Today’s News 16th January 2023

• Destroying American Democracy – An Inside Job
  Destroying American Democracy – An Inside Job

  Authored by Pete Hoekstra via The Gatestone Institute,

  Over the last few years, there has been much written about the destruction of American democracy. Frequently the threat has been of alleged interference in U.S. elections by Russia, China or other state actors. Government agencies, the name of election integrity, were assigned to identify and disrupt these foreign intrusions. As more and more information is revealed about these agencies, it seems that America’s Intelligence Community participated in these activities domestically, and in a way that poses a grave threat to both election integrity and American democracy.

  

  Just last week it was revealed that the FBI again withheld pertinent information from the American public, for past two months, until after the November 8, 2022 federal election. As with the Bureau’s reported cover-up of evidence influence-peddling reportedly found on Hunter Biden’s laptop, agents knew, since November 2, 2022, about at least some of the three sets of classified material that illegally found their way into the garage and library of President Joe Biden and into the Penn Biden Center think tank at the University of Pennsylvania — to which anonymous members of the Chinese Communist Party have donated $54.6 million.

  Their existence only became known this week, after the newly elected Republican-majority House of Representatives announced that it would hold hearings on “how the [Justice] department handled investigations into classified materials found at former President Donald Trump’s Florida home and those found at President Joe Biden’s office in a Washington think tank bearing his name and his Delaware home…”

  In addition, the recent release of the “Twitter Files” has raised at least two major concerns regarding actions by the Intelligence Community. The first is that the wall of separation between the Intelligence Community and the U.S. media has not only sprung a leak, it has totally collapsed. The report that officials from the Office of the Director of National Intelligence (ODNI) met weekly with Twitter executives to coordinate information is totally inappropriate. Would officials from the ODNI review, affirm or label certain sets of information as false? When ODNI was created, no one intended its officials to have a role in these types of discussions.

  It also appears that intelligence officials in recent years have politically weaponized intelligence. The combination of a politically weaponized Intelligence Community, operating hand-in-hand with organizations that are the main gateways for information to millions of Americans, poses a serious threat to American democracy and the integrity of our elections.

  Let us just briefly look at the steep slope of lying, deceit and corruption that has seeped into the leadership of the U.S. Intelligence Community.

  First, there are not enough words to praise our Intelligence Community and the men and women who risk their lives to keep America safe. These are the rank-and-file professionals that form the core of the Intelligence Community. Most are dedicated to the mission of gathering the necessary information to protect our nation. Their leaders have a responsibility to serve these individuals. Too often, however, as the current array of whistleblowers indicates, those leaders have let these individuals down.

  Imagine their reaction in 2013 when, in response to a question from Senator Ron Wyden to then-Director of National Intelligence (DNI) James Clapper about whether the National Security Agency (NSA) collects “any type of data on millions, or hundreds of millions of Americans,” Clapper answered, “No sir, not wittingly.” Clapper, who had been given the question the previous day, was asked after the hearing if he wanted to amend the answer, and declined. It was shortly thereafter that a massive NSA program containing millions of pieces of Americans’ data was revealed. Clapper was caught in a huge lie — to U.S. Senator Wyden and the American people.

  On January 12, 2017, CNN reported that President-elect Donald Trump had been briefed by DNI Clapper, FBI Director James Comey, CIA Director John Brennan, and NSA Director Michael Rogers. The topic: “Russian operatives claim to have compromising personal and financial information about Donald Trump.” It was intended to inform the President-elect that these allegations “are circulating among intelligence agencies, senior members of Congress, and other government officials in Washington.” The briefing also touched on other major allegations they claimed were “circulating.”

  Having this false information — some of which the FBI actually altered — in the public domain was evidently intended to damage Trump. The Russian “hoax” allegations would haunt and damage the Trump presidency for almost two years. Clapper himself stated:

  “I express my profound dismay at the leaks that have been appearing in the press … they are extremely corrosive and damaging to our national security.”

  Clapper also released a statement that neither he nor anyone else in the Intelligence Community were responsible for the leaks. How did this highly classified information, then, get into the public domain?

  A House Republican investigation provides the answer. Clapper denied leaking the dossier but admitted to discussing the dossier with CNN correspondent Jake Tapper and perhaps other journalists in early January 2017. Later in 2017, Clapper would go on to join CNN as a “national security” contributor and CNN would receive an award for its reporting at the White House Correspondents’ dinner.

  Today we know that the “Russia hoax” was a lie. After a 22-month investigation, no evidence of collusion between any element of the Trump campaign and Russia was uncovered. The supposedly compromising evidence had never existed; the information in the “Steele dossier” was false — and the FBI had known it was from the start. The entire fabrication had been an attempt to attack and politically weaken Trump.

  In October 2020, shortly before the elections 51 former intelligence professionals had even signed a joint letter stating that the Hunter Biden laptop had “has all the classic earmarks of a Russian information operation.” They stated that their national security experience made them “deeply suspicious that the Russian government played a significant role in this case.” They went on:

  “If we are right, this is Russia trying to influence how Americans vote in this election, and we strongly believe that Americans need to be aware of this.”

  The New York Times raised questions about the authenticity of the materials found on the laptop. Bill Evanina, the National Counterintelligence and Security Center Director, had indicated in August that Russia was trying to denigrate the Biden campaign. All these manufactured “facts” were apparently intended to create circumstances where reasonable people would have to conclude that the Hunter Biden laptop was Russian disinformation.

  Signatories of the 2020 letter included Clapper, Brennan, Michael Hayden, Jeremy Bash and David Buckley. Clapper and Brennan are familiar names. They were involved in the January 2017 briefing to President Donald Trump on the fake Steele dossier. Jeremy Bash and David Buckley are worth mentioning because they continue to play significant roles in domestic and national security areas in the U.S. government. Buckley was the majority staff director on the House Select Committee investigating January 6th. Bash has been named to co-chair a government commission to review the war in Afghanistan.

  The fraudulent efforts by the U.S. government, Clapper, Brennan and the 49 others — along with Hillary Clinton, her campaign committee, the Democratic National Committee and the suppression of the media and social media (here and here) — to influence the public unfortunately met with some success. For almost two years, the authenticity of the material found on Hunter Biden’s laptop was questioned. Today, its authenticity has been verified; the information is real and damning. As summarized by the New York Post:

  “Yes that letter from the Dirty 51 had all the classic earmarks of a disinformation operation, all right – one designed to ensure Joe Biden won the presidency. And it was essentially a CIA operation, considering 43 of the 51 signatories were former CIA.”

  One final example of the Intelligence Community involving itself in domestic politics comes from the recent release of the “Twitter Files.” According to tweet #20 of the third tranche released:

  “This post about the Hunter Biden laptop situation shows that Roth not only met weekly with the FBI and DHS, but with the Office of the Director of National Intelligence.”

  Tweet #17 states: “executives were also clearly liaising with federal enforcement and intelligence agencies about moderation of election-related content.”

  Finally, the FBI paid Twitter $3.5 million reportedly to “handle requests from the bureau.”

  We now know what happened. Twitter suppressed discussion of the Hunter Biden laptop story and suppressed conservative messaging, while at the same time it appears the FBI, DHS and the ODNI had literally had set up shop at Twitter.

  The American people should be outraged. This level of collaboration between federal law enforcement and a private sector company on controlling speech is terrifying. Having our Intelligence Community, which is supposed to be focused on foreign intelligence collection, involved is even more terrifying.

  DNI James Clapper lying to the American people in 2013 about government surveillance of them, the promoting of the Russian hoax theory in 2017 by CIA Director Brennan, DNI Clapper, FBI Director Comey and others, the suppression of the Hunter Biden laptop story by 51 former intelligence professionals, and the close working arrangement between the FBI, DHS and the ODNI in 2020-2022 raises a staggering series of questions:

  • Can our government, law enforcement, and the Intelligence Community still be trusted?

  • Have those federal government agencies literally weaponized law enforcement and intelligence against political opponents in the U.S.?

  • Has more than one solitary person — former FBI attorney Kevin Clinemith, for altering an email — been held accountable for these egregious abuses of power?

  • Why wasn’t there a more powerful response from the Intelligence Community and the law enforcement community about the disinformation from the 51 former intelligence professionals?

  • Who authorized the cozy relationship between law enforcement, the intelligence community with Twitter?

  • Who in these government agencies reviewed and approved of the output and decisions coming from these joint efforts?

  • Were political appointees in the review loop?

  • Who has the records, notes and decisions that emanated from these groups?

  It is clear that our law enforcement community needs to be investigated, but most importantly we need to investigate how our Intelligence Community has evolved from having literally a non-existent relationship with speech in America to being inside the room determining what speech is allowed.

  There also needs to be a significant investigation by an outside, non-government group to understand how far this massive government overreach into free speech and election manipulation went.

  Clearly the government has been influencing what we get to see and hear. It needs to stop — now — before our democracy is destroyed.

  Tyler Durden
  Sun, 01/15/2023 – 23:30

• Visualizing The Changing World Population, By Country
  Visualizing The Changing World Population, By Country

  On average, there are 250 babies born every minute around the world. As Visual Capitalist’s Freny Fernandes details below, this adds up to over 130 million new human beings entering the world every year.

  Then it’s no surprise that the world’s population, which now stands at a whopping 8 billion, has more than tripled since the mid-20th century.

  This graphic by Truman Du uses December 2022 population data from the UN and summaries from the French Institute for Demographic Studies (INED) to show the unequal rise and fall of the world’s population by 2050.

  

  Let’s take a closer look at some of these population trends.

  Most Populous Countries: 2022 vs. 2050

  The Asian countries of India and China have topped the rankings of the world’s most populous countries for hundreds of years.

  China currently holds the number one spot on this list. But the population of India is expected to surpass that of China’s by later this year, eventually reaching a total of 1.67 billion in 2050.

  

  The United States, Nigeria, Pakistan, and Indonesia are the next most populous countries in 2022, and they are expected to hold onto these spots until 2050. However, they have a long way to go before catching up with the top two, as their combined population doesn’t add up to half that of India and China’s total.

  Interestingly, it is estimated that Nigeria’s population will shoot up to 375 million by 2050, almost matching the population of the United States. In 2022, the African country’s population was just around 219 million. This expected spike is largely due to a high birth rate and booming economy, and the resultant rural-to-urban migration.

  Countries with Declining Populations

  While many countries will be seeing their populations boom over the next three decades, other nations such as China are expected to experience the opposite.

  

   

  Several countries in the world are expected to see their populations decline over the next 30 years. And the main reason for this: extremely low birth rates.

  South Korea, which has the world’s lowest fertility rate, is expected to see a sharp decline of almost 12% in its population as it falls to 46 million by 2050.

  Changing world population trends like this can pose challenges for economies around the world, such as labor shortages, aging populations, and an increasing financial burden on younger generations.

  Tyler Durden
  Sun, 01/15/2023 – 23:00

• The Importance Of Being Biden: How Hunter Reached New Low Seeking To Bar Daughter From Using His Name
  The Importance Of Being Biden: How Hunter Reached New Low Seeking To Bar Daughter From Using His Name

  Authored by Jonathan Turley,

  In Oscar Wilde’s “The Importance of Being Ernest,” the main character’s search for his true name comes to a head when he finally demands “would you kindly inform me who I am?” In an astonishing filing this week, Hunter Biden answered that question for his four-year-old daughter Navy Joan and effectively declared “you are no Biden.”

  

  Hunter Biden’s disgraceful treatment of his daughter has long been on display in Arkansas where he long denied being her father, fought paternity, and was threatened with contempt of court over his failure to supply needed documents. After DNA testing was forced by a court, Hunter was found to be the father but he continued to resist efforts to force him to pay child support and supply financial records.

  Recently, Lunden Roberts sought to have a surname change for her daughter to Biden. Even after his long and abusive treatment of his daughter in court, Hunter Biden’s opposition is breathtaking.  He opposes his daughter using his name and says that, if she does, she will never have a “peaceful existence.”

  Of course, Biden did not feel that way with his other four children. They are all true Bidens and living peaceful existences. It is only Navy Joan who he does not want to bear the family name.

  Hunter’s concern for Navy Joan’s peaceful existence is a bit odd since he has reportedly never even seen his daughter after fighting for years to deny his paternal status and child support.

  While living in a luxurious mansion in Malibu, Hunter continued to fight his obligations under child support and requested in September 2022 to have the payments lowered, bemoaning how his “financial circumstances” were difficult for him.  The public pays more for his security in his mansion than he does in monthly support for his daughter.

  Hunter is asking Circuit Court Judge Holly Meyer to deny Navy Joan the ability to use her father’s surname and claiming that it is in her best interest. The filing is so self-serving and transparently dishonest that it does what was once thought impossible: reach a new low for Hunter. All of his reported selfies having sex and doing drugs with prostitutes were shocking. His attacks on his former sister-in-law, Hallie Biden, widow of the deceased brother (with whom Hunter later had a romantic relationship), were appalling. However, the craven effort to deny this child his name reaches a level of cad that stands unrivaled.

  The position of Hunter in court has been disgraceful, but the media has largely ignored the matter. It has also ignored the utter lack of support from President Joe Biden and the First Lady, who tellingly omitted a stocking for Navy Joan as one of their grandchildren. (The dog and cat did receive stockings). There is no record that Joe or Jill Biden have ever sought to meet, let alone embrace, their grandchild. The President has, however, sought to deny the child security protection (despite his son’s concern for her “peaceful existence”).

  Joe Biden has long campaigned against “deadbeat Dads” but when a Fox reporter asked about Hunter’s refusal to pay child support, President Biden snapped at him and refused to answer the question on the “personal matter.” (The media also ignored Hunter’s deadbeat dad record in fawning interviews about this “bravery” in writing a book on his life).

  The obvious effort of the Biden family in this filing is to preserve distance from this child. The legal standard for a name change in Arkansas has been based on the “best interests of the child,” not the political interest of the father and his family. Indeed, historically, Arkansas courts followed a presumption in favor of a child have the surname of its father.

  More recently, the Arkansas Supreme Court in Huffman v. Fisher laid out various factors to balance including (1) the child’s preference; (2) the effect on the child’s relationship with each parent; (3) the length of time that the child has borne the prior surname; (4) the community respect for the rivaling surnames; (5) the social difficulties that could arise from the adoption of the new surname; and (6) the presence of any parental misconduct or neglect.

  The petition is based on the best interest of the child.  Roberts’ lawyer claims that the Biden name is “now synonymous with being well educated, successful, financially acute, and politically powerful.” The “financially acute” part did jump out for many of us who have followed Hunter Biden’s scandals for years.  The Bidens have certainly made themselves wealthy during Joe Biden’s time in office. However, they are synonymous not with financial acuity but influence peddling. While influence peddling has long been the leading industry in Washington, the Bidens have long taken it to levels unimagined by other powerful families with millions in windfall payments from foreign sources, including some connected to foreign intelligence operations.

  Nevertheless, the child is clearly better off with the Biden surname, particularly in establishing the very connection that Hunter, Joe, and Jill Biden seem committed to conceal or ignore.  Navy Joan is the grandchild of the 47th President of the United States. That alone makes the change beneficial. Navy Joan will be able to benefit from the cache of that connection in applying to college, seeking employment, and other pursuits. It also establishes (despite the efforts of the Bidens) that she is part of the family’s legacy.

  Joe Biden often talks about his Irish roots and his family tree. The familial legacy also includes Navy Joan. Those are her relatives even if they refuse to recognize or embrace her.

  There is no real doubt about the best interests of his child in his filing.  For their part, the Bidens have made it clear what is in their best interest. It is not this child. The court should make fast work of this petition and change Navy Joan’s surname to Biden. That will not make the family more loving or supportive or accepting. She will have to eventually deal emotionally with this latest effort to conceal her true identity.

  Yet, she is a Biden and could easily prove the best of the lot.

  Tyler Durden
  Sun, 01/15/2023 – 22:30

• How Long Is Compulsory Military Service?
  How Long Is Compulsory Military Service?

  Taiwan is extending its mandatory military service in 2024 from four months to one year, as tensions continue to rise with China. Taiwanese President Tsai Ing-wen announced early last week that conscription will include more intense training so that the country is better equipped should China invade. Conscripts will also receive a higher monthly stipend, increasing from NT$6,500 (US$211) to NT$26,307 (US$856), which is roughly akin to minimum wage. In a poll conducted by the Taiwanese Public Opinion Foundation in December, 73 percent of respondents supported the move.

  Fewer than 30 countries worldwide still require whole age cohorts to complete military service. But, as Statista’s Anna Fleck details below, among those that do, four months is a relatively short period of time. Taiwan had originally stipulated two years of service, however this was gradually cut down to four months as of 2013, with the intention of relying more heavily on volunteer forces instead.

  As Statista’s chart shows, North Korea stands at the other end of the spectrum in terms of duration, although media reports vary. The Guardian reported 10 years for men and 7 for women as of 2015, while the Indian Express puts the figures closer to 8 years for men and 5 for women. According to media reports, those in the elite class are usually able to avoid conscription.

  

  You will find more infographics at Statista

  Israel too has a fairly long and rigorous conscription, albeit far shorter than North Korea. Most Israeli men over the age of 18 who are Jewish, Druze or Circassian must serve in the Israel Defense Forces for 32 months and women for 24 months, according to the IDF. Meanwhile, in Egypt, conscription is compulsory for men aged between 18 and 30 for up to 36 months. As with several countries on the chart, service can be pushed back until students finish their studies and there are a number of clauses that exempt men from joining the forces, for example, if they are the only son/sole breadwinner of the family.

  South Korea, which is technically still at war with North Korea, also has mandatory conscription for all able-bodied men for a period of 18 months to 21 months, depending on the posting. Some athletes and classical artists are allowed to postpone or forgo the draft entirely. The K-Pop group BTS brought the issue to light recently, with debate over whether they could be excused from service. The decision was made that men can delay their military draft until the age of 28 and those working in the entertainment industry are now allowed to postpone their service until they turn 30. The oldest member of BTS, Jin, has now started his mandatory draft.

  There’s huge variation in the rules for how long citizens must join the military in the countries that still have mandatory conscription as well as possible reasons for exemptions. For instance, in Turkey, new laws introduced in 2019 decreed that instead of the mandatory six months of military training, conscripts could do one month and buy-out the remaining five months for a fee of 31,000 Turkish Lira ($1,651), according to the Australian Government’s Department of Foreign Affairs and Trade. Conscripts’ levels of higher education can also impact the type and length of their post.

  Punishments for not enlisting vary too. In Eritrea, anyone evading or attempting to evade compulsory military service could face imprisonment of one to three years. According to DFAT, this could increase to 7-10 years imprisonment in a time of emergency or war.

  While most countries with conscription only draft men, a handful of countries including North Korea, Israel, Norway, Sweden, Eritrea and Mozambique conscript women too.

  Tyler Durden
  Sun, 01/15/2023 – 22:00

• Japan's Experts Baffled By High 'COVID Deaths' Despite High Vaccination Rate
  Japan’s Experts Baffled By High ‘COVID Deaths’ Despite High Vaccination Rate

  Authored by Guy Gin via ‘Making (COVID) Waves In Japan’ Substack,

  After three booster campaigns in 2022, the Japanese are now in a league of their own among mRNA consuming countries, administering far more boosters than countries that had far more coercive vax campaigns.

  

  Japanese over 65 have done their best to reduce Japan’s 612-million-dose stockpile of mRNA jabs, with 3rd, 4th, and 5th jab rates of 91%, 82.5%, and 56%, respectively. But unfortunately, Japan has started 2023 by reporting its highest ever daily Covid death tolls. During the booster era starting in early 2022, each wave has been noticeably higher than the last.

  

  What could possibly explain this? Let’s ask Takaji Wakita, chairman of Japan’s Covid Response Advisory Board.

  

  The cause of the rise in Covid deaths is *hard to explain.*

  What about Dr Satoshi Kamayachi, director of the Japan Medical Association?

  

  JMA director on increased Covid deaths: “There’s a lot we don’t know, and we don’t have evidence.”

  Nice to see an expert admit the limit of his knowledge. But there must be something Dr Kamayachi can tell us, right?

  Dr Kamayachi, citing the rapid spread of Covid infections as one reason, explained that the majority of those who died were over 60 and many had underlying medical conditions. The direct cause of death is often heart failure or kidney disease, and he said that “thorough analysis is needed.”

  Heart failure, you say? Well, it’s not like most Japanese over 60 have been injected multiple times with anything that causes cardiovascular problems, is it? And kidney disease is coincidentally a side-effect of Remdesivir, an approved Covid treatment in Japan.

  Of course, Japan has been counting anyone who dies with a positive test result as a Covid death regardless of actual cause of death since 2020, but Dr Kamayachi and the rest of Japan’s experts haven’t bothered bringing up the issue of attribution until now. In fact, they were more than happy to cite inflated mortality data to help promote the jabs. But now that people may question why daily reported Covid deaths are higher than ever after the majority of over 65s have taken the experts’ advice to get multiple boosters, underlying medical conditions can apparently be discussed.

  But although he’s three years late, Dr Kamayachi has a point. Although reported Covid deaths have been much higher in the booster era, far fewer Covid cases have been receiving mechanical ventilation (the gray line shows the number of ventilators/ECMO secured for Covid patients).

  

  But even if hardly any of them have been struggling for breath on mechanical ventilation, Japan’s elderly have been dying in higher than expected numbers in the booster era. The national figures for December won’t be out until late Feb, but Yokohama (Japan’s second largest city) has already releases its all-cause death numbers for 2022. Somehow I doubt Dr Kamayachi will call for a “thorough analysis” to find out the cause of the increase since August.

  

  All-cause deaths in Yokohama 2016-2022

  Although there’s no good news here for Japan’s vaxed-to-the-max elderly, there is for Japan’s medical establishment: high numbers of Covid deaths mean the publicly funded Covid gravy train will keep going. From The Nikkei.

  On 11th Jan, experts offered their views on reclassifying Covid-19 under the Infectious Diseases Act. In light of the current situation where the number of reported Covid deaths per day is the highest ever, the experts called for the government to continue to provide a certain amount of financial support to cover treatment and hospitalization costs and for securing hospital beds.

  Basically, the government’s selected experts, including Dr. Wakita above, recommend that Covid should be downgraded “gradually”, i.e., medical costs should continue to be covered by public funds rather than health insurance/out-of-pocket payments like every other medical condition. This might seem reasonable. But under the current scheme of Covid support payments, hospitals can be paid ¥436,000 (US$3,370) per day to “secure” a single ICU bed regardless of whether anyone is in it. And overpriced Covid treatments include glorified cold medications like Shinogi’s Xocova.

  So let’s recap what the experts have told us.

  The cause of increased Covid deaths? “Dunno.”

  Should the government keep showering medical institutions and pharma companies with money? “Absolutely!”

  Well, what were you expecting them to say?

  

  Tyler Durden
  Sun, 01/15/2023 – 21:30

• House GOP Bill Would Order Federal Workers Back To Office
  House GOP Bill Would Order Federal Workers Back To Office

  House Republicans have introduced a bill that would command legions of federal employees to stop teleworking and return to the office. 

  The Stopping Home Office Work’s Unproductive Problems Act — or “SHOW UP Act” — was introduced by Kentucky Rep. James Comer, who chairs the House Committee on Oversight and Accountability. 

  “Americans have suffered from the federal government’s detrimental pandemic-era telework policies for federal bureaucrats,” said Comer. “President Biden’s unnecessary expansion of telework crippled the ability of departments and agencies to fulfill their responsibilities and created cumbersome backlogs.”

  The bill gives federal employees who worked in person prior to the pandemic 30 days to get back to the office. A November Federal News Network survey found that 60% of feds were working in a “hybrid” environment, with a third working entirely remotely.  

  

  Comer says Oversight Committee members have received whistleblower reports indicating that General Service Administration’s (GSA) chief Robin Carnahan has spent the majority of her time away from Washington, DC.   

  The SHOW UP Act would also direct federal agencies to study the impact of tele-work on their missions and report their findings to Congress. “The federal government’s expansion of telework during the pandemic has delayed critical assistance to veterans, tax refunds, passport applications, and other basic services,” said Comer’s office.

  Agencies would also have to provide data on locality pay received by federal employees — who may not actually be spending much time in that locality at all. 

  Locality pay is a substantial layer of compensation that’s added to federal employees’ base pay. As the name implies, it varies depending on where the job is located. The 2022 default locality pay for areas of the country without a customized percentage was 16.5% of base pay.

  However, in Washington DC, it’s a whopping 32.49% of base pay. For 2003, employees in the DC locality received one of the largest locality-pay hikes: 4.86%.  

  The SHOW UP Act alludes to an important question: How many purported Washington DC federal employees are receiving enormous locality pay while living somewhere else and phoning it in? That question isn’t only relevant for DC: The same dynamic would apply federal employees in other localities who’ve left the big city to go live cheap somewhere else and only visit the office when required.  

  In 2021, the federal Office of Personnel Management said employees in “remote work” arrangements — a permanent arrangement with no expectation of coming to the office — should receive locality pay based on their remote location.

  Things get murkier, though, where flexible “telework” is concerned. Telework usually requires reporting in-person twice every two weeks…unless that requirement is waived. Teleworking feds’ locality pay is determined by the office location, not their home. 

  To that point, the SHOW UP Act says agencies must analyze costs attributable to “paying higher rates of locality pay to teleworking employees as a result of incorrectly classifying such employees as teleworkers rather than remote workers.” 

  

  It isn’t just Republicans who are itching to get federal employees out of their pajamas and back to work. Earlier this month, DC Mayor Muriel Bowser urged President Biden to kill the liberal telework policies that have left many office buildings nearly vacant, with corresponding impacts on the city economy. Otherwise, she wants government offices repurposed. 

  The SHOW UP Act, which has no future in a Democrat-controlled Senate, would bolster her case: It commands agencies to assess the cost of “owning, leasing or maintaining under-utilized real property.” 

  Tyler Durden
  Sun, 01/15/2023 – 21:00

• The Benefits Of A Savings Culture & The Future Role Of China's Yuan
  The Benefits Of A Savings Culture & The Future Role Of China’s Yuan

  Authored by Alasdair Macleod via GoldMoney.com,

  Savings are a vital component of any successful economy, and the foolishness behind the paradox of thrift is exposed in this article. It has been a huge error for Keynesian policy makers to discourage savings in the interests of temporary boosts to consumerism.

  It is probably too late now but encouraging people to save by removing all taxation from savings makes an enormous contribution to reducing price inflation and trade deficits, while enhancing national wealth. This is evidenced empirically and demonstrated by reasoned theory. 

  Furthermore, there is an error in assuming that there is no alternative to Triffin’s dilemma, which posited that for a nation to produce a meaningful level of reserve currency for external circulation it must run trade deficits. Triffin was describing the problems the United States gave itself under the Bretton Woods agreement, leading to the failure of the London gold pool in the late sixties. It still informs US policy makers today, and wrongly leads American commentators to believe that the dollar cannot be toppled from its pre-eminent position.

  But Triffin’s dilemma assumes that central banks must accumulate currency reserves. Unless a government has foolishly indebted itself in a foreign currency, there is no need for them to do so. Currency reserves add nothing to a domestic currency’s stability. Gold fulfilled this role successfully, and likely to do so again in future.

  It is a savings ratio of 45% which is at the root of China’s power. The lack of savings in America and its western alliance is their Achilles heel.

  

  Empirical evidence

  If there was one taxation policy which would reduce consumer price inflation, stabilise a fiat currency, encourage capital allocation for productive purposes, and improve government finances for the longer-term, what would it be?

  Remove all taxes from savings.

  This is the lesson from past-war West Germany and Japan, both of which suffered absolute defeat and economic destruction in the Second World War. Their currencies were worthless. But they recovered to become economic powerhouses in Europe and Asia respectively in little more than two decades. Both implemented savings-friendly taxation policies, which made capital available at stable interest rates for new industries to invest in production. Germany developed its Mittelstand, and Japan built on her vertically integrated Zaibatsu.

  Germany was fortunate in its Economy Minister, Ludwig Erhard. A free marketeer who on 20 June 1948 took the bull by the horns, Erhard unilaterally ended rationing on the same day as the new mark was introduced, presenting it as a fait accompli to the military governors in the British and American zones. In a week, shops had begun to reopen, and goods became widely available.

  In negotiations with the military governors, Erhard managed to obtain income tax concessions for savings, which through the banking system were invested making capital available for private sector reconstruction. While he struggled against both military governments in the two zones to retain lower taxes and for favourable treatment for savings into the 1950s, Erhard had laid the foundations for a savings driven, free market economy. By the 1980s, the only tax on savings was a 10% withholding tax on bank interest and bond coupons, which was not generally pursued by the German tax authorities in the knowledge that attempts to do so would simply drive savings beyond their reach into Luxembourg and Zurich.

  For this reason, Germany remained a savings driven economy with a strong currency right up to the mark’s incorporation in the new euro. Much to the confusion of British and American neo-Keynesians subscribing to their cherished savings paradox, Germany became the wealthiest of the European nations, other than perhaps Switzerland. In both cases, hard currencies accompanied wealth creation.

  Erhard’s post-war opposition was principally from General Sir Brian Robertson, the head of the British occupation government, and from the French. The commander of the American occupation zone, General Lucius Clay was more sympathetic with free market solutions. The Americans had promoted A Plan for the Liquidation of War Finance and Financial Rehabilitation of Germany (1946), written at Clay’s behest, one of the co-authors being Joseph Dodge. In 1949, Dodge was then appointed to advise the Japanese government on its post-war reconstruction as an aide to General MacArthur. And Dodge was instrumental in ensuring that up to a certain level, post office savings accounts were entirely tax free. It was probably a deliberate oversight on his part, but the tax law didn’t stop an account holder merely opening another savings account when the tax-free limit on an existing account was reached.

  Dodge implemented what became known as “The Dodge Line”. By insisting on a balanced national budget and shutting down the printing presses, he ended hyperinflation. The exchange rate between the yen and the dollar stabilised. Government economic intervention and interference was slashed across the board. Echoing John Cowperthwaite’s free market policies in Hong Kong, Dodge realised that the best economic progress was obtained by eliminating state interference, leaving it to Japan’s businessmen and entrepreneurs who, despite the war, retained the skills and connections to run their businesses. With MacArthur’s support, he ruthlessly eliminated subsidies and price controls. Dodge was eventually recalled to America, becoming Truman’s Director of the Budget where in the space of only a year he had cut the US federal deficit in half.

  Dodge’s free market approach was supplemented by the assistance of another American adviser, W Edwards Denning. Denning introduced quality control techniques to Japanese manufacturing which revolutionised production. As a consequence of Denning’s contribution, Japan rapidly evolved from a source of shoddy goods into a producer of the best consumer technology and the manufacture of world-beating high quality consumer goods.

  Behind this revolution was the tax incentive to save – a simple approach of assuming that taxed earnings put aside should not be taxed again. In both Germany and Japan, these were not the only factors that led to a successful emergence from total desolation, but they are the elements that ensured that both nations continued to flourish. And in Japan, despite the government fully embracing Keynesian philosophy in the wake of the late-eighties speculative bubble, the savings culture of “Mrs Watanabe, the Japanese housewife” persists to this day.

  After his stint in Japan and while Joe Dodge worked his budget magic for Truman, the British were going in the opposite direction, eschewing free markets, embracing Keynesianism, persisting with rationing until 1954, and imposing punitive taxes on savings. The decline of post-war Britain and much of Europe need not enter our narrative, but it was a feature of all nations which implemented economic policies of taxing savings.

  The theory behind savings

  The empirical evidence is clear. Since the Second World War, economies that embraced free markets and the role of personal savings outperformed those which saw savings as an easy source of tax revenue. Furthermore, we can easily explain why free markets succeed in creating wealth for all, while a state directed economy is anti-progress. It was demonstrated by the Austrian economist, Ludwig von Mises, who in an essay written in 1920 explained the futility of central planning due to a lack of the ability to perform economic calculation. Admittedly, he compared the full-blown socialism which Russia had embraced with free markets. But his conclusions, that the state is unable to allocate economic resources including capital as efficiently as profit-seeking capitalists applies equally to less aggressive forms of socialism.

  In a free market economy, individuals are compelled to make provision for the unknown vagaries of the future. Often through the medium of insurance policies and pension plans, they put aside a portion of their income to protect themselves from the financial consequences of ill-health and incapacity, provide for their old age, and to ensure there is something to pass on to their heirs. If the circulating medium is sound, no financial skill is required to preserve the value of savings in these arrangements and in the form of bank deposits. Within the limits of their acumen, those with some financial knowledge can venture into other forms of savings, such as bonds issued by their government agencies and corporations and even to acquire equity interests in ventures.

  As always, investors with skill and knowledge will improve their position relative to those less financially literate, which is anathema to redistributors of wealth. But the corruption of the value of credit that goes with monetary intervention by the state impoverishes those who lack investing skills most, always the poorest in society. It stands to reason therefore, that an economy that benefits most from the savings of the masses must protect the value of credit.

  The Keynesian revolution rode roughshod over this issue. Keynes dismissed capitalist savers as rentiers, a term with emotive connotations suggesting that they are workshy and greedy only for interest on their capital. His academic environment at Cambridge and afterwards the Bloomsbury set in London was certainly populated with these flaneurs. But this was not representative of the wider population which was to be deprived by his desire for the euthanasia of the rentier expressed openly in his General Theory.

  So it was that Keynes came up with the paradox of thrift, while he was working his way towards discarding Say’s law to justify his General Theory. In Chapter 23, he takes preceding crackpot theories on the subject as evidence of the destruction wrought by saving. Earlier in Chapter 3, on Observations of the Nature of Capital, he claimed that excess savings could lead to “the fate of Midas…  assuming that the propensity to consume and the rate of interest are not deliberately controlled in the social interest but are left mainly to the influences of laissez-faire”. In working his way towards a role for the state, which appears to be his objective here, Keynes makes a number of errors, the principal ones being glossing over the role of bank credit (there is only one indexed reference to credit, commercial bank or otherwise in the whole book!), and whether it is the borrower or lender who sets the rate of interest. To be absolutely certain of the role of savings in an economy, and as to whether there can be an excess leading to the fate of Midas, we must explore Keynes’s errors further.

  Variations in the rate of interest are not due to the ephemeral dispositions of rentiers but in large part to fluctuations in the supply of bank credit. It is the expansion of bank credit which leads to an economic boom, which when it leads to excessive demand and speculation by driving up prices engenders caution in the banker’s mind. Naturally, he then restricts the supply of credit, which raises the interest cost. This is why the cycle of bank credit would never permit “the fate of Midas” to occur. Clearly, Keynes’s conclusion that there can be a savings glut is based on his wilful ignorance of the nature of money and credit.[iii]

  Furthermore, Keynes’s basic assumption, that it is the greed of the rentier which forces an unnecessary and arguably immoral cost onto production is also incorrect. It is the same error that leads monetary policy makers today to assume that by manipulating the interest rate the general level of prices can be controlled. It was Keynes himself who earlier noted this error, which he named Gibson’s paradox after Arthur Gibson, who pointed out the lack of correlation between the two. Because Keynes was unable to explain the paradox, he simply proceeded as if it did not exist, and so has every monetary policy committee ever since.

  The paradox is real, and the explanation is simple, falling into two elements. The first is that savers are generally reluctant to save, because it means a deferment of consumption, an immediate satisfaction being exchanged for one in the future of less certain value. Therefore, a business requiring capital for production must bid up the rate of interest it is prepared to pay to a level where the consumer is willing to defer his enjoyment. It is this marginal rate that balances the demands for capital with the availability of savings in an economy. And it is not just a question of setting the rate of interest for recycling credit through the banks’ balance sheets. It sets the rates of return for all financial assets as well and the cost of funding for their issuers.

  The second element is the time-preference for which savers will naturally expect compensation. Time preference describes the value of possession of money or money substitutes. A saver loses the value of possession until his money or credit for money is returned. For simplicity’s sake, we must ignore counterparty risk but include expectations of changes in the purchasing power in the circulating media for the time that possession is lost.

  It becomes clear that if a potential saver is to part with possession of money or credit when the evidence points to its debasement, he will reasonably seek compensation. Therefore, for the saver interest rates are not the cost of money which he demands, except in a strictly minimally additional and marginal sense. For a central bank to assume that by varying the underlying rate of interest it can control the economy is therefore incorrect. Central banks have it the wrong way round, which explains why there is no correlation between their interest rate setting and the rate of price inflation. 

  Furthermore, Gibson pointed out that the correlation was between interest rates and the general level of wholesale prices, and not their rate of change. This correlation is consistent with a businessman’s economic calculation: in order to calculate the profitability of an investment, he must consider the price he will expect for his production, by necessity always referring to current levels. He can then calculate the interest cost he is prepared to pay to secure the capital necessary for his project, and therefore assess its profitability.

  The hope harboured by Keynes, that the state can stimulate the economy at the expense of savings beyond the very short term is incorrect. His paradox of thrift, which Keynes used to try to dissuade a propensity to save, was a conclusion drawn from these errors. They are in large part responsible for the plight in which the US, the UK, and various member states of the EU now find themselves. 

  Savings in the context of national finances

  More than any other factor, the propensity to save is a major influence on national finances, being a “swing factor” between a government’s budget and the national trade position.

  There is an important question most analysts ignore. It is the twin deficit hypothesis, whereby if the savings rate doesn’t change, a budget deficit leads to a matching trade deficit.  The reason the two deficits are linked in this way is because of the following national accounting identity:

  (Imports – Exports) ≡ (Investment – Savings) + (Government spending – Taxes)

  In other words, a trade deficit is the result of a budget deficit not funded by savings but by additional credit. This can be confirmed by following the money. For a budget deficit, there are only two sources of funding. Consumers put aside some of their spending to increase their savings in order to subscribe for government bonds. Otherwise, the banking system comes up with funding in the form of credit issued by the central bank or by commercial banks, putting additional credit into circulation which didn’t exist before.

  The financing of a budget deficit by credit expansion leads to excess credit in an economy without matching production. This is the point behind Say’s law, which defines the division of labour. We produce to consume, and the function of money and credit is one of intermediation between the two. Injecting extra credit into an economy does nothing to raise production, but it does increase overall demand, at least until it is absorbed into the economy in accordance with the Cantillon effect.

  Directly or indirectly, this excess demand can only be satisfied by imported consumer goods, because an increase in domestic production is unavailable. 

  The role of savings in the context of national finances is very important. An increase in savings is at the expense of consumption, which is why economists often refer to savings as consumption deferred. For consumption to remain deferred requires it to be invested, either into production or government debt usually through the banks, pension funds, insurance companies or other financial channels acting on the savers’ behalf.

  If the destination of additional savings is investment in government debt, they are turned into consumption by the government. By not being spent on additional consumer goods, the trade deficit falls relative to the budget deficit. 

  As noted above, despite the destructive Keynesian policies of its government, Japanese savers habitually respond to an increase in credit by retaining it in their savings accounts. Consequently, consumer price inflation is subdued, relative to that in other countries. While the Eurozone has employed similar interest rate policies and is suffering CPI-recorded debasement of over 10%, in Japan it is about 4%. As we note below, in China whose savings ratio is 45%, CPI measured inflation is currently less than 2%.

  The deployment of capital by Japan’s corporations, which is the counterpart of increased savings, is invested in improvements in technology and production methods, keeping consumer prices lower than they would otherwise be. Because Japanese savers are so consistent in their savings culture, Japanese corporations have benefitted from a relatively low and stable cost of capital, making business calculation more reliable. For Japan, savings are the positive swing factor in the twin deficit hypothesis.

  The same is true of any economy where there is a government deficit while at the same time there is a propensity in the population to save rather than spend. It is the driving force behind China’s export surpluses, because with the sole exception of Singapore, the Chinese are the biggest savers on the planet. The position of nations whose economic policies have been to tax savings and to encourage immediate consumption is diametrically different. It is consumption funded by the expansion of money and credit without increases in savings which has led to persistent US trade deficits, twinned with budget deficits. 

  The evidence confirms that a savings driven economy is more successful than a consumption driven economy. Not only does the former protect the currency’s purchasing power by reducing the need for reliance on foreign capital inflows to finance internal deficits, but empirical evidence clearly shows savings-driven economies are more successful at creating wealth for their citizens. Importantly, a currency backed by a savings culture can weather a greater level of credit expansion by its central bank without adverse consequences for prices.

  The condition which must apply is that fiat currencies continue to operate as media of exchange. The moment a major currency such as the US dollar fails, then all fiat currencies are likely to be destabilised. The cure for that risk is to tie currencies to legal money, which is gold. In the absence of that link, even the strongest fiat currency loses purchasing power over time. The Japanese yen has lost 95% of its purchasing power relative to gold since 1970, an average of 1.83% every year. But including tax-free bank interest, the Japanese housewife has probably just about retained the value of her post office savings account, unlike her taxed equivalents in the other major currencies.

  Supplying a reserve currency 

  As Robert Triffin, the Belgian-American economist put it, for a currency to be available internationally to act as the reserve currency requires irresponsible short-term domestic economic and monetary policies. Triffin originally described why this is the case in evidence before the US Congress in 1959. It was a dilemma, which would eventually lead to an erosion of confidence in the currency. He was proved right eight years later when the London gold pool failed, leading to the abandonment of the Bretton Woods agreement in 1971.

  In a twist of Triffin’s earlier warning whereby his predicted outcome is ignored, in recent years the dilemma has been taken to justify continual trade deficits, the counterpart of which is the accumulation of dollars in foreign hands. The eventual consequences are ignored. Currently, these dollars and the US financial assets in which they are invested total over $30 trillion, significantly more than US GDP. This total has fallen by over $3 trillion in the year to September, mainly due to a fall in market valuations. But there has been net foreign selling of existing US dollar assets as well, while the US trade deficit has added to the outflow by an additional trillion dollars.

  The US now appears to be in a similar position to that described by Triffin as the inevitable outcome of providing the world with its reserve currency. Furthermore, the scale of dollar and dollar denominated financial asset accumulation has been encouraged by a bond bull market on the back of a declining interest rate trend which has lasted forty years. Crucially, domestic funding of budget deficits as recorded by the savings rate has failed to match this foreign interest.

  However, domestic investors have made substantial portfolio gains along with foreign holders of dollars. Driving these gains has been the inflation of credit directed into financial activities thereby sustaining the bubble, while the Fed goosed valuations by suppressing interest rates to the zero bound.

  When the rate of consumer price inflation unexpectedly broke the bounds of statistical management — independent analysts had it far higher than official figures for many years citing changes in methodology — it became clear that the bull market in US asset values was over. Being in the early stages of a bear market, this fundamental change is yet to be widely recognised, but with official interest rates well below the CPI rate of increase, foreign investors are certain of yet more portfolio and currency losses. Domestic investors and bulls of their own currency assume foreigners will still demand dollars, when the evidence from the continuing trade deficit and the US Treasury’s TIC figures confirm they are already turning sellers.

  This dichotomy between foreigner and domestic users of a currency is not unusual. An examination of previous episodes of currencies in trouble confirms that the foreign exchanges are usually first to recognise they should be sold, while domestic users usually continue to believe that they will retain their value. 

  If it is not too late, the solution to stabilising today’s fiat currencies is to remove all obstacles to savers, in an attempt to increase the savings ratio. But when a currency is already on its way to eventual extinction, removing tax disincentives may not be enough, and other measures to reduce the budget deficit must be taken in order to reduce the trade deficit. But then we run into Keynes’s savings paradox: discouraging consumption in favour of savings is viewed by neo-Keynesians as recessionary when economic growth is already stalling.

  The Saudi’s decision to ditch dollars in favour of yuan — turning from petrodollars to petroyuan — couldn’t have come at a worse time for the dollar. In addition to facing a bear market for their dollar assets, foreign holders now find its mainstay justification is distinctly frayed. Almost certainly, the dollar is on the verge of a Triffin crisis.

  The future role of China’s yuan 

  This time, it appears that the dollar has nowhere to turn. Asia is now the most important geopolitical region, with some 3.8bn people rapidly industrialising. Member states of the Shanghai Cooperation Organisation, the Eurasian Economic Union, and BRICS are increasingly determined to move away from dollars, its hegemony, and influence. As the Saudis and the whole Gulf Cooperation Council of oil exporters are demonstrating, China’s yuan is being seen as the dollar’s replacement for inter-Asian payments. The roles of the euro, yen, and sterling in foreign reserves are also likely to diminish with the dollar as well. 

  At this stage the new global currency reserve position is still unclear, with the Eurasian Economic Union planning a trade settlement currency, and the Russians sending vague signals but yet to prognosticate. But in the context of Triffin and savings rates, China could hardly be more different from the US. 

  China has a savings rate of about 45% of its GDP. With this propensity to save, it is unsurprising that consumer price inflation is under two per cent. Moreover, government finances have taken a hit from China’s covid lockdown policies and a property development crisis, leaving a deficit of over $1 trillion equivalent for 2022. But even so, with such a high savings rate the surplus on the balance of trade for 2022 was still positive at $890bn.

  The Triffin dilemma suggests that for the yuan to become a replacement reserve currency the Chinese government will have to start spending like drunken sailors while taxing domestic savings to the hilt. Only then can a trade deficit be expected to arise. But such a volte face in economic policy would surely destroy the yuan’s credibility. After all, it took ten years from the suspension of the Bretton Woods agreement and interest rates rising to 20% for the dollar to then assume the role of a reserve currency in gold’s stead.

  We must question the need for central banks to maintain currency reserves in the future. Not only did the western alliance send a signal that they could be made worthless by its cartel at the stroke of a pen, but the shift from the petrodollar to the petroyuan is symbolic of a currency regime that has had its time. The possession of reserves originated with the requirement for central banks to back their currencies with legal money — gold. It is the abandonment of this link with money that led to possession of currency reserves, with dollar holdings at their core. But other than for limited international intervention purposes there seems to be little reason to hold them, particularly for those central banks who have become aware of the western alliance’s declining influence.

  China with its trade surplus while maintaining a balance in its payments by exporting capital has no need for other currency reserves beyond some minor liquidity. The capital being exported is in yuan in the form of bank credit, and it suits China with her plans for the industrialisation of Greater Asia and its suppliers in Africa and South America to make substantial investments for her greater good. The Chinese government controls its major banks and can direct the application of this surplus credit. There is no need therefore for China to destroy its finances to provide yuan as a reserve currency, as Triffin originally suggested.

  Clearly, there must be a revolution in central bank thinking underway in the broader Asian camp. Central banks are beginning to replace the major currencies in their reserves with yuan and even roubles. But these currencies are not available in sufficient quantities to replace their dollars, euros, yen, and sterling. This is why they are turning the clock back and beginning to accumulate physical gold.

  In a few words, it is China’s high savings rate which gives its government the resources, the power, and the opportunity to displace the American dollar and its hegemony from Greater Asia and much of the developing world. Our mistake leading to our relative decline was to listen to Keynes and his paradox of thrift.

  Tyler Durden
  Sun, 01/15/2023 – 20:30

• Prediction Consensus: What The Experts See Coming In 2023
  Prediction Consensus: What The Experts See Coming In 2023

  In this fourth year of Visual Capitalist’s Prediction Consensus (now part of their more comprehensive 2023 Global Forecast Series), they’ve learned a few things about the universe of predictions, experts, outlooks, and forecasts.

  1. Experts are reasonably good at predicting the future one year out, though they are also in a strong position to help shape the future through their influential thought leadership and actions.

  2. Situations can and will flare up in unexpected ways, which can have knock-on effects on the whole system (e.g. COVID-19, Ukraine invasion).

  3. Experts are just as susceptible to hype as the rest of us, as evidenced by the glut of Web3 predictions in 2022 and AI predictions this year.

  Of course, as Visual Capitalist’s Nick Routley admits, we’re susceptible to hype as well, which is why we asked ChatGPT to write the intro to this article:

  

  Not bad. But, simple curiosity aside, it’s the practical considerations we’ll focus on today. This article serves as an overview of how experts think the markets will move, how trends will develop, and which risks and opportunities to watch over the coming 12 months.

  Let’s gaze into the crystal ball.

  

  The Economic Vibe Check

  First, we’ll look at some big picture themes, and how experts see them playing out over 2023.

  Inflation: This was the top economic story of last year, so it’s a natural starting place. Many of the expert opinions in this year’s database (now at 500+ predictions) are pointing to inflation easing off as the year progresses*. On the downside, few predict that inflation will drop back down to the 2% range that Fed policymakers favor.

  GDP: Forecasters have been revising their economic projections downward in recent weeks. The latest was World Bank, which now sees global growth declining to 1.7% in 2023, down from 3% just six months ago. Most of the predictions in our database see global economic growth in the range of 1.5% to 2%.

  Recession: As 2022 came to a close, the broad sentiment among experts in the financial industry is that recession is all but inevitable in developed markets this year. As dawn breaks in 2023, a few analysts now feel that the U.S.—and possibly Europe—could narrowly avoid recession.

  Markets: Experts on Wall Street and beyond are cautiously optimistic about equities, and after the worst year on record for bonds in 2022, most analysts are declaring that “Bonds are back”.

  *Interestingly, this was also last year’s prediction, but the scale of Russia’s invasion of Ukraine was a curve ball that caught many experts off guard.

  AI is Eating the World

  Jobs being displaced by automation is far from a new theme, but given the exponential improvements in AI in recent years, the risk to entire industries feels more existential today.

  As an example, let’s consider art and design. One of the ways many illustrators and artists earn a living is through commissions⁠—essentially being hired and paid to create a specific piece of art in their style.

  Today though, free, powerful AI tools, such as Midjourney, allow users to generate high-quality art in an infinite number of styles with just a few clicks. Real art will never truly go out of style, and accomplished artists will always attract an audience, but this one example shows how quickly technology can disrupt an industry. (Artists can take solace in the fact that AI is still comically bad at rendering hands.)

  

  Of course, there are obvious positive aspects to this technological advancement as well. Generative AI tools are useful for generating ideas and mock-ups, and even functional snippets of code. AI systems like AlphaFold unlock a world of possibilities in scientific domains.

  From the hundreds of predictions we evaluated, it’s clear that experts view AI as a major catalyst this year. AI start-ups are forcing Big Tech to innovate faster, and employees are finding new ways to use AI-powered tools to increase productivity.

  Experts predict that AI will impact peoples’ lives in a much more visible and tangible way in 2023 than in past years.

  The China Factor

  As world’s second largest economy and linchpin of global trade, events in China have a major impact on the world economy.

  Xi Jinping’s reversal of Zero-COVID restrictions should drastically change the trajectory of the country’s economy. For one, reopening will unleash a flood of household spending and consumption.

  

  China’s reopening will also impact other economies as well. For example, the resumption of travel will be a boon to destinations favored by Chinese vacationers. Economically, Hong Kong stands to benefit immensely—its GDP could jump upwards of 8% after reopening is complete. Emerging market commodity exporters could see a lift as well, though inflation could be reinvigorated as a result.

  In the U.S., a storm is brewing over the extremely popular video app, TikTok. Many experts predict that regulators will either ban the app altogether in 2023, or force the sale of the company to an American entity. Regardless how that situation plays out, it underscores the souring relationship between the U.S. and China. The rivalry will continue to have ripple effects on the global markets throughout the year.

  Energy

  Energy was the S&P 500’s top performing sector two years in a row, and many experts feel that more growth is on the horizon.

  The global system that supplies us with energy is breathtakingly complex, with a lot of unpredictable factors at play. Of all factors, conflict can create the most volatility, and 2023 has a number of geopolitical risks that could impact energy supplies. First, Europe will continue to diversify its energy imports away from Russia. Recently, liquefied natural gas from the U.S. has helped fill gaps.

  

  Next, Iran could be a flashpoint in the Middle East this year. A brewing conflict in the region could cause instability, which will have knock-on effects on the energy industry—particularly in the event of attacks on oil and gas infrastructure.

  Here are a few other factors to consider this coming year:

  • The U.S. Energy Department will aim to replenish its Strategic Petroleum Reserve

  • Easing of U.S. sanctions on Venezuela could lay the ground work for increased oil production

  • In post-Zero-COVID China, economic activity will increase, pushing up demand

  • In the UK, the energy price guarantee will rise in April, meaning higher energy bills for households

  The Elon Playbook

  After a lull in December (nobody wants to be the company that fires people during the holiday season) tech and tech-adjacent companies have resumed their zealous slashing of headcounts.

  There had been a slew of layoffs already in 2023, topped by Salesforce, which is trimming 7,000 jobs, and Amazon, which is cutting 18,000 roles—primarily impacting the corporate side of the business.

  Given the influence of Elon Musk in the tech industry, many experts are suggesting that his strategy of ruthlessly slashing headcount at Twitter might serve as inspiration for other technology leaders.

  

  Employees in the tech industry are very well compensated, and many were hired during periods of intense competition between companies to attract talent and capture market share.

  During a downturn, it’s tempting—and often necessary—for companies to course-correct. There were also predictions that the whole start-up and investment ecosystem could be switching from a hypergrowth to a value-focused mindset, which is a theme that is worth consideration in 2023.

  Tyler Durden
  Sun, 01/15/2023 – 20:00

• LAPD Chief Blasted For "Political Pandering" After Banning 'Blue Lives Matter' Flag From Los Angeles Police Stations
  LAPD Chief Blasted For “Political Pandering” After Banning ‘Blue Lives Matter’ Flag From Los Angeles Police Stations

  Authored by Monica Showalter via AmericanThinker.com,

  So Los Angeles has a new mayor — the far-left Karen Bass, and it hasn’t taken long for changes to kick in, letting the police know she doesn’t have their back.

  Latest news is this diktat from above, as reported by Fox News:

  The Los Angeles Police Department banned the Thin Blue Line flag from public areas within police departments this week over a complaint that the flag represented “violent, extremist views.”

  LAPD Chief Michel Moore defended the controversial move in an email sent to Fox News Digital, saying, “Yesterday, we received a community complaint of the presence of a Blue Line Flag” with “the view that it symbolized support for violent extremist views, such as those represented by the Proud Boys and others.” 

  “I directed to have the item taken down from the public lobby. The U.S. flag should be proudly displayed in our lobbies whenever possible. Memorials for our fallen are also authorized in all public spaces,” he said. 

  

  The banned flag looks like this:

  

  Where’d I take that photo? At a party full of LAPD cops, celebrating the birthday at the home of one of their own. The photo doesn’t include the cops, but there were a lot of them. 

  It was at this party that I learned how much that flag means to these officers, all of whom were black or Hispanic, none of whom were white. This flag is a big deal to them, an emblem of their hard job, an expression of the dangers and death they face, and a rallying point for their reasonable interests.

  They want to ban this? Because of one wokester complaint, a complaint from someone who undoubtedly doesn’t want any cops whatsoever, a cop-hater, and they are out there, as that’s been the party line in the anti-cop wokester-activist community for several years now.

  The excuses from headquarters were really pathetic:

  Moore explained that a flag displayed in one station’s lobby spurred a complaint and he added, “It’s unfortunate that extremist groups have hijacked the use of the ‘Thin Blue Line flag’ to symbolize their undemocratic, racist, and bigoted views.” 

  The LAPD chief ordered all flags with the symbol to be removed from public areas. Moore said officers still can display the flag “their workspace, locker door, or personal vehicle.” 

  While Moore said he viewed the flag as symbolizing “the honor, valor, dedication, and sacrifice of law enforcement to protect our communities,” he said others had undermined the flag with their “racist, bigoted and oppressive values.”

  Really? Let’s hear some names, which naturally, Moore and his ilk didn’t give.

  This has about as much credibility as the Pentagon’s hunt for extremists (read: Trump supporters) in the military’s ranks, or the FBI’s hunt for domestic terrorists among the parents attending school board meetings.

  

  And while we are at it, let’s look at the diversity composition of the LAPD these days since policing is so synonymous with white supremacy and that flag the LAPD brass hates so much.

  According to Wikipedia:

  As of 2019, the Los Angeles Police Department had 10,008 officers sworn in. Of these, 81% (8,158) were male and 19% (1,850) female. The racial/ethnic breakdown:[50]

  • 48.8% or 4,882 was Hispanic/Latino (of any race)

  • 30.9% or 3,090 was non-Hispanic White

  • 9.62% or 962 was African American

  • 7.66% or 766 was Asian

  • 2.46% or 246 was Filipino American

  • remaining were Indian and Other Ethnicities.

  The claim that flag was white supremacist, accompanied by the dog biscuit thrown to the cops, that they can still display the flags on their personal cars and lockers, pretty well pegs any cop who has such stickers as a white supremacist. After all, if they’re going to peg a symbol as white supremacist, why are they allowing it on lockers and cars? Do they allow Klan or White Aryan Brotherhood symbols on cars and lockers of cops, too?

  Don’t think so.

  The concession given is because they know how alienated the cops are by this decision. According to Fox News, a union representing 9,900 Los Angeles police officers fire back with this statement:

  “It is difficult to express the level of utter disgust and disappointment with Chief Moore’s politically pandering directive to remove Thin Blue Line flags and memorials for fallen officers from all public areas within our police stations. This direction came as a result of complaints from anti-police, criminal apologists, and activists who hold too much sway over our city leaders and, unfortunately, our Chief,” the Board of directors for the Los Angeles Police Protective League wrote in a statement.

  The union said they “vehemently” opposed “this disrespectful and defeatist kowtowing by our department leadership to groups that praise the killing of police officers and outright call for violence against those of us in uniform. We have directly expressed our outrage to the Chief.”

  Note that word “vehemently.” 

  We pretty well can tell what the sentiment in the not-so-white ranks is regarding this ban on the only public emblem the cops even have — and which without, they are all alone out there, no rallying symbol for their lives and welfare.

  With the police brass playing politics, as they say, it’s pretty obvious that the “politics” here is the politics of the new mayor, Karen Bass, who’s a wokester fanatic so leftwing she was rejected by the Biden team for the vice presidency, which handed the slot of the giggly and less competent Kamala Harris instead. Obviously, they’ve been read the Riot Act by Bass, and are looking to save their skins. The bad part here is that the line officers have been sent a message — that politicians and the police brass don’t have their backs now. Already thousands of officers, including many at that very party, have retired, or retired at their desks.

  This flag message sends the message in the already crime-plagued city, one of the country’s worst, that it’s time to quit and move someplace where they want the blue in place and are willing to support the blue.

  Tyler Durden
  Sun, 01/15/2023 – 19:30

• Fully Priced-In: Even Goldman Expects Sharp Contraction In Profit Margins In 2023
  Fully Priced-In: Even Goldman Expects Sharp Contraction In Profit Margins In 2023

  There has been a bizarre episode of cognitive dissonance developing within Goldman’s trading desk and research departments over the past three months: as readers may recall, some time in late September, just as stocks slumped near their 2022 lows for the second time, Goldman’s chief equity strategist David Kostin – who had heretofore been one of the staunchest equity bulls – slashed his market outlook and his S&P price target, which he now sees closing unchanged from its Friday level, or right at 4,000. That’s right, Goldman clients can now take a 11 and a half month vacation, spare themselves the emotional rollercoaster that is to follow, and come back for the last day of trading in 2023 when Goldman expects stocks to be… unchanged.

  Of course, when Goldman started turning bearish some three months ago (which just happened to coincide with that other permabull Marko Kolanovic also turning bearish), we said that that was the bottom and so far, some 400 S&P points higher, our cynicism has been proven correct.

  Kolanovic turned bearish. Bottom https://t.co/bXVFOHDoRS

  — zerohedge (@zerohedge) September 30, 2022

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

  But as so often happens, with Goldman so bearishly positioned at a time when the Fed is hinting that a rate hike pause is imminent and the market is expecting at least 50bps of rate cuts in the second half, last week saw the first tentative signs that Goldman’s strategists and economists are starting to turn bullish again, which means that the countdown to a material upgrade in Goldman’s year-end price target (to, say, 4,500) has begun.

  Indeed, in the past week, two top Goldman strategists, Jan Hatzius and Dominic Wilson highlighted the “improving investing landscape” in two notes this week: “Mostly Better News” (available to pro subs here) and “A Bit More Room to Grow” (also available to pro subs), pointing out that after the latest payrolls and CPI data, “markets are now pricing in the soft landing for the US economy that we forecast; Europe no longer appears to headed towards a recession either (Goldman also raised its GDP growth forecast into positive territory earlier this week in “10 Questions for 2023” and no longer expects a European recession)” and Goldman even saw upside to its China growth forecast which now anticipates a 4Q23/4Q22 GDP growth pace of over 7%.

  But, as Goldman strategist Chris Hussey notes in his Friday weekly recap, “just like in Legoland, this ‘Everything is awesome!’ environment may still be riddled with risks that our strategists and analysts also highlight this week from macro to micro.”

  One such risk was brought up by none other than David Kostin, who remains one of the bearish holdouts withing Goldman (not for long) and continues to sound a cautious tone in a fresh note this week, urging the bank’s clients to “buy protection” in his note “strategies for soft and hard landings.” According to Kostin, the biggest red flag: downward earnings revisions have been extreme and have only looked like this in past recessions (2000 and 2008).

  

  

  As such, Kostin is hesitant to look through this dependable market indicator and believe prudent portfolio managers should at least consider the implications if a hard landing transpires.

  Over the weekend, Kostin continued this game of good cop (Hatzius, Wilson) vs bad cop (Kostin), writing in his latest weekly Kickstart note (available to pro subs here) that “negative consensus earnings revisions and analyst expectations for a lackluster 4Q 2022 earnings season continue the trend of weakening corporate profitability in recent quarters.” Additionally, the S&P’s trailing 4-quarter return on equity declined by 29 bp to 20.6% in 3Q 2022 driven by a contraction in margins: as Kostin calculates, “at a sector level 7 of 11 S&P 500 sectors experienced declining ROE, with Info Tech suffering the largest drop and Energy expanding the most.” Looking ahead, Kostin warns that an upwards inflection in S&P 500 ROE will be difficult to achieve in 2023, “as headwinds from a higher cost of capital and higher taxes will place further strain on profitability.”

  Of course, this is all taking place as Q4 earnings season kicked off in earnest on Friday with large banks reporting mixed results, and with consensus expecting the aggregate S&P 500 index to post -1% EPS growth in 4Q 2022 vs. 4Q 2021 and decline by 5% excluding the Energy sector. As shown in the charts above, earnings revisions have recently been very negative, adding to many investors’ concerns about a potential recession on the horizon.

  What does all of this mean for corporate profitability? Clearly, nothing good: according to Kostin, the increasingly negative consensus earnings revisions and current analyst expectations for a lackluster 4Q 2022 earnings season continue the trend of weakening corporate profitability in recent quarters. To wit, S&P 500 trailing 4-quarter return on equity declined by 29 bp to 20.6% in 3Q 2022. The decline in ROE represented the third consecutive quarterly decline following the metric’s all time high of 22% in 4Q 2021 (despite the recent declines the latest figure still ranks in the 99th percentile of S&P 500 ROE going back to 1975, meaning there is a lot more downside from here).

  

  The Goldman strategist finds that contraction in profit margins was the main reason for the ROE decline last quarter: “We use a five-factor DuPont decomposition to analyze the drivers of ROE.Falling EBIT margins drove 69 bp of ROE contraction (Exhibit 2). Margins had already begun to decline in both 1Q and 2Q 2022 after a full year of expansion in 2021, and the trend continued in 3Q 2022. Index-level LTM EBIT margins contracted q/q by 48 bp in 3Q (vs. -90 bp in 2Q and -47 bp in 1Q). Slightly higher interest and tax expenses also weighed on ROE during 3Q (contributing -20 bp total). These headwinds were offset by higher asset turnover, which contributed +62 bp to ROE.”

  

  Financial jargon aside, while most sectors saw ROEs fall last quarter, they also enjoy profitability well above historical averages. 7 of 11 S&P 500 sectors experienced declining ROE, with Info Tech suffering the largest drop (-237 bp) and Energy expanding the most (+518 bp). The increase in Energy ROE was driven by margin expansion, contrasting with contracting margins in every other sector except for Real Estate. In addition to Energy, Consumer Discretionary, Industrials, and Utilities saw slight ROE gains. Despite lackluster ROE growth over the past three quarters, 9 of 11 sectors’ levels of ROE still stand above their historical sector averages, and 6 have ROEs currently in the top decile vs. their sector’s history.

  Ironically, while to some this may mean that Energy – which was the blowout outperforming segment in 2022 – is overvalued, the reality is just the opposite, and with most sector P/B valuations currently well-ordered based on ROE, Energy and Utilities remain outliers. Energy remains below the P/B implied by its expected ROE while Utilities’ valuation appears stretched. In the case of Energy, the lackluster valuation is likely due to consensus expectations for -15% EPS growth in 2023 (after +161% growth in 2022) and lower long-term growth expectations relative to other sectors. Meanwhile, utilities valuations have benefitted in part due to the attractiveness of the sector’s defensive attributes amid heightened recession concerns.

  

  Looking ahead, the bearish Goldman strategist concedes that “an upwards inflection in S&P 500 ROE will be difficult to achieve in 2023” and he expects margins for most sectors to contract while also expecting further cut in current consensus EPS estimates to bring them closer to Goldman’s baseline and recession scenarios (which is odd since Goldman chief economist Jan Hatzius is adamant that a recession will not happen, but that’s all part of Goldman’s “good cop, bad cop” CYA routine). As other ROE headwinds, Kostin lists taxes, leverage, and borrow costs.

  

  Taking a closer look at margin hurdles, Goldman notes that historically, higher leverage and lower taxes have been the largest contributors to ROE. Indeed, since 1975, declining interest rates and corporate tax rates have been the strongest tailwinds to corporate profitability. Declining interest rates have allowed firms to utilize higher leverage to bolster equity holder returns, resulting in a cumulative contribution of +1463 bp to ROE while lower borrow costs have contributed +476 bp to ROE over the period. Similarly, declining corporate tax rates have contributed +900 bp. On the other hand, lower asset turnover has been the largest detractor from ROE, shaving off -2522 bp over time.

  

  Here, Kostin warns that “near-term improvements to ROE from higher leverage will be unlikely given higher cost of capital”, i.e. the Fed’s tightening. The weighted average cost of capital (WACC) for US firms has spiked by 200 bp to 6%, the highest level in a decade and the largest 12-month rise in 40 years, or since the Volcker Fed.

  

  Goldman expects the WACC in 2023 will remain near the current level (which of course, is as good as tell as any that Powell will very soon be slashing rates). The direct consequence of a higher WACC is costlier leverage, which will ultimately disincentivize firms from boosting ROE through this channel in 2023. As an aside, despite higher WACC, borrow costs will be less of a dramatic headwind, as most S&P 500 debt is fixed rate with long maturities. 75% of S&P 500 debt is fixed, and only 24% of total debt is expected to mature between 2023 and 2025.

  Finally, Goldman warns that higher taxes in 2023 will also be a headwind for ROE expansion. While new corporate taxes from the Inflation Reduction Act (IRA) should reduce S&P 500 EPS by less than 2% in 2023, the direction of the change in tax expense will now weigh on ROE instead of supporting it.

  

  According to the Goldman strategist, This impact should be pronounced for sectors with low effective tax rates such as Info Tech and Health Care which will face a larger impact from minimum tax provisions. Sunsetting provisions from the 2017 Tax Cuts and Jobs Act and the new 1% excise tax on buybacks introduced in the IRA will place additional tax-related strain on ROE.

  Of course, none of what Kostin claims above is incorrect (he goes on to note that in a challenging environment for ROE growth, stocks that were expected to grow ROE outperformed the S&P 500 by 10 pp in 2022 and then pitches Goldman’s ROE growth basket which contains 50 stocks with the highest consensus-expected ROE growth during the next 12 months, the full list available to pro subs) but what we find most notable is that now that even Goldman fully embraces the core pillar of the 2023 bear case (as laid out by Michael Wilson some 6 months ago), the reality is that while sellside analysts may be slow to trim their optimistic outlooks, most on Wall Street have applied their own personal discounts to consensus, and more importantly, the margin contraction and EPS shrinkage narratives are both fully priced in by now, and only a full-blown recession can lead to further downward repricings. In other words, now that a sharp slide in inflation is the base case, the longer the Biden Dept of Labor ignores reality and pretends that job growth is there, the higher stocks will rise.

  More in the full Goldman note available to pro subs.

  Tyler Durden
  Sun, 01/15/2023 – 19:00

• The Rise And Fall (And Rise Again) Of Music Sales, By Format (1973-2021)
  The Rise And Fall (And Rise Again) Of Music Sales, By Format (1973-2021)

  We live in a world of music. Whether when driving to work or jamming out at home, people around the world like to have their favorite tunes playing in the background.

  But while our love for music has been constant, the way we consume media has evolved drastically. The past 50 years have seen many different music formats used to access these tunes, mirroring society’s shift from analog to digital.

  This video, created by James Eagle vis Visual Capitalist using data from the Recording Industry Association of America (RIAA), highlights sales of different music formats in the U.S. over the last 50 years.

  Vinyl

  Up until the late 1980s, vinyl dominated the music format industry, earning billions of dollars in sales annually. Records of Bruce Springsteen’s Born to Run or Pink Floyd’s Dark Side of the Moon were some of the top selling albums available.

  Vinyl is said to provide its listeners with analog sounds that reverberate and the warm notes of almost-live music. For vinyl users and enthusiasts to this day, the music produced by these sleek yet massive records is unparalleled.

  8-Track

  If you’re a millennial (or younger), you may have never heard of the 8-track. But this music format played an integral part in the history of music.

  When the booming automotive vehicle industry found it challenging to translate the music experience to cars using vinyl, it looked to the “Stereo 8” eight-track cartridge, better known as the 8-track. This cartridge used an analog magnetic tape and provided 90 minutes of continuous music play time.

  8-track carved a niche for itself much before the advent of cassettes and CDs. And through the proliferation of vehicles, 8-track sales climbed to reach a peak revenue of $900 million in 1978.

  Cassettes

  The era of cassettes pushed 8-tracks into the history of music in the early 1980s. These pocket-sized tapes were more convenient to use than 8Tracks and quickly spread worldwide.

  By 1989, the cassette format reached its peak revenues of $3.7 billion.

  CDs

  First released in 1982, the Compact Disc or CD came into the music market as the successor to the vinyl record.

  Developed by Philips and Sony, sales of the sleek and portable CD grew quickly as home and car stereos alike added CD functionality. The format brought in $13.3 billion in revenue in both 1999 and 2000. To date, no other music format has reached the same milestone since.

  Digital Music Formats

  When it comes to preferred music formats over time, convenience (and cost) seem to have been the biggest catalysts of change.

  From the start of the early 2000s, CDs had started to be replaced by other forms of digital storage and distribution. The massive shift to internet consumption and the introduction of digital music, available through downloads, pushed audio CD sales down rapidly.

  The launch of streaming platforms like Spotify in 2006 exacerbated this decline, with CD sales dropping by around $4 billion in five years.

  Digital sales continued to evolve. Ringtone sales alone brought in $1.1 billion in 2007, and in 2012, the revenues from downloads shot up to a peak of $2.9 billion. But music streaming platforms kept climbing through 2021, and will likely continue to be the future face of music consumption.

  RankMusic formatsRevenue in 2021

  1Streaming$11.5 billion

  2Vinyl$1.0 billion

  3CD$0.6 billion

  4Downloads$0.5 billion

   Other$1.4 billion

   Total$15.1 billion

  Music streaming and subscription services pushed the accessibility of music to new highs, especially with free ad-supported platforms.

  In 2021, streaming secured the music industry a whopping $11.5 billion in sales, good for 76% of the total. If it keeps growing in popularity and accessibility, the format could potentially challenge the peak popularity of CDs in the late 90s.

  The Vintage Comeback?

  There’s no doubt that digital music formats are getting increasingly popular with every passing year. However, one of our vintage and beloved music formats—the vinyl record—seems to be making a comeback.

  According to the RIAA database, the revenue earned by LP/EP sales has shot up to $1.0 billion in 2021, its highest total since the mid-1980s.

  Tyler Durden
  Sun, 01/15/2023 – 18:00

• Morgan Stanley: "We Are Focusing On These Three Key Global Transitions"
  Morgan Stanley: “We Are Focusing On These Three Key Global Transitions”

  By Michael Zezas, Head of Global Thematic Research at Morgan Stanley

  What do you get when 45 global research analysts gather in a room for two days to debate secular market trends? A plan. Amid rapid change, Morgan Stanley Research views concentrating on multiyear secular trends as an opportunity. In markets where short-term focus has become the norm (i.e., the average equity holding period has declined from eight years in the 1960s to six months today), it stands to reason that there’s less competition and more potential alpha to be found from analyzing the market impacts of longer-term trends. A collaborative, cross-asset culture has long been core to our mission, and in the spirit of debate and collaboration, we gathered analysts from around the globe to identify the key secular themes that Morgan Stanley Research should focus on this year.

  Our dialogue made it clear that collaboration can eliminate blind spots for investors who are grappling with complex global themes. The agenda for our meeting included over 30 topics, none of them unfamiliar to market participants. But the discussion raised questions of broader concern, suggesting their answers could impact markets beyond what analysts could plausibly perceive or analyze individually. Many of these questions centered on knock-on impacts to inflation, interest rates, and the structure of markets themselves as the world undergoes major geopolitical and technological transformations.

  This year, we’re taking our collaborative, in-depth work a step further, focusing on three key global transitions. We think these shifts will have a profound impact on markets for many years, but that a collaborative, cross-asset approach is required to master their complexity and produce meaningful insights for investors. The three transitions are: 1) Rewiring global commerce for a multipolar world; 2) Decarbonization; and 3) Accelerated technology diffusion. We plan to address them this year in collaborative in-depth reports, briefs, and podcasts.

  • Rewiring global commerce for a multipolar world: With the shift from unbridled globalization to a world with more than one meaningful power base and commercial standard, companies and countries can no longer seek efficiencies through global supply chains and market access without factoring in geopolitical risks. While we first flagged this secular trend in 2018, we believe it became the consensus following Russia’s invasion of Ukraine and the West’s policy response, which created fresh trade barriers and incentives to realign supply chains.

    What our analysts believe is less well understood are the practical implications of this rewiring. It makes sense in theory but is exceedingly complicated to execute in practice. Questions that surfaced in our discussions included: How long will it take? Will it lead to higher inflation and, if so, for how long? How will bond markets cope with financing the transition? Which companies and countries will benefit or suffer because of it? Having come early to this theme, we believe we are well placed to address these questions through a collaborative, multidisciplinary approach across economists, market strategists, and equity analysts.

  • Decarbonization: Between 1) Europe’s problematic reliance on imported natural gas being laid bare by Russia’s invasion of Ukraine; 2) Growing EU policy support for energy transition infrastructure via the REPowerEU plan; and 3) The US appropriation of $400 billion+ to speed the adoption of clean energy technology, we think it’s fair to say that the developed world is accelerating its efforts to reduce carbon emissions. Still, this is a tall order. To reach ‘Net Zero by 2050’, carbon emissions would need to start falling by ~8% per year. Even during 2020, when the lockdowns heavily impacted mobility and global GDP shrank, emissions fell only 5%. In addition, the cost would be significant. The IEA estimates that the energy transition will cost an extra ~$70 trillion over the next 30 years, taking energy spending to 4.5% of global GDP from its current run rate of 2.5%.

    Investors will need to grapple with both the positive and negative impacts of this transition. Our assessment of which companies, sectors, and macro markets will benefit or be challenged will be shaped by answers to the following questions: What are plausible scenarios for timelines? Which technological and policy developments and failures could speed or slow the transition? Which markets will finance it and how must they change and expand? Which companies will benefit and which are exposed to downside risks? What are the macroeconomic and geopolitical impacts of different paths to Net Zero?

  • Tech diffusion: While this is hardly a new theme, what’s different and noteworthy are the speed and breadth with which tech diffusion can impact sectors that were previously untouched. Fragmented industries or those with high regulatory barriers – which have typically not reaped as much tech-driven productivity benefit – suddenly look poised for a multi-year transition via tech diffusion. Opportunities range from embedded finance in consumer user experience and payments, to tokenized assets allowing for greater global financial inclusion, to modernizing healthcare data ownership and biopharma R&D breakthroughs. We expect the next five years of tech diffusion to move meaningfully faster than the last five.

  And what if we’ve identified the wrong themes? We’ll regroup and tell you about it. Our analyst group stressed the importance of remaining flexible. While not fans of the source, we see wisdom in the truism that “there are decades where nothing happens, and there are weeks where decades happen”. The past three years certainly underscored how unforeseen events, e.g., a global pandemic and a war in Europe, can give rise to new, dominant secular themes. Hence, if similar events occur in 2023, we’ll be quick to reorganize our thematic efforts, let you know, and deliver the collaborative insights you need to navigate new transitions.

  Tyler Durden
  Sun, 01/15/2023 – 17:30

• Putin Hails "Positive" Momentum In Ukraine, "Stable" Economy In Surprisingly Upbeat Remarks
  Putin Hails “Positive” Momentum In Ukraine, “Stable” Economy In Surprisingly Upbeat Remarks

  Fresh off the Russian armed forces declaring victory in the strategic Donetsk town of Soledar days ago, Russian President Vladimir Putin surprised officials in the West by touting the ‘positive dynamic’ of the Ukraine operation overall, despite the prior months of setbacks and a slower-going operation than Moscow expected. 

  He said in fresh weekend comments to Rossiya 1 state television when asked about the successful Soledar operation that “The dynamic is positive.” He described that “Everything is developing within the framework of the plan of the Ministry of Defense and the General Staff.” Putin followed with, “And I hope that our fighters will please us even more with the results of their combat.”

  

  He also made comments on the state of the economy while confirming that Russia will turn for trade to Asian powers, China and India in particular. 

  “The situation in the economy is stable,” Putin said. “Much better than not only what our opponents predicted but also what we forecast.” For this he cited low unemployment, saying: “Unemployment is at a historic low. Inflation is lower than expected and has, importantly, a downward trend.”

  Despite his county finding itself more isolated than ever before in its modern history, and despite unprecedented Western-led sanctions, Putin showed no signs of backing down from objectives previously set in Ukraine, as Reuters summarizes of the new remarks…

  “Putin now casts the war in Ukraine as an existential battle with an aggressive and arrogant West, and has said that Russia will use all available means to protect itself and its people against any aggressor.”

  Further the report characterized the Western stance in the following: “The United States and its allies have condemned Russia’s invasion of Ukraine as an imperial land grab, while Ukraine has vowed to fight until the last Russian soldier is ejected from its territory.”

  Meanwhile, as we previewed recently, there are reasons to believe Russia is readying an escalation in response to the West sending tanks and deepening its military involvement in support of Ukraine forces. 

  

  But for now, the defense ministry is continuing its strategy of pummeling Ukraine’s energy grid and civilian and military infrastructure through major air strikes. Attacks on Sunday and Saturday marked about the 12th large wave to come in recent months. Air alert sirens have been sounding across the country on Sunday. 

  Russia’s army described that it targeted “the military command and related energy facilities,” and said that “all targets were reached.”

  Ukraine’s national energy operator Ukrenergo said it’s again working to quickly restore power in impacted places but acknowledged this latest attack has “increased the energy deficit.”

  “The period of outages may increase,” it acknowledged, already after the national grid having been severely degraded for months, and as emergency blackouts continue for most of the country, with more severely impacted areas with permanent blackouts.

  The weekend airstrikes may have included high civilian casualties, compared to prior waves, given the Ukrainian government says a large residential tower was directly hit in the central Ukrainian city of Dnipro.

  A Russian missile struck a residential building in Dnipro. https://t.co/ArXCn2oRfMhttps://t.co/bSWkrwfVZj pic.twitter.com/oJq66JVQev

  — Rob Lee (@RALee85) January 14, 2023

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

  The New York Times details of the Saturday afternoon strike at a moment a rescue operation is still underway, “Rescuers on Sunday continued to comb the rubble of a nine-story apartment building that was cut in half by a Russian strike, as the death toll from the attack in the central Ukrainian city of Dnipro a day earlier climbed to 30,” and noted: “It was one of the largest losses of civilian lives far from the front line since the beginning of the war.”

  “By Sunday evening, 30 people had been confirmed dead, according to Ukraine’s State Emergency Service,” the Times continued. “At least 75 people were injured, and more than 30 people were still believed to be missing, local officials said.”

  Tyler Durden
  Sun, 01/15/2023 – 17:00

• 7 Factors Bitcoin Investors Should Watch In 2023
  7 Factors Bitcoin Investors Should Watch In 2023

  Authored by Craig Deutsch, Dylan LeClair, and Same Rule via BitcoinMagazine.com,

  The below is an excerpt from a recent year-ahead report written by the Bitcoin Magazine PRO analysts. Download the entire report here.

  

  Bitcoin Magazine PRO sees incredibly strong fundamentals in the Bitcoin network and we are laser-focused on its market dynamic in the context of macroeconomic trends. Bitcoin aims to become the world reserve currency, an investment opportunity that cannot be understated.

  In our year-ahead report, we analyzed seven notable factors that we recommend investors pay attention to in the coming months.

  1. CONVICTED BITCOIN INVESTORS

  We can put investor conviction into perspective by looking at the number of unique Bitcoin addresses holding at least 0.01, 0.1 and 1 bitcoin. This data shows that bitcoin adoption continues to grow with a growing number of unique addresses holding at least these amounts of bitcoin. While it is entirely possible for individual users to hold their bitcoin in multiple addresses, the growth of unique Bitcoin addresses holding at least 0.01, 0.1 and 1 bitcoin indicate that more users than ever before are buying bitcoin and holding it in self-custody.

  

  Unique bitcoin addresses continues to grow across the board.

  Another promising metric is the amount held by long-term holders, which has increased to almost 14 million bitcoin. Long-term holder supply is calculated using a threshold of a 155-day holding period, after which dormant coins become increasingly unlikely to be spent. As of now, 72.49% of the bitcoin in circulation is not likely to be sold at these prices.

  

  Long-term holder supply reached 72.52% of the circulating bitcoin supply.

  There is a large subset of bitcoin investors who are accumulating the digital asset no matter the price. In a December 2022 interview on “Going Digital,” Head of Market Research Dylan LeClair said, “You have people all over the world that are acquiring this asset and you have a huge and growing cohort of people that are price-agnostic accumulators.”

  With a growing number of unique addresses holding bitcoin and such a significant amount of bitcoin being held by long-term investors, we are optimistic for bitcoin’s advancement and rate of adoption. There are many variables that demonstrate the potential for asymmetric returns as demand for bitcoin increases and adoption increases worldwide.

  2. TOTAL ADDRESSABLE MARKET

  During monetization, a currency goes through three phases in order: store of value, medium of exchange and unit of account. Bitcoin is currently in its store-of-value phase as demonstrated by the long-term holder metrics above. Other assets that are frequently used as stores of value are real estate, gold and equities. Bitcoin is a better store of value for many reasons: it is more liquid, easier to access, transport and secure, easier to audit and more finitely scarce than any other asset with its hard-cap limit of 21 million coins. For bitcoin to acquire a larger share of other global stores of value, these properties need to remain intact and prove themselves in the eyes of investors.

  

  Estimations of global stores of wealth.

  As readers can see, bitcoin is a tiny fraction of global wealth. Should bitcoin take even a 1% share from these other stores of value, the market cap would be $5.9 trillion, putting bitcoin at over $300,000 per coin. These are conservative numbers from our viewpoint because we estimate that bitcoin adoption will happen gradually, and then suddenly.

  3. TRANSFER VOLUME

  When looking at the amount of value that was cleared on the Bitcoin network throughout its history, there is a clear upward trend in USD terms with a heightened demand for transferring bitcoin this year. In 2022, there was a change-adjusted transfer volume of over 556 million bitcoin settled on the Bitcoin network, up 102% from 2021. In USD terms, the Bitcoin network settled just shy of $15 trillion in value in 2022. 

  

  Bitcoin transfer volume was higher than ever in USD terms.

  Bitcoin’s censorship resistance is an extremely valuable feature as the world enters into a period of deglobalization. With a market capitalization of only $324 billion, we believe bitcoin is severely undervalued. Despite the drop in price, the Bitcoin network transferred more value in USD terms than ever before.

  4. RARE OPPORTUNITY IN BITCOIN’S PRICE

  By looking at certain metrics, we can analyze the unique opportunity investors have to purchase bitcoin at these prices. The bitcoin realized market cap is down 18.8% from all-time highs, which is the second-largest drawdown in its history. While the macroeconomic factors are something to keep in mind, we believe that this is a rare buying opportunity.

  

  The realized cap drawdown in 2022 was the second largest in bitcoin’s history.

  Relative to its history, bitcoin is at the phase of the cycle where it’s about as cheap as it gets. Its current market exchange rate is approximately 20% lower than its average cost basis on-chain, which has only happened at or near the local bottom of bitcoin market cycles.

  Current prices of bitcoin are in rare territory for investors looking to get in at a low exchange rate. Historically, purchasing bitcoin during these times has brought tremendous returns in the long term. With that said, readers should consider the reality that 2023 likely brings about bitcoin’s first experience with a prolonged economic recession.

  5. MACROECONOMIC ENVIRONMENT

  As we move into 2023, it’s necessary to recognize the state of the geopolitical landscape because macro is the driving force behind economic growth. People around the world are experiencing a monetary policy lag effect from last year’s central bank decisions. The U.S. and EU are in recessionary territory, China is proceeding to de-dollarize and the Bank of Japan raised its target rate for yield curve control. All of these have a large influence on capital markets.

  Nothing in financial markets occurs in a vacuum. Bitcoin’s ascent through 2020 and 2021 — while similar to previous crypto-native market cycles — was very much tied to the explosion of liquidity sloshing around the financial system after COVID. While 2020 and 2021 was characterized by the insertion of additional liquidity, 2022 has been characterized by the removal of liquidity.

  Interestingly enough, when denominating bitcoin against U.S. Treasury bonds (which we believe to be bitcoin’s largest theoretical competitor for monetary value over the long term), comparing the drawdown during 2022 was rather benign compared to drawdowns in bitcoin’s history. 

  

  As we wrote in “The Everything Bubble: Markets At A Crossroads,” “Despite the recent bounce in stocks and bonds, we aren’t convinced that we have seen the worst of the deflationary pressures from the global liquidity cycle.”

  In “The Bank of Japan Blinks And Markets Tremble,” we noted, “As we continue to refer to the sovereign debt bubble, readers should understand what this dramatic upward repricing in global yields means for asset prices. As bond yields remain at elevated levels far above recent years, asset valuations based on discounted cash flows fall.” Bitcoin does not rely on cash flows, but it will certainly be impacted by this repricing of global yields. We believe we are currently at the third bullet point of the following playing out:

  

  Source: Dylan LeClair

  6. BITCOIN MINING AND INFRASTRUCTURE

  While the multitude of negative industry and worrying macroeconomic factors have had a major dampening on bitcoin’s price, looking at the metrics of the Bitcoin network itself tell another story. The hash rate and mining difficulty gives a glimpse into how many ASICs are dedicating hashing power to the network and how competitive it is to mine bitcoin. These numbers move in tandem and both have almost exclusively gone up in 2022, despite the significant drop in price.

  

  Bitcoin mining difficulty continues to rise.

  

  Bitcoin hash rate continues to rise.

  By deploying more machines and investing in expanded infrastructure, bitcoin miners demonstrate that they are more bullish than ever. The last time the bitcoin price was in a similar range in 2017, the network hash rate was one-fifth of current levels. This means that there has been a fivefold increase in bitcoin mining machines being plugged in and efficiency upgrades to the machines themselves, not to mention the major investments in facilities and data centers to house the equipment.

  Because the hash rate increased while the bitcoin price decreased, miner revenue took a beating this year after a euphoric rise in 2021. Public miner stock valuations followed the same path with valuations falling even more than the bitcoin price, all while the Bitcoin network’s hash rate continued to rise. In the “State Of The Mining Industry: Survival Of The Fittest,” we looked at the total market capitalization of public miners which fell by over 90% since January 2021.

  

  The market cap of all public mining equities has dropped by 9

  We expect more of these companies to face challenging conditions because of the skyrocketing global energy prices and interest rates mentioned above.

  7. INCREASING SCARCITY

  One way to analyze bitcoin’s scarcity is by looking at the illiquid supply of coins. Liquidity is quantified as the extent to which an entity spends their bitcoin. Someone that never sells has a liquidity value of 0 whereas someone who buys and sells bitcoin all the time has a value of 1. With this quantification, circulating supply can be broken down into three categories: highly liquid, liquid and illiquid supply.

  Illiquid supply is defined as entities that hold over 75% of the bitcoin they deposit to an address. Highly liquid supply is defined as entities that hold less than 25%. Liquid supply is between the two. This illiquid supply quantification and analysis was developed by Rafael Schultze-Kraft, co-founder and CTO of Glassnode.

  

  Bitcoin’s illiquid supply continues to grow.

  2022 was the year of getting bitcoin off exchanges. Every recent major panic became a catalyst for more individuals and institutions to move coins into their own custody, find custody solutions outside of exchanges or sell off their bitcoin entirely. When centralized institutions and counterparty risks are flashing red, people rush for the exit. We can see some of this behavior through bitcoin outflows from exchanges.

  In 2022, 572,118 bitcoin worth $9.6 billion left exchanges, marking it the largest annual outflow of bitcoin in BTC terms in history. In USD terms, it was second only to 2020, which was driven by the March 2020 COVID crash. 11.68% of bitcoin supply is now estimated to be on exchanges, down from 16.88% back in 2019. 

  

  Exchanges saw a massive decrease in the bitcoin balances on their platforms.

  

  Bitcoin balance on exchanges decreased in 2022.

  These metrics of an increasingly illiquid supply paired with historic amounts of bitcoin being withdrawn from exchanges — ostensibly being removed from the market — paint a different picture than what we’re seeing with the factors outside of the Bitcoin network’s purview. While there are unanswered questions from a macroeconomic perspective, bitcoin miners continue to invest in equipment and on-chain data shows that bitcoin holders aren’t planning to relinquish their bitcoin anytime soon.

  CONCLUSION

  The varying factors detailed above give a picture for why we are long-term bullish on the bitcoin price going into 2023. The Bitcoin network continues to add another block approximately every 10 minutes, more miners keep investing in infrastructure by plugging in machines and long-term holders are unwavering in their conviction, as shown by on-chain data.

  With bitcoin’s ever-increasing scarcity, the supply side of this equation is fixed, while demand is likely to increase. Bitcoin investors can get ahead of the demand curve by averaging in while the price is low. It’s important for investors to take the time to learn how Bitcoin works to fully understand what it is they are investing in. Bitcoin is the first digitally native and finitely scarce bearer asset. We recommend readers learn about self-custody and withdraw their bitcoin from exchanges. Despite the negative news cycle and drop in bitcoin price, our bullish conviction for bitcoin’s long-term value proposition remains unfazed.

  *  *  *

  For the full report, follow this link to subscribe to Bitcoin Magazine PRO. Our team of experts covers macroeconomics, on-chain data, derivatives markets, the bitcoin mining industry & more to unpack the most important market trends.

  Tyler Durden
  Sun, 01/15/2023 – 16:30

• House Republicans Prepare To Execute Emergency Strategy For Breaching Debt Limit
  House Republicans Prepare To Execute Emergency Strategy For Breaching Debt Limit

  House Republicans are preparing to give the Treasury Department guidance if the White House and Congress can’t agree to lift the nation’s debt ceiling.

  

  The plan was part of the private deal struck between House conservatives and Rep. Kevin McCarthy (R-CA) in order for McCarthy to win speakership, according to Rep. Chip Roy (R-TX), who helped broker the deal. Roy told the Washington Post that McCarthy agreed to adopt a payment prioritization plan by the end of the first quarter of the year.

  According to the Post, the emergency contingency plan will need to include major spending cuts from the Biden administration, in exchange for which Republicans will sign off on raising the current limit of $31.4 trillion before the Treasury Department can’t borrow any more.

  On Friday, Treasury Secretary Janet Yellen said that the Treasury department will enact “extraordinary measures” next week so the government can keep its payment obligations – however she couldn’t guarantee that the US will make it beyond early June without default.

  Also on Friday, White House press secretary Karine Jean-Pierre made clear that the administration will not negotiate.

  In the preliminary stages of being drafted, the GOP proposal would call on the Biden administration to make only the most critical federal payments if the Treasury Department comes up against the statutory limit on what it can legally borrow. For instance, the plan is almost certain to call on the department to keep making interest payments on the debt, according to four people familiar with the internal deliberations who spoke on the condition of anonymity to describe private conversations. House Republicans’ payment prioritization plan may also stipulate that the Treasury Department should continue making payments on Social Security, Medicare and veterans benefits, as well as funding the military, two of the people said. –WaPo

  That said, Democrats are preparing to push back on the plan, and will likely note that any hypothetical proposal to triage Social Security, Medicare and benefits for veterans and the military would still leave out ‘huge swaths of critical federal expenditures on things such as Medicaid, food safety inspections, border control and air traffic control,’ etc. Democrats will also likely accuse Republicans of pandering to bondholders, which include Chinese banks, vs. Americans.

  “Any plan to pay bondholders but not fund school lunches or the FAA or food safety or XYZ is just target practice for us,” said one senior Democratic aide.

  In other Kevin McCarthy news, the newly minted speaker may be trying to win back the MAGA crowd, announcing on Thursday that he’s open to the idea of “expunging” one or both of former President Trump’s impeachments.

  As the Epoch Times notes,

  When asked about the possibility of erasing the impeachments during a Jan. 12 press conference at the Capitol, McCarthy replied that he would “have to look” at the situation, saying, “I understand why members would want to bring that forward.”

  “Our first priority is to get our economy back on track, secure our borders, make our streets safe again, give parents the opportunity to have a say in their kids’ education, and actually hold government accountable,” he added. “But I understand why individuals want to do it, and we’d look at it.”

  Trump was first impeached by the House in December 2019 over a phone call he had with Ukrainian President Volodymyr Zelenskyy. He was charged with abuse of power for allegedly pressuring Zelenskyy to investigate a political opponent, and with obstruction of Congress, but was ultimately acquitted of those charges by the Senate.

  In 2021, Trump was impeached again for alleged “incitement of insurrection” following the Jan. 6 Capitol breach. Again, he was acquitted.

  Previous Expungement Attempts

  Last year, then-Rep. Markwayne Mullin (R-Okla.) led House Republicans’ attempts to expunge Trump’s impeachment record, introducing a resolution to erase the former president’s 2019 impeachment in March.

  “So, what we’re doing with the resolution is just simply saying, ‘Hey, listen, Congress made a mistake,’” Mullin, now a senator, said at the time. “‘We impeached a president under Article One, Section Two, that shouldn’t have ever taken place.’”

  In May, Mullin followed up the first bill with a second resolution to expunge Trump’s 2021 impeachment. That bill (pdf), citing 2020 election irregularities and the impeachment’s rushed nature, held that the impeachment process had failed to prove that the former president had committed “high crimes and misdemeanors” or engaged in an insurrection.

  Although both of Mullin’s resolutions garnered some Republican support, neither was ever considered by the Democrat-controlled House.

  A ‘Political Hoax’

  Trump, for his part, has maintained that both the impeachments and the Jan. 6 Select Committee’s subsequent criminal referrals were simply partisan attempts to “sideline” him and prevent him from holding elected office again.

  “The Fake charges made by the highly partisan Unselect Committee of January 6th have already been submitted, prosecuted, and tried in the form of Impeachment Hoax # 2,” the former president noted on Dec. 19 after the committee referred him to the Justice Department for prosecution.

  In February 2020, after his first acquittal by the Senate, Trump was asked by reporters about the potential of a future expungement.

  “That’s a very good question,” he said. “Should they expunge the impeachment in the House? They should because it was a hoax. It was a total political hoax.”

  At the time, it was McCarthy who floated the idea, vowing to erase the impeachment if the Republican Party regained control of the House and he became speaker.

  “I don’t think it should stay on the books,” McCarthy said.

  Despite opposition from several Trump-aligned Republicans, McCarthy achieved his goal of becoming speaker of the House—with Trump’s backing—last week.

  After a contentious week of intraparty negotiations, McCarthy secured the speakership in the 15^th vote, attributing the victory to the former president’s support.

  “I do want to especially thank President Trump,” he told reporters on Jan. 7. “I don’t think anybody should doubt his influence. He was with me from the beginning.”

  Tyler Durden
  Sun, 01/15/2023 – 16:00

• The Gas Stove Scare Is A Fraud Created By Climate Change Authoritarians
  The Gas Stove Scare Is A Fraud Created By Climate Change Authoritarians

  Authored by Brandon Smith via Alt-Market.us,

  In the past I have often tried to take a big picture approach to the issues facing the American public and how there is almost always a deeper connection between a variety of political and economic events. And, what has become increasingly clear to me is that in order to understand government actions and geopolitics, you must always ask yourself “Who benefits?”

  

  The bottom line is this – At the heart of nearly every conflict and every crisis the same group of power mongers usually benefits, and they have taken a keen interest in the climate change narrative in particular. But like I said, this is the big picture. Right now I’d like to take a look at a relatively small issue and how the little dominoes lead up to a bigger con game and a bigger disaster. Let’s talk about gas stoves…

  Frankly, I don’t care about what my stove uses to cook with as long as it works. That said, around 38% of US households use natural gas for cooking and heating. That’s a significant percentage of people that rely on gas based energy for their daily needs. Here’s the problem, though – Natural gas is not politically correct these days. Nearly all carbon emitting energy sources have been marked by climate activists and western governments as a threat that needs to be erased between 2030 to 2050.

  Globalist institutions and climate change grifters have put natural gas on the naughty list, but there are a couple of realities that must be addressed. First, as noted, a vast portion of the western world including the US and Europe rely on natural gas for numerous energy applications. Ban natural gas and civilization faces an immediate plunge in economic activity, as well as much higher prices on all remaining energy sources due to increasing demand. There is NO green energy solution that can fill the same roll as gas.

  All you have to do is look at Europe and the UK today and see how they are struggling with vastly higher costs due to sanctions on Russian gas exports. It’s a mess, and they are lucky that the winter has so far been rather mild, because the moment things freeze, they are in trouble. There are not enough alternative energy resources available to fulfill Europe’s shortages if the temperatures plummet.

  But what does this have to do with banning gas stoves in the US? Isn’t that a health issue rather than an environmental issue? No, it’s not a health issue, it’s a climate agenda issue being rebranded as a health issue.

  There has been a coordinated government and media blitz on the gas stove narrative this week, with an avalanche of claims that natural gas causes everything from asthma in children to a slowdown in cognitive development. What is the evidence for these claims? The Biden Administration and the agency weighing a potential ban, the Consumer Product Safety Commission (CPSC), have not given specific sources yet.

  The assertions are most likely rooted in a single study published in December by the International Journal of Environmental Research and Public Health in December. The group is privately funded and this particular study on gas stoves was led by RMI, a non-profit research entity that advocates for aggressive green policies and works to “transform global energy systems across the real economy.” The two lead authors, Talor Gruenwald and Brady Seals, are RMI researchers who have contributed to the group’s “carbon-free buildings” initiative.

  In other words, the study is written by people with a built in bias, and since science these days is now being linked to activism, no single study funded by a private ideological group can be trusted. RMI is not only part of the climate cult, they also promote “equity” theory and general woke politics. These concepts and real science cannot coexist.

  The American Gas Association made this exact point in a responding statement, noting that the study’s testing did not include real life appliance usage, and:

  “Ignored [previous] literature, including one study of data collected from more than 500,000 children in 47 countries that ‘detected no evidence’ of an association between the use of gas as a cooking fuel and either asthma symptoms or asthma diagnosis.”

  The push for a gas stove ban is not about health, it’s about control. It is an attempt to falsely link carbon emissions and energy products to negative health concerns as a way to trick the public into supporting decarbonization out of fear. But why revert to such a strategy? Is the climate cult really that desperate?

  Yes, yes they are.

  You see, the truth about climate change is beginning to spread to the masses, and the debunking of anti-carbon propaganda is picking up momentum. Here are the facts:

  The average global temperature is not climbing to dangerous levels. The Earth’s temps have increased according to the NOAA by less than 1°C in the past century.

  There is no evidence that this kind of temperature increase represents a threat to the environment or human health. In fact, the Earth’s temps have been much higher than they are today multiple times in the Earth’s history long before man-made carbon emissions were a thing. The official temperature record used by climate scientists only goes back to the 1880s – That is a TINY sliver of time in comparison to the epic lifespan of the Earth’s atmosphere.

  

  And what about all those arguments that there are more dangerous weather patterns emerging due to global warming? That’s a lie. There is no significant difference between storm patterns today compared to 100 years ago.

  

  And let’s not forget that global warming propaganda has been going on a long time now. Back when I was a kid in the 1980s, they used to tell us in school that large parts of continents would be under water by the year 2000. This obviously never happened and likely never will. Many of us who grew up in that era are still waiting around for the icecaps to melt.

  

  The climate change agenda is about giving governments and globalist institutions the power to bottleneck energy usage, tax carbon emissions and thus control almost every aspect of our daily lives. Without the free flow of carbon based energy almost all industry will collapse. Green energy is inefficient and cannot fill the void left behind by gas, petroleum and coal. All that would be left is a minimal manufacturing base, minimal food production and a shrinking human population. Those that survive would be slaves to carbon restrictions; it would be a living nightmare.

  There are very rich and powerful people out there that greatly benefit from such a scenario.

  The globalists have been scheming to use environmentalism as an excuse for centralization since at least 1972, when the Club Of Rome, a think-tank attached to the UN, published a treatise titled ‘The Limits To Growth’. Twenty years later they would publish a book titled ‘The First Global Revolution.’ In that document they specifically recommend using global warming as a vehicle:

  “In searching for a common enemy against whom we can unite, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like, would fit the bill. In their totality and their interactions these phenomena do constitute a common threat which must be confronted by everyone together. But in designating these dangers as the enemy, we fall into the trap, which we have already warned readers about, namely mistaking symptoms for causes. All these dangers are caused by human intervention in natural processes, and it is only through changed attitudes and behaviour that they can be overcome. The real enemy then is humanity itself.”

  The statement comes from Chapter 5 – The Vacuum, which covers their desire for global government. The quote is relatively clear; a common enemy must be conjured in order to trick humanity into uniting under a single banner – The globalist banner. And the elites see environmental catastrophe, caused by mankind itself, as the best possible motivator.

  How does this agenda start? It starts with gas stoves. It starts with something we might see as small, and then it grows from there. Pretty soon, they will be banning natural gas for heating. They will ban wood stoves. They will artificially induce gas price inflation. Then they will implement carbon taxation on manufacturers which will in turn cause prices to rise for consumers. Then there will be carbon taxes for the average individual. They will use whatever means at their disposal to make it impossible to use “fossil fuels.”

  Again, it’s not about health, it’s about control. It’s always about control. The gas stove issue is a fraud; one domino in a long chain that leads to carbon totalitarianism.

  *  *  *

  If you would like to support the work that Alt-Market does while also receiving content on advanced tactics for defeating the globalist agenda, subscribe to our exclusive newsletter The Wild Bunch Dispatch.  Learn more about it HERE.

  Tyler Durden
  Sun, 01/15/2023 – 15:30

• Why Was Hunter Paying Joe Biden $50k Per Month To Rent House Where Classified Documents Found?
  Why Was Hunter Paying Joe Biden $50k Per Month To Rent House Where Classified Documents Found?

  A Thursday tweet from the NY Post‘s Miranda Devine containing a background check for Hunter Biden has people asking questions.

  

  “The now-52-year-old began listing the Wilmington home as his address following his 2017 divorce from ex-wife Kathleen Buhle — even falsely claiming he owned the property on a July 2018 background check form as part of a rental application,” the Post reported.

  Of note, this is the same house where classified documents were found.

  Yet, upon closer inspection, Hunter lists the “Monthly Rent” as $49,910 – or roughly $550,000 for the 11 months he indicated he lived there?

  In 2018 Hunter Biden claimed he owned the house where Joe Biden kept classified documents alongside his Corvette in the garage Via @jj_talking pic.twitter.com/L7c80MRRiS

  — Miranda Devine (@mirandadevine) January 12, 2023

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

  A Zillow search reveals that the most expensive home currently for rent in Wilmington, Delaware is going for $6,000 per month.

  

  According to Town & Country magazine, Biden’s home is worth around $2 million.

  Could Hunter, a crackhead, have accidentally listed the annual rent payment to his father for the house which contained classified documents? Sure. But why was his wealthy ex-VP dad charging him rent in the first place, when Hunter was allegedly broke?

  Trending Politics asks the quiet part out loud; was this Hunter’s way of funneling money to his father?

  After Hunter’s divorce was finalized in May of 2017, he was included in an email from his business partner James Gilliar about a venture with Chinese state-funded energy company CEFC China Energy. The email stated that Hunter and his partners would receive 20% of the shares in the new business, with 10% going to Hunter’s uncle James Biden and the other 10% being “held by H for the big guy.”

  Tony Bobulinski, another one of Hunter’s former business partners, claims that he had a meeting with Joe Biden regarding the CEFC venture on May 2, 2017, and that the president was the individual referred to as the “big guy” in Gilliar’s email. Additionally, Gilliar himself confirmed that Joe Biden was the “big guy” mentioned in a message found on the laptop.

  And as the NY Post reports, “The following year, federal investigators began looking into whether Hunter and his business associates violated tax and money laundering laws during their dealings in China and other countries. Emails and other records related to the deals were found on the laptop, which Hunter dropped off at a Delaware repair shop in 2019 and never reclaimed.“

  “I hope you all can do what I did and pay for everything for this entire family for 30 years,” Hunter told his daughter Naomi in January, 2019. “It’s really hard. But don’t worry, unlike pop, I won’t make you give me half your salary.”

  Of course, Hunter paid his daddy $50k a month in rent.

  Here’s a text message Hunter sent his daughter in 2019 saying he gives JOE BIDEN “half” his salary.

  This was found on Hunter’s laptop.https://t.co/Ys1TzTlq3l pic.twitter.com/gsO8hP8r3b

  — kanekoa.substack.com (@KanekoaTheGreat) January 14, 2023

  As the Post continues:

  The laptop doesn’t contain any direct evidence of such money transfers but shows Hunter was routinely on the hook for household expenses — including repairs to the Wilmington home.

  In December 2020, weeks after his father was elected president, Hunter Biden announced that his “tax affairs” were being investigated by federal authorities in Delaware, and said he was “confident that a professional and objective review of these matters will demonstrate that I handled my affairs legally and appropriately.”

  Recent reports have indicated investigators believe they have enough evidence to charge the first son with tax crimes — as well as with lying about his drug abuse on a federal form so he could buy a gun in 2018.

  So, was the $49,910 ‘monthly’ rent a simple crackhead mistake when that was in fact the annual payment amount, or did Hunter create “Exhibit A” for any honest prosecutors to pursue? We aren’t holding our breath on the latter.

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

  Tyler Durden
  Sun, 01/15/2023 – 15:00

• "For The Record"
  “For The Record”

  By Peter Tchir, chief strategist at Academy Securities

  Since it is the start of the year, it seems like as good of a time as any to put a few things on record before diving into the meat of this T-Report. There are things that I want to refer back to over the course of the year because they relate to the business of strategy.

  For the Record #1

  Everyone hates strategists who claim to have called every move correctly. I can guarantee you that if someone called every move right in the markets, they wouldn’t be sitting in front of a computer typing missives because they’d be bazillionaires!

  A close second for the most annoying behavior by strategists is touting their good calls and completely ignoring their bad calls (Bitcoin is back to $21,000 this weekend).

  Some of this is human nature. We all “want” to be right and all tend to emphasize the “good” rather than the “bad”.

  For the Record #2

  Many of our readers have P&Ls. That is a discipline like no other and while I try to think of our strategies in terms of P&L generation, risk management, etc., it isn’t the same as having an actual P&L.

  Having said that, we have people who live and die by daily/weekly/monthly P&Ls (which is ideal for Bloomberg IB as a form of communication). We also have people with weekly/monthly/quarterly timeframes (the T-Report is geared for these people). Finally, we have some who even think in years (which seems important for corporate strategy, but it is difficult to manage a portfolio around).

  For the Record #3

  One thing that strategists dislike is when people discuss their “idea” with them but don’t realize that it was the strategist’s “idea”! That is largely a failing on the strategist’s part. Either the work isn’t getting distributed well enough (a good time to check mailing lists, ensure things aren’t going to junk, etc.), the work/titles are too confusing (though I’m not sure I could live without writing I Like Big Banks and I Can Not Lie), or I just need to write more clearly.

  Last weekend’s A Simple View is part of the process of addressing this issue going forward. 8 Seconds served the function of letting people know that our positioning had changed, but maybe the title was confusing (though the image of trying to ride a wild bull felt “informative” to me).

  Finally, while the Fed is apolitical, I couldn’t help but send out the Shifting Politics of Inflation on Friday, because that has the potential to shift the national narrative and could either influence the Fed or (at least in the case of the WSJ) might be the conduit the Fed is using to signal a change.

  On the Record

  We will “subtly” shift from “for the record” to “on the record”.

  Rachel Washburn hosted a fun and interesting webinar on Friday that started with World War III possibilities but ended in a better place. Generals (ret.) Walsh and Marks were spot on, and I was able to add a few points on how their geopolitical input is impacting our macro market and economic outlooks (replay will be available shortly).

  Academy was one of three firms that participated in Friday’s half-hour Real Yield show on Bloomberg TV. You know a show covers a lot of fixed income ground when CLO ETFs get mentioned and it seemed to be a fluid part of the conversation (rather than forced). Some really interesting views and ideas from the other guests made this a great show to watch if you have about 20 minutes or so this long weekend.

  On the Road

  My favorite part of my job has kicked off in earnest! From D.C. and Princeton last week, to San Francisco, Palo Alto, Newport Beach, and San Diego this week, seeing clients is back in vogue. There is nothing more fun than sitting with people in a variety of jobs/industries and sharing ideas. I’m even excited for Minneapolis in early Feb (it will be cold, but should be fun) and look forward to another opportunity to speak to a group of municipal issuers in Alabama!

  Travel and seeing such a diverse group of people allows me to learn about so many aspects of the economy and it makes my job so much easier!

  Consensus is Neutral

  Back to the meat of the report. If I’ve done a good job explaining myself this year, you should know that I’m basically neutral on stocks, bonds, and credit here. That view seems to be rather consensus.

  The CNN Fear & Greed Index has bumped up to 63 (which is technically in greed territory, but just above neutral).

  The AAII Sentiment Survey is in neutral territory (though very close to being too pessimistic). What was most interesting is that the number of bears has dropped from 52.3% to 39.9% since December 21st, but almost all of those people piled into the “neutral” camp as the number of bulls remained quite low.

  I’m not big on technical charts, but this chart sticks out so much that I couldn’t help but use it to illustrate my “neutral” point (I’m not opposed to charts, but they just aren’t my first choice of things to highlight).

  

  The S&P has snuggled right up against the 200 day moving average. From my limited understanding of charts, this is a crucial level. The S&P has failed to breach the 200 DMA since the sell-off took hold in late March. It could easily be rejected again. On the other hand, if it breaks through, we could see buyers emerge. Not only from all of those positioned as “neutral”, but from bears and particularly CTAs which have a reputation for being formulaic/algorithmic and tied to big levels (like the 200 DMA).

  So maybe I should refine my view from simply “neutral” to “neutral, waiting to pounce on the next move – if only I knew what that next move would be”.

  Even though at the start of today’s report we wrote about providing more “clarity” on views, I’d lean towards owning some tail risk in either direction! If we fail around here, many could press shorts and get out of recently acquired risk. If we break above, the opposite happens.

  Yes, at some level this happens all the time, but the “neutral” positioning coupled with a major, very visible level (which happens to coincide with the big round number of 4,000) makes the next few days particularly interesting for me!

  What’s Next for Inflation?

  I think that inflation will continue to fall and we will see more monthly CPI prints that are negative and even Core CPI will have a negative print this quarter.

  Many disagree, but I think that with Q4 coming in at 0.8% (3.2% simply annualized) we’ve “beaten” inflation.

  What Will the Fed Do?

  I’d be shocked if they did more than 25 bps at their next meeting.

  Yes, they will talk about “financial conditions” (aka the S&P 500), but they are starting to get the political and media aircover to back down from 50 bps and some of their higher terminal rate calls.

  There are still over 2 weeks until their meeting and we will get more data. I’m betting that if anything, that data steers them to “25 bps and done” messaging (probably too late for them to do zero, which is what I think that they should do).

  The Fed will NOT be quick to cut. They should stop hiking, but even I’m not advocating for cuts (it would have been easier if they started on the glide path to stopping rate hikes a few meetings ago).

  They will continue to do QT. This, to me, acts as an anchor on markets as every month we need to absorb more bonds from the system than if QE had not started in the first place. Why QT gets so little attention still baffles me.

  The Bank of Japan is expected to let the 10-year yield rise to as much as 1%. I view this as “on par” with QT. It is another drag on asset prices in the U.S. as Japanese investors can allow some of their FX hedged/dollar denominated bonds to roll-off when the hedges come due and just buy domestic bonds. It isn’t alarming and won’t be all at once, but it adds to the pressures of finding dollar denominated asset buyers. With the 10-year bund at 2.16% this is already happening in Europe, but it also tells me that 1% is probably getting to the low end of the range that the JGB 10-year would naturally trade at given their domestic savings rate and still low levels of inflation.

  What Will the Economy Do?

  Yes, jobs still seem good, but that isn’t as important as it should be. What I’m seeing is a couple industries acting as the epicenter of the problems for the economy!

  Big tech, fueled by everyone (from private equity, to vehicle manufacturers) took 5 steps forward in the past few years! Will we see one or two steps back as companies become more cost conscious and not every tech investment will be cheered by equity holders. Have manufacturers changed what chips they rely on as they’ve battled supply chains? Without a doubt, in 5 years technology will play an even bigger role in society and the economy, but it doesn’t mean that we haven’t already priced too much in.

  I see a potential problem in this market that it is radiating out. The local economies are incredibly interconnected.

  The homebuilder ETF (XHB) is up almost 20% in the past 3 months! This is a contrarian play that I probably should have gotten on board with, but this is an industry still in the early stages of digesting the spike in mortgage rates and overall loss of wealth in this country. I’m keeping an eye on this.

  We will get some clarity and resolution on the inventory side of the equation in the coming weeks as we get the regular data and we also have companies discussing it in detail. I’m not optimistic, but maybe this will be a pleasant surprise.

  Services could be the key. Was the print that we highlighted last weekend an anomaly or a harbinger of more bad news? Even as a bear on the economy, that data seemed surprisingly weak, so I expect something not quite so bad, but “less good” than most bulls are building into their forecast.

  What About Earnings?

  I will start by quoting my friend Peter Boockvar. He “guarantees” every quarter that about 70-75% of companies will beat earnings. His point, as I take it, is that expectations get pushed down to the point that most companies beat them, so there is little to be gleaned from the parade of “beats” that we will get.

  We will all be listening to how CEOs portray their vision for the rest of the year. Their views will mean a lot, but they usually do.

  My gut is that they will be more cautious than expectations, in part because some of the “wiggle” room that they had late last year has already been used. Also, they are in jobs where they want to outperform expectations, and even if your company is doing well, you might be cautious because you see companies around you going through tougher times.

  The one thing I “know” for certain is that we will get a lot of chatter about stock repurchases post earnings announcements and unless something changes, that will help support equities.

  It’s a Moving Picture, not a Snapshot

  The biggest mistake people may be making is looking at the data as though it is static.

  If we take a snapshot of recent data, it is easy to craft a “soft” landing narrative.

  But we don’t live in a static world. Decisions made months ago (on the policy side, on the household side, on the corporate side, etc.) take time to play out. It would be fun if economists could drive the economy like a jet ski, but it is a huge tanker, and once underway it is difficult to turn or even change speed.

  So, I 100% agree that the current data has a “soft” landing feel, but I don’t believe there is a chance that the weakening of economic data (alongside lower inflation) will stop here!

  We had to be setting up to “catch” the fall here, and if anything, we are still pushing on this well past the point we should be.

  Maybe I’m wrong here, but simple Newtonian physics tells us that an object, once set in motion, will stay in motion and that is what the Fed has done and we are going to blow right through the “soft” landing station and enter into some unsafe territory.

  Bottom Line

  Stocks

  • Neutral.
  • Own options that cost very little, but generate profits if the S&P 500 breaks 4,100 or 3,900 by the end of next week (yes, resolution will be rapid and I hope that I don’t miss it between now and when futures open, let alone in the actual market).
  • “Gun to head” I’d bet that the rally continues and we test 4,200 on the S&P 500 which means I’ve got to get back on that bucking bronco (or I got off too early).
  • We will break 2022’s lows, but that isn’t my gut for the next move.

  Rates

  • The 10-year at 3.5% isn’t particularly appealing. We should see corporate issuance spike after earnings announcements. 3.5% is quite inverted versus the front end with a Fed that will hike at least 25 bps more. The BOJ won’t help things. Positioning has become a bit bullish on bonds (at least from the chatter I hear). So, even in my deflationary view, I would not be long 10s here.
  • I like 5-years better than other points. It is “only” 3.6%, so not much of a pick-up, but I like the risk/reward better in 5s. Maybe, the 2-year is more obvious, but it has so little duration and if I’m right and the Fed won’t hike (but also won’t cut), then there isn’t a lot of room.
  • For now, I’d be short Treasuries/sovereign debt. Yes, I think that deflation will be the discussion point of this quarter, but for now, I just don’t see much value in sovereign debt.

  Credit

  • A “weird” barbell. I’m most concerned about leveraged loans (more so than high yield, because of the type of issuer that tapped that market, versus the bond market), but I like “senior” tranches of CLOs (anything IG rated and even BB). It is difficult to go lower in the cap structure of CLOs given the fact that the building blocks are my least favorite part of the credit market. Prices of various CLO tranches have bounced nicely in the past couple of months and new deals could accumulate some good collateral at really interesting levels.
  • I’m “meh” on high yield and even investment grade.
    • High yield is so hated but while it is interesting, the combination of rate risk and credit risk isn’t a screaming buy to me (though certainly more of a buy than leveraged loans).
    • Investment grade is ok, but I think if Treasury yields rise, spreads will contract by 25% or so of the move in Treasuries, so I expect higher overall yields and lower dollar prices. If sovereign yields drop, spreads will widen on at least a 50% basis (if not closer to 100%). So, in a falling yield environment, IG yields won’t change much and dollar prices won’t do a lot (kind of a difficult risk/reward to pitch).
  • So, I am equal weight IG and underweight sovereign debt. I am underweight leveraged loans and would use those funds to buy CLO tranches or some high yield bonds instead.

  That’s what I’ve got for now. Will be an interesting week or two and it is difficult being so bearish on the economy, but neutral (and maybe “gun to the head” bullish) on risk in the very short-term.

  Tyler Durden
  Sun, 01/15/2023 – 14:30

• Adam Schiff Admits Possible National Security Jeopardized With Biden Documents
  Adam Schiff Admits Possible National Security Jeopardized With Biden Documents

  You know it’s bad when…

  

  No lessor liar than Rep. Adam Schiff (R-Calif.), the now former chairman of the House Intelligence Committee, admitted this morning that it’s possible national security was jeopardized after President Joe Biden’s lawyers confirmed classified documents were found in various locations.

  “I don’t think we can exclude the possibility without knowing more of the facts,” the California Democrat said of the Biden documents when pressed by “This Week” co-anchor Jonathan Karl about any national security risks.

  “We have asked for an assessment in the intelligence community of the Mar-a-Lago documents,” Schiff said.

  “I think we ought to get that same assessment of the documents found in the think tank as well as the home of President Biden. I’d like to know what these documents were. I’d like to know what the [intelligence community’s] assessment is, whether there was any risk of exposure and what the harm would be and whether any mitigation needs to be done.”

  Of course, Schiff was quick to get back on track with the narrative, as echoing the media and most other Democrats, the Russia collusion hoaxer asserted that Biden’s and Trump’s cases are different because Biden, he said, is cooperating.

  “The Biden approach was very different in the sense that it looks that it was inadvertent that these documents were at these locations,” Schiff said.

  “There was no effort to hold onto them, no effort to conceal them, no effort to obstruct the Justice Department’s investigation.”

  Democrat Rep. Adam Schiff says he’s “going to reserve judgment” on the Biden classified document scandal because it was probably “inadvertent” that Biden left classified documents lying around his office, garage, and home.#Democrat #Schiff #ClassifiedDocuments

  via @RNCresearch pic.twitter.com/kq8k0f0pVU

  — TRUTH PUKE (@TruthPuke) January 15, 2023

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

  It’s worth noting, however, that the National Archives had confirmed last year that Trump’s lawyers were cooperating with the agency before the FBI raided his Florida residence in August.

  Tyler Durden
  Sun, 01/15/2023 – 14:00

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