- EU Prosecutor Opens Probe Into COVID Vaccine Purchases
EU Prosecutor Opens Probe Into COVID Vaccine Purchases
Two weeks after Pfizer CEO bailed on EU testimony in the wake of a report highlighting a ‘secretive’ vaccine deal between himself and European Commission President Ursula ‘missing texts‘ von der Leyen, the European Public Prosecutor’s Office (EPPO) has opened an investigation into the EU’s Covid-19 vaccine purchases, Politico reports.
EPPO, and independent EU body, is responsible for investigating and prosecuting financial crimes, including fraud, money laundering and corruption, according to the report. In its Friday announcement, the body did not specify who was being investigated, or which contracts were the subject of inquiry.
That said, two other watchdog agencies have brought attention to the von der Leyen – Bourla deal.
“This exceptional confirmation comes after the extremely high public interest. No further details will be made public at this stage,” said the EPPO.
In April 2021, the New York Times first reported on text messages exchanged between von der Leyen and Pfizer CEO Albert Bourla in the run-up to the EU’s biggest vaccine procurement contract — for up to 1.8 billion doses of BioNTech/Pfizer vaccine. The deal would be worth up to €35 billion if fully exercised, according to leaked vaccine prices.
In January this year, the EU’s ombudsman charged the Commission with maladministration for failing to look for the text messages in response to a freedom of information request. Without confirming the existence of the texts, the Commission argued in its response that “short-lived, ephemeral documents are not kept.” It said that a search for the text messages hadn’t yielded any results. -Politico
Last month, the European Court of Auditors published the aforementioned report in which it said the Commission refused transparency regarding details of von der Leyen’s personal role in the Pfizer contract.
In it, the budget watchdog found that the EU chief went rogue in order to personally hammer out a preliminary deal with Pfizer, instead of relying on joint negotiating teams. While the Commission has been forthcoming with other vaccine contracts, it has refused to provide the court with any documents regarding those preliminary negotiations.
According to Belgian Socialist MEP Kathleen van Brempt, “several aspects” of the Pfizer contract should be investigated, including “the text messages between the Commission President and the fact that there is no paper trail of the preliminary negotiations in first instance.”
2/3 We need to know why the biggest contract is the least transparent. We need to understand why the EU is obliged to buy 1.8 billion Pfizer/BioNTech vaccines, regardless of the needs, regardless of whether new and better players have entered the market.
— Kathleen Van Brempt (@kvanbrempt) October 14, 2022
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3/3 Many EU contracts reserved a “right” to buy but with the Pfizer contract we do have an “obligation” to buy. Why did we deviate from the normal procedure for a contract that covers our needs many times, for a period where all would already be vaccinated (2022 and 2023).
— Kathleen Van Brempt (@kvanbrempt) October 14, 2022
https://platform.twitter.com/widgets.jsAccording to Politico, “The MEP chairs the European Parliament’s special committee on COVID-19,” adding that both the EU’s ombudsman and a member of the European Court of Auditors have made appearances before the panel.
“The [COVID-19] committee will be following this case with great attention,” said Van Brempt.
Tyler Durden
Mon, 10/17/2022 – 02:45 - Global Tensions Rise Over Russia And Ukraine – What Happens Next?
Global Tensions Rise Over Russia And Ukraine – What Happens Next?
Authored by Brandon Smith via Alt-Market.us
There comes a point in the lifespan of any economic or political analysis when most of your observations or predictions either become mostly wrong, or mostly right. If you have done your job properly through due diligence, research and applied practical insight, then you will be in a position to point out why the dominoes are falling. People have to understand how these events were predictable so that they can prepare better in the future.
The mainstream media, politicians and global banks will tell the public that “no one could have seen these events coming.” This is a lie. Some of us in the alternative fields did see them coming and with considerable clarity. The establishment and their defenders don’t want you to know that. They will deny up and down that we predicted anything; they’ll claim that we don’t exist, that our analysis never happened, or as a last ditch effort they’ll claim that they saw it all coming before we did.
The mainstream officials and analysts have to maintain their image of public authority, and they can’t do that if “upstarts” in the alternative arena are constantly right while they are constantly wrong. They have all the fancy Ivy League degrees, after all.
In my article ‘The Globalist Reset Agenda Has Failed – Is Ukraine Plan B?’, published in January of this year, I outlined why I believed that a war between Ukraine and Russia was the most likely crisis to follow after the hype of the covid pandemic faded away.
In my article ‘Ukraine Learns The Value Of An Armed Citizenry, But Far Too Late’ I argued the high probability that NATO troops were already on the ground in the region and not just as advisors. According to mounting evidence it is clear that western troops are active in Ukraine and that US and European intel are essentially running the war. In some cases this has been openly admitted. And why wouldn’t they be running the war? It’s being fought entirely with NATO money and NATO weapons.
Then, recently I predicted that the Kremlin was poised to shift strategies, rather than trying to hold larger swaths of territory I believed they would instead seek to use a “tenderizing” strategy and destroy the bulk of Ukrainian infrastructure, specifically electricity and water grids. In my article ‘Escalation: Recent Events Suggest Mounting Economic Danger’ published a month ago I stated that:
“With the amount of propaganda coming from Ukrainian Intelligence and NATO, it’s hard to say what is actually happening, but I suspect Russia is changing strategies and repositioning to deploy missile and artillery bombardment of infrastructure, including power grids and water.”
“This is a tactic that Russia has avoided for months, which is surprising because one of the first measures usually taken by the US during an invasion is to eliminate most key infrastructure (as we did in Iraq). You would think Russia would have done the same, but perhaps they were saving that scenario for winter when it is harder for Ukraine to cope…This would make Ukraine essentially unlivable in the coming winter for most of the population.”
This past week my latest prediction came true, with Russia now striking multiple infrastructure targets using cruise missiles and drones and taking down at least 60% of Ukraine’s electrical grids. These grids are now rerouted to provide SOME power to the affected regions, but in the best case scenario they are only able to be active for 5 hours a day. Kyiv city authorities called on residents and businesses to limit electricity consumption from 5pm until 10pm and urged owners of advertising signs to turn off their lights during this time.
Ukraine has halted all energy exports to Europe in response to the grid damage. Meaning, the EU just lost even more of their primary energy resources on top of the loss of Russian gas and oil.
Some people might claim that the missile attacks were impromptu and were only triggered by the partial destruction of the Kerch Bridge by a Ukrainian truck bomb. This is false. According to Ben Hodges, a retired U.S. general, the intensity and volume of the attacks indicated they were planned well in advance of the weekend’s explosion on a bridge linking Russia and annexed Crimea. Meaning, Russia was going to strike Ukraine infrastructure regardless.
But what does all this mean, and what happens next?
My track record on the crisis has been accurate so far, but you don’t need a crystal ball to see where this situation is headed. First and foremost, the propaganda war is going to go into high gear, with Russia widely condemned for “genocide” as Ukraine civilians face a long winter with little to no electricity and minimal clean water.
To put this in perspective, however, when the US invaded Iraq for the second time during Operation Iraqi Freedom, we annihilated most vital grid resources and left millions of Iraqis without power or water. Hundreds of thousands of civilians died during the war, many of them due to lack of basic necessities. So, we need to be careful about how we throw around the word “genocide,” our glass house breaks just as easily as any other.
I would remind readers that I have no personal interest in either side of this conflict, I’m only interested in the facts on the ground and how they affect the rest of the world and America in particular. I don’t trust Vladimir Putin with his long running ties to globalists in the WEF and his friendship with Henry Kissinger, and I certainly don’t trust the puppet government in Ukraine. I suspect this conflict has been instigated to the benefit of global elitists, and I gave all my reasons why at the very beginning of the war.
I would also remind readers that not long ago there was an aggressive push by Democrats and some GOP Neo-cons to get the American public to support deep US involvement and possibly open troop deployments to Ukraine. This attempt failed for the most part, but they will try again as the conflict escalates. Words like “genocide” are used liberally by propagandists to induce emotional outrage, but these people are rarely honest.
That’s not to say Ukraine isn’t facing disaster, far from it. Until now, they have enjoyed amenities which are rarely available to a country in the midst of invasion, including power and internet communications. This is now changing. As grid systems continue to fail or be destroyed by targeted strikes it is inevitable that millions more Ukrainians will seek to leave the region as refugees to neighboring countries. The influx will definitely create a humanitarian crisis.
Furthermore, the calls by NATO governments for direct intervention will increase to a constant roar and the mainstream media will try to amplify the saber rattling as much as possible.
Ukraine will turn to more asymmetric strikes within Russia, using multiple guerrilla or terrorist actions, more so to elicit a wider response from Russia that might lure America and the EU into open engagement.
Russia will simply bide their time. They are facing minimal economic pressure given they are enjoying an explosion in energy profits and their close trade ties with China and India. All Putin has to do is wait for the NATO weapons and money to run out, which they will, sooner rather than later. From a strategic perspective, it makes sense for Russia to continue targeted strikes rather than trying to grab more territory. That said, a prolonged conflict also helps the establishment as a distraction from the economic crisis that they have caused.
Putin would never admit it, but the Russian presence in Ukraine serves many globalist interests.
The biggest question on everyone’s mind is of course if this will lead to a nuclear event? If we are talking about a global nuclear war, then I think not. If we are talking about a limited regional strike, such as one or two weapons, then yes, the chances are high.
The automatic assumption people will make is that if one nuclear bomb goes off, then ALL the nuclear bombs will go off. This is not necessarily true. A regional strike, most likely by Russia or at least blamed on Russia, would actually be beneficial to globalist interests who could use the image of a mushroom cloud over Ukraine as a tool of ultimate fear and panic. The public might be more malleable and controllable if they thought evil Russians with nukes are about to erase them.
An actual global nuke exchange would NOT be so advantageous for the establishment, as the outcome would be completely unpredictable and the vast infrastructure they have spent generations building would be eliminated in the blink of an eye. I think the globalists will do everything in their power to avoid a worldwide nuclear calamity, but they would certainly try to use the threat to their advantage.
Ukraine’s energy crisis will dovetail with Europe’s impending energy crisis this winter and I doubt there will be many countries in the EU that will avoid economic and supply chain breakdowns. The extent of the crisis will be determined by the harshness of the winter.
As far as America is concerned, I continue to worry most about political optics. I am already seeing a narrative floating around social media platforms that conservatives are complicit with Russia and that in some cases groups that stand against the draconian policies of the establishment and the Biden Administration are actually “Russian agents.”
The strategy here is so transparent it’s almost laughable. As Biden continues to overstep and continues to beat his war drums against half the US population, the claim will be that those of us who respond or resist are not “freedom fighters,” but paid Russian saboteurs. Even those of us that have been fighting this fight for decades will be accused of “treason” and “insurrection” instead of simply defending ourselves against tyranny.
The time is coming for the ultimate gaslighting of the American citizenry – They will try to take away our freedoms and everything we have and accuse us of being villains and foreign agents at the same time. This IS the endgame of the East/West paradigm, at least for Americans. But, if we can see it coming then we can at least prepare for it and warn as many people as possible before it happens.
Tyler Durden
Mon, 10/17/2022 – 02:00 - Hopkins: The Gaslighting Of The Masses
Hopkins: The Gaslighting Of The Masses
Authored by CJ Hopkins via The Consent Factory,
For students of official propaganda, mind control, emotional coercion, and other insidious manipulation techniques, the rollout of the New Normal has been a bonanza. Never before have we been able to observe the application and effects of these powerful technologies in real-time on such a massive scale.
In a little over two and a half years, our collective “reality” has been radically revised. Our societies have been radically restructured. Millions (probably billions) of people have been systematically conditioned to believe a variety of patently ridiculous assertions, assertions based on absolutely nothing, repeatedly disproved by widely available evidence, but which have nevertheless attained the status of facts. An entire fictitious history has been written based on those baseless and ridiculous assertions. It will not be unwritten easily or quickly.
I am not going to waste your time debunking those assertions. They have been repeatedly, exhaustively debunked. You know what they are and you either believe them or you don’t. Either way, reviewing and debunking them again isn’t going to change a thing.
Instead, I want to focus on one particularly effective mind-control technology, one that has done a lot of heavy lifting throughout the implementation of the New Normal and is doing a lot of heavy-lifting currently. I want to do that because many people mistakenly believe that mind-control is either (a) a “conspiracy theory” or (b) something that can only be achieved with drugs, microwaves, surgery, torture, or some other invasive physical means. Of course, there is a vast and well-documented history of the use of such invasive physical technologies (see, e.g., the history of the CIA’s infamous MKULTRA program), but in many instances mind-control can be achieved through much less elaborate techniques.
One of the most basic and effective techniques that cults, totalitarian systems, and individuals with fascistic personalities use to disorient and control people’s minds is “gaslighting.” You’re probably familiar with the term. If not, here are a few definitions:
“the manipulation of another person into doubting their perceptions, experiences, or understanding of events.” American Psychological Association
“an insidious form of manipulation and psychological control. Victims of gaslighting are deliberately and systematically fed false information that leads them to question what they know to be true, often about themselves. They may end up doubting their memory, their perception, and even their sanity.” Psychology Today
“a form of psychological manipulation in which the abuser attempts to sow self-doubt and confusion in their victim’s mind. Typically, gaslighters are seeking to gain power and control over the other person, by distorting reality and forcing them to question their own judgment and intuition.” Newport Institute
The main goal of gaslighting is to confuse, coerce, and emotionally manipulate your victim into abandoning their own perception of reality and accepting whatever new “reality” you impose on them. Ultimately, you want to completely destroy their ability to trust their own perception, emotions, reasoning, and memory of historical events, and render them utterly dependent on you to tell them what is real and what “really” happened, and so on, and how they should be feeling about it.
Anyone who has ever experienced gaslighting in the context of an abusive relationship, or a cult, or a totalitarian system, or who has worked in a battered women’s shelter, can tell you how powerful and destructive it is. In the most extreme cases, the victims of gaslighting are entirely stripped of their sense of self and surrender their individual autonomy completely. Among the best-known and most dramatic examples are the Patty Hearst case, Jim Jones’ People’s Temple, the Manson family, and various other cults, but, the truth is, gaslighting happens every day, out of the spotlight of the media, in countless personal and professional relationships.
Since the Spring of 2020, we have been subjected to official gaslighting on an unprecedented scale. In a sense, the “Apocalyptic Pandemic” PSYOP has been one big extended gaslighting campaign (comprising countless individual instances of gaslighting) inflicted on the masses throughout the world. The events of this past week were just another example.
Basically, what happened was, a Pfizer executive confirmed to the European Parliament last Monday that Pfizer did not know whether its Covid “vaccine” prevented transmission of the virus before it was promoted as doing exactly that and forced on the masses in December of 2020. People saw the video of the executive admitting this, or heard about it, and got upset. They tweeted and Facebooked and posted videos of Pfizer CEO Albert Bourla, Bill Gates, the Director of the CDC, official propagandists like Rachel Maddow, and various other “experts” and “authorities” blatantly lying to the public, promising people that getting “vaccinated” would “prevent transmission,” “protect other people from infection,” “stop the virus in its tracks,” and so on, which totally baseless assertions (i.e., lies) were the justification for the systematic segregation and persecution of “the Unvaccinated,” and the fomenting of mass fanatical hatred of anyone challenging the official “vaccine” narrative, and the official New Normal ideology, which hatred persists to this very day.
The New Normal propaganda apparatus (i.e., the corporate media, health “experts,” et al.) responded to the story predictably. They ignored it, hoping it would just go away. When it didn’t, they rolled out the “fact-checkers” (i.e., gaslighters).
The Associated Press, Reuters, PolitiFact, and other official gaslighting outfits immediately published lengthy official “fact-checks” that would make a sophist blush. Read them and you will see what I mean. They are perfect examples of official gaslighting, crafted to distract you from the point and suck you into an argument over meaningless details and definitions. They sound exactly like Holocaust deniers pathetically asserting that there is no written proof that Hitler ordered the Final Solution … which, there isn’t, but it doesn’t fucking matter. Of course Hitler ordered the Final Solution, and of course they lied about the “vaccines.”
The Internet is swimming with evidence of their lies … tweets, videos, articles, and so on.
Which is what makes gaslighting so frustrating for people who believe they are engaged in an actual good-faith argument over facts and the truth. But that’s not how totalitarianism works. The New Normals, when they repeat whatever the authorities have instructed them to repeat today (e.g., “trust the Science,” “safe and effective,” “no one ever claimed they would prevent transmission”), could not care less whether it is actually true, or even if it makes the slightest sense.
These gaslighting “fact-checks” are not meant to convince them that anything is true or false. And they are certainly not meant to convince us. They are official scripts, talking points, and thought-terminating clichés for the New Normals to repeat, like cultists chanting mantras at you to shut off their minds and block out anything that contradicts or threatens the “reality” of the cult.
You can present them with the actual facts, and they will smile knowingly, and deny them to your face, and condescendingly mock you for not “seeing the truth.”
You can show the New Normals the video, and they will watch it, and then look you right in the eye and deny it. pic.twitter.com/iLWsS7jl0f https://t.co/JJTuhGViya
— Consent Factory (@consent_factory) October 13, 2022
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But here’s the tricky thing about gaslighting.
In order to effectively gaslight someone, you have be in a position of authority or wield some other form of power over them.
They have to need something vital from you (i.e., sustenance, safety, financial security, community, career advancement, or just love). You can’t walk up to some random stranger on the street and start gaslighting them. They will laugh in your face.
The reason the New Normal authorities have been able to gaslight the masses so effectively is that most of the masses do need something from them … a job, food, shelter, money, security, status, their friends, a relationship, or whatever it is they’re not willing to risk by challenging those in power and their lies. Gaslighters, cultists, and power freaks, generally, know this. It is what they depend on, your unwillingness to live without whatever it is. They zero in on it and threaten you with the loss of it (sometimes consciously, sometimes just intuitively).
Gaslighting won’t work if you are willing to give up whatever the gaslighter is threatening to take from you (or stop giving you, as the case may be), but you have to be willing to actually lose it, because you will be punished for defending yourself, for not surrendering your autonomy and integrity, and conforming to the “reality” of the cult, or the abusive relationship, or the totalitarian system.
I have described the New Normal (i.e., our new “reality”) as pathologized-totalitarianism, and as a “a cult writ large, on a societal scale.” I used the “Covidian Cult” analogy because every totalitarian system essentially operates like a cult, the main difference being that, in totalitarian systems, the balance of power between the cult and the normal (i.e., dominant) society is completely inverted. The cult becomes the dominant (i.e., “normal”) society, and non-cult-members become its “deviants.”
We do not want to see ourselves as “deviants” (because we haven’t changed, the society has), and our instinct is to reject the label, but that is exactly what we are … deviants. People who deviate from the norm, a new norm, which we reject, and oppose, but which, despite that, is nonetheless the norm, and thus we are going to be regarded and dealt with like deviants.
I am such a deviant. I have a feeling you are too. Under the circumstances, it’s nothing to be ashamed of. On the contrary, we need to accept it, and embrace it. Above all, we need to get clear about it, about where we stand in this new “reality.”
We are heading toward New Normal Winter No. 3. They are already cranking up the official propaganda, jacking up the fabricated “cases,” talking about reintroducing mask-mandates, fomenting mass hatred of “the Unvaccinated,” and so on. People’s gas bills and doubling and tripling. The global-capitalist ruling classes are openly embracing neo-Nazis. There is talk of “limited” nuclear war. Fanaticism, fear, and hatred abound. The gaslighting of the masses is not abating. It is increasing. The suppression of dissent is intensifying. The demonization of non-conformity is intensifying. Lines are being drawn in the sand. You see it and feel it just like I do.
Get clear on what’s essential to you. Get clear about what you’re willing to lose. Stay deviant. Stay frosty. This isn’t over.
Tyler Durden
Sun, 10/16/2022 – 23:30 - Goldman Trader: I Said "This Reminds Me Of 2008" More Times This Week Than I Can Remember
Goldman Trader: I Said “This Reminds Me Of 2008” More Times This Week Than I Can Remember
Over the weekend, we discussed that the probability of another sharp leg lower on Monday after Friday’s panicked reversal of Thursday’s furious gains is extremely low (in fact it’s likely that we will get yet another squeeze), if only due to technicals and positioning as hedge funds doubled-down on short aggressively into Friday’s dump while overall hedge fund net leverage fell to the lowest level since Mar ’20.
And if that isn’t enough, Sundial Capital’s Jason Goepfert pointed out something far more startling: “Last week, retail traders bought $19.9 billion worth of puts to open. They bought only $6.5 billion in calls to open. This is the first time in history that puts were 3x calls.“
I don’t think people really appreciate what’s happening in the options market right now.
Last week, retail traders bought $19.9 billion worth of puts to open. They bought only $6.5 billion in calls to open.
This is the first time in history that puts were 3x calls. pic.twitter.com/GR2apNfFtb
— Jason Goepfert (@jasongoepfert) October 16, 2022
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Translation: the massive Delta hedge unwind that sent futures explosively higher on Thursday after the dismal CPI print is back even bigger than before, and just waiting for the signal to unwind the dealer delta hedge that will send futures soaring higher.
Still, as we discussed yesterday, while technicals point to a rollercoaster reversal on Monday as we get another overshorted, oversold rally on Monday and we may get a powerful bear market rally in November that pushes stocks to 4,000 or higher by year end, “the bear market won’t end until the Fed pivots. The timing of that still remains to be determined, however after the midterm elections when the political blinders drop, we expect that the full – and dire – picture of the US labor market will finally emerge and shock everyone, especially the Fed.”
Until then, however, the bear market will be alive and raging, and it is this part of the market cycle that Goldman flow trader, Matt Fleury, who has been one of the most vocal bears on the bank’s trading desk, focuses on not only the bear market that is yet to come but also on the Mother of all bear markets, the Global Financial Crisis.
As he writes in his latest note, titled “Adult Swim” (available to pro subs in the usual place), “I said “this reminds me of 2008” more times this week than I can remember. The velocity of moves is increasing. The pace of tremors quickening.”
Below we excerpt from Fleury’s must-read note, published with quite a bit of urgency late on Saturday night ahead of what is shaping up to be another hair-raising week, at a time when as Bank of America warned that “Liquidity Breaks And Credit Freezes” as its Credit Dysfunction Indicator Breaches The Critical Zone. In short, all hell may be about to break loose.
The year when you started in this business shapes you. I started in 2006 at Bear Stearns with a Bachelor & Masters in how good the economy of Ireland was during the Celtic Tiger. Quite a baptism.
If you started in this business after 2009, all you know is a ‘buy the dip’ market, all you know is a Fed that has your back. You have got glimpses of crashing bear markets. But never rolling bear markets.
A crashing bear market is like swimming in shallow water; eventually you put your feet down and its ok, and there is a lifeguard on duty (the Fed) who is there to save you.
A rolling bear market is deep water swimming, with no lifeguard.
That’s what we are in. A rolling bear market.
The pain trade is lower. It’s always lower.
I get in this debate all the time, and it’s usually with people who started after 2009. It’s a pain trade to watch your friends lose their entire net worth because they never sold a Bear Stearns share. It’s a pain trade to watch your parents lose what money they had saved their whole lives which were in Irish bank shares when they went under.
It is not a pain trade when a hedge fund returns +0.5% on a given day and the market is 2%. They get paid on that +0.5%.
The pain trade is lower, and I do not believe we have seen the worst yet. Sample conversation on the trading floor:
“Matt, but everyone is bearish.”
“Yes, but those same people have their entire net worth ex their homes in equities.”
“Oh.”
Liquidity is tightening
“Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks, and focus on the movement of liquidity… most people in the market are looking for earnings and conventional measures. It’s liquidity that moves market.” – Stan Druckenmiller
The Fed’s continued aggressive pace of hikes is causing unexpected knock on effects. I was certainly not aware of how levered the UK LDI pensions were. This had an eerie feel to me of the Bear Stearns hedge funds that went down in 2007 and all I could think of “what else is out there we don’t know about?”
The inflation reading in the US was undoubtedly bearish for risk assets.
There was an oversold/technical bounce which was swiftly sold. Ironically this is exactly what I was looking for last month which turned out to be a very strong candidate for worst call of the year.
It is noticeable however how these bounces are getting shorter and shorter. This makes me very uneasy.
The mark of a bear market is large intraday trading ranges. H/t Matt Kaplan for the chart, which I think is a good illustration of when you get wide intraday trading ranges, it tends to be in the depths of bear markets. Based on history, there is certainly more scope for these to increase in frequency.
Here are a few headlines which caught my eye this week in my inbox for GIR’s excellent econ team. A worrying theme:
- Poland: Large Inflation Increase in September Confirmed, As Underlying Inflation Reaccelerates
- USA: Core CPI Inflation Jumps to 6.6% on Service-Sector Strength
- Romania: Inflation Rises by 0.6pp to +15.9%yoy, Surprising Expectations to the Upside
- India: CPI inflation increased in September driven by higher food prices
- USA: Producer Prices Above Expectations In September
- Hungary: Sharp Rise in Inflation on Household Energy Price Hike, And Underlying Inflation Rises Further
- Asia in Focus: ASEAN-5 Inflation Outlook: Higher For Longer
Within the US there is an increased focus on sticky inflation. The transition from goods consumption to services consumption kicks off labor demand and wages drive shelter inflation which is sticky.
Here is the 12mo Atlanta Sticky-Price CPI:
GIR breaks this move from goods to services down nicely:
The Fed’s hands are tied here and the terminal rate which the market is pricing continues to move higher.
If you are waiting for the Fed to pivot and save you, I point you towards the 2024 dots.
I am of the opinion that the Fed has already made one error by not moving quick enough to hike rates, is now compounding that error, and is also making it up as they go along. They will stay the course into 2023 at least.
The market is leading the Fed, and it is moving ever higher.
This hawkish impulse has been a consistent headwind for equities and I don’t see that stalling in the near term.
Putting the UK in the rearview mirror
For quite some time S&P futures have moved hand in hand with Britcoin (GBP), but that seems to be breaking as the events within the UK take almost circus like turns.
I do believe the live cam of “who will last longer?” of Liz Truss versus a head of lettuce (LINK) will mark the “peak UK fears” for stock operators.
Rolling bears
These are what rolling bears look like. This is the environment we are in.
I have seen a lot of talk about the 200wk moving average acting as support. Well yes, it does aside from in rolling bear markets. 200wk MA with Fed support:
But when it breaks in rolling bears, it is ugly:
Corporate Finance 101
These are the MSFT bonds on Bloomberg. Let’s call it a 5% average. You can debate the attractiveness of owning a 23x MSFT P/E vs its bond at 5%.
But a more important question right now, if the market deems MSFT paper should yield 5%, where will it price lower quality company debt when they need to come to market?? 10%? 12%?
This is the GIR estimate for net corporate demand in 2023.
Question for the upcoming conference calls:
“Hey great quarter guys. Mr. CFO, in this backdrop, with your cash yielding ~4%, are you really buying back stock? And where do you think you would be able to issue debt in the current environment?”
In difficult times, corporate issuance ramps up. I will be watching to see how companies choose to fund themselves in 2023 – via debt or via equity issuance.
Additionally, there has been a lot of money that flowed into dividend funds – surely that can now buy some high quality IG paper?
Similarly, is there a home to be found for fallen heroes? This is the market value of AAPL + AMZN + GOOGL + MSFT. That looks like a break.
What am I watching this week?
Liquidity remains poor. Top of book depth:
I call this chart the “potential for destruction” – it is top of book depth normalized by 1mo implied vol. It’s as bad now as it was in March 2020.
Overlaying top of book depth in futures vs 1mo 95/105 risk reversals, it will tell you that it is now worse:
Intraday vol is picking up:
Puts are not helping as much as they could. This is the 100d SPX % change vs SPX 25dp change in vol points. If hedges aren’t working, degrossing is more likely.
This was the chart from Thursday of intraday SPX move vs Vix level (h/t Cullen Morgan):
This could change soon. I sent around some thoughts to those on my direct mailing list. Options volume is exploding. The tail is wagging the dog.
More daily notional calls traded in SPX on Thursday than ever before.
The 5dma of $put notional is ever climbing. It now dwarfs 2008/9 when dealers hands were less tied due to banking regulation and risks they could absorb.
Levered ETF volumes are picking up, and SOXL (Semis 3x levered ETF) is the centre of attention. $10bn+ daily rebalances at the close in this ETF are common place now.
These are not healthy undercurrents. And the Fed’s hands are tied due to the inflation set up.
The Fed pivot will come, but when it comes the Fed pivot will be bearish. It is my view they will be forced to pivot because inflation is coming down due to a cardiac arrest in economic activity.
It is somewhat ironic that a Fed pivot is both part of the bull and bear case.
I do not believe we have seen the full pain of a Fed tightening this quickly yet.
Where are the bankruptcies? Where are the private mark downs? Who owns too much illiquid assets that haven’t had a real mark in years? Where are the over levered homebuilders going under?
The UK LDI pensions look like the first domino to me. The old regime of a central bank supported market is gone. And many business models that were spawned in that era will be tested.
This also comes at a time when the west has no allies in Opec for the first time since inception as the US drains the SPR (potential for oil price to stay elevated further causing headaches for the Fed?), and geopolitical tensions with China potentially impacting future global growth (see escalation on semiconductors late this week).
Good luck out there; it is adult swim, and there is no liFEguarD.
The full note available to pro subs.
Tyler Durden
Sun, 10/16/2022 – 23:00 - Igor Danchenko Trial Revelations: Team Mueller’s Obstruction
Igor Danchenko Trial Revelations: Team Mueller’s Obstruction
Authored by Techno Fog via The Reactionary,
On Friday, Special Counsel John Durham finished presenting evidence in the Igor Danchenko trial.
The most damning part of the day, if not the trial? Testimony that FBI supervisors within the Mueller Special Counsel refused requests to interview a source for the Steele Dossier: longtime Democrat activist Charles Dolan.
But first we start with the redirect examination of a witness from Thursday afternoon – FBI Special Agent Kevin Helson – who handled Danchenko when he was a confidential human source. (Our prior article discussed Helson’s investigative failures at length.)
Durham questioned Helson about efforts to determine the Danchenko-Dolan connection in the summer of 2017. By that time, the Mueller Special Counsel had been ongoing since May 2017 and had, on its own, taken part in the last Carter Page FISA renewal. And if you recall from our last articles, Danchenko had been an FBI CHS since March 2017. Once Mueller was appointed, Helson was the go-between, asking Danchenko questions posed by the then-Special Counsel’s team.
By June 2017, the Mueller Special Counsel had developed information that Democrat Charles Dolan may have been a source of the Steele Dossier. They passed questions about Dolan to Agent Helson:
Q Who did those [Dolan] questions come from?
A It came from the Mueller investigative team, particularly Ms. [Amy] Anderson.
Durham also cleaned-up Helson’s sloppiness. The previous day, Helson testified that Danchenko didn’t know the Steele Dossier was going to the FBI. Helson admitted he didn’t have any evidence to support his own conclusion.
Q You were asked a question yesterday that you adopted — you were asked a question about, well, the defendant didn’t know that Steele’s reports were going to the FBI, and you said yes. Do you have any independent knowledge of that?
A No.
Q That’s just what the defendant told you, right?
A Yeah.
Q So when you told the jury that he, Mr. Danchenko, didn’t know that they were going to the FBI, you don’t know that to be the case?
A I had no other knowledge that suggested that, no.
Q Right. There’s no independent evidence of any sort, correct?
A Yes, correct.
Helson was also asked about Danchenko’s lack of complete honesty with respect to his interactions with Charles Dolan and his travels to Moscow. As you’ll see, Helson’s answers also implicate his own failure to fully investigate his source.
Q Did Mr. Danchenko tell you about his having been in Moscow in June of 2016?
A No, he did not tell me that.
Q Did he tell you anything about his having met with or seen Mr. Dolan in Moscow in June of 2016?
A No, sir.
Q Do you recall, sir, whether or not you ever learned the dates on which Mr. Danchenko was in Moscow in June of 2016?
A I learned of it later.
Q And do you remember: When you learned at a later point in time he had been in Moscow in June of 2016, did you talk to him about that?
A No.
Danchenko’s June 2016 Moscow trip, where he met with Dolan, has significant timing because Danchenko flew from Moscow to London to give “a report”. Who was in London? Christopher Steele.
Durham also inquired about Helson’s October 24, 2017 interview of Danchenko. Helson described the purposes of that meeting:
“This meeting was — in part, it was a direction from the Mueller investigative team bringing up the discrepancies in the Sergei Millian matter, and they wanted me to go back specifically to ask the questions and get his response.”
Just so we’re clear – by October 24, 2017, the Mueller Team knew there were issues with Danchenko’s allegations about Sergei Millian. At a minimum, they were aware of the discrepancies in Danchenko’s claims about Millian. And how did Danchenko respond? By changing his story.
The importance is two-fold. First, it confirms to the Mueller Special Counsel that there are even more problems with Danchenko’s story. Second, it catches Danchenko in a lie that would, 4+ years later, be part of his own indictment.
The Testimony of Former FBI Intelligence Analyst Brittany Hertzog
Hertzog was with the FBI from 2008 through 2019 as an intelligence analyst with a primary focus on Russian counterintelligence. She described her role as an analyst who “looks at information and tries to identify trends, patterns, and investigative next steps.” She was assigned to the Directorate of Intelligence at FBI Headquarters.
Hertzog was assigned to Special Counsel Mueller’s Office in July 2017. She described her role and chain of command with the Mueller Team:
Q And what, generally, was your role with the Special Counsel Mueller’s team?
A I was primarily initially to focus on looking into reports that the FBI had received on Russian matters.
Q All right. Did those reports have a particular name?
A We referred to them typically as the Steele dossier.
Q Now, as a member of Special Counsel Mueller’s team, was there a chain of command?
A Yes.
Q Can you describe the chain of command that you worked with?
A I reported directly to SIA Brian Auten. Above him was Special Counsel Mueller. There were horizontal chains of reporting as well. So there was an attorney, a supervisory special agent, and then head of FBI personnel.
Q Okay. So you had occasion to work with special agents as well, correct?
A Correct.
Q And who were some of the special agents that you worked with Special Counsel Mueller?
A I worked with Supervisory Special Agent Amy Anderson and Supervisory Special Agent Joe Nelson.
Hertzog became familiar with the Steele Dossier, and with the parties involved in the Steele Dossier, once she joined the Mueller Team:
Q And how did you become familiar with Mr. Steele?
A When I reported [July 2017] to the Special Counsel’s Office, SCO, I had received background information on the investigation up until that point.
It was her job to “look into the Steele Dossier.” She described this as “trying to identify the sourcing for the claims in the dossier and, specifically, the national security threat with regards to the Russian influence piece.” Hertzog explains:
Q And a lot of names appeared in those dossier reports?
A Correct.
Q Did you learn that there were a number of different sources that the defendant relied on?
A Yes.
Q Did you have a particular focus on any of those sources?
A There were a number of sub-sources that were identified for investigative next steps.
Q Okay. And did you have a particular individual that you focused on?
A Yes. There was an individual named Olga Galkina who was — when I was assigned to SCO, was my primary focus initially.
Compare Hertzog’s testimony to the words of Robert Mueller:
How do we not conclude that Mueller lied to Congress?
Unless his own team kept him in the dark about their own investigation of the Steele Dossier?
The title of this post references “obstruction” by the Mueller Special Counsel. Just to clarify, we’re not saying that there will be charges of obstruction of justice from anyone on the Mueller Team. (We’re not going to predict what comes next.) By obstruction we mean obstructing the truth, or obstructing the efforts to determine the truth. We plan to dive deeper into this Mueller issue in the near future.
Back to Hertzog. She took investigative steps to look into the Steele Dossier. She investigated Olga Galkina. She also looked into Charles Dolan:
Q And what’s your understanding of who Mr. Dolan is?
A Mr. Dolan, to my understanding, having reviewed FBI databases, had connectivity to both Mr. Danchenko and Ms. Galkina.
Q So your testimony is that you learned about Mr. Dolan through the various FBI databases?
A I believe information was provided to me as background when I on boarded with SCO, and I became aware of more information as I researched.
In fact, Hertzog connected Dolan to Olga Galkina, and also to those who had worked in the Russian government (such as Putin ally and confidant Dmitry Peskov). She checked Dolan’s travel records, finding he had traveled to Cyprus (where Galkina was located) and also to Russia. She found Dolan’s link to Galkina, a “sub-source for the Steele Dossier” of particular importance.
Hertzog also discovered that Dolan and Danchenko had been in Moscow together and described that fact’s importance:
“It was an important fact because Mr. Danchenko was identified as being a source for the Steele dossier, and connectivity between Mr. Dolan and Danchenko was important, especially considering Mr. Dolan’s connectivity to Dmitry Peskov.”
Special Counsel Keilty asked Hertzog about her desire (and the desire of counterintelligence analyst Amy Anderson, and even Brian Auten) to interview Dolan. Hertzog was emphatic that she wanted the interview:
Other members of the Mueller Special Counsel team, however, took the position “to not investigate Mr. Dolan.” Their side ultimately won. To the best of Hertzog’s knowledge, “nobody at Special Counsel’s team interviewed Mr. Dolan.”
Not that Hertzog didn’t try to convince others to look deeper into the Dossier sources. Her file on Galking, which referenced Dolan, was uploaded into three different case files. Hertzog did those because she “wanted others to see it who had the authority to take action.”
And why did she take that step?
That report was specifically put into once case file she “believed would be reviewed by Washington Field Office, FBI headquarters, and the Inspector General.” Hertzog explains why she sent it to the IG:
Q And for the benefit of the jury, to your knowledge, what is generally the inspector general?
A The inspector general looks at matters — sorry. Are you asking specifically that or just the inspector general?
Q Just generally, what the inspector general does, to your knowledge.
A To my knowledge, the inspector general reviews Department of Justice agencies to ensure that actions are being taken appropriately.
Q Okay. So you wanted the inspector general to see your report on Ms. Galkina, correct?
A Correct.
Q And that’s because Mr. Dolan’s name was in it, correct?
A Yes.
Q And you thought Mr. Dolan was an important individual?
A I believed that — yes.
Q And did you believe that further investigative steps should have been taken on Mr. Dolan?
A Yes.
The Testimony of FBI Special Agent Amy Anderson
Agent Anderson, who works in the field of counterintelligence, was part of the Crossfire Hurricane/Mueller Team from April 2017 through January of 2018. Her initial assignment was “to attempt to validate the Steele Dossier,” to “either verify the reporting or determine that it was not accurate.”
Anderson described her role and supervisors with Special Counsel Mueller:
Q What was your initial — who were you initially working with in that role at the Special Counsel’s investigation?
A When I first arrived at the Special Counsel, I worked with Supervisory Intelligence Analyst Brian Auten, as well as quite a few other intelligence analysts, Stephanie LaParre, Iva Drasinover. We had a team that was working the dossier in particular.
Q Did you work with someone by the name of Brittany Hertzog?
A I worked with Brittany a little bit later. She came in not at the very beginning but maybe a month after, a month or two.
Q And in terms of who you reported to at the Special Counsel’s office, if you could, just tell us who you reported to.
A Technically, I reported to Supervisory Special Agent Joe Nelson.
Anderson said she was interested in Dolan in particular, given his connection to Galkina and Danchenko:
Q And how did you learn of the connection between Mr. Dolan to Ms. Galkina and the defendant?
A I believe it was also database checks, and Ms. Galkina did tell us that she knew him — both of them.
Q And learning of Mr. Dolan’s connection to the two individuals, what did you do with respect to Mr. Dolan? Did you look into him?
A I wanted to look into him.
She also wanted to speak to Danchenko. But she had to do that through Agent Helson, Danchenko’s handler. Here’s how that process worked:
Q And just briefly explain to the jury how it might work. If you wanted to get information from Mr. Danchenko, how would you go about getting that?
A I would speak to the source handler. So in this case, I would speak to Agent Helson, and we would discuss what might be interesting for us to know. And then he would go and speak to his source. We do that for reasons of source safety, so that not everyone knows who our sources are.
Agent Anderson would eventually fly to Cyprus with Auten to interview Olga Galkina. She said Galkina was mostly forthcoming, except when it came to discussing Charles Dolan:
Q And did you interview with her all days?
A Yes, we did three days.
Q And would you characterize Ms. Galkina as forthcoming with her information about her role with the dossier and any information in it?
A She seemed mostly forthcoming.
Q You said mostly forthcoming. Was there a particular area that she was not forthcoming about?
A Yes. She was hesitant in telling us about Mr. Dolan.
Q All right. Let’s start with the beginning of these interviews. When you began interviewing Ms. Galkina, did you specifically ask her about Mr. Dolan or not?
A We did.
Q And if you could, how did she react when you asked her about Mr. Dolan the first time?
A She did not want to speak about him.
But Anderson kept pressing and eventually straight-up asked if Dolan had a connection with the Steele Dossier. At that point, Galkina admitted Dolan’s involvement:
Agent Anderson then prepared a report of the interviews and compiled a report on everything that she and Analyst Hertzog had compiled on Charles Dolan. That report was submitted to her supervisor, Supervisory Special Agent Joe Nelson. Read what happened next:
How convenient that the Mueller Special Counsel ended an inquiry that would have implicated itself.
Agent Anderson didn’t have any personal knowledge as to why the interview request with Dolan was declined. We’re confident Durham asked that very question to SSA Joe Nelson.
The Testimony of FBI Special Agent Ryan James
Agent James’s purpose was to discuss evidence acquired by Special Counsel Durham’s team through the course of their investigation. To briefly summarize, he discussed:
-
How they obtained telephone/e-mail/Facebook records.
-
Danchenko’s e-mails, call records, and Facebook postings.
-
Sergei Millian’s travels and his telephone calls.
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The time and dates of the calls between Danchenko and Dolan.
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The lack of calls between Danchenko and Millian, and the lack of the 10 to 15 minute call Danchenko purportedly received from someone he thought was Millian.
And that wrapped-up evidence for this case.
The court did, as reported, dismiss Count One of the indictment, which alleged Danchenko gave a false statement when asked whether he had talked to Mr. Dolan about anything that ended up in the Dossier. The problem Durham always faced with Count One was the FBI Agent’s lack of attention to detail; the world “talked” has a very specific definition. The judge recognized as much. No surprise with that dismissal.
As to the Defense?
Danchenko will not be testifying, and his attorneys will not be presenting any evidence. Closing arguments are scheduled for Monday. Expect them to last an hour or less, with jury deliberations to begin thereafter. The jury might give us a verdict on Monday afternoon at the earliest.
But the trial’s biggest takeaways will be what we learned about the FBI and the Mueller Special Counsel.
Tyler Durden
Sun, 10/16/2022 – 22:30 -
- Beijing's New Leadership Faces Same Old Problems
Beijing’s New Leadership Faces Same Old Problems
By Ye Xie and Georgei Lei, Bloomberg Markets Live reporters and analytsts
The Party Congress typically doesn’t make major policy announcements. Still, personnel changes, such as the makeup of the top-decision body — the Politburo’s Standing Committee — may influence China’s economic and development strategy in coming years.
Regardless, Beijing faces the same daunting challenges that have confronted China in recent years, including an aging population, mounting debt and a deteriorating relationship with the US. These constraints mean that Beijing is unlikely to deviate away from its current strategies for curtailing debt, boosting birth rates and becoming self-reliant in key technologies. It also implies slower growth in coming years.
Start with the worsening demographics. With a fertility rate below that of Japan, China’s working age population will keep falling in the next decade and beyond, according to Bloomberg economist Eric Zhu. Last year, new marriages fell to a record low, nearly half of the rate a decade ago. That figure could drop further this year due to Covid lockdowns. Also, a decline in the number of people working points to lower growth potential and higher burdens in the pension system.
Source: Goldman Sachs A shrinking population means that China doesn’t need as many homes as before, suggesting the sector will turn from a major contributor to a drag on growth. By Goldman Sachs’s estimate, demand for housing may fall from 18 million units a year in 2010-2020 to 6 million by 2050. Developing more-productive industries, such as high-tech manufacturing, to make up for the holes left by a downsized real-estate sector is becoming a top priority.
Source: Goldman Sachs Beijing has to transit away from housing without a further buildup in debt. After all, China’s debt leverage has already surpassed that of Japan prior to the burst of an asset bubble in the 1990s. Beijing started the deleveraging campaign last year but was forced to reverse course as Covid restrictions took a toll on the economy. Going forward, stabilizing leverage and containing financial risks remain a key theme.
Source: BIS What makes such a transition to more productive-sectors challenging is the deteriorating relationship with the US. The Biden Administration has shifted its strategy from containing China to one that aims to “freeze” China’s technology development at the current level. The recent sweeping restrictions on China’s access to US semiconductor technology reflects such a shift. It forces Beijing to become more self-sufficient in key technology and slows its catchup.
Source: Clocktower President Xi Jinping is set to retain his position as the paramount leader when the Party Congress concludes. But the structural headwinds mean the policy choices he and his colleagues in the new leadership have are quite limited.
Tyler Durden
Sun, 10/16/2022 – 22:10 - 'Crying CEO' Uses Granny's Death To Pump Company
‘Crying CEO’ Uses Granny’s Death To Pump Company
The CEO of an Ohio-based marketing firm who made headlines in August for posting a “crying selfie” on LinkedIn to announce layoffs has once again come under fire – this time for announcing the death of his grandmother on the networking site.
“My grandma passed away today,” begins the post by Braden Wallake. “I got the text from my mom, closed my computer, and headed straight over to her house,” he continued. “While driving to my moms, I was reminded days like today are why I do what I do.”
He then opined over “hustle culture,” and how he’s had “sleepless nights” and had to ‘skip fun things for work.’
“But the reason I started HyperSocial was to help these same people build their businesses in the background so they can go have fun, spend time with family, do the important things that matter besides work, be next to people that matter.”
LinkedIn users were not amused.
“Such a sad post, to use your Grandmom’s death as a way to promote your company,” wrote one user, Jason A.
“Very sorry to hear about the passing of your grandmother,” said another – Brian FitzGerald. “When can we expect the crying selfie?“
Wallake hit back at critics – telling the New York Post “I’m not exploiting her death for company promotion,” adding “It would suck if I couldn’t be there for my mom because of work. And the same thing for our clients. We exist so they don’t miss out on life.”
On LinkedIn, he wrote: “Sometimes I get so lost in the weeds it’s hard to remember the why behind what I do,” adding “But when I’m able to go be with my mom when her mom passes away and know that I can step away with no issues, I’m ever grateful for it.”
Tyler Durden
Sun, 10/16/2022 – 22:00 - Hedge Fund CIO: "I'm Growing Extremely Concerned About The Market. We're Close To A Broad Liquidation Point For Markets"
Hedge Fund CIO: “I’m Growing Extremely Concerned About The Market. We’re Close To A Broad Liquidation Point For Markets”
By Eric Peters, CIO of One River Asset Management
“Following the 2008 crisis, there was this well-intended, monoline focus on banks becoming safe,” said the CIO, high atop his prodigious pile. “The thought was that by making banks permanently safe, we could effectively eliminate systemic risk,” he said. “That’s wrong of course, but not for obvious reasons.” Following each financial crisis, the politicians, regulators, and policy makers strive to ensure that we never repeat the debacle, which inevitably appears obvious in hindsight. They usually succeed, and in so doing, sow the seeds of something novel.
“Removing the possibility that banks would be the source of risk in the financial system required that regulators prevented them from having flexible balance sheets,” continued the same CIO. “In a market decline, banks used to be able to buy distressed assets.” Expanding their balance sheets, absorbing panic selling by their clients, taking on market risk. “But they can no longer be a buyer in periods of market stress. And the regulators think this is fine, because the risk is transferred to investors and speculators, none of whom threaten to the broader system.”
“But the issue of course, is that the risk in the system has been transferred from banks to asset managers,” he said. “And asset managers do not have flexible balance sheets.” In an industry that has grown to be dominated by passive, long-only products, asset managers simply buy assets when they get inflows and sell assets when they get outflows. They do not have the ability to expand their balance sheets when assets are being sold at distressed prices. No such mechanism exists. “In today’s system, the shock absorber is the asset price.”
“In a system where price is the shock absorber, we should expect very large price moves, and the need for the central bank to step in and support markets becomes more obvious in a crisis,” he said. “But given today’s inflationary backdrop, policy makers cannot be seen to react quickly. They won’t bend early, they simply can’t,” he said.
“I’m growing extremely concerned about the market. Bearish sentiment remains awful. But despite this, the rallies are getting shorter, sharper, whippier. We’re getting close to a broad liquidation point for markets.”
“Most people remain focused on bearish investor positioning,” he said. That measure has been helpful for years; but it was in a disinflationary period with QE in the background, Fed puts, plunge protection teams. “Traders are fearful of missing the turn, the bounce, the Fed pivot. It is all micro focus; they’re chasing their tails. They underestimate the impact of rapidly contracting liquidity; today’s novel flow into reverse repos. They miss things like UK pension margin calls. No one appreciates the risk that the market runs out of oxygen.”
Tyler Durden
Sun, 10/16/2022 – 21:30 - China Orders Evacuation Of All Citizens Still In Ukraine, Sparking Escalation Fears
China Orders Evacuation Of All Citizens Still In Ukraine, Sparking Escalation Fears
China’s foreign ministry on Saturday issued an urgent call for any Chinese nationals still in Ukraine to exit immediately, kicking off speculation over what’s behind the unspecified appeal and scramble.
The notification is being widely seen as the most forceful evacuation order yet, and suggests that Beijing might be aware of Russian plans for possibly imminent bigger, sweeping airstrikes against Ukrainian cities, such as the widespread escalatory strikes conducted last Monday into Tuesday.
With the current grim security situation in #Ukraine, China’s Ministry of Foreign Affairs and Chinese Embassy in Ukraine on Sat urge Chinese citizens in the country to enhance safety precautions and evacuate. The Embassy will assist in organizing the evacuation of people in need. pic.twitter.com/1jB1TwiKKI
— Zhang Meifang张美芳 (@CGMeifangZhang) October 15, 2022
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The first big evacuation of Chinese citizens took place starting last March, in which some 6,000 Chinese nationals left the country amid the Russian invasion. But now, as state media Global Times writes, “Some Chinese nationals still in Ukraine have signed up for evacuation from the country, with most registering for organized evacuations, while others are preparing to leave Ukraine on their own, the Global Times learned on Sunday, after the Chinese Foreign Ministry urged Chinese citizens to leave Ukraine, citing the grave security situation.”
The foreign ministry and embassy warned of the “grave security situation” and ordered an immediate departure, citing the need “to enhance safety precautions and evacuate.” The statement indicated that “the embassy will assist in organizing the evacuation of people in need.” Russian state sources also on Sunday began publicizing the new alert notification.
GT is reporting that an evacuation is now in progress:
As of press time on Sunday, 161 people had registered on the form the embassy sent out for organized evacuation, and another 27 people registered on the form for self-evacuation, according to a Global Times’ count of the registration on the embassy’s WeChat account.
It additionally comes at a moment of stepped-up cross-border attacks on the Russian city of Belgorod, which lies just north of the Ukrainian border opposite Kharkiv.
“Serious Security Situation” alert goes out to Chinese citizens in Ukraine. China warned citizens to leave previously due to the war, but this seems to be of a more urgent, but unspecified nature. https://t.co/fruQMgv6ng
— Good Trouble (@GoodTroublers) October 16, 2022
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While it’s yet unknown precisely what triggered the heightened, urgent appeal for all remaining Chinese nationals to exit Ukraine, it’s possible the answer could come Monday or in the following days. Does this signal that greater Russian escalation on the horizon?
Tyler Durden
Sun, 10/16/2022 – 21:00 - 'Wild Ride' Begins With Court Clash Over First US Law To Ban Child Transgender Surgeries
‘Wild Ride’ Begins With Court Clash Over First US Law To Ban Child Transgender Surgeries
Authored by Janice Hisle via The Epoch Times (emphasis ours),
When America’s first law banning “gender transition procedures” for minors was passed in Arkansas last year, it spawned a wave of similar legislation.
But legislative proposals in a dozen other states withered on the vine, while the Arkansas law faced an immediate court challenge that temporarily blocked the law from taking effect in July 2021.
A gender neutral sign is posted outside a bathroom at Oval Park Grill on May 11, 2016 in Durham, North Carolina. The debate over transgenderism is spreading nationwide, particularly when it comes to transition surgery for young people. (Sara Davis/Getty Images) Since then, Alabama and Arizona moved forward and passed their own versions of the Arkansas act, while California took a 180-degree turn to counteract the bans. Last month, California became the nation’s first “sanctuary” state welcoming out-of-state youths who seek puberty blockers, cross-sex hormones, and surgeries.
And now, the Arkansas law, called the Save Adolescents From Experimentation (SAFE) Act, remains closely watched from all sides as it heads to trial in Little Rock starting Oct. 17.
The outcome will determine how lawmakers and activists nationwide plan their next moves in the evolving controversy over medical intervention for transgender-identifying minors.
‘Necessary’ or ‘Experimental’?
U.S. District Court Judge James Moody Jr. must decide a case that pits the American Civil Liberties Union (ACLU) against Arkansas officials who are defending the SAFE Act.
The ACLU contends that the SAFE Act unconstitutionally denies “medically necessary” treatments for youths suffering from gender dysphoria, which is persistent distress about one’s gender.
In its lawsuit, the ACLU is representing four gender-dysphoric children, ages 9 to 16 at the time of the filing in May 2021, and two doctors who provide “gender-affirming care.”
The children’s parents described seeing marked improvements in attitude and reduced anxiety after counseling and, in some cases, treatments with hormones.
The parents worry about what would happen to their children if the law were to take effect, requiring the treatment to abruptly stop.
Arkansas Attorney General Leslie Rutledge counters that the state is obligated to protect juveniles from “experimental” treatments that can permanently alter their still-developing bodies. She and other supporters of the SAFE Act say that long-term effects of the treatments remain unknown.
Multiple Appeals Likely
The case serves as the nation’s first test of the constitutionality of this type of law, Danielle Weatherby, an associate professor at the University of Arkansas School of Law, told The Epoch Times.
Regardless of which way the judge rules, “this is just the beginning of a wild ride,” Weatherby said.
She predicts multiple appeals will follow, along with legislative proposals in a number of states.
From a legal standpoint, Moody’s decision will be considered a precedent only within the Eighth Circuit, a six-state federal court region that includes Arkansas.
At least two Eighth Circuit states, Iowa and Missouri, had introduced bills resembling the SAFE Act. (The remaining states are Nebraska, North Dakota, and South Dakota.)
If the ACLU prevails and Moody strikes down the SAFE Act, “it will mean that any state that is in the Eighth Circuit will not be permitted to pass one of these laws,” Weatherby said.
When Moody agreed to temporarily block Arkansas from implementing the SAFE Act, he was required to base that decision on a “reasonable likelihood” that the ACLU would prevail in its lawsuit.
Arkansas sought a reversal of Moody’s decision, but the U.S. Court of Appeals for the Eighth Circuit upheld the preliminary injunction.
Thus, Moody’s court and the appeals court both appear to have telegraphed that they’re leaning toward the ACLU’s contentions in the case.
But Moody is expected to have five long days of testimony to mull over, leaving open the possibility that he still may uphold the SAFE Act.
Court Disputes ‘Reversible’ Tag
On a personal level, Weatherby said she cares about the outcome of the case because she knows several transgender people and their families.
“I know that firsthand, having worked with transgender children, they do not make this decision lightly,” to undergo gender-altering medical procedures, she said. “And I think that gets lost in the conversation.”
She also is aware of the debate over whether “gender-affirming care” is safe and effective. She said that’s a decision each family has to make, in consultation with doctors, and “do the best we could do with the knowledge we have, because these kids are suffering from certain fear, anxiety and depression.”
One atypical argument in favor of the SAFE Act relies on a British court ruling, as opposed to one in the United States.
“When there’s no precedent, we look elsewhere,” Weatherby said.
Rutledge, the attorney general, wrote, “The SAFE Act responds to widespread, growing international concerns” over body-altering medical treatments being performed on minors’ still-developing bodies.
She noted that, a few months before the SAFE Act was approved, the high court in the United Kingdom “determined that children likely cannot ever understand the irreversible consequences of using puberty-blocking drugs as a transition procedure.”
The UK court also disputed assertions that puberty blockers’ effects are “fully reversible,” if the patient stops using the medications.
Instead, the court found: “Missed development and experience, during adolescence, can never truly be recovered or ‘reversed.’”
In its initial complaint against Arkansas, the ACLU declared: “Puberty-delaying treatment is reversible.” But further down on the same page, the ACLU cites professional guidelines describing the “partly irreversible effects” of those prescriptions.
Such conflicts arise because the science is unsettled, Arkansas officials have argued.
Odd Battle Lines Drawn
Another unusual aspect of the case: The unexpected mix of people on both sides.
A large number of medical organizations, including the American Medical Association and the American Academy of Pediatrics have thrown their support behind the ACLU, along with other groups supporting civil rights and LGBT rights, plus 20 states, predominantly Democrat, as The Epoch Times reported in a previous story.
On the other side, backers of the SAFE Act include 19 mostly Republican-dominated states, along with a number of “detransitioners,” who say medical transitioning didn’t solve their problems—it just created more issues. Those people express regret over their gender-altering medications and surgeries.
Additional supporters of the SAFE Act include a handful of individual doctors, the conservative Family Research Council, and a nationwide feminist group, the Women’s Liberation Front.
The somewhat unexpected alliances within each camp show “what an anomaly this case is,” attorney Vernadette Broyles told The Epoch Times.
Broyles, who holds a Harvard University law degree and an undergraduate biology degree from Yale University, is positioned as a rare authoritative voice when legal and medical battles intersect.
Conveyor Belt Approach?
Broyles and her team with the Child and Parental Rights Campaign filed a brief that shares stories of 10 families whom the SAFE Act would have protected.
Read more here…
Tyler Durden
Sun, 10/16/2022 – 20:30 - "We Have Entered The Stage Where Policy Makers May Feel They Have Control, But Are Nevertheless No Longer In Control"
“We Have Entered The Stage Where Policy Makers May Feel They Have Control, But Are Nevertheless No Longer In Control”
By Eric Peters, CIO of One River Asset Management
“We’ve announced we will be out by the end of this week. My message to the pension funds is you’ve got three days left,” said Bank of England governor Andrew Bailey, explaining his intention to end support for the price of Britain’s government bonds. Prices fell and investors raced to hit the central bank’s bid before it disappeared.
What made Bailey’s statement of great significance, is that for over a decade, each successive central bank and government intervention seemed to never end. And even when a program did wind down, its sequel was waiting anxiously in the wings. But here was Bailey, ending a program that had only just started on September 28th, following the catastrophic mini budget. To halt the ensuing bond crash, Bailey had pledged to buy UK government debt “on whatever scale is necessary.”
Naturally, limited intervention is the only path a prudent government should take. And had policy makers restrained themselves during these past fifteen years, we would not have hyper-financialized our economies, and would thus be unlikely to find ourselves in today’s predicament. This trap of our own creation requires central banks to tighten policy hard enough to restrain inflation, which in turn creates a level of financial instability that requires central banks to ease policy.
The UK is a rather poorly run nation, so it is unsurprising that the architecture of this circular trap should first be revealed there. But after decades of growing monetary policy homogeneity across the developed world, what we are seeing now in the UK will manifest broadly before this cycle is over.
Bailey correctly realized that he cannot credibly tighten and ease policy simultaneously. But what he does not yet appreciate is that we have entered the stage in this cycle where policy makers may feel they have control, but they are nevertheless no longer in control.
Tyler Durden
Sun, 10/16/2022 – 19:30 - Morgan Stanley: Trouble In The Kingdom Is Just Starting
Morgan Stanley: Trouble In The Kingdom Is Just Starting
By Andrew Sheets, Chief Cross-Asset Strategist for Morgan Stanley, as excerpted from the bank’s Sunday Start.
At the west end of the new rail station in Canary Wharf, up the escalators and to the right, is a coffee shop. It’s full of wooden panelling and a big chalkboard above the tills with the price of the drinks. Faint markings on the chalkboard make something very clear. The prices have been changing.
The United Kingdom is the world’s sixth-largest economy and faces a complicated, interwoven set of challenges. It is a volatile and fascinating cross-asset story.
First among these challenges is inflation. High UK inflation is partly due to global factors like commodity prices, but even excluding food and energy core inflation in the UK is 6.3%Y. Since the UK runs a large current account deficit (5.5% of GDP), a weak currency is driving higher costs on imported items. Meanwhile, Brexit has reduced the supply of labor and increased the costs of trade, boosting inflation and reducing the benefit that a weaker currency would otherwise bring.
The circularity here is unmissable; high inflation drives currency weakness, and vice versa. High inflation has depressed UK real rates, making the currency less attractive to hold. And high inflation relative to other countries undermines valuations: on an inflation-adjusted basis (i.e., purchasing power parity) the British pound has ‘cheapened’ by a similar percentage as the Swiss franc over the last year, and much less than, say, the Norwegian krone. That’s hardly irrational.
If inflation is high, why doesn’t the Bank of England simply raise rates to slow demand? The BoE is moving, but as our UK economist Bruna Skarica notes, it has raised rates by less than the market expected in six of its last eight meetings. That’s left investors anticipating ~320bp of BoE hikes between now and May 2023, ~140bp more than expected from the Federal Reserve over the same period; if the UK underdelivers and the Fed does not, it could drive more FX weakness.
The BoE’s hesitation is understandable; my colleague Vasundhara Goel notes that most UK mortgage debt is only fixed for 2-5 years, with roughly 100k loans resetting every month (see “UK Mortgage Repayments Poised To Soar To Financial Crisis Levels“). The impact of higher rates can therefore flow through to the economy quickly, especially as UK households are also facing an unusually large year-on-year increase to utility costs.
Another path to slow inflation would be tighter fiscal policy. But the UK government announced a budget to loosen fiscal policy, which was followed by further increases to UK rates and more currency weakness, which in turn put historical pressure on the country’s pension sector and contributed to UK 30-year inflation-linked bonds falling 67% from last December. To give it some context, the S&P 500 is down about 25% year to date. If the S&P 500 fell 25% three more times…it would be down about much as that 30-year UK inflation-linked bond.
Then on Friday, the government announced that the Chancellor of the Exchequer was stepping down and recent plans to cut corporate taxes would be shelved in an attempt to reassure markets. But questions remain; the UK Prime Minister stated that she still desires a “low tax” economy, and fiscal policy will still be loosened under the government’s proposals. Immediately following the press conference Friday afternoon announcing these changes, GBP fell and yields rose.
The UK’s problems are not insurmountable. But for the moment, they remain daunting. My colleague Wanting Low in FX strategy expects GBP to weaken to parity with USD. My colleague Theo Chapsalis, our UK rates strategist, likes being long UK 5-year inflation (RPI) and is negative on duration, expecting gilts to underperform swaps as issuance increases and the balance sheet becomes more valuable. Sterling IG credit, at a ~7.0% yield, is increasingly competitive versus UK equities, but it is also a much smaller credit market than its global peers.
A weak GBP may help UK stocks outperform EU equities, but with my colleague Graham Secker well below consensus for EPS in the region, that’s a low bar. For investors looking for deep value, we believe that the better opportunity is in emerging market equities, which we’ve just upgraded to overweight after a long period of skepticism. That upgrade is a function of both a top-down view that EM can bottom before DM markets (it has repeatedly in the past), and bottom-up work by our sector teams. Within EM, our strategists like Korea, Taiwan and Brazil.
The UK is an evolving story and essential macro viewing, but for now, we see better opportunities elsewhere.
Tyler Durden
Sun, 10/16/2022 – 18:30 - Saudis Announce $400M In Ukraine Aid After Biden Said US 'Re-Evaluating' Ties With Kingdom
Saudis Announce $400M In Ukraine Aid After Biden Said US ‘Re-Evaluating’ Ties With Kingdom
Saudi state media announced Saturday that the kingdom will provide $400 million in humanitarian aid to Ukraine, following a Friday phone call between Crown Prince Mohammed bin Salman and President Volodymyr Zelensky.
SPA stated of the call, “The crown prince expressed the kingdom’s readiness to continue efforts of mediation and support everything that contributes to de-escalation,” in reference to the over seven-month long invasion of Ukraine.
Anadolu via Getty Images The timing of the new aid is raising eyebrows at a moment there are growing calls in US Congress to freeze all new military arms and equipment sales to Riyadh, and after the White House just days ago confirmed President Biden will re-evaluate ties with Saudi Arabia.
“We are reviewing where we are; we’ll be watching very closely, talking to partners and stakeholders,” State Department spokesman Ned Price price said Tuesday, following the Saudis having led the way in getting major oil producers to cut petroleum output, crucially also ahead of mid-term elections in the US.
As reported previously by Al Jazeera of Price’s press briefing:
He added that President Joe Biden had previously spoken of the need to “recalibrate” ties with Saudi Arabia to better serve the US – a position that Price said was underscored by the recently announced oil cuts.
“Our guiding principle will be to see to it that we have a relationship that serves our interests. This is not a bilateral relationship that has always served our interests,” Price said.
Price went so far as to charge the OPEC is essentially supporting Russia’s aggression in Ukraine “against the interests of the American people” in this latest move.
Chart via Al Jazeera: OPEC members’ oil reserves
Currently Senator Chris Murphy and Rep. Ro Khanna are leading a Congressional move to get advanced anti-air missile systems which the Pentagon has stationed in Saudi Arabia removed and transferred to Ukraine.
Murphy announced in a Thursday statement, “For several years, the US military has deployed Patriot missile defense batteries to Saudi Arabia to help defend oil infrastructure against missile and drone attacks. These advanced air and missile defense systems should be re-deployed to bolster the defenses of eastern flank NATO allies like Poland and Romania — or transferred to our Ukrainian partners.”
Saudi Prince Saud al-Shaalan, close relative of MBS, said this following Democrats’ criticism of their oil price hike: “Anybody that challenges the existence of this country and this kingdom, all of us we are projects of jihad and martyrdom.”
pic.twitter.com/3nXXnE6lZ4— Ken Klippenstein (@kenklippenstein) October 16, 2022
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As a member of the Senate Foreign Relations Committee, Murphy also lent his voice to ongoing calls to “freeze new military aid to Saudi Arabia” – which would possibly impact the pending sale and transfer of Advanced Medium Range Air-to-Air Missiles (AMRAAM) to Riyadh based on a previously approved contract of $650 million
Tyler Durden
Sun, 10/16/2022 – 18:00 - The Wall Of Worry Knows No Bounds
The Wall Of Worry Knows No Bounds
By Peter Tchir, chief macro strategist at Academy Securities
The Wall of Worry Knows No Bounds
There is no shortage of risks for markets and companies to worry about right now. Today’s T-Report will be short because some of these things have been discussed lately:
- Top Secret – Russia’s Nuclear Threat. Markets had a brief respite as stories about potential talks between Russia and possible intermediaries to Ukraine circulated, but those faded by the end of the week as Putin (and increasingly Belarus) stuck to the hardline approach.
- For Your Eyes Only – OPEC+. The more I think about this report, the more concerned I am that we’ve bled our strategic reserves to very low (if not precarious) levels when there remains so much uncertainty around Russia, the Middle East, and Venezuela. The only place with “certainty” seems to be domestically where the energy industry still seems to be under attack rather than encouraged.
- The Defense of Taiwan. We haven’t completed the trilogy yet, as we will wait for what comes out of China this weekend, but if Xi mentions reunification in a major way, it is yet another thing for markets to worry about.
The other reason today’s T-Report will be short is because I’m undergoing Clockwork Orange style reprogramming to accept that housing inflation is running at the hottest levels it has been in 3 decades according to CPI!
- OER Seems Crazy. I cannot come to grips with using data that seems nonsensical to determine policy. There are many explanations as to why it lags (in addition to potential calculation biases), but that just makes it explainable (i.e., still not sensical). Scientists wouldn’t let bad, or inaccurate, or stale data affect their analysis, so why should economists? As you can tell, at the time of this writing, the shock therapy isn’t working well.
But as scary as nuclear war, oil shortages, deteriorating relationships across the Middle East, and the risk to Taiwan is, they barely form the foundation of the current wall of worry!
I’ve Lost Track of What to Worry About in the U.K.
I’ve literally lost track of the narrative around why the U.K. is a huge problem.
- Corporate Taxes! Remember that line from the original Wall Street movie – “Your boy really did his homework, Fox. And you’ll have the shortest executive career since that Pope that got poisoned.” Well, even Bud Fox might feel sorry for Kwasi Kwarteng.
- Limited “whatever it takes.” Draghi turned an entire continent around when he uttered “whatever it takes,” even though he had little (if anything) ready to back it up. “Whatever it takes” with the present deadlines and likely limited resources isn’t really “whatever it takes,” even adjusting for the British sense of humor.
- LDI. Overleveraged is still overleveraged even if you try and give it a fancy new name, though LSS (Leveraged Super Senior) and CPDO (Constant Proportion Debt Obligation) were still more interesting than LDI, and far more damaging.
I’m not sure what is left for the U.K. to do, but the one takeaway that we cannot forget is that we have witnessed a top 10 country (with a developed economy and a seasoned bond market) succumb to complete disarray!
That loss of faith in such a major market is concerning as it begs the question of “could it happen here”? To that, I have two things that I feel the need to point out:
Could we see a “failed” German bund auction? The mechanics for U.S. Treasury auctions are very different than how German government bund auctions are managed. I vaguely remember that there has been concern about this in the past, and given what has gone on in England, it is yet another worry.
Maslow’s Hierarchy of a Credit Bubble. I need to update the chart, but one thing that I argue in this report is that any Financial Crisis Starts with “Safe” Assets. It seems paradoxical at first, but it is how and where “safe” assets are used that ensures that when they crack, calamity will ensue. From the S&L crisis, to Russia/LTCM, to WorldCom/Enron, to AAA MBS and Greece, the biggest problems come when safe assets are no longer deemed safe. While I’m not alarmed about sovereign debt, it made its way onto my crisis bingo card in a hurry after the U.K.’s cracks were highlighted.
Weekly and Daily Options Give CDS a Good Name
Despite starting my Wall Street career as a credit derivatives structurer (they weren’t traded enough back in the day to warrant being called a trader), many people, including some still on this distribution list, like to tell me that Credit Default Swaps were the worst invention ever on Wall Street. That says a lot. The combination of gamma, low liquidity, and stop losses (Trader of the Year Awards) seems to determine not just how any given day normally trades, but as we saw on Thursday of last week, these things can also fuel massive intraday moves (i.e., the 6% swing in the Nasdaq from high to low).
CDS may be bad (I beg to differ), but a lot of people are noticing and complaining about these products and the impact they are having on markets.The Data
At this point:
- I’m not sure how to predict next week’s data at all.
- More importantly, I’m not sure I’d pay good money to know the data in advance. This is because I’m not sure how markets will respond given positioning, options, and the wide array of data and news that is impacting markets.
I continue to believe that:
- QT is a drag and FX is increasingly a problem not just for corporations, but for investors of all stripes as they revisit the cost of hedging dollar denominated assets back to their own currency.
- Inventories are a Major Problem. It will be interesting to see if various sales, such as early Prime, will clear excess inventory or not.
- Data should weaken over time.
- The messaging that we are getting on earnings calls is key to inferring where the economy is headed.
- Stagflation is NOT a Stable State in an economy such as ours. Though I guess if you compare old data with new data, it is possible to have one show inflation and the other show recession.
- Cracks are appearing and we need to be “ready” for new hits. Cracks tend to expose more cracks.
Bottom Line
If it seems like I’m mentioning a lot of 2007 and 2008 terms, it is because I am. This market and the global economy seem fragile to me. On the other hand, Wall Street traditionally has to climb a wall of worry, and since this wall knows no bounds, it might be time to put on that climbing gear!
It is a bit nerve wracking that there is some evidence that positioning isn’t as negative as sentiment (i.e., it might be “cool” to sound bearish, but positioning hasn’t caught up). I’m not sure I buy that argument, but it is in the back of my mind.
I’ve also been on the Darkest Before the Dawn view since the start of October. Weirdly, the S&P 500 is violently unchanged since then! It closed at 3,585 on the 30th and 3,583 on Friday. There have been so many opportunities to be right or wrong since then that the “darkest before the dawn” call seems wrong, but it’s actually been ok.
The bet, for better or worse, is that the market will either price in a pivot or a soft landing, or it will decide that it has already priced in too many negatives (in conjunction with QT and Fed hiking) and rally. Options will help. Then we can worry about my bigger fear which is the dreaded hard landing.
The only strategy worse than “hope” might be “climbing the wall of worry” but I like it for now, caveated by the guiding principles of late:
- Be small.
- Be nimble.
- Use options as much as reasonably possible (when vol isn’t prohibitive).
There were signs last week (at least until Friday) that we could climb that wall of worry and I think that we will see more of that this week!
Tyler Durden
Sun, 10/16/2022 – 17:30 - "This Is What Annihilation Looks Like": Biden Export Controls 'Wreaking Havoc' On China's Chip Industry
“This Is What Annihilation Looks Like”: Biden Export Controls ‘Wreaking Havoc’ On China’s Chip Industry
A Twitter thread translated by Rhodium Group China expert Jordan Schneider – whose blog, China Talk, can be found here, provides keen insight into the effects of the Biden administration’s new export controls on the chip industry.
To review, the Biden administration last week laid out new rules on chip exports based on US concerns that China will use AI to improve military capabilities, support surveillance for human rights abuses and “disrupt or manufacture outcomes that undermine democratic governance and sow social unrest,” according to Assistant Secretary of Commerce for Export Administration Thea D. Rozman Kendler.
The sweeping regulations will curb the sale of semiconductors and chipmaking equipment to its #1 geopolitical rival – which, as Bloomberg puts it, is “sending shockwaves through the $440 billion industry.“
In a Friday Twitter thread which he translated from Hedgehog Computing Group founder Xinran Wang (@lidangzzz), Schneider lays out the carnage in English:
“To put it simply, Biden has forced all Americans working in China to pick between quitting their jobs and losing American citizenship,” Schneider writes, adding “One round of sanctions from Biden did more damage than all four years of performative sanctioning under Trump.”
Every American executive and engineer working in China’s semiconductor manufacturing industry resigned yesterday, paralyzing Chinese manufacturing overnight.
One round of sanctions from Biden did more damage than all four years of performative sanctioning under Trump.
— Jordan Schneider (@jordanschnyc) October 14, 2022
Continued (emphasis ours):
Although American semiconductor exporters had to apply for licenses during the Trump years, licenses were approved within a month. With the new Biden sanctions, all American suppliers of IP blocks, components, and services departed overnight —— thus cutting off all service [to China].
Long story short, every advanced node semiconductor company is currently facing comprehensive supply cut-off, resignations from all American staff, and immediate operations paralysis.
This is what annihilation looks like: China’s semiconductor manufacturing industry was reduced to zero overnight. Complete collapse. No chance of survival.
Person B: Yes. Not just Yangtze, but also HLMC, ICRD’s Jiading fab, Hefei’s CXMT DRAM fab
All leaving
Even Geehy in Hangzhou is pausing operations]
— Jordan Schneider (@jordanschnyc) October 14, 2022
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The only possible explanation is that this major story, and its future ramifications, will bring severe damage to the supposedly “continuously flourishing” semiconductor industry and Chinese national security as a whole.
— Jordan Schneider (@jordanschnyc) October 14, 2022
According to Schneider, “The level of embarrassment is on par with Pelosi’s Taiwan visit.”
Tyler Durden
Sun, 10/16/2022 – 17:00 - Texas Sheriff Declares Undocumented Migrants "Crime Victims" To Secure Visas
Texas Sheriff Declares Undocumented Migrants “Crime Victims” To Secure Visas
Bexar County Sheriff Javier Salazar made national headlines by opening a criminal investigation into the recent flights arranged by Florida of undocumented migrants to Martha’s Vineyard. I have previously written about the dubious claims of kidnapping and human trafficking made by figures like Hillary Clinton.
Now, however, Salazar is certifying the roughly 50 individuals as “crime victims” despite the lack of any criminal charges in order to qualify them for visas. While this is clearly not human trafficking, Salazar is working with immigration advocates to use a law designed to protect victims of human trafficking and other crimes, even before any such charge is brought by prosecutors.
The move could be denounced as itself an inducement, even a political exploitation, of migrants who must cooperate with an investigation to qualify.
Immigration advocates were only able to get three migrants to join the initial challenge.
Salazar opened a criminal investigation into Governor DeSantis based on the allegation that the Venezuelans were “lured under false premises” to leave the Migrant Resource Center in Bexar County to fly to Florida. Three filed a complaint against the state. Florida has responded with signed waivers by the migrants.
While no criminal charges have been filed, Salazar is working with Massachusetts immigration advocates seeking to secure “U visas” for the migrants based on their alleged status as victims of crime or witnesses to criminal acts. Given the small percentage of the migrants who joined the initial lawsuit, the inducement of the U Visa program could change the situation.
In order to qualify, the migrants must claim that, being given free passage to the East Coast, qualified as “substantial physical or mental abuse.” That would be highly challengeable, but it would be up to the Biden Administration.
Florida could object that Salazar is himself inducing the participation of the migrants by certifying U Visa for cooperating with the investigation. While he is suggesting that all 50 will be declared crime victims, they might be induce to support the claims to qualify under the program.
The U Visa program was created by Congress with the passage of the Victims of Trafficking and Violence Protection Act in October 2000. It is meant to enhance the ability of law enforcement agencies to investigate and prosecute cases of domestic violence, sexual assault, trafficking of noncitizens and other crimes. It also protects victims of crimes who have suffered substantial mental or physical abuse due to the crime. They are expected to assist law enforcement authorities in the investigation or prosecution of the criminal activity.
Under the program, eligibility requires that:
You have information about the criminal activity. If you are under the age of 16 or unable to provide information due to a disability, a parent, guardian, or next friend may possess the information about the crime on your behalf (see glossary for definition of ‘next friend’).
You were helpful, are helpful, or are likely to be helpful to law enforcement in the investigation or prosecution of the crime. If you are under the age of 16 or unable to provide information due to a disability, a parent, guardian, or next friend may assist law enforcement on your behalf.
Thus, the visa could be an inducement for the other migrants to join efforts by immigration advocates in Massachusetts who were only able to secure three migrants in the initial filing.
In most cases, the certification under the U Visa program before a charge is not particularly controversial. However, Salazar’s claims of crimes like human trafficking and kidnapping are, in my view, wildly off-base. There are other allegations of misuse of pandemic funds, though various blue states have been accused of similar violations.
The Biden Administration has launched an investigation through Treasury into the funds, but that is not likely to be a criminal matter. Moreover, Florida insists that it consulted with Treasury.
Salazar has had controversies as sheriff, including (ironically) improper transfers of inmates.
It is not clear if the Biden Administration will oppose giving these undocumented migrants visas, but the basis for the certification could be used a major avenue for legalization of status by cooperating local law enforcement.
Tyler Durden
Sun, 10/16/2022 – 16:30 - Tourists Shocked As Number Of Homeless Encampments Explodes In DC
Tourists Shocked As Number Of Homeless Encampments Explodes In DC
Washington DC has been looking more and more like other Democrat-run cities across the country, as abject squalor spreads throughout the nation’s capital.
AP Photo/Marcio Jose Sanchez Over the past two years, the number of homeless encampments has grown to an estimated 120, following pandmic-era decisions by both the city and federal governments to pause enforcement actions – making it an easy choice for itinerants to set up shop, the NY Post reports.
A tour by The Post of the district’s major tourist areas this week found at least 35 vagrants in residence at a National Park Service site two blocks from the White House; more than 20 in the green spaces surrounding the State Department complex; and five across the street from the infamous Watergate Hotel.
And these sites accounted for less than 5 percent of the estimated 120 tent cities in Washington D.C. -NY Post
“It’s wicked and it’s medieval,” said 59-year-old Robert Westover, a longtime DC resident. “We’re really letting people suffer on the street like animals? Somehow that’s progressive?”
Tourists are shocked
“The land of milk and honey’ — it means that in America you don’t lack anything,” said 39-year-old Elvis Shu from Cameroon. “I know people don’t get hungry here, so I’m surprised indeed.”
Another tourist, 48-year-old Moti from Israel, said “We didn’t expect to see the homeless here near the White House.“
“I thought it was a rich city,” said his wife, Orli. “It’s a Democrat here in the White House, and the Democrats are more socialist, right?”
Wait until they hear about DC’s stance on bused-in migrants!
According to homeless man Daniel Kingery, who set up his tent in historic McPherson Square over two years ago, the number of people living on the street has exploded since President Biden’s inauguration.
“Bleeding hearts have no brains, unfortunately,” he said. “There’s so much [donated] food coming into this park, there’s not enough people to eat it. So they’ll give it to the birds or throw it away.”
“All of these bleeding-heart organizations,” added the 61-year-old, ““bring pretty much the same thing to the same park and it usually gets thrown away … sleeping bags, ponchos, and once in a while I would throw away brand new blankets.”
William Everett Randolph, 66, who has lived at McPherson off and on for five years after moving from Philadelphia, agreed.
“You got people giving out breakfast, giving out juice, giving out socks, giving out all types of stuff they need, a toothbrush, toothpaste,” he said.
But it’s not freebies that keep him in an underpass encampment at 3rd St. and Virginia Ave. SE, said David Graves, 44, who came to Washington from New York three years ago.
“I moved here and met these brothers and we formed this society or community or whatever,” Graves said. “We became a family, understanding, you know, it could be dangerous if we don’t stick together and work together.” -NY Post
With a median monthly rent at $1,976, Washington DC ranks number 8, just behind New York City in terms of the most expensive metro areas in the nation, according to Stessa.com.
While the number of tent cities explode, Mayor Muriel Bowser brags that the number of people reported living on the street or in a shelter – 4,410 – is the lowest in 17 years. That said, the city also counted a 40% increase in the number of encampments in November 2021 vs. 2020 – causing the Centers for Disease Control to issue a document telling cities that homeless encampments should be left untouched for the duration of the outbreak.
“Clearing encampments can cause people to disperse throughout the community and … increases the potential for infectious disease spread,” explained the CDC.
Read more here…
Tyler Durden
Sun, 10/16/2022 – 16:00 - Few Getting Updated COVID-19 Boosters Despite White House Pleas
Few Getting Updated COVID-19 Boosters Despite White House Pleas
Authored by Jack Phillips via The Epoch Times (emphasis ours),
Few people have received updated COVID-19 vaccine boosters since it was first made available in August, according to recent data published by the federal government.
A man fills syringes with COVID-19 vaccine booster shots at a COVID-19 vaccination clinic in San Rafael, California, on April 6, 2022. (Justin Sullivan/Getty Images) About 14.8 million have received bivalent boosters made by Pfizer and Moderna, Centers for Disease Control and Prevention data that was published Thursday shows. The Food and Drug Administration provided emergency use authorizations for both booster doses on Aug. 31 for people aged 12 and older, while it signed off on an emergency approval for children aged 5 to 11 this week.
Some 226 million people have received their primary vaccination series, CDC data shows. It means that about 6.5 percent of people who are eligible got the updated boosters, which were designed to target the Omicron variant and several of its subvariants.
The Biden administration has repeatedly called on people to get the bivalent booster shots. Earlier this week, White House COVID-19 coordinator Ashish Jha earlier this month claimed that “tens of thousands of lives” could be saved by people taking the booster shot.
“Each of the last two winters we have seen increases in Covid infections, hospitalizations, and deaths. There are new subvariants of Omicron emerging that are going to pose substantial challenges to several of our therapies. So our message is very simple: Don’t wait. Get vaccinated,” he stated.
Lack of Testing?
However, some medical professionals—including members of an FDA advisory panel—have recommended that young people shouldn’t receive the updated boosters.
Dr. Paul Offit, a member of the FDA’s Vaccines and Related Biological Products Advisory Committee, said in a CNN interview that he isn’t convinced the Omicron-specific shots will provide any benefit to that age cohort.
“When you’re asking people to get a vaccine, I think there has to be clear evidence of benefit,” he said in September. “And we’re not going to have clinical studies, obviously, before this launches, but you’d like to have at least human data [on] people getting this vaccine, you see a clear and dramatic increase in neutralizing antibiotics, and then at least you have a correlate of protection against [Omicron subvariant] BA.4, BA.5.”
Tyler Durden
Sun, 10/16/2022 – 15:30 - In Groundbreaking Speech, Xi Vows To Guide China To "Incomparable Glory", An Alternative To The US
In Groundbreaking Speech, Xi Vows To Guide China To “Incomparable Glory”, An Alternative To The US
Flanked by party leaders past and future, President Xi Jinping on Sunday took center stage to present his grand vision for China, and in a speech running almost two hours, Xi let the world know that China wouldn’t change course and that by rallying around the party center – of which Xi is the core- they would be able to ride out the storms and guide the country to “incomparable glory” as China restores the country to the forefront of global powers even as he highlighted the challenges and risks faced by the country and warned party members to brace for “dangerous storms” ahead. Instead, he declared the “rejuvenation of the Chinese nation is now on an irreversible historical course” and as Bloomberg notes, forcefully offered China up as an alternative to the US and its allies as he laid out the ruling party’s priorities on everything from Covid Zero to its ambitions on Taiwan and goals for tech sufficiency.
China’s President Xi Jinping delivers his speech to the party congress in Beijing. Photo: AFP In his 105-minute speech on Sunday, which took months to prepare and gives the president an opportunity to review past challenges and achievements and lay out his grand vision and goals for the nation, Xi highlighted the challenges and risks faced by the country and warned party members to brace for “dangerous storms” ahead. But by rallying around the party center, of which Xi is the core, they would be able to ride out the storms and guide the country to “incomparable glory”, he declared.
“China’s international influence, appeal and power to shape the world has significantly increased,” Xi said in kicking off the Communist Party’s once-in-five-year party congress, at which he’s set to secure a norm-breaking third term in office. “Chinese modernization offers humanity a new choice for achieving modernization,” he added.
This came as Xi, widely regarded as the most powerful Chinese politician since Deng Xiaoping, delivered his work report to some 2,000 Communist Party delegates gathered in Beijing for the twice-a-decade national congress. As SCMP reports, the speech marked the beginning of a weeklong session ending on October 22, when a new Central Committee to head the 97 million party members will be formed and ratified.
Chinese President Xi Jinping and his predecessor Hu Jintao at the Great Hall of the People, in Beijing on October 16. Photo: Kyodo Some more highlights from Xi’s speech:
- By 2049, when the People’s Republic will hold centennial celebrations, China should become a leading power in all aspects, Xi said. To achieve this, the party will first aim to complete all modernization programs by 2035, turning China from the largest developing economy to a middle-to-high-income country, he said. This would mean that China will have successfully avoided the “middle-income trap”.
- Building on the momentum, China will strive to become a leading global power by mid-century. This power will not only be measured by the size of China’s economy but also by its achievements in the fields of science and technology and culture, Xi said.
- The Chinese military force, already the largest in the world, will become a “world-class fighting force”. On the environment front, China will also “largely eliminate pollution” and achieve carbon neutrality.
But what drew the longest applause from the audience, was Xi’s vow that the island of Taiwan – self-governed since a bitter civil war in 1949 – must be brought back into the fold. But he also said Beijing would show the “utmost sincerity and make the greatest efforts” to achieve such reunification by peaceful means, while stressing that it would not give up the use of force as a last resort.
Xi’s remarks indicate that China is ready to stare down a growing challenge from the US under President Joe Biden, who has moved to hinder Beijing’s ability to access advanced technology and sought to deter any military action against Taiwan – the biggest flash point between the world’s biggest economies. The Chinese leader hailed the nation’s “fighting spirit” and said the country was “well-positioned for pursuing development and ensuring security.”
“The message to the party is that China can develop its technological advantages without the United States, and is going to be able to withstand the policies that Biden and others are promoting to cut China off from certain high-tech goods like semiconductors,” said Neil Thomas, a China analyst at Eurasia Group Ltd., a political risk advisory and consulting firm. “Whether that’s going to succeed is a totally different question of course, but it’s certainly expressing confidence to those in the system.”
According to Bloomberg, Xi’s speech reflected a changed world from 2017, when he declared that China was “standing tall and firm in the East.” Since then, he’s faced a barrage of US tariffs, financial sanctions and trade curbs aimed at blocking China’s ability to grow even more powerful, culminating in a sweeping order this month restricting Beijing’s access to high-end chips used in artificial intelligence, supercomputing and other technologies set to drive the modern economy.
On Sunday, Xi vowed to “resolutely win the battle in key core technologies.” Pledging to speed up innovation in areas vital to “technology self-reliance,” he said that China “will move faster to launch a number of major national projects that are of strategic, big-picture and long-term importance.”
Xi’s defiant tone stood in stark contrast with the calamitous problems facing China’s economy. The country is facing one of its most challenging periods in decades as Covid Zero policies and a property crackdown place pre-pandemic predictions of a 5% growth rate out of reach. In addition to failing to make significant breakthroughs on chip technology despite spending tens of billions of dollars, the nation is also facing the slowest economic growth in more than four decades, excluding 2020’s Covid slump. Restrictive pandemic policies have cut off visitors and hurt spending, while youth unemployment is around record highs. A property crisis has also spurred a wave of mortgage boycotts.
Xi reiterated that economic development was the party’s “top priority,” even as he twice mentioned the need to “balance development with security” — a phrase suggesting growth can be sacrificed for goals like self-sufficiency and national defense. Noting “drastic changes in the international landscape,” he said the party “safeguarded China’s dignity and core interests.”
The speech delivered by Xi at the Great Hall of the People was an abridged version of his work report. This was a departure from tradition, as the party chief usually reads out the entire document. The only exception was at the 16th party congress 20 years ago, when the then-party chief, Jiang Zemin, aged 76, also opted for a shorter version. According to SCMP, Xi may have cut back his speech out of concern for the retired elderly party leaders who made a rare appearance to join him on stage. They included his predecessor Hu Jintao, 79, who looked tired and frail throughout the session. At 105, Song Ping was the most senior party elder to appear on stage on the day. However, the two most noticeable absentees were former president Jiang, now 96, and former premier Zhu Rongji, 93. Their names, however, are on the list of an ad hoc group set up to supervise the proceedings of the party congress.
Communist Party elder Song Ping (left) and former vice-president Zeng Qinghong at the opening ceremony of the 20th party congress. Photo: Kyodo While the influence of party elders varies over time, their appearance this time could be largely symbolic. While Xi had sought their views, the president has a free hand to make all key decisions. Yu Jie, a senior research fellow on China at Chatham House – an independent policy think-tank based in London – is among analysts who see the shortened report as an indication of Xi’s firm hold on power.
“The 20th party congress report speech is significantly shorter than the 19th, a clear indication of Xi’s success in centralising power,” Yu said. “The speech acts as a summary of the party’s achievements and future plans – expressed as the lowest common denominator of consensus between competing factions. A shorter report speech would seem to suggest smaller factional gaps in reaching consensus.”
While Xi did not mention the United States in his speech, he warned against a cold-war mentality – a catchphrase to describe Washington’s attempts to isolate China – as well as Western double standards, as he asserted that the country would not be bullied. Further elaboration of the point came in the full work report released shortly afterwards.
“The attempt to suppress and contain China’s growth could escalate anytime,” the report read. “We are entering a stage where great opportunities and risks coexist. Uncertainties and unpredictability are rising. All kinds of black swans and grey rhinos [unexpected and overlooked risks] could strike any time. We must have a keen sense of crisis and make thorough preparations. Only by doing that can we rise to the challenges ahead.”
To mitigate the risks, Xi said the party needs to strengthen its work on national security and improve the protection of all major infrastructure and networks, as well as data, biosecurity, nuclear and space assets.
“We must improve our capacity to counter foreign sanctions, interference and long-arm jurisdiction,” the report said. Long-arm jurisdiction in party-speak usually refers to the US imposing its own laws and court orders on other countries.
China also needs to increase self-reliance in the food, energy and technology sectors, Xi said, as he listed technological innovation and scientific breakthroughs as key to achieving the development goals outlined in the report.
“We must speed up technological progress and self-reliance. We must pool our resources and focus on key areas to achieve breakthroughs, so that we can win the race in core technologies critical to our national strategy.”
The party must also develop more open, inclusive and efficient talent schemes to groom and attract top talents to China, Xi emphasised.
Xie Maosong, a senior fellow at Tsinghua University’s National Strategy Institute, described the work report as a “galvanising call” to the party and the Chinese people. “This is the party’s first work report after its centennial celebration [in 2021], so it is not just meant [to resonate] for the next five years,” Xie said. “It sets the goal of realising China’s great rejuvenation, and to do so by charting our own path and not following the Western model of political party rotation,” he explained.
“To achieve that, the party needs to address the unique question of how to stay in power and win public trust continuously. It needs to provide a structural and systematic answer on ways to maintain a high-quality decision-making process and fight chronic corruption.”
Xi’s work report was the first highlight of the 20th party congress. The weeklong event is also expected to endorse a revision to the party constitution, which most observers believe will further elevate Xi’s position and governance philosophy.
On Monday, the committee will vote to confirm the line-up of a new 25-member Politburo and seven-member Politburo Standing Committee – the highest decision-making body in Chinese politics. While Xi is set to get a convention-breaking third term as party leader, he will reshuffle many key positions and put together a new supporting cast for the next five years and beyond.
* * *
Below we excerpt from a note by Goldman strategist Andrew Tilron summarizing his main takeaways from Xi’s opening remarks:
- The 20th National Congress of the Communist Party of China (NCCPC) convened today in Beijing and will conclude on 22 October. Through the opening remarks, President Xi summarized the achievements over the past five years and set out the blueprint for the Party and the country for the future.
- In summary,
- 1) President Xi’s “Thoughts on Socialism with Chinese Characteristics for a New Era” have been further highlighted;
- 2) national security and social stability appear to have become more important, especially for the security of key supply chains;
- 3) President Xi reiterated the “One Country, Two Systems” principle, and strengthened the stance to secure national sovereignty; and
- 4) economic development remains important, with continued focus on high-quality growth.
- Our textual analysis suggests the adjusted frequency of “security”, “people”, “socialism”, “modernization” and “military” this time increased versus five years ago, that of “growth” and “law-based governance” remained largely stable, while that of “economy”, “market” and “reform” declined somewhat.
- We believe the ongoing Party congress may not be an inflection point for major policy changes. We maintain our view that a reopening will probably be delayed until at least Q2 2023, and implemented gradually to the extent possible. Policymakers’ reaction function such as “no flooding of easing measures” and the top leadership’s long-term goals are unlikely to change after the Party Congress.
- In terms of equity market implications, we are not changing our views in the absence of any fresh and material policy and political inputs so far from the Congress—We prefer China A over Offshore equities, and would continue to focus on thematic ideas such as “Common Prosperity” and “Little Giants” to trade for sustainable alpha in the stock market. That said, we’d argue that a high level of risk premium is embedded in prevailing equity valuations, and investors should consider option strategies to tactically position in the market.
(Full note available to pro subscribers.)
Finally, courtesy of Bloomberg, here is how global China experts are reacting to Xi’s speech:
Neil Thomas, a China analyst at Eurasia Group:
- “Xi changed the structure of the report fairly significantly compared to previous years. There are new sections on science and education, on national security and on the legal system areas that have previously been addressed in other parts of report. Having these new sections means they’re going to be even higher priorities.
- “The new focus on science and education is a reflection on just how much Xi is betting on innovation as a solution to China’s economic problems and its reliance on Western technology. I think that’s super significant.
- “What’s new there is the addition that this would be done by using or done through Chinese-style modernization. That’s a strong sign Xi is sticking to his guns in going his own way toward wealth, power and very much not following the ways of the West.
- “The message for the United States is that China’s going to do its own thing. The message to the rest of the world is that China is going to remain powerful and is going to remain a potential partner, especially for developing countries.”
Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic & International Studies:
- “The language of this speech is all about trying to establish a different kind of international system from what we’ve seen since World War II — one led by the US emphasizing free markets and through the UN system, multilateralism and democracy.
- “And you can see the whole emphasis of this speech an emphasis of a Chinese style everything — China’s foreign policy, domestic policy, and, in some ways, an acceptance of the fact that the US and China are strategic competitors in the type of world order they’re trying to create. And he was not backing down from that at all.
- “So I think we’re seeing a real effort for the Chinese to say, ‘You know what, we still want to participate in this global society but we want to be rule makers not just rule takers.’”
Peiqian Liu, chief China economist of Natwest Markets:
- “There were two parts that are important to the medium term. First, there was a balanced emphasis on both development and security. This means growth rates will no longer be the only and top priority in coming years, security of development also matters.
- “Second, there was a lot of emphasis on technology and innovation, which means the focus will likely shift away from just lowering financial risks and reducing debt growth to pouring more resources to development of high tech and innovation.
- “Common prosperity is still highlighted. That means the policy goal of redistribution of income and wealth is still a medium term goal.”
Wu Xianfeng, fund manager at Shenzhen Longteng Assets Management Co:
- “The standout of the speech was that Xi emphasized economic development still remaining the priority, contrary to the jitters and misconceptions prior to the meeting that common prosperity would come first.
- “It’s reassuring the leaders say growth still comes first and foremost in the current stage of development, especially as we are faced with economic difficulties from virus curbs and as we are in for challenges from the US over the long term.”
Ding Shuang, chief economist for Greater China and North Asia at Standard Charted Plc:
- “It’s important that he reiterated that development is the first priority, and that modernization can’t be achieved without the material foundation. That means the economy’s size still needs to expand and the quality needs to improve.
- “The speech is mostly an extension of Xi’s previous thoughts on the economy, and there aren’t much new ideas. That’s understandable because he has helmed development in the past decade.
- “The speech itself may not have much impact on the market, because most of the points have already been raised in the past.”
Frank Tsai, lecturer at the Emlyon Business School’s Shanghai campus:
- “Xi’s speech sends a signal that China is serious about its socialist roots. To paraphrase, Xi stated that China offers a ‘new choice for humanity,’ China’s ‘scientific socialism,’ and that ‘Chinese wisdom and capacity’ will make this model work for the benefit of all. This sounds like boilerplate propaganda, but it is serious. China is the last major country standing with Cold War roots in Soviet communism.”
Alfred Wu, associate professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy:
- “From his speech, it’s clear he’s the leader of the world’s number two country; he wants to change the world order. So China’s clash with the US will be intensified. I don’t see any possibility of tensions being lowered.
- “China has always argued that the US made the current world order, but now they are doubling down on how they present a true alternative world.
- “Xi emphasized and boosted the narrative of national security because it is serving as a justification for him to remain in office for as long as possible. He won’t tolerate sensitive issues that could jeopardize his regime.”
Chen Shi, fund manager at Shanghai Jade Stone Investment Management Co.:
- “The report settled my nervousness over the past weeks, and should assuage concerns of those investing in China. The fact that the report is shorter this time says to me that the party is confident and policies are consistent — it doesn’t feel the need to waste words explaining itself, and that the overall direction in policies remains the same, and iterated in various policy blueprints in the past.
- “The way that development and technology came so high up in the report also is reassuring to me — this party is not just about ideology, as some were beginning to fear, but development and economic stability stays high on the list. Those words coming out the mouth of the man himself means that China will still be full of investment opportunities.”
- Xi Jinping tells the Communist Party that China’s “power to shape the world” has increased, although “dangerous storms” are ahead.
Drew Thompson, visiting senior research fellow at the Lee Kuan Yew School of Public Policy at the National University of Singapore:
- “It’s interesting how Xi characterizes China’s response to the dynamic international situation as a ‘struggle’ in the Marxist sense for its own national and political security. He is calling on the nation to struggle against international forces that threaten China’s interests.
- “It reflects an adversarial world view that is zero-sum, and likely foretells of continuing tensions between China and developed nations, featuring wolf warriors and coercion in multiple domains — diplomatic, economic, informational, and military.
- “Xi emphasized the importance of the country gaining in strength, and the need to struggle against challenges and threats to the party and country, which requires not only a modern military, but a ubiquitous domestic security apparatus as well.”
Baohui Zhang, a professor of political science at Lingnan University in Hong Kong:
- “Xi’s speech re-emphasized China’s commitment to ‘openness,’ which was started by Deng Xiaoping. Many have wondered if the strategic rivalry between China and the United States could push them apart and motivate China to pursue autarky. Xi’s message is to assure the world the China remains committed to economic integration with the world.
- “However, this may not impact the Sino-US rivalry in significant ways. Washington is pursuing at least limited decoupling to redefine its relations with China. Recent technology denial measures are the latest evidence. As such, China’s commitment to ‘openness’ does not mean that decoupling will not continue ,as Washington’s choices and strategies also impact their relations.”
Wen-Ti Sung, a political scientist at Australia National University’s Taiwan Studies Program:
- “By giving Taiwan the spotlight early in his speech, Xi is committing the performance of his Taiwan policy to be put under the microscope over the next five years.
- “Xi declared the Chinese military has both the capability and resolve to deter external influence over Taiwan. What he still hasn’t said is if Chinese ‘intent’ to do so.
- “In that sense, China is still preferring peaceful unification to using force, but the focus on military capability will only accelerate an arms race in the Taiwan Strait, and the need to demonstrate resolve through military exercises will both raise tensions and increase risks of accidental escalation.”
Tyler Durden
Sun, 10/16/2022 – 15:00
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