Today’s News 1st April 2022

• UK Sleepwalking Into Food Crisis As Fresh Produce Set To Vanish From Supermarkets 
  UK Sleepwalking Into Food Crisis As Fresh Produce Set To Vanish From Supermarkets 

  The National Farmers’ Union has warned the UK is sleepwalking into a food security crisis. Soaring energy and fertilizer costs have led to an unprecedented situation where growers’ margins have collapsed, forcing many to halt growing operations. 

  Reuters says because of the inclement weather in the UK. Farmers grow cumbers, plant peppers, aubergines, and tomatoes in vast greenhouses. Greenhouses use natural gas for heat, but after last year’s surge in gas prices exacerbated by Russia’s invasion of Ukraine last month, the crops have become uneconomical to produce. 

  

  Trade body British Growers said the average cost to produce a cucumber in Britain before the energy crisis was around 25 pence, which is now more than doubled and set to hit 70 pence when higher energy prices fully kick in. 

  “Gas prices being so sky-high, it’s a worrying time,” grower Tony Montalbano said. 

  “All the years of us working hard to get to where we are, and then one year it could just all finish,” Montalbano said.

  He noted his 30,000 square meters of glasshouses at Green Acre Salads business, which supplies major supermarkets such as Tesco, Sainsbury’s, and Morrisons, are shuttered because costs outpace market prices. In fact, the farmer would be losing money if he were to grow. 

  Compared with this time last year, European gas prices are up a mindboggling 500%. 

  

  Fertilizer prices have tripled since last year, along with soaring prices for packaging, diesel, freight, labor, and everything related to running a grow operation. 

  “We are now in an unprecedented situation where the cost increases have far outstripped a grower’s ability to do anything about them,” said Jack Ward, head of British Growers.

  With many greenhouses offline, this will inevitably push down the output of produce for supermarkets and result in persistent and or even higher food inflation when overall inflation is at historic levels. 

  To give an idea of just how bad the situation is, the Valley Growers Association, whose members produce about 75% of Britain’s cucumber and sweet pepper crop, said 90% of farmers didn’t plant in January. Others said they would not grow with elevated gas prices. 

  “There’s definitely going to be a lack of British produce in the supermarkets,” association secretary Lee Stiles said. “Whether there’s a lack of produce overall depends on where and how far away the retailers are prepared to source it from.“

  The UK could increase imports of produce, but countries worldwide are implementing protectionism measures to keep farm goods domestically to mitigate shortages due to the Ukraine conflict disrupting the global food supply. 

  Like many other countries worldwide, the UK is sleepwalking into a food crisis.

  Tyler Durden
  Fri, 04/01/2022 – 02:45

• Ukraine Demands Removal Of Slovenian Flag Because It Looks A Bit Russian
  Ukraine Demands Removal Of Slovenian Flag Because It Looks A Bit Russian

  Authored by Paul Joseph Watson via Summit News,

  Ukrainian authorities demanded the removal of a Slovenian flag from an embassy in Kiev, despite Slovenia supporting Ukraine, because it looked a bit similar to the Russian flag.

  

  No, this isn’t the Babylon Bee.

  Russophobia has spread to colors. Anything that looks a bit Russian is now prone to cancellation.

  “When we arrived in Kiev, it was quite windy, and when we proudly raised the Slovenian and European flags back, they fluttered in the wind,” Slovenian Chargé d’Affaires Bostjan Lesjak said in an interview with TV Slovenia.

  However, a couple of days later after the wind died down and the flag slumped on the pole, it looked a bit too Russian for the liking of members of the Ukrainian National Guard.

  They asked if the embassy could “temporarily remove the Slovenian flag because it is too similar to the Russian one,” and it was duly removed.

  The flag was cancelled despite Slovenian Prime Minister Janez Jansa having expressed support for Ukraine on numerous occasions and calling for the country to be allowed to join the EU.

  The removal of the flag occurred after Ukrainian officials demanded the global “criminalization” of use of the letter Z in the context of supporting Russia.

  Yes, Z is also cancelled.

  Both Zurich Insurance Group and Samsung have distanced themselves from ‘Z’ in brand names and advertising.

  As we previously highlighted, Siberian cats were banned from competing in international cat competitions, while a tree was also robbed of its ‘tree of the year’ victory because it was Russian.

  One wonders how Ukrainian authorities are going to see off the Russian war machine if they are too precious to tolerate the existence of cats, trees, letters of the alphabet and flags of other countries.

  *  *  *

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  Tyler Durden
  Fri, 04/01/2022 – 02:00

• Is Russia The Real Target Of Western Sanctions?
  Is Russia The Real Target Of Western Sanctions?

  Authored by Kit Knightly via Off-Guardian.org,

  Soaring oil prices, energy and food crises on the horizon…is it possible the REAL target of this economic war is us?

  

  The first tweet I saw when I checked my timeline this morning was from foreign policy analyst Clint Ehlirch, pointing out that the Russian ruble has already started recovering from the dip created by Western sanctions, and is almost at pre-war levels:

  The Russian Ruble is nearing its pre-invasion value.

  Sanctions were designed to collapse its value. They failed. pic.twitter.com/OLmVIsS34E

  — Clint Ehrlich (@ClintEhrlich) March 29, 2022

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

  Ehrlich states, “sanctions were designed to collapse the value of the Ruble, they have failed”.

  …to which I can only respond, well “were they?”

  …and perhaps more importantly, “have they?”

  Because it doesn’t really look like it, does it?

  If anything, the sanctions seem to be at best rather impotent, and at worst amazingly counterproductive.

  It’s not like the US/EU/NATO don’t know how to cripple economies. They have had years of practice starving the people of Cuba, Iraq, Venezuela and too many others to list.

  Now, you could argue that Russia is a larger, more developed economy than those countries, and that’s true, but the US and its allies have previously managed to hurt the Russian economy quite drastically.

  As recently as 2014, following the “annexation” of Crimea, Western sanctions were tame compared to the recent unprecedented measures, but crucially the US massively increased its own oil production, then later that year (following a visit by US Secretary of State John Kerry) Saudi Arabia did the same.

  Despite objections from other members of OPEC – Venezuela and Iran chiefly – the Saudis flooded the market with oil.

  The result of these moves was the biggest fall in oil prices for decades – collapsing from $109 a barrel, in June 2014, to $44 by January 2015.

  This kicked Russia into a full recession and saw Russia’s GDP shrink for the first time under Putin’s leadership.

  Again, just two years ago, allegedly as part of competing with Russia for a share of the oil market, Saudi Arabia once more flooded the market with cheap oil.

  So, the West does know how to hurt Russia if it really wants to – by increasing oil production, flooding the market and tanking the price.

  But has the US increased its oil production this time round? Have they lent on their Gulf allies to do the same?

  Not at all.

  In fact, in a point of beautiful narrative synchronicity, the US claims it’s “unable” to increase its oil production due to “staff shortages” caused by that gift that keeps on giving – Covid.

  Similarly, Saudi Arabia is not tanking the oil market, but deliberately increasing prices.

  Yes, right now, with the Western allies locked in an alleged economic war with Russia the price of oil is soaring, and may continue to do so.

  This is good news for the Russian economy, to the point it may even make up for the damage done by the brutal sanctions.

  The high price of oil and need “not to rely on Putin’s gas” or “de-Russify” our energy supply will doubtless result in millions being poured into “green” technology.

  Those Western sanctions are targeting other Russian exports too, including grains and food in general.

  Russia is a net exporter of food, meaning they export more food than they import. Conversely, many countries in Western Europe rely on imported food, including the UK which imports over 48% of its food supply.

  If Europe refuses to buy Russian food, the net effect is that Russia has food…and the West doesn’t.

  And, just as with oil, increasing food prices will help rather than hinder the Russian economy.

  Take wheat for example, of which Russia is the biggest exporter in the world. The vast majority of this wheat is not even sold to Western countries – but instead to China, Kazakhstan, Egypt, Nigeria and Pakistan – and so is not even subject to sanctions.

  Nevertheless, the sanctions, and the war, have actually driven the price of wheat up almost 30%.

  This is good for the Russian economy.

  Meanwhile, according to CNN, the US is likely to enter a full-blown recession by 2023, France is considering food vouchers and countries all over the world are expected to begin rationing fuel.

  So, the sweeping sanctions imposed against Russia by the West, allegedly in response to the invasion of Ukraine, are not having their stated aim – tanking the Russian economy – but they are driving up the price of oil, creating potential energy and food shortages in the West and exacerbating the “cost of living” crisis created by the “pandemic”.

  You should always be wary of anybody – individual or institution – whose actions accidentally achieve the exact opposite of their stated aim. That’s a simple rule to live by.

  Remember how Orwell described the evolution of the concept of war in 1984:

  War, it will be seen, is now a purely internal affair. In the past, the ruling groups of all countries, although they might recognize their common interest and therefore limit the destructiveness of war, did fight against one another, and the victor always plundered the vanquished. In our own day they are not fighting against one another at all. The war is waged by each ruling group against its own subjects, and the object of the war is not to make or prevent conquests of territory, but to keep the structure of society intact.

  Recall that “the worst food shortages for fifty years” were predicted as a result of Covid. But they never materialised.

  Likewise, we were due to experience Covid-related energy disruptions and power cuts. Short of the UK’s damp squib of a “petrol crisis”, they never really arrived.

  But now they are heading our way after all – because war and sanctions

  Increased food prices, decreased use of fossil fuels, lowering standards of living, public money poured into “renewables”. This is all part of a very familiar agenda, isn’t it?

  Regardless of what you feel about Putin, Zelensky, the war in general or Ukrainian Nazis, it’s time to confront the elephant in room.

  We need to be asking: What exactly is the real aim of these sanctions? And how come they align so perfectly with the great reset?

  Tyler Durden
  Thu, 03/31/2022 – 23:40

• ​​​​​​​Silencer Shop Reports ATF Approving Suppressors In Record Time
  ​​​​​​​Silencer Shop Reports ATF Approving Suppressors In Record Time

  The ATF recently allowed Form 4s or “Application for Tax Paid Transfer and Registration of Firearm” to be submitted via eForms to reduce the time it takes for a law-abiding citizen to obtain a suppressor for a gun. Anyone who has bought a suppressor over the years has painfully understood it takes the ATF a mindnumbing 6 to 9 months for approval until now.  

  According to the Firearm Blog, citing Silencer Shop, a company specializing in suppressors and submitting Form 4’s on behalf of customers, the ATF’s eForm process has seen approvals in as little as six days.

  

  The new eForm process, launched in December of 2021, expedites the process for a law-abiding citizen to receive a silencer within 90 days. There have been many instances, according to Silencer Shop, where eForms are approved in 30 days and, as noted above, less than a week. 

  “Numerous Silencer Shop customers have already received their eForm 4 approvals. Per the ATF, the timeline was an expected 90 days, and some customers have been approved much sooner. Silencer Shop dealers have been a resource for the community by submitting eForm 4s since the middle of January 2022. We’ve seen applications submitted on Jan 17, 2022 approved on February 11, 2022, which is less 30 days and we’ve even seen a 6 day approval!” said Dave Matheny, CEO of Silencer Shop. 

  “Customers have reacted enthusiastically to the Silencer Shop Full Auto software; it’s been great seeing such positive outcomes for gun owners getting their suppressors or other NFA items so quickly,” Matheny continued. 

  The eForm system is running smoothly and could set a new precedent for law-abiding citizens to obtain suppressors much quicker than the old benchmark of 6-9 months. 

  Tyler Durden
  Thu, 03/31/2022 – 23:20

• California Reparations Panel Struggles To Decide Which Black Americans Should Receive Handouts
  California Reparations Panel Struggles To Decide Which Black Americans Should Receive Handouts

  Autho9red by Eric Lendrum via AmGreatness.com,

  In California, the first reparations panel in the nation has spent two years trying to decide which African-Americans are eligible for reparations.

  

  According to the Associated Press, the state’s panel on reparations, which was first created following a law signed by Governor Gavin Newsom (D-Calif.) in 2020, has been plagued with internal divisions over how many black Americans should receive financial compensation for alleged “racism.”

  Since it was first formed in June, some of the panel’s nine members have argued that only direct descendants of actual slaves prior to the Civil War should receive handouts, while others call for a more liberal distribution of funds to every black American. The warring factions led to the panel delaying its originally-planned vote last month.

  Despite having existed for two years, the panel has no concrete plan yet for what their reparations would look like. Supporters say that compensation would account for various historical instances of discrimination such as slavery, segregation, and alleged racism in incarceration rates. Some of the proposals for compensation include free college, grants to churches and community organizations, and financial handouts in buying homes and starting up businesses.

  Kamilah Moore, the committee’s chairwoman, has voiced her support for only giving reparations to direct descendants of slaves, having pointed out that broader reparations based simply on race are far more likely to be struck down in court.

  If the plan focused solely on race, then it would surely face “hyper-aggressive challenges that could have very negative implications for other states looking to do something similar, or even for the federal government,” Moore explained. “Everyone’s looking to what we’re going to do.”

  But another committee member, Lisa Holder, argues that lineage does not matter in modern America, and that all black Americans are discriminated against.

  “No one asked me if my ancestors were enslaved in the United States or if they were enslaved in Jamaica or if they were enslaved in Barbados,” said Holder.

  “We have to embrace this concept that black lives matter, not just a sliver of those Black lives, because black lives are in danger, especially today.”

  A full report by the committee is due by June of this year, and a detailed reparations proposal is due by July of next year, at which point the state legislature will consider a vote to pass it into law.

  Tyler Durden
  Thu, 03/31/2022 – 23:00

• The Yield Curve Inverts: What Happens Next
  The Yield Curve Inverts: What Happens Next

  Shortly before the close on Thursday, the closely-watched 2s10s yield curve, better known as the recession harbinger, inverted again for the second time in three days, and this time it will likely fail to bounce as the US slides ever closer to its recession D-Day.

  

  To be sure, the Fed and most of permabullish sellside strategists have spent most of their time in recent days to “explain away” why the yield curve doesn’t actually matter, with the Fed going so far as penning an absolutely idiotic paper titled “(Don’t Fear) The Yield Curve, Reprise“, in which the authors who have never had a real job in their lives reference FDR in making the point that the 2s10s is only notable in that “it can only make things worse if investors not only fear the prospect of a recession, but at the same time, are spooked by that fear itself, which is mirrored in inverted term spreads.” Instead of addressing a level of stupidity that once upon a time was prohibited at the Fed, we will merely show a chart comparing the 2s10s and superimpose the Consumer Optimism Gap (as defined by the spread between the Conference Board Expectations and Current situation), to show the clear correlation and that a plunge in the 2s10s coincides with a collapse in optimism… and the start of a recession.

  

  Not convinced? That’s ok, because thanks to DB’s Jim Reid we have a full presentation (available to professional subs) which shows exactly what happens after every single inversion. Below we excerpt some of the key findings:

  1. Every recession in the last 70 years has only happened AFTER the 2s10s has inverted. We have now seen an inversion on March 29th intra-day and again on March 31. History would say US recession risks now elevated 12-24 months out.

  

  2. Bulls will point out that while all yield curves between 2Y and 10Y have inverted, anything involving 3M money is still historically steep, and that there is a record directional divergence between any yield curve measure including 3m money and those not. This argument is disingenuous as it only reflects that the Fed is so far behind the curve and anchoring the 3M. This, naturally, won’t last as Fed hikes aggressive over next 12 months…

  

  3. While the steep 3M curve will invert soon enough once the Fed hikes a handful of times, which also means it only has “noise” value, it also means that it’s only the 2s10s matters as it’s inverted before EVERY recession going back 70 years (3 month money ones didn’t invert pre-50s/60s recessions). Also, it goes without saying, an inversion for 3 months is a stronger signal than a brief inversion.

  

  4. Furthermore, while bulls will argue that a 2s10s inversion means there is still a long time before the recession (roughly 18 months), the reality is that recessions after 1st Fed hike in a cycle occur sooner when 2s10s inversion happens during hiking cycle… Well, this inversion occurred in record time post the start of the hiking cycle.

  

  5. Another remarkable datapoint: on average it takes around 2 years after the Fed starts hiking for the 2s10s to invert…. This time around it took just 2 weeks.

  

  * * *

  Now let’s take a look at how some assets perform after inversions.

  For S&P the supercycle matters: pre-1980 inversions almost always led to a sell-off. Post 1980, inversion and recessions have been relatively inconsequential hiccups in structural 40-year bull market.

  

  … so as Jim Reid notes, the average performance following inversions is misleading as it’s a period of two dramatically different halves.

  

  Yields still tend to go up for in the months after inversion starts with only one example of mildly lower yields around the 4 month point…

  

  In any case, the 2s10s indicates that odds of a recession in the next 24 months are a solid 60%+ and rising by the day.

  

  Meanwhile, in a humorous counter to the 3M polyannas, the reason why the 3M 3M18M is still steep is that with the Fed behind the curve,18m3m-3m is the steepest point on the yield curve, with cuts priced shortly after. Yes: in just over a year, the US will be in recession! The market likely will stop pricing additional hikes if they believe a recession is imminent. As Reit notes, “18m3m-3m should flatten soon as hikes are delivered, upgrading its implied recession signal over time.”

  

  * * *

  Two other observations why the inverted yield curve is a guaranteed signal of imminent recession: just before the 2008, Bernanke said this time was different, and to ignore the flat yield curve…

  “I would not interpret the currently very flat yield curve as indicating a significant economic slowdown to come, for several reasons. First, in previous episodes when an inverted yield curve was followed by recession, the level of interest rates was quite high, consistent with considerable financial restraint. This time, both short- and long-term interest rates–in nominal and real terms–are relatively low by historical standards. Second, as I have already discussed, to the extent that the flattening or inversion of the yield curve is the result of a smaller term premium, the implications for future economic activity are positive rather than negative. Finally, the yield curve is only one of the financial indicators that researchers have found useful in predicting swings in economic activity. Other indicators that have had empirical success in the past, including corporate risk spreads, would seem to be consistent with continuing solid economic growth. In that regard, the fact that actual and implied volatilities of most financial prices remain subdued suggests that market participants do not harbor significant reservations about the economic outlook.”

  … and also right before the bursting of the dot com bubble, William McDonough said the same in Feb 2000.

  “Typically, the inverted yield curve is seen as a sign of a coming recession, McDonough said. ”I don’t see that as the explanation,” he said. He said an expected drop in supply of long-term debt, as a result of reduced U.S. government debt sales and announced buybacks, is more likely the reason. Without those conditions, the inverted yield curve probably wouldn’t exist, he said.”

  Just a few days later, the dot com bubble burst.

  There is much more in the full DB presentation available to pro subs.

  Tyler Durden
  Thu, 03/31/2022 – 22:40

• New Hearing In Sussman-Russiagate Case Reveals Why Clinton Emails Will Likely Come Out
  New Hearing In Sussman-Russiagate Case Reveals Why Clinton Emails Will Likely Come Out

  Authored by Techno Fog via The Reactionary,

  Today, there was a hearing in the U.S. District Court for the District of Columbia in the matter of the United States v. Michael Sussmann, the former DNC/Clinton/Perkins Coie lawyer accused of providing false statements relating to the Alfa Bank/Trump Organization hoax to then-FBI general counsel James Baker in the fall of 2016. Here is more background on his indictment and how Sussmann and his allies passed Trump transition data to the CIA.

  

  About the hearing – we have the transcript (link at the bottom). The hearing related to Sussmann’s efforts to dismiss the indictment, with the defense alleging that Sussmann’s alleged lies were not material.

  The Court looked on that argument with skepticism. And rightly so, as the issue of materiality is typically a question for the jury. Sussmann’s lawyers did him no favors by admitting it was a “closer call” on whether the government’s arguments of materiality should be presented to the jury.

  

  The Special Counsel’s argument on materiality was more more effective, explaining what Sussmann did and why his lies mattered:

  

  Interestingly, the Court also asked if the underlying information – the Alfa Bank/Trump Organization data that Sussmann provided the FBI – was “false”. On that question the Special Counsel declined to show their hand.

  

  Why does this matter? Because it has been long-suspected that the the Alfa/Trump data was manipulated, if not outright invented. Recall this discussion in the Sussmann indictment, where the researchers discussed the inability “to defend against the criticism that this is not spoofed traffic”:

  

  Now we get to the juicy parts of the hearing. The Special Counsel is in possession of a number of documents from the Clinton Campaign, Rodney Joffe (more about him here), and Hillary for America. And there is a fight over whether some of those documents are privileged.

  

  The Special Counsel provided one example, stating that the Clinton Campaign is putting out bogus claims of privilege over the communications of Rodney Joffe. These are likely to fail. The Clinton Campaign was not copied on the e-mails, there might very well be a crime-fraud exception to any assertion of privilege, and because Joffe wasn’t providing legal advice to Hillary.

  

  Fusion GPS is making similar claims of privilege to keep their documents secret.

  

  They’ve tried these types of abuses of “privilege” in a civil case, and we previously discussed why those efforts were bound to fail, perhaps most notably because Fusion GPS has admitted they were doing political work not subject to privilege. Fusion GPS cannot now claim they were performing legal or litigation-focused work.

  

  Moreover, even if this were legal work, Fusion GPS waived privilege when leaking their research to the media, government officials, and other third parties. Oops.

  

  Finally – here is the transcript. Happy reading.

  -Techno

  Tyler Durden
  Thu, 03/31/2022 – 22:20

• "They're In Desperate Need Of Capital" – SoftBank Halts Investments As It Scrambles To Raise Cash
  “They’re In Desperate Need Of Capital” – SoftBank Halts Investments As It Scrambles To Raise Cash

  2021 was a difficult year for Softbank, and so far, 2022 is shaping up to be even more punishing. The Japanese telecoms giant/VC firm/conductor of the “AI Revolution” booked massive losses on its investment portfolio as massive bets on Didi and Grab soured (among other holdings), saddling the firm with tens of billions of dollars in losses for 2021 (this according to the firm’s most recent earnings report). And as shares of Alibaba and other prominent SoftBank holdings continued to tumble during Q1, dragging SoftBank shares lower in tandem, the situation has only continued to deteriorate.

  As SoftBank shares have tumbled, founder Masayoshi Son has seen roughly $25 billion of his net worth evaporate.

  

  The firm’s investment losses  – spurred by a crackdown in Beijing (which has sheered $9 billion off the firm’s Didi holdings, and that’s just one stock), the war in Ukraine, and other factors outside SoftBank’s control – could represent an existential threat, since SoftBank borrows heavily against its own shares to finance investments in early-stage companies. Because of this heavily leveraged structure, if the company’s financial position deteriorates too aggressively, it could trigger a brutal margin call “doom loop” that could force it to sell even more of its holdings. Masa Son lost his first fortune during the dot-com blowup. The last thing he wants is to be financially ruined a second time.

  To try and guard against this eventuality, Masa Son has reportedly ordered his lieutenants to halt investments in new firms as the company seeks to conserve cash as the value of its portfolio continues to deteriorate.

  Here’s more from the FT:

  SoftBank founder Masayoshi Son has told his top executives to slow down investments, as the world’s largest tech investor seeks to raise cash amid falling tech stocks and a regulatory crackdown in China.

  The Japanese billionaire made the remarks to his leadership team at a recent meeting, according to people briefed on the discussions, as the group responds to the massive hit to the value of its holdings in recent months. The previously unreported discussions offer a rare glimpse into the growing tension within SoftBank, which has disrupted the tech investing landscape since launching its first Vision Fund in 2017.

  Instead of looking for new innovative tech companies to pump money into (or soliciting backers for a third iteration of its ‘Vision Fund’), SoftBank is evaluating its portfolio to decide which holdings might be best suited for liquidation. One insider said the firm doesn’t expect valuations of its Chinese holdings to rebound any time soon.

  “Valuations for Chinese companies listed overseas have collapsed,” said one person close to SoftBank’s China team. “We don’t expect a turnround anytime soon.” One person familiar with the company’s plans added that SoftBank is pushing to raise cash and is evaluating assets that could be liquidated.

  As the firm pointed out in its latest quarterly report, its loan-to-value ratio (a key metric in the eyes of financial analysts) is getting dangerously close to the red line separating a sustainable from an unsustainable debt burden.

  

  The company’s shares have shed 40% of their value over the past year, and during Q1, its portfolio shed another $20 billion and $30 billion.

  

  Back in October 2019, we speculated that SoftBank might be the tech bubble era’s “short of the century”. Aside from a few short-lived rallies, our timing on that call could not have been better.

  SoftBank’s present difficulties follow one of the busiest years for dealmaking in the firm’s history: it closed investments in 195 private companies last year, the most in recent memory.

  Now, in a bid to raise cash, SB is scrambling to borrow against its stake in British chipmaker Arm Holdings (which is headed or an IPO spinoff following the collapse of a deal to sell it to Nvidia) and other holdings. Still, to many on Wall Street, this strategy reeks of desperation.

  In a bid to raise cash, SoftBank has also used stock in Coupang and other large holdings in the Vision Fund as collateral for loans. The Japanese tech group is also finalising loans worth as much as $10bn tied to the IPO of UK chip designer Arm Holdings, following the collapse of its $66bn sale to US rival Nvidia last month. “If you look at all the action, it’s very clear that they are in desperate need of capital,” said Amir Anvarzadeh, a strategist for Japan equity at Asymmetric Advisors who has recommended shorting SoftBank.

  The firm’s long-term solution focuses on its Vision Fund. Executives at SoftBank’s second Vision Fund, which manages $40 billion of SoftBank’s own money, say they’re hoping to make fewer investments of a higher quality. The big question now, as Alibaba shares continue to struggle in the face of a crackdown by Beijing: how much longer can SoftBank hold out without being forced to sell more shares of its ‘golden goose’?

  Tyler Durden
  Thu, 03/31/2022 – 22:00

• Biden Administration Actively Seeks 'Realignment' Of US-China Trade Relationship: US Trade Chief
  Biden Administration Actively Seeks ‘Realignment’ Of US-China Trade Relationship: US Trade Chief

  Authored by Michael Washburn via The Epoch Times (emphasis ours),

  One of the highest priorities of the Biden administration’s trade agenda is resetting the U.S.-China trade relationship with a view to putting American farmers and exporters on a level playing field with their Chinese counterparts, U.S. Trade Representative Katherine Tai said on March 30.

  

  In a prepared statement before a House Ways & Means Committee hearing, Tai criticized the prominent role of state-owned enterprises in China’s imports and exports as well as “labor rights suppression, a weak environmental regime, [and] other distortions that put market-oriented participants out of business.”

  She also noted Beijing’s failure to meet purchase commitments under the “phase one” trade agreement signed in January 2020. Those purchase agreements stipulated that China would import at least $200 million more of U.S. goods and products in 2020-2021 than the country bought in 2017.

  “We absolutely need to enforce all our agreements, phase one included, and that’s why we’ve spent the last several months fighting for our farmers who have a lot at stake in the purchase agreements,” Tai said during the hearing.

  U.S. concerns about Beijing’s abusive trade practices led Tai and her team in October 2021 to initiate a dialogue with the Chinese regime, emphasizing the importance of meeting phase one obligations, she said in the statement.

  But it became clear to Washington that Beijing did not consider the agreement to be binding and met only those commitments that the regime felt served its own interests, the statement said. Tai called this cherry-picking when it comes to meeting obligations a “familiar pattern” that U.S. officials encounter when dealing with Chinese regime officials, whether in the context of the World Trade Organization or bilateral talks.

  While these experiences have not completely turned Washington off to the possibility of dialogue with Beijing, she said, it is clear that the old approach by itself is insufficient.

  To that end, Tai urged Congress to pass the America COMPETES Act, a bill aimed at expanding semiconductor manufacturing in the United States and curbing reliance on Chinese products and know-how.

  The trade official also emphasized that the Biden administration has forcefully demonstrated to the Chinese regime the resolve of the United States to enforce the Uyghur Forced Labor Prevention Act, which banned the importation of all products from China’s Xinjiang over Uyghur forced labor concerns.

  “The challenge that we face from China is significant and it goes to how we as the U.S. continue to be able to compete and have thriving industries,” Tai told the lawmakers.

  Tyler Durden
  Thu, 03/31/2022 – 21:40

• March Payrolls Preview: Can Wage Growth Slow Enough To Dent The Fed's 50bps Rate Hike
  March Payrolls Preview: Can Wage Growth Slow Enough To Dent The Fed’s 50bps Rate Hike

  With the Fed’s rates “lift off” already a done deal, traders will frame Friday’s March jobs data (which comes just hours after the month of March is in the actual history books) in the context of monetary policy, where money markets are assigning a 76% probability that the Federal Reserve will lift interest rates by a 50bps increment in May. Accordingly, as Newsquawk writes in its NFP preview, there will be much attention on the average hourly wages measures in the jobs report for signs about how the recent surge in inflation is affecting Americans’ real incomes, and for any evidence of the so-called second-round effects of inflation. The consensus looks for wages to rise in the month, lifting the annual measure, but some desks argue that the pressure is easing in the labor market, which should see wage growth ease in the months ahead. Meanwhile, proxies in the month continue to suggest a healthy labor market (initial jobless claims fell in the payrolls survey week, while business surveys suggest firms are ramping up hiring). While the data will likely cause the typical stock price volatility over the release, analysts have said that it would take a significant miss, accompanied by weakness in other economic data, for the Fed to waiver from its seeming intent to raise rates by 50bps in May.

  Wall Street Expectations:

  • Consensus is for 490k nonfarm payrolls to be added to the US economy in March, with the rate of job creation easing to below recent trend rates (12-month average 556k, 6-month average 583k, 3-month average 582k).

  • Jobless rate is expected to fall by 0.1ppts to 3.7% (the Fed sees the jobless rate ending this year at 3.5%).

  • Wage metrics will attract a lot of attention amid the recent surge in inflation and inflation expectations; policymakers have been attentive to the possibility of both a wage-price spiral and second round effects; average earnings are expected to rise 0.4% M/M (vs unchanged in February), pushing the annual measure up to 5.5% Y/Y (from 5.2% in February).

  POLICY DEBATE: Fed Chair Powell recently said that the central bank would move to a more restrictive policy if that was needed to restore price stability (translation: the Fed can and will create a recession to contain inflation, something markets refuse to believe) . UBS said that Powell was referring to a deliberate policy of pushing growth below trend; “it is important to note that this policy option was presented in a conditional way–if that is what is required– deliberately pushing policy to generate growth below trend would only be required if there were evidence of a wage-cost spiral developing, and there is not really evidence of that at the moment.” Other analysts point out that average hourly earnings have outperformed other indicators, and accordingly, some relative underperformance could be seen ahead. Either way, the consensus remains that the Fed will raise interest rates by a 50bps increment in May (money markets assign a probability of around 76% of that happening), and it would therefore take a dreadful labor market report combined with other weak data metrics for the Fed to back away from that course.

  

  WAGES: Anecdotally, the compensation software provider Payscale, citing its data, said US firms were planning to give the highest pay increases in years, but these would still not match inflation. But Capital Economics says that the easing in job postings on Indeed.com suggests that there has been a softening in labor demand. While it notes that the relationship isn’t perfect, it would be consistent with employment growth easing too, and would match the slowdown in GDP. “The apparent drop-back in job openings also implies that there is now less excess demand for workers, consistent with broader evidence that labour shortages are starting to ease,” and it argues that the “unemployment rate, which is still above its pre-pandemic low, hasn’t proved a useful gauge of labour market slack over the past year”; while it expects this rate will fall in March other indicators suggest that conditions are no longer tightening. “After rising to their highest levels on record last year, the share of small firms struggling to fill job vacancies and the net share of consumers saying jobs are easy to find have both edged lower in recent months,” and “that suggests that the upward pressure on wages will also ease.” The consultancy sees the rate easing back to 5.0% Y/Y in the months ahead.

  JOB ADDITIONS: Weekly initial jobless claims and continuing claims that coincide with the BLS’ employment report survey period both declined (initial claims eased to 215k from 249k into the February jobs report, while continuing claims eased to 1.35mln from 1.47mln). The ADP’s gauge of private payrolls was more-or-less in line with market expectations (455k vs expected 450k), while the February data was revised up a little (to 486k from 475k). The ISM business surveys have not been released ahead of the March jobs data– these usually offer us some insight about hiring activity. The comparable Markit PMI data, however, noted that companies were stepping up hiring, with the rate of overall jobs creation the highest since April 2021; “manufacturers and service providers alike recorded steeper upturns in employment,” the report said, “numerous firms noted that investment in recruitment campaigns was starting to show gains.” Goldman estimates that payrolls rose by an above-consensus 575k in March as “dining activity rebounded further in March, and most Big Data indicators are consistent with strong job gains.” Additionally, the bank believes that “fierce competition for workers incentivized firms to pull forward recruiting activities earlier in the spring hiring season.”

  CONSUMER CONFIDENCE: Within the Conference Board’s gauge of consumer confidence, the number of consumers saying that jobs were “plentiful” rose to 57.2% from 53.5%, a new record high; the number of consumers who said jobs were “hard to get” fell to 9.8% from 12%, taking the differential to 47.4 from 41.5, boding well for those expecting the unemployment rate to decline. However, the survey also revealed that consumers were mixed in their views about the short-term outlook for the labour market, where the number expecting more jobs in the months ahead falling, even though those who anticipate fewer jobs also fell. Consumers were also mixed about their short-term financial prospects. “Confidence continues to be supported by strong employment growth and thus has been holding up remarkably well despite geopolitical uncertainties and expectations for inflation over the next 12 months reaching 7.9%—an all-time high,” the Conference Board said, adding that “these headwinds are expected to persist in the short term and may potentially dampen confidence as well as cool spending further in the months ahead.”

  ARGUING FOR A STRONGER-THAN-EXPECTED REPORT:

  • Public health. After reaching new highs in December and early January, covid infections fell sharply in February and March, returning to last summer’s relatively low levels. Dining activity also rebounded sharply over the last two months. Coupled with the rise in ADP’s estimate of leisure and hospitality jobs, Goldman expects a significant contribution from leisure-sector payrolls in tomorrow’s report (our estimates embed a rise of 150k, mom sa).

  

  • Big Data. High-frequency data on the labor market also generally indicate strong growth in March employment. While Homebase is an outlier to the downside, that signal was overly pessimistic in five of the last six reports.

  

  • Seasonality. Some firms frontloaded spring hiring because of what Goldman believes was fierce competition for workers. In past tight labor markets, job growth tends to be stronger in the first quarter than in the second quarter. That being said, the March pace often slows relative to February’s. 

  • Employer surveys. The employment components of business surveys generally increased in March. Goldman’s services survey  employment tracker increased 1.8pt to 55.7 and our manufacturing survey employment tracker increased 0.5pt to 57.9. This resilience in domestic business surveys also argues against a meaningful employment drag from the Russia-Ukraine war.

  • Job availability. The Conference Board labor differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get—increased by 5.4pt to an all-time high of +47.4. JOLTS job openings edged down by 17k in February to 11.3mn but remained above the pre-pandemic peak. Jobless claims. Initial jobless claims decreased during the March payroll month, averaging 209k per week vs. 231k in February. Continuing claims in regular state programs decreased 132k from survey week to survey week.

  ARGUING FOR A WEAKER-THAN-EXPECTED REPORT

  • Job cuts. Announced layoffs reported by Challenger, Gray & Christmas increased by 4% month-over-month in March, after decreasing by 8% in February (SA by GS).

  NEUTRAL/MIXED FACTORS

  • ADP. Private sector employment in the ADP report increased by 455k in March, in line with expectations but somewhat below tomorrow’s consensus for private payrolls (+496k mom sa).

  Tyler Durden
  Thu, 03/31/2022 – 21:20

• Mauled Treasuries To Get Some Respite, Fed Priced-In
  Mauled Treasuries To Get Some Respite, Fed Priced-In

  Authored by Ven Ram, currency & rates strategist at Bloomberg,

  As brutal as the bond-market backdrop has been, losses in Treasuries may abate in the second quarter even as the Federal Reserve takes aim at quelling inflation that is running at a breakneck pace.

  The odds of a repeat of the first-quarter selloff are approximately 1-in-30,000…

  The Bloomberg Treasury Index incurred a loss of 5.91% since the start of the year through Tuesday, the worst in data going back nearly 50 years.

  That represented a 2.5 standard-deviation move to the left — in itself an extreme probability in a normal distribution of returns that is confirmed by running the Kolmogorov-Smirnov test.

  

  Fundamentals also suggest that losses may moderate.

  Two-year yields surged about 160 basis points this quarter, the most since 1984. That increase came on top of a 46-basis point move in the last quarter of 2021, suggesting the market has priced in the bulk of the Fed’s likely tightening.

  

  The possibility of a de-escalation of conflict in Ukraine sent breakeven rates lower across the curve, with the markets heaving a sigh of relief on what that would mean for inflation.

  

  The inversion of the two- and 10-year part of the yield curve may also alter investor behavior.

  While there are more authentic markers of a true curve inversion, the negative spread may become a self-fulfilling prophecy: if economic agents in sufficient number believe a slowdown is in the offing and modify their decisions accordingly, we could get a veritable speed-bump.

  

  Notice how the curve inverted well after news of Ukraine broke on Tuesday, suggesting that there is already a bid to mop up the yields currently available on the longer maturity.

  That is classic investor behavior ahead of typical slowdowns.

  The confluence of the de-escalation of conflict and fears of a slowdown — whether well-founded or otherwise — may therefore offer a tactical long bias for bonds.

  While Fed speakers including Chair Jerome Powell have remarked that they are open to raising rates by 50 basis points if need be, they have stopped short of suggesting that such a scenario would be their base case.

  Even though headline inflation is already running around 8%, the Fed seems reluctant to deploy outsized increases for fearing of creating an adverse feedback loop in the economy.

  What could go wrong with this outlook?

  Possibly, double-digit inflation. A monster print of that magnitude may force the Fed to raise rates by 50 basis points in May and keep volatility on the front burner.

  That scenario apart, the current backdrop of markets having priced in an aggressive Fed trajectory and a possible de-escalation in Ukraine hostilities taken together suggests that the denouement for Treasuries may be less sordid in the months ahead.

  Tyler Durden
  Thu, 03/31/2022 – 21:00

• Putin Signs Decree Ordering Gas Exports To Be Halted If Buyers Don't Pay In Rubles
  Putin Signs Decree Ordering Gas Exports To Be Halted If Buyers Don’t Pay In Rubles

  Contrary to expectations that Vladimir Putin was bluffing about collecting rubles in exchange for Russian energy exports, moments ago a decree signed by the Russian president confirmed that that was not the case.

  According to Bloomberg, Putin said he had signed a decree demanding payment in rubles for Russian gas supplies, which is set to begin April 1 as previously reported. According to the decree, while Russia will continue to supply gas at set volumes and prices, it will demand that buyers of gas open accounts in Russian banks, and warned that Moscow can halt gas contracts if buyers don’t pay in rubles; additionally, new proceedings in EUR or USD could be blocked. Pushing what many viewed as a bluff to the edge, Putin said that active contracts will be halted if demands are not met, and explained that the move is meant to increase settlements in national currencies.

  Putin’s decree follows an earlier report in the Russian press that Gazprom was studying options of halting gas supplies to Europe amid RUB payment issues. It also follows comments from the Kremlin which suggested that it would look into the idea from lawmakers to ask other nations to pay for a wider range of Russia exports in rubles.

  Indicating Russia’s operational readiness to follow through with the plan, Interfax adds that Putin has ordered for special accounts for gas payments to be opened at Gazprombank which will sell gas FX on a Moscow exchange.

  In kneejerk response to the news, US nat gas prices spiked – perhaps in anticipation that much of US output will now be LNG-ed over to Europe, potentially creating a US shortage in due course…

  

  … while oil also rose from session lows following the latest SPR release jawboning which has yet to be confirmed by the White House.

  

  Finally, now that it appears the ruble will have to be purchased by western powers, the currency has completed its roundtrip to pre-invasion levels.

  

  Tyler Durden
  Thu, 03/31/2022 – 20:31

• NIH Deleted Info From Wuhan Lab On Covid-19 Genetic Sequencing, Watchdog FOIA Finds
  NIH Deleted Info From Wuhan Lab On Covid-19 Genetic Sequencing, Watchdog FOIA Finds

  Authored by Mark Tapscott via The Epoch Times (emphasis ours),

  National Institutes of Health (NIH) documents obtained by a nonprofit watchdog in a federal court suit reveal that the agency deleted Covid-19 genetic sequencing information from the Wuhan Institute of Virology at the Chinese lab’s request.

  

  The Arlington, Virginia-based Empower Oversight Whistleblowers and Researchers (EO) obtained, as a result of a Freedom of Information Act (FOIA) request and lawsuit, more than 230 pages of documents dating from 2020 that include emails, memoranda, and other correspondence among and between the lab and multiple NIH officials.

  Covid-19 was first detected in China in late 2019, before it spread worldwide. Since the first death from the virus in the United States was reported in January 2020, an estimated 1 million Americans and 6 million globally have reportedly succumbed to the virus.

  Controversy has raged in the United States over whether the virus originated in an animal-to-human transfer in a Wuhan-area wet market, as Chinese officials have insisted, or if it escaped from the Wuhan lab where research was being done on such viruses, some of which was being supported with NIH funds through the New York-based nonprofit EcoHealth Alliance.

  Among the NIH officials prominently mentioned in the documents are then-NIH Director Dr. Francis Collins and National Institute for Allergies and Infectious Diseases (NIAID) Director Dr. Anthony Fauci, who actively participated in the discussions and decision-making described in the materials obtained by EO.

  “On June 5, 2020, a Wuhan University researcher requested that NIH retract the researcher’s submission of BioProject ID PRJNA637497 because of error. The Wuhan researcher explained ‘I’m sorry for my wrong submitting,’” EO said in a statement on March 29.

  “BioProject ID PRJNA637497 is also referred to as Submission ID SUB7554642. Three days later, on June 8th, the NIH declined the researcher’s request, advising that it prefers to edit or replace, as opposed to delete, sequences submitted to the SRA,” EO reported.

  But then, on June 16, 2020, NIH officials reversed themselves and deleted the genetic sequencing data, as requested by the Wuhan researcher.

  That researcher was quoted by EO as explaining to NIH: “Recently, I found that it’s hard to visit my submitted SRA data, and it would also be very difficult for me to update the data. I have submitted an updated version of this SRA data to another website, so I want to withdraw the old one at NCBI in order to avoid the data version issue.”

  After some discussion about what would be deleted, the NIH concluded the discussion by reassuring the Wuhan researcher that it “had withdrawn everything.”

  The documents also indicate, according to EO, that after researcher Jesse Bloom, a virologist at the Fred Hutchinson Cancer Research Center, “alerted NIH about the deleted sequences, [Collins] and [Fauci] hosted a Sunday afternoon Zoom meeting. The invitation Collins sent out for the meeting asks invitees to read Bloom’s [June 22, 2021] preprint paper closely and provide their ‘advice on the interpretation and significance of’ it.”

  According to EO, the documents show that “Professor Trevor Bedford of the Fred Hutchinson Cancer Research Center later sent the group an email stating that the deleted data seemed to support the idea that the pandemic began outside the Huanan market in Wuhan and that the matter must be analyzed properly.”

  If the virus’s spread began outside of the market, it would undermine the official Chinese government claim, and thus reinforce claims of experts in the United States and elsewhere that the pandemic likely escaped from the Wuhan lab.

  The EO report also claims that NIH communications staff members were using off-the-record emails to advise “reporters toward more favorable coverage concerning termination of public access to the sequences by The Washington Post, and away from coverage by The New York Times, whose ‘tone’ had been criticized in communications among NIH officials.”

  In addition, EO said NIH claims to have retained copies of the deleted data “for preservation purposes,” although the federal agency has refused to conduct a transparent examination of it.

  An NIH spokesperson told The Epoch Times in an email that the sequences in question were submitted in March 2020 by a researcher at a China-based institution for posting in SRA, which it said it managed by NIH’s National Center for Biotechnology (NCBI).

  “In June 2020, in response to a request by the same researcher, NCBI gave the sequence data the status of ‘withdrawn,’ which removes sequencing data from all public means of access but does not delete them. NCBI subsequently reassigned the status of the sequence data to ‘suppressed,’ which means that sequence data are removed from the search process but can be directly found by accession number. This action to reassign the data was identified as part of NLM’s ongoing review into the matter. We are working to make more information available,” the spokesperson said.

  Collins, Fauci, and the NIAID did not respond to requests for comment.

  The EO document release is likely to strengthen congressional efforts to get all the facts concerning the NIH’s role in funding the Wuhan lab research that may be at the center of the CCP virus’s creation and spread around the world.

  Sen. Roger Marshall (R-Kan.), a physician who is a member of the Senate Committee on Health, Employment, Labor and Pensions (HELP), told The Epoch Times that “the NIH deleting key data at the onset of the pandemic has only caused more questions regarding its involvement on the emergence of” the virus.

  “The American people deserve to know the truth behind the origins of COVID-19, as well as how we can best prepare for, prevent, and recover from future global pandemics,” Marshall said. “As a physician, I think we always need to know the what, where, how, and why when giving a diagnosis. For this reason, it couldn’t be more important that we get to the bottom of this deleted data and ensure that NIH operates at the interest of our national security.”

  The HELP panel on March 15 approved legislation—the PREVENT Pandemics Act—that requires the establishment of a government task force to investigate the origins of the CCP virus. That legislation includes eight provisions authored by Marshall.

  “This legislation is in response to the congressional inquiries and various media investigations–including The Epoch Times–revealing national security issues with federal agencies authorizing dangerous research with certain foreign entities that may have contributed to the COVID-19 pandemic,” Marshall’s office told The Epoch Times.

  “Dr. Marshall secured his bipartisan 9/11-style COVID Task Force to investigate the origins of COVID-19, as well as find out how we can prepare for, prevent, and recover from future global pandemics,” his office said, adding that he seeks “to ensure that American organizations would never be allowed to conduct dangerous research capable of pandemic proportions with organizations in countries that threaten our national security.”

  Sen. Marsha Blackburn (R-Tenn.) told The Epoch Times via email that “the radical left has systematically worked to cover the Chinese Communist Party’s tracks and hide the truth of COVID origins.”

  “Dr. Fauci, the NIH, and liberal media giants weaponized the COVID-19 pandemic to shut down schools, businesses, and life for hardworking Americans. The report from Empower Oversight exposes what we’ve always known about COVID-19—it’s all about big government control,” she added.

  Another Republican senator, Joni Ernst of Iowa, proposed last November to ban all federal funding of EcoHealth Alliance and the “gain-of-function” virus research it supported with federal funds at the Wuhan lab. Other congressional Republicans have also called for a federal investigation of the nonprofit.

  Zachary Stieber contributed to this report.

  Tyler Durden
  Thu, 03/31/2022 – 20:20

• Sri Lanka Turns Off Street Lights As Energy Crisis Worsens; Fishermen Unable To Sail For Lack Of Fuel
  Sri Lanka Turns Off Street Lights As Energy Crisis Worsens; Fishermen Unable To Sail For Lack Of Fuel

  Tiny Sri Lanka is struggling through an economic crisis that is having terrible repercussions for its economy, as a brutal energy crisis threatens to blossom into shortages of food and other essential goods.

  Thanks to an energy crisis (and China’s reluctance to allow the country to restructure its debts), Sri Lanka is resorting to turning off its street lights to save electricity as its worst economic crisis in decades bites, forcing – among other cutbacks – the temporary closure of the local stock market as the impact of the crisis is felt (the Colombo Stock Exchange reduced daily trading to two hours from the usual four-and-a-half because of the power cuts for the rest of this week at the request of brokers).

  

  The island nation of 22 million people is struggling with rolling power cuts for up to 13 hours a day as the government is unable to make payments for fuel imports because of a lack of foreign exchange.

  According to Reuters, the energy-drained country expects a diesel shipment paid for under a $500 million line of credit from neighboring India is expected to arrive on Saturday, but the situation isn’t expected to improve any time soon, as power restriction will need to continue, according to the country’s power minister.

  “We have already instructed officials to shut off street lights around the country to help conserve power,” Power Minister Pavithra Wanniarachchi told reporters.

  …

  “Once that arrives we will be able to reduce load shedding hours but until we receive rains, probably some time in May, power cuts will have to continue,” Wanniarachchi told reporters, referring to the rolling power cuts.

  “There’s nothing else we can do.”

  Another reason for the power crisis (and a lesson for all nations that are aiming to ramp up ‘green’ energy sources): Water levels at reservoirs feeding hydro-electric projects had fallen to record lows, while demand had also hit record levels during the hot, dry season, she said.

  As Reuters explains, the crisis in Sri Lanka is the result of a confluence of factors that have drained the country’s foreign exchange reserves.

  The crisis is a result of badly timed tax cuts and the impact of the coronavirus pandemic coupled with historically weak government finances, leading to foreign exchange reserves dropping by 70% in the last two years.

  Sri Lanka was left with reserves of $2.31 billion as of February, forcing the government to seek help from the International Monetary Fund and other countries, including India and China.

  And if the situation doesn’t improve soon, the small country’s energy crisis could metastasize into a food crisis. Because, as the AFP explains, without fuel, the country’s fishermen have been stranded on shore, unable to reel in the day’s catch. And the ramifications are being felt by families across the country.

  “If we queue up by five in the morning, then we will get fuel by three in the afternoon, on good days,” Arulanandan, a seasoned member of Negombo’s close-knit fishing community, tells AFP.

  “But for some, even that is not possible, because by the time they get to the end of the queue, the kerosene is gone.”

  As they look for somebody to blame, the locals have settled on one key culprit: Beijing, and its ‘debt diplomacy’, which seems to have caught Colombo in its trap.

  One of the reasons behind economic crisis in Sri Lanka is its huge debt to China.

  Sri Lanka asked China to restructure debt repayments.

  China will implement its debt trap diplomacy in Sri Lanka

  Instead of claiming Indian territory, Nepal should learn from the Sri Lankan crisis

  — Anshul Saxena (@AskAnshul) March 31, 2022

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

  Tyler Durden
  Thu, 03/31/2022 – 20:00

• Death Of Denial: Part 1 (With Apologies To Agatha Christie)
  Death Of Denial: Part 1 (With Apologies To Agatha Christie)

  By Russell Clark of Capital Flows and Asset Markets Substack

  One of the reasons I left the money management game was that many of the theories that I had used to manage money stopped working. Some of them were original, some I taken from others, and some I had modified. I knew I need to take time off and have a think. I also knew that I needed to read different books to get my mind thinking differently. As it happens, I have just finished reading Agatha Christies “Death on the Nile” (excellent book), and I particularly enjoyed how he looked at all the clues, organized them, and then slowly but surely eliminate suspects until only the murderer, however unlikely, was left.

  

  For me, recent market action has eliminated the final suspect for what has caused the extremely long lived bull market in US equities. I had speculated that robustness of the US stock market was a feature of extremely loose credit conditions. These loose credit conditions were only possible due to a long drawn out commodity bear market, and hence if we had a spike in commodity prices which led to rising bond yields, then were likely to see a much weaker equity market.

  Commodity prices, and particularly food prices have spiked. Food prices had spiked in 1996 before the Asian Financial Crisis, again in 2007 before the GFC and in 2011 during the Eurocrisis. My working assumption was that another spike would also signal problems. But with the exception of Chinese equities, major equity market returns over last 12 months have been robust. MSCI World is barely 5% from highs. I have used food, but energy price spikes have also led to weaker equity markets historically too.

  

  I have also learnt to be cautious on equities when the Asian Dollar Index is going sideways or falling. Even after the Asian Financial Crisis, Asian currencies strengthened during the dot com bubble. Since a beak in 2010, they have been generally poor, even as U S equities have powered on.

  

  I have also used net international investment position data to inform whether to be bearish on a currency or equity market. This worked well on pointing out danger in the dot-com bubble, and the top in the US dollar in the early 2000s. It also worked well for the Japanese bubble economy, the Asian Financial Crisis and the Eurocrisis. But this model has had me bearish on the US dollar and US equities since 2016, so very wrong indeed (see Spotting Property Bubbles in East Asia in my Archive for more details).

  

  On a much shorter term basis, the S&P 500 has seemingly broken out of its relationship with HYG US (High Yield ETF). A similar chart can be drawn using mortgage rates, which have spiked. I would include – but Substack says I am at the limit already in this post!

  

  I realized that I needed to look at all this clues again, and have a think about why they worked before, but did not work this time. And, by eliminating suspects, and having a long think, I think I have the answer. The murderer of all possible bear markets in the US dollar and US equity is….. (to be continued).

  Tyler Durden
  Thu, 03/31/2022 – 19:40

• Shanghai Officials Conceal COVID Deaths At City Nursing Homes Amid Punishing Lockdown
  Shanghai Officials Conceal COVID Deaths At City Nursing Homes Amid Punishing Lockdown

  As local authorities in Shanghai prepare to start the second phase of the Shanghai lockdown, the western press has seized on reports that the death toll from the omicron-driven outbreak in China’s most populous city (and its financial capital) has been even larger than authorities have let on – the latest indication that the numbers being released by China’s public-health authorities have been sanitized, and that the true scope of the outbreak is even larger than believed.

  An outbreak at a Shanghai home for the elderly has killed a handful of residents in recent days, deaths that haven’t been reflected in authorities’ official numbers, which haven’t reported any deaths in the hundreds of homes for the elderly in the city.

  

  Citing a group of orderlies who had been sent to one of China’s quarantine facilities, WSJ reported that an unknown number of bodies had been removed from the facility, where at least 100 positive cases have been confirmed among its residents.

  Of course, concealing deaths in the city’s nursing homes might strike a chord with Americans, who remember all too well former New York Gov. Andrew Cuomo’s deliberate under-reporting of the number of deaths at nursing homes in the Empire State during the first months of the pandemic.

  In Shanghai, one of the orderlies who spoke with WSJ said they were tasked with dressing the body of one dead patient, an order that made the orderly fear for their safety.

  “I was scared to death. I said, ‘Look, look, those are for dead bodies,'” another orderly said, recalling the sight of half a dozen hearses parked at the hospital gate at night.

  But the orderlies weren’t the only sources who spoke with WSJ (speaking with members of the foreign press is, of course, discouraged by the CCP, and these individuals spoke out at great personal risk). Separately, the son of a patient at the hospital said that his father had died within the past week, a friend of the son told the Journal, adding that others who had visited the hospital reported seeing the bodies of at least a dozen deceased patients.

  More than half a dozen users on several of China’s major social-media platforms have also posted messages alleging unreported deaths at the hospital in recent days.

  Another orderly told WSJ that a surprising number of providers and staffers at the facility had been infected.

  “Orderlies, nurses and doctors, we’re all infected,” she said.

  The facility, Shanghai Donghai, has been around for 20 years, and is run by a state-owned food conglomerate with 1,800 beds and an orthopedics ward that also treats younger patients. It’s the city’s biggest elder-care facility by capacity, and it reported zero COVID infections in 2021.

  But why would local authorities want to hide the number of infections and deaths if they’re ordering lockdowns anyway?

  Well, as Nikkei noted on Thursday, the reputations of prominent local bureaucrats are being threatened, so they’re doing anything they can to mask the severity of the situation to try and salvage their reputations. With the National Party Congress set for later this year, Li Qiang, the Communist Party secretary of Shanghai, is hoping to be elevated to the Politburo Standing Committee, China’s most powerful policy-setting body. He’s seen as one of President Xi’s closest allies, and before the lockdown, he had been expected to move to Beijing and become a vice premier in charge of the economy. Unfortunately for him, the lockdown looks to have disrupted such plans.

  Now, those within the party who oppose President Xi’s power grab (the party’s paramount leader is expected to clinch a third term as leader during the party Congress this fall, making him the first leader since Chairman Mao to break the limit of two five-year terms) are hoping to use the situation in Shanghai to block Li’s promotion, depriving Xi of an important ally in the Politburo.

  Reflecting the outpouring of  public anger stoked by the Shanghai lockdown (as supplies of food and medicine have grown increasingly strained), one local official told ABC News that the city’s leadership failed to adequately prepare.

  Ma Chunlei, a senior Shanghai official, acknowledged shortcomings in the city’s response. Authorities have rushed to bolster food deliveries to the city after panic buying stripped store shelves of necessities.

  “We didn’t prepare sufficiently enough,” Ma said. “We sincerely accept the criticisms from the public and are making efforts to improve it.”

  Meanwhile, city of Shanghai was preparing to reopen the eastern half of the city, and shut its western half, as the staggered 9-day lockdown continues. While Shanghai’s lockdown has slowed factory output (a byproduct of lockdowns across China), authorities have decided to lift a lockdown in Jilin Province (the epicenter of China’s worst outbreak since Wuhan). Starting tomorrow, locals will be able to move about freely, although they will be required to wear masks and, when indoors, stay 1 meter (3 feet) apart. Public gatherings in parks and squares are prohibited.

  Tyler Durden
  Thu, 03/31/2022 – 19:20

• Russian Palladium And Platinum – Too Important To Sanction
  Russian Palladium And Platinum – Too Important To Sanction

  Submitted by Ronan Manly, BullionStar.com

  When on 7 March, the London Bullion Market Association (LBMA) suspended 6 Russian precious metals refiners from the London Good Delivery Lists for Gold and Silver, and in the process blocked from the London market any new gold and silver bars produced by these refiners, one unanswered question was whether the London Platinum and Palladium Market (LPPM) was going to follow suit and also suspend Russian precious metals refiners from its Good Delivery Lists for Palladium and Platinum.

  This was more than a theoretical question because two of the refiners excluded from the gold and silver Good Delivery Lists by the LBMA were JSC Krastsvetmet (located in Krasnoyarsk) and Prioksky Plant of Non-Ferrous Metals, and both Krastsvetmet and Prioksky were also accredited refiners on the LPPM’s Good Delivery List for both Platinum and Palladium .

  For anyone reading BullionStar Blogs, this LBMA – LPPM conundrum was not a surprise since we highlighted it on 28 February, saying that:

  “Note too that the LBMA also administers the London Platinum and Palladium Market (LPPM), and there are two Russian refineries on both the current LPPM Good Delivery List for Platinum and the LPPM Good Delivery List for Palladium, namely “The Gulidov Krasnoyarsk Non-Ferrous Metals Plant” and the “Prioksky Plant of Non-Ferrous Metals” (a.k.a. Krastsvetmet and Prioksky).

  To make matters worse, since the CME Group (operator of the COMEX) more or less clones the LBMA Good Delivery Lists and had the 6 Russian refiners on the COMEX “Approved Brands” lists, this forced the COMEX to follow the LBMA’s lead on 7 March and exclude the same 6 Russian precious metals refiners from these ‘Approved Brands’ lists for gold and silver, while leaving the Krastsvetmet and Prioksky refiners on the COMEX Approved List for Platinum and leaving Krastsvetmet on the COMEX Approved List for Palladium.   

  For how could the LBMA in London, as it said in its press release on 7 March, suspend the 6 Russian refiners “with immediate effect” and “in light of UK/EU/US sanctions”, while its sister organization, the LPPM in London, did nothing about Krastsvetmet and Prioksky?

  And how could the Commodity Exchange (COMEX) also on 7 March “effective immediately“ and “until further notice”, suspend “the approved status for warranting and delivery” of the 6 Russian refiners for their gold and silver brands, while leaving Krastsvetmet and Prioksky on its Platinum/Palladium approved brands lists?  

  The answer is of course about money, and the fact that sanctions are a political weapon which can be ignored in hypocritical closed doors meetings in the City of London and Chicago/New York when it affects the bottom line too much.

  LBMA and LPPM – Same People, Different Hats

  As Reuters’ Peter Hobson pointed out in a 8 March article titled “London market green-lights Russia’s palladium while blocking its gold”:

  “The London Platinum and Palladium Market (LPPM), an industry association, said it would keep the two Russian refiners it accredits on its “good delivery” list of firms whose material is eligible to trade in London.

  “Traders and analysts said removal of the palladium refiners from London trading would have worsened worries over Russian supply that have sent prices to record highs.”

  On 8 March, the LPPM also – with a straight face – added a hypocritical press release to its website, which said:

  LPPM GOOD DELIVERY PLATINUM AND PALLADIUM UPDATE

  Due to the terrible events taking place in Ukraine, the LPPM has reviewed its Good Delivery list and the US, EU and UK sanctions. Following that review it has decided to make no changes to the Good Delivery list.

  We will however continue to monitor and review the situation.”

  In other words, due to, in the words of the LPPM, “terrible events” in Ukraine, the LPPM decided to do nothing, all because Russian palladium and platinum are too important to sanction.

  On the same day, Reuters published another version of its 8 March article  – which is now only available on the NASDQ website and is titled ”Russian refiners still OK to trade, says London Platinum and Palladium Market”, in which Peter Hobson wrote that:

  “Following a meeting of the Management Committee of the LPPM…, there will be no changes to our Good Delivery list,” the LPPM’s Chief Administrative Officer, Jane-Anne Wardley, said.

  So now we know that it was the LPPM Management Committee which made the decision to ‘make no changes’ to the LPPM Good Delivery Lists, despite what they called the ‘terrible events’ in Ukraine.

  

   

  It’s A Big Club & You Ain’t In It!

  And what or who is this LPPM Management Committee?

  From the LPPM website management committee page we see that the LPPM Management Committee comprises individuals representing 9 heavy weight entities which are involved in the global platinum and palladium market, four of which are bank entities. These 9 entities and their representatives are:    

  • Chairman – John Cullen, Johnson Matthey Plc (US/UK refinery)
  • Members – Vincent Domien, HSBC (bank)
  • Thomas Kendall, ICBC Standard Bank (bank)
  • Anton Down, Royal Bank of Canada (bank)
  • Vikas Chamaria, T D Securities (bank)
  • John Metcalf, BASF Metals Limited (trader – note BASF which took over the old Engelhard)
  • Andy Daniel, Heraeus Metals Germany GmbH (German refinery)
  • Joe Stefans, MKS Pamp SA (Swiss refinery)
  • David Jollie, Anglo Platinum Marketing Ltd (part of Anglo American Platinum, miner)

  Note – Vincent Domien, now of HSBC, was a SocGen director of the London Gold Market Fixing Limited (the old London Gold Fixing) until 30 August 2019.

  Seven of these Management Committee members are Full Members of the LPPM, namely HSBC, ICBC Standard, Toronto Dominion (TD), Johnson Matthey, Heraeus, MKS PAMP, and  BASF Metals. The other two, Royal Bank of Canada and Anglo Platinum, are associate members of the LPPM.

  As there are only 14 Full Members of the LPPM, the other 7 full members of the LPPM which are not on the LPPM Management Committee are 4 banks – Goldman Sachs, JP Morgan Chase, UBS, and Standard Chartered Bank, and 3 precious metals refiners – Metalor (Swiss), Valcambi (Swiss) and Tanaka Kikinzoku Kogyo (Japanese).

  In addition, the ‘Market Making’ members of the LPPM (whose trading desks make two-way markets in palladium and platinum) are Goldman Sachs, HSBC, ICBC Standard Bank, JP Morgan Chase, Standard Chartered Bank, Toronto-Dominion Bank, and UBS.

  And there’s more. Each business day in London, a group comprising Goldman Sachs, HSBC, ICBC Standard, Johnson Matthey, BASF Metals, along with StoneX, take part in the daily LBMA platinum and palladium auctions so as to ‘establish’ benchmark prices for the daily LBMA Platinum Price and the LBMA Palladium Price (price data which by the way is intellectually owned by Precious Metals Prices Limited – which is a subsidiary of the LBMA).

  And finally, these LBMA Platinum and Palladium auctions, which are run for the benefit of the LPPM’s ‘market’ (a market which is behind the scenes administered by the LBMA), are run on a daily basis by the London Metal Exchange (LME).

  As George Carlin once said “It’s A BIG Club & You Ain’t In It!”

  Shockingly, the LPPM’s decision to keep the Russian refiners Krastsvetmet and Prioksky on the LPPM Good Delivery Lists for Palladium and Platinum comes despite the fact that the LPPM’s own ‘Responsible Sourcing program” which is overseen by the LPPM Management Committee, has a “Sanctions Policy” which says:

  “SANCTIONS POLICY

  Failure to meet the standards required could have serious implications for LPPM Good Delivery refiners. Sanctions could include suspension subject to resolution or being transferred to the Former List with immediate effect.”

  However, on this occasion, the LPPM Management Committee seems to have thrown its sanctions policy out of the window, hoping that no one would notice.

  

  In Russia, mined palladium is a by-product of nickel mining, with nearly all Russian palladium supply being mined by the mammoth MMC Norilsk Nickel The next biggest palladium producer is the South African-US combine Sibanye-Stillwater.

  According to the latest Heraeus “Palladium Standard” report from September 2021 (produced by SFA Oxford), Russian palladium production in 2021 was forecast to be 2350 koz out of a global total of 6,770 koz (or 35% of global palladium mine supply).

  However, in 2021, Russian palladium supply was less than normal due to mine flooding and a concentrator accident, which reduced supply by about 365 koz. So in a normal year, Russian palladium supply is about 2800 koz, or about 40% of global annual supply of 7000 koz. See the Heraeus ‘Palladium Standard’ report here. 

  On the demand side, palladium is critical for the global automobile industry (along with platinum), where both metals are used in auto-catalytic converters that reduce exhaust emissions – as both palladium and platinum are excellent catalysts and are somewhat substitutable. Both palladium and platinum are also used widely in industry, e,g. in computer chips and electronic devices.

  Furthermore, both metals have a large demand driver in the form of jewelry and importantly, platinum and palladium are both investment precious metals, with both metals are held in physically backed Exchange Traded Funds (ETFs), and both metals are fabricated into investment platinum and investment palladium bars and coins.

  Conclusion

  So now you can see how important Russian palladium is to the LPPM trade group, and to the banks, traders, and refiners of the LPPM.

  If Russian palladium stopped flowing to market, there would be serious problems, especially for the global auto and computer chip industries. And the same, to a lesser extent, goes for Russian platinum supplies.

  And since the LPPM could hardly sanction Russian platinum without sanctioning palladium as this would draw even more attention to the double standards and political nature of the sanctions, hence the LPPM put its head in the sand and sanctioned neither, hoping that it would all blow over.

  Which is also why the US/UK/EU sanctions have avoided sanctioning the ‘final boss’, the giant Norilsk Nickel. Because Norilsk Nickel, the world’s largest palladium producer and a major producer of platinum is, as the Wall Street Journal put it recently, ‘Too Big to Sanction’.

  So now you can see why the LPPM Management Committee threw its sanctions book out the window when confronted with having to sanction the Russian palladium and platinum refiners Krastsvetmet and Prioksky, despite what the LPPM called the ‘terrible events” in Ukraine. Because, in the world of the bullion bank controlled palladium and platinum markets in the City of London and on COMEX, money talks while everything else walks.

  And the bullion banks couldn’t have the palladium and platinum prices spiking in London in the same way as the nickel price debacles. What if it spilled over into silver? Or gold?

  And which is why on 24 March, when UK prime minister Boris Johnson, ahead of the NATO-G7-EU meetings in Brussels, talked about “tightening the economic vice” on Vladimir Putin, and “looking at what we can do to stop Putin using his gold reserves”, while not surprisingly failing to mention the LPPM and the double standards of the City of London when it comes to palladium and platinum.

  Because “tightening the economic vice” on Russian palladium and platinum, would seize up the global auto industry and could find Boris having to ride his bike to work each day instead of being chauffeured in a 2022 emissions-friendly Bentley.

  This article was originally published on the BullionStar website under the same title “Russian Palladium and Platinum – Too Important to Sanction”.

  Tyler Durden
  Thu, 03/31/2022 – 19:00

• US Army Proposes To Cut Troop Levels Under 1 Million For The First Time In 20 Years
  US Army Proposes To Cut Troop Levels Under 1 Million For The First Time In 20 Years

  What better time for the U.S. Army to considering cutting its numbers than right now, with tensions between the U.S. and both Russia and China likely at multi-decade highs? But that’s exactly what a new budget proposal suggests, according to a new report by Bloomberg. 

  The Army would fall under 1 million soldiers for the first time in 20 years under the new proposal, with active duty Army falling from 485,000 soldiers to 473,000. That number, combined with National Guard and Reserve forces, puts the U.S. total at 998,500 soldiers. 

  National Guard and Reserve numbers are expected to stay at 336,000 and 189,500 for fiscal 2023, the report says. Gabe Camarillo, the undersecretary of the Army, commented: “We did not want, as we looked ahead at recruiting projections, to take any decrease in our quality.”

  

  He told Bloomberg that the move was “pro-active” and said that the decision to make the cuts was catalyzed by “a focus on recruiting high-quality soldiers without lowering standards” and not to free up cash in the budget. 

  He also said he still expects the Army’s numbers to rise within the next five years. 

  Then, he attributed some of the “pro-active” decision to a “tight labor market”, stating: “All employers, to include the Army, are facing significant challenges just as a result of a tight labor market that we see across our economy. That creates a lot of the conditions that we are responding to.”

  The Army is asking for $178 billion in funding for 2023, up $2.8 billion from 2022. The additional funds are being used for “real growth” and “inflation”, the Army’s Director of Budget, Maj. Gen. Mark Bennett, said. 

  “We are able to maintain our momentum. We did not need to look at our modernization accounts as sources of major reductions of any kind,” Camarillo concluded. 

  Tyler Durden
  Thu, 03/31/2022 – 18:40

• Illinois' Pritzker Ranks 4th-Worst Governor For Economic Freedom
  Illinois’ Pritzker Ranks 4th-Worst Governor For Economic Freedom

  Authored by Dylan Sharkey bv IllinoisPolicy.org,

  In a new report on America’s 50 governors, Gov. J.B Pritzker was ranked 47th because of the harm he’s done to the state economy. Voters saved him from a lower rank by rejecting his ‘fair tax.’

  

  Gov. J.B Pritzker finds himself near the bottom of a new report on how America’s governors are guiding their state economies.

  The American Legislative Exchange Council’s rankings are in the 2021 report on Economic Freedom: Grading America’s 50 Governors. The report ranked Pritzker overall at No. 47 – fourth from the bottom – by using a combination of Pritzker’s policies and the state’s economic performance under his leadership to form a list of 12 criteria.

  One measure was Illinois’ 2021 economic performance: 48th in the nation, the third worst. Economic performance was mainly held back by Illinoisans moving out of the state. Illinois lost population during 2021 in 81 of 102 counties.

  Voters prevented Pritzker from ranking even lower by defeating his state income tax hike, said Jonathan Williams, chief economist for ALEC.

  “Voters in Illinois saved him from becoming 50th if they would have passed the progressive income tax that was on the ballot recently that I know he advocated very strongly in favor of,” Williams said.

  Pritzker invested $58 million of his own dollars in the campaign to pass the “fair tax,” which would have allowed Illinois to start taxing retirement income and allowed state lawmakers to gradually increase taxes on different income brackets. Voters soundly rejected the tax in 2020, 55% to 45%.

  Williams also pointed to pension debt as a major issue for Illinois.

  “Whether it’s the massive amount of debt with Illinois’ public pension liabilities, whether we look at the income taxes on corporate income, personal income, down the line of all the things that we measure,” Williams said.

  ALEC’s rankings feature a new metric for 2021: how states spent their federal pandemic relief funds. Illinois still has an outstanding balance of unemployment debt that could be paid down using federal relief. A proposal to use $2.7 billion in federal funds falls short of the $4.5 billion debt and would trigger job-killing payroll taxesmandated by federal law to refill the unemployment trust fund.

  State leaders have also given Illinois’ economy another potential hit by pushing Amendment 1. If voters pass the constitutional change Nov. 8, public union bosses will be empowered to demand and strike over a virtually limitless array of issues guaranteed to drive up taxation in a state already suffering under the nation’s highest tax burden.

  Tyler Durden
  Thu, 03/31/2022 – 18:20

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