Today’s News 13th October 2021

• Beijing Liberalizes Coal-Fired Power Prices To Combat Energy Crunch   
  Beijing Liberalizes Coal-Fired Power Prices To Combat Energy Crunch   

  Beijing said on Tuesday it would allow price fluctuations of power derived from coal-fired plants to improve the country’s power market as shortfalls in power generation have sparked an energy crisis. 

  According to a notice from National Development and Reform Commission (NDRC), electricity prices generated by coal-fired plants will be permitted to rise and fall by 20%. That compares with the prior upside limit of 10% and the lower limit of 15%. The reform would take effect from Oct. 15

  NDRC requested provincial governments to require industrial and commercial users to purchase power at market prices. The agency added liberalization of the power market would help prevent price manipulation and monopolistic practices.

  Power plants in the country have struggled to meet post-pandemic demand, and record-high coal costs have rendered many power operations uneconomical. NDRC said by allowing market forces to dictate power prices in a range of 20% will increase power generation by making loss-making generators profitable and bring online generators that were once deemed uneconomical. 

  

  NDRC official Peng Shaozong said the reform was “designed to reflect power demand and consumption, and to some extent to ease operation difficulties of power firms and encourage plants to increase power supply.”

  Frederic Neumann, co-head of Asian Economic Research at HSBC, told Reuters that liberalization of “thermal power pricing is a positive for growth by reducing power outages.”

  “Still, this comes with a further rise in price pressures, as power companies can now pass on higher input costs to their commercial and industrial customers,” Neumann said. 

  However, Lara Dong, senior director of IHS Markit, said, “power prices at 20% above coal-fired power benchmark will not be sufficient to help coal plants break even at current fuel prices.”

  And she warned that energy-intensive sectors would face record-high power prices, which is pushing up the producer price index (PPI). 

  Historically, Chinese coal prices – due to their core role as the anchor of China’s energy-intensive economy – have been the commodity that most closely has correlated with PPI. And while we wait to get the latest Chinese CPI and PPI print later this week, we can already predict what will happen this winter. 

  

  “Higher electricity price in China will add to the worry of rising global inflation,” Kevin Xie, senior Asia economist at Commonwealth Bank of Australia, warned.

  The reform comes as the Northern Hemisphere’s winter fast approaches, and China is facing an energy shortage of fossil fuels, including coal and natural gas. 

  Tyler Durden
  Wed, 10/13/2021 – 02:45

• Polexit!? Polish Court Overrules EU's European Court Of Justice
  Polexit!? Polish Court Overrules EU’s European Court Of Justice

  Authored by Mike Shedlock via MishTalk.com,

  Poland and the EU are increasingly at odds. Let’s take a look at events to see where this is headed…

  

  After the top Polish court overruled the ECJ, Fears Rose the Court Ruling Points to EU Exit.

  Tens of thousands of protesters marched through Warsaw and other Polish cities late Sunday to oppose a court ruling that European Union legal judgments have become incompatible with the Polish constitution, a decision protesters fear could prompt Poland to follow the U.K. out of the bloc.

  Waving EU and Polish flags, demonstrators held banners reading “I’m Staying in Europe” and “No Polexit!”

  Unlike in the U.K., an overwhelming majority of Poles wish to stay members of the EU—as do Hungarians, another Central European country whose government is in regular conflict with the bloc over where the EU’s powers end and national sovereignty begins.

  On Thursday, Poland’s Constitutional Tribunal ruled that the process of European integration encoded in EU treaty law has reached what it called a “new stage” that is incompatible with the Polish constitution, and that the latter should take precedence when the two conflict. When joining the EU in 2004, Poland agreed to implement EU treaties, also signing up a few years later to the bloc’s updated Lisbon Treaty. Poland’s ruling party says the EU has overstepped its authority.

  In Brussels, a spokesman for the European Commission, the EU’s executive arm, on Monday gave no timeline for responding to Poland. EU officials fear a domino effect and gradual disintegration of the EU’s legal and political authority if one country can overrule EU rules and EU court decisions.

  “If you allow all these fundamental principles of European integration to be hollowed out and ignored, then this is eventually the end of the EU,” said Piotr Buras, head of the European Council on Foreign Relations’ Warsaw office.

  Fertile Ground for Secession

  In Ultra Vires, a column on the situation in Poland, Eurointelligence founder Wolfgang Münchau places some of the blame for what’s happening in Poland on the German Constitutional Court located in Karlsruhe.

  In its ruling last week, Poland’s constitutional court went beyond anything the German constitutional court ever did. It declared Art. 1 of the Treaty on European Union, the clause that establishes the EU, not compatible with certain chapters of the Polish constitution. It found the same for Art. 19 TEU, which establishes the CJEU. If sustained, this would constitute a legal Polexit. If a member states believes that the EU treaties violate their national constitution, they either have to change the constitution, get the other members to agree to a change in the treaties, or leave the EU. The EU could, if it wanted to, even make an argument under international law that this ruling automatically voids Poland’s accession treaty, and thus its EU membership. 

  The role of the German constitutional court in all of this is indirect but nonetheless important. What it did was engage in a legal discourse that made the Polish outrage possible. Readers may recall that the CJEU was a big factor in the Brexit discussions. If only the remainers had known that they could have renationalised some of those powers? Despite the europhobia that led to Brexit, there was much less of a sense of secessionism in the legal profession, compared to with Germany or Poland.

  Some of the arguments used during the Polish hearings were straight copies of arguments made by the German constitutional court. Karlsruhe, for example, popularised legal concepts such as ultra vires and the democracy principle. They sound more innocent than they are. Karlsruhe argues that sovereignty can be conferred but not shared. This implies that the CJEU cannot be the arbiter of its own remit. It also means that EU law does not override national law in areas outside the agreed perimeter, and that it is the national courts that decide the precise location of that perimeter. Fiscal policy and defence are not part of that remit. So, if you want a fiscal union or a European army, you cannot do this inside the existing treaty. 

  The Polish ruling will almost surely end up in Poland backing down. I see Polexit as a possible but improbable outcome. But remember that Brexit, too, started out that way.

  The Karlsruhe version of legal euroscepticism has been far more clever, and more effective. It managed to create legal facts out of thin air that informed the EU negotiating position of successive German governments. The Polish ruling, by contrast, is drafted as a deliberate provocation that might play into the hands of Law and Justice ahead of the 2023 elections. Karlsruhe is not responsible for what is happening in Poland. But it is responsible for starting a discourse that others take up and push to the limits.

  No Polexit!?

  Münchau opines there will not be a Polexit. 

  OK, but what about changes to the existing treaties for Eurobonds, financial debt commingling, or a European army? 

  It takes unanimous consent to change anything in the EU. Heck, it took nearly a decade just to work out something seemingly simple like a trade deal with Canada.

  Half-Baked Union

  Hungary and Poland are at odds with the EU over court rulings. Other countries are tangled up with EU disputes regarding immigration and borders.

  The European Monetary Union (EMU) or Eurozone is in a similar situation.

  It takes unanimous agreement to change anything or even do many things unless there were specifically established by treaty.

  Germany demanded these unanimous consent rules out of fear of debt commingling. Now these rules hamper efforts by the EU to bring Poland, Hungary, the Czech Republic and other countries into line over anything not clearly spelled out.

  The EU has a half-baked union and it will stay that way unless every country agrees to changes. 

  Good luck with that.

  *  *  *

  Like these reports? If so, please Subscribe to MishTalk Email Alerts.

  Tyler Durden
  Wed, 10/13/2021 – 02:00

• Which War Is Beijing Preparing For?
  Which War Is Beijing Preparing For?

  Op-Ed by James Gorrie via The Epoch Times (emphasis ours),

  

  It’s no secret that Beijing is preparing for war.

  One of the main reasons is China’s cratering economy. The recent collapse of the Evergrande real estate development firm is only the latest in a series of dire symptoms that are fueling rising domestic discontent. The $8 trillion debt crisis in the shadow economy—more than half of its GDP—is also looming large in China’s ability to keep its financial system afloat. An aging, less productive population, higher production costs, and fleeing foreign investment all result in falling GDP.

  China’s Power Has Peaked

  The reality is that China’s economic power is already declining.

  Sure, the statistics can be adjusted, but it doesn’t change reality. What’s more, this across-the-board economic decline is driving the Chinese Communist Party (CCP) to impose even more extreme, oppressive measures against its people and businesses. The CCP’s response only worsens economic performance and civil unrest.

  Concurrently, Beijing has been adjusting its internal arrangements for several years. For example, its National Defense Transportation Law went into effect on Jan. 1, 2017. The law restructured its legal framework, putting all commercial shipping under direct authority of the CCP.

  Externally, China’s deepening isolation from the world is clearly evident and underscores its ongoing decoupling from the global economy and the international norms of trade and diplomacy. This trend may well make a Taiwan invasion likely sooner than later, if only to divert attention from China’s domestic problems.

  

  Military and naval experts conclude that Beijing plans to use commercial transport ships to help transport up to 2 million soldiers in a Taiwan invasion.

  Recent news reports seem to confirm such a conclusion. China’s official press, the Global Times, all but acknowledges the inevitable, if not imminent, invasion of Taiwan. “China is prepared for the worst-case scenario—the US and its allies, including Japan, launch(ing) an all-out military intervention to interrupt China’s national reunification.”

  Clearly, war or the threat of war is on the horizon, and all the nations in the Asia-Pacific region know it.

  In response to China’s increasing aggressive posture, including the commercial shipping arrangement, Taiwan and other nations are adding more long-range anti-ship missiles. Japan, which for decades has maintained a pacifist foreign policy, has also made a massive shift in its thinking, linking Taiwan’s security to its own.

  The impact of a Chinese invasion of Taiwan wouldn’t be limited to just Taiwan. Should it occur, like Japan, it will be perceived by the United States and other nations as a strategic threat to their own national security.

  This is partially due to the fact that Taiwan provides more than 50 percent of the world’s semiconductors necessary for advanced data processing, automobiles, artificial intelligence, and other high technology. But an invasion would also threaten democratic nations in the region, as well as trade and international legal norms.

  More Trigger Points

  But Taiwan is not the only trigger point. China is also threatening the uninhabited Senkaku Islands in the East China Sea, which Japan considers its territory. They’re also claimed by China and Taiwan, and could become a flashpoint for war. The Biden administration has recently assured Japan’s new prime minister, Fumio Kishida, that the United States would defend the Senkaku Islands if China should attack.

  And as noted in an earlier article, the CCP has already put Australia on notice. Should Canberra acquire nuclear-powered submarines from the United States under the recent AUKUS military alliance, China would add Australia as a legitimate target for nuclear attack.

  

  South Korea has expressed clear opposition to Beijing’s ambitions in Taiwan. In a joint statement with the United States, and for the first time, both nations committed to defend international rules and norms in the South China Sea and Taiwan Strait. The unusual directness of the message is an acknowledgement of the imminent threat China poses to Taiwan and the Asia-Pacific region.

  Further afield, China’s recent military skirmish with India in the Himalayan heights of the Galwan Valley has alerted New Delhi to the reality that China is seeking unambiguous hegemony over its neighbors, of which India is one. This has driven India to strategically align itself with the U.S.-led AUKUS alliance. Its recent participation in the Malabar joint naval exercises off the U.S. territory of Guam from Aug. 26 to 29 of this year sent a clear message to Beijing.

  The lynchpin to all of these arrangements is, of course, the United States. It still maintains a significant naval advantage over China. But what is less certain is the political will of the Biden administration to follow through on its military commitments. With the United States’ retreat from Afghanistan, the Biden administration is perceived as weak and more concerned with domestic economic and social issues than projecting American power to protect the international order. Around the world, confidence in American leadership is at an ebb.

  Beijing is certainly aware of these facts, and it may be influencing its strategy with respect to Taiwan and the region as a whole. Chinese leadership may have concluded that the Biden administration’s weakness poses a unique opportunity to test American resolve in the region.

  Such perceptions would help explain the new and greater threats to the United States that are coming out of Beijing. But Xi Jinping’s personal leadership and ownership of the CCP, coupled with China’s mounting domestic failures, are most certainly also contributing factors.

  China would prefer to avoid war—at least until it can match U.S. military might in the region. But one area that it does lead the United States is in hypersonic anti-ship missile technology. Rather than clashing with its neighbors, could the CCP be planning a strike on American naval forces to drive the United States from the region?

  If so, how would the United States react? How would the region react?

  Anything less than a full response by the United States to a Chinese attack would mean that the U.S.-led Asia-Pacific security alliance would immediately cease to exist. It would then likely be up to each nation to make their separate peace with Beijing—if that were even an option.

  That would suit the CCP just fine.

  Tyler Durden
  Tue, 10/12/2021 – 22:25

• "Don't Buy The Dip": BofA Explains Why The Fed Has Lowered Its Put Strike
  “Don’t Buy The Dip”: BofA Explains Why The Fed Has Lowered Its Put Strike

  One week ago, Bank of America’s derivatives team observed that “equity investors are losing confidence in Buy The Dip” and warned that after suffering a “meaningful setbacks in recent weeks,” the coast appears far from clear. The bank pointed to recent episodes of increasing market fragility, and highlighted the recent market volatility manifesting in the second daily selloff of 3 standard deviations or more in just 7 trading days, only the 24th time since 1928 that the S&P experienced two or more 3-sigma shocks within 10 trading days.

  

  Fast forward a week and BofA’s increasingly bearish derivatives team led by Riddhi Prasad and Benjamin Bowler has intensified their warning, and pointing to the market’s increasing trouble to rebound from its recent slump – it has now been 27 trading days without a record high, the longest such stretch since September 2020 – they note that momentum has been fading this fall, “and investor confidence in buying the dip may only keep waning the longer this sideways price action persists.”

  In the absence of proactive buyers – such as retail investors who have recently turned their back on the market, or aggressive stock buybacks which are currently in a blackout period due to the coming earnings season –  the “market may for the first time since the Covid shock, need to test the Fed put in the next selloff,” BofA warns.

  Then, of course, we have the Fed’s tapering. In an amusing interlude, BofA explains that the last time it warned that tapering is bearish, it got the usual “tapering is not tightening” platitudes from clients (spoiler alert: tapering is tightening as even Morgan Stanley now admits), adding that “the main pushback we received was that tapering asset purchases has a smaller economic impact than hiking rates, and is therefore a more minor threat than that of prior hiking cycles.”

  In response, the strategists counter that investors’ should focus “not just on the way tapering and hiking change the underlying economics, but on their impact on investor sentiment in today’s environment. For instance, just like the S&P thrived against 3 rate hikes in 2017 but choked on the 2018 hikes, a tapering cycle today could turn out as painful for the equity market as a prior hiking cycle.”

  Elaborating on that point, BofA starts with the obvious, namely “that unparalleled monetary policy contributed to the historic returns and valuations achieved post-Covid.”

  

  But with tapering looming and lacking such explicit Fed support, and with momentum fading this fall, “the market may need a period of bad news to get the Fed back on its side or reach more attractive valuation levels. The longer the recent sideway action persists, the weaker the momentum and confidence that investors require to buy the dip.”

  To be sure, the Fed will have one key lever to push stocks higher once tapering begins, namely jawboning about the timing of the first rate hike. That’s the lever Fed famously used to reverse falling stocks leading up to the first hike post-GFC. In October 14, St. Louis Fed President Bullard stepped in to calm markets fearful of a growth shock. In 2015, on the back of another bout of stock market weakness, Yellen pushed back a largely-expected hike around the Sep FOMC meeting and then delayed the next hike for an entire year.

  

  However, BofA cautions, “the option to delay hiking rates doesn’t rule out a period of higher volatility”, as:

  1. we still haven’t seen how the market will react to the actual taper today,
  2. the change in Fed tune means the Fed put might have to be tested (vs. the dip getting bought in anticipation), and
  3. overshooting inflation might limit the Fed’s ability to rescue the equity market as easily as it did during the last taper/tightening cycle (with inflation breakevens today well above anything experienced in the last taper and tightening cycles).

  

  In a potential double-whammy, the fact that fixed income markets are not pushing back against the Fed’s taper announcement lowers the Fed put strike, in BofA’s view. That’s because while traders generally tend to focus on equity market tantrums as the Fed’s signal to intervene, major U-turns in Fed stance were often encouraged by the bond market ‘disagreeing’ with the Fed’s plans.

  For example, the 2013 taper tantrum was by far most felt in fixed income markets, while both inflation breakevens and expected rate hikes fell sharply as Powell raised rates through the second half of 2018, indicating that well ahead of the infamous Powell pivot they already knew he was on the right path.

  

  Today, on the contrary, Eurodollar futures implied rates and inflation breakevens are rising in line with an uninterrupted hiking cycle ahead (Exhibit 9) – perhaps because investors don’t even bother to sell ahead of a market drop they know the Fed will step into and “rescue”, while rates vol has remained muted through the latest rise in long-term yields (unlike in the short-lived Treasury selloff of 1Q21; Exhibit 10). This price action – driven by bonds – has raises the Fed’s bar to easily change course if the equity weakness continues, and, as BofA warns, it calls into question where the Fed put strike is.

  To summarize BofA’s argument, between the coming taper and frequent recent warnings about euphoric markets from both FOMC talking heads and even the IMF today cautioning about a risk of sudden and steep declines in global equity prices and home values, the risk is the Fed put strike is (much) lower than the market anticipates, as:

  1. Equity valuations & returns have accelerated to extremes post-Covid,
  2. The bond market is projecting tightening is needed and
  3. Risks of inflation overshooting are increasingly real, with 5yr inflation break-evens well-above any level witnessed during the 2014-2018 taper/tightening cycle.

  As a result, Prasad warns that “the Fed may be less willing to so easily deviate from tapering plans and talk the market back up as during the last cycle, further adding to risks.” His conclusion – “bad news (delaying the Fed) would be the best news equities can wish for.”

  Translation: It’s almost time for another crisis.

  Tyler Durden
  Tue, 10/12/2021 – 22:23

• Kim Vows To Build "Invincible Military" Due To Persistent US "Hostile Actions"
  Kim Vows To Build “Invincible Military” Due To Persistent US “Hostile Actions”

  A noticeably slimmer Kim Jong Un of North Korea laid out plans to build an “invincible” military to defend against what he charged as the persistent hostile threat from the United States. The comments came during a Monday speech at a North Korean weapons exhibition, which analysts have said is a rare venue compared to the usual state venues for such a speech.

  With a variety of large missiles surrounding him at the indoor expo dubbed ‘Self-Defense 2021’ in the capital of Pyongyang, he said “The US has frequently signaled it’s not hostile to our state, but there is no action-based evidence to make us believe that they are not hostile,” and made the accusation: “The US is continuing to create tensions in the region with its wrong judgments and actions.”

  

  That’s when he said that in the face of this US “source” of instability on the Korean Peninsula, the north will prioritize attaining to “invincible military capability” that no powerful country can possibly challenge, according to the official Korean Central News Agency.

  The speech is being widely interpreted as having an aim of driving a wedge between Washington and Seoul, also given Kim underscored that Korean peoples shouldn’t be fighting each other. At the same time he stressed there was “no action-based basis” to make Pyongyang believe the US has good intentions. 

  “We are not discussing war with anyone, but rather to prevent war itself and to literally increase war deterrence for the protection of national sovereignty,” he said. International reports described some of the weapons on display as follows:

  …the weapons in the photos include what appears to be a new ICBM that North Korea disclosed during a military parade last year but hasn’t test-fired…

  Other weapons on display were another ICBM that North Korea tested in 2017; ballistic missiles that can be fired from submarines or a train; solid-fueled, short-range missiles; and a developmental hypersonic missile that had its first test-flight last month.

  

  The past weeks have seen ramped up weapons testing activity out of North Korea, after a first half of the year which was relatively quiet on the Korean peninsula (which was also Biden’s first six months in office). At the weapons exhibit from which Kim’s fiery speech was given, a number of recently tested weapons, including ICBMs, were on display. 

  A few high resolution shots from North Korea’s “Self-Defense 2021” exhibition. (None of the Hwasong-8 glider, sadly.) pic.twitter.com/jSz6WqchvL

  — Ankit Panda (@nktpnd) October 12, 2021

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  An ABC News report cited one South Korean missile expert, Lee Choon Geun, who advises government officials as saying of the occasion, “Basically, North Korea wants to send this message: ‘We’ll continue to develop new weapons and arm ourselves with nuclear force, so don’t slap sanctions with these as we can’t agree on the double standards.’“

  Tyler Durden
  Tue, 10/12/2021 – 22:00

• Corn, Soybean Futures Dip After WASDE Forecasts Bigger Reserves
  Corn, Soybean Futures Dip After WASDE Forecasts Bigger Reserves

  Soybean and corn futures dipped in Chicago this afternoon following the World Agricultural Supply and Demand Estimates (WASDE) report revealed the US raised estimates for domestic stocks. 

  Soybeans fell as much as 2% to $12.00 per bushel after domestic stocks will be around 320 million bushels at the end of the season, compared with an earlier estimate of 298 million. Corn fell as much as 2% to $5.22 per bushel after domestic stocks were larger than expected, at around 1.5 billion, compared with an earlier estimate of 1.418 billion. 

  

  Ahead of the report, the Bloomberg Agriculture Spot Index has declined a little more than 2% over the last few sessions. 

  

  Charlie Sernatinger, head of global grain futures at ED&F Man Capital Markets Inc. in Chicago, told Bloomberg that end-of-season estimates for corn suggest prices to dip below $5 per bushel. He said soybean ending stocks will continue to increase in future reports: “None of the row crop numbers look bullish, either short term, or down the line for further revisions.” 

  Meanwhile, wheat prices moved higher on the session and are increasingly diverging from corn and soybeans. That’s because of tight supplies.

  

  The biggest takeaway from the report is that larger than estimated corn and soybean estimates are putting downward pressure on crop prices that might be a sign of relief for soaring food prices. The latest UN data showed global food prices hit a fresh decade high earlier this month. 

  Tyler Durden
  Tue, 10/12/2021 – 21:35

• India-China Border Talks Fail As Each Side Pursues Troop Build-Up Amid Threats
  India-China Border Talks Fail As Each Side Pursues Troop Build-Up Amid Threats

  Authored by Dave DeCamp via AntiWar.com,

  Talks between India and China over the disputed border region in the Himalayas have broken down, with each side blaming the other for the failed negotiations. Tensions have been high between the two powers along the Line of Actual Control (LAC), which separates Indian-controlled territory from Chinese-controlled territory.

  In 2020, Chinese and Indian troops fought several skirmishes along the LAC, including one in June 2020 that turned deadly. The failed talks mean that India and China will continue to have troops forwardly deployed in Ladakh, where the skirmishes took place. China has blamed the failure on what it called “unreasonable demands” from India.

  

  “The Chinese side has made great efforts and fully demonstrated its sincerity to promote the de-escalation of the border situation,” said Long Shaohua, a spokesman for China’s Western Theater Command. “But the Indian side still insists on unreasonable and unrealistic demands, making the negotiations more difficult.”

  India rejected the Chinese claim and said it made “constructive suggestions” but that the Chinese were “not agreeable” and “could not provide any forward-looking proposals.” Before the talks concluded, India’s army chief said China is building up troops on its side of the disputed border and building infrastructure.

  “So, it means that they are there to stay. We are keeping a close watch on all these developments, but if they are there to stay, we are there to stay, too,” said Gen. M.M. Naravane.

  According to a description of heightened tensions in India’s media:

  Southeast of Galwan Valley is where 20 Indian and at least four Chinese soldiers died in clashes in June 2020, Hot Springs lies in the Chang Chenmo river valley, close to Kongka La, a pass that marks the Line of Actual Control. India’s Patrolling Point 15, it is not a launchpad for any offensive action though the area did see action before and during the 1962 war.

  China’s unwillingness to pull back its platoon-sized unit from Hot Springs is a sign of the difficulties that lie in normalising the situation. The PLA has traditionally had a major base east of Kongka La.

  

  A 2004 CIA map of the disputed Kashmir region with red circles corresponding to 2020 conflicts.

  Since the deadly June 2020 skirmish, the US has stepped up military cooperation with India, including a new military pact that shares more satellite data with New Delhi. With this increased intelligence sharing, India can keep a better eye on Chinese troops.

  * * *

  Meanwhile, here’s Rabobank’s take…

  The Global Times is also doing its usual job, but this time threatening war with India again (“New Delhi needs to be clear about one thing: it will not get the border the way it wants. If it starts a war, it will definitely lose. Any political manoeuvring and pressure will be ignored by China.”) 

  I’m a little late to this extraordinary editorial by GT on bordre standoff. It presents the dispute in very uncomplicated terms. China is more powerful, so it will do what it wants to and India must deal with it. Case closed. https://t.co/2VbT4hoHzR

  — Sreemoy Talukdar (@sreemoytalukdar) October 12, 2021

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  PLA tank exercises were reportedly held last night. Of course, one would logically presume there are more than enough fish for China to fry on the domestic and another geographic front….so ’Tra la la?’ 

  Tyler Durden
  Tue, 10/12/2021 – 21:10

• Former Mossad Chief Stuns Audience By Admitting Iran "Not Even Close" To Getting Nuclear Bomb
  Former Mossad Chief Stuns Audience By Admitting Iran “Not Even Close” To Getting Nuclear Bomb

  Foreign Minister Yair Lapid is in Washington D.C. to meet with top Biden administration officials for talks centered on Iran as well as the Gaza Strip and other security-related matters. As expected, Lapid warned US National Security Adviser Jake Sullivan that Iran is on brink of becoming a “nuclear threshold state”.

  Lapid’s office issued this statement after the Sullivan meeting: “The foreign minister shared with the national security adviser Israel’s concerns about Iran’s race toward nuclear capabilities, as well as that Iran is becoming a nuclear threshold state,” according to The Times of Israel. “Lapid also discussed with the national security adviser the need for an alternative plan to the nuclear agreement.”

  As nuclear talks between Tehran and world powers have remain stalled in Vienna, a key question at center of debate over whether the US should seek a restored JCPOA deal with Iran remains just how close is Iran to acquiring a nuke?

  

  Apparently even within the Israeli national security state, there’s a deep divide over the question, despite hawks sounding the alarm for decades that Iran is ever “on the brink” of obtaining a nuke. Or also, it could be that internally Israeli intelligence knows the Iranians are not actually close, while the politicians publicly take a very different position for propaganda purposes, and to keep up the international pressure on Tehran.

  The influential former Mossad director Yossi Cohen suggested this precisely in Tuesday comments that raised eyebrows. The Israeli intelligence veteran commander said in reality that Iran is “not even close” to getting a nuclear weapon – though he chalked this up largely to Israeli’s sabotage and espionage efforts targeting the Iranians. 

  “I think that Iran, to this day, is not even close to acquiring a nuclear weapon… This is due to longstanding efforts by some forces in the world,” he said in response to a question by Jerusalem Post intelligence reporter Yonah Jeremy Bob, which included references to Israeli covert actions in the Islamic Republic.

  Cohen added that due to Israeli intelligence efforts, Iran has “less foreign support for what [it is] doing than in the past.”

  The merely obvious https://t.co/BUzve5Pe3T

  — Daniel Larison (@DanielLarison) October 12, 2021

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  He called for a “completely refurbished” nuclear deal, or else warned that the Islamic Republic would indeed become more likely to develop a bomb. Here’s more according to The Jerusalem Post:

  If Iran develops a nuclear weapon, Israel must be able to stop it on its own, Cohen said.

  Asked if that would be possible without bunker-buster bombs, he responded: “We have to develop capabilities to allow us to be absolutely independent, doing what Israel has done twice before” – bombing nuclear reactors in Syria and Iraq.

  He further threatened that “They should not sleep quietly in Iran.” For much of the past few years Israel has been bombing what it frequently describes as ‘Iranian assets’ inside Syria. 

  The nuclear reactor reference the former Mossad chief made is to the 2007 Israeli bombing of a suspected Syrian nuclear reactor that was under construction allegedly with the help of North Korea. The attack on the Al-Kubar facility near Deir al-Zor in eastern Syria was belatedly admitted to by Israeli officials in 2018.

  Tyler Durden
  Tue, 10/12/2021 – 20:35

• UN Tells Greta Thunberg To Pound Sand Over Climate Complaint
  UN Tells Greta Thunberg To Pound Sand Over Climate Complaint

  After three years of deliberations, an 18-member UN panel told Swedish climate alarmist Greta Thunberg to pound sand – saying that it could not immediately rule on a complaint that state inaction on climate change violates children’s rights – and that the teenage exhibitionist should have taken the case to national courts first.

  

  The complaint, filed in 2019, argues that France, Turkey, Brazil, Germany and Argentina (but not China) failed to curb their carbon emissions despite knowing the risks of climate change for decades.

  “I have no doubt this judgment will haunt the committee in the future,” said US petitioner Alexandria Villasenor of the Monday judgement, according to Reuters. “When the climate disasters are even more severe than they are now, the committee will severely regret not doing the right thing when they had the chance.”

  While Thunberg has yet to comment, we assume it will be along the lines of…

  

  The case is one of a growing number of climate litigation cases that invoke human rights and is seen as setting an important precedent.

  The committee, made up of 18 independent human rights experts, concluded that a “sufficient causal link” had been established between the significant harm allegedly suffered by the children and the acts or omissions of the five states.

  However, it accepted the arguments of the five countries that the children should have tried to bring cases to their national courts first.

  “You were successful on some aspects but not on others,” the committee told the young activists in a letter, which commended them on their “courage and determination.”

  “We hope that you will be empowered by the positive aspects of this decision, and that you will continue to act in your own countries and regions and internationally to fight for justice on climate change,” the letter added.

  Attorneys representing the children said they would attempt to go through national courts, however it would likely be time-consuming and fruitless.

  “In effect, the Committee instructed the youth to squander years waiting for inevitable dismissal,” reads a late-Monday joint statement from lawyers Hausfeld and Earthjustice.

  Meanwhile, looks like Thunberg isn’t backing down in her war against all polluting countries except China.

  ‘We will hear many nice speeches, we will hear many pledges’: @GretaThunberg says she expects ‘meaningless’ pledges at #COP26 as the climate activist asserted it’s time for leaders to be honest https://t.co/lWKmS782sF pic.twitter.com/pCOb3hEC9R

  — Reuters (@Reuters) October 12, 2021

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  How. Dare. They.

  Tyler Durden
  Tue, 10/12/2021 – 20:10

• US Farm Income Booms To Near Decade Highs 
  US Farm Income Booms To Near Decade Highs 

  Farmers in America have had a banner year as crop prices soared and exports to China increased, which means farm income boomed, according to Bloomberg. 

  Farm income has been struggling over the last decade, but since President Trump’s China trade deal and virus pandemic, Beijing has instructed domestic firms to dramatically increase ag imports from the U.S. Prices have also catapulted higher and marked 2021 as a pretty good damn year to be an American farmer. 

  

  USDA estimates farm income from crops to surge around 20% to $230.1 billion in 2021, the second-highest ever, almost surpassing the record in 2012. 

  

  It remains unclear how long the good times will last, considering snarled supply chains and the cost of everything is on the rise. Energy, fertilizer, machinery, and labor costs are rising, indicating margin compression ahead. There’s also an issue of slumping corn and soybean prices from their highs in recent months. 

  

  But the Bloomberg ag index remains in an overall uptrend.

  

  Bloomberg expects the USDA to increase estimates for domestic corn and soybean stockpiles on Tuesday. 

  Even with record drought and back-to-back heat waves in the western half of the U.S., farmers like Zach Egesdal in Iowa still “produced better than we thought with the limited moisture.” 

  “We’ve sold more than we have in the last few years out of the field for both corn and soybeans,” Egesdal told Bloomberg. “We were able to lock in a profit and made more sales.” 

  Rising costs and uncertainty could doom farm income in 2022: 

  “All of our inputs for next year are going to be significantly higher than what they were this past year,” farmer Pat Swanson from Iowa said. 

  Tyler Durden
  Tue, 10/12/2021 – 19:45

• Oregon Senators Call For Investigation Into Alleged COVID-19 Statistical Manipulation
  Oregon Senators Call For Investigation Into Alleged COVID-19 Statistical Manipulation

  Authored by Tammy Hung via The Epoch Times (emphasis ours),

  

  Oregon state Sens. Kim Thatcher and Dennis Linthicum, both Republicans, have petitioned Acting U.S. Attorney Scott E. Asphaug to launch a grand jury investigation into the measurement of COVID-19 statistics by the Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA).

  Thatcher and Linthicum submitted the petition in a letter (pdf) on Aug. 16 after gathering signatures from 1,718 Oregonians and 53,032 Americans.

  In the petition, the senators expressed concerns over the measurement and reporting of COVID-19 vaccine adverse reactions including fatalities and injuries.

  The lawmakers stated that a whistleblower, under sworn testimony, said the data reported under the CDC’s Vaccine Adverse Events Reporting System may have been underreported by a factor of five.

  Regarding the diagnosis of COVID-19 through widely-used PCR tests, the senators said that the CDC and the FDA’s setting of one particular test parameter—the cycle threshold—generated “false positives resulting in inflated numbers of COVID cases, hospitalizations, and deaths.”

  Harvard epidemiologist Dr. Michael Mina told The New York Times in August 2020 that tests with too high of a threshold may detect not just live viruses but also genetic fragments. Mina suggested setting the cut-off at 30 cycles or less.

  Thatcher expressed concern over the cycle threshold of 28 when testing vaccinated individuals. According to the petition, a low cut-off is likely to “eliminate false positive results and thereby reduce the number of vaccine ‘breakthrough’ cases.”

  Thatcher and Linthicum said that they consulted large groups of doctors, epidemiologists, and virologists on the subject of COVID-19 statistical reporting.

  “Additionally, we are profoundly concerned that the scientific literature continues to provide empirical evidence that safe and effective treatments and management strategies for COVID infections exist but are not being made available to Americans most in need,” continued the letter.

  Stand for Health Freedom (SHF), a non-profit organization that helped with the petition, said in a statement that the petition was submitted one month before public release to “protect those involved.”

  SHF also cited a March 2020 study (pdf) alleging that the CDC over-emphasized COVID-19 as the cause of death in compiling its statistics while “circumvent[ing] multiple federal laws” in the process.

  Tyler Durden
  Tue, 10/12/2021 – 19:20

• Third Quarter Earnings Season Begins Tomorrow: It Could Be Ugly
  Third Quarter Earnings Season Begins Tomorrow: It Could Be Ugly

  As the following chart from Bloomberg shows, for six consecutive quarters, earnings season provided the antidote to all the stock market ills (if not on fundamentals but because stock stubbornly tracked the relentless growth of the Fed’s balance sheet which rose by $120BN every month like clockwork). But that perfect record is about to get its biggest test yet at a time when uncertainty is swirling among equity investors, and not just because a potentially ugly earnings season is on deck but because the Fed’s liquidity cannon is about to see its first “tapering” since the covid pandemic unleashed trillions and trillions in liquidity.

  

  Looking back, the large and persistent earnings beats over the last 5 quarters…

  

  … prompted record upgrades to forward earnings estimates.

  

  The market has moved higher in lockstep with these upgrades…

  

  … leaving the forward multiple remarkably flat at very elevated levels since May of last year. And as Deutsche Bank’s Binky Chadha warns, “the market is priced for these large beats and upgrades to continue” but can Q3 earnings season deliver?

  

  And so, as jittery investors brace to comb through the corporate tea leaves for clarity on everything from the impact of rising rates and commodity inflation to broken supply chains, setting the stage for a particularly dramatic serving of results, below we take a loot at what Wall Street expects as 3Q earnings kick off tomorrow when JPM reports bright and early.

  Following another huge beat in 2Q, 3Q EPS has risen 3% over the past three months to $49.06 (+27% YoY), down from an eye-popping 94% Y/Y surge in Q2; typically this estimate falls by 4% into the quarter. According to BofA, consensus forecasts imply the 2-year growth rate falling sharply to +16% vs. +27% in 2Q amid supply chain issues and the delta variant-driven slowdown (the just released news about Apple slashing its iPhone production due to chip shortages being the latest case in point).

  In a conspicuous break from the last 4 quarters which saw upgrades, DB notes that Q3 consensus estimates are being downgraded ahead of the earnings season, marking a return to what has been the historical norm. Downgrades have largely been driven by the pandemic-loser group on delta variant concerns, and by insurers following the impacts of hurricane Ida. But even excluding these lumpy impacts, estimates have stayed flat in contrast to the upgrades of recent quarters.

  

  As is typical, the consensus sees a drop in earnings sequentially (-4.5% qoq excluding loan loss provisions)…

  

  … with nearly all sector groups seeing declines. But that’s usually the case and in the end, earnings growth usually comes in positive.

  

  Cutting to the chase, DB notes that amidst a macro backdrop that is a little less supportive than over the last 4 quarters, the bank sees earnings continuing to rise but only modestly so (+1.5% qoq), beating consensus by 6%, far lower than the 14-20% range of the last 5 quarters and closer to the historical average beat of 5%

  Expect no beat this quarter

  In Q2, S&P500 companies delivered another monstrous beat topping consensus by 17%. With the strong beat, 3Q EPS estimates have risen 3% over the past three months, but BofA sees increased headwinds heading into 3Q, primarily driven by supply chain issues, delta-driven slowdown, and continued inflationary pressure.

  

  That said, while there are reasons to be cautious, earnings misses are extremely rare: since 2009, there have been only two quarters (out of 50) when earnings missed consensus (2Q11 & 1Q20). And with consensus expecting a meaningful moderation in the 2-year growth rate to 16% from 27%, BofA’s 3Q EPS estimate is in line with consensus, representing the worst earnings season since COVID and below the historical median beat of 3.5%.

  BofA generally agrees with DB, and expects earnings to come in in-line with consensus and revises its 3Q EPS down by $2 (to $49) and 4Q by $1. But, as has been the case for much of the past year, one of the top questions will be around guidance (which started to soften) and 2022 EPS will be revised lower.

  Another core question: who is best positioned to weather the surging input costs: “What we are going to be laser-focused on in this earnings season is pricing power,” said Giorgio Caputo, senior portfolio manager at J O Hambro Capital Management. “What we’re seeing is that getting the machine back up and running — those who thought it would be an easy quick fix are being disappointed now.”

  Which leads us to the most important variable of Q3 season: profit margins. As we noted at the time, although margins expanded to record highs in 2Q, companies highlighted increasing difficulties passing through cost inflation. Since then, issues have worsened: supply chain news stories increased 74% and freight rates from China rose 20%…

  

  … with record backlogs at the West Coast Ports. In 3Q, we also saw a near-record number of profit warnings stories (third highest since 2011), only after 4Q15 and 1Q19.

  

  In those quarters, earnings beat consensus by 0.6% and 4.9%, respectively, but subsequent quarter earnings were revised down by 9.3% and 2.2% mostly due to supply issues.Incidentally, we predicted that this would happen.

  If MS and BofA are right on slumping consumer demand and margin contraction we should start seeing Q3 earnings warnings in the next 2 weeks.

  — zerohedge (@zerohedge) August 30, 2021

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  To be sure, consumer demand remains robust but soaring inflation poses downside risks. While analysts have baked in margin  contraction this quarter (non-Financials net margins -70bps QoQ), both BofA and Morgan Stanley see big risks to 2022 numbers, where analysts expect record margins, an outcome which is virtually impossible unless all the input cost inflation is passed through to consumers.

  It’s not just broken supply chains: wages are surging too; indeed as BofA writes, “wage inflation is just as big of a headwind (if not
  bigger)” than supply chains. The BEA estimates wages are as much as 40% of total private sector costs. At the same time, slowing China and its property sector issues also pose risks to US multinationals. And while higher oil prices have historically been positive for S&P earnings (every 100bps move up in WTI added 50bps to S&P earnings growth), but Energy companies’ capital discipline could translate to a lower earnings multiplier (i.e. less revenue for energy capex beneficiaries). Soaring gas prices also add pressure to Chemicals and Utilities. In other words, higher oil could be a headwind rather than a tailwind this time.

  Mentions of “inflation” on 2Q earnings calls topped 1Q levels and jumped to a record high, based on BofA’s Predictive Analytics team’s analysis. On a YoY basis, inflation mentions rose more than 900% YoY, in line with the increase we saw last quarter.

  

  Notably, supply chain mentions rose the most among inflation categories tracked in 2Q, more than doubling YoY (along with labor mentions). Since then, supply chain issues have worsened: news stories on “supply chain” increased 74% since the 2Q earnings season according to Bloomberg, and freight rates from China also rose 20% (Exhibit 10)

  

  And yet, amid all these rising margin risks, analysts are expecting margins to hit a new peak in 2022!

  Consistent with recent developments, consensus does point to a 70bps drop in net margins (ex-Fins) to 12.0% in 3Q, which does reflect some conservatism. However, they then expect the margin compression to stop there – with flattish margins in 4Q21, and expanding margins in 2022 to new record highs (above 2018 peaks).

  

  Analysts expect margins to hit new highs in 4 of 10 sectors, excluding Financials (Exhibit 14). BofA disagrees and expects current headwinds to last well into 2022, and sees risk to consensus numbers.

  

  As the bank cautions, “analysts have consistently underestimated margins over the past five quarters, but given the worsened macro environment for corporate profits (more below), we do not expect those big margin beats to repeat in 3Q.”

  And with good reason: the early reporters have shared mixed data at best. So far, 21 companies (primarily “early reporters” with August quarter-end) have reported 3Q results. Early reporters are concentrated in Consumer, Tech and Industrials, but can often give a read on the full quarter’s results: BofA has found a 71% correlation between the proportion of early reporter beats on EPS and sales and the proportion of full-quarter beats on EPS and sales. So far, 67% have beaten on EPS, 76% on sales and 57% on both. This is weaker than last quarter (67%/94%/67%), but still above the historical average (since 2012) of 70%  EPS beats, 63% sales beats and 49% both beats. The median EPS beat so far has been 4.0%.

  

  More ominously, BofA’s 3-month guidance ratio (# of above- vs. below-consensus guidance instances) sharply fell from a record high to 2.6x in September, albeit it remains well above the historical average of 0.8x. The more volatile 1-mo. guidance ratio also fell to 1.2x, representing the lowest level since Jun 2020, as companies warned about rising inflationary pressure. Meanwhile, guidance instances have picked up to the highest level in a decade in September.

  

  But perhaps the most troubling indication of what to expect comes from companies themselves after what BofA notes was peak corporate sentiment. According to BofA’s Predictive Analytics team overall, corporate sentiment dipped from a record high, potentially indicating peak corporate sentiment amid inflation concerns and the Delta variant. Consumer sectors had the weakest sentiment compared to their own history, while Materials and Real Estate had the worst sentiment on an absolute basis.

  

  Similarly, companies’ mentions of business conditions (ratio of mentions of “better” or “stronger” vs. “worse” or “weaker”) indicate slightly weaker business conditions vs. the peak level last quarter. Mentions of optimism also plummeted from record highs in the prior two quarters.

  

  Putting it all together, below is a handy list of what to expect courtesy of Deutsche Bank:

  • The macro backdrop is a little less supportive. After having been strongly positive for over a year, data surprises turned negative in late-July. Earnings estimate revisions have historically been tied to data surprises. Consensus Q3 GDP estimates have also been revised downwards from over 7% at the end of Jul to 5% now. DB economists also cut their Q3 GDP forecast for growth from 8.9% to 4.7% in early September. The sales-weighted G4 manufacturing PMI, a preferred measure of global growth, rose sharply from its trough of 42.4 in Q2 2020 to 59.3 in Q2 2021. In Q3 so far, it has stayed flat (Jul-Aug average of 59.4). The US dollar is also up slightly in Q3 after 4 quarters of declines.
  • Secular growers (MCG+ Tech) earnings likely to flatten at an elevated level. Earnings for MCG+ Tech have been boosted well above trend by a broad cyclical lift as well as from being direct beneficiaries given the realities of the pandemic. The cyclical component which is tied to global growth and the US dollar is likely to stay flat. With re-opening having gathered steam through the quarter, the idiosyncratic pandemic-related benefit should arguably start to wane, but even if the full benefit were to remain intact, it would still point to earnings overall staying largely flat (0.4%). With consensus seeing a drop (-4.5%), DB sees a beat of about 5.2%, a sharp slowdown from the 10-17% beats they posted over the last 5 quarters, but in line with the historical average of 6%. Notably, earnings remaining flat would also mean a modest move back towards their historical trend with the gap shrinking from a record +25% in Q2 to +22% in Q3.
  • Cyclicals earnings almost back to trend. The consensus sees losses for the pandemic losers diminishing in Q3 (-$6.6bn to -$2.4bn) as mobility rose albeit not as quickly as initially expected. Outside of the direct pandemic losers, the rest of the cyclicals in our view should continue to post modest growth (+1.7% qoq sa) as activity levels remain robust at elevated levels. Consensus sees earnings for cyclicals declining modestly (-0.4%), implying a beat of 8%, a sharp slowdown from the 14-38% range seen in the past four quarters, but ahead of the historic average level of 5.2%. If realized, cyclicals earnings would be almost back to their pre-pandemic trend, a strong and fast recovery after being over 70% below in Q2 last year
  • Defensives earnings likely to move back down towards trend. Earnings for the defensives were significantly above trend in Q2 (+7%), as they continued to benefit from a pandemic boost. We see earnings retrace halfway back to trend in Q3 implying a modest  (-1.5% qoq sa) decline, while the consensus sees a larger -6.3% drop, pointing to a potential 5.1% beat in the quarter. If realized, this would be the weakest aggregate beat since the start of the pandemic, which has seen surprises in the 7-18% range, but at about the average level of pre-pandemic beats (historical average of 4.4%).
  • Financials to continue posting outsized beats as benign credit costs remain a tailwind. Banks released large amounts from loan loss reserves in the past two quarters ($13.8bn in Q1 and $9.5bn in Q2), boosting earnings, and that is expected to continue given benign credit conditions. However, the consensus sees banks adding to reserves in Q3 ($3.8bn). Moreover, excluding loan-loss provisions the consensus sees earnings fall to the bottom of their 2013-19 trend channel. Together this points to a massive 29% beat again this quarter, in line with the 13-36% range of the last five quarters and way ahead of the typical +4.2% average.
  • Energy. Oil prices have risen from $69/bbl in Q2 to $73/bbl in Q3 on average. The consensus forecasts Energy sector earnings to grow 22.5% (qoq) in Q3, which is somewhat ahead of what is implied by the increase in oil prices. DB sees lower earnings growth of 12.8% qoq, which could see the sector miss (-8%) in the quarter, in contrast with the solid double digit beats of the past four quarters and a historic average beat of 6.4%. Energy earnings beats historically have tended to be extremely volatile.
  • Overall beats to remain robust but returning towards the historical norm. DB sees earnings for the S&P 500 rising modestly by +0.8% and EPS coming in at $53.6/share in Q3 2021. This compares with the consensus at $49.2/share, or a beat of 9%, significantly lower than the 14-21% range of the last 5 quarters. Excluding the outsized contribution from lumpy loan-loss reserve changes, DB expects a beat of 6.3%, close to the historical average of 5% and compares to the 10-21% range of the last 5 quarters

  In conclusion, and as noted earlier, huge beats and upward revisions kept the forward consensus rising steeply over the last 15 months according to DB’s Chadha. Since then, consensus estimates for 2021 have edged slightly lower over the last few weeks (-0.2%), while 2022 estimates have flat-lined. The 4 quarter ahead growth rate of consensus estimates has now fallen to the steady pre-pandemic average (around 14%). In the absence of upgrades, current forecasts point to the growth rate falling well below (11%) over the next 2-3 quarters. As beats and forward earnings look to be returning to historical norms, will forward valuations follow?

  Tyler Durden
  Tue, 10/12/2021 – 18:55

• It's All Fake: Kamala Harris Used Child Actors Who Had To Audition For Weird NASA Promo
  It’s All Fake: Kamala Harris Used Child Actors Who Had To Audition For Weird NASA Promo

  While President Biden draws ridicule for using a ‘Truman Show‘ fake White House set across from the actual White House…

  Why does Joe Biden feel the need to use a Fake White House set across the street from the actual White House? pic.twitter.com/5p7TLwoPmw

  — Benny (@bennyjohnson) October 6, 2021

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  …Vice President Kamala Harris is earning jeers of her own for using child actors in a recent NASA YouTube video about space exploration.

  Filmed in August while the Taliban was rapidly taking over Afghanistan and closing in on Kabul (and right before the Biden-Harris administration murdered a family of innocent civilians, including seven children), the “Get Curious with Vice President Harris” was tweeted by the VP’s account on October 7 to celebrate World Space Week.

  And it’s a cringe-fest…

  The video portrayed the children as regular kids – however it has been revealed that they were all paid actors who auditioned for the part by submitting a monologue and questions they would ask a world leader, according to the Daily Mail, which notes that the Washington Examiner revealed the production company; ‘Sinking Ship Entertainment’ out of Canada.

  Monterey resident Trevor Bernardino, 13, told KSBW he was stunned when he learned he would be traveling to Washington, DC to take part in the video.    

  ‘Then after that, like a week later my agent called me and was like ‘Hey Trevor you booked it,’ he told the network.

  Trevor was one of five teens who participated in the video for the YouTube original series. He was joined by Derrick Brooks II, another child actor, Emily Kim, likewise a child actor, Zhoriel Tapo, a child actor and aspiring journalist who has interviewed former First Lady Michelle Obama, and Sydney Schmooke. 

  The video was shot at the Naval Observatory, Harris’ residence, from August 11 to August 13. During that time the Taliban were making rapid advances across Afghanistan and were closing in on Kabul during the chaotic U.S. withdrawal. -Daily Mail

  So – the sitting US president is broadcasting from a fake White House, and his Vice President used a foreign production company and child actors for a NASA promo instead of tackling the border crisis.

  The video was mocked by Fox News‘ Tucker Carlson, who called it ‘fake’ and ‘fraudulent.’

  “So for humanitarian reasons we are not going to play that’ll video, but it’s online,” said Carlson. “If you dare, look it up, watch it. Watch it again, watch your own soul die as you do. It’s the fakest thing that’s ever been caught on video but in fact it’s even faker than it looks.”

  Tyler Durden
  Tue, 10/12/2021 – 18:35

• Fed's Quarles To No Longer Chair Committee On Supervision, Setting Stage For Brainard Ascent
  Fed’s Quarles To No Longer Chair Committee On Supervision, Setting Stage For Brainard Ascent

  While Fed watchers are on edge over the fate of Fed vice chair Richard Clarida, and whether the recent revelations about his stock trades will make him the third senior Fed official to step down as a result of his potentially illicit stock trades (as a reminder, he traded out of $1-$5 million in a Pimco bond fund on Feb. 27, 2020, and on the same day bought between $1 and $5 million of the Pimco StocksPlus Fund, one day before an emergency market-moving announcement by Chair Powell), moments ago the Fed announced that Fed Vice Chairman for Supervision Randal Quarles will be removed from his role as the main watchdog of Wall Street banks after his title officially expires Wednesday. The Fed made the announcement in a statement that seeks to answer key questions for banks and Democrats about how the Trump appointee’s era of oversight will end.

  “In light of the expiration of the vice chair’s term, he will no longer chair the committee on supervision and regulation,” the Fed said in a statement. The committee will meet “on an unchaired basis,” and only matters that all the members can agree on will be forwarded to the full board, the statement said.

  Quarles – who also sits on the Fed’s board of governors – will cease to be chairman of the central bank’s supervisory committee, leaving the panel without a leader. That means Lael Brainard, the board’s lone Democrat who has more seniority at the Fed, and Governor Michelle Bowman will equally share responsibilities with Quarles. Joe Biden has yet to nominate a candidate for the supervision role, which would also be subject to Senate confirmation.

  Quarles hasn’t said how long he will stay at the Fed as governor but it is likely he will step down shortly.

  As Bloomberg previously reported, Biden’s advisers are considering a recommendation that the president renominate Chair Jerome Powell and appoint Brainard as the vice chair for supervision. The Fed’s bank-supervision chief is the regulator with the longest reach into Wall Street banking. The decision on the vice chair is entangled with Biden’s decision about whether to nominate Powell for a second term. 

  With Quarles imminent departure, yet another hawk is set to part ways with the Fed. If he is replaced by Brainard it means that the balance of power will tip further toward the Doves.

  

   

   

  Tyler Durden
  Tue, 10/12/2021 – 18:30

• Southwest To Comply With Biden Vaccine Order, Ignore Texas Ban
  Southwest To Comply With Biden Vaccine Order, Ignore Texas Ban

  Dallas-based Southwest Airlines will ignore a Texas Executive Order prohibiting any entity from imposing Covid-19 vaccine mandates on employees or customers.

  Instead, the beleaguered airline will comply with a yet-to-be issued Biden federal mandate which requires that government employees and contractors get vaccinated, according to CEO Gary Kelly in a Tuesday interview with CNBC.

  “I’ve never been in favor of corporations imposing that kind of a mandate. I’m not in favor that. Never have been,” Kelly told “Squawk on the Street,” adding “But the executive order from President Biden mandates that all federal employees and then all federal contractors, which covers all the major airlines, have to have a [vaccine] mandate … in place by December the 8th, so we’re working through that.”

  Southwest CEO blames Biden for vax mandate: “I’m not in favor of that, never have been. But the executive order from President Biden mandates that all federal employees, and then all federal contractors, which covers all the major airlines, have to have a mandate.” pic.twitter.com/TQs21CEMoG

  — Tom Elliott (@tomselliott) October 12, 2021

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  In addition to federal workers and contractors, President Biden announced a mandate last month which requires companies with 100 or more employees to ensure that their workforce is vaccinated or tested regularly. The Labor Department has yet to release details of the emergency rule, however Biden encouraged companies to ‘act now’ and not to wait for the requirement to go into effect.

  Another lie. There is no federal vaccine mandate. There’s no executive order, no federal regulation. It was a press release. https://t.co/6Uub9qDSMO

  — Sean Davis (@seanmdav) October 12, 2021

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  In response, Texas Governor Greg Abbott issued an executive order on Monday which prohibits any entity – including private businesses, from imposing vaccine mandates on either employees or customers.

  “The COVID-19 vaccine is safe, effective, and our best defense against the virus, but should remain voluntary and never forced,” said Abbott in a statement. The rule follows several executive orders Abbott issued over the summer banning local governments and school districts from mask or vaccination mandates – with $1,000 fines for those who fail to comply.

  Last week, Southwest announced that its 56,000-person workforce would need to be fully vaccinated with the Covid-19 jab by Dec. 8 in order to remain employed – an announcement which came days after other carriers (including American Airlines, Alaska Airlines and JetBlue Airways) announced similar measures, according to CNBC.

  Doubling down on the airline’s claim that widespread flight disruptions over the past four days weren’t related to an employee protest over the mandate, Kelly blamed “absenteeism” – which, we’re quite frankly

  BREAKING: Southwest CEO denies massive flight cancellations were related to vaccine mandates, blames ‘absenteeism’ pic.twitter.com/xl5MB6Iq8O

  — Jack Posobiec 🇺🇸 (@JackPosobiec) October 12, 2021

  We can’t believe CNBC didn’t ask Kelly, if that’s true, where this flag came from.

  This photo was just sent to me of a grounded Southwest plane flying a Gadsden flag out of the cockpit. The Hero Pilots at Southwest and other Airlines deserve our support. True patriots worthy of the American Freedom Fighter tradition.
  Don’t Tread On Me.
  God Bless Them 🇺🇸✈️🙏🏻 pic.twitter.com/tAo9pT4Q60

  — Benny (@bennyjohnson) October 11, 2021

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  Tyler Durden
  Tue, 10/12/2021 – 18:15

• America's Bottom 50% Have Nowhere To Go But Down
  America’s Bottom 50% Have Nowhere To Go But Down

  Authored by Charles Hugh Smith via OfTwoMinds blog,

  One might anticipate that the bottom 50%’s meager share of the nation’s exploding wealth would have increased as smartly as the wealth of the billionaires, but alas, no.

  

  America’s economy has changed in ways few of the winners seem to notice, as they’re too busy cheerleading their own brilliance and success. In the view of the winners, who just so happen to occupy all the seats at the media-punditry-Federal Reserve, etc. table–the rising tide of stock, bond and real estate bubbles are raising all boats. What’s left unsaid is except for the 50% of boats with gaping holes below the waterline, i.e. stagnant wages and a fast-rising cost of living.

  The truth the self-satisfied winners don’t include in their self-congratulatory rah-rah is there’s no place for the bottom 50% of American households to go but down. All the winnings flow to those who already owned assets back when they were affordable– the already-wealthy–whose wealth has soared as assets have shot to the moon while the the burdens of inflation and debt service hit the bottom 50% the hardest.

  Meanwhile, the Federal Reserve is whining that inflation isn’t high enough yet for their refined tastes. Boo-hoo, how sad for the Fed–inflation isn’t yet high enough. Oh wait–didn’t they each mint millions by front-running their own policies? No wonder they’re not worried about inflation.

  The reality few acknowledge is that globalization and financialization have stripped the American economy of low-skilled jobs that don’t demand much of the employee. The reality is that a great many people don’t have what it takes to learn high-level skills and work at a demanding pace under constant pressure–the description of the average job in America.

  There were once millions of low-skill, low-pay jobs for people who for whatever mix of reasons were unable to muster the wherewithal to fulfill the fantasy of working extra hard, going to night school, soaking up high-level skills, moving quickly up the ladder to higher pay, buying the starter home and then moving up the food chain to middle class security from there.

  The cost of living was low enough that those working these low-skill, low-pay jobs could still have an independent life. There were still low-cost rentals, often derided by the wealthy, in nooks and crannies of even the costliest cities. (I once lived in a room stuffed with old tax records in a poolside shack in an upscale neighborhood. The room had been cleared for a single bed and a path to the decrepit bathroom. Its most important attribute was that I could afford it on my low earnings.)

  Affordable housing has vanished, eliminated by the financialization of America’s economy. Once landlords pay double the price for the property, rents have to double to pay their higher expenses. The apartment didn’t double in size or amenities–the rent doubled without any increase in utility to the renter. You get nothing more for double the price–nice.

  

  Yes, people could make better choices, and some do. The point here is the game is rigged against those in the lower tier of the economy who can no longer afford a house or other stake in the only winning game in town–speculative asset bubbles. Go ahead and work a second job and go to night school–you’ll still be left behind the already-rich.

  Globalization opened every job in America to global competition via offshoring or the influx of undocumented workers so desperate to support their families back home that no pay was too low and no working condition too wretched to refuse.

  Many overindulged pundits who never worked an honest day in their lives sneer about burger flippers without realizing how hard those burger flippers have to work. I doubt the well-dressed pundits, snobbish about their university degrees and general brilliance, could manage to work a single day in a demanding fast-food job.

  As the price of housing and other assets have soared, enriching the already rich, they’re out of reach for the bottom 50% who struggle to pay their bills as wages have stagnated and the costs of essentials have skyrocketed.

  

  The rising cost of parking tickets, junk fees, user fees, utilities and food don’t impact the well-paid top 5% technocrat class, whose stake in the Everything Bubble keeps expanding by tens or hundreds of thousands of dollars. But for the bottom 50%, those incremental increases are, when added to higher rents, absolutely crushing.

  As for getting high-quality healthcare that includes mental health support–those are reserved for the rich. But no worries, self-medication is always a “choice.”

  Getting a boost in pay from $12 an hour to $15 an hour is welcome, but that doesn’t put the worker any closer to affording a house or equivalent stake in the Everything Bubble.

  The new feudalism is masked by the glossy SillyCon Valley PR of a gig economy where (per the PR fantasy) bright, shiny and totally independent workers freely choose to serve the winners in the rigged sweepstakes for low pay and zero benefits.

  In the SillyCon Valley PR, serfs freely choose to serve their noble masters for nothing but survival because they love the “freedom” and “choice” of kissing the nobility’s plump derrieres. (After all, there were “choices” even back in the good old days of feudalism–one could join the brigands in the forest, or enlist in a poorly paid mercenary army where the odds of dying were high–you know, “choices” of “gigs.”)

  One might anticipate that the bottom 50%’s meager share of the nation’s exploding wealth would have increased as smartly as the wealth of the billionaires, but alas, no–the bottom 50%’s share of stocks (equities) actually plummeted in the the glorious decades of Federal Reserve free money for financiers, stock buy-backs and asset bubbles.

  

  All this suits the billionaires and those collecting the crumbs of the Everything Bubble just fine. So what if the bottom 50% have nowhere to go but down? There’s plenty of room in the homeless encampment for another broken down station wagon or an old camper. There’s lots of “choices.”

  And no consequences for the winners, of course, because The Fed has our backs.

  *  *  *

  If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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  Tyler Durden
  Tue, 10/12/2021 – 18:05

• California Bans Small Off-Road Gas Engines, Including Lawnmowers And Chainsaws
  California Bans Small Off-Road Gas Engines, Including Lawnmowers And Chainsaws

  Authored by Christopher Burroughs via The Epoch Times (emphasis ours),

  

  California moved one step closer to ending reliance on fossil fuels as Democratic Gov. Gavin Newsom signed a new bill into law on Sunday to ban all off-road gas-powered engines.

  The new law requires the state to apply the new rule by Jan. 1, 2024, or as soon as regulators determine is “feasible,” whichever date is later, according to the bill.

  The bill served as one step in the governor’s California Comeback Plan that includes a strong focus on climate change initiatives.

  “In a time when the state and country are more divided than ever, this legislative session reminds us what we can accomplish together. I am thankful for our partners in the state Legislature who furthered our efforts to tackle the state’s most persistent challenges – together, we took action to address those challenges head-on, implementing historic legislation and the California Comeback Plan to hit fast forward on our state’s recovery,” Newsom said in a press release on Saturday.

  “What we’re doing here in California is unprecedented in both nature and scale. We will come back from this pandemic stronger than ever before,” he added.

  A ‘Massive Change’ Measure

  Not all Californians approve of the new legislation. Andrew Bray, vice president of government relations for the National Association of Landscape Professionals, argued the zero-emission commercial-grade equipment landscapers will be far too expensive.

  “These companies are going to have to completely retrofit their entire workshops to be able to handle this massive change in voltage so they’re going to be charged every day,” Bray said, according to a Los Angeles Times report Saturday.

  The change could strongly impact small businesses in landscaping and related industries. In addition to increased costs, the change could result in other unexpected problems, such as the need to carry charged batteries.

  “Bray said a three-person landscaping crew will need to carry 30 to 40 fully charged batteries to power its equipment during a full day’s work,” according to the report.

  A Small Business Disaster

  The new law is expected to affect nearly 50,000 small businesses, according to The Washington Examiner. It noted that California’s budget includes $30 million for professional landscapers and gardeners to quit using gas-powered equipment, but that it would not be enough to cover the full costs.

  The change is also not the only recent climate change announcement regarding gas-powered engines by Newsom. Last month, the governor signed an executive order to ban gas-powered and diesel cars by 2035.

  “This is the most impactful step our state can take to fight climate change,” Newsom said in the press release announcing the order. “For too many decades, we have allowed cars to pollute the air that our children and families breathe.

  Tyler Durden
  Tue, 10/12/2021 – 17:40

• Vaccine Effectiveness In New York Dropped As Delta Variant Surged During Summer, Study Shows
  Vaccine Effectiveness In New York Dropped As Delta Variant Surged During Summer, Study Shows

  Authored by Ivan Pentchoukov via The Epoch Times (emphasis ours),

  

  The effectiveness of the three COVID-19 vaccines dropped significantly over the course of 10 weeks this summer when the Delta variant exploded to become the dominant strain of the CCP virus, according to a preprint study (pdf).

  Scientists from the New York State Department of Health and the University at Albany School of Public Health studied the vaccination, testing, and hospitalization records of more than 8.8 million New Yorkers for the period between May 1 and July 10 this summer.

  The analysis found that effectiveness dropped the sharpest for those under the age of 50.

  The greatest decline in vaccine effectiveness occurred for the Pfizer-BioNTech shot, with a decline of 24.6 percent for people aged 49 and under, 19.1 percent for those 50 to 64 years old, and 14.1 percent for people 65 and over.

  Effectiveness for the Moderna and Janssen vaccines likewise dropped, although less so than the Pfizer shot. Moderna effectiveness dropped 18 percent, 11.6 percent, and 9.0 percent for those under 50, those aged 50 to 64. and people 65 and over respectively. The effectiveness of the Janssen shot dropped 19.2 percent, 10.8 percent, and 10.9 percent for the same respective age groups.

  The drop in effectiveness for all three vaccines occurred as the Delta variant of the CCP virus grew in prevalence from 1.8 percent on May 1 to over 85 percent on July 10. The CCP (Chinese Communist Party) virus, commonly known as the novel coronavirus, is the pathogen that causes COVID-19.

  “Our results provide evidence of immunity loss associated with time since completion of vaccination,” the study says.  “Irrespective of the cause or propensity for continued declines in [vaccine effectiveness], our findings have important implications for national vaccine policy. Pfizer-BioNTech booster doses have been demonstrated safe and to increase short-term protection against the Delta variant. Our findings align with the CDC recommendation for Pfizer-BioNTech boosters in persons [over] 65 years [old].”

  The reduction in effectiveness recorded in New York, while significant, is far less than that recorded in Israel. The New York study’s authors say this “may be due to earlier vaccination, increased sensitivity definitions, or other methodological differences.”

  All three vaccines remained effective at preventing COVID-19 related hospitalizations, with a small reduction effectiveness show for people 65 and over who took the Pfizer vaccine.

  “This latest study conducted by our renowned scientists here at DOH is the largest to examine in-depth changes in vaccine effectiveness over time broken down by all three COVID-19 vaccines types currently authorized for use in the United States,” said senior author and New York Health Commissioner Howard Zucker in a statement.

  Tyler Durden
  Tue, 10/12/2021 – 17:15

• Private-Jet Demand Soars As Planemakers Enter Boon Times 
  Private-Jet Demand Soars As Planemakers Enter Boon Times 

  The virus pandemic has increased demand for private jets and is expected to continue with the lack of commercial flight options. 

  Kenn Ricci, the chairman of Flexjet, told Bloomberg his private-plane business is soaring like never before as he scrambles to find planes to expand his fleet. The company provides fractional ownership for private jets, aircraft leasing, and jet card services for people who wish to avoid busy airports and travel in comfort. 

  

  Ricci said the “used private jet market has been picked clean,” and ordering new planes from aircraft manufacturers takes longer than usual. He said 65 aircraft had been ordered to expand Flexjet’s fleet by 40% next year. 

  Flexjet demand has been off the charts since the pandemic and will continue through 2022 as the company had to suspend sales of blocks of flight hours. The influx of new customers means Flexjet’s annual growth has surged 30% this year. Ricci believes new customers who began using their service during the virus pandemic will stick around because of convenience.

  Even though corporate travel remains subdued – private aircraft flights are at the highest since 2008. 

  The demand for new private jets means boon times for planemakers, including Bombardier Inc., Textron Inc., Embraer SA, and General Dynamics Inc.’s Gulfstream unit. Those companies cut deliveries early in the pandemic but are now boosting production and raising prices. 

  Ron Draper, CEO of Textron Aviation, the maker of Cessna jets, said the influx of new customers comes as a surprise as many discover that avoiding commercial air travel is essential in a post-COVID world. 

  Take, for example, the thousand-plus flights Southwest Airlines canceled in the last few days stranded passengers across the county because of an alleged sickout by pilots over vaccine mandates. If anyone has been in this position, flight cancellations and delays are a headache.

  Avoid commercial air travel. Take a private jet appears to be a hot trend among those with the financial ease to do so. 

  Tyler Durden
  Tue, 10/12/2021 – 16:50

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