- A 'Cup Of Joe' Is About To Get A Whole Lot More Expensive
A ‘Cup Of Joe’ Is About To Get A Whole Lot More Expensive
Robusta coffee prices continued to soar to record-highs this week as concerns deepen over the outlook from Brazil, the world’s top producer.
“Cheaper robusta-coffee beans, used widely in instant-coffee beverages such as Nestle SA’s Nescafe brands, are sold out in Brazil. After drought and frost ruined crops of the higher-end arabica variety favored by cafes like Starbucks Corp., local roasters are racing for robusta replacements and driving prices to new records each day,” Bloomberg wrote.
Spot prices for Brazil robusta Espirito Santo have nearly doubled this year, up 356 reais per 60-kg bag, or about 87% to 769 reais.
Much of the price appreciation came after a freak cold snap decimated Brazil’s coffee-growing regions in July/August. The unexpected weather was compounded by massive droughts, destroyed arabica crops, hence why robusta is being bought up in droves.
“There seems to be a consensus that 20% of all trees were affected,” Sholom Sanik, an analyst at Friedberg Mercantile Group Ltd., said in a note. “Although more than half of the crop was harvested before the first frost hit, much of the fruit that remained unharvested will be lost.”
In the past, US importers would quickly source from Vietnam, the second-largest producer, if there were weather-related issues in Brazil. But this time around, COVID restrictions, shortage of shipping containers, exorbitant freight costs, and port congestion have made it difficult and expensive to source from the Southeast Asian country.
According to a recent Barclays note, US importers like Starbucks are hedged out for more than a year to deal with price fluctuations. Though JM. Smucker, which owns the Folgers and Dunkin’ coffee brands, recently warned that supply chain disruptions are rising costs that will impact its business.
“As we came into the fiscal year, we were anticipating mid-single-digit cost inflation as a percent of our total cost of goods sold,” J.M. Smucker’s Chief Financial Officer Tucker Marshall said. “Now we see high single-digit cost inflation.”
Earlier this year, we warned that cheap coffee is no more, and a global deficit is coming. Even cheaper beans are hyperinflating away.
Tyler Durden
Tue, 09/21/2021 – 02:45 - Russia Aware Of Kiev's Military Preparations, Hopes It Won't Turn To Hostilities
Russia Aware Of Kiev’s Military Preparations, Hopes It Won’t Turn To Hostilities
Russia knows about Kiev’s military preparations, hopes that reason will prevail and that it will not come to hostilities, Russian Deputy Foreign Minister Andrei Rudenko told reporters.
The conference of the Valdai Club “Russia and Uzbekistan facing the challenges of development and security at a new historical stage of interaction” is being held in Tashkent on September 20th, organized in partnership with the Institute for Strategic and Interregional Studies under the President of Uzbekistan.
“We know about these military preparations (of Kiev), we know about the assistance that Kiev receives from the United States and other countries,” Rudenko said.
According to him, “it is difficult to predict something with the current leadership in Kiev, nothing can be ruled out.”
“But all these things are taken into account in our military planning. We hope that after all, reason will prevail in Kiev and that the military scenario, including the Donbass scenario, will not reach,” the Deputy Foreign Minister stressed.
Meanwhile, Kiev should not count on Washington’s help in the event of a war with Russia, former US Ambassador to Kiev John Herbst said.
He noted that the White House can provide Ukraine with equipment, but not with troops.
“If the situation changes radically, maybe, but today I don’t see it,” the ex-diplomat said.
However, he admitted the likelihood of Russia’s disconnection from the SWIFT international payment system.
Speaking about Ukraine’s membership in NATO, Herbst noted that he does not see it among the members of the alliance neither in five nor ten years.
However, in his opinion, this is possible if “something radically changes.”
Russia has repeatedly stressed that it has no aggressive intentions towards any countries. At the same time, Moscow is observing unprecedented NATO activity at its borders. The North Atlantic Alliance regularly conducts exercises and simulates battles with the Russian army.
Press Secretary of the Russian President Dmitry Peskov noted that Moscow does not pose a threat to anyone, however, it will not disregard actions potentially dangerous to its interests.
Separately, there are reports that the US may deliver an Iron Dome defense system to Ukraine.
The Iron Dome missile defense system, which the United States can transfer to Ukraine, will increase the combat capability of the Ukrainian army, said Oleksiy Arestovich, advisor to the head of the Ukrainian presidential office, spokesman for the Kiev delegation to the contact group on Donbass.
Earlier, Politico newspaper wrote that several US congressmen included in the defense bill for 2022 an amendment that provides for the sale or transfer of new air and missile defense systems to Ukraine, including the Iron Dome batteries, which are currently used by the US army.
Arestovich expressed the opinion that obtaining such systems would be important for Ukraine.
“The main thing here will be if it is reported that Ukraine receives weapons of the most modern models, an increase in the combat ability of the armed forces of Ukraine as a whole, and will be able to cover either two key cities, or two defense facilities, or two facilities, or maybe more, of critical infrastructure,” he said.
According to Politico, the United States does not have many air and missile defense batteries that could be sent to other countries. An employee of the congress noted that the two batteries of the “Iron Dome” purchased from Israel are the main candidates for being transferred to Ukraine, the newspaper writes.
Tyler Durden
Tue, 09/21/2021 – 02:00 - Victor Davis Hanson: The Afghanistization Of America
Victor Davis Hanson: The Afghanistization Of America
Authored by Victor Davis Hanson via AmGreatness.com,
The United States should be at its pinnacle of strength. It still produces more goods and services than any other nation—China included, which has a population over four times as large. Its fuel and food industries are globally preeminent, as are its graduate science, computer, engineering, medical, and technology university programs. Its constitution is the oldest of current free nations. And the U.S. military is by far the best funded in the world. And yet something has gone terribly wrong within America, from the southern border to Afghanistan.
The inexplicable in Afghanistan—surrendering Bagram Air Base in the middle of the night, abandoning tens of billions of dollars of military equipment to the Taliban, and forsaking both trapped Americans and loyalist Afghans—has now become the new Biden model of inattention and incompetence.
Or to put it another way, when we seek to implant our culture abroad, do we instead come to emulate what we are trying to change?
COVID Chaos
Take COVID-19. Joe Biden in 2020 (along with Kamala Harris) trashed Trump’s impending Operation Warp Speed vaccinations. Then, after inauguration, Biden falsely claimed no one had been vaccinated until his ascension (in fact, 1million a day were being vaccinated before he assumed office). Then again, Biden claimed ad nauseam that he didn’t believe in mandates to force the new and largely experimental vaccinations on the public. Then, once more, he promised that they were so effective and so many Americans had received vaccines that by July 4 the country would return to a virtual pre-COVID normality.
Then came the delta variant and his self-created disaster in Afghanistan.
To divert his attention away from the Afghan morass, Biden weirdly focused on an equally confused new presidential COVID-19 mandate, seeking to subject federal employees, soldiers, and employees of larger firms to mandatory vaccinations—right as the contagious delta variant seemed to be slowly tapering off, given the millions who have either been vaxxed, have developed natural immunity, or both.
Consider other paradoxes. American citizens must be vaccinated, but not the forecasted 2 million noncitizens expected to cross the southern border illegally into the United States over the current fiscal year. Soldiers who bravely helped more than 100,000 Afghan refugees escape must be vaccinated, but not the unvetted foreign nationals from a premodern country?
Scientists now are convinced naturally acquired COVID-19 immunity from a previous infection likely provides longer and better protection than does any of the current vaccinations.
Yet those who suffered COVID-19, and now have antibodies and other natural defenses, must likewise be vaccinated. That anomaly raises the obvious logical absurdities: will those with vaccinations—in reciprocal fashion—be forced to be exposed to the virus to obtain additional and superior natural immunity, given the Biden logic of the need for both acquired and vaccinated immunity?
Tribal Lands
We have Afghanistanized the border as well, turning the United States into a pre-state whose badlands borders are absolutely porous and fluid. There is no audit of newcomers, no vaccinations required, no COVID-19 tests—none of the requirements that millions of citizens must meet either entering the United States or working at their jobs. Our Bagram abandonment is matched by abruptly abandoning the border wall in mid-course.
Yet where the barrier exists, there is some order; where Joe Biden abandoned the wall, there is a veritable stampede of illegal migration.
October 7, 2019. Mark Wilson/Getty Images
Coups, Juntas and Such
Third-World countries suffer military coups when unelected top brass and caudillos often insidiously take control of the country’s governance in slow-motion fashion. The latest Bob Woodward “I heard,” “they say,” and “sources reveal” mythography now claims that General Mark Milley, chairman of the Joint Chiefs, discussed separating an elected commander-in-chief from control of the military. Woodward and co-author Robert Costa also assert that Milley promised his Chinese Communist military counterpart that he would tip off the People’s Liberation Army of any planned U.S. aggressive action—an odd paranoia when Donald Trump, of the last five presidents, has proved the most reluctant to send U.S. troops into harm’s way.
If that bizarre assertion is true, Milley himself might have essentially risked starting a war by eroding U.S. deterrence in apprising an enemy of perceived internal instability inside the executive branch, and the lack of a unified command. (So, Woodward wrote: “‘General Li, I want to assure you that the American government is stable, and everything is going to be okay,’ Milley said. ‘We are not going to attack or conduct any kinetic operations against you.’ Milley then added, ‘If we’re going to attack, I’m going to call you ahead of time. It’s not going to be a surprise.’”)
More germanely, when Milley called in senior officers and laid down his own operational directives concerning nuclear weapons, he was clearly violating the law as established and strengthened in 1947, 1953, and 1986 that clearly states the Joint Chiefs are advisors to the president and are not in the chain of command and are to be bypassed, at least operationally, by the president.
The commander in chief sets policy. And if it requires the use of force, he directs the secretary of defense to relay presidential orders to the relevant theater commanders. Milley had no authority to discuss changing nuclear procedures, much less to convey a smear to an enemy that his commander in chief was non compos mentis.
Milley has been reduced to a caricature of a caricature right out of “Dr. Strangelove”—and is himself a danger to national security. After Milley’s summer 2020 virtue-signaling “apology” for alleged presidential photo-op misbehavior (found to be completely false by the interior department’s inspector general); after leaked news reports that Milley considered resignation (promises, promises) to signal his anger at Trump in summer 2020; after his dismissal of the 120 days of rioting, 28 deaths, 14,000 arrests, and $2 billion in damage as mere “penny packet protests”; after his “white rage” blathering before Congress; after the collapse of the U.S. military command in Kabul; and after his premature and hasty assessment of a U.S. drone strike that killed 10 innocent civilians as “righteous,” Woodward’s sensationalism may not sound as impossible as his usual fare.
Milley should either deny the Woodward charges and demand a real apology or resign immediately. He has violated the law governing the chain of command, misused his office of chairman of the Joint Chiefs, politicized the military, proved inept in his military judgment and advice, and may well have committed a felony in revealing to a hostile military leader that the United States was, in his opinion, in a crisis mode.
Yet, Milley did not act in isolation. Where did this low-bar Pentagon coup talk originate? And who are those responsible for creating a culture in which unelected current and retired military officers, sworn to uphold the constitutional order and the law of civilian control of the military, believe that they can arbitrarily declare an elected president either incompetent or criminal—and thus subject to their own renegade sort of freelancing justice?
As a footnote, remember that after little more than a week of the Trump presidency, Rosa Brooks, an Obama-era Pentagon appointee, published in Foreign Policy various ways to remove the newly inaugurated president. Among those mentioned was a military coup, in which top officers were to collude to obstruct a presidential order, on the basis of their own perceptions of a lack of presidential rectitude or competence.
We note additionally that over a dozen high-ranking retired generals and admirals have serially violated the uniform code of military justice in demonizing publicly their commander in chief with the worst sort of smears and slanders. And they have done so with complete exemption and in mockery of the very code they have sworn to abide.
Two retired army officers, colonels John Nagl and Paul Yingling, on the eve of the 2020 election, urged Milley to order U.S. army forces to remove Trump from office if in their opinion he obstructed the results of the election—superseding in effect a president’s elected powers as well as those constitutional checks and balances of the legislative and judicial branches upon him.
We know that these were all partisan and not principled concerns about an alleged non compos mentis president, because none of these same outspoken “Seven Days in May” generals have similarly violated the military code by negatively commenting publicly on the current dangerous cognitive decline of Joe Biden and the real national security dangers of his impairment, as evidenced by the disastrous skedaddle from Afghanistan and often inability to speak coherently or remember key names and places.
In short, is our new freelancing and partisan military also in the process of becoming Afghanized—too many of its leadership electively appealing to pseudo-higher principles to contextualize violating the Constitution of the United States and, sadly, too many trying to reflect the general woke landscape of the corporate board to which so many have retired? Like tribal warlords, our top brass simply do as they please, and then message to us “so what are you going to do about it?”
Achin, Afghanistan, 2011. John Moore/Getty Images
The Constitution as Construct
How paradoxical that the United States has sent teams of constitutional specialists to Iraq and Afghanistan to help tribal societies to draft legal, ordered, and sustainable Western consensual government charters that are not subject to the whims of particular tribes and parties. Yet America itself is descending in the exact opposite direction.
Suddenly in 2021 America, if ancient consensual rules, customs, and constitutional mandates do not facilitate and advance the progressive project, then by all means they must end—by a mere one vote in the Senate. It is as if the centuries of our history, the Constitution, and the logic of the founders were analogous to a shouting match among a squabbling Taliban tribal council of elders.
Junk the 233-year-old Electoral College and the constitutional directive to the states to assume primary responsibilities in establishing voting procedures in national elections. End the 180-year-old Senate filibuster. Do away with the now bothersome 150-year nine-justice Supreme Court. And scrap the 60-year-old tradition of a 50-state union.
Impeachment was intended by the founders as a rare reset of the executive branch in extremis. Now it is to be a pro formaattack on the president in his first term by the opposite party as soon as it gains control of the House—without a special counsel, without witnesses and cross-examinations, without any specific high crimes and misdemeanors or bribery and treason charges. And why not from now on impeach a president twice within a year—or try him in the Senate when he is out of office as a private citizen?
When private citizen Joe Biden is retired from the presidency, will his political enemies dig up his sketchy IRS records alleging that he never paid income taxes on the “big guy’s” “10 percent” of the income from the Hunter Biden money machine?
American Tribes
We may think virtue-signaling pride flags, gender studies, and George Floyd murals in Kabul remind the world of our postmodern sophistication. Yet, in truth, we are becoming far more like Afghanistan in the current tribalization of America—where tribal, racial, and ethnic loyalties are now essential to an American’s primary identity and loyalty—than we were ever able to make Afghanistan like us.
When we read leftist heartthrob Ibram X. Kendi’s endorsement of overt racial discrimination or academic and media obsessions with a supposed near-satanic “whiteness,” or the current fixations on skin color and first loyalties to those who share superficial racial affinities, then we are not much different from the Afghan tribalists. We in America apparently have decided the warring badlands of the Pashtuns, Tajiks, Hazaras, and Uzbeks have their advantages over a racially blind, consensual republic. They are the model to us, not us of the now-discredited melting pot to them.
How sad in our blinkered arrogance that we go across the globe to the tribal Third World to teach the impoverished a supposedly preferrable culture and politics, while at home we are doing our best to become a Third-World country of incompetency, constitutional erosion, a fractious and politicized military elite, and racially and ethnically obsessed warring tribes.
Tyler Durden
Mon, 09/20/2021 – 23:40 - North Korea Says AUKUS Submarine Deal Will Trigger "Dangerous" Nuclear Arms Race
North Korea Says AUKUS Submarine Deal Will Trigger “Dangerous” Nuclear Arms Race
North Korea has weighed in on the major tussle among Western allies which has seen France become isolated in the Indo-Pacific as it lashes out against the “duplicity” of partner nations Australia and the US. The north’s foreign ministry said in statements carried by the official KCNA news agency that Washington’s intentions to transfer nuclear-powered submarines to Australia sets a “dangerous” precedent for the region which threatens to set off a nuclear arms race.
“The US has recently struck the trilateral security partnership with Britain and Australia, and decided to transfer the technology of building a nuclear-powered submarine to Australia,” the statement began.
Image source: AFP “These are extremely undesirable and dangerous acts which will upset the strategic balance in the Asia-Pacific region and trigger off a chain of nuclear arms race,” Pyongyang added.
The AUKUS pact announced last week to the shock and consternation of France and the EU, given Canberra immediately canceled a deal to receive French-made conventional submarines, has also been met with condemnation in Beijing, which also warned of an arms race.
The North Korea statement further called out comments by White House Press Secretary Jen Psaki, who previously claimed that the AUKUS is not aimed at China or any other regional rival of the US. She said last Thursday when news of the agreement broke to the world that it’s “is not about any one country”.
Pyongyang lashed out at this in the Monday statement, saying according to Reuters:
Her comment “amounts to a stand that any country can spread nuclear technology if it is in its interests, and this shows that the U.S. is the chief culprit toppling the international nuclear non-proliferation system,” the ministry said.
“We are closely looking into the background of the U.S. decision and will certainly take a corresponding counter-action in case it has even a little adverse impact on the security of our country.”
Pyongyang also condemned Washington’s “double-dealing attitude” – accusing the US of ultimately fueling nuclear arms proliferation in the region across the globe.
Just last week North Korea resumed cruise missile test after relative quiet in terms of major arms testing over the last six months. Likely the announced transfer of nuclear sub technology to Canberra will result in more such provocative ballistic missile tests out of the north.
Tyler Durden
Mon, 09/20/2021 – 23:20 - Science Shaky On School Mask Mandates While Harms Ignored
Science Shaky On School Mask Mandates While Harms Ignored
Authored by Nathan Worcester via The Epoch Times,
Should children be required to wear masks at school?
A review of the costs and benefits, including some of the latest science, does not add much to the case for mandating school masks.
First, some basics… The risk of death from COVID-19 among schoolchildren is very, very low.
How Low?
A Nature study estimating the COVID-19 infection fatality rate (IFR), or proportion of those infected who die, found IFRs of just 0.001 percent in children aged 5–9, and IFRs well below 0.01 percent in all those aged 19 and under.
That’s less than one in 10,000 among teenagers and less than one in 100,000 in 5- to 9-year-old children.
The American Academy of Pediatrics (AAP), which has advocated masking children aged 2 and up, found that only 460 children had died of COVID-19 between late May 2020 and Sept. 9, 2021 across 45 states, New York City, Guam, and Puerto Rico—0.08 percent of the total number of deaths they counted.
Looking again across multiple states, the AAP found that COVID-19 cases among children have surged in recent weeks, growing by 10 percent from 4,797,683 to 5,292,837 between Aug. 26 and Sept. 9—a trend that could be related to the start of in-person schooling.
Yet the AAP’s own data shows children are just 0.9 percent of COVID-19 hospitalizations, a rate on par with previous weeks, and down from reported hospitalization rates of 3.8 percent in mid-2020.
With all that in mind, what are the benefits of masking children?
According to the AAP, those benefits include the “protection of unvaccinated students from COVID-19,” as well as “reduc[ed] transmission.”
Yet as described above, COVID-19’s risks for schoolchildren have been, and remain, extremely low.
What’s more, vaccines have been made widely available or are even mandated among teachers, who belong to age groups more vulnerable to COVID-19 than children—and despite efforts to restrict access to ivermectin, individuals may still be able to obtain the drug, identified as an “essential medicine” by the World Health Organization, as well as other potential therapeutics.
Like the AAP, the Centers for Disease Control and Prevention (CDC) now recommends universal masking in schools, a change from its previous stance that vaccinated students and teachers do not have to wear masks. (Neither the AAP nor the CDC mention natural immunity in their school masking guidance).
They, too, point to transmission as a justification for universal indoor masking, citing the highly transmissible Delta variant.
Concerns about transmission come down to two questions:
-
First, how much is widespread COVID-19 transmission driven by children in school, and
-
Second, how well do masks and mask mandates limit transmission?
While some scientists have provided evidence that children might play a significant role in community spread, researchers generally agree that children, and especially young children, are not the primary drivers of it.
An observational study in the Journal of the American Medical Association suggested that children up to the age of 9 attending school were not major contributors to COVID-19 spread, though the study’s findings on teenagers were more equivocal.
A 2020 meta-analysis, or analysis of multiple studies, on COVID-19 susceptibility among young children and adolescents concluded susceptibility was lower in those groups than in adults and offered “weak evidence” that they play a lesser role in population-level transmission.
More recently, a 2021 meta-analysis on COVID-19 transmission clusters concluded that children infected in school “are unlikely to spread SARS-CoV-2 to their cohabiting family members.”
While the Delta variant appears to be more contagious, driving a rise in CCP (Chinese Communist Party) virus-related cases and deaths, many have argued that it is less deadly than the original Alpha strain.
This would be in line with the hypothesized trade-off between transmission and virulence, which suggests that pathogens evolve in the direction of spreading farther while also becoming less damaging to their hosts.
The effectiveness of masks, and mask mandates, in schools is also a matter of dispute, with mask mandates for students apparently lacking clear support.
In his July 30 executive order against mask mandates in Florida schools, Gov. Ron DeSantis argued that “forcing students to wear masks lacks a well-grounded scientific justification,” citing a 2021 preprint that found no correlation between mask mandates and COVID-19 case rates among students and faculty across schools in Florida, New York, and Massachusetts.
Yet the authors of that study stressed that their research was limited to just three states, meaning their conclusions may not apply elsewhere. They also emphasized that the masking variation they identified in Florida schools could make their findings “even less generalizable to all U.S. students.”
A 2020 report by the CDC itself on elementary schools in Georgia noted that “COVID-19 incidence was 37% lower in schools that required teachers and staff members to use masks.”
Crucially, however, the CDC found that mask mandates for students did not have a statistically significant impact on COVID-19 incidence.
Here too, the study’s authors noted some limitations to their work; notably, their findings were based on self-reporting, and investigators did not directly examine whether people were using masks.
What About Masks More Generally?
An early randomized controlled trial of 4,862 adult participants from Denmark did not find that surgical masks reduced COVID-19 infection, although the authors noted that some results were “inconclusive.”
On Sept. 1, however, researchers released a working paper detailing a cluster-randomized trial of mask promotion across communities in rural Bangladesh, which involved 600 villages and more than 300,000 individuals, that appeared to support masking.
After surveying “all reachable participants” and testing blood from symptomatic individuals, the researchers linked mask promotion to a slight reduction in symptomatic COVID-19 infections.
Yet similar to the Danish study, the Bangladesh study was explicitly intended to examine mask-wearing among those “who appear to be 18 years or older”—not the young children or adolescents to whom school mask mandates apply.
What, then, are the potential costs of requiring children to be masked at school?
An obvious one is cleanliness.
“We were almost all taught as children that disposable tissues are good because handkerchiefs are unhygienic and disgusting,” wrote Michael Brendan Dougherty in an article for National Review Online. “But for young children, toddlers in particular, the cotton-jersey masks that they most often wear in schools are just that, a handkerchief pulled over their mouth and nose constantly. They often are disgusting at the end of a day of use.”
Unsurprisingly, children’s masks may be a breeding ground for bacteria and other microorganisms, some of them potentially dangerous.
One recent analysis from the University of Florida revealed that most masks worn by children in 90-degree-Fahrenheit heat were contaminated with parasites, fungi, and bacteria, including a virus known to cause a fatal systemic disease in deer and cattle.
Masks, particularly disposable masks, are also harmful to the environment. With billions of single-use masks being thrown out every day, researchers believe that discarded masks and respirators are adding to plastic pollution—a problem to which school mask mandates can only contribute.
Masking and other interventions may also have knock-on effects related to the frequency of other respiratory diseases.
The recent, out-of-season spike in pediatric hospitalizations for respiratory syncytial virus (RSV) has been tied to the COVID-19 response, with infants and young children who would have otherwise been exposed to RSV at an earlier age now falling ill from it.
Masking may also have significant psychological and developmental effects on children.
A 2004 article on masking in a pediatric hospital, authored long before the COVID-19 pandemic shifted the scientific debate on masking, expanded on some of the psychological hazards for children.
“Imagine the impact of a hospital filled with “faceless” people on a young child. Who is smiling? Who is frowning? How do I recognize my doctor? How does my nurse recognize me? Why is everyone so scared of me and my germs?…”
“When wearing masks, goggles and/or face shields, non-verbal communication is impaired. Subtle facial cues are absent or can be misread and lip-reading is impossible.”
More recently, in a roundtable with Governor DeSantis and other scientists, Stanford professor Dr. Jay Battacharya argued that masking children is both medically unnecessary and “developmentally inappropriate.”
“I mean, how do you teach a child to read with a face mask on Zoom? I think children develop by watching other people,” Battacharya said.
The controversy over the developmental impact of masking children has even impacted the AAP.
In August, Internet users unearthed an AAP webpage emphasizing the developmental importance of face time between parents and babies that had apparently been removed from the organization’s website, along with other AAP webpages describing how babies and young children learn through looking at faces.
The AAP responded by explaining that the web pages disappeared as a result of website migration, telling Just the News that “some content areas, including Early Brain and Child Development, are still being organized before they go live on the new platform.”
Finally, the practice of mandating masks could be argued to compromise individual and parental autonomy.
Advocacy groups such as Utah Parents United have spoken out against school mask mandates, saying that they undermine parental rights and are unnecessary for such a low-risk group, particularly given the availability of vaccines to adult teachers and staff.
With all that we know so far, how can we answer these parents?
If the benefits of mask mandates do not outweigh the costs, it’s hard to find fault with opposition, or at least skepticism—especially for young schoolchildren, who are at the lowest risk of serious illness and death, and who may be most vulnerable to the uncertain and understudied costs of universal masking and other stringent measures.
Tyler Durden
Mon, 09/20/2021 – 23:00 -
- Didi Executive Plans To Step Down As Chinese Tech Giants Rattled By Crackdown
Didi Executive Plans To Step Down As Chinese Tech Giants Rattled By Crackdown
Once again on Monday, markets re-focused on Beijing as the CCP scrambled to deal with the teetering developer Evergrande. But elsewhere, Didi co-founder and President Jean Liu has told some of her closest associates that she intends to step down, two sources said, potentially making her the latest casualty of President Xi Jinping’s “community crackdown”.
Ironically, Liu is a former Goldman Sachs banker who rose to become an MD at the Vampire Squid before jumping to Didi in 2014. A few weeks ago, sources told Reuters, Liu told a couple of executives close to her in recent weeks – including those who had followed her to Didi from the Wall Street bank – that she planned to leave and encouraged them to start looking for new jobs as well, said one of the sources who was briefed on the matter, per Reuters.
Some of those executives have since approached industry contacts for job leads, the source said.
Reuters was unable to learn further details, including whether Liu had submitted a formal resignation letter or set a date to leave.
Chinese authorities have launched a broad crackdown on private companies, including those that handle sensitive private data, while breaking down monopolistic practices.
Billionaires minted by high-profile listings, such as Didi’s $4.4 billion debut, have fallen out of favor as President Xi Jinping warns against the country’s vast income inequality.
Didi ran afoul of the powerful Cyberspace Administration of China (CAC) when it pressed ahead with its debut on June 30, despite the regulator urging the company to put it on hold while it conducted a cybersecurity review of its data practices, according to people with knowledge of the matter. Soon after the listing, the CAC announced an investigation into Didi and subsequently ordered the removal of its apps for download in China. Officials from at least six other departments also got involved.
Tyler Durden
Mon, 09/20/2021 – 22:40 - Supreme Court To Hear Oral Arguments Challenging Roe V. Wade In December
Supreme Court To Hear Oral Arguments Challenging Roe V. Wade In December
Authored by Zachary Stieber via The Epoch Times,
Arguments in a case challenging the validity of the 1973 Supreme Court ruling that access to abortion is a constitutional right are scheduled to take place in the nation’s highest court near the end of 2021.
The Supreme Court will hear arguments in the case of Dobbs v. Jackson Women’s Health Organization on Dec. 1, the court announced on Sept. 20.
Justices had agreed in May to hear the case, but it hadn’t been known before when the case would be heard.
Mississippi enacted a law in 2018 barring abortions after 15 weeks outside of medical emergencies or the discovery of a severe abnormality in the unborn baby.
U.S. District Judge Carlton Reeves, an Obama appointee, struck down the law, finding “it is a facially unconstitutional ban on abortions prior to viability.”
A trio of 5th Circuit Court of Appeals judges later upheld the ruling.
“In an unbroken line dating to Roe v. Wade, the Supreme Court’s abortion cases have established (and affirmed, and re-affirmed) a woman’s right to choose an abortion before viability. States may regulate abortion procedures prior to viability so long as they do not impose an undue burden on the woman’s right, but they may not ban abortions,” U.S. Circuit Court Judge Patrick Higginbotham, a Reagan appointee, wrote in the decision.
That prompted a request in early 2020 for the Supreme Court to analyze the lower court decisions.
In a brief to the court over the summer, Mississippi Attorney General Lynn Fitch, a Republican, said the court should overturn Roe v. Wade.
“The conclusion that abortion is a constitutional right has no basis in text, structure, history, or tradition,” Fitch wrote.
Hillary Schneller, senior staff attorney for the Center for Reproductive Rights, which is representing the Jackson Women’s Health Organization, the last abortion clinic in Mississippi, has said the legislation in question “defies decades of Supreme Court precedent.”
Roe v. Wade made abortion lawful throughout the United States.
The Supreme Court, in ruling on the 1992 case Parenthood v. Casey, said states can’t impose significant restrictions on abortion before a fetus becomes viable for life outside of the womb, though the justices didn’t specify when viability occurs.
Pro-life groups have asserted that science has advanced since the decisions of decades ago, with findings including fetuses, or unborn babies, may be able to feel pain as early as 13 weeks into a pregnancy.
The groups hope the makeup of the court could signal a favorable decision. The nine-justice court includes just three Democrat-appointed justices, with six appointed by Republican presidents. That includes three justices appointed by then-President Donald Trump, an avowed opponent of abortion.
Tyler Durden
Mon, 09/20/2021 – 22:20 - How Evergrande Became Too Big To Fail And Why Beijing Will Have To Bail It Out
How Evergrande Became Too Big To Fail And Why Beijing Will Have To Bail It Out
While the world is obsessing with the fate of Evergrande, and more importantly when, or if, Beijing will bail it out, another just as interesting question is how did the company many call “China’s Lehman” get to the point of no return and become a global systematic risk. For a fascinating look into how we got here, we turn our readers’ attention to a recent article from Caixin titled “How Evergrande Could Turn Into ‘China’s Lehman Brothers‘,” and which provides one of the most comprehensive insights into why Beijing will have to, even if it is kicking and screaming, bail out Evergrande which, at its core, is just one giant shadow-banking black box whose time has finally run out.
* * *
For the past two months, hundreds of people have been gathering at the 43-floor Zhuoyue Houhai Center in Shenzhen, where China Evergrande Group’s headquarters occupy 20 floors. They held banners demanding repayment of overdue loans and financial products. Police with riot shields had to be on site to keep things under control.
The demonstrators are construction workers at the property developer’s housing projects, suppliers providing construction materials and investors in the company’s wealth management products (WMPs). From paint suppliers to decoration and construction companies, Evergrande owes more than 800 billion yuan ($124 billion) due within one year, while it has only a 10th of that amount of cash on hand.
As of the end of June, Evergrande had nearly 2 trillion yuan ($309 billion) of debts on its books, plus an unknown amount of off-books debt. The property giant is on the verge of a dramatic debt restructuring or even bankruptcy, many institutions believe.
A bankruptcy would amount to a financial tsunami, or as some analysts put it, “China’s Lehman Brothers.” The venerable American investment bank’s 2008 collapse helped trigger a global financial crisis.
Certainly Evergrande, one of China’s three biggest developers, has a giant footprint in China.
Unfinished residential buildings at Evergrande Oasis, a housing complex developed by Evergrande Group, in Luoyang, China September 16, 2021 Its liabilities are equivalent to about 2% of China’s GDP. It has more than 200,000 employees, who themselves and many of their families have invested billions of yuan in the company’s WMPs. The company has more than 800 projects under construction, more than half of them halted due to its cash crunch. There are thousands of upstream and downstream companies that rely on Evergrande for business, creating more than 3.8 million jobs every year.
Like many of China’s “too big to fail” conglomerates, Evergrande’s crisis has fueled speculation over whether the government will step in for a rescue. Several state-owned enterprises, including Shenzhen Talents Housing Group Co. Ltd. and Shenzhen Investment Ltd., both controlled by the Shenzhen State-owned Assets Supervision and Administration Commission (SASAC), are in talks with Evergrande on its Shenzhen projects, according to people close to the talks. But so far, no deals have been reached.
In a statement last week, Evergrande denied rumors that it will go bankrupt. While the developer faces unprecedented difficulties, it is fulfilling its responsibilities and is doing everything possible to restore normal operations and protect the legitimate rights and interests of customers, according to a statement on its website.
The company hired financial advisers to explore “all feasible solutions” to ease its cash crunch, warning that there’s no guarantee the company will meet its financial obligations. It has repeatedly signaled that it will sell equity and assets including but not limited to investment properties, hotels and other properties and attract investors to increase the equity of Evergrande and its affiliates.
Growth on borrowed money
Over the years, Evergrande has faced liquidity pressure several times, but every time it dodged the bullet. This time, the crisis of cash flow and trust is unprecedented.
Evergrande shares in Hong Kong plummeted to a 10-year low. Its onshore bonds fell to what investors call defaulted bond level. All three global credit rating companies and one domestic rating company have downgraded Evergrande’s debt.
For many years, Chinese developers were driven by the “three carriages” — high turnover, high gross profit and high leverage. Developers use borrowed money to acquire land, collect presale cash before projects even start, and then borrow more money to invest in new projects.
In 2018, Evergrande reported record profit of 72 billion yuan, more than double the previous year’s net. But behind that, it spent more than 100 billion yuan a year on interest.
Even in good years, the company usually had negative operating cash flow, with not enough cash on hand to cover short-term loans due within a year with and presale revenue not enough to pay suppliers. In addition to borrowing from banks, Evergrande also borrows from executives and employees.
When developers seek funds from banks, lenders often require personal investments from the developers’ executives as a risk-control measure, a former employee at Evergrande’s asset management department told Caixin.
“At times like this, Evergrande would have an internal fund-raising campaign,” the manager said. “Either the executives would pay out of their own pockets, or they would set a goal for each division.”
One crowdfunding product issued to executives was called “Chaoshoubao,” which means “super return treasure.” In 2017, Evergrande tried to obtain project financing from state-owned China Citic Bank in Shenzhen, which required personal investment from Evergrande’s executives. The company then issued Chaoshoubao to employees, promising 25% annual interest and redemption of principal and interest within two years. The minimum investment was 3 million yuan. China Citic Bank eventually agreed to provide 40 billion yuan of acquisition funds to Evergrande.
In 2020, Chen Xuying, former vice president of China Citic Bank and head of the bank’s Shenzhen branch from 2012 to 2018, was sentenced to 12 years in prison for accepting bribes after issuing loans.
A senior executive at Evergrande said he personally invested 1.5 million yuan and mobilized his subordinates to invest 1.5 million yuan into Chaoshoubao. Some employees would even borrow money to invest in the product because the 25% return was much higher than loan rates.
When the Chaoshoubao was due for redemption in 2019, the company asked employees who bought the product to agree to a one-year extension for repayment. Then in 2020, the company asked for another one-year extension. One investor said buyers received an annualized return of 4% to 5% in the last four years, far below the 25% promised return.
When Evergrande’s cash flow crisis was exposed, the company chose to repay principal only to current executives. From late August to early September, the company repaid current executives and employees about 2 billion yuan but still owed 200 million yuan to former employees, including Ren Zeping, former chief economist of Evergrande who joined Soochow Securities Co. in March.
Evergrande’s wealth division also sells WMPs to the public. Most of these WMPs offer a return of 5% to 10%, with a minimum investment of 100,000 yuan, the former employee at Evergrande’s asset management department said. As the return is higher than WMPs typically sold at banks, many of Evergrande’s employees bought them and persuaded their families and friends to invest, an employee said. Usually, a 20 million yuan WMP could be sold out within five days, the employee said.
The company also sells WMPs to construction partners. Evergrande would require construction companies to buy WMPs whenever it needed to pay them, a former employee at Evergrande’s construction division told Caixin.
“If the construction companies are owed 1 million or 2 million yuan, we would ask them to buy 100,000–200,000 yuan of WMPs, or about 10% of their receivables,” the former employee said. Although it was not mandatory for construction companies to buy WMPs, they often would do so for the sake of maintaining a good relationship with Evergrande, the former employee said. In addition, Evergrande property owners were also buyers of the company’s WMPs.
About 40 billion yuan of the WMPs are now due. “It is difficult for Evergrande to make all of the repayments at once at this moment,” said Du Liang, general manager of Evergrande’s wealth division.
Evergrande initially proposed to impose lengthy repayment delays, with investments of 100,000 yuan and above to be repaid in five years. After heated protests by investors, the company tweaked its plan last week, offering three options. Investors can accept cash installments, purchase Evergrande’s properties in any city at a discount, or waive investors’ payables on residential units they have purchased.
Some investors opposed the “property for debt” option, as many projects of Evergrande have been halted and there is a risk of unfinished projects in the future.
“The proposals are insincere,” a petition signed by some Guangdong investors said. “It’s like buying nonperforming assets with a premium.” The petition urged the government to freeze Evergrande’s accounts and assets and demanded cash repayment of all principal and interest.
Some investors chose to accept the payment scheme proposed by Evergrande. They selected Evergrande projects located in hot cities in the hope of making up for losses by resale in the future.
As Evergrande owed large amounts to construction companies, more than 500 of Evergrande’s 800-plus projects across the country are now halted. The company has at least several hundred thousand units that have been presold and not delivered. It needs at least 100 billion yuan to complete construction and deliver the units, Caixin learned.
Whether and how to repay WMP investors or deliver housing is Evergrande’s dilemma.
Debt to construction partners and suppliers
In August, the construction company that was contracted to build Evergrande’s Taicang cultural tourism city in Nantong, Jiangsu province, announced the halt of the project due to bills unpaid by Evergrande. The company, Jiangsu Nantong Sanjian Construction Group Co. Ltd., said it put 500 million yuan of its own funds into the project and Evergrande paid it less than 290 million yuan.
Sanjian has other construction contracts with Evergrande and its subsidiaries. As of September, Evergrande owes the Nantong company about 20 billion yuan.
As of August 2020, Evergrande had 8,441 upstream and downstream companies it was working with. If the flow of Evergrande cash stops, the normal operation of these companies will be disrupted, and some would even face the risk of bankruptcy.
In Ezhou, Hubei province, five of Evergrande’s projects have been halted for more than a month, and it owes contractors about 500 million yuan.
“Housing delivery involves not only hundreds of thousands of families, but also local social stability,” a banker said. The housing authorities in Guangdong province are coordinating with Evergrande and its construction partners, trying to resume construction, the banker said.
Evergrande relies heavily on commercial paper to pay construction partners and suppliers. Among payments it made to Sanjian, only 8% was in cash and the rest in commercial paper.
Initially, the commercial paper borrowings were mostly six-month notes with annualized interest rates of 15%–16%. Now most carry interest rates of more than 20%. Holders of such commercial paper can sell the notes at a discount to raise cash. In 2017–18, the discount rate on Evergrande paper could reach 15%–20%. Since May 2021, the few Evergrande notes that could still be sold have been discounted as much as 55%, according to a person familiar with such transactions.
For small and medium-sized suppliers, holding a large amount of overdue Evergrande notes is a burden too heavy to bear. In recent months, a number of suppliers sued Evergrande for breach of contract but often settled the cases. A lawyer who represented Evergrande in related cases told Caixin that many plaintiffs chose to negotiate with Evergrande while fighting in court.
Evergrande also offered a “property for debt” option to its commercial paper holders. The company said it’s in talks with suppliers and construction contractors to delay payment or offset debt with properties. From July 1 to Aug. 27, Evergrande sold properties to suppliers and contractors to offset a total of 25 billion yuan of debt.
Selling assets, but not land
Meanwhile, Evergrande has been offloading its assets to raise cash. Its biggest assets are its land reserves. As of June 30, it had 778 land reserve projects with a total planned floor area of 214 million square meters and an original value of 456.8 billion yuan. Additionally, it has 146 urban redevelopment projects.
In the past three months, Evergrande has been in talks with China Overseas Land and Investment Ltd., China Vanke Co. Ltd. and China Jinmao Holdings Group Ltd. for possible asset sales. Shenzhen and Guangzhou SASACs have arranged for several state-owned enterprises to conduct due diligence on Evergrande’s urban redevelopment projects, a person close to the matter said. Evergrande has approached every possible buyer in the market, the person said.
However, no deals have been reached. Several real estate developers that have been in contact with Evergrande told Caixin that while some of Evergrande’s projects look good on the surface, there are complex creditors’ rights that make them difficult to dispose of.
Some potential buyers have said they could consider a debt-assumption acquisition, but Evergrande was reluctant to sell at a loss, Caixin learned.
At an emergency staff meeting Sept. 10, the wealth management general manager Du said in a speech that most of Evergrande’s land reserve is not for sale, reflecting the position of his boss, founder and Chairman Xu Jiayin.
“In China, land reserves are the most valuable assets,” Du said. “This is Evergrande’s biggest asset and last resort.
“For example, for a land parcel, Evergrande’s acquisition cost is 1 billion yuan, and the land itself is worth 2 billion yuan, but the buyer may only offer 300 million yuan,” Du said. “If we sold at a loss, we would have no capital to revive.”
For his part, Xu maintained that Evergrande could repay all its debts and recover as long as it turns land into houses and sells them.
But even if Evergrande can quickly sell its houses, the revenue would be far from enough to pay down debt. The chance that Evergrande won’t be able to pay interest due in the third quarter is 99.99%, estimated by a banker whose employer has billions of yuan of exposure to the company.
As of the end of June, Evergrande had total assets of 2.38 trillion yuan and total liabilities of 1.97 trillion yuan. Of the nearly 2 trillion yuan of debt, interest-bearing debt was 571.7 billion yuan, down about 145 billion yuan from the end of 2020. The decrease in interest-bearing debt was mostly achieved by deferred payables to suppliers.
In addition to the 571.7 billion yuan of interest-bearing debt on its books, it’s not a secret that developers like Evergrande have huge off-balance sheet debt. But the amount at Evergrande is not known.
In the early stage of projects, developers need to invest a lot of money, which could significantly increase the debt on the balance sheet. Companies often place these debts off their balance sheet through a variety of means. After the pre-sale of the project, or even after the cash flow of the project turns positive, these debts would be consolidated into the balance sheet in the form of equity transfer, according to a property industry insider.
For example, 40 billion yuan of acquisition funds Evergrande obtained from China Citic Bank were invested in multiple projects. Among them, 10.7 billion yuan was used by Shenzhen Liangyang Industrial Co. Ltd. to acquire Shenzhen Duoji Investment Co. Ltd. As Evergrande doesn’t have an equity relationship with the two companies, this item was not required to be consolidated into Evergrande’s financial statement. Evergrande used leveraged funds to acquire equities in 10 projects, and none of them were included in its financial statement, the prospectus of its Chaoshoubao shows.
Evergrande has sold equity in subsidiaries to strategic investors and promised to buy back the stakes if certain milestones can’t be reached in the future. Such equity sales are actually a form of borrowing, too. In March, Evergrande sold a stake in its online home and car sales platform Fangchebao for HK$16.4 billion ($2.1 billion) in advance of a planned U.S. share sale by the unit. If the online sales unit doesn’t complete an initial public offering on Nasdaq or any other stock exchange within 12 months after the completion of the stake sale, the unit is required to repurchase the shares at a 15% premium.
Evergrande’s hidden debts also include unpaid payments to acquire equities. Dozens of small property companies have sued Evergrande demanding cancellation of their equity sales agreements with the company because Evergrande failed to pay them. They are Evergrande’s partners in local development projects. Evergrande usually paid them 30% down for equities but declined to pay the rest even after the project was completed, according to the lawsuits. A plaintiff’s lawyer told Caixin that Evergrande’s project subsidiaries don’t want to go sour with local partners, but they have no money to pay as sales from the projects have been transferred to the parent company.
A total of 49 of Evergrande’s wholly owned local subsidiaries have been sued since April, according to Tianyancha, a database of publicly available corporate information.
Evergrande also owes land transfer fees to some local governments. Some 20 Evergrande affiliates have not yet made payments to the city government of Lanzhou, the capital of Northwest China’s Gansu province, according to a list of 41 such firms issued in July by the city’s natural resources department.
A potential default by Evergrande could spread to markets outside China as it has huge, high-interest offshore bonds. Some of its offshore bonds carry interest rates as high as 15%, a person close to the Hong Kong capital market said. UBS estimates that $19 billion of Evergrande’s liabilities are made up of outstanding offshore bonds.
Evergrande has been frantically selling properties at discounts this year. In late May, it offered certain homebuyers 30% to 40% off if they paid entirely in cash. In the first half, the company reported 356 billion yuan of contracted sales, slightly higher than 349 billion yuan for the same period last year. Average selling prices in the first six months declined 11.2%. Meanwhile, payables increased 14.7% to 951 billion yuan, and sales and marketing expenses increased 30% to 17.8 billion yuan. In response to the market environment, the company increased sales commissions and marketing expenses, the company said.
Compared with its competitors, Evergrande has higher capital and human costs but lower selling prices, an industry participant said. “How can it make money?” the person said.
The developer reported a 29% slide in profit for the first half. Its 10.5 billion yuan of profit mainly reflected an 18.5 billion yuan gain from the sale of some shares and marked-to-market holding in internet unit Henten Networks. It reported a loss in its core property business of 4 billion yuan.
Evergrande’s extremely high debt ratio, high financing cost and repeated delays in payments to suppliers, partners and local government show that its liquidity has always been tight, but on the other hand, the fact that it has survived years under this model indicates that it has always been able to generate money, a veteran investor said.
Now everyone is watching whether it can dodge the bullet once again.
Tyler Durden
Mon, 09/20/2021 – 22:00 - France Won't Let Go Of Submarine Dispute "Crisis" – Threatens To Torpedo EU-Australia Trade Talks
France Won’t Let Go Of Submarine Dispute “Crisis” – Threatens To Torpedo EU-Australia Trade Talks
Over the weekend France’s top diplomat continued calling out the United States and Australia over their “duplicity, contempt and lies” after “no warnings” were given ahead of the AUKUS pact, which led Australia to scrap a French submarine order for more than $60 billion.
French President Macron will reportedly hold a phone call within the coming days with President Biden in order to seek clarification from the White House – this after late last week Paris for what’s believed to be the first time in history recalled its ambassador to Washington (a dramatic move France also made with Australia, and further canceled a high level defense meeting with the UK).
French Foreign Minister Jean-Yves Le Drian’s latest scathing criticisms were issued to France 2 television, where he said the move to recall the ambassadors “signifies the force of the crisis today” between France, the US and Australia.
And France’s ambassador to Australia Jean-Pierre Thebault, who has left his post and returned to Paris, said “we felt fooled”:
“This was a plot in the making for 18 months. At the same time while we were engaged with making the best of this [submarine] program where France committed its most well-kept military secrets … there was a complete other project that we discovered, thanks to the press, one hour before the announcement. So you can imagine our anger – we felt fooled.”
Significantly the dramatic word “crisis” was thrown out there ahead of planned EU-Australia trade talks for later this year which could now be torpedoed in the wake of Paris venting its rage, as CNN relates:
“Keeping one’s word is the condition of trust between democracies and between allies,” France’s European affairs secretary Clément Beaune told Politico. His remarks were confirmed on Monday by a spokesperson. “So it is unthinkable to move forward on trade negotiations as if nothing had happened with a country in which we no longer trust,” Beaune added.
Free trade negotiations have been ongoing since kicking off in June 2018, with eleven rounds having been held so far, and the next to come within months this fall.
Importantly EU foreign affairs chief Josep Borrell late last week had also expressed shock in support of France’s position, saying “This alliance we have only just been made aware and we weren’t even consulted,” also indicating he only found out through media reports. “As high representative for security, I was not aware and I assume that an agreement of such a nature wasn’t just brought together overnight. I think it would have been worked on for quite a while.”
‘We thought we were mates’: “We are not speaking about normal contracts; we are speaking about a strategic partnership where France was sharing state military secrets with Australia” #AUKUS https://t.co/ybphBUsajV
— WikiLeaks (@wikileaks) September 19, 2021
https://platform.twitter.com/widgets.js
“We regret not having been informed – not having been part of these talks,” Borrell added. “We weren’t included, we weren’t part and parcel of this.”
According to background by Bloomberg:
The EU is Australia’s third-largest trading partner, with the total trade in goods accounting for 36 billion euros ($42 billion) last year 2020, according to the Commission. If Macron really wanted to make waves, he could try to block a pact being negotiated by the EU that could increase exports to Australia by up to a third.
Meanwhile, the EU Parliament Trade Committee Chair has admitted that the AUKUS certainly makes upcoming trade negotiations much more complicated in terms of the desired goal of an EU-Australia agreement.
But at the same time statements out of the UK and Australian governments appear to be downplaying the whole ordeal, and have expressed hope of defusing tensions, also explaining decisions were made with sovereign defense and Australia’s best interests in mind. This hasn’t kept France from feeling that it’s been cut out of Indo-Pacific defense sharing and coordination in efforts to counter China’s influence in the region.
Tyler Durden
Mon, 09/20/2021 – 21:40 - Louisiana State University Begins Disenrolling Students Not Compliant With Vaccine Rules
Louisiana State University Begins Disenrolling Students Not Compliant With Vaccine Rules
By Ben Zeisloft of Campus Reform
Louisiana State University has begun unenrolling students who failed to comply with COVID-19 regulations.
As Fox 23 reports, seventy-eight students were told that they had been “resigned” from the school and would be refunded 50 percent of their fees. Louisiana State media relations director Ernie Ballard confirmed on Twitter that the students are “being contacted that they are being unenrolled from the university.”
“As a student, you were sent numerous notifications regarding the Entry Test Requirement and reminders to comply,” read an email sent to the students.
“Should you want to re-enroll at the university, you must complete the Entry Test Verification Survey. You will then need to email the Office of Academic Affairs… stating your desire to be reinstated and added back to your courses.”
The university’s website states that all students had to “meet entry protocols” before September 10 in order to remain enrolled. The protocols included providing a negative COVID-19 test result no more than five days prior to arrival on campus, proof of a COVID-19 vaccination, or proof of a positive COVID-19 test result no more than 90 days prior to arrival.
On Wednesday, Louisiana State University announced that its president, William Tate, was invited by the Biden administration to discuss the school’s COVID-19 regulations. Executives from Disney, Microsoft, Children’s Hospital of Philadelphia, and other organizations were also present.
“It is an honor to present our successful COVID mitigation strategies to President Biden and the COVID Response Team, and we are proud that our multi-tiered approach to protecting our students, faculty and staff has been recognized at such an incredibly high level,” said Tate in the release. “Our strategies have worked, with more than 81 percent of our student body currently vaccinated, a monthly testing protocol that monitors the presence of the virus on our campus, wastewater testing that allows us to intervene before an outbreak occurs, and a vaccine/testing mandate at Tiger Stadium to keep our fans safe, too.”
Ernie Ballard, the media relations director for Louisiana State University told Campus Reform that 78 students received an email stating that they were disenrolled from the university and must meet entry protocols by September 17 to re-enroll.
Tyler Durden
Mon, 09/20/2021 – 21:20 - "Not Transitory" – US CEOs Warn Inflation Is "Unprecedented" And Becoming "Structural"
“Not Transitory” – US CEOs Warn Inflation Is “Unprecedented” And Becoming “Structural”
Some of the biggest names in business virtually attended the annual Morgan Stanley Laguna conference last week and warned about the complex nature of soaring inflation.
Much of the discussion was centered around the soaring cost of raw materials, labor, and logistical nightmares. Corporate leaders from 3M Company to Trane Technologies to General Electric Co., among others, all warned about increasing inflationary pressures, according to Bloomberg.
3M’s Chief CFO Monish Patolawala shocked attendees by calling inflation “unprecedented.” He said the impact of higher commodity prices and soaring freight prices would impact its 2021 earnings.
Trane Technologies Plc’s CFO Chris Kuehn told a very similar story: “Unprecedented is the word we’d use around the inflation side.”
At the virtual event, Morgan Stanley analyst Josh Pokrzywinski joked that everyone could check the word “unprecedented” on their 2021 bingo cards.
But what has become an increasing concern, pointed out by General Electric’s CEO Larry Culp, is that inflationary pressures are “increasingly getting structural in nature.”
David Petratis, CEO of lock maker Allegion Plc, said inflationary pressures might stick around two to three years. He said his company is preparing for more persistent inflation, adding “it’s not a transitory situation.”
Diversified power management company Eaton Corporation’s CEO Craig Arnold said supply-chain bottlenecks are fueling price increase this quarter. “Much to our surprise, and to the surprise, really I think of everybody in the industry, we’ve seen that things actually got materially worse,” he said. “I’m hopeful that by the time we get to the end of this year, things have settled a bit,” he added. “But I’ll acknowledge as well — we got it wrong. I think we all got it wrong,” he said. Eaton expects revenue guidance for the current quarter to miss because of part shortages.
Another company is Carrier Global Corp, which warned persistent inflation is ahead. So far, the home appliances corporation can’t raise prices faster than inflation.
Raytheon Technologies Corp said higher commodity and labor costs are beginning to impact the company financially. CEO Greg Hayes said, “I wish I could tell you exactly how long this transitory inflation was going to last.”
Hayes said August’s 5.3% year-over-year gain in the headline consumer price index is a huge number and should be closely monitored.
After listening to some of the biggest names in corporate America, it’s becoming more apparent that current inflationary pressure exists well beyond commodities and is also found in complex supply chains. There has yet to be relief in shipping container or dry bulk costs in a highly interconnected world, and congestion at ports continues to build. This is all affecting companies’ ability to procure supplies.
One thing that corporate leaders didn’t touch on is the increasing threat of stagflation. BofA’s Michael Hartnett recently told clients his macro backdrop for the second half is one of higher inflation, hawkish central banks, weaker growth, i.e., stagflation.
Tyler Durden
Mon, 09/20/2021 – 21:00 - BLM Protest Planned At New York Restaurant Where Vaccination Proof Was Demanded
BLM Protest Planned At New York Restaurant Where Vaccination Proof Was Demanded
Authored by Jack Phillips via The Epoch Times,
A Black Lives Matter chapter confirmed it will hold a protest at a New York City restaurant to support three black women who were arrested after a melee with a hostess who allegedly demanded they present proof of COVID-19 vaccination.
Black Lives Matter Greater New York confirmed to Fox News and other news outlets that they will side with the three women—identified by officials as Kaeita Nkeenge Rankin, 44, Tyonnie Keshay Rankin, 21, and Sally Rechelle Lewis—arguing that the city’s vaccine passport is being weaponized against black people.
“I believe that this New York City vaccine passport will be used to keep black people out of spaces, and if we don’t stop it now then the police will use it as an excuse to harass and arrest our people,” a Black Lives Matter Greater New York spokesman told Fox News in a statement.
Video footage posted online last week showed a hostess with Carmine’s on Manhattan’s Upper West Side in a scuffle with several people. Lawyers for Carmine’s on Saturday told Fox that the women did, in fact, show proof of vaccination and were seated inside when the fracas started, and the altercation started when two men from the women’s party were not able to provide proof.
Carmine’s on the UWS says a hostess was assaulted after asking a group for proof of Covid vaccine to eat inside. “It’s a shocking and tragic situation when one of our valued employees is assaulted for doing their job – as required by city policies…” @NBCNewYork after football. pic.twitter.com/xrqZoNm74R
— Adam Harding (@HardingReports) September 17, 2021
https://platform.twitter.com/widgets.js
But Justin Moore, a lawyer for one of the women, claimed they were racially profiled and demanded the hostess be fired.
“This hostess clearly has some anger management issues and unfortunately her aggression and her violence led to something that three black women are being punished for,” Moore, of Texas, told the New York Daily News. He furthermore claimed that the hostess used a racial slur against the three and attacked one of the Rankins, sparking the melee.
A lawyer for Carmine’s denied Moore’s allegations.
“Any claim that they were racially profiled is a complete fabrication, disingenuous, and outright irresponsible,” Carolyn Richmond, the attorney, told the Daily News.
Earlier, a spokesperson for the restaurant said that one of the women physically assaulted the hostess, who was not named.
“It’s a shocking and tragic situation when one of our valued employees is assaulted for doing their job—as required by city policies—and trying to make a living,” the spokesperson told news outlets Friday. “Our focus right now is caring for our employee and the rest of our restaurant family. We are a family-style restaurant, and this is the absolute last experience any of our employees should ever endure and any customers witness.”
The three women were given tickets for assault and released by the New York City Police Department, according to local reports.
Hawk Newsome, a prominent Black Lives Matter activist in New York, wrote on Twitter and Instagram that the group will be “outside” Carmine’s restaurant on Monday at 5 p.m. “Those Sisters @CarminesNYC had proof of vaccination!” he also wrote.
“Restaurants are using vaccine mandates to enforce their racist beliefs and excluding black patrons,” Newsome also told the New York Times last week.
According to data provided by the New York City Department of Health as of Monday, 38 percent of black New Yorkers of all ages are fully vaccinated. Among the largest age group, 18 to 44, 35 percent are fully vaccinated.
The Epoch Times has contacted Black Lives Matter and Carmine’s for comment.
Tyler Durden
Mon, 09/20/2021 – 20:40 - Nancy Pelosi, Estimated To Be Worth $114 Million, Says Capitalism Has "Not Served Us Well" And "Needs Improving"
Nancy Pelosi, Estimated To Be Worth $114 Million, Says Capitalism Has “Not Served Us Well” And “Needs Improving”
House Speaker Nancy Pelosi’s husband must not be having the success with his daytrades that he once was. Otherwise, we can’t think of any other reason for Pelosi to come out last Friday and state in London that capitalism “has not served” the U.S. economy as well as it should.
“In America, capitalism is our system, it is our economic system, but it has not served our economy as well as it should,” Pelosi said according to WaPo. “So what we want to do is not depart from that, but to improve it and to make sure that it serves us.”
The statement is ridiculous on a number of levels, not the least of which is that Pelosi and her husband have been partaking in the system – exactly as it exists today – by executing meaningful options trades in U.S. listed public companies, many of which have had “interestingly timed” runs of fortune since Pelosi’s involvement.
Pelosi’s criticism of capitalism was that it had “historically allowed workers’ wages, as well as management’s, to rise alongside productivity”. We wonder if she has taken a good hard look at the effect of the ongoing Democratic government dole on productivity as well?
Doing her best Karl Marx impression, Pelosi said: “You cannot have a system where the success of some springs from the exploitation of the workers and springs from the exploitation of the environment and the rest, and we have to correct that.”
Pelosi said that the economic shift has been to “shareholder capitalism” which caused “employee salaries to stagnate”.
So naturally we’re expecting that Pelosi will dump all of her investments where her and her husband are “shareholders” – lest she contribute to the very same system she is arguing is decimating America and the middle class.
Pelosi, meanwhile, is estimated to be worth $114 million.
What’s it going to be, Nancy?
Tyler Durden
Mon, 09/20/2021 – 20:20 - UN Warns Artificial Intelligence May Pose "Negative, Even Catastrophic" Threat To Human Rights
UN Warns Artificial Intelligence May Pose “Negative, Even Catastrophic” Threat To Human Rights
Authored by Katabella Roberts via The Epoch Times,
The United Nations has warned that artificial intelligence (AI) systems may pose a “negative, even catastrophic” threat to human rights and called for AI applications that are not used in compliance with human rights to be banned.
U.N. human rights chief Michelle Bachelet on Sept. 15 urged members states to put a temporary ban on the sale and use of AI until the potential risks it poses have been addressed and adequate safeguards put in place to ensure the technology will not be abused.
“We cannot afford to continue playing catch-up regarding AI—allowing its use with limited or no boundaries or oversight and dealing with the almost inevitable human rights consequences after the fact,” Bachelet said in a statement.
“The power of AI to serve people is undeniable, but so is AI’s ability to feed human rights violations at an enormous scale with virtually no visibility. Action is needed now to put human rights guardrails on the use of AI, for the good of all of us,” the human rights chief added.
Her remarks come shortly after her office published a report that analyzes how AI affects people’s right to privacy, as well as a string of other rights regarding health, education, freedom of movement, and freedom of expression, among others.
The document includes an assessment of profiling, automated decision-making, and other machine-learning technologies.
While the report notes that AI can be used for good use, and can help “societies overcome some of the great challenges of our times,” its use as a forecasting and profiling tool can drastically impact “rights to privacy, to a fair trial, to freedom from arbitrary arrest and detention and the right to life.”
According to the report, numerous states and businesses often fail to carry out due diligence while rushing to incorporate AI applications, and in some cases, this has resulted in dangerous blunders, with some people reportedly being mistreated and even arrested due to flawed facial recognition software.
Meanwhile, facial recognition has the potential to allow for unlimited tracking of individuals, which may well lead to an array of issues surrounding discrimination and data protection.
An AI robot (L) by CloudMinds is seen during the Mobile World Conference in Shanghai on June 27, 2018. (-/AFP/Getty Images)
As many AI systems rely on large data sets, further issues surrounding how this data is stored in the long-term also poses a risk, and there is potential for such data to be exploited in the future, which could post significant national security risks.
“The complexity of the data environment, algorithms and models underlying the development and operation of AI systems, as well as intentional secrecy of government and private actors are factors undermining meaningful ways for the public to understand the effects of AI systems on human rights and society,” the report states.
Visitors look at an AI smart city system by iFLY at the 2018 International Intelligent Transportation Industry Expo in Hangzhou in China’s eastern Zhejiang province in December 2018. (STR/AFP/Getty Images)
Tim Engelhardt, a human rights officer in the Rule of Law and Democracy Section, warned that the situation is “dire” and that it has only become worse over the years as some countries and businesses adopt AI applications while failing to research the multiple potential risks associated with the technology.
While he welcomes the EU’s agreement to “strengthen the rules on control,” he noted that a solution to the myriad of issues surrounding AI won’t be coming in the next year and that the first steps to resolve these issue need to be taken now or “many people in the world will pay a high price.”
“The higher the risk for human rights, the stricter the legal requirements for the use of AI technology should be,” Bachelet added.
The report and Bachelet’s comments come following July’s revelations that spyware, known as Pegasus, was used to hack the smartphones of thousands of people around the world, including journalists, government officials, and human rights activists.
The phone of France’s finance minister Bruno Le Maire was just one of many being investigated amid the hack via the spyware, which was developed by the Israeli company NSO Group.
NSO Group issued a statement to multiple outlets that did not address the allegations, but said that the company will “continue to provide intelligence and law enforcement agencies around the world with life-saving technologies to fight terror and crime.”
Speaking at the Council of Europe hearing on the implications stemming from the Pegasus spyware controversy, Bachelet said the revelations came as no surprise, given the “unprecedented level of surveillance across the globe by state and private actors.”
Tyler Durden
Mon, 09/20/2021 – 20:00 - Cuba Becomes First Country To Mass Vaccinate Children As Young As 2-Years Old
Cuba Becomes First Country To Mass Vaccinate Children As Young As 2-Years Old
Starting this week and within the past days Cuba has become the first country in the world to begin a mass COVID-19 vaccination program for all children. Though the campaign was initiated earlier in September, CNN reporting on Monday observed the large scale campaign in action for children two and up.
“During a single day at a policlínico in Havana, where CNN and other media were invited to film the vaccinations, more than 230 children ages 3 to 5 were vaccinated, the clinic’s administrator said,” the report observed.
What’s more is that to be considered “fully vaccinated”, Cubans – including children – must receive three shots, which is also something unique globally (Israel is the only other country to officially push a third “booster” shot for its citizens to be deemed fully vaccinated).
Screengrab of clinic in Cuba via CNN footage A recent summer spike in infections across Cuba with the rapid spread of the Delta variant caused authorities to delay the opening of the school year in September. For now, state TV channels provide school lessons to children watching from their homes, also as many Cubans can’t access internet service.
The last months have seen an alarming rise in Covid infections in children; however, it remans unclear and undisclosed how many of these cases are severe or have resulted in hospitalization, as CNN explains further:
So far during the pandemic at least 117,500 minors have been diagnosed with Covid in Cuba, according to official statistics. The government has not said how many children have died in Cuba during the pandemic. But since the beginning of August, 10 minors, children and infants have been listed as having died in daily press briefings given by the Health Ministry.
Currently Havana authorities are administering three Cuban-manufactured vaccines that state health regulators gave “emergency approval” for, but have struggled to produce enough for the island’s 11+ million population.
Cuba begins vaccinating children from the age of two with locally developed vaccines | DW News https://t.co/EQAe5sEsyQ pic.twitter.com/4X8KUno3K4
— Albert Schram (@albertschram) September 19, 2021
https://platform.twitter.com/widgets.js
The Cuban government has at the same time come under criticism by global health officials, including at the WHO, for “excessive secrecy” regarding its homegrown vaccine development and program.
Vaccinating children as young as two remains hugely controversial among populations across the globe, particularly in the United States, where the FDA has yet to approve Covid vaccines for people under 12-years old. This is given that the majority of children are asymptomatic, or merely experience mild illness, according to the general consensus among doctors and health authorities.
It’s further exceptional that Cuba would also administer a third shot to children, given most vaccines approved in other countries require a maximum of two shots.
Tyler Durden
Mon, 09/20/2021 – 19:40 - "If You Come To US Illegally, You Will Be Returned" – Homeland Security Secretary To Travel To Mexico Border
“If You Come To US Illegally, You Will Be Returned” – Homeland Security Secretary To Travel To Mexico Border
Authored by Zachary Stieber via The Epoch Times,
Homeland Security Secretary Alejandro Mayorkas plans to travel to the U.S.–Mexico border amid the illegal immigration crisis there.
“I will be traveling to the border myself,” Mayorkas said on CNN on Sunday.
Mayorkas did not say when or where he would be going and the Department of Homeland Security (DHS) did not respond to emailed questions.
Thousands of illegal immigrants, many from Haiti, have amassed in recent days under the international bridge in Del Rio, Texas, highlighting the Biden administration’s failure to stem the surge in illegal immigration since President Joe Biden took office in January.
Del Rio Mayor Bruno Lozano, a Democrat, has repeatedly appealed to administration officials to take notice of what’s happening, singling out Biden and Vice President Kamala Harris.
Lozano said he updated Mayorkas on the latest updates on Sunday morning and was “grateful to receive an immediate plan of action.”
Illegal immigrants bathe and play on the U.S. side of the Rio Grande, the international boundary with Mexico, in Del Rio, Texas, on Sept. 18, 2021. (Charlotte Cuthbertson/The Epoch Times)
DHS closed checkpoints in Texas on Friday and began expelling some of the immigrants over the weekend.
The agency surged some 400 agents and officers to the area to try to get the situation under control. It also helped move thousands of the immigrants to other processing locations to alleviate the crush in Del Rio and started talks with the immigrants’ home countries on accepting them back. The White House, meanwhile, directed federal agencies to work with the Haitian government and other governments to provide assistance to immigrants once they’re flown back to where they came from.
Thousands of illegal immigrants amass in Del Rio, Texas, on Sept. 16, 2021. (Charlotte Cuthbertson/The Epoch Times)
Beyond those steps, “the Biden Administration has reiterated that our borders are not open, and people should not make the dangerous journey,” DHS said in a statement Saturday, adding, “Individuals and families are subject to border restrictions, including expulsion. Irregular migration poses a significant threat to the health and welfare of border communities and to the lives of migrants themselves, and should not be attempted.”
“We certainly are experiencing a challenging situation, but we are surging resources and we have a multi-pronged approach to this,” Mayorkas said on CNN. He also said the Department of Defense was going to provide resources; the department did not return an inquiry.
Mayorkas said Haitians who arrived before July 29 would get temporary protected status but that those who arrived later would be repatriated.
“If you come to the United States illegally, you will be returned,” Homeland Security Secretary Alejandro Mayorkas said Tuesday after briefing with state and local leaders on the migration situation at the Del Rio bridge in Texas. https://t.co/XyXGK44G2K pic.twitter.com/F0vUoq9Mwv
— CBS News (@CBSNews) September 20, 2021
https://platform.twitter.com/widgets.js
The White House has not commented on the situation. White House press secretary Jen Psaki did not hold a briefing on Friday. Biden left Washington Friday for a weekend vacation in Rehoboth Beach, Delaware, where he ignored questions from pool reporters. Harris appeared at a college football game in Washington on Saturday to do the coin toss.
Tyler Durden
Mon, 09/20/2021 – 19:20 - There Is "Real Risk" The Government Will Shut Down At The End Of The Month
There Is “Real Risk” The Government Will Shut Down At The End Of The Month
In all the excitement surrounding the Evergrande crisis which hit risk assets like a ton of bricks today, market watchers may have forgotten that not only is the Fed scheduled to make a regular appearance on Wednesday but that the debate over the fiscal stimulus and the debt ceiling are still ongoing.
So, as Goldman’s Alec Philips summarizes the latest newsflow out of the Beltway, there are two main risks out of Washington at the moment:
First, the debt limit (late October deadline) and funding the government to avoid a shutdown Oct. 1 appear no closer to resolved. The House Rules Committee was due to move forward today on legislation addressing both issues, but it is still not clear whether the stopgap spending measure Democrats instead put forward to keep the government open past Sep. 30 will include a debt limit suspension. If it does, there is a real risk of a shutdown at the end of the month, since Republicans look likely to oppose it in the Senate. If the issues remain separate, a shutdown becomes unlikely but the risk around the debt limit increases somewhat. That decision, which should have come today, now looks likely tomorrow, though further delay is clear possible.
NEW: House Rules Cmte will not reconvene today.
Instead, Dems will unveil their govt funding/debt ceiling bill tomorrow AM, bring it to the Rules Committee & possibly floor tomorrow.
Much more in @PunchbowlNews PM coming out shortly … https://t.co/dg451H5Vxt@bresreports & me
— Jake Sherman (@JakeSherman) September 20, 2021
https://platform.twitter.com/widgets.js
The other risk relates to the fiscal package the House has been working on. Axios reports that Sen. Manchin (D-W. Va.) told a group that he supported a “pause” on the broad fiscal package until 2022. While not completely surprising — he already said he supported a pause, but did not specify for how long — this suggests more risk to the fiscal package than his prior comments had. Separately, Sen. Sinema (D-Ariz.) is reported to have indicated that she would not vote for the broad fiscal package if the House does not pass the separate infrastructure bill when it is expected to come up for a vote on Sep. 27. This comes as Democratic leaders have raised the prospect of delaying the vote on the infrastructure package, which was scheduled for Sep. 27 as part of an agreement with Democratic centrists in the House, in return for their support for the Democratic budget resolution that passed in August.
In short, a mess, but as the Goldman strategist notes, while these appear to be important developments that could shape the outcome of the fiscal legislation Phillips still expects both fiscal packages to become law despite potential setbacks:
It seems unlikely that any of these lawmakers will want to take responsibility for blocking their own party’s entire domestic policy agenda. Indeed, some of the centrists who have raised issues with the legislation are often in the most competitive congressional districts and are likely to want to be able to show an accomplishment between now and the midterm election. More generally, we would expect that even if the legislative process on both packages stalls, Democratic leaders would likely find a way to salvage many of the important pieces before year-end, when items like the expanded child tax credit expires.
That said, recent developments are another reason to believe that the size of the package will be scaled back (as discussed last week, Goldman expects the $3.5 trillion to be reduced to $2.5 trillion, and the risks lean toward an even smaller package, just as the US economy is rapidly slowing down) and that the tax hikes proposed to pay for it are scaled back as well (the bank expects $1.5 trillion in tax hikes, also with risks leaning toward a smaller figure).
Tyler Durden
Mon, 09/20/2021 – 19:00 - A Looming Crude Oil Showdown
A Looming Crude Oil Showdown
By Ryan Fitzmaurice, senior commodity strategist at Rabobank
Summary
-
As expected, China’s recent attempt to pressure oil prices lower has so far been unsuccessful
-
All eyes will be on the next OPEC+ meeting to see if Saudi Arabia will surprise the oil market by slowing or pausing planned production increases in response to China’s SPR release
-
US CPI inflation data for August registered a +5.3% year-on-year gain in consumer prices
-
The broad-based commodity indices are signalling even more upside inflationary pressures ahead, as those indices reached new multi-year highs just this week
Oil prices were strong last week, setting new multi-week highs much to the dismay of large oil consuming nations that are fighting soaring commodity price inflation. This is particularly true for China given that crude oil imports there have soared back above the 10mb/d mark in recent data.
Moreover, China’s recent attempt to pressure oil prices lower by announcing its intention to release oil from its strategic petroleum reserve (SPR) has so far been unsuccessful, a dynamic we discussed in detail in last week’s note. Further reinforcing our thesis, oil prices fell suddenly again on Tuesday morning as more details of the Chinese SPR release were announced, however, the bearish market reaction was very short-lived and oil prices went on to quickly recover and settle higher on the day, just as they did last week when news of the Chinese SPR plans first hit the wires. Notably, ever since the pandemic hit, OPEC+ holds a virtual conference call every month to adjust supply to current market conditions with the stated goal of reducing global stockpiles and the unstated goal of increasing oil prices and revenue.
As such, all eyes will be on the next OPEC+ meeting, scheduled for October 4th, to see if Saudi Arabia will surprise the oil market by slowing or pausing planned production increases in response to China’s SPR release. This is a real possibility, as we see it, and especially in light of the Saudi Energy Minister’s recent comments indicating he still has “tricks up his sleeve” and suggesting he would inflict financial pain on those that seek to impede the OPEC+ mission.
Importantly, if there were to be a surprise on the supply side, it would likely have a much bigger impact on oil than the Chinese SPR release has, given that OPEC+ controls nearly all of the available spare capacity. In addition to that, OPEC+ has the powerful herd of systematic algos on its side doing the heavy-lifting and bidding oil prices higher.
Commodity inflation
As we noted in the onset, soaring commodity price inflation has put large consuming nations on the defensive this year. Further to that end, US CPI data for August was released on Tuesday and registered a +0.3% month-on-month gain which equated to a +5.3% year-on-year gain in consumer prices. Moreover, this was the fourth consecutive month that consumer inflation has come in at or above 5% y/y with no signs of letting up. In fact, the broad-based commodity indices are signalling even more upside inflationary pressures ahead, as those indices reached new multi-year highs just this week, thanks in large part to the gains in oil and gasoline prices.
The CPI data release also prompted comments from President Biden yesterday in which he suggested that gasoline prices were somehow being artificially propped up despite evidence that they should be lower, as he put it. The President did not provide any detail as to what evidence there is to suggest gasoline prices should be lower which left many traders and analysts scratching their heads. On the contrary, we see considerably more upside risks than downside risks to oil and gasoline prices into year-end and even beyond. As it stands, both fundamental and quantitative market signals are overwhelming bullish and the speculative positioning has plenty of room to grow from current levels as we discussed last week. Perhaps more important though, is the revival in commodity index investing that was such a key driver for commodity markets in the first half of the year. On that note, the massive capital inflows into commodity index products witnessed in the first half of the year have gone dormant in recent months, a dynamic we detailed here. However, in our view, it won’t be long before institutional investors and large asset managers are forced to increase commodity index allocations as surging inflation expectations and fear of missing out forces capital off the side-lines. As such, we fully expect to see a notable pick-up in commodity allocations in the coming weeks and months given the well-known inflation hedging benefits commodity indices have historically provided. Furthermore, commodity markets are the best performing asset-class year-to-date with gains of more than 25%, so those asset allocators that have remained underweight commodities have missed out on the strong risk-adjusted gains and are very likely underperforming their peers and benchmarks.
Looking Forward
Looking forward, we see real potential for a bullish OPEC+ surprise at the upcoming October meeting in response to China’s recent SPR release. As we noted, OPEC+ currently has the herd of systematic algorithms on its side helping to bid up prices. Further to that end, aggregate open interest for petroleum futures increased this week as prices rose, signalling new speculative “long” positions are likely being established.
Furthermore, we see the potential for a large increase in commodity index allocations as a result of surging inflation worries coupled with fears of missing out (FOMO) on the strong absolute and relative performance of commodity markets this year.
Tyler Durden
Mon, 09/20/2021 – 18:40 -
- Dear Joe, You Know It's Bad When Chuck Todd Turns On You…
Dear Joe, You Know It’s Bad When Chuck Todd Turns On You…
You know it’s bad for Joe Biden when establishment media operative Chuck Todd calls out Joe Biden for having a “pretty big credibility crisis on his hands.”
“I think he’s got a pretty big credibility crisis on his hands. Because all of these problems, in some ways, showed up after he said something basically the exact opposite.
Afghanistan withdrawal wasn’t going to be messy. This wasn’t going to look like Saigon. The booster shots, he came out and essentially said eight months, and even indicated maybe we should start it as soon as five months. Now we’re not sure if anybody under 65 is going to get a booster shot…
Of course, the border has been, whether this is — we can talk about the border problems say there are years in the making, but it’s pretty clear we have a bigger problem now than we’ve had in years, and these policies have turned into becoming a magnet.”
(h/t citizenfreepress.com)
There is only so much denial…
Joe needs help.
Tyler Durden
Mon, 09/20/2021 – 18:20
Digest powered by RSS Digest
Saving...
