Today’s News 15th November 2023

• US Beef Prices Hit Record High As Nation's Cattle Herd Expected To Shrink Through 2025
  US Beef Prices Hit Record High As Nation’s Cattle Herd Expected To Shrink Through 2025

  Brazilian processor Marfrig Global Foods SA warned the US cattle herd will continue shrinking through the midpoint of the decade. Less supplies will pressure meatpackers and keep the prices of steak and hamburgers at elevated levels. 

  During a conference call, Tim Klein, the head of Marfrig’s North American operation, explained the availability of fattened animals for meatpackers to slaughter and process should trough between 2025 and 2026. He said this is because ranchers have not yet started keeping cows for breeding.

  As we’ve noted, years of drought and high feed costs forced ranchers across the Midwest to send the cows to slaughterhouses, leading to a sharp reduction in the nation’s overall herd size. In January, the beef cow herd size was the smallest since 1962. 

  

  Tight supplies of cattle have hurt the profits of meatpackers, including Tyson Foods Inc. and JBS SA: 

  National Beef Inc., Marfrig’s US unit, saw adjusted earnings before items such as taxes and interest more than halve in the third quarter from a year ago to $150 million, according to a statement from the company on Monday. Tyson Foods Inc. and JBS SA posted results earlier that were largely affected by lower profits in their US beef operations. -Bloomberg 

  Declining cattle numbers also sent US beef prices at the supermarket to record highs.

  

  Also, US beef exports are forecasted to slide 14% this year from 2022 to 3 billion pounds, the lowest since the early days of the Covid pandemic when plant closures crushed meatpackers. The USDA warned US beef production is expected to decline further next year. 

  Last week, Pete Bonds, a Texas-based cattle producer, told Reuters, “The future of this industry is not here in the United States.” 

  Food inflation remains sticky. And soon, beef will be a luxury only the rich can afford. As for the working poor, Tyson plans to build a new insect plant in 2025. 

   

  Tyler Durden
  Tue, 11/14/2023 – 23:45

• Lucid Lost $227,000 Per Car Sold In Q3
  Lucid Lost $227,000 Per Car Sold In Q3

  What do you get after a decade of negative real rates and unlimited QE as monetary policy? Losing $227,000 per vehicle as an acceptable business model for an automobile company!

  At least that’s the case over at Lucid, according to a new writeup from the Daily Caller. 

  The California-based Lucid Motors, offers four electric vehicle (EV) models priced between $74,900 and $249,000 and reported a third-quarter net loss of $630.9 million, excluding overhead costs.

  This amounts to over $227,000 in losses per car sold, the report says, citing its financial statements and calculations by The Wall Street Journal.

  

  Despite having sold only 125 vehicles by November 2021, the company’s valuation peaked at $91 billion. However, its stock price has since dropped by approximately 93%.

  Last week, Lucid Motors reduced its vehicle prices to boost demand, the report notes. All the while, the electric vehicle company’s primary investor is the Saudi Arabian public investment fund, ironically sustained by oil revenues.

  The Saudi government plans to purchase 100,000 Lucid cars over ten years, with the fund investing heavily to support the struggling company, the report added. 

  Lucid is not alone in its financial struggles within the EV sector. Rivian, another upscale EV maker, faced a loss of $33,000 per vehicle sold in the second quarter. Meanwhile, Ford, a traditional automaker, anticipates over $4 billion in losses from its EV division this year.

  All this completely rational, sensible behavior and market mechanics in the name of climate change…

  Tyler Durden
  Tue, 11/14/2023 – 23:20

• WeInflate, WeMalinvest, WeWork
  WeInflate, WeMalinvest, WeWork

  Authored by Peter C. Earle via the American Institute for Economic Research,

  

  The bankruptcy filing of WeWork Inc. on November 6, 2023 came with neither a whimper nor a bang, but with a laconic shrug. Although the company has been around for 13 years, it has been defined more by successive flirtations with demise and unseemly corporate revelations than by innovative ideas for the second half of its life. Few were surprised when the latest, and possibly not the final, chapter arrived.

  While some stories are better told starting at the end, the WeWork story is best told from the beginning: It started as a company that rents desks. That’s it. Yes, it has been described as an enterprise providing “flexible co-working spaces” with the value adds of “collaboration” and “community.” Over the years it has variously billed itself as a real estate company and a high-tech firm. It has dabbled in online events, run a design agency, owned a smartphone authentication startup, acquired an online facilities management platform, and stretched the We brand beyond recognition (WeLive, WeGrow, Rise by We, and others). At the root of all, though — buried deep under a morass of corporate mysticism, questionable business dealings, and most of all a penchant for squandering money at a Biblically diluvian rate — is a business of renting desks.

  One can easily see how the sharing model employed by Uber, AirBNB, Turo, TaskRabbit, Spinlister, and other such firms would’ve found its way into the commercial real estate business. Yet subleasing as a business was not pioneered by WeWork. Large urban office buildings are frequently not fully occupied outside traditional business hours. And rarely are there office spaces small enough to both accommodate and justify the expense of one or two individuals, or for only a day or two per week, or other permutations thereof. And this is where economic calculation begins: If some smart person could figure out how to treat commercial space like a four-dimensional game of Tetris, cleverly fitting different occupancy needs of spaces and times together in ways that traditional building managers can’t or won’t, they might not only serve an unmet need, but eke out a profit in the process. 

  But landlords aren’t terribly interested in putting wild-eyed intermediaries between themselves and their earnings. So an entrepreneur interested in offering unique, customizable office spaces has to first rent out space, usually several floors or an entire building, only then dividing it into the unusual units for which there may be a market. While eventually WeWork did purchase and operate its own buildings, its basic business is that of a sublessor: renting space to rent back out at a slight premium with perks to enhance the marketability of spaces. Some of those amenities were subtle, like dartboards or Ping Pong tables. Others seemed out-of-place in a business context, like beer on tap and hammocks. A few, like administrative support, phone systems, and printers undoubtedly added value.

  While there are many challenges to running that kind of business, several are immediately evident. First, margins are likely to be small — even before spending on inducements. Also, providing maximum permutability to would-be renters of various sizes and terms requires taking long-term leases. And it goes without saying that in order to make significant revenue and profits, the business — again, fundamentally, renting desks — would have to be scaled enormously. More floors, in more buildings, in more cities, with tireless marketing, sales, and development support. 

  If, sometime in 2019, you’d asked a major, international sublessor what the major threats to their business were, they’d probably have said a terror attack or serious recession. But both of those things have happened, and while they dampened economic growth, they weren’t long-lasting. Plus, international diversification provides a hedge, of sorts, to that kind of shock. What few, if any, would have guessed is that a pandemic would break out. Far fewer would have guessed that governments around the world, with few exceptions, would respond to a pandemic by ordering widespread business shutdowns, restrictions on in-person meetings, and other heedlessly destructive policies. And who, even when the word COVID became part of the 24-hour news cycle throughout 2020 and 2021, would have anticipated that the relaxation of non-pharmaceutical interventions would not be met by a surge back into office spaces, but by a vastly broader acceptance of remote work?

  In the future, the many idiosyncrasies of founder Adam Neumann are likely to figure prominently in WeWork retellings. The explanation for the bankruptcy that is likely to prevail, however, is that WeWork was felled by COVID precautions. In fact, WeWork was conceived of and established during the Federal Reserve’s post-2008 collapse zero interest rate policy (ZIRP), at a time when credit was cheap and plentiful. And just as the company was facing calamity, historically expansive monetary and fiscal policy measures gave the long-ailing WeWork a reprieve before it ultimately succumbed to long-looming financial vulnerabilities.

  Austrian Business Cycle Theory

  It sometimes puzzles observers that scores of sound businesses humming along would suddenly collapse in large bunches as economic conditions begin to deteriorate. Or relatedly, that firms which are unprofitable can at times limp along for years on end. The Austrian Business Cycle Theory (ABCT) offers an explanation for these phenomena, by focusing upon the relationship between central bank policies, interest rates, and the allocation of resources within an economy.

  ABCT designates the start of booms with a period of credit expansion by a central bank, which typically involves lowering interest rates and increasing the money supply. This expansion leads to a decrease in market interest rates, making borrowing cheaper and more attractive to businesses and investors. As a result of the lower interest rates, businesses and investors increase their borrowing and investment activities. This leads to an economic boom characterized by increased spending, investment in long-term projects, and a general sense of optimism in the economy.

  Artificially low interest rates (rates set by policy, rather than set by market forces in lending markets) send misleading signals to entrepreneurs and investors. These low rates suggest that resources are more abundant than they actually are, and that the time preference for consumption, versus saving and investment, has changed. Entrepreneurs and businesses respond to the distorted interest rate signals by making investments in long-term and capital-intensive projects that may not be economically viable in the long run. They may engage in speculative ventures and allocate resources inefficiently. Owing to bountiful credit at negligible cost, business concepts which, in normal periods at market-determined rates, may never have gotten off the ground are not only established but gain initial traction. 

  The credit expansion can lead to the creation of asset bubbles in various sectors. These bubbles are unsustainable because they are driven by the artificial credit expansion rather than genuine economic fundamentals. Eventually, the unsustainable nature of the boom becomes evident. The central bank may start to raise interest rates or reduce monetary stimulus, leading to a contraction in credit and a shift in market sentiment. This triggers the “bust” phase. Malinvestments made during the boom become apparent. Businesses may find that their long-term projects are no longer profitable, leading to bankruptcies, layoffs, and a revaluation of asset prices.

  The Federal Reserve began its first round of quantitative easing (QE1) in late 2008 in response to the global financial crisis. It was followed by QE2, which ran from November 2010 to September 2012 and QE3, which ended in October 2014. WeWork’s establishment in March 2010 places its corporate birth late within the first, most-expansionary phase of the post-2008-crisis monetary policy regimes. 

  When interest rates are driven to rock-bottom prices as a matter of policy, investors begin to seek higher-risk projects and vehicles to produce meaningful returns. This phenomenon is known as the “reach for yield,” which has been seen time and time again throughout boom and bust cycles. It may induce individual investors preparing for retirement to abandon investment grade bonds and stock indices in favor of riskier securities. And it may drive venture capital firms already in the business of taking on speculative ventures to ratchet up their exposure to uncertain and questionable ventures. This has been shown from one speculative bubble to the next. 

  The WeWork Saga

  As mentioned previously, WeWork has done one thing consistently since its founding: lose money. A $15 million investment in 2010 which valued the company at $45 million leapt to a $16 billion valuation by 2016. By that time, the firm was already struggling, missing several financial targets and laying off a substantial number of its employees. By mid-2017 the firm was valued at $20 billion, boosted by high-profile investments from the Softbank Vision Fund among others. Throughout this period, WeWork embarked upon an acquisition spree, purchasing high-profile buildings, international spaces, competitors, and several businesses (some particularly unusual). The valuation of the company reached roughly $42 billion by the end of 2018, even as it lost over $2 billion throughout the year. 

  The peak of WeWork’s valuation was $47 billion in January 2019. At that point, an initial public offering of stock was considered, and in August 2019 a Form S-1 was filed with the United States Securities and Exchange Commission (SEC). 

  (It is instructive at this point to note that an initial public offering, while sometimes depicted as a magnanimous opportunity for retail investors, is in fact an exit strategy for founders and early-stage investors. Although most companies continue to generate positive returns after going public, IPOs are undertaken when the general consensus among insiders is that the explosive period of initial growth is over, nearly so, or that public equity valuations are high enough that they should be taken advantage of.)

  The filing revealed WeWork to be incurring massive losses, with questionable governance arrangements and dubious prospects. Of particular note was the disclosure that the company had incurred $47 billion in future lease obligations with only $4 billion in lease commitments. A number of questionable financial metrics within the filing additionally raised concerns regarding the proper depiction of the firm’s financial health. The effect of these revelations, as well as doubts regarding the fitness of Neumann to serve as the CEO of a public company, led to the IPO being withdrawn in September 2019. Within this time period, the company’s valuation plummeted from nearly $50 billion to an estimated $10 billion. 

  In November, SoftBank Group disclosed a $9.2 billion loss in the value of its investments in WeWork, which amounted to approximately 90 percent of the $10.3 billion that SoftBank had previously invested in WeWork over the preceding years. Less than two weeks later, WeWork announced workforce reductions of roughly 20 percent of its global headcount. The firm was already struggling mightily before the pandemic struck. 

  With the onset of the pandemic came several rounds of massively expansionary monetary policy programs, as well as fiscal stimuli policies, on a global scale. A stock market crash in March 2020 — the first since 1987 — accompanied by several rounds of stimulus checks, rock-bottom interest rates, and collective ennui, drove investors into markets ranging from equities to cryptocurrencies and beyond. The coordinated short squeezes of a handful of distressed equity issues was emblematic of the effects of the massive credit boom.  

  Throughout 2020, WeWork liquidated some of its Chinese assets and engaged in several more rounds of layoffs. It also renegotiated certain lease agreements and deferments at many locations. Cheap money and seemingly insatiable risk appetites throughout the year led to a surge in Special Purpose Acquisition Company (SPAC) deals, which:

  are also commonly referred to as blank check companies … [T]hrough a SPAC transaction, a private company can become a publicly traded company with more certainty as to pricing and control over deal terms as compared to traditional initial public offerings, or IPOs … Unlike an operating company that becomes public through a traditional IPO, however, a SPAC is a shell company when it becomes public.  This means that it does not have an underlying operating business and does not have assets other than cash and limited investments, including the proceeds from the IPO. 

  This was the means by which WeWork ultimately became a publicly traded company on October 21, 2021. It ended its first trading day up 13 percent to $11.78 per share, for a valuation of $9 billion. 

  Fed Funds rate (red), WeWork stock price (black, w/first trading date green horizontal line

  

  (Source: Bloomberg Finance, LP)

  Less than six months later, in March 2022, the Federal Reserve began its most-aggressive contractionary policy campaign in four decades to arrest the surge of inflation in the United States. With higher interest rates and the contraction of the balance sheet, the size of the US money stock began contracting for the first time in decades. As the flow of credit slowed and became more expensive, the prospects of many SPACs dimmed, with their stock prices following. 

  After going public, WeWork’s stock price and valuation declined steadily. By August 2023 the share price hit $0.14 cents, down 99 percent in 22 months. WeWork bonds traded at a deeply distressed 10 cents to the dollar. Once valued at $47 billion, the company’s valuation had fallen to $300 million. To maintain the minimum $1 bid price required to remain listed on the New York Stock Exchange, the company undertook a 1:40 reverse split. And despite a debt restructuring, shedding superfluous assets, and the renegotiation of virtually all of its remaining global leases, WeWork filed for bankruptcy on Monday, November 6th, with $15 billion in assets, $18 billion in debt, and at a reverse split stock price of 84 cents valued at $60 million. Softbank’s total losses in WeWork are calculated at over $14 billion. 

  Since 2008, some eleven years have seen policy rates set at one percent or less. In that time period, the year-over-year expansion of different monetary aggregates has varied greatly. From March 2020 to July 2022, the M2 money supply increased by almost $6 trillion, and has since been contracting at the fastest rate in decades. 

  Companies founded in easy money periods will tend to be the most vulnerable. Many firms will survive the credit crunch, but few will emerge unscathed. WeWork is only among the most prominent of countless firms which were carried aloft by expansionary policies, now feeling the effects of the severe contractionary reversal (see also Peloton, Beyond Meat, Zoom, Didi Global, and others). 

  Stock prices of Peloton (blue), Beyond Meat (green), Zoom (purple), and Didi Global ADR (red), M1 Money Supply Index (black dash), and M2 Money Supply M2 Index (black dots), 2020 – present

  

  The liquidation of malinvestment is painful and takes time. There will be more layoffs, more breached contracts, and more fire sales. There is a chance that, greatly scaled down and highly focused, WeWork can emerge from bankruptcy and find some measure of commercial success. Or its assets may be acquired by other entrepreneurs and put to work profitably. One cannot and should not fault business visionaries for attempting to scale a niche, low-margin business into a global empire…even if that business is renting desks. Nor are they to be blamed for taking advantage of investor interest, expansive credit offers, or unconventional sources of financing. The cause ultimately lies not with them, and much less with a virus, but with the monetary interventionism that made both the attempt and the ensuing wreckage possible. 

  Peter C. Earle is an economist who joined AIER in 2018. Prior to that he spent over 20 years as a trader and analyst at a number of securities firms and hedge funds in the New York metropolitan area. His research focuses on financial markets, monetary policy, and problems in economic measurement. He has been quoted by the Wall Street Journal, Bloomberg, Reuters, CNBC, Grant’s Interest Rate Observer, NPR, and in numerous other media outlets and publications. Pete holds an MA in Applied Economics from American University, an MBA (Finance), and a BS in Engineering from the United States Military Academy at West Point.

  Tyler Durden
  Tue, 11/14/2023 – 22:55

• Watch: Officials Grilled Over San Fran's 'Miraculously' Spotless Streets For Xi Visit
  Watch: Officials Grilled Over San Fran’s ‘Miraculously’ Spotless Streets For Xi Visit

  With Chinese President Xi Jinping’s airplane having touched down in California Tuesday night, the Biden administration is facing questions over the now viral images coming out of San Francisco. As we and others have detailed, the feces-encrusted Golden City was miraculously able to clean itself up, seemingly overnight.

  We previously pointed out that for decades, and with increasing severity, residents of San Francisco have been forced to navigate through shit-covered streets, drug dens and criminal elements, all while the city feigned the inability to do anything about it. On Monday, the White House was pressed on the growing and unavoidable public perception that the federal and local government in San Fran cares more about the soon to arrive Communist dictator than American citizens and civic life and public health.

  But as the disturbing clip below from a yesterday afternoon press briefing shows, the administration could care less. Biden admin advisor Jake Sullivan was asked, “Does President Biden agree that it’s more important to impress the leader of China than the American people that live in San Francisco?” Watch Sullivan’s pathetic non-answer below…

  “Does President Biden agree that it’s more important to impress the leader of China than the American people that live in San Francisco?”

  JAKE SULLIVAN: “I completely reject the premise” pic.twitter.com/1GBkp5XGot

  — RNC Research (@RNCResearch) November 13, 2023

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  As one online commenter has pointed out, “San Francisco’s homeless population was entirely cleared out for Xi Jinping” and took note that “The government can easily fix our cities overnight. It just doesn’t want to.”

  And look who just basically admitted that this is precisely what’s going on…

  “I know folks say, ‘Oh, they’re just cleaning up this place because all these fancy leaders are coming into town.’ That’s true because it’s true.”

  Gavin Newsom admits San Francisco wiped its streets of filth and excrement for Xi Jinping but not Americans:

  “I know folks say, ‘Oh, they’re just cleaning up this place because all these fancy leaders are coming into town.’ That’s true because it’s true.” pic.twitter.com/qF1NrfeNFz

  — Citizen Free Press (@CitizenFreePres) November 13, 2023

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  And the reaction from San Francisco Mayor London Breed, who also skirted the relevant pointed question and gave a non-answer…

  “We have been working on this now for a few years…

  This is not an issue that we’ve been sitting around waiting to solve,” Mayor Breed said. 

  Wow. Journalist actually asked San Francisco mayor London Breed a real question:

  “Why has it taken the visit of US President Biden and China’s President Xi for action on all of the problems that this city has been talking about for 4 years?” pic.twitter.com/QtqEyCVmaF

  — Citizen Free Press (@CitizenFreePres) November 13, 2023

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  Meanwhile, Xi has emerged to newly “clean streets”…

  good idea not to show the 2 feet of excrement he is walking in https://t.co/nIkaUevGJk

  — zerohedge (@zerohedge) November 14, 2023

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  Tyler Durden
  Tue, 11/14/2023 – 22:30

• Harvard Grad Union Endorses Anti-Israel BDS Movement Amid Backlash From Jewish Alumni
  Harvard Grad Union Endorses Anti-Israel BDS Movement Amid Backlash From Jewish Alumni

  Authored by Bill Pan via The Epoch Times (emphasis ours),

  

  Harvard University’s graduate student union has voted to endorse the Boycott, Divestment, Sanctions (BDS) movement against Israel, a move that risks further ire from the Ivy League school’s Jewish affiliates who are threatening to withhold donations.

  The roughly 600-member Harvard Graduate Student Union voted on Nov. 10 to support a BDS statement from some rank-and-file members of the United Auto Workers, the national union to which the Harvard group belongs, according to student newspaper The Harvard Crimson.

  The BDS is a loose amalgam of organizations and individuals who call for economic pressure on Israel to change its Palestinian policies. While some merely see BDS activism as a way to express their solidarity with the Palestinians, others are convinced that it is a concrete strategy to isolate and delegitimize the state of Israel by inflicting real economic damage.

  “As members of the labor movement, we call on U.S. labor unions to cut all ties with Israeli unions,” the UAW rank-and-file statement reads.

  About 64 percent of Harvard grad union members voted in favor of the statement, representing the largest turnout for a non-contract vote in the union’s history, The Crimson reported.

  Also approved at the Nov. 10 meeting was a separate statement calling for a ceasefire in Gaza. The statement, primarily signed by the United Electrical, Radio and Machine Workers of America, also calls for the release of Israeli civilians taken hostage by Hamas.

  “The road to peace cannot be found through warfare,” it reads. “We commit ourselves to work in solidarity with the Palestinian and Israeli peoples to achieve peace and justice.”

  The second statement passed with 69 percent of votes.

  Shani Cohen, a former bargaining committee member who voted against the BDS endorsement but is in favor of the calling for a ceasefire, told The Crimson that she will resign from the union. She argued that the union’s actions are not helping to fix the hostile climate against Jewish and pro-Israel students on campus.

  “The union kind of failed its basic role in protecting members and being in solidarity with members that are Israeli or Jewish,” she said.

  ‘Polarizing Rhetoric’

  The union’s vote also comes as more than 1,600 Harvard alumni declared that they will close their checkbooks to the Cambridge, Massachusetts, school if it doesn’t take urgent action to crack down on anti-Semitism.

  “We never thought that, at Harvard College, we would have to argue the point that terrorism against civilians demands immediate and unequivocal condemnation,” wrote members of the Harvard College Jewish Alumni Association (HCJAA) in an open letter to President Claudine Gay and Dean of Harvard College Rakesh Khurana. “We never thought we would have to argue for recognition of our own humanity.”

  “We are calling on the University to meet its commitment to protecting all its students, not just those that shout the loudest or blare the most polarizing rhetoric.“

  The HCJAA was formed last month in the aftermath of the university’s response to the Oct. 7 attacks. Organizers claim that this is the first Jewish alumni association in Harvard’s history.

  In an interview with CNN, Rebecca Claire Brooks, a co-founder of the HCJAA, said many of the signatories of the letter are key donors to the university.

  “This is a broad and growing intergenerational movement of alumni from many different sectors and industries,” she said. “Yes, some of them are very influential donors and some of them are sort of more normal-sized donors. But we’re speaking in one unified voice in response to this moment.”

  Harvard, like every other Ivy League school, relies on donations and endowments for a significant proportion of its income. According to the university’s financial report for fiscal year 2022, donations generated total revenue of $5.8 billion. Only 55 percent of the university’s revenue was generated through education, research, and other means such as publications and royalties.

  “As the University’s single largest contributor to revenue, 45 percent of this year’s income arose from philanthropy—9 percent from current use gifts, which have an immediate impact on operations, and 36 percent from the ongoing support of distributions from the endowment,” the report stated.

  Several high-profile donors have already announced that they were cutting ties with Harvard. Israeli billionaire Idan Ofer and his wife, Batia, quit an executive board at the university in protest over the university leadership’s response to the Hamas attacks. Bill Ackman, founder of Pershing Square Capital Management; and Leslie Wexner, former chief executive Victoria’s Secret, have also joined the donor exodus.

  Tyler Durden
  Tue, 11/14/2023 – 22:05

• "No Ceasefire!": Largest Pro-Israel Rally In World Held In D.C.
  “No Ceasefire!”: Largest Pro-Israel Rally In World Held In D.C.

  Tuesday saw a huge pro-Israel rally take over Capitol Hill in Washington D.C., which organizers say was in support of ongoing Israeli military efforts to free hostages held by Hamas in Gaza, and towards denouncing antisemitism in the US and globally.

  Some reports estimate the crowd was nearly 300,000 people, as it filled the National Mall and stretched for several blocks. Jewish organizations had been active in bussing activist groups from cities across the east coast.

  

  Israeli President Isaac Herzog addressed the crowd via live video feed. He said people from all over the US and world were in D.C. “to march for the babies, the boys and girls, women and men viciously held hostage by Hamas; to march for the right of every Jew to live proudly and safely in America, in Israel and all around the world.”

  The march is being widely reported as the largest pro-Israel demonstration to occur anywhere since the killing of some 1,200-1,400 Jews in Hamas’ Oct.7 attacks:

  Addressing the pro-Israel rally on Washington’s National Mall, Conference of Presidents of Major American Jewish Organizations CEO William Daroff says over 290,000 people are in attendance, making it the largest pro-Israel gathering in history.

  He adds that more than 250,000 people have also been watching online and on C-SPAN.

  US House Speaker Mike Johnson spoke in person, receiving loud cheers when he denounced any talk of ceasefire. He actually called the very idea of ceasefire at this point “outrageous.” He emphasized, “Israel will cease their counter-offensive when Hamas ceases to be a threat to the Jewish state.” The crowd then broke out into chants of “no ceasefire!” 

  Some critics said the march had the atmosphere of a “pro-war rally”…

  As Speaker Johnson declares that “The calls for a ceasefire are outrageous,” the crowd starts chanting “no ceasefire.”

  Difficult to see how a demonstration demanding that the carnage continues can be called anything other than a pro-war rally.

  Also difficult to see how this… pic.twitter.com/BQYgTWlYxz

  — Trita Parsi (@tparsi) November 14, 2023

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  Senate Majority Leader Chuck Schumer also addressed the rally, saying “When Hamas says from the river to the sea, they mean all the present-day Israel should be a Jewish-free land.” He said: “We stand with you, and we will not rest until you get all the assistance you need.”

  Many Evangelical pastors and leaders were also present. The Evangelical movement, and particularly those who have ‘end times’ Biblical prophecy as a primary doctrinal focus, represent a significant base of Israel’s unwavering support in America. Arguably the most controversial pastor to address Tuesday’s rally was Christians United For Israel’s Pastor John Hagee, who is based out of San Antonio. 

  Here with thousands of supporters of Israel to send a message to the world…Israel, you are not alone!!! #MarchForIsrael #StandWithIsrael #BringThemHome pic.twitter.com/Fm0Spx2ruD

  — Pastor John Hagee (@PastorJohnHagee) November 14, 2023

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  “You, the leaders of Israel, and you alone, should determine how this war is going to be conducted and concluded,” Hagee told the cheering crowd. “You decide — no one else.”

  He continued, “Choose Israel or Hamas,” and emphasized: “There is no middle ground in this conflict. You’re either for the Jewish people or you’re not.”

  But Hagee has long been well-known to make incredibly controversial statements regarding the Jewish state, which he says Christians must support as a matter of dogma. For example:

  Here’s #MarchForIsrael speaker John Hagee claiming, in a 2005 sermon broadcast internationally and sold by Hagee’s ministry, that Hitler was a “hunter” sent by God to chase Europe’s Jews to what is now Israel.https://t.co/dhGuatz8Gv

  — Bruce Wilson (@brucewilson) November 14, 2023

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  Tuesday’s massive march comes after dozens of large pro-Palestinian demonstrations in the US and across major Western and global capitals have denounced Israel’s military operation as “genocidal”. These rallies have become particularly big in London. They have denounced Israel’s killing of well over 10,000 Palestinians (and now, the mostly civilian death has surpassed 11,200). However, strong supporters of Israel have often deemed these events ‘antisemitic’–and the Israeli government has also accused these marches of being “pro-Hamas”. 

  The D.C. event was considered a ‘high security’ situation, and Metro police were out in force. Earlier in the day it was reported that “The Department of Homeland Security has designated Tuesday’s March for Israel in Washington, D.C., as a  ‘Level 1’ security event, the highest rating of risk assessment, sources tell ABC News.” But thankfully there appears to have been no significant security incident.

  Tyler Durden
  Tue, 11/14/2023 – 21:40

• Xi/Biden: Photo Op Or "Defining” Moment?"
  Xi/Biden: Photo Op Or “Defining” Moment?”

  By Peter Tchir of Academy Securities

  Xi/Biden – Photo Op or “Defining” Moment?

  I just want to make sure that we are on the same page: I generally view these international meetings (G-20, UN, COP 25, and Davos) as much more about “photo ops” and “soundbites” rather than anything material. However, I think that this time could be different.

  I have been negative on our relationship with China.

  • The need to carefully safeguard intellectual property.
  • The need to secure supply chains. For corporations (and for the nation as a whole), as we reassess what “wartime production” means, the war might not feature a traditional enemy, and could include anything from cyber to pandemics.
  • The competition for chips. This is a tricky one, as it is really about high-end, military, AI, and quantum computing grade chips, but it is impacting the entire industry and IP.
  • Rare earth metals, critical minerals, and processing. We largely ceded this to China as we failed to deal with many of the countries that have these minerals in abundant supply and we regulated ourselves out of much of the processing.
  • The threat to global sales of U.S. products, especially in emerging markets, as China transitions from “Made in China” to “Made by China.” This is a natural progression for Chinese brands, but it introduces a new competitor for our domestic brands.
  • The rise in trade that is being denominated in yuan (versus the dollar or other currencies). This is only a “negative” because it reduces the impact of sanctions in many regions, as trade can easily continue in other currencies.
  • Investing in China. My concern has been about “the ability to get the money out” and “what rules could be changed” especially in cases where the rules were bent to allow for certain investments or financial activities to occur.
  • Taiwan, the South China Sea, China’s military, Geopolitics, and Diplomacy. While these are more in the purview of Academy’s Geopolitical Intelligence Group, everyone is well aware of the risks, and these risks are a concern for many of our clients.

  Based on everything that we’ve done so far, I still think that we could get some “positive” surprises out of this meeting.

  The Case for a “Defining” Moment

  It is important for me to get this on the record, partly because it may surprise people given the litany of issues that were raised in the first section.
  The reasons why I think that we could get a positive surprise out of this meeting are:

  • Tariffs. If you weren’t mired in the back and forth around the tariffs that Trump put in place, then you saved yourself some misery. It was probably the first time that I can remember where one’s political affiliation seemed to really impact one’s views on tariffs. “Trade wars are bad!” I was in the “we’ve been in a trade war for 2 decades and this is the first time that we’ve fired a shot” camp. In any case, there was real vitriol at the time and many pieces were written against tariffs. But the election came and went, and the tariffs were largely unchanged. I believe that many of those senior economic advisors who opposed tariffs still do, which means that there must be an inclination to cut back on tariffs. In fact, many expected that the administration would roll back tariffs on day one and these people were somewhat surprised when that didn’t happen. Rolling back some tariffs seems possible.
  • The chip industry. This is incredibly important, and we initially addressed this in World War V3.1. The risk has always been about finding the “right level” of technology to restrict. If it’s too low, then we don’t accomplish our national security objectives. If it is too high, then we won’t allow companies to profit from existing developments or use those profits to propel us into the future (the Chips Act helps but isn’t sufficient). I must imagine that lobbyists are saying that some recent proposals have gone too far. Real potential for some pullback on rhetoric.
  • Iranian oil. Venezuelan oil. The SPR. We have been “pragmatic” (to say the least) in many cases around the world. So-called “lines in the sand” have been moved. But let’s just focus on oil and what has happened in the past year as we “fought inflation.” By all accounts, Iran is selling over 3 million barrels of oil a day despite sanctions that should be keeping that number much lower. The U.S. struck a deal to start accessing Venezuelan oil, which required a commitment to free elections. The Venezuelan courts killed the free election idea, but so far there is no indication that we have lost interest in getting Venezuelan oil. Not long ago, we said something about replenishing the Strategic Petroleum Reserve when oil was below $80. If we did this, it was at a snail’s pace. So, for anyone arguing that the U.S. has changed its current stance, I must mention the “pragmatic” behavior that we’ve seen recently.
  • Too much geopolitical uncertainty. The attack by Hamas and Israel’s response has opened a new front for U.S. involvement in the region (in terms of support). The Ukrainian offensive stalling doesn’t help matters there, where international support for Ukraine (after almost 2 years) seems to be diminishing. China has been careful not to act against anyone, and many of their diplomatic actions seem to encourage a reconciliation in these conflicts. At the same time, their activity around Taiwan has escalated, pilots have acted more “daring” around U.S. military aircraft, and their Coast Guard has interfered with the resupplying of the Second Thomas Shoal by the Philippines. Wouldn’t it be nice to de-escalate this? With so much going on around the globe, de-escalating the risks here so that the U.S. and China can focus on all the problems already on their plates would be very helpful, especially coming into an election year.
  • China’s slowing economy. China’s economy has still not kicked into gear post-COVID. This is partly because companies across the globe have less interest in creating manufacturing facilities there, the Belt and Road Initiative seems to have slowed, and the real estate market is in decline (which limits the ability of many citizens to consume). Xi has a middle class that he and the Chinese Communist Party would like to placate (remember, after some protests, the government did an about-face on the COVID lockdowns). Xi is not in a position to play hardball and should want a deal (he does have the advantage of knowing that he has a “lifetime” to achieve his goals, so his negotiating strategy can be longer-term in nature).
  • Inflation. Inflation remains a legitimate fear. I’m not in the runaway inflation camp, though I do think that geopolitical/reshoring/ESG inflation will put upward pressure on inflation for the next several years (1% to 3% above “normal” inflation). However, I understand the fear (especially if India’s economy kicks into an even higher gear). Some sort of deal would likely be seen as deflationary (driving bond yields lower and stock prices higher).

  So, be prepared for the meeting this week to come across as highly conciliatory prompting an “everything rally” into year-end. We don’t even need to see concrete actions taken. If the messaging is strong, that messaging (combined with seasonality and a lot of negativity priced into the market) should be enough to get the job done.

  Bottom Line

  I suspect that I will rant about any “deal,” saying that the U.S. traded short-term benefits for longer-term problems, but that won’t stop a “deal” from helping markets near-term.

  We will know more by the end of the week, but position for the “everything rally” in case this meeting turns out to be far more than a mere “photo op” and delivers a deal that will be pitched as “historic!”

  Tyler Durden
  Tue, 11/14/2023 – 21:15

• Israeli Troops Storm Gaza's Largest Hospital After Doctors Warn Of 'Catastrophic Consequences'
  Israeli Troops Storm Gaza’s Largest Hospital After Doctors Warn Of ‘Catastrophic Consequences’

  Update(2113ET): In the overnight and early morning hours of Wednesday (local time), Israel’s military says it is moving against al-Shifa hospital, the Strip’s largest, while saying the assault “operation” is necessary to root out a Hamas command post there. 

  Al Jazeera earlier reported that Israel announced the hospital would be raided in “minutes” – but the fate of worried doctors and patients has remained unknown since. According to the latest being reported in The Wall Street Journal: 

  Israeli forces carried out a targeted operation against Hamas “in a specified area’’ of Gaza’s largest hospital, hours after the White House backed Israeli assertions that Palestinian militants are running military operations from the enclave’s hospitals.

  The Israeli military said that it launched “a precise and targeted operation’’ in the Al-Shifa Hospital in Gaza City. The White House had earlier cautioned Israel not to carry out airstrikes against the hospital. Hamas said in a statement that it holds Israel and President Biden “fully responsible” for the raid on Al-Shifa hospital.

  On the ground Al Jazeera coverage is showing chaos unfolding at the hospital, which has already been site of mass death, given the IDF has had it surrounded for days and has reportedly fired at targets near the entrance. Fighting has also engulfed its environs, where tanks have the area surrounded.

  The Ministry of Health in Gaza has stated: “Dozens of [Israeli] soldiers entered the emergency department building in Al-Shifa Hospital Complex.”

  AL SHIFA HOSPITAL, GAZA pic.twitter.com/1r3nQ0ADCK

  — The_Real_Fly (@The_Real_Fly) November 15, 2023

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  Doctors interviewed by Al Jazeera say they plan to remain with the patients, who have been moved into interior corridors, as gunfire can be heard on the hospital campus. There are multiple thousands, including displaced refugees seeking shelter, still inside the besieged hospital. There are growing accusations that Israel’s operation is a clear war crime.

  Below is the official IDF statement in English announcing the new offensive against al-Shifa:

  🔴 Operational Update:
  IDF forces are carrying out a precise and targeted operation against Hamas in a specified area in the Shifa Hospital, based on intelligence information and an operational necessity.

  The IDF is conducting a ground operation in Gaza to defeat Hamas and…

  — Israel Defense Forces (@IDF) November 15, 2023

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  Palestinian Minister of Health Dr. Mai Al-Kaila had earlier been cited in regional sources as warning ahead of the new assault, “Israeli forces are committing a new crime against humanity, medical staff, and patients by besieging and bombing the Shifa Medical Complex. We hold the occupation fully responsible for the lives of the medical staff, patients, and displaced people in the Shifa Medical Complex, and we warn of the catastrophic consequences of storming the medical complex.”

  Israel says it got a green light for the raid on Shifa from the US, after the White House said it backs Israel’s narrative that it’s being used for military purposes.

  * * *

  Israel has been ramping up its global messaging campaign at a moment it faces increased isolation from Global South countries, and amid growing criticism from large powers like China, Russia, and major Latin American countries such as Brazil.  

  But there have been signs of dissent even within the Biden administration as well, with pushback especially coming from the State Department of late, as US officials want to see the White House become more publicly critical of alleged Israeli war crimes, given also the immense death toll, at over 11,200 Gazans killed – with some half of these believed to be women and children.

  Israeli Prime Minister Benjamin Netanyahu is now taking his message to the American public, in a Monday night appearance on Fox News’ Sean Hannity, warning that the US will be “next” if his military doesn’t decimate Hamas.

  

  “We have to win not only for our sake, but for the sake of the Middle East, for the sake of our Arab neighbors. You know what, for the sake of Gazans who’ve been held by this dark tyranny that has brutalized and brought them nothing but bloodshed and poverty and misery,” Netanyahu introduced.

  “We have to win to protect Israel. We have to win to safeguard the Middle East. We have to win for the sake of the civilized world. That’s the battle we’re fighting, and it’s being waged right now. There is no substitute for that victory.”

  And that’s when he emphasized the potential dire repercussions for the West if Israel fails in its objectives. “If we don’t win now, then Europe is next and you’re next. And we have to win,” he added.

  Netanyahu’s words carried a theme of a war between ‘barbarians’ and ‘civilization’, with an intent to make Americans believe what’s happening in the Middle East is “your fight” as well. According to Fox:

  Netanyahu stressed that “our fight is your fight” and that there is “no substitute for victory.”

  “We have to have the forces of civilization beat these barbarians because otherwise this barbarism will spread and will endanger the entire world,” Netanyahu said. “Every American, every civilized country will be under peril. We have to win. There is no substitute for victory. Total victory.”

  Such messaging filled with a ‘good vs. evil’ motif was also heavily relied upon by the Bush administration and neocons in selling the Iraq War in 2003. Netanyahu has in past years also painted such simple contrasts when speaking about Iran and its supposed ‘nuclear threat’ as well.

  Netanyahu may have been responding to rare words of restraint issued by President Biden on the same day. “I have not been reluctant in expressing my concerns about what’s going on and it’s my hope and expectation that it will be less intrusive action relative to the hospital,” Biden said Monday regarding the worsening humanitarian crisis at al-Shifa hospital in the center of Gaza City.

  Zelensky’s playbook of “you’re next”?…

  Netanyahu on Hannity last night:

  – Israel is invading Gaza “for the sake of Gazans.” Sounds very generous and humanitarian

  – War boils down to “good guys” versus “bad guys”

  – If Israel doesn’t occupy the Gaza strip, “Europe is next, and you’re next.” I guess he means Ohio pic.twitter.com/4GXGDC5khk

  — Michael Tracey (@mtracey) November 14, 2023

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  “So, I remain somewhat hopeful but the hospital must be protected,” he said. This was in response to growing international condemnation, including from the UN, of Israeli troops laying siege to the large Gaza hospital, amid reports that patients – including the very young – are dying, and as the hospital has run out of fuel to keep vital generators going.

  Tyler Durden
  Tue, 11/14/2023 – 21:13

• Empty Words? Biden Tells Family Members Of US Hostages In Gaza: "Hang In There, We're Coming"
  Empty Words? Biden Tells Family Members Of US Hostages In Gaza: “Hang In There, We’re Coming”

  It was only on Sunday that the Bident administration belatedly revealed that an American toddler is among the some 240 Israeli and foreign hostages being held by Hamas. Though an exact figure is hard to come by, there may be a dozen or more dual US citizens among the captives. Last month, two were among the first to be released. Days ago, White House spokesman Jake Sullivan put the number at nine Americans missing.

  But hopes are dwindling concerning the fate of the rest, given how violent the fighting in Gaza City has been. The Israel Defense Forces (IDF) announced Tuesday a new death of one of its soldiers in captivity: 19-year old Cpl. Noa Marciano. She had been kidnapped by Hamas during the Oct.7 terror raids, but then—

  On Monday evening, Hamas published a propaganda video of Marciano, showing her speaking to the camera four days after being taken hostage, identifying herself and reciting the names of her parents and her hometown. The video then cut to showing her dead body.

  

  Hamas sources have suggested she died as the result of an airstrike, while Israeli sources say that terrorists beat her to death, or executed her. The IDF has now confirmed her death in captivity.

  This has sparked new fears over the worst case scenario for remaining hostages. On Tuesday reporters asked President Joe Biden about what’s being done to free the rest, and particularly the Americans. He told reporters that his message to the hostages and their families is “Hang in there, we’re coming.”

  “I’ve been talking to the people involved every single day. I believe it’s going to happen, but I don’t want to get into any detail,” Biden said. These talks have centered on Qatar’s ability to mediate, given it communicates with Hamas leadership.

  Sullivan over the weekend had told ABC News, “There are ongoing negotiations involving the Israelis, the Qataris, and we, the United States, are actively engaged in this as well because we want to make sure that we bring home those Americans who have been taken hostage as well as all of the other hostages.”

  In addition to the negotiations track, it’s possible the White House could be preparing a military rescue “option”, but such an operation would of course be extremely risky and filled with uncertainty amid the evolving urban battlefield. 

  The Biden administration has accidentally revealed the identities of several Delta Force commandos helping Israel in the hostage rescue – Sky News

  A photo of Biden shaking hands with one of the soldiers, in the presence of other soldiers, was posted on the official White House… pic.twitter.com/jWPMOSYaAz

  — NEXTA (@nexta_tv) October 20, 2023

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  It was previously confirmed that the Pentagon currently has elite special forces operators advising the Israelis. There are also rumors these US forces could be on the Gaza battlefield in limited numbers. 

  Tyler Durden
  Tue, 11/14/2023 – 20:50

• Speculator Or Investor? What’s The Difference?
  Speculator Or Investor? What’s The Difference?

  Authored by Lance Roberts via realinvestmentadvice.com,

  

  Are you an “investor” or a “speculator?” 

  Over the last month, we have discussed the “false market narratives” that push investors to make portfolio mistakes. Such is why we previously discussed the “Investing Rules” needed to navigate volatile markets.

  This past week, on the #RealInvestmentShow, we discussed the difference between being an investor, like Warren Buffett, and a speculator, which is both you and I.

  In today’s market, the majority of investors are simply chasing performance. However, why would you NOT expect this to happen when financial advisers, the mainstream media, and Wall Street continually press the idea that investors “must beat” some random benchmark index from one year to the next?

  But this defines the difference between being a “speculator” or an “investor?” 

  Graham And Carret

  If you were playing a hand of poker and were dealt a “pair of deuces,” would you push all your chips to the center of the table?

  Of course not.

  The reason is you intuitively understand the other factors “at play.” Even a cursory understanding of the game of poker suggests other players at the table are probably holding better hands, which will rapidly reduce your wealth.

  More importantly, just like a game of poker, as individuals buying a few company shares, we have ZERO control over how that company manages its finances, makes decisions, or conducts its business. As such, we are “betting” on an unknowable future outcome with only a basic understanding of the risks involved.

  Therefore, as individuals, we are “speculators” in the financial markets, and as such, we must focus on the management of the risks to allow us to “stay in the game long enough” to “win.”

  “Philip Carret, who wrote The Art of Speculation (1930), believed “motive” was the test for determining the difference between investment and speculation. Carret connected the investor to the economics of the business and the speculator to price. ‘Speculation,’ wrote Carret, ‘may be defined as the purchase or sale of securities or commodities in expectation of profiting by fluctuations in their prices.’” – Robert Hagstrom, CFA

  Chasing markets is the purest form of speculation. It is simply a bet on prices going higher rather than determining if the price being paid for those assets is selling at a discount to fair value.

  Benjamin Graham and David Dodd attempted a precise definition of investing and speculation in their seminal work Security Analysis (1934).

  “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”

  There is also an essential passage in Graham’s The Intelligent Investor:

  “The distinction between investment and speculation in common stocks has always been a useful one and its disappearance is a cause for concern. We have often said that Wall Street as an institution would be well advised to reinstate this distinction and to emphasize it in all its dealings with the public. Otherwise the stock exchanges may some day be blamed for heavy speculative losses, which those who suffered them had not been properly warned against.”

  Indeed, in today’s world of chasing markets from one year to the next, the meaning of being an investor has been lost. However, the following ten guidelines from legends of our time will hopefully get you back on track and turn you from being a speculator to a successful investor.

  10-Investing Guidelines From Legendary Investors

  1) Jeffrey Gundlach, DoubleLine

  “The trick is to take risks and be paid for taking those risks, but to take a diversified basket of risks in a portfolio.”

  This is a common theme that you will see throughout this post. Great investors focus on “risk management” because “risk” is not a function of how much money you will make but how much you will lose when you are wrong. As a speculator, you can only play if you have capital.

  Be greedy when others are fearful and fearful when others are greedy. One of the best times to invest is when uncertainty and fear are the highest.

  2) Ray Dalio, Bridgewater Associates

  “The biggest mistake investors make is to believe that what happened in the recent past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment. Typically, high past returns simply imply that an asset has become more expensive and is a poorer, not better, investment.”

  Nothing good or bad goes on forever. The mistake that investors repeatedly make is thinking, “This time is different.” The reality is that it will change despite whatever mainstream narrative is permeating headlines. The rule that never changes is that “what goes up must and will come down, and vice versa.”

  Wall Street wants you to be fully invested “all the time” because that is how they generate fees. However, as an investor, it is crucially important to remember that “price is what you pay, and value is what you get.” 

  Speculators don’t care about value. Investors do.

  3) Seth Klarman, Baupost

  “Most investors are primarily oriented toward return, how much they can make and pay little attention to risk, how much they can lose.”

  The most significant risk in investing is investor behavior driven by cognitive biases. “Greed and fear” dominate the investment cycle of investors, ultimately leading to “buying high and selling low.”

  4) Jeremy Grantham, GMO

  “You don’t get rewarded for taking risk; you get rewarded for buying cheap assets. And if the assets you bought got pushed up in price simply because they were risky, then you are not going to be rewarded for taking a risk; you are going to be punished for it.”

  Successful investors avoid “risk” at all costs, even if it means underperforming in the short term. The reason is that while the media and Wall Street have you focused on chasing market returns in the short term, ultimately, the excess “risk” built into your portfolio will lead to abysmal long-term returns. Like Wyle E. Coyote, chasing financial markets will eventually lead you over the cliff’s edge.

  5) Jesse Livermore, Speculator

  “The speculator’s deadly enemies are: ignorance, greed, fear and hope. All the statute books in the world and all the rule books on all the Exchanges of the earth cannot eliminate these from the human animal….”

  Allowing emotions to rule your investment strategy is, and always has been, a recipe for disaster. All great investors follow a strict discipline, process, and risk management diet. The emotional mistakes show up in the returns of individual portfolios over time. (Source: Dalbar)

  

  6) Howard Marks, Oaktree Capital Management

  “Rule No. 1: Most things will prove to be cyclical.

  Rule No. 2: Some of the greatest opportunities for gain and loss come when other people forget Rule No. 1.”

  As with Ray Dalio, realizing nothing lasts forever is critical to long-term investing. To “buy low,” one must first “sell high.” Understanding that all things are cyclical suggests that investments become more prone to declines after long price increases.

  

  7) James Montier, GMO

  “There is a simple, although not easy alternative [to forecasting]… Buy when an asset is cheap, and sell when an asset gets expensive…. Valuation is the primary determinant of long-term returns, and the closest thing we have to a law of gravity in finance.”

  “Cheap” is when an asset sells for less than its intrinsic value. “Cheap” is not a low price per share. When a stock has a very low price, it is usually priced there for a reason. However, a very high-priced stock CAN be cheap. Price per share is only part of the valuation determination, not the measure of value itself.

  8) George Soros, Soros Capital Management

  “It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”

  Regarding risk management, being right and making money is great when markets are rising. However, rising markets tend to mask investment risk that is quickly revealed during market declines. If you fail to manage the risk in your portfolio and give up all of your previous gains and then some, you lose the investment game.

  9) Jason Zweig, Wall Street Journal

  “Regression to the mean is the most powerful law in financial physics: Periods of above-average performance are inevitably followed by below-average returns, and bad times inevitably set the stage for surprisingly good performance.”

  The chart below shows the 3-year average of annual inflation-adjusted returns of the S&P 500 to 1900. The power of regression is seen. Historically, when returns exceeded 10%, it was not long before they fell to 10% below the long-term mean. Those reversions were devastating to investor’s capital.

  

  10) Howard Marks, Oaktree Capital Management

  “The biggest investing errors come not from factors that are informational or analytical, but from those that are psychological.”

  The biggest driver of long-term investment returns is the minimization of psychological investment mistakes.

  Baron Rothschild once said, “Buy when there is blood in the streets.” This means that when investors are “panic selling,” you want to be the one they sell to at deeply discounted prices. Howard Marks expressed the same sentiment: “The absolute best buying opportunities come when asset holders are forced to sell.”

  Conclusion

  As an investor, it is simply your job to step away from your “emotions” and look objectively at the market around you. Is it currently dominated by “greed” or “fear?” Your long-term returns will depend significantly on how you answer that question and manage the inherent risk.

  “The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham

  As I stated at the beginning of this message, “Market Timing” is ineffective in managing your money. However, as you will note, every great investor throughout history has had one core philosophy in common: the management of the inherent risk of investing to conserve and preserve investment capital.

  “If you run out of chips, you are out of the game.”

  Tyler Durden
  Tue, 11/14/2023 – 20:25

• Doug Casey On The Imminent Bankruptcy Of The US Government
  Doug Casey On The Imminent Bankruptcy Of The US Government

  Authored by Doug Casey via the International Man,

  

  International Man: Everyone knows that the US government has been bankrupt for many years. But we thought it might be instructive to see its current cash-flow situation.

  The US government’s budget is the biggest in the history of the world and is growing at an uncontrollable rate.

  Below is a chart of the budget for the most recent fiscal year, which had a deficit of nearly $1.7 trillion.

  

  Before we get into the specific items in the budget, what is your take on the Big Picture for the US budget?

  Doug Casey: The biggest expenditure for the US government are so-called entitlements. It’s strange how the word “entitlements” has been legitimized. Are people really entitled to the government paying for their health, retirement, and welfare? In a moral society, the answer is: No. Entitlements destroy personal responsibility, legitimize theft, destroy wealth, and create antagonisms.

  The fact is that once people have an “entitlement,” they come to rely on it, and you can’t easily take it away. The Chinese call that breaking somebody’s rice bowl. In the case of the American welfare state, it’s more a question of breaking a whipped dog’s doggy bowl. It’s a shame because many have come to rely on their mother, the State, not entirely through their own fault. The US has become pervasively corrupt.

  The World Economic Forum (WEF)—a pox upon them—isn’t entirely incorrect when it arrogantly calls most people “useless mouths.” An increasing number produce absolutely nothing but only consume at the expense of others. Courtesy of the State.

  There’s little doubt in my mind that the government’s expenses are going way up as people demand more. While receipts go down as the Greater Depression deepens. Which it will, as the economy is burdened by evermore taxes, regulations, and currency debasement. That’s on top of the gigantic debt the government and country are buried under.

  The government reminds me of a poker player on tilt, betting more and more crazily in hope of magic or luck to bail him out. It always ends badly.

  We’ve watched this progression accelerate since at least the 1960’s—a slow motion train wreck. But the inevitable has finally turned into the imminent.

  International Man: What are your thoughts on Social Security, Health, and Medicare?

  With an aging population, it seems politically impossible to make any meaningful cuts here. On the contrary, spending in these areas is likely to explode.

  Doug Casey: They should be abolished. I’ve said this many times before, but it bears repeating as often as possible because everybody forgets the most basic of the basics. Namely, the government, as an instrument of force, should be limited to protecting people from physical force. And nothing else.

  That implies a police system to defend people from force within, a military to defend against foreign aggressors, and a court system to allow people to adjudicate disputes without resorting to force. I’d further argue that those three things are so important to the conduct of a civil society that they shouldn’t be left to the kind of people who inevitably gravitate towards government. But that’s a different subject.

  Looking at these three things you mentioned in particular, they’re complete disasters. They’re fiscally unsound, will bankrupt the US government, and, therefore, bankrupt the country itself, especially with an aging population.

  Social Security seemed like a good idea at the time so that poor people wouldn’t be left totally without an income in old age. But the fact is that Social Security is a classic Ponzi scheme. Its taxes have gone from a trivial percentage to 12.4%.

  It’s so high that people are on the bottom end of society, who it’s meant to help, are precluded from saving on their own. Social Security is both a practical and moral disaster.

  As for Medicare, how is it your problem if another has failed to take care of his body? Your body is your primary possession. Should it also be your problem if somebody fails to take care of his car? Should the State fix all your property?

  Should the government have anything to do with health? No. It’s strictly a matter of personal responsibility. Of course, if the State believes it owns you, like a milk cow, the cattle can expect food to show up, as will medicine if they get sick.

  Government entitlement schemes encourage everyone to try to live at the expense of his neighbors. They’re intrinsically dehumanizing, corrupting, and degrading. They’re a bad deal all around.

  International Man: With the most precarious geopolitical situation since World War 2, “National Defense” seems unlikely to be cut.

  Instead, so-called defense spending is all but certain to increase.

  What is your take?

  Doug Casey: The United States’ “defense” spending exceeds that of the next 10 nations combined, including Russia and China. Most of that spending goes into the maw of five major defense companies. A decade or two ago, there used to be 30 or 40 defense companies. But they’ve now consolidated, the better to deal with Big Government.

  They increasingly make only expensive high-tech weapons, which may prove totally useless in today’s environment. For instance, the US is currently suffering an invasion of feet people across the southern border—millions and millions of young males, of alien race, language, religion, and culture, in the last two years alone. We may yet wind up with a civil war in the US, on top of several insane foreign wars.

  These high-tech weapons, in the process of bankrupting the US and enriching the defense establishment, will prove largely useless. Meanwhile, military personnel are being gutted. It’s no secret that the services can’t recruit enough people to keep their numbers where they want them. That’s in good measure because ESG and DEI have been insinuated throughout the military like slow-acting poisons. The military is no longer a meritocracy. Now, it’s critical to be the right color and gender. George Patton would quit in disgust.

  On top of all that, defense spending is a provocation to other countries. It’s like waving around a giant golden hammer. They’re correctly afraid that everything has started to look like a nail to the US.

  International Man: The net interest expense on the national debt was $659 billion in FY 2023, which is sure to rise.

  The US government needs to roll over a significant portion of its existing debt issued when interest rates were 0% in an environment of much higher and rising rates.

  What are your thoughts on this item?

  Doug Casey: Interest on the debt is the next big thing, in addition to entitlements and out-of-control “defense” spending.

  They used to say, “Don’t worry about the national debt; we owe it to ourselves,” which was always ridiculous because some specific people always owed it to other specific people.

  But the US can no longer generate adequate capital to fund the government’s debt. And I hasten to point out that the government is not “We the People.” The government is a separate entity, with its own interests, as distinct as General Motors.

  In the recent past, the national debt has been financed not by Americans, but by foreigners. At this point, however, foreigners no longer want to own the debt of a bankrupt entity whose currency is nothing but a floating abstraction. The government can only finance its debt by selling it to its central bank, the Fed, which creates new dollars to buy the debt.

  As the dollar inevitably loses value, interest rates will rise. That’s regardless of what the Fed does or doesn’t want. The market will demand higher interest rates to finance the debt. You don’t want to own bonds.

  International Man: US government expenses seem to have nowhere to go but up.

  Is there any chance the US government can reform and return to a sustainable basis?

  If not, what are the implications?

  Doug Casey: The US government is bankrupt. It’s not just the official $34 trillion. The real number is several times higher, considering contingent liabilities. It’s probably more like $100 trillion. This debt will never be repaid. The US government is like Wiley Coyote after he runs off a cliff.

  In addition, the average American is deeply in debt—student loans, mortgage debt, credit card debt, auto debt, and much more. The country is in big trouble. Frankly, there’s no practical way out at this point except to officially declare bankruptcy.

  I realize serious change is impossible since the situation is so out of control. But here are six things to imagine—for a start:

  1. Allow the collapse of all bankrupt entities. No bailouts, subsidies, or guarantees for banks, insurers, corporations, or anything. 

  There will be plenty in the coming years. Bailout money is always wasted. Most of the real wealth now owned by the bankrupt entities will still exist.

  It will simply change ownership. But that’s not nearly enough. At this point, it would be a half-measure, a 3-foot rope over a 12-foot gap. If you allow the collapse of unprofitable enterprises without changing the conditions that created the problem, recovery is going to be even harder. So…

  2. Deregulate. Contrary to what almost everyone thinks, the main purpose of regulation is not to protect consumers but to entrench the current order. Regulation prevents new institutions from arising quickly and cheaply.

  Does the Department of Agriculture really need 100,000 employees to regulate fewer than two million farms in the US? Abolish it.

  Has the Department of Energy, created in 1977 to somehow solve a temporary crisis, done anything of value with its 110,000 employees and contractors and $32 billion annual budget? Abolish it.

  How about the terminally corrupt Bureau of Indian Affairs, which has outlived whatever usefulness it might have had by 100 years. Abolish it.

  The FTC, SEC, FCC, FAA, DOT, HHS, HUD, Labor, Commerce, and many more, serve little or no useful public purpose. Eliminate them, and the entire economy would blossom – except for the parasitical lobbying and legal trades. There are hundreds of agencies like these. Most aren’t just useless. They’re actively destructive.

  3. Abolish the Fed. This is the actual engine of inflation. Money is just a medium of exchange and a store of value; you don’t need a central bank to have money. In fact, central banks are always destructive. They benefit only the cronies who get their money first.

  What would we use as money? It doesn’t matter as long as it’s a commodity that can’t be created out of thin air. Gold is the obvious choice. Bitcoin may turn out to be excellent.

  The whole idea of a central bank is a swindle. Massive bailouts and optional wars can’t be done without it.

  4. Cut taxes by 50%… to start. The economy would boom. The money won’t be needed with all the agencies gone. Certainly not if the next two points are followed.

  5. Default on the national debt. I realize this is a shocker unless you recall that the debt will never be paid anyway. Why should the next several generations have to pay for the stupidity of their parents?

  A default sounds dishonorable—and it is in civil society. But government is different. It hasn’t been “We the People” for a long time; it’s now a self-dealing behemoth run by cronies. It’s like a building with a rotten foundation—better to bring it down with a controlled demolition than wait for it fall unpredictably.

  Governments default all the time, though most defaults are subtle, through inflation. In an outright default, however, the only people who get hurt are those who lent money to an institution that can only repay them by stealing money from others. They should be punished.

  6. Disentangle and disengage. The entanglements the US needs to escape prominently include the UN and NATO. Spending could easily be cut 50%. The US combat troops now in over 100 foreign countries can come home. They’re not “defending” anything but local collaborators while picking up bad habits and antagonizing the locals. Spending on the military and its sport wars significantly adds to the economy’s problems.

  Editor’s Note: The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion.

  The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation.

  That’s precisely why bestselling author Doug Casey and his colleagues just released an urgent new PDF report that explains what could come next and what you can do about it.

  Click here to download it now.

  Tyler Durden
  Tue, 11/14/2023 – 19:35

• Luxury Bust Worsens: Rolex, Patek Prices Hit Two-Year Lows 
  Luxury Bust Worsens: Rolex, Patek Prices Hit Two-Year Lows 

  In October, the secondary market for pre-owned Rolex and Patek Philippe watches reached its lowest point in two years, primarily due to high interest rates crushing demand and increasing supply returning to the market. The combination of the two is accelerating the bust cycle in the luxury watch market. 

  The Bloomberg Subdial Watch Index, which tracks prices for the 50 most-traded watches by value on the secondary market, fell 1.8% in October, stumbling to its lowest level since 2021. 

  

  Subdial data shows a Patek Philippe Nautilus Travel Time 5990/1A-001 has crashed 42.5% since peaking at $271,000 in March 2022. 

  

  Prices for a Rolex Daytona 116506 have been halved since peaking at $185,000. 

  

  “We are seeing growing downward pressure in the market, which could lead to a further downward drift in prices as dealers cut valuations to chase sales,” Christy Davis, the co-founder of Subdial, wrote in an October market report. 

  According to Subdial data, the number of used watches hitting the secondary market has increased 5% since August. More supply is adding downward pressure on an already fragile market. 

  “With more watches available at a wider spread of prices, what we’re seeing is people dropping prices to chase sales going into the holiday season,” Davis said.

  However, she did not provide a specific reason for the increased supply. We note it could be attributed to speculators who purchased luxury watches at high prices during the mania phase during Covid and are now forced to sell to generate liquidity. 

  Last week, luxury group Richemont warned about waning consumer demand for watches, jewelry, and clothing. The owner of Cartier Jewelry was gloomy about the economic outlook. 

  In October, luxury conglomerate LVMH, controlled by billionaire Bernard Arnault, reported a slowdown in sales for high-quality products, such as leather goods, perfumes, watches, and wine, in China, Europe, and the US amid a soaring interest rate environment. 

  Timing the bottom of the used luxury watch market might be a 2024 story. This year has been nothing more than a ‘falling knife.’  

  Tyler Durden
  Tue, 11/14/2023 – 19:10

• The Debt Reaper
  The Debt Reaper

  Authored by Robert Burrows via Bond Vigilantes,

  Debt is an integral aspect of modern economies and has long been hailed as a catalyst for growth. When wielded judiciously, it stands as a potent tool for economic development, providing the means to finance projects, expand operations, and invest in essential sectors like education, health, and housing. In the right context, debt fuels economic growth, creates jobs, and fosters innovation. Furthermore, during economic downturns, it offers a safety net for individuals and organizations, helping them weather financial storms.

  The ghost of future wealth

  Governments have traditionally argued that as long as debt remains manageable and serviceable without difficulty, there’s little cause for concern. While this notion holds some truth, the reality is that recent growth has largely been fueled by an insurmountable increase in debt. Particularly since the Global Financial Crisis of 2008, the creation of what seems like wealth has resulted in soaring asset prices, including equities and real estate, contributing to an alarming rise in wealth inequality. However, there exists a disconnect between perceived wealth and actual wealth, a scenario unlikely to endure. Distinguished economists have persistently argued that debt for consumption essentially borrows demand from the future. This borrowed debt inevitably must be repaid, heralding a probable future slowdown in demand. However, debt allocated for investment purposes differs significantly, capable of fostering future growth and potentially curbing long-term debt.

  

  The trajectory of global debt, as depicted in the chart above, illustrates an unrelenting rise in both government and private debt over time. Up until the 2000s, the surge in debt was primarily attributed to burgeoning private debt, empowering a substantial improvement in living standards, especially in developed nations. Since 2000, private debt has plateaued, whilst government debt has sharply ascended, sustaining the growth in living standards. Yet, the overarching question remains – at what cost? However benign they might seem, debt levels can swiftly move from being a seemingly manageable concern to a formidable challenge once they surpass a particular threshold.

  Renowned economists Reinhart and Rogoff attempted to ascertain this threshold and concluded that it begins to matter when debt levels hit 90% of GDP. Nonetheless, this figure remains a moving target, contingent upon a multitude of variables. Recent economic theories, particularly Modern Monetary Theory, have further complicated this limit, challenging the traditional understanding of debt thresholds. The struggle to identify this threshold arises from the confluence of two pivotal variables: the stock of debt and the level of interest rates, both in perpetual flux. Research aiming to determine at what point servicing debt becomes unmanageable largely predates the widespread implementation of quantitative easing and the drive towards zero interest rates. As a result of these two relatively recent phenomena, debt levels have significantly swelled, accompanied by a notable surge in bond yields in response to this. Some nations like Japan, sustaining an elevated debt level of 250% of GDP, continue to flourish due to their substantial savings, but issues are  beginning to surface. The Japanese economy represents a unique case. Conversely, smaller economies running twin deficits are anticipated to confront their threshold much sooner. Though the definitive threshold remains an mystery, it is evident that we are closer to this limit than we were just a few years ago. Perhaps economies with low levels of outstanding debt will be considered the new safe harbour going forward. 

  The Factors that Transform Debt into a Menacing Problem

  Interest Rates:

  The escalation of interest rates significantly affects debt servicing costs. As rates soar, the cost of servicing this debt climbs, straining government budgets and impeding economic growth. The Federal Reserve and other central banks strive to engineer a controlled economic slowdown to contain inflation. Nevertheless, history often demonstrates that rapid interest rate hikes are typically followed by recession.

  

  Crowding Out:

  The hike in rates leads to a natural consequence called crowding out. As rates rise, investors lean towards guaranteed government bond yields rather than venturing into riskier private sector investments. This shift diminishes the availability of private sector financing and forces down valuations of private assets, adversely impacting the equity market. On the consumer front, higher interest rates stimulate a proclivity for saving, as consumers take advantage higher returns in cash, but also brace for anticipated higher tax levels in the future. This hampers demand and augments the likelihood of an economic downturn.

  Budgetary Constraints:

  When a significant portion of a government’s or a business’s budget is directed towards servicing debt, it limits the resources available for essential services, investments, and initiatives. It also restricts the government’s ability to implement a Keynesian fiscal stimulus during economic downturns.

  Economic Downturns:

  Economic recessions or crises can exacerbate debt issues. Reduced revenues and amplified demands on government services lead to deficits and increased borrowing requirements. Extended periods of ultra-loose monetary policy invariably breed misallocations of capital. The rapid increase in interest rates will likely bring these misallocations to the surface, albeit with the usual monetary policy lags. A slowdown is more probable than not.

  Investor Confidence:

  The current high levels of global debt have notably diminished investor confidence. If creditors lose faith in a government’s ability to manage and service debt, they will demand higher yields to cover risks. Alternatively, investors might abstain from investing altogether or, worse, decide to sell existing debt, further complicating the situation.

  Battle lines drawn – electorate vs bond market

  Governments often bear the brunt of public anger, seen as the ‘bad guys’ for imposing spending cuts and increased taxes.  However, this essentially reflects the democratic process, where elected governments serve as gatekeepers of fiscal policy. Should the electorate resist upcoming austerity measures intended to foster debt sustainability, they will likely opt for a new government. However, this poses a challenge. The electorate’s choices for fiscal largesse have been feasible thus far due to low debt levels, compounded by the era of ultra-low interest rates. The bond market presses for fiscal rectitude, pitted against an electorate reluctant to endure forthcoming difficult times in pursuit of debt sustainability given the context of a painful austerity experience in the not too distant past. The recent government bond crisis in the UK is a very good example of this issue and ultimately the bond market won. Further struggles between the bond market and the electorate loom on the horizon.

  In the case of the United States, achieving debt sustainability appears challenging. Both major political parties seem at odds in their fiscal ideals. Democrats aspire to expand entitlement spending, while Republicans are inclined towards tax reductions. Under both administrations, fiscal deficits continue and debt mounts. Ongoing events in regions like Ukraine and the Middle East are unlikely to conclude soon, adding to US military spending, and increasing the debt burden. The move towards carbon neutrality will continue to compete in the race of ever increasing spending. The US is not alone in facing these issues, however, if the biggest and most liquid bond market in the world runs into difficulty, the impacts will be felt far and wide.

  

  As it stands debt servicing costs remain relatively low in historical context. However, the Treasury market has an average maturity of circa 7 years and approximately 31% of the $33 trillion needs to be refinanced in the next 12 months, which will result in debt servicing costs moving meaningfully higher. The below chart shows what the Treasury has experienced to date.

  

  The whims and trends in bond markets offer insights into current sentiments, while elections present an accurate pulse of the electorate’s leanings. The impending number of elections over the coming year hints at potentially increasing political instability.

  

  Nassim Nicholas Taleb famously introduced the black swan theory, identifying events that emerge unexpectedly and bear significant consequences. In contrast, a neon swan characterizes rare yet highly predictable events with severe implications. The burgeoning stock of debt firmly falls into the latter category.

  A tussle between the electorate and the bond market is unfolding. The eventual victor remains unclear, but the debt reaper is sure to claim some economic souls along the way.

  Tyler Durden
  Tue, 11/14/2023 – 18:45

• Wall Street Bonuses Set For Another Year Of Declines
  Wall Street Bonuses Set For Another Year Of Declines

  Wall Street bonuses are set for another disappointing year, affected by elevated inflation, high-interest rates, failures of regional banks, and a downturn in dealmaking and new stock listings.

  A new survey released by New York-based pay consultancy Johnson Associates found investment bankers (on the advisory side) are expected to see bonuses tumble by 15-25% from a year ago, including both cash and stock-based compensation. Retail and commercial bankers at regional banks could see 10-20% smaller bonuses. And investment bankers in debt underwriting could see their payouts slide by as much as 10%.

  Here’s the complete list of expected bonus cuts for Wall Street 2023:

  

  “It’s another disappointing year, and you overlay that with inflation, people’s incomes are down meaningfully,” stated Alan Johnson, Managing Director at Johnson Associates, as reported by the Wall Street Journal.

  It’s the second consecutive year of sliding compensation for Wall Street after record low-interest rates, helicopter money, and juiced-up financial markets sent bonuses to record levels. Global dealmaking has since fallen after peaking at record highs. 

  Last year, the average Wall Street payout plunged 26% to an average of $176,000 across all NYC financial services employees. According to data from the NY State Comptroller Thomas DiNapoli, this was the most significant annual drop since the financial crisis. 

  Johnson Associates expects 2024 will be “another challenging year” for Wall Street as the Fed holds interest rates’ higher for longer’, which already has rate traders pricing in 50bps of rate cuts for July 2024 on fears of an economic downturn. 

  

  This year, Goldman Sachs, UBS, Citigroup, and JPMorgan Chase, among others, have been laying off staff over economic uncertainty. Some of these banks have reproed declines in trading, leaving the bonus pool with less cash to pay staff. 

  Tyler Durden
  Tue, 11/14/2023 – 18:20

• Michael Burry Liquidates "Big Short" After Suffering Big Loss; Doubles Down With Bet Against Semiconductors
  Michael Burry Liquidates “Big Short” After Suffering Big Loss; Doubles Down With Bet Against Semiconductors

  Six months ago, when looking at Michael Burry’s Q1 13F which in turn followed just a few months after the famous permabear admitted he had been wrong to urge his followed to sell…

  

  … we found that the Big Short had continued the trend of rapidly rotating his entire portfolio and in the first quarter, Burry liquidated the rest of his legacy 2022 holdings, dumping his entire stake in companies like Black Knight, Wolverine World Wide, MGM Resorts and Qurate, and also trimmed his formerly largest holding, private prison operator GEO group, and had reallocated the proceeds in three ways:

  • Adding to his Chinese exposure, making JD.com and Alibaba his top stocks (a move which appears to have been driven by the Q4 momentum and which has since fizzled, leading to substantial losses in Chinese names).

  • Launching a handful of new positions in energy names such as Coterra, NOV and Devon

  • Most notably, a third – or seven of the fund’s total 21 positions – were bank names, and with the exception of Wells, they were mostly distressed, regional, small banks and/or credit card companies, such as CapitalOne, Western Alliance, Pacwest, First Republic, and Huntington Bancshares, all of which had been hammered significantly during the March bank crisis.

  In other words, as we put it then, “Burry appears to have enough of being called the “big short” and in this particular twist of the liquidity cycle is positioning himself to be the next “big long.”

  Fast forward three months, when back in August we found that in Q2 Burry’s Scion Asset Management made even more dramatic changes to the investor’s personal portfolio.

  First and foremost, we found that once again, Burry liquidated the bulk of his Q1 holdings, selling not only his previous top two positions, JD.com and Alibaba but also another 13 names of the 21 names that made up Burry’s Q1 holdings, among which were Zoom, Sibanye, Coherent, energy names such as Coterra, NOV and Devon, as well as all the banks he had acquired during the March crisis including Capital One, Wells Fargo, Western Alliance, Pacwest, and First Republic.

  He also bought a bunch of things. Let’s start with Burry’s largest cash holdings which as of June 30, were Expedia ($10.9MM), Charter Communications ($9.2MM) and Generac ($8.2MM, which however is surely worth much less after the company’s catastrophic Q2 earnings which wiped out almost a third of its value). Other names Burry added were Cigna, CVS, MGM, Stellantis, Vital, all of which represented new mid-to-high single digit million positions (the full list is below).

  But what was the most interesting new development, was not the single names Burry bought or sold, but his ETF and derivative trades.

  Starting at the top, as of June, Burry owned two 2 million notional-equivalent blocks of SPY puts (for a notional-equivalent value of $887 million) and QQQ puts (a $739 million notional equivalent). In total, Burry owned puts on both the S&P and Nasdaq 100 for a notional-equivalent of $1.625 billion (which of course is not the capital at risk, and the actual premium Burry paid for those puts is orders of magnitude less), and which are both deeply underwater as of this moment since both the S&P and Nasdaq are trading high above where they were on June 30.

  In other words, in the second quarter, Burry had made another giant (at least for his AUM) and very levered (using over $1.6 billion notional in put) “big short” bet on the broader market. Alas, unlike his infamous and original bearish bet against subprime, Burry’s latest attempt to time a market crash has crashed and burned, because according to the just released 13F from Burry’s Scion Capital, the $1.6 billion notional in puts on the SPY and QQQ have been liquidated. And since during the third quarter, when Burry unwound these positions (originally put on in Q2), the S&P did not drop below the June 30 highs, one can conclude that the puts either expired either worthless or were sold with very little value due to the brutal theta observed n Q3 when both calls and puts saw their value eviscerated.

  Ok, so the “big short” liquidated his big market shorts; what else did he do in Q3?

  Well, as has been the case recently, Burry once again rotated almost all of his holdings, liquidating a total of 25 existing positions, including what were formerly his three biggest cash holdings including Expedia, Charter and Generac. At the same time he added to a handful of smaller positions including Stellantis, Nexstar, and Star Bulk carriers, none of which have done all that well in Q3 or Q4. Burry also appears to have taken a hedged position in Booking Holdings, where he bought both the stock and puts against the stock. Oh, and after liquidating his JD.com and Alibaba positions in Q1, the former doctor is back in the two Chinese names and is once again hoping that this time Chinese stocks will finally surge.

  But the one most notable trade Burry did in Q3 was to put on a large bearish trade against semiconducors, by buying $47 million notional worth of SOXX puts, a trade which was likely prompted by Burry’s bearishness against NVDA and its peers, yet which may have been an even bigger flop than Burry’s ill-timed bet against the SPY and QQQ, especially if he held on to it until now when the SOXX is once again well above where it was on Sept 30 and is fast approaching 2023 highs largely thanks to Nvidia.

  Burry’s full 13F summary is below.

  

  Tyler Durden
  Tue, 11/14/2023 – 18:13

• House Funding Bill Passes Thanks To Democrats, Averting Government Shutdown
  House Funding Bill Passes Thanks To Democrats, Averting Government Shutdown

  Update (1801ET): Democrats stepped in to save the day on Tuesday, helping House Speaker Mike Johnson avert a government shutdown despite opposition from Republicans in the Freedom Caucus who opposed the bill due to a lack of offsetting spending cuts.

  

  According to Punchbowl News’ Jake Sherman, more Democrats voted for it than Republicans.

  Rs: Y: 127 N:93
  Ds: Y: 209 No: 2

  🚨NEWS — The House has passed the stopgap funding bill.

  336-95\

  BUT — Democrats saved him. More Democrats voted for this than Republicans.

  Rs: Y: 127 N:93
  Ds: Y: 209 No: 2

  Dangerous territory for a GOP speaker. See McCarthy, Kevin.

  — Jake Sherman (@JakeSherman) November 14, 2023

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

  The legislation now heads to the Senate, where both Chuck Schumer (D-NY) and Mitch McConnell (R-KY) gave it their full-throated support as noted earlier.

  According to a Tuesday statement by Schumer, the Senate will work to pass it “as soon as possible,” after which it will head to President Joe Biden’s desk for a signature.

  Along the lines of what Sherman said;

  Passage of the legislation marks an early legislative achievement for Johnson, who was elected to the Speakership less than a month ago after three weeks of standstill in the House following former Speaker Kevin McCarthy’s (R-Calif.) removal from the role.

  That ouster was caused in large part by McCarthy’s decision to put a “clean” continuing resolution on the floor and pass it with help from Democrats — similar to Johnson’s course of action this week.

  But hardline conservatives said they would give Johnson some breathing room this time around — despite opposing his stopgap bill — citing his nascent Speakership.

  “He’s had two weeks to pass it; his predecessor had since January and then he jammed us up against the Sept. 30 deadline,” said Rep. Tim Burchett (R-Tenn.), one of the eight Republicans who voted to oust McCarthy.

  Trouble, nonetheless, looms for Johnson and his fractious House GOP conference as they stare down two funding deadlines and try to pass their remaining five appropriations bills, which have run into trouble on the floor and in committee. 

  Johnson plans to tackle Ukraine funding next, which has become a contentious issue among Republicans.

  “I’ve been drinking from Niagara Falls for the last three weeks,” Johnson said on Tuesday. “This will allow everybody to go home for a couple of days for Thanksgiving, everybody cool off — members have been here for, as Leader Scalise said, for 10 weeks, this place is a pressure cooker. And so I think everybody can go home, we can come back, reset, we’re gonna get our group together, we’re gonna map out that plan to fight for those principles.”

  Good luck with that.

  *  *  *

  House Speaker Mike Johnson’s new stopgap funding bill designed to avert a  government shutdown on Friday is expected to head to a vote today, marking Johnson’s first big vote as head of the chamber.

  

  Johnson’s plan, a “two-step continuing resolution,” would fund some parts of the government until January 19, while others would receive funding until February 2.

  “This two-step continuing resolution is a necessary bill to place House Republicans in the best position to fight for conservative victories,” Johnson said in a statement after announcing the plan to House Republicans in a conference call.

  If Johnson’s plan does pass in the House, it appears the Senate will rubber-stamp it – with both Senate Majority Leader Chuck Schumer (D-NY) and Senate Minority Leader Mitch McConnell (R-KY) expressing support for the ‘clean’ bill, which McConnell labeled a “responsible measure that will keep the lights on,” adding “Shutting down does nothing — nothing — to advance that work,” referring to the passage of funding bills.

  

  “Regular order requires that Congress provides itself the time for careful consideration and thorough amendment. I’m glad that Speaker Johnson has produced a continuing resolution that would do exactly that,” McConnell continued.

  The House Freedom Caucus may dick with Johnson’s plans, however, announcing after a meeting with the Speaker on Monday night that they won’t support the stopgap because it doesn’t include any offsetting reductions in spending.

  

  “The House Freedom Caucus opposes the proposed ‘clean’ Continuing Resolution as it contains no spending reductions, no border security, and not a single meaningful win for the American People,” the group said in a Tuesday morning position statement. “Republicans must stop negotiating against ourselves over fears of what the Senate may do with the promise ‘roll over today and we’ll fight tomorrow.'”

  “While we remain committed to working with Speaker Johnson, we need bold change,” the Caucus added.

  “I’ll eat my Thanksgiving dinner sitting right on the floor of the house…I’d be happy to be here on Thanksgiving Day in order to fight to secure the border of the United States.”

  Rep Roy talks about what’s at stake in the fight over the funding deadlinehttps://t.co/UyRipwF8gF

  — Rep. Chip Roy Press Office (@RepChipRoy) November 13, 2023

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

  The announcement also comes after GOP leaders announced last night that they would seek to fast-track the bill through a floor vote in order to avoid Republican opposition shooting it down – though it will require support from two-thirds of the whole house, meaning that dozens of Democrats will have to cross the aisle.

  An official position from the Freedom Caucus requires support from 80 percent of the group, which has around three dozen members. But the caucus is not unified in opposition to the continuing resolution plan.

  Freedom Caucus member Rep. Andy Harris (D-Md.) is an architect of the two-tiered stopgap funding plan. –The Hill

  “The two-step CR is a way to get the broken appropriations process back on track without resulting in a massive omnibus spending bill,” Harris wrote on X over the weekend.

  Tyler Durden
  Tue, 11/14/2023 – 18:02

• A Trump-Tucker Ticket?
  A Trump-Tucker Ticket?

  Authored by Andrew W. Coy via American Thinker,

  

  A Trump Tucker ticket for the presidency in 2024.  Just imagine it.

  Wow.  Oh my goodness.  Praise the Lord.  Fantastic.  Our prayers are answered. 

  Could it actual happen?  The dream ticket is not as far-fetched as previously thought. 

  A Trump Tucker (T2) presidential ticket is beginning to look like a real possibility.  A T2 ticket would be putting the Make America Great Again movement and the America First alliance on steroids. 

  As opposed to being a “balanced ticket,” it would be a “double down” on an American exceptionalism ticket. 

  A Trump-Tucker ticket would certainly electrify and energize a base already loaded for bear.  A T2 ticket would tell the American citizen, and put the globalist elites, and the Deep State hooligans on notice, that we are right, we are unashamed, we will not be intimated, and we will not apologize.  A Trump-Tucker ticket might possibly be the ticket that saves our democratic republic.  A T2 ticket might be the platform that holds off the communists/deep state/globalist elites.

  A T2 presidency might be the answer to putting the BLM and Antifa criminals in jail.  A Trump-Tucker administration might be the only hope for securing the First and Second amendments.  An unashamed and without apology Trump-Tucker ticket might just be the political platform and personalities that save the American empire from the dustpan of history.

  Now, if there is election interference and voter fraud like there was in 2020, it will not matter. 

  If in the toss-up states, they stop counting the votes at 11:30 p.m. and after everyone goes home, start up again at 2:30 in the morning, it won’t matter. 

  If Fulton County, Georgia counts Biden votes multiple times, it won’t matter. 

  If the upper Midwest states use Zuckerbucks again,  it won’t matter. 

  If the management and upper echelons at Fox News appear to be willing participants, it won’t matter.  

  If state election officials in Pennsylvania are once again allowed to purposely ignore their very own state legislated election laws, it won’t matter. 

  If 2024 election tabulations are counted just as they were in the Purple States in 2020, it won’t matter. 

  But, but, but, if the election is run fair and square in the swing states, without cheating, without the Deep State “brownshirts” putting their thumb on the scale; it will matter. 

  Without the FBI/CIA/NSA running cover for the Biden/Harris ticket; Donald Trump and running mate Tucker Carlson will win the 2024 election for the presidency. 

  If only legitimate and legal votes are counted, and they are counted only once, T2 will win by a landslide and they will even dominate in the Purple/Border/Swing States.

  Fair Elections Matter.

  Tucker Carlson brings a great deal to the ticket for Donald Trump.  Tucker is bright, youthful, articulate, and seasoned as to D.C. politics.  Tucker is fearless, unafraid, and courageous to the attacks he will undoubtedly face from D.C. and the far left media.  Tucker has had over 30 years of life  in the D.C./New York City environment and he knows who the evil people are and what their tactics will be. 

  Yet he is the David of the Old Testament taking on the Goliath of the D.C. deep state criminals.  Tucker’s back will be straight, his knee will only bow to the Lord, and he is willing to have a bull’s-eye on his back.

  Donald Trump needs such a soldier.  And ‘soldier’ is the correct term because if T2 are successful, it will be war. 

  Maybe not armed conflict, maybe, but it certainly will be cloak-dagger tactics done by the alphabet intelligence goons.  Unlike Mike Pence, who is now doing his Benedict Arnold/John Dean III impersonation, Tucker Carlson will fight as hard, be loyal, and be as relentless as his president.  Evangelicals, conservatives, Christians, Constitutionalists and supporters of Israel will be very pleased to have Tucker Carlson as vice president. 

  President Trump was willing to take on those sacred cows during his presidency.  Trump fearlessly took on the Deep State, the FBI/CIA/NSA,  NATO, the military industrial complex, and Obama/Bush. 

  Tucker similarly has a history of taking on the sacred cows as well.  Tucker has full-throatily taken on the CIA, the JFK assassination, the J6 FEDsurrection, and the George Floyd lies.  Tucker has without fear taken on the Nord Stream II pipeline explosion, COVID-19 lies, the vaccination lies, white replacement goals, and the falsities of global warming. 

  Tucker continues to attack Hillary Clinton, Anthony Fauci, the military -industrial complex, Kamala Harris, Ray Epps, and why are we in Ukraine. He asks where the Jeffrey Epstein client list is. 

  Tucker is unafraid and Trump must have that in his veep. Tucker is pro-life, worships God, and knows that an America without the underpinning of Judeo-Christian values is headed for the same fate as the Roman empire. 

  Tucker knows , if America has no Godly conscience, then we are done.  Tucker continues to fight for our flawed, but heroic, Founding Fathers.  He knows our Founders were not perfect, but they were exceptional.  Because of Tucker’s background, experience, and his intuition; Tucker knows where many of the bodies are buried and who put them there.

  Tucker Carlson appears exactly who Donald Trump needs to put him over the top in 2024. 

  The T2 ticket tells our friends and our enemies, from within and without, what the T2 mission is.  Trump-Tucker will show MAGA and America First that they are not the forgotten working class.

  A T2 presidency will let Jerusalem and Israel know that we have their backs and that there is no moral equivalence between the Jews and Hamas.  A Trump-Tucker ticket stands with Israel, a Biden administration does not. 

  A T2 presidency will make sure Russia is out of Ukraine, China backs away from Taiwan, and Iran stops its nuclear proliferation…..and this will be done without the firing of one bullet.  A firm, in-your-face, and convincing warning is all that will be needed to thus back off Moscow, Tehran, and Beijing.  A T2 ticket will once again have our friends trust us and our enemies fear us.  A T2 ticket might well replace the gender indoctrinations and white guilt propaganda in our public schools with an emphasis on returning to math, English, computer literacy, civics, and student discipline.  The “free exercise of religion” might soon return to our social fabric.  Tucker on the ticket might just be the final personality and intellect that  Trump needs to assure victory.  Almost assuredly the J6 freedom fighters will be released from the D.C. Bastille.  Trump and Tucker will pardon these political prisoners. 

  The middle class, the blue collar laborers, the working class, and the legal immigrants in our country will all blossom and flourish under T2.  Senior citizens’ dollars will go further once the inflationary policies of Mr. Biden are nullified. 

  The military will become strong, vibrant, and victorious once again.  With our military, once T2 are in office, the days of the impotent and embarrassing Afghanistan retreat will be a thing of the past.  Christians, conservatives, and Constitutionalists will once again be allowed back into our military without harassment.   In our economy, businesses will again operate under sound business money making practices, not D.E.I. mandates. 

  Under Trump-Tucker, we will again be an energy self supporting country.  We will be energy independent once again.  We will not have to kowtow to our enemies in Iran, Venezuela, and Russia for energy.  Under T2, the price of gasoline will once again be under $2 a gallon.  Our nation’s borders will become secure again under T2. 

  Deportations of illegals, criminals, terrorists, Hamas, child traffickers and those that wish our nation harm would begin very soon after January of 2025.  Much like Ronald Reagan, Trump and Tucker know that a nation without borders; really is not a nation. 

  A Trump-Tucker ticket will make our country strong again.  It will allow for religious freedom again. Pro-life advocates will no longer be imprisoned.  And soccer moms at school board meetings will no longer be on the FBI “watchlists” like terrorists.   

  They  will drive out some of the corruption in the Swamp. 

  It will however be dangerous.  Both Trump and Tucker are outsiders.  Many people are surprised that both Trump and Tucker have not already met untimely deaths.  The evil inside of D.C. and also globally, would want to put Trump and Tucker in jail; as Stalin, Mao, and Castro did to their political opponents.  Or they might want to put them in the ground, much like what happened to JFK.  It will certainly make for dangerous times.

  The election of 2024 will undoubtedly be one of the most crucial elections in American history.  2024 can easily be compared to 1860 or 1960 or 1980 or 2020.  It will be crucial and the aftermath of this election result will carry on for decades.  Donald Trump adding Tucker Carlson as his running mate will hopefully help America to still be a rising sun; and not one that is soon to set.  T2 might just make the difference in America’s as well as the world’s future. 

  Donald Trump would be very wise, and he is, to look at Tucker Carlson as his running mate. America’s destiny might well be in the balance of that choice.

  Tyler Durden
  Tue, 11/14/2023 – 17:55

• Strip Clubs, D*ck Pics & Booze: FDIC Revealed As Misogynistic Free-For-All In New Expose
  Strip Clubs, D*ck Pics & Booze: FDIC Revealed As Misogynistic Free-For-All In New Expose

  A brand new expose out this week paints banking regulator the Federal Deposit Insurance Corp. as a toxic work environment where strip club visits, sex with underlings and drinking at work – not to mention male workers texting female co-workers photos of their genitals – were all part of the “day to day” culture. 

  The Wall Street Journal expose was out on Monday and hours later FDIC Chairman Martin Gruenberg announced that the agency has engaged BakerHostetler for a comprehensive review following. In a staff video, Gruenberg stated that necessary changes would be made based on the law firm’s findings.

  The Journal’s investigation revealed several incidents at the FDIC, including a male supervisor in Denver engaging in sexual relations with an employee, bragging about it to colleagues, and encouraging her to consume alcohol during work hours.

  Additionally, it was reported that senior bank examiners sent inappropriate images to female staff and extended invitations to a strip club, according to the Wall Street Journal. Despite these allegations, the implicated men remain on the FDIC’s payroll.

  

  This ongoing issue of misconduct and the apparent absence of disciplinary action have reportedly forced many female employees to consider leaving the organization, as evidenced by interviews, legal documents, union complaints, EEOC filings, and various internal communications reviewed in the report. 

  The Journal reports that female examiners characterized the FDIC as a male-centric, sexually charged workplace, where discussions about women’s looks were common.

  Highlighting the severity, a former female employee recounted male colleagues suggesting that women must resort to sexual favors for career advancement, while directly gazing at her. Additionally, the outlet’s extensive interviews, over 100 with current and former staff, including more than 20 women who resigned, indicate a widespread belief among female employees of unequal opportunities compared to their male counterparts.

  Lauren Lemmer, a former examiner-in-training, commented: “It was just an accepted part of the culture.”

  Examiner, Neha Singh who joined in 2017 said she felt pressured to drink every night. “I felt really taken advantage of in a moment where I was totally vulnerable,” she said after being told “You seem a little arrogant” when declining drinks with co-workers. 

  Singh resigned from the FDIC in 2022, within her first year of becoming a fully qualified examiner, having just received her commission. She stated that she clearly informed the senior management that her departure was due to what she perceived as a culture of harassment and misogyny. According to Singh, one of the managers acknowledged hearing similar complaints from other female employees and admitted it was an issue.

  Another former employee, Kelsi Foutz, said: “For the longest time, I didn’t have any perspective. It was just normal. You deal with it.”

  

  She remembered a time when she was told not to bring up issues she was having about her 2018 performance review because the reviewer, she was told, was just “intimidated by tall, beautiful women.”

  “Just smile and make him feel good,” her male counterparts told her. One male co-worker told her in 2013: “Obviously if I walked into this office and you were naked, I’d f–k you right here.”

  The Journal reported that female FDIC staffers said the agency’s toxic work culture persisted nationwide, not just at its Washington, DC headquarters. This pervasive atmosphere, especially during offsite bank examinations, led to it being termed the “Wild West.”

  In one instance, a female examiner, while on a 2018 North Carolina assignment, received an unsolicited explicit image from a colleague but chose not to confront him due to close work proximity. Additionally, Lemmer, who left the FDIC in 2013, recounted various incidents of inappropriate behavior, including being followed to her hotel room, invited to a strip club, and receiving an explicit photo, all of which coincided with her being overlooked for career advancement, the report says.

  You can read the Journal’s full expose here. 

  Tyler Durden
  Tue, 11/14/2023 – 17:40

• At Least 4 More Attacks On US Forces Since Latest US Airstrikes In Syria
  At Least 4 More Attacks On US Forces Since Latest US Airstrikes In Syria

  Authored by Dave DeCamp via AntiWar.com,

  US troops based in Syria have come under attack at least four times since the latest US airstrikes in eastern Syria were launched on Sunday, Task & Purpose reported on Monday.

  The Pentagon announced Sunday that it launched strikes against facilities “used by Iran’s Islamic Revolutionary Guard Corps (IRGC) and Iran-affiliated groups” in eastern Syria’s Deir Ezzor province. It marked the third round of US airstrikes since US troops in Iraq and Syria have come under a spate of attacks in response to President Biden’s backing of Israel’s war in Gaza.

  

  A Pentagon official told Task & Purpose that US forces in Syria came under attack three times on Sunday after the US airstrikes and one time on Monday. The White House has said one purpose of its airstrikes is to “deter” further attacks on US troops, but it’s clear the strategy has failed.

  The British-based Syrian Observatory for Human Rights said it recorded six attacks on US forces on Monday alone, but the report is not confirmed. The four incidents confirmed by the US official brings the total number of attacks on US bases in Iraq and Syria since October 17 to 52. The Pentagon has said at least 56 US troops have been wounded.

  An umbrella group of Shia militias known as the Islamic Resistance of Iraq has taken credit for most attacks on US forces. Militia leaders have said they won’t back down unless Israel’s onslaught on Gaza comes to an end. Iran supports the Shia militias that operate in the region but denies any role in the attacks on US forces.

  The US has about 2,500 troops in Iraq and 900 in Syria, where it backs the Kurdish-led SDF. The occupation of eastern Syria is opposed by the government in Damascus, and the continued US military presence in Iraq is opposed by many elements in Iraqi politics.

  Many observers have pointed out that with a crisis like the Gaza war, US troops occupying Syria are vulnerable as prime targets for Iran-aligned militias in the region…

  The #US illegal base in al-Omar oil field in #Syria’s Deir Ezzor was targeted by a rocket or drone attack.💥💥
  No matter how hard the US try, the attacks will continue until the complete cessation of hostilities and atrocities against the Palestinians in Gaza!! pic.twitter.com/H0ApqhyqWE

  — IWN (@A7_Mirza) November 13, 2023

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

  After the US launched a drone strike in January 2020 that killed Iranian Gen. Qassem Soleimani and Iraqi militia leader Abu Mahdi al-Muhandis in Baghdad, Iraq’s parliament voted to expel US troops, but the US refused to leave. In an effort to placate anti-US factions, the US formally changed its presence in Iraq from a combat role to an advisory role in December 2021 but did not withdraw any troops.

  Tyler Durden
  Tue, 11/14/2023 – 17:15

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