia Treasurer Riley Moore at a June 8 press conference.
He cited firms that he said wish to benefit from the state’s finances while simultaneously “trying to diminish our dollars and destroy our industries.”
The letters come after months of escalating conflict between many energy-producing states and much of the financial sector.
In May 2021, Moore and treasurers from 14 other states sent a letter to U.S. Climate Envoy John Kerry protesting against his private comments to banks in March of that year. He reportedly asked major financial institutions to step up their climate commitments.
“We intend to put banks and financial institutions on notice of our position, as we urge them not to give in to pressure from the Biden administration to refuse to lend to or invest in coal, oil, and natural gas companies,” Moore and his colleagues wrote at the time.
Environmental nonprofits mounted their own pressure campaign encouraging Kerry to further Wall Street’s divestment from the fossil fuel industry.
A March 2021 letter from 145 environmental organizations demanded that Kerry “[end] the flow of private finance” to the fossil fuel industry, specifically requesting that he push asset managers “to divest from pure-play coal, oil, and gas.”
In January of this year, West Virginia divested from BlackRock, the world’s largest asset manager.
“BlackRock CEO Larry Fink has been outspoken in pressuring corporate leaders to commit to investment goals that will undermine reliable energy sources like coal, natural gas and oil under the guise of helping the planet, but at the same time he’s pouring billions in new capital into China, turning a blind eye to abhorrent human rights violations, genocide and that country’s role in creating the COVID-19 global pandemic,” Moore said in a January 17 press release explaining the decision.
Moore told The Epoch Times he has not yet heard from BlackRock.
In his view, the war in Ukraine underscores the vital importance of maintaining domestic energy resources.
“There is power in this type of energy, and I just don’t mean electrification. I mean, power for the countries. And that’s why energy independence is so important,” he told The Epoch Times in a June 8 interview.
Moore claimed it would be “very easy” to get West Virginia to change its increasingly aggressive stance toward financial institutions that have turned against fossil fuels or embraced extreme environmental, social, and governance (ESG).
“All you all need to do is have banks act like banks, asset managers act like asset managers and maximize returns for your shareholders and your company. It’s pretty simple. I mean, that’s kind of how capitalism works,” he said.
The Epoch Times has requested additional information on the six banks from the West Virginia Treasury.
The Epoch Times has also reached out to BlackRock.
Tyler Durden
Sun, 06/12/2022 – 20:35 - Goldman Sees S&P Tumbling To 3150 When The Recession Hits
Goldman Sees S&P Tumbling To 3150 When The Recession Hits
After plunging on Friday, S&P futures are starting off the new week even lower with spoos at 3,860 in Sunday evening trade, just 4 points away from a bear market (3856 is 20% off the January all time high), with all other assets – treasuries, commodities and cryptos – all puking as well in the latest “crash correlations to 1” trade as markets freak out that the Fed will crash and burn everything – stocks, bonds, the economy, Biden’s approval rating – just to contain inflation, forgetting that once the Fed achieves its mission of a hard landing (because a soft-landing won’t push jobs nearly low enough to short-circuit the wage-price spiral), it will be up to the Fed to restart the US economy (since Democrats will be kicked out of Congress in an avalanche this November) and with Biden president, there will be no fiscal stimulus for at least two more years.
With that in mind, Goldman’s chief equity strategist – whose economists now expect the Fed to hike 50bps in September, if keep the June hike at 50bps despite some banks such as Barclays now expecting a “surprise”, non-consensus 75bps rate hike this week – cautions clients that equity valuations remain far from depressed, to wit:
The median S&P 500 constituent’s P/E ratio of 18x ranks in the 87th percentile since 1976. For context, in March 2020 the median stock’s P/E was 14x (47th-percentile). Valuations appear more attractive in the context of interest rates, but still do not look “cheap.” The 540 bp gap between the median stock’s EPS yield and the real 10-year Treasury yield ranks in the 49th percentile, whereas in March 2020 the yield gap was 727 bp (7th percentile).
Yet as David Kostin writes in his latest Weekly Kickstart note (available to professional subs) his base case forecast valuation is expected to remain roughly flat while earnings growth does the heaving lifting and pushes the S&P back to 4300 at year-end 2022, some +10% from here – or at least until Kostin slashes his year end forecast once again, and for the 4th time in a row- as he himself hedges when warning that “inflation surprises like this morning’s will also affect the path of multiples, for better or worse.“
How do we know that Kostin is just biding his time until he cuts his S&P price target again (which will likely mark the bottom of stocks in the current cycle)? Because as he admits next, “some of the economic developments that have boded well for the Fed’s battle with inflation have intensified concerns about the earning outlook.” As a result, he notes that while “Valuations dominated investor focus in early 2022, but recent client conversations have centered on risks to EPS estimates” which of course is not news to regular readers and to those who have been focusing on Wall Street’s more bearish strategists, such as Morgan Stanley’s Mike Wilson, who has been warning for a while now that attention has shifted from multiples to earnings. Anyway, back to Kostin who writes that “company announcements have added to these concerns. Just weeks after shares fell by 25% on disappointing 1Q margins, Target (TGT) cut margin guidance this week as it struggles to manage excess inventory. Investors have also focused on a string of downbeat comments from tech companies. In recent weeks firms including AMZN, MSFT, and NVDA have signaled intentions to slow hiring. This development is positive in terms of balancing the labor market but reflects management anxiety about growth and inflation.”
Catching up to what Wilson has been saying for months, Kostin finally concedes that he, too, “expects further downward revisions to consensus earnings estimates.”
The Goldman strategist also warns that while “margins have driven the majority of recent analyst cuts, estimates still appear too high” and Kostin now expects S&P 500 net margins excluding Financials and Energy will slip from 12.7% in 2021 to 12.6% in 2023, even as consensus idiotically expects a 30 bps rise to 13.0%, even though most sectors (with the notable exception of Energy) have recently experienced negative margin revisions.
Keeping in mind that his latest note is just a placeholder for the forthcoming S&P price target cut, Kostin notes that his “base-case 2023 EPS forecast is $239, 5% below consensus of $251. If the economy contracts, the 13% median historical recession decline would bring 2023 EPS to $200. If the economy avoids recession, but margins and revenues for most sectors return to pre-COVID trends, S&P 500 EPS would equal roughly $215.”
The chart below summarizes the potential S&P 500 levels at year-end 2022 based on various EPS and P/E scenarios (which a first year analyst can do on their own, of course). The scenarios assume that by year-end consensus 2023 EPS forecasts move halfway from current estimates to eventual actual EPS. For example, if the consensus 2023 EPS estimate moves halfway to our top-down forecast of $239 and the P/E multiple remains at 17x, the implied index level would equal 4165. If the EPS estimate moves to $225, halfway to the recession scenario of $200, a 14x P/E would bring the S&P 500 to 3150.
What we find more interesting is Goldman’s admission that a worst-case scenario is likely, and what that would mean for the S&P:
In a recession, if the EPS estimate moves halfway to $200, a 14x P/E would bring the S&P 500 to 3150.
What does all this mean for investors, especially those who aren’t dumping everything yet because they realize that the coming Fed freakout and equity ETF buying will be something never before seen:
Investors looking for value opportunities should consider both valuations and potential downside risk to earnings estimates. For example, at the sector level, Energy trades well below its 30-year average P/E multiple in absolute terms, and close to record lows relative to the S&P 500. Even haircutting its EPS by the median of the past six recessions, the P/E ratio today would still rank below the 30-year average. While Health Care trades at a P/E close to its 30-year average, it has grown EPS during each of the last six recessions, and looks more attractively valued today than other defensive sectors like Utilities.
What about growth stocks ahead of the coming recession? Somewhat controversially, Kostin is not overly negative here, and writes that at a factor level, “the macro environment is becoming more favorable for Growth stocks” yet valuations is one reason he still prefer “quality” attributes.
Hints of easing inflation and less need for FCI tightening help explain the recent Growth stock rebound, including the past month’s 30% return for the GS Non-Profitable Tech Basket (GSXUNPTC). Concerns about corporate earnings also increase the appeal of secular growth stocks. However, the outlook for the Fed’s battle with inflation remains uncertain, as underscored by today’s CPI data and our commodity strategists raising their Brent forecast to $140/barrel. In addition, the valuation spread between Growth and Value remains wide relative to history. In contrast, our sector-neutral low volatility, high profit margin, and high return on capital factors each trade at discounts to their historical average valuations.
Bottom line: we commiserate with Kostin who is tacitly hinting that yet another S&P price target cut is looming, especially when one considers that a recession is now just months if not weeks away, (one which as Kostin concedes would send the S&P tumbling to 3,150) an outcome which is abundantly clear when reading the latest note from that other Goldman trader and strategist, Tony Pasquariello, who unlike Kostin is not afraid to say what he really thinks.
Tyler Durden
Sun, 06/12/2022 – 20:20 - Futures Open Down Hard, S&P Nears Bear Market (Again), Treasury Curve (Re)Inversion Imminent
Futures Open Down Hard, S&P Nears Bear Market (Again), Treasury Curve (Re)Inversion Imminent
US equity futures have opened down hard in quiet Sunday night trading with Nasdaq the hardest hit, down 1.5%. This move leaves the S&P down over 6% in the last 3 days…
…and once again nearing the ‘bear market’ Maginot Line…
Which we doubt will be so eagerly bid this time ahead of this week’s chaotic event risk (FOMC) and technical factors (VIX/Equity opex).
Gold is up modestly, oil down over 1%, and Longer-end Treasury futures are down very small for now (equiv around 1bp higher in yield)…
But the short-end is getting hammered again with 2Y Yields up 8bps…
Which has pushed the all-knowing 2s10s curve very close inverting… again…
The dollar is extending Thursday and Friday’s gains…
As we detailed previously, veteran hedge fund managed Stan Druckenmiller warned this week that:
“My best guess is that we’re six months into a bear market,” adding that “for those tactically trading, it’s possible the first leg of that has ended. But I think it’s highly, highly probable that the bear market has a ways to run,” he added.
When it comes to investing himself, Druckenmiller said he’s taking a step back from trading.
“I’ve lived through enough bear markets, that if you get aggressive in a bear market, on the short side, you can get your head ripped off in rallies. I’m pretty much taking a break,” he said.
Druckenmiller is not alone in his pressimism. Former Obama administration Treasury Secretary Larry Summers predicted the United States will enter an economic recession and suggested the possibility of yet higher gas prices than the country is currently seeing.
“I think the optimists were wrong a year ago in saying we have no inflation and I think they are wrong now if anyone is highly confident that we are going to avoid recession,” he said on CNN’s “State of the Union” on Sunday, adding that Treasury Secretary Janet Yellen’s and Federal Reserve Chair Jerome Powell’s predictions are “too optimistic.”
Finally, Druckenmiller worries about the many “bull market geniuses” that were surfing with a hurricane, giving them some nice waves, though like anything, nothing lasts forever.
Tyler Durden
Sun, 06/12/2022 – 19:55 - Mike Wilson: The S&P 500 Is Headed Toward 3,400 Before A More Tradable Low Is In
Mike Wilson: The S&P 500 Is Headed Toward 3,400 Before A More Tradable Low Is In
By Michael Wilson, chief US equity strategist at Morgan Stanley
Growth Risks Still Not Priced
Over time, the lion’s share of stock returns is determined by earnings growth if one assumes that valuations are relatively stable. However, they are far from stable and often hard to predict. In my experience, most investors don’t spend nearly as much time trying to predict multiples as they do earnings. This is probably because it’s hard to do consistently and there are so many methodologies it’s often difficult to know if you are using the right one. For equity strategists, predicting valuations is core to the job and so we spend a lot of time on it.
Our methodology is fairly simple, which doesn’t make it right but does make it easy to determine what kind of bet one is making. There are just two components – 10-year Treasury yields and the equity risk premium (ERP). At any given time, the P/E ratio and 10-year Treasury yields are observable from market prices. The equity risk premium is therefore just a plug based on those independent variables, making it relatively volatile. Year to date, the biggest driver of stocks has been the de-rating in valuations. To illustrate this point, the S&P 500 P/E has fallen approximately 20% while the price has fallen only 15%. At the lows just a few weeks ago, the P/E was down close to 24% when the index was down 20%. At that point, the P/E was 16x, right in line with our de-rating forecast for this year but above our current fair value multiple of 14.6x, which assumes an ERP of 370bp and a 10-year Treasury yield of 3.15%.
As noted above, predicting the right multiple for stocks may be one of the hardest things to do as an investor; however, there are times when the valuation gets so out of line the call is easier to make. For example, in March 2020, valuations collapsed as equity markets panicked about what the lockdowns and recession would do to growth and earnings. At the market’s low in 2020, the ERP reached nearly 700bp, a level we have surpassed only two other times in the past 30 years – during the global financial crisis in 2008 and in summer 2011, when US Treasury debt was downgraded. Both events were truly terrifying for investors but both also proved to be great buying opportunities. 2020 was another, and the 700bp ERP was the main reason why we flipped to bullish at the right time. Markets can always go lower in such circumstances, but cheap valuation provides the buffer against being wrong on timing.
At the end of last year, we had the opposite situation with the P/E at 21.5x. From our vantage point, both rates and ERP appeared to be mis-priced. Rates are obviously more levered to inflation expectations and Fed policy. At year-end, 10-year Treasuries did not properly reflect either risk. Today, we would argue that’s not the case. In fact, 10-year Treasuries may be pricing too much Fed tightening if growth continues to erode and recession risk becomes acute as Friday’s consumer confidence number suggests.
In contrast to rates, the ERP is largely a reflection of growth expectations. When growth is accelerating/decelerating, the ERP tends to be lower/higher. At year-end, the ERP was 315bp, well below the average of the past 15 years. It was also below our estimate for the ERP of 335bp at the time. In short, the ERP was not reflecting the rising risks to growth in 2022 that we expected coming into this year. Fast forward to today, and the ERP is even lower at just 295bp, 75bp below our current estimate of fair value.
Given the growing evidence of slowing growth and the risk to earnings, that estimate could even rise further and is why we think the S&P 500 is headed toward 3,400 before a more tradable low is in.
With growth now the main risk to stocks, our focus remains on names that can deliver on earnings in a very difficult environment for many companies to navigate. In short, it is still the year of the stock picker as the index remains challenged. We continue to like classic late-cycle winners – defensives and energy – and companies with high operational efficiency.
Tyler Durden
Sun, 06/12/2022 – 19:30 - Top Ranking Senator Declares Punishing Putin & Assad "Will Never Be Over"
Top Ranking Senator Declares Punishing Putin & Assad “Will Never Be Over”
Occasionally US officials, especially Congressional hawks, speak the quiet part out loud. Last week a Senate Foreign Relations committee hearing considered and advanced a measure that would require formal reports to Congress on Russian atrocities in Ukraine. Idaho Republican Jim Risch was among those attempting to connect the situations of Russia and Syria, arguing that “autocrats are watching our actions.”
“Current and future autocrats are watching our actions. We cannot send the message that we will forget these atrocities over time and welcome Assad back to the international community,” Risch said. He suggested this would send a message to Putin. That’s when he stressed “this will never be over” – referring to US plans to punish and isolate both Assad and Putin.
At a hearing on US policy in Syria — i.e. US military occupation & crippling sanctions — GOP Sen. Jim Risch declares that, like Ukraine, “we can’t have this end… this is something that’s got to go on for a long time.”
Asst. Sec. of State Barbara Leaf agrees. pic.twitter.com/YZsVVskj7s— Aaron Maté (@aaronjmate) June 9, 2022
https://platform.twitter.com/widgets.js
Risch said, “We can’t have this thing end – just as what’s happened in Syria… but we can’t have this end and say ‘OK it’s over’.”
“No it’s not over, this will never be over until people are held to account for what they’ve done… this is something that’s got to go on for a long time” – this as already the US has hit both Russia and Syria (which in Syria’s case started years prior) with unprecedented sanctions.
Sen. Risch further lambasted some US allies for recent reported efforts to reestablish positive diplomatic relations and communications with the Assad government in Damascus.
In March for example, President Bashar al-Assad made his first trip to the United Arab Emirates since the Syrian war began in 2011, where he was given red carpet treatment.
Saudi Arabia too is signaling that it’s deemed “times have changed” regarding viewing Assad as a pariah. Days ago, Al Jazeera reported that “Saudi Arabia is close to reaching an agreement on diplomatic normalization with President Bashar al-Assad’s government, as Riyadh jockeys to play a lead role in removing the Iranian presence from Syria, Al Jazeera has been told by those with close knowledge of the discussions.”
Damascus International Airport will be out of use for some time after the Israeli attack, likely weeks, possible months. Planes unable to move, runways taken out, big strikes on each runway. Remaining flights redirected to Aleppo, huge cost, air travel in Syria paralysed.
— Danny Makki (@danny_makki) June 11, 2022
https://platform.twitter.com/widgets.js
This has infuriated Washington, and is expected to be raised during President Joe Biden’s expected visit to meet with Saudi crown prince Mohammed bin Salman, which is likely to come as early as next month, according to admin officials.
The kind of ‘total economic war’ previously unleashed on Syria and its population is now being implemented on Russia in the wake of the Ukraine invasion…
Damage in Damascus International Airport. pic.twitter.com/Wfj7Wpw4gQ
— Danny Makki (@danny_makki) June 11, 2022
https://platform.twitter.com/widgets.js
Meanwhile, a recent book entitled Syria Crucified has detailed stories of common Syrian civilians living under economic siege by the West and US-led sanctions. Ironically, after surviving the bullets and bombs of foreign-backed jihadist “rebels” during the prior decade long proxy war – much of the population is now under threat more than ever by starvation, lack of resources like fuel, lack of medicines and hospital equipment, and runaway inflation. The Senate Foreign Relations committee has just agreed, “we can’t have this end.”
Tyler Durden
Sun, 06/12/2022 – 19:00 - "Regret And Anxiety": Dems Quietly Panicking, Don't Want Biden To Face Trump In 2024
“Regret And Anxiety”: Dems Quietly Panicking, Don’t Want Biden To Face Trump In 2024
The New York Times – the establishment mouthpiece of record – has thrown President Biden under the bus.
After interviewing “50 Democratic officials, from county leaders to members of Congress, as well as disappointed voters who backed Mr. Biden in 2020,” the Times reports that the Democratic party is “alarmed about Republicans’ rising strength and extraordinarily pessimistic about an immediate path forward.”
In short, time to bench Biden – who “should announce his intent not to seek re-election in ’24 right after the midterms,” according to Steve Simeonidis, a Democratic National Committee member from Miami.
“To say our country was on the right track would flagrantly depart from reality,” he said. And top Democrats in general are feeling the same, it would appear.
Midway through the 2022 primary season, many Democratic lawmakers and party officials are venting their frustrations with President Biden’s struggle to advance the bulk of his agenda, doubting his ability to rescue the party from a predicted midterm trouncing and increasingly viewing him as an anchor that should be cut loose in 2024.
As the challenges facing the nation mount and fatigued base voters show low enthusiasm, Democrats in union meetings, the back rooms of Capitol Hill and party gatherings from coast to coast are quietly worrying about Mr. Biden’s leadership, his age and his capability to take the fight to former President Donald J. Trump a second time. –NYT
Sounds pretty dire, no?
Adding to Democrats’ undoubted frustration is the fact that just 19 million Americans tuned in to watch this week’s professionally-produced January 6th Committee hearings – the establishment’s current Hail Mary against the president they threw two impeachments and a Russia hoax at, yet still remains the Republican front runner (unless DeSantis makes a serious move).
For reference, an estimated 38 million people tuned in to Trump’s inauguration, 20 million watched Christine Blasey Ford’s testimony against Justice Brett Kavanaugh, while Trump’s impeachment second impeachment hearing, as well as testimony by Russiagate investigator Robert Mueller, drew just 13 million or so viewers.
In short, the J6 hearings are unlikely having the anticipated impact as Democrats (and RINOs) once again attempt to hobble Donald Trump’s image going into an election year.
According to the Times, the Biden administration’s repeated failures to pass big-ticket legislation on signature Democratic issues – on top of his “halting efforts to use the bully pulpit of the White House to move public opinion,” have resulted in terrible approval ratings and “a party that, as much as anything, seems to feel sorry for him.”
Biden’s failures have left Democratic leaders struggling to explain why nothing is his fault – from inflation rates not seen for 40 years, surging gas prices, a botched pandemic response, a Supreme Court about to strike down the right to abortion, and a complete fail on gaining party consensus to pass meaningful provisions of their Build Back Better agenda.
Democrats are also worried because Biden, 79, is ancient – and would be 82 by the time he might win reelection in 2024. The Times relays Democrats’ concern over “political viability.”
They have watched as a commander in chief who built a reputation for gaffes has repeatedly rattled global diplomacy with unexpected remarks that were later walked back by his White House staff, and as he has sat for fewer interviews than any of his recent predecessors.
“The presidency is a monstrously taxing job and the stark reality is the president would be closer to 90 than 80 at the end of a second term, and that would be a major issue,” said David Axelrod, former Obama strategist and Democratic operative.
Kamala who?
And while Democrats are sick of their embarrassment-in-chief, Vice President Kamala Harris isn’t ‘polling’ much better within the party due to “a series of political hiccups of her own in office.”
So who will they turn to? What does anyone do when you’ve got a terrible hand? Since there’s no folding, Democrats are just going to play the cards they’re dealt.
Democrats mentioned a host of other figures who lost to Mr. Biden in the 2020 primary: Senators Amy Klobuchar of Minnesota, Bernie Sanders of Vermont, Elizabeth Warren of Massachusetts and Cory Booker of New Jersey; Transportation Secretary Pete Buttigieg; and Beto O’Rourke, the former congressman who is now running for Texas governor, among others.
Who knows, maybe they’ll wheel Hillary back out – or activate Gavin Newsom for a longshot?
“The generation after me is just a complete trash heap,” said Howard Dean, the 73-year-old former Vermont governor and Democratic National Committee chairman who ran for president in 2004. “We need to have specific examples of how we’re dealing with things; it can’t just be pie-in-the-sky and kumbaya.“
Biden’s allies have offered totally not-delusional support for the president – insisting he’s kept the country on the right track despite the obstacles, and no other Democrat would do better than him in 2024.
“Only one person steered a transition past Trump’s lies and court challenges and insurrection to take office on Jan. 20: Joe Biden,” said Anita Dunn, a senior adviser to the president, citing strong jobs numbers and efforts to combat the pandemic.
“I am worried that leaders in the party aren’t more aggressively touting the success of the administration,” said Cristóbal Alex, who was a senior adviser for the Biden campaign and was the deputy cabinet secretary in the White House until last month. “The narrative needs to shift, and that can only happen with a powerful echo chamber combined with action in Congress on remaining priorities. The American people feel unsettled.”
Cristóbal Alex, a former senior adviser to the Biden campaign, said the president was the only Democrat who could win a national election. (photo: Shuran Huang for The New York Times) Not delusional at all.
Meanwhile, Biden’s approval ratings hit a new low last week. According to a Wednesday poll by Quinnipiac University, Biden’s overall job approval is just 33%, and 22% among those aged 18-34. What’s more, just 24% of Hispanic voters and 49% of black voters say they think Biden’s doing an ok job.
Across all major polls, Biden’s approval rating has sunk to 39.4% according to RealClear Politics.
Other Democrats, such as freshman Texas state Rep. Jasmine Crockett are keeping their mouths shut. “I’m not allowed to have feelings right now” she said, referring to thoughts on Biden. “When you’re an incoming freshman, you just don’t get to.”
Except, then she went on…
“Democrats are like, ‘What the hell is going on?” Crockett said, referring to a “stark enthusiasm gap” between Texas Republicans and Democrats, who “have not used their narrow control of the federal government to advance a progressive agenda.”
“Our country is completely falling apart. And so I think we’re lacking in the excitement.”
How is the average Democratic voter feeling?
“I need an equivalent of Ron DeSantis, a Democrat, but not a 70- or 80-year-old — a younger person,” said Alex Wyshyvanuk, 33, a data analyst from Annapolis, Md. “Someone who knows what worked for you in 1980 is not going to work for you in 2022 or 2024.”
The Times also notes the party’s “Regret and anxiety,” over “Biden’s inability to persuade centrist Democratic senators to back his agenda.”
With the prospect looming of a Republican majority in at least one chamber of Congress next year, Democrats who have been in a similar position of holding fleeting control of government are nervous that past mistakes will be repeated.
Elizabeth Guzmán, a member of the Virginia House of Delegates, said Democrats in her caucus regret not passing a sweeping abortion rights law last year before they lost control of the state House and governor’s mansion to Republicans.
“We wanted to codify Roe v. Wade, and look what happened,” she said.
Judy Vidal, 58, a retail worker from Cape Coral, Fla., echoed that sentiment.
“I just wish that since we have the majority now they would have behaved the way Republicans did and push things through,” she said. -NYT
The anxiety “extends to the core of his political base,” such as Adrianne Shropshire – executive director of BlackPAC.
“Does this frustration and the malaise and the worry and the fear, does that translate into an ongoing enthusiasm gap, and does that cause people to feel like their participation doesn’t make significant change?” she asked. “That’s the real question.”
“Democrats need fresh, bold leadership for the 2024 presidential race,” said Shelia Huggins, a lawyer from Durham, N.C., who is a member of the Democratic National Committee, adding:
“That can’t be Biden.“
Tyler Durden
Sun, 06/12/2022 – 18:44 - CIO: Investors Must Seriously Consider The Collapse Of Europe As "Whatever It Takes" Doesn't Work At 8% Inflation
CIO: Investors Must Seriously Consider The Collapse Of Europe As “Whatever It Takes” Doesn’t Work At 8% Inflation
By Eric Peters, CIO of One River Asset Management
“We have always known how to combat this fragmentation: in 2010, in 2012, in 2020, every time with different instruments,” declared the European Central Bank’s Villeroy. “Nobody should have any doubt, including on markets, over our collective will to prevent fragmentation,” continued the Frenchman, Italian government bond spreads widening.
“We have the will, and nobody should doubt we will have the instruments if and when necessary.” But this of course, left those of us who are paid to entertain doubts to wonder what will mark the point where it becomes necessary for Europe’s central bank to intervene in markets, creating euros to then purchase peripheral bonds.
“There is no specific levels of yields increase, or lending rates or bond spreads that can unconditionally trigger this or that,” explained Christine Lagarde, ECB President, when asked for details.
“We will determine on the basis of circumstances, of countries, how and when that risk is likely to materialize and we will prevent it,” she asserted, hopeful that such ambiguity will discourage speculators from pushing markets to the point where the central bank pledged to act. “But we are committed – committed – to proper transmission of our monetary policy and as a result fragmentation will be avoided to the extent that it would impair that transmission,” said Lagarde, confident.
But no two crises are the same. In 2010, 2012, and 2020, European inflation in Europe’s north was virtually non-existent. In 2012, when President Draghi declared the ECB would do “Whatever it takes,” European inflation was 2.35%.
In a world of perpetually low inflation, the power of central banks to create money with which to prevent fragmentation – also known as subsidizing cohesion – appears unlimited, costless. But in a world of high and rising inflation, subsidies risk boosting inflation and de-anchoring expectations.
Investors must contemplate all outcomes and are left to evaluate the probability northern Europeans are willing to bear such costs on behalf of their southern neighbors now that EU inflation is 8.1%.
Tyler Durden
Sun, 06/12/2022 – 18:30 - Kremlin Responds After Polish EU Official Says West Should Give Ukraine Nukes
Kremlin Responds After Polish EU Official Says West Should Give Ukraine Nukes
Starting in April, dangerous rhetoric related to regional nuclear aspirations began coming out of Poland – apparently directed as a ‘threat’ to Russia amid the invasion of Ukraine. Early that month, for example, ruling Polish party leader, Deputy Prime Minister Jaroslaw Kaczynski suggested that a “tougher” anti-Russian defense posture would include Poland being “open” to having nuclear weapons stationed in the country.
But this weekend has seen the rhetoric heighten even further, eliciting a fierce response from Moscow, when Poland’s European Parliament Deputy and former Foreign Minister Radoslaw Sikorski suggested that the West give nukes to Kiev. “The West has the right to give Ukraine nuclear warheads so that it can protect its independence,” Sikorski said according to regional sources.
MEP Radoslaw Sikorski, via Reuters As also detailed in a Yahoo News/Ukrayinska Pravda report, “He argued that Russia broke the terms of the Budapest Memorandum on Security Assurances by refusing to respect Ukraine’s sovereignty and integrity, so nuclear weapons should be returned to Kyiv, even though Ukrainians voluntarily disposed of them.”
In response, a top Russian Duma official warned that such a scenario would mean central Europe would in effect “cease to exist” as it would surely trigger nuclear war:
The Head of the State Duma of the Russian Federation, Viacheslav Volodin, threatens that if the suggestion by the former Foreign Minister of Poland Radoslaw Sikorski to provide Ukraine with nuclear weapons is fulfilled, then the possible nuclear conflict will destroy the European continent.
Volodin said specifically in response to the Polish EU official: “Sikorski is provoking a nuclear conflict in the center of Europe. He doesn’t think neither about the future of Ukraine nor about the future of Poland. In case his suggestions are fulfilled, these countries will cease to exist, as will Europe as well.”
The Russian Duma: Supplying #Kiev with nuclear weapons, as requested by #Poland, will provoke a nuclear conflict in central #Europe.#Russia #Ukraine #Russia_Ukraine
— خالد اسكيف (@khalediskef) June 12, 2022
https://platform.twitter.com/widgets.js
Since 1994, Ukraine has voluntarily been a ‘nuclear-arms-free’ country based on being a signatory to the Budapest Memorandum on Security Assurances, which marked its accession to the Treaty on the Non-Proliferation of Nuclear Weapons.
In the days ahead of Russia’s Feb.24 invasion, President Vladimir Putin accused the Ukrainian government of seeking to revive nuclear capabilities based on Soviet technology still in its possession.
This is supposed to be one of the “adults in the room”.
The war over Ukraine is lost — so the insane bureaucrats in Brussels and Warsaw want to escalate with nuclear weapons.
For this statement alone, Sikorsky ought to lose his position. https://t.co/TxMeaNhpIY
— Gonzalo Lira (@GonzaloLira1968) June 12, 2022
https://platform.twitter.com/widgets.js
“There have already been statements that Ukraine is going to create its own nuclear weapons… Ukraine does indeed still have Soviet nuclear technologies and [the] means of delivering such weapons,” Putin had said in televised address just days before the war against Ukraine started, listing it as a justification for Moscow’s actions to come.
“Therefore, it would be much easier for Ukraine to obtain nuclear weapons than to some other states – I won’t name them now – who effectively carry out such research. Especially in case of technological support from abroad, and we must not rule this out as well,” Putin added in his speech at the time.
Tyler Durden
Sun, 06/12/2022 – 18:00 - Uvalde Police Chief Defends Response To Robb Elementary Massacre In First In-depth Interview
Uvalde Police Chief Defends Response To Robb Elementary Massacre In First In-depth Interview
Authored by Katabella Roberts via The Epoch Times (emphasis ours),
Police Chief Pete Arredondo, who has faced criticism over his response to the shooting massacre at Robb Elementary School in Uvalde, Texas, has defended his actions in his first public interview.
Uvalde school district Chief of Police Pete Arredondo hugs a school student at a community prayer evening held the day after a mass shooting at Robb Elementary School that killed 19 children and two teachers, in Uvalde, Texas, on May 25, 2022. (Charlotte Cuthbertson/The Epoch Times) Speaking to The Texas Tribune, Arredondo said that a missing key to a locked classroom door was ultimately to blame for law enforcement taking 77 minutes to take down gunman Salvador Ramos on May 24.
“The only thing that was important to me at this time was to save as many teachers and children as possible,” Arredondo said.
During the interview, Arredondo, 50, said he took what he believed to be the best steps to protect lives on the day of the massacre, explaining: “My mind was to get there as fast as possible, eliminate any threats, and protect the students and staff.”
The police chief pointed out that roughly 500 students attending the school were able to be evacuated safely during the incident.
Arredondo’s comments come as he is facing growing public criticism and scrutiny over his response to the events at Robb Elementary, in which 18-year-old Ramos killed 19 children and two teachers.
The school district police chief has been keeping a low profile since the shooting and failed to appear at a city council meeting in Uvalde on Tuesday, despite being sworn in on May 31.
Meanwhile, the head of the state police has said Arredondo made the “wrong decision, period” when he decided not to immediately breach the classroom that the shooter had entered, and instead ordered officers to hold and wait for backup.
Arredondo insisted that was not the case.
“Not a single responding officer ever hesitated, even for a moment, to put themselves at risk to save the children,” Arredondo said. “We responded to the information that we had and had to adjust to whatever we faced. Our objective was to save as many lives as we could, and the extraction of the students from the classrooms by all that were involved saved over 500 of our Uvalde students and teachers before we gained access to the shooter and eliminated the threat.”
Arredondo said the door to the classroom door was “reinforced with a hefty steel jamb,” and “designed to keep an attacker on the outside from forcing their way in.” Given that the gunman was inside the classroom, this prevented officers from kicking in the door and confronting the shooter, he explained.
The police chief said he “believed the situation had changed from that of an active shooter, to a gunman who had barricaded himself in a classroom with potential other victims,” according to the Texas Tribune.
Police cordon off the streets around Robb Elementary School after a mass shooting, in Uvalde, Texas, on May 24, 2022. (Charlotte Cuthbertson/The Epoch Times) 
Uvalde residents comfort each other at a community prayer evening held the day after a mass shooting at Robb Elementary School in Uvalde, Texas, on May 25, 2022. (Charlotte Cuthbertson/The Epoch Times) He spent more than an hour in the hallway, and in the first 40 minutes, called for tactical gear, a sniper, and keys to get inside, choosing to hold back from the doors for fear of provoking Ramos to shoot more. Arredondo also attempted to talk to the gunman but received no response, he said.
Eventually, dozens of keys finally arrived, but none of them would work in opening the door.
“Each time I tried a key I was just praying,” he said.
While other officers outside the school evacuated children, Arredondo said he and the officers in the hallway stayed in position and waited for tools to arrive so that they could get into the classroom and confront the gunman.
“It’s not that someone said stand down,” Arredondo’s lawyer, George E. Hyde, told the Tribune. “It was ‘Right now, we can’t get in until we get the tools. So we’re going to do what we can do to save lives.’ And what was that? It was to evacuate the students and the parents and the teachers out of the rooms.”
One hour and 17 minutes after Ramos launched his massacre, police were finally able to enter the classroom and fatally shoot him.
During the interview, Arredondo also explained his decision not to take his police radio into the school with him, which experts believe may have contributed to the chaoticness of the situation on May 24, and which meant he was unaware that students were calling 911 from inside the two classrooms and begging police to stop him.
The police chief said he wasted no time running into the school without the radios because he believed carrying them would slow him down, describing how one “had a whiplike antenna that would hit him as he ran” and another “had a clip” that he “knew would cause it to fall off his tactical belt during a long run.”
He also was not wearing body armor, according to the paper.
His lawyer also said Arredondo did not issue any orders to other law enforcement agencies and did not consider himself the incident commander on that day.
“Once he became engaged, intimately involved on the front line of this case, he is one of those that is in the best position to continue to resolve the incident at that time,” Hyde said. “So while it’s easy to identify him as the incident commander because of that NIMS process, in practicality, you see here he was not in the capacity to be able to run this entire organization.”
Texas Department of Public Safety Director Steve McCraw has referred to Arredondo as the shooting’s “incident commander.”
Meanwhile, The New York Times reported that a group of U.S. Border Patrol agents responding to the incident ignored an order spoken into their earpieces not to enter the classroom.
Arredondo said he had not spoken out before because he “didn’t want to compound the community’s grief or cast blame at others.”
The Epoch Times has contacted the Texas Department of Public Safety for comment.
Tyler Durden
Sun, 06/12/2022 – 17:30 - How Fast Does The Job Market Need To Crash To End The Fed's Hiking Panic? Goldman Answers
How Fast Does The Job Market Need To Crash To End The Fed’s Hiking Panic? Goldman Answers
With inflation coming in red hot, hotter than most had anticipated, and unlikely to revert back to normal any time soon especially as exploding energy, food and rent prices will remain in the stratosphere for a long time (absent a depression), the last hope bulls have is that the jobs market will crater (a process which real-time indicators suggest is already in pla, yet which the BLS stubbornly refuses to acknowledge, likely for obvious political reasons with a critical mid-term election looming).
And if not crater, then certainly the US labor market needs to slow down well beyond recent trendline in order to short-circuit the vicious wage-price spiral and allow inflation to reset. Indeed, as Goldman’s chief economist Jan Hatzius said on Friday, a combination of higher labor force participation and lower labor demand will likely be necessary to restore balance to the labor market and bring inflation back toward the FOMC’s 2% inflation target.
To be sure, indicators of labor demand have already softened in recent months, with job openings declining 4% in April and the monthly pace of payroll growth slowing to roughly 400k from 600k in the winter, but as even the most optimistic economists will admit, demand needs to cool meaningfully further (in fact, as even Bloomberg now admits, “Powell Facing Choice Between Elevated US Inflation and Recession.”)
So doing some quick math, Goldman calculates that payroll growth will need to slow to roughly 150k on average in the second half of the year in order to begin to rebalance the labor market and calm wage and price pressures, and the faster the better. The problem is that as Goldman also concedes, according to historical data and statistical analysis “such a slowdown may be hard to achieve: slowdowns of this magnitude have only happened a few of times outside of recessions in modern US history, and while the recent trend of payrolls growth—the best predictor of upcoming payrolls growth—has slowed, the pace is still elevated.”
Here are some more details on why the hurdle for job growth to slow by the required amount appears high on a historical basis..
The chart below shows the nine instances since 1960 that payrolls growth has slowed by more than 0.20% — roughly the amount Goldman thinks is required to restore balance to the labor market today, expressed as the change in the six-month average monthly percent change (in Goldman’s framework, monthly payroll growth needs to decline from 0.34% over the last six months to 0.11% over the next six months).
Although slowdowns of 0.20% or more have been quite uncommon outside of recessions, today’s economic backdrop – at least until a recession is officially declared in a few months – is somewhat comparable to the three historical instances where job growth slowed and a recession was avoided: ahead of the slowdowns in 1976 and 2021, job growth was running well above trend as the economy was recovering from a recession, and ahead of the slowdown in 1967, the Federal Reserve tightened monetary policy to combat inflationary pressures.
As an aside, Goldman economists points out that the recent pace of payroll growth is one of the best predictors of upcoming payrolls growth and even more useful than knowing the future rate of output growth (the predictive power of job momentum likely reflects lags in the hiring and firing process, the cost of large personnel changes, and the pro-cyclicality of capacity utilization.)
With payrolls growing just over 400k per month over the last three months (if slowing), putting a high weight on momentum would suggest a high hurdle for job growth to slow enough in coming quarters to restore balance to the labor market. However, it is also the case that employment growth has recently slowed to roughly 225k per month over the last three months in the noisier household survey, suggesting that the underlying trend could be overstated by just looking at nonfarm payrolls. Furthermore, while not captured yet by the US labor bureau, leading labor market indicators such as mass layoff announcement has surged in recent weeks, with dozens of announcements in the otherwise rock-solid tech sector. Expect similar weakness across the rest of the rest of the labor market.
Goldman itself admits as much: “recent anecdotes of hiring freezes and more selective hiring indicate that companies expect payroll growth to slow, and the most recent business activity surveys corroborate these signals.”
In the next chart, the bank constructs an aggregate index of employment growth expectations by replicating its own survey tracker methodology on the employment expectations components of eight regional Fed manufacturing and services surveys. It found that in May, this series recorded its third largest monthly decline since 2000—behind only October 2008 and March 2020—yet even so it remains at a historically elevated level… but not for long.
Which brings us to punchline #1: to get a sense of how much employment growth could slow – or rather should slow – over the coming months, Goldman estimates a model of future payroll growth based on lagged payroll growth, changes in output growth, and lagged changes in survey-based employment growth expectations. It then uses the model coefficients to project future payrolls growth based on different assumptions about the recent employment growth trend and future output growth.
Goldman derives two conclusions from the scenarios above:
- First, different plausible assumptions for the recent employment growth trend imply a wide range of outcomes for future payrolls growth: coupling the bank’s baseline (and recently cut) H2 2002 GDP growth forecast with the different employment growth trends suggests that monthly payrolls growth could range from roughly 125k up to 325k (middle column).
- Second, the balance of risks to near-term employment growth appears skewed to the upside relative to Goldman’s own forecasts of 215k per month over the next three months and 160k over the next six months (suggesting that Goldman is once again overly optimistic on the economy and will soon be slashing its jobs, and GDP, forecasts again).
One final point: while Goldman does not say it, but is generously implied in its analysis, the bigger the recession, the faster US job growth turns negative and the quicker wage growth implodes, the better for the bulls even if it sends the odds of more summer violence (if not before the midterms, then certainly next year after the GOP has won control of Congress) through the roof.
Tyler Durden
Sun, 06/12/2022 – 17:03 - Biden Admin Orders 500,000 More Monkeypox Vaccines
Biden Admin Orders 500,000 More Monkeypox Vaccines
Authored by Mimi Nguyen Ly via The Epoch Times (emphasis ours),
The Biden administration has ordered an additional 500,000 more doses of the Jynneos vaccine for monkeypox, marking a big step up in the government’s response amid rising cases in the United States and around the world.
An electron microscopic (EM) image shows mature, oval-shaped monkeypox virus particles as well as crescents and spherical particles of immature virions, obtained from a clinical human skin sample associated with the 2003 prairie dog outbreak in this undated image obtained by Reuters on May 18, 2022. (Cynthia S. Goldsmith, Russell Regnery/CDC/Handout via Reuters) Denmark-based biotech group Bavarian Nordic, the manufacturer of the vaccines, said that the U.S. Biomedical Advanced Research and Development Authority (BARDA) has placed the order, to be delivered later this year.
“With the previous order from BARDA for 1.4 million doses of liquid-frozen JYNNEOS, awarded in 2020, this order will bring the total U.S. inventory of the vaccine to nearly 2 million doses,” the company announced on Friday. Many of the 1.9 million doses are being held by the company until the U.S. government requests them.
The 500,000 vaccine doses will be manufactured using bulk materials that are owned by the United States under previous contracts with BARDA, and are currently stored with the company.
“The majority of this bulk, however, will be converted to approximately 13 million freeze-dried doses of JYNNEOS during 2023-2025,” Barvarian Nordic said.
Dawn O’Connell, Assistant Secretary for Preparedness and Response, said on Friday that the U.S. government has a stockpile of 72,000 Jynneos doses, and will get 300,000 more doses from Bavarian Nordic over the next several weeks. She also confirmed that 500,000 more Jynneos doses from Bavarian Nordic will be delivered later this year.
“We have the vaccines and treatments we need to respond,” she said.
As of late Friday, the United States has identified 49 monkeypox cases in 16 states and the District of Columbia. More than 1,470 cases have been found in about 30 other countries outside of Africa, where the virus is endemic, according to the Center for Disease Control and Prevention (CDC).
Test tubes labeled “Monkeypox virus positive” in an illustration taken on May 23, 2022. (Dado Ruvic/Reuters) The CDC said Friday that every case they had looked at in the United States involved very close contact. Officials have alerted doctors to watch for monkeypox cases and offered vaccinations to people in close contact with those who were infected.
Monkeypox, a viral disease typically limited to Africa, was first reported this year in the United States on May 18, in Massachusetts. The Biden administration on the same day placed a $119 million order for the Jynneos vaccine.
While there are currently no vaccines or antivirals specifically designed to treat monkeypox, the United States has two vaccines approved by the Food and Drug Administration (FDA) that can be used to treat monkeypox.
Jynneos is the only vaccine the FDA has explicitly approved to prevent monkeypox in the United States, in high-risk adults aged 18 and older. It is also approved for use against smallpox.
At the time of the Jynneos vaccine’s approval in September 2019, Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research, said that a potential “intentional release” of smallpox “could have a devastating effect.”
According to the CDC, the Jynneos vaccine “is administered as a live virus that is non-replicating,” in two injections four weeks apart. People are not considered vaccinated until two weeks after they receive the second dose of the vaccine.
Meanwhile, an older vaccine called ACAM2000, made by Emergent BioSolutions, was approved by the FDA in 2007 to prevent smallpox, but it can also be used to prevent monkeypox, according to CDC recommendations.
The CDC said that ACAM2000 “is recommended for laboratorians working with certain orthopoxviruses and military personnel.” It has noted, however, that the ACAM2000 vaccine “has the potential for more side effects and adverse events” than the Jynneos vaccine.
The CDC’s Advisory Committee on Immunization Practices (ACIP) recommends that people whose jobs may expose them to orthopoxviruses “such as monkeypox” get vaccinated with either ACAM2000 or the Jynneos vaccine.
According to the CDC, ACAM2000 is “a live Vaccinia virus preparation.”
“Following a successful inoculation, a lesion will develop at the site of the vaccination (i.e., a ‘take’). The virus growing at the site of this inoculation lesion can be spread to other parts of the body or even to other people,” the CDC stated. “Individuals who receive vaccination with ACAM2000 must take precautions to prevent the spread of the vaccine virus and are considered vaccinated within 28 days.”
There are over 100 million doses of the ACAM2000 vaccines available, officials recently said.
Monkeypox is in the same virus family as smallpox but presents with milder symptoms.
The Associated Press contributed to this report.
Tyler Durden
Sun, 06/12/2022 – 16:30
Digest powered by RSS Digest
Saving...
