Today’s News 24th February 2023

• Weaponizing Everything, Including Lawyers And Balloons: China's 1999 Manual For Defeating America
  Weaponizing Everything, Including Lawyers And Balloons: China’s 1999 Manual For Defeating America

  Authored by Austin Bay via The Epoch Times,

  During its North American aerial odyssey, The Big Chinese Balloon passed within intel-gathering distance of ICBM silo fields, strategic bomber bases, key global logistics hubs (Charleston for example), and major Army and USAF headquarters.

  

  The balloon wasn’t just blowing in the wind. Its calculated military itinerary tells reasonable Americans and Canadians—reasonable being a qualifier that excludes media influencers and politicians bribed or blackmailed by communist China—that the balloon was spying on critical North American defense installations.

  Which means it had a War Mission. Note I did not write “pre-War”; I wrote “War.”

  I’ll explain why in a moment, but first due praise for The Wall Street Journal’s Feb. 20 article titled: “China’s Newest Weapon to Nab Western Technology—Its Courts.”

  According to the report, U.S. and EU officials “accuse China of using its courts and patent panels to undermine foreign intellectual-property rights and help Chinese businesses. They say China is focusing such efforts on industries it deems important, including technology, pharmaceuticals and rare-earth minerals.”

  Beijing has weaponized its legal system to steal technology.

  Beijing’s lawfare is calculated and synchronized. According to the Journal the EU is suing China for attempting to bar European companies from protecting their patents in courts outside China. One company official lamented: “It is puzzling that so many cases went wrong at the same time.”

  Actually—it isn’t puzzling at all.

  At the bottom line, communist China is fighting a war to dominate the world. In pursuit of that goal the Chinese state has weaponized every technology, media, and means of personal and organizational interaction.

  

  Informed minds assure us the study titled “Unrestricted Warfare” and published by the People’s Liberation Army in February 1999 isn’t a war plan. I’ll agree it isn’t a step-by-step plan, but it is a thoughtful and deadly intellectual guidebook China’s communist leaders are using to defeat the United States and establish a Chinese-mandated international order.

  The authors are Qiao Liang and Wang Xiangsui. When they wrote “Unrestricted Warfare,” both men were People’s Liberation Army Air Force colonels. Qiao later made major general.

  Chapter 2 discusses full-spectrum warfare.

  Its title in English: “The War God’s Face Has Become Indistinct.”

  Translation: In China’s long war with the United States, weather balloons and lawyer jargon are weapons that can degrade American capabilities.

  The chapter lists several types of warfare that China can use to attack and harm the United States without risking a military counterattack.

  Start with Drug Warfare.

  The authors add this comment on pushing drugs: “obtaining sudden and huge illicit profits by spreading disaster in other countries.”

  In 1999 it was one of Qiao’s and Wang’s speculative options. In 2023 fentanyl is savaging American society.

  Beijing’s delivery system for this weapon in Drug Warfare? Mexican cartels.

  Here are some other Qiao and Wang options with their comments in parentheses.

  • Psychological warfare (“spreading rumors to intimidate the enemy and break down his will”).

  • Smuggling warfare (“throwing markets into confusion and attacking economic order”).

  • Media warfare (“manipulating what people see and hear in order to lead public opinion along”).

  • International law warfare (“seizing the earliest opportunity to set up regulations”). The use of courts to steal technology is another wrinkle.

  • Resources warfare (“plundering stores of resources”). China’s attempt to gain control of Congo’s cobalt reserves involved crooked contracts and bribery. That is white collar plundering.

  • Economic aid warfare (“bestowing favor in the open and contriving to control matters in secret”). Controlling matters in secret hints at bribery, blackmail, and intimidation. The concept goes hand in glove with resources warfare.

  • Cultural warfare (“leading cultural trends along in order to assimilate those with different views”). Beijing has spent billions influencing Hollywood and social media. American teenagers love the China-sourced TikTok app. But TikTok and similar apps are potentially routes for spying and disseminating psychologically and socially destructive propaganda.

  TikTok is being banned by some states. We can fight back.

  Tyler Durden
  Thu, 02/23/2023 – 23:40

• Victor Davis Hanson: The Ukraine War's Prelude To What?
  Victor Davis Hanson: The Ukraine War’s Prelude To What?

  Authored by Victor Davis Hanson via AmGreatness.com,

  The Ukraine mess is daily looking more like the Spanish Civil War of 1936 to 1939, a meat grinder that took 500,000 lives. That three-year conflict became a savage proxy war and prelude for the belligerents of World War II…

  

  The Ukraine battlefield is proving a similar laboratory of death. New lethal weaponry and tactics are introduced, modified—and always improved—from drones to guided missiles to internet-fed artillery. 

  Likewise, a similar pre-global war lineup of the eventual adversaries is emerging in preview of a much larger, much scarier war to come.

  The first mission of Ukraine, the aggrieved victim of a peremptory Russian attack, was simple survival. 

  But now that it has been armed to the teeth and its soldiers proved far more capable and heroic than Putin’s once-feared Russia, Kyiv now seeks to push back Russians to their 2014 Ukrainian acquired borders.

  Next President Volodymyr Zelenskyy has announced that the third stage will be to eject every Russian from 2013 Ukraine. He promises to reabsorb both the Crimea and the Donbas.

  That is an ambitious goal that might require preemptive attacks inside Russia and on the Black Sea.

  To accomplish the last two missions, Zelenskyy needs a blank check of support from a United States that can neither control its own borders nor maintain its critical infrastructure and is $33 trillion in debt.

  Americans are not only to supply the money and arms to fuel Zelenskyy’s counteroffensives, but to sign onto a dangerous anti-Russian agenda that is not necessarily synonymous with one that is in the best interests of the United States.

  As far as Russia goes, Vladimir Putin knows his attack was a costly mistake. It was predicated on the assumption that an appeasing, doddering Biden and a U.S. military humiliated in Afghanistan would always remain passive.

  Yet Putin still believes that his blunder will not have been a fatal one if he can still destroy much of Eastern Ukraine, institutionalize what he gained in 2014, fracture NATO, propagandize the war as an existential cause of saving Mother Russia from a corrupt West, and reconfigure a new alliance with China, Iran, North Korea, and perhaps Turkey and India.

  As far as the United States goes, the Biden Administration sees America’s interest as largely defined by a proxy war to defang Russia. To paraphrase, Secretary of Defense Lloyd Austin, America will pour limitless arms into Ukraine to so weaken Russia that it will have to stay within its current borders. 

  Washington blithely dismisses all of Putin’s existential threats as empty nuclear saber-rattling—on the Pentagon’s assurance that wounded, cornered, and growling tigers can always be assumed to remain predictably docile.

  Biden, whose family influence-peddled with Kyiv for a decade, has radically reversed his initial course.

  No longer is Biden offering a free ride out of Dodge for Zelenskyy or dismissing any worry over a “minor” Russian invasion.

  Biden instead now sees saving Ukraine and punishing Russia as his one shot at a redeeming accomplishment for an otherwise failed administration.

  The once-pacifist American Left has embraced Ukraine as its “I told you so” proof that Vladimir Putin was really the monster that it could not find guilty in its various Russian collusion concoctions and laptop disinformation hoaxes.

  The NATO nations are acting uncharacteristically defiant given the war is on their borders. They rightly fear a victorious Putin would be vengeful and not satiated.

  Yet their “you go first” shipment of hodgepodge weapons to Ukraine, as well as their embarrassment over their past suicidal energy polices and slow-motion disarmament, remind us that Europeans in NATO before the war could not keep the Russians out, the Americans in, or the Germans down.

  China believes it can be the real winner of the war.

  Its rivals and enemies are weakened the longer the war continues. The West is depleting its arsenals. It is tiring of the cost. Rival Russia is bleeding, selling Beijing cheap oil and begging for its weapons.

  Neither Europe nor America, China believes, will want to repeat another proxy war—say, one over Taiwan—against a nuclear power with far more leverage over the West and far greater wherewithal on the battlefield.

  Iran is selling drones to Russia.

  Tehran expects a desperate Putin to sell it all the enriched uranium it needs, prevent a preemptive strike on Tehran, and end Moscow’s Syrian wink-and-nod policy with Israel.

  India, like Turkey, likes newfound cheap Russian oil.

  It feels a proximate Russia and China are better entertained than a distant and provocative, but increasingly internally divided and weakened, United States.

  Turkey is suddenly booming with cheap oil and a big arms appetite from Russia.

  It feels rich and illiberal China and Russia both fear Turkey’s export of Islamism and seem better allies than the loud-talking but declining West.

  North Korea sees only positives in Western distraction in Ukraine.

  It counts that its nuclear recklessness is seen as a valuable irritant by both Russia and China.

  The longer this preview war goes on, the surer will follow the nightmarish main attraction.

  Tyler Durden
  Thu, 02/23/2023 – 23:00

• Even JPMorgan Is Lashing Out At Ridiculous Seasonal Adjustments In Key US Data
  Even JPMorgan Is Lashing Out At Ridiculous Seasonal Adjustments In Key US Data

  It has become impossible to be an economist or data-watcher (and thus strategist, investor, pundit or analyst) in the US: the reason is that seasonal adjustments have made virtually every data set a load of garbage, with little relevance to the real world. 

  Consider the latest nonfarm payroll number, where the seasonally adjusted print came at a shocking 517K, but only thanks to a near record seasonal adjustment factor which transformed a 2.5 million decline into a blowout gain which had a profound impact on market – and Fed psychology.

  

  Or what about the latest retail sales, which also shocked to the upside, but only after generous seasonal adjustments – which are based on just some excel modeling (and a few political taps on the shoulder) converted the traditionally weak January into a blowout month.

  

  It’s not just plain vanilla economic data: it now appears that arbitrary – and massive – seasonal adjustments are also hitting the weekly DOE oil inventory report: the past two weeks, when we saw near record inventory builds, were nothing more than the figment of some excel spreadsheet’s imagination because as the chart below shows, that’s when the DOE Crude Oil supply “adjustment” factor was one of the highest on record.

  

  Which brings us to today’s weekly initial jobless claims report, which once again surprised to the downside, and despite wave after wave of mass layoffs (and severance), it magically dropped to four-week lows, once again underscoring just how “wonderful” Biden’s economic policies are as they translate into such a great labor market.

  

  Which of course is horseshit only this time, it’s not zero hedge, or even UBS, but the largest US bank that is calling the bullshit on the increasingly ridiculous, politicized GIGO that comes out of the admin.

  In a note from JPM’s Dan Silver, the bank’s economist points to the stubbornly, laughably low initial jobless claims, especially when considering directly tabulated reports of layoffs which in January just hit a multiyear high (according to Layoffs.fyi)…

  

  … and politely says that “some alternative seasonal adjustments of the initial claims data show some less favorable changes in filings from recent weeks than the official figures.”

  

  Here, JPM is merely echoing Goldman, which several weeks ago also found that initial claims are unrealistic, and that when looking at credible, state-level WARN mass layoff notices initial claims are far higher.

  

  It’s not just JPM and Goldman, however: three weeks ago, UBS also joined the fray, and showed that yet another data series – Job Openings – is either intentionally or accidentally inflated, and that  when look at third party data, the real number of job openings is about a third of what the monthly JOLTS report indicates.

  

  What is especially funny is that banks no longer merely observe how the data no longer fits, but are making it into a type of personal crusade to expose the grotesque levels of BS emanating from the Biden admin. Case in point, another UBS economist just a few days ago published a report asking (rhetorically) if the NFP report is overestimating job gains.

  

  But it’s not just the sellside: both the Philadelphia Fed and the BLS itself (!) recently found that the monthly NFP data is useless. Here is UBS economist Jonathan Pringle explaining why:

  he Bureau of Labor Statistics reported last week that the net change in private sector jobs in 2022Q2 was -287K. In contrast, in the monthly employment report, private nonfarm payroll employment (NFP) is estimated to have risen 1.045 million! The former estimate comes from the BLS’s Business Employment Dynamics (BED) data. The latter comes from the monthly establishment survey data, NFP, the data series that usually makes the first Friday of every month an exciting one for financial markets and economists (in good ways and bad). Plus, the Federal Reserve Bank of Philadelphia staff published a paper last month estimating NFP overstated the employment gains in 2022Q2 by more than 1 million (link here). If BLS and Fed researchers say NFP was wrong, could there be some truth to that? We think so…

  

  And here’s why:

  In late September, the Bureau of Economic Analysis (BEA) revised down estimates of private wage and salaries sharply. The initial estimates are based on NFP and average hourly earnings. Those monthly estimates are replaced with a 1 to 2 quarter lag as more accurate tax records become available. The tax records are also the source data to which NFP is eventually benchmarked. The Q1 wage and salary estimates based on NFP were too strong. That large downward revision to Q1 income data was a signal that NFP might be overstating the strength of job gains. The Q2 tax records then revised down wage and salary estimates further.

  

  How big is the data discrepancy between the real data and the published monthly NFP report? Here’s the answer to that too:

  QCEW data then showed more weakness than NFP too: The Quarterly Census of Employment and Wages (QCEW) is also derived from those tax records, generally assumed to be an accurate assessment of payroll employment due to the fines employers incur for failure to properly report to the states’ unemployment insurance systems. The data covers roughly 95% of employees in the US. It is the NFP source data, in a sense. However, the data is released with a lag.

  The QCEW data shows that in the 12 months ending on June 2022, job growth was 5.7 million. The current published change in NFP is 6.2 million. Plus, NFP is set to revise up by roughly 500K as of March 2022 at the annual revision to be reported next week. We expect that the upward revision reflects the strength in 2021. We expect that NFP went from understating employment strength in 2021 to overstating it in 2022.

  And this is where the seasonal adjustments come in:

  If the BED and QCEW point to Q2 weakness, why alter that story? Because of what we see in the BEA data and seasonal adjustment. The BEA revisions to the wage and salary data point to more overstatement in 2022Q1. In addition, the QCEW data is difficult to adequately seasonally adjust. Consider the detailed, disaggregated seasonal adjustment for the monthly employment report, and still there are periodic problems. Our guess is the estimates of 400K to 1 million jobs too many, or overstatement, in the monthly NFP data, were likely spread over 6 to 9 months. We’ll know better when we get the QCEW Q3 data in a month.

  

  Of course, if UBS knows this, and JPM knows this, and Goldman knows this, why not just call out the BS? Simple: the Biden admin has until February 2024 to come clean, which is when the official corrections to all the data errors will be revealed, as UBS concludes:

  … Unfortunately, what we, the BLS, and the Philly Fed staff see as overstatement in 2022, will not be corrected until February 2024.

  In other words, there will be another 12 months of randomly fabricated data meant to serve just one narrative – a political one – instead of representing the true (sad) state of the economy. The problem is that the Fed, and the market, are both using this flawed, seasonally manipulated adjusted data to make monetary policy and capital allocation decisions; decisions which in retrospect one year from today will be proved to have been dead wrong.

  By then, Powell will be long gone, Biden – having collected the big guy’s share for another 12 months – will be on his drooling way out to some tropical island paradise, but since the BLS continues to misrepresent the true state of the labor market, Fed funds may be in the double digits, leading to a historic implosion of the US economy. The only question then will be whether said gutting, like the global covid emergency and economic lockdowns, was orchestrated and by whom.

  The full UBS report on payroll “ovestatement” can be found here for pro users.

  Tyler Durden
  Thu, 02/23/2023 – 22:20

• Facing "Unprecedented Challenges" And Soaring Rates, PIMCO-Owned Landlord Defaults On $1.7 Billion In Office Mortgages
  Facing “Unprecedented Challenges” And Soaring Rates, PIMCO-Owned Landlord Defaults On $1.7 Billion In Office Mortgages

  Amid the recent record surge in interest rates, the residential housing market may have frozen – as the gap between bids and asks stretches to unprecedented levels – but it is hardly in freefall, courtesy of several years of ultra-low rates which allowed homeowners to lock in low rates for the foreseeable future, even if it means aspiring and new homeowners remain locked out indefinitely of a housing market that has never been more unaffordable (and instead are forced to rent).

  But while the residential housing market may be relatively immune against the adverse consequences of soaring rates – if only for a finite period of time – the same can not be said about commercial real estate, where the impact of higher (or lower) rates is transmitted much faster. It’s also why the commercial real estate sector is seeing unprecedented pain. A recent example was the bankruptcy of the iconic Times Square Crowne Plaza hotel, located at 1601 Broadway, which as we noted two months ago, reported some 88,000 square feet, or 45% of the office space at this address, was vacant, forcing owners Vornado Realty Trust to take a big L on the property. 

  

  Furthermore, as we also mused rhetorically…

  Is this the first major commercial real estate domino to fall in the aftermath of covid’s “work from home” revolution?

  … the answer was clearly yes, and with every day that rates continue rising to multi-decade highs, the headaches for commercial real estate will only grow.

  Fast forward to today, when Bloomberg reports that an office landlord controlled by bond giant PIMCO has defaulted on about $1.7 billion of mortgage notes on seven buildings, “a sign of widening pain for the industry as property values fall and rising interest rates squeeze borrowers.”

  The buildings — in San Francisco, New York, Boston and Jersey City, New Jersey — are owned by Columbia Property Trust, which was acquired in 2021 for $3.9 billion by funds managed by Pimco. The mortgages have floating-rate debt, which led to rising monthly payments as interest rates soared last year.

  “We, like most office owners, are addressing the unique and unprecedented challenges currently facing our asset class and customer base,” Justina Lombardo, a spokesperson for Columbia Property Trust, said in an emailed statement. “We have engaged with our lenders on a restructuring of our loan on seven properties within our larger national portfolio.  We look forward to a collaborative process yielding thoughtful solutions that reflect current market conditions and best serve the interests of all stakeholders.”

  Some more details on the offices in question: a San Francisco building at 650 California St., built in 1964, is the most valuable property in the portfolio at $479 million, according to 2021 figures. Other properties include 229 W. 43rd St., 245-249 W. 17th St. and 315 Park Ave. South in Manhattan, 201 California St. in San Francisco, 116 Huntington Ave. in Boston and 95 Christopher Columbus Drive in Jersey City.

  

  As discussed two months ago, US offices, especially the older buildings with fewer amenities, have struggled in recent years to retain tennants amid the rise of remote work during the pandemic and recent layoffs. According to Green Street, values of those properties have fallen 20% since the onset of the pandemic in March 2020,

  The seven buildings owned by Columbia Property Trust were appraised at $2.27 billion in 2021, according to loan documents on a $485 million CMBS that financed part of the debt. Goldman Sachs, Citigroup Inc. and Deutsche Bank funded the original debt of almost $1.9 billion.

  The Columbia default follows two weeks after Brookfield Corp., parent of the largest office landlord in downtown Los Angeles, defaulted on loans tied to two buildings rather than refinancing the debt as demand for space weakens in the center of the second-largest US city.

  The two properties in default, part of a portfolio called Brookfield DTLA Fund Office Trust Investor, are the Gas Company Tower, with $465 million in loans, and the 777 Tower, with about $290 million in debt, according to a filing. The fund manager had warned in November that it may face foreclosure on properties.

  

  The values of comparable office buildings have broadly dropped, according to the Barclays analysts. Office vacancies have increased across the country since the pandemic made working remotely more routine. The vacancy rate in the Los Angeles central business district vacancy rate was 22.7% in the fourth quarter of 2022, according to a Jones Lang LaSalle Inc. report.

  As Bloomberg reports, Brookfield had the option to extend the maturity on the loans tied to the Gas Company Tower, but elected not to. It also elected not to get interest-rate protection that was required for loans for the 777 Tower property, which amounts to an event of default, the company’s latest filing said.

  The Brookfield DTLA portfolio has a total of $2.28 billion in secured debt, according to a November filing. Other buildings with maturing debt include the Wells Fargo Centers North Tower with $500 million in debt due in October and the Wells Fargo Centers South Tower with $263 million maturing in November. The buildings have about $1.8 billion of floating-rate obligations, generally hedged with interest-rate derivatives, which can translate to increased payments as the Federal Reserve raises interest rates. 

  The lenders have not foreclosed on the two properties or exercised other remedies available to them, according to Brookfield’s filing. In January, Oaktree Capital Management wrested control of the building known for providing the exterior shots for the main office in the television series “L.A. Law” after the owner, Coretrust Capital Partners, went into default on a loan tied to the property.

  Still, despite the recent increase in office-linked defaults, the delinquency rate for commercial mortgage-backed securities for offices is still relatively low, at just 1.83% in January, according to Trepp. It won’t stay there long if the Fed continues with its

  Tyler Durden
  Thu, 02/23/2023 – 22:20

• Billionaire Private Equity Financier Thomas H. Lee Dies Of Self-Inflicted Gunshot Wound
  Billionaire Private Equity Financier Thomas H. Lee Dies Of Self-Inflicted Gunshot Wound

  Thomas H. Lee, the billionaire who pioneered the private-equity industry and leveraged buyouts through a firm that bore his name, has died of a self-inflicted gunshot wound at his Manhattan office on Thursday morning, police sources told the NY Post. He was 78.

  

  Cops responded to a 911 call at 767 Fifth Avenue, where Thomas H. Lee Capital, LLC is located on the sixth floor, at around 11:10 a.m., the Post sources said adding that EMTs pronounced the 78-year-old businessman dead at the scene.

  “The family is extremely saddened by Tom’s death. While the world knew him as one of the pioneers in the private equity business and a successful businessman, we knew him as a devoted husband, father, grandfather, sibling, friend and philanthropist who always put others’ needs before his own,” Lee spokesperson Michael Sitrick said in a statement. “Our hearts are broken. We ask that our privacy be respected and that we be allowed to grieve.”

  The Office of the Chief Medical Examiner will determine the official cause of death.

  A front desk worker at Lee’s office building was told there was an “emergency,” on the sixth floor, but was unaware of Lee’s death. “They don’t want anyone going to that space right now, not even the building staff,” the man said.

  Lee ran Boston-based Thomas H. Lee Partners from 1974 until 2006, when the firm had $12 billion to invest after producing triple-digit returns on some of its deals. Lee quit and formed New York-based Lee Equity Partners, which created funds that focused on smaller deals for fast-growing companies.

  Through both firms, Lee invested more than $15 billion in hundreds of transactions as of 2020. That included his best-known transaction, the 1992 purchase of Snapple Beverage Corp. After his firm bought Snapple for $135 million, investing only $28 million of its own money, Lee sold it to Quaker Oats Co. for $1.7 billion two years later after boosting revenue from $95 million a year to $750 million, Bloomberg reports.

  His Snapple return on equity was 334% after his firm took out $927 million from the sale, according to a 1997 Forbes profile. With profits like that, by 2022, Lee was worth $2 billion, according to Forbes.

  There were some notable mistakes along the way: besides a $500 million investment in 1999 in insurer Conseco which soured after the company sought bankruptcy protection three years later, Lee’s firm was also rattled by its $507 million investment in Refco, the futures and commodities brokerage firm. Refco filed for bankruptcy protection after it disclosed in 2005 that its chief executive had hidden $430 million in debt for years. In 1999, Lee led a deal for what would become Vertis Communications, the fifth largest North American printer. Vertis filed for bankruptcy in 2008.

  Lee was often seen chewing a cigar around the office, and he sometimes drew comparisons to the fictional private-equity banker Thomas Crown portrayed in the 1999 movie “The Thomas Crown Affair,” Businessweek reported in 2005.

  An avid art collector, Lee owned works by artists including Willem de Kooning and Jackson Pollock and was a trustee of Lincoln Center and the Museum of Modern Art, according to Forbes.

  “I’ve been lucky to make some money. I’m more than happy to give some of it back,” Lee said in 1996 after donating $22 million to his alma mater Harvard University, one of the school’s largest gifts ever from a living alumnus.

  Lee leaves behind his wife of 27 years, Ann Tennenbaum. He is survived by his children Jesse, Zach, Nathan, Robbie, and Rosalie, as well as two grandchildren.

  Tyler Durden
  Thu, 02/23/2023 – 22:00

• A Crypto Friendly Asia: What It Will Mean For Markets
  A Crypto Friendly Asia: What It Will Mean For Markets

  By Conor Ryder, of Kaiko Research

  On Monday, Hong Kong made its intentions clear to open the door to crypto trading for retail. Reports claim that China is quietly encouraging the move, using Hong Kong as a testing ground for what safe crypto trading might look like. The Hong Kong Securities and Futures Commission (SFC) outlined various caveats for retail investing in crypto, namely hinting at only having a small subset of the largest tokens available to trade.

  The move from Hong Kong, with China behind the scenes, paints a stark contrast to the enforcement approach we’ve seen from the SEC in the US recently. While the West risks stifling innovation and driving crypto business out of the US, Asia looks to be positioning itself to be at the forefront of the next crypto revolution by welcoming crypto business with open arms. 

  An enticing East could well be the next catalyst that propels crypto prices upwards, with some proclaiming that this run has already started, propelled by an Asian-linked token rally. However, looking at market dynamics, these claims seem premature. When looking at BTC volume so far in 2023, the majority of high volume hours have been during US trading, indicating that crypto’s flagship asset is in fact driven by the West at present. Interestingly, the trend was less extreme in 2021, as China only outlawed crypto trading towards the end of the year.

  

  BTC hourly volumes can be considered step one in debunking the Asia-led market rally. However, we know that altcoin trading is popular in the region, with South Korea in particular having a reputation for investing in the latest trends. That being said, it’s important to look at the broader market dynamics across all tokens and exchanges. Firstly, using a basket of tokens linked to projects in Asia, we can see that although there is less of an extreme difference between Asian and US hours, the majority of volume still occurs during US hours over the last three years, with not much change year to year. Interestingly, 2023 volumes so far have shown no new trend.

  

  (In this case, we classify “Asia-linked” crypto tokens as those affiliated with a project headquartered in Asia or boasting a dominant regional user-base, such as Axie Infinity or Tron.)

  Looking at volumes at the exchange level, we can see that exchanges catering for the Asia region have been losing a significant amount of market share since the start of 2020, with Binance being the main benefactor. As a caveat, our exchange classifications are not exact considering many offer global trading services. As such, our classifications are based on a combination of information on the exchange’s headquarters and historical user base. 

  

  A large reason for the rapid decline in Asian exchanges’ share of volume was China’s crypto ban in 2021, outlawing all crypto related transactions. Huobi and others closed all services to Chinese customers by the end of 2021, leaving many Asian exchanges desperate for volumes. Binance benefited from not targeting one specific market, becoming the most global exchange and reaping the rewards in terms of trading volume. Binance market share of all volumes has risen from 15% in January 2020 to 68% as of February 2023, with Asian exchange market share moving in the opposite direction, falling from 78% of volumes to just 22% over the same period.

  As a global-serving exchange, I have kept Binance in a category of its own. OKX on the other hand was counted as an Asian exchange despite being headquartered in the Seychelles, as they cannot service US customers and a majority of trade volume was placed during Asian hours. We can see the Binance volumes are more obviously US trading hour biased, with some of its lowest volume hours occurring during Asian trading hours. What is curious about this, though, is that Americans cannot use Binance, only Binance.US. So although trade volume is skewed towards US trading hours, it is likely not coming from within the country but from off-shore entities.

  

  Why Now?

  So why are Hong Kong and potentially other jurisdictions in the Asia region loosening the shackles of regulation now, particularly after such a tumultuous few months post FTX collapse? If anything, one would have forgiven Hong Kong for saying I told you so after the last few incidents where investors bore the brunt of devious actors in the space. 

  Well for one, thanks to a crypto regulatory carpet bomb from the SEC, now looks like the perfect time to strike for Hong Kong. The contrasting regulatory approach of the West may drive many businesses looking for more regulatory clarity towards Asia. 

  I could see a lot of exchanges, for example, focusing more on Asian markets to avoid the iron fist of Mr. Gensler. Why hang around, losing market share to Binance, unsure what products you can and can’t offer thanks to a lack of regulatory guidance, and potentially be hit with a fine – when you could move operations to Asia, benefit from a friendlier regulatory environment and carve out a chunk of a growing market?

  Trade volume since 2020 shows us that Asian exchanges benefitted the most from the bull run of 2021, but since China outlawed crypto towards the end of 2021, Asia has lagged Binance in volumes significantly. Welcoming investors back to Hong Kong and Asia now makes sense for not only Hong Kong, but for the Asian exchanges as well.

  

  From a token standpoint, tokens affiliated with crypto projects in the Asia region have struggled to keep pace with BTC volumes over the last year.

  

  On the left we can see the dwindling volumes of Asia-project linked tokens. On the right we can debunk stories that the market is being driven by these tokens: there was no significant increase in market share of volumes between BTC and the selection of tokens affiliated with projects in Asia since the start of the year.

  When looking at trade volume trends, the market appears to not have been driven by activity in the Asian region, meaning the reaction to this regulatory news out of the East has been subdued. The long term market dynamics of this are more interesting and once the friendlier regulation comes into effect, a handful of tokens could see a wave of new money directed their way. 

  Which tokens stand to benefit will be decided by Hong Kong’s SFC, who hinted at tokens that are included in at least “two approved indices”.

  Indices

  According to the proposal by the SFC, they will only allow trading for “large-cap virtual assets…that are included in at least two approved indices”. It’s unclear what exactly classifies as large cap, and what the approved indices might be, but the guidance at least helps us narrow down the universe of tokens that could be available. Using some of crypto’s largest indices, @tier10k on Twitter listed the tokens they hold, identifying any potential overlap for tokens that are included in at least two indices.

  

  There’s a couple of things that stand out to me here. Firstly, some of the indices hold relatively illiquid altcoins: Stellar Lumens, Ethereum Classic, EOS and Bitcoin Cash to name a few. Given the conservative nature of the Hong Kong guidance, I highly doubt they will include some of these more speculative tokens.

  Secondly, in the list of tokens that are included in at least two indices, Bitcoin Cash, Litecoin and Polkadot interestingly make the cut, included in 3 or 4 out of the 5 indices. Perpetual futures markets reacted well to the realization that these tokens could see renewed flows from Asia, with open interest for all three rising by about 15% in the last week. Funding rates also moved positive and have mostly persisted since the announcement, with BCH being the exception.

  

  There is reason for caution however, as I’m not sure some of these tokens are liquid enough to warrant consideration as large-cap assets. As I’ve written about before, using market cap alone to measure the value of tokens isn’t sufficient and we need to incorporate other metrics, specifically liquidity. It’s commonplace in traditional finance that liquidity is one of the criteria for indices construction, and crypto should be no different. According to Nasdaq, their indices are constructed using “rigorous liquidity standards”. I’m not sure how that justifies holding XLM, ETC or UNI. In December I ranked the top 28 tokens by liquidity: XLM finished dead last, UNI finished 22nd and ETC wasn’t liquid enough to even be included.

  The inclusion of Bitcoin Cash, Polkadot and Litecoin has me worried from a liquidity standpoint and I believe if the SFC are to include large-cap assets, they must use more liquid tokens in their selection. For starters, all three tokens rank poorly in 2% market depth, measuring the amount of orders currently sitting on exchanges order books within 2% of current prices.

  

  Tokens like XRP, MATIC and LINK look to be excluded from the SFC’s list by not being included in at least two indices. They miss out while tokens with worse liquidity, particularly BCH, look to be up for consideration. This is more of a qualm with index construction in crypto, as the fact BCH is included in 3 of the top 5 indices in crypto is definitely cause for concern. A more robust approach to index construction is needed that accounts for liquidity alongside market cap.

  For example, yesterday I noticed that OKB, the exchange token for OKX, was included in the top 10 tokens on CoinGecko and other ranking sites due to an update of their circulating supply figure, apparently increasing from 60m to roughly 250m. This increased its market cap by over $9bn, moving it inside the top 10. If a large cap index was constructed based on market cap, it would potentially have to include OKB now. Using liquidity metrics alongside market cap, however, would rule OKB out of consideration. Comparing OKB’s market depth to DOGE, who lost out on its top 10 spot thanks to OKB, the difference in liquidity is stark.

  

  OKB’s 2% market depth is under $1m, compared to DOGE’s depth of $32m. On that note, and a potentially controversial take, but I believe DOGE warrants more consideration for the SFC than BCH thanks to its vastly superior liquidity. 

  Takeaways

  The news out of Hong Kong, with stories of quiet backing from China, are no doubt positive for crypto longer term. Short-term, we have seen that markets aren’t actually being driven by this narrative, rather investors in the US buying on the assumption that those in Asia are. The timing of the announcement, while the SEC crack down on crypto, looks intentional and may actually drive crypto business out of the US and towards Asia over time. 

  However, some of the tokens that could be considered under the SFC’s new rules aren’t of the highest caliber, from both a fundamental and a liquidity perspective. This is actually an issue with index construction in crypto, but the SFC needs to properly account for liquidity as they may be excluding some tokens with better fundamentals and liquidity just because they aren’t included in two indices. Any token that is included in the new parameters should see fresh investment and improved sentiment, while Asia may be increasingly well-positioned for a new wave of crypto investment.

  Tyler Durden
  Thu, 02/23/2023 – 21:40

• New Hi-Res Images Of Chinese Spy Balloon Released
  New Hi-Res Images Of Chinese Spy Balloon Released

  “Mr. Xi…I’m ready for my close-up!”

  New images that were reportedly taken on February 3, 2023 of the Chinese spy balloon that threw the nation into a frenzy have been released by the United States Department of Defense. 

  The images were from when the balloon was flying at 60,000 over the American Midwest, according to Breaking 911. They were captured by a U.S. U-2 spy plane that was trailing the balloon across the country, the report says. 

  The report says the balloon’s payload – consisting of reconnaissance sensors, antennae, and solar power panels – can be seen the photo, along with the shadow of the U-2 plane that was following it. 

  

  Recall, last week we wrote about how Republican senators had “raised concerns that U.S. manufacturing might have assisted in the construction of the Chinese spy balloon…”.

  The Epoch Times noted that Sens. Josh Hawley (R-Mo.) and Dan Sullivan (R-Alaska) took part in an all-senators classified briefing on Feb. 9, held by officials from the Office of the Director of National Intelligence, the Pentagon, and the State Department. The agencies held a separate classified briefing for House lawmakers on the same day.

  After the briefing, Sullivan told reporters that the question of whether American companies helped build the Chinese balloon was raised, but officials didn’t provide a conclusive response.

  

  As we reported last week, the balloon was eventually shot down over the Atlantic on February 5, 2023. A US F-22 stealth jet was responsible for downing it off the Carolina coast. 

  The recovery mission of the balloon is ongoing and little new information about what it contained has been released over the past week. Several U.S. Navy and Coast Guard vessels established a security perimeter where the balloon hit the water, about six nautical miles off the coast of South Carolina, The Epoch Times reported the day after it was shot down. 

  

  Tyler Durden
  Thu, 02/23/2023 – 21:20

• Only 19% Of Americans Have Confidence In Biden's Handling Of Ukraine Conflict, New Poll Finds
  Only 19% Of Americans Have Confidence In Biden’s Handling Of Ukraine Conflict, New Poll Finds

  Authored by Steve Watson via Summit News,

  An Associated Press and NORC poll has found that fewer than 20 percent of Americans have a “great deal” of confidence in the way Joe Biden is involving the U.S. in the Ukraine conflict.

  

  The survey reveals that only 19 percent of the public have a “great deal” of confidence in Biden’s ability, while 37 percent say they have “only some” confidence,” and 43 percent have “hardly any” confidence.

  

  The poll also found that only 42 percent approve of the way Biden is handling the U.S.’ relationship with Russia, while 54 percent disapprove. 

  The poll also found that a quarter of respondents believe the U.S. shouldn’t be playing any role in the war, with a further 49 percent saying that the U.S. should only have minor role.

  Just 26 percent believe the U.S. should be playing a major role.

  

  The poll also found that while 59 percent of Democrats said they were in favour of sending government funds directly to Ukraine, just 21 percent of Republicans concur.

  The figures represent a decrease in support among both groups, as last year 63 percent of Democrats and 28 percent of Republicans said they were in favour.

  The findings come after Biden’s probable 2024 opponent Donald Trump declared that he would negotiate a peace deal and end the conflict within 24 hours, as well as ousting all the “demented warmongers and globalists” currently occupying the U.S. National Security establishment.

  *  *  *

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  Tyler Durden
  Thu, 02/23/2023 – 21:00

• JPMorgan Says Staley-Epstein 'Snow White' Emails Don't Prove That Minors Were Abused
  JPMorgan Says Staley-Epstein ‘Snow White’ Emails Don’t Prove That Minors Were Abused

  Last week, the US Virgin Islands released bombshell emails between former JPMorgan executive Jes Staley and Jeffrey Epstein from 2010, which reference Disney princesses, presumably in the context of girls procured for sexual activities.

  

  “That was fun,” Staley allegedly wrote to Epstein. “Say hi to Snow White.“

  To which Epstein replied: “[W]hat character would you like next?”

  “Beauty and the Beast.”

  Epstein also emailed Staley photos of young women in seductive poses, the filing continues.

  

  On Wednesday, JPMorgan responded – claiming that the emails fail to show that minors were victimized, or that “force, fraud or coercion” were used against women. The bank has asked the judge to dismiss the case, in which the USVI says JPMorgan is liable for facilitating Epstein’s sex trafficking of minors because they ignored obvious red flags while continuing to provide banking services to the prolific pedophile, Bloomberg reports.

  JPMorgan said on Wednesday that though the emails show that “inappropriate personal conversations” took place, they don’t prove that any illegal conduct did and “provide no basis to infer that Staley detected Epstein’s sex-trafficking.”

  The bank slammed the USVI suit as providing an “inaccurate and salacious telling of events.” JPMorgan has previously called the claims a “masterclass in deflection,” pointing out that the territory failed to act against Epstein in a law enforcement capacity and instead gave him favorable tax treatment. -Bloomberg

  JPMorgan also called racketeering claims by the USVI “impermissibly extraterritorial.” 

  “USVI’s attempt to hold JPMC accountable under USVI law for JPMC’s actions in New York — on the theory that JPMC’s client, Epstein, unilaterally decided to spend time in USVI — disregards the limits of USVI’s legislative jurisdiction,” the bank argued, adding that the USVI also failed to establish that Staley’s travels to Epstein’s island, or his use of work emails, fell within the scope of his employment at the bank.

  Staley and Epstein exchanged upwards of 1,200 emails over a period of several years. In 2013, Staley left JPMorgan to become CEO of Barclays, which he left in 2021 following a probe by the UK Financial Conduct Authority into his relationship with Epstein.

  Epstein, meanwhile, had around 55 accounts with JPMorgan between 1998 and 2013, which contained hundreds of millions of dollars. At least 20 individuals paid through JPMorgan accounts were “victims of trafficking and sexual assault in Little St James,” according to the USVI.

  Tyler Durden
  Thu, 02/23/2023 – 20:40

• Let's Check In On President Obama's Promise To End Homelessness By 2023
  Let’s Check In On President Obama’s Promise To End Homelessness By 2023

  Authored by Mike Shedlock via MishTalk.com,

  Obama’s “Housing First” plan to end homelessness worked so well that President Biden adopted the idea in December of 2022. We are now “ALL IN”…

  

  Homeless Funding Opportunity for Housing First

  Let’s start with a HUD Funding Opportunity from 2013. 

  The CoC Program is designed to promote a community-wide commitment to the goal of ending homelessness; to provide funding for efforts by nonprofit providers, States, and local governments to quickly re-house the homeless while minimizing the trauma and dislocation caused by homelessness; to promote access to and effective utilization of mainstream programs by the homeless; and to optimize self-sufficiency among those experiencing homelessness. 

  Housing First is a model of housing assistance that is offered without preconditions (such as sobriety or a minimum income threshold) or service participation requirements, and rapid placement and stabilization in permanent housing are primary goals. Research shows that it is effective for the chronically homeless with mental health and substance abuse disorders, resulting in fewer inpatient stays and less expensive interventions than other approaches. PSH projects should use a Housing First approach in the design of the program. 

  Obama Promised to End Homelessness This Year

  The Wall Street Journal comments on Obama’s Promise to End Homelessness This Year

  It may be hard to believe looking at the current state of major American cities, but 2023 was supposed to be the year that all types of homelessness would be eradicated. That’s what the Obama administration promised when in 2013 the Department of Housing and Urban Development formally changed the federal government’s homelessness policy to “housing first,” under which homeless people receive federally funded housing vouchers with no strings attached. Things haven’t panned out as the administration planned.

  Team Obama ignored a harsh reality of homelessness: It is overwhelmingly a problem of untreated mental illness and substance-use disorder. California Policy Lab, a nonpartisan research institute at the University of California, found in 2019 that 78% of the homeless population in America reported having mental-health conditions, and 50% said mental illness contributed to their loss of housing. Additionally, 75% of the homeless said they struggled with substance abuse, and 51% said drug or alcohol use contributed to their loss of housing.

  Before 2013, HUD strongly encouraged and often required that Continuum of Care organizations provide treatment and job training and that they make housing vouchers conditional on participation in those programs. In 2013 the Obama HUD told all funding recipients that they instead had to adopt “a Housing First approach” without “service participation requirements.”

  That change precipitated a dramatic increase in homelessness. HUD data show that unsheltered homelessness rose 20.5% from 2014 to the beginning of 2020, before Covid hit.

  Inexplicably, homelessness is treated differently. Policy makers act as if it’s simply an issue of people not having houses, rather than a complex problem often rooted in mental illness and substance-abuse disorders.

  Research shows that “housing first works.” 

  What research was that? 

  

  By any chance did the National Association of Realtors or National Association of Homebuilders sponsor the research? 

  Spotlight California

  CAL Matters reports California Accounts for 30% of Nation’s Homeless.

  • Country’s highest homelessness rate, with 44 people out of every 10,000 experiencing homelessness.

  • Largest increase in its homeless population of any other state from both 2020-22 (6.2%) and 2007-22 (23.4%), whereas Florida — a state often in Gov. Gavin Newsom’s crosshairs as he spars with its Republican governor Ron DeSantis — saw a 5.6% decrease from 2020-22 and notched the country’s biggest decrease from 2007-22 (46%).

  • California had nine times more unsheltered people than Washington, the state with the next highest number (115,491 people compared to 12,668 people).

  Project RoomKey

  • Los Angeles Mayor Karen Bass is set today to launch a program to start moving the city’s estimated 40,000 homeless people into hotels and motels, the Associated Press reports. The plan appears to be modeled on Newsom’s Project Roomkey and Homekey.

  • Bass, who declared a homelessness state of emergency on her first day in office last week, also issued a sweeping executive order Friday that aims to significantly speed up the development of 100% affordable housing by requiring city agencies to finish reviewing applications within 60 days — instead of the typical six to nine months.

  Biden to the Rescue

  Please consider the Biden Administration’s Plan to Prevent and End Homelessness. 

  Every American deserves a safe and reliable place to call home. It’s a matter of security, stability, and well-being. It is also a matter of basic dignity and who we are as a Nation.

  Yet many Americans live each day without safe or stable housing. Some are in emergency shelters. Others live on our streets, exposed to the threats of violence, adverse weather, disease, and so many other dangers exacerbated by homelessness. Both the COVID-19 pandemic and the reckoning our Nation has faced on issues of racial justice have also exposed inequities that have been allowed to fester for far too long.

  At the same time, we know we can do something about it. That is why I’m proud to present the Biden-Harris Administration’s Federal Strategic Plan to reduce homelessness by 25 percent by January 2025—an ambitious plan that will put us on the path to meeting my long-term vision of preventing and ending homelessness in America. We need partners at the State and local levels, in the private sector, and from philanthropies to all play a part in meeting this goal. 

  Housing First Worked So Well That ….

  We are proud and pleased to present this new plan, which restores the importance of Housing First. 

  Seems like the new plan is the same as the old one that did not work. 

  There is however a name change. The plan is no longer the Obama Housing First plan. It’s now the Biden-Harris Housing First plan.

  And the Data?

  It means being guided by the data and evidence that some Americans who face ongoing discrimination are disproportionately overrepresented among those experiencing homelessness—especially people of color, LGBTQI+ people, and people with disabilities. It means recognizing that experiencing the crisis of homelessness is a form of significant trauma that can impact individuals and families for decades and generations. Solving homelessness means delivering help to the people who need it most and who are having the hardest time. It means putting housing first, along with the person-centered supports needed to succeed and thrive. 

  Proud of the Work

  While we acknowledge there is much work ahead, we are proud of the work this administration has done to address homelessness.

  If we give everyone a house, free food, insurance, etc. what would it cost?

  LA Spends Up to $837K Per Unit to House a Mere 5,600 of Over 40,000 Homeless

  On March 24, 2022 I noted LA Spends Up to $837K Per Unit to House a Mere 5,600 of Over 40,000 Homeless

  Key Points

  • California had 28,464 Homeless in 2016.

  • LA then passed proposition HHH, authorizing $1.2 billion to address the problem.

  • In early 2020, pre-Covid, the city had 41,250 homeless. There are no current homeless stats and due to Covid are undoubtedly much higher.

  • The city is building units to address the problem. 1,200 units have been completed.

  • 4,400 units are in construction. 

  That’s “housing first” in actual practice. It’s certainly something to be proud of.

  *  *  *

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  Tyler Durden
  Thu, 02/23/2023 – 20:20

• Greenwald: NYT Finally Admits "The International Community" Does Not Stand With US On Ukraine
  Greenwald: NYT Finally Admits “The International Community” Does Not Stand With US On Ukraine

  A typical consumer of Western and especially American media over the past year of war in Ukraine might be forgiven for assuming the so-called international community is fully in Washington and NATO’s corner. But a detailed tally of nations and where they stand shows otherwise.

  This week, two somewhat surprising reports out of the most prominent and visible newspapers in the US have much belatedly set the record straight. Journalist Glenn Greenwald has pointed out that finally The New York Times has acknowledged the reality that the majority of the globe does not in fact “stand with the US” in its approach to the Russia-Ukraine conflict. Greenwald sounds off in a Twitter thread as follows…

  From the start of the war in Ukraine, the US media continuously claimed “the international community” is united behind the US (that phrase always means: W. Europe and whatever countries happen to side with the US).

  Today, the NYT recognizes the truth: https://t.co/VE00QIxWjn

  — Glenn Greenwald (@ggreenwald) February 23, 2023

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

  Greenwald then directs the reader’s attention to statements from the Times report which proves long-standing media assumptions in this regard were nothing but ‘false fairy tales’.

  No, there was never any kind of “united” global stance, per the report (emphasis ours): 

  But the West never won over as much of the world as it initially seemed. Another 47 countries abstained or missed the vote, including India and China. Many of those “neutral” nations have since provided crucial economic or diplomatic support for Russia.

  And even some of the nations that initially agreed to denounce Russia see the war as somebody else’s problem — and have since started moving toward a more neutral position.

  A couple of key paragraphs from the NYT story that deflates and debunks the inspiring and from-the-start obviously false fairy tale that “the international community” was united with the US in support of Ukraine: pic.twitter.com/QLf72NT7lQ

  — Glenn Greenwald (@ggreenwald) February 23, 2023

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

  And more from the Times:

  A year on, it’s becoming clearer: While the West’s core coalition remains remarkably solid, it never convinced the rest of the world to isolate Russia.

  Instead of cleaving in two, the world has fragmented. A vast middle sees Russia’s invasion as, primarily, a European and American problem. Rather than view it as an existential threat, these countries are largely focused on protecting their own interests amid the economic and geopolitical upheaval caused by the invasion.

  Greenwald points out that The Washington Post has also made a similar concession…

  The WashPost has a very similar concession this morning. While all the usual DC militarism advocates — people like @BillKristol, @DavidFrum and @Mattduss — pen homages to the diplomatic genius of Biden, the headline of the Post article tells a far different story: pic.twitter.com/nIZ1rCLZPC

  — Glenn Greenwald (@ggreenwald) February 23, 2023

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

  Greenwald continues his commentary:

  A staple of left-wing foreign policy is the valorization of the “Global South” (for good reason: I share the view that they matter more than is recognized). Yet as both papers say, the “Global South” rejects support for the US view of Ukraine, yet the US left ignores this.

  A major reason the US liberal-left in DC is *unanimous* in support of Biden’s war policies — even as the left all over the world is divided to hostile — is lingering anger toward Russia because of the view they helped defeat Hillary.

  Greenwald concludes: “It’s utter madness but it’s how they think.”

  Meanwhile…

  Indian officials hosting G-20 finance chiefs this week are seeking to avoid using the word “war” when referring to Russia’s war in Ukraine, a person familiar with the matter says https://t.co/lTN3ZxzgCe

  — Bloomberg Africa (@BloombergAfrica) February 22, 2023

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

  Tyler Durden
  Thu, 02/23/2023 – 20:00

• Are Reparations Part Of The American Rescue Plan? Cities Say Yes And Plan To Use Federal Funds To Support Reparations Efforts
  Are Reparations Part Of The American Rescue Plan? Cities Say Yes And Plan To Use Federal Funds To Support Reparations Efforts

  Authored by Jonathan Turley,

  There is an interesting fight brewing in Congress after various cities indicated that they may not only pay reparations but use federal pandemic funds for such payments.

  There has been a long call for federal reparations with various Democratic bills introduced in Congress. BET founder Robert Johnson has called for $14 trillion in federal reparations. However, cities like Providence, Rhode Island are not waiting. They insist that federal reparations funds are already effectively approved as part of their pandemic relief.

  

  We have been discussing how California’s Reparations Task Force has presented a bill for $569 billion for reparations while cities like San Francisco have a reparation board demanding $5 million per eligible black resident.

  Other cities are saying that the federal government can foot the bill. They are relying on massive payments of federal money under the American Rescue Plan (ARP). They insist that Congress put so few conditions on the money that they can use it for reparations.

  The $1.9 billion dollars in the American Rescue Plan Act of 2021 was passed on a loose mandate to encourage economic stimulus and deal with the economic and health effects of the pandemic and ongoing recession. Advocates are arguing that the pandemic exacerbated the lingering effects of slavery for the Black community. Every Republican (and one Democrat, Jared Golden of Maine) voted against the Act.

  FOX Business reported that Providence, Rhode Island has already dedicated $10 million in pandemic relief toward creating the Providence Municipal Reparations Commission to address “racial equity.” Likewise, officials in Shelby County, Tennessee (where Memphis is located) voted to spend $5 million to study the possibility of a long-term reparations program. The county said it may use pandemic funds for the effort.

  Other cities are moving forward with reparation task forces, including most recently Boston. As in cities like San Francisco, the Boston reparations will cover not just slavery but more “recent” housing and economic inequities. Mayor Michelle Wu declared “For four hundred years, the brutal practice of enslavement and recent policies like redlining, the busing crisis, and exclusion from City contracting have denied Black Americans pathways to build generational wealth, secure stable housing, and live freely.”

  Likewise, this week, Washtenaw County in Ann Arbor, Michigan approved its own commission based on reparations approved by cities like Evanston, Illinois. It was described as “An evolution of an exploratory committee led by the Racial Equity Office, the Advisory Council on Reparations will be a perpetual body of Commissioner appointed subject matter experts representing relevant sectors.”

  Sen. Cory Booker (D., N.J.) introduced a new federal reparations bill that would create a new federal commission similar to those of states like California. It is supported by Senators Dick Durbin (D-IL), Ed Markey (D-MA), Bob Casey (D-PA), Jeff Merkley (D-OR), Mazie Hirono (D-HI), Dianne Feinstein (D-CA), Bernie Sanders (I-VT), Ben Cardin (D-MD), Tammy Duckworth (D-IL), Tim Kaine (D-VA), Tammy Baldwin (D-WI), Alex Padilla (D-CA), Chris Van Hollen (D-MD), Sheldon Whitehouse (D-RI), Elizabeth Warren (D-MA), Amy Klobuchar (D-MN), Sherrod Brown (D-OH), Tina Smith (D-MN), Chris Coons (D-DE), Richard Blumenthal (D-CT), and Patty Murray (D-WA).

  Some 190 organizations now support federal reparations including the ACLU and Amnesty International.

  Tyler Durden
  Thu, 02/23/2023 – 19:40

• Another Gulf State Opens Airspace For Israeli Carriers As 'Normalization' Advances
  Another Gulf State Opens Airspace For Israeli Carriers As ‘Normalization’ Advances

  In another sign of rapidly warming ties between Arab gulf countries and Israel, Oman has announced it is opening its airspace to Israeli carriers for the first time in history. 

  It comes on the heels of Saudi Arabia allowing Israeli airplanes to also traverse its airspace, seen as a huge step in the normalization of relations process still underway, based on the Trump administration’s ‘Abraham Accords’. Israeli airlines can now significantly shorten travel eastbound to places like India and China. 

  

  For months, the White House has been working behind the scenes with the Omani government to improve economic and diplomatic relations with Israel. This included meetings going back to November between White House national security adviser Jake Sullivan, Secretary of State Tony Blinken and Omani Foreign Minister Sayyid Badr al-Busaidi.

  The prior Omani government had pledged to open its airspace years ago, but this was halted. “In 2018, Israeli Prime Minister Benjamin Netanyahu visited Oman and got a commitment from then-Sultan Qaboos to allow Israeli airlines to use Omani airspace,” Axios writes. “But after Qaboos died, current Sultan Haitham bin Tariq rolled back the decision.”

  Last week, Bloomberg reported that Israel’s new government under Benjamin Netanyahu has stepped up efforts to cement stronger military and intelligence cooperation between Saudi Arabia (and by extension the rest of the Gulf Cooperation Council/GCC) and Israel.

  While historically the Saudis have never recognized the ‘Jewish state’ – both have long secretly cooperated in places like Syria and Yemen, in what they see as ‘counter-Iran’ operations.

  

  Israel normalized relations with the UAE and Bahrain in 2020 under the Abraham Accords, and is hoping Saudi Arabia will be next. However, this would likely be met with fierce anger among the Saudi public, and particularly among the powerful Sunni clerical establishment. 

  Tyler Durden
  Thu, 02/23/2023 – 19:20

• Escobar: Putin's "Civilizational" Speech Frames Conflict Between East And West
  Escobar: Putin’s “Civilizational” Speech Frames Conflict Between East And West

  Authored by Pepe Escobar via The Cradle,

  In his Federal Assembly address, President Putin emphasized that Russia is not only an independent nation-state but also a distinct civilization with its own identity, which is in conflict and actively opposes the values of ‘western civilization.’

  

  Russian President Vladimir Putin’s much awaited address to the Russian Federal Assembly on Tuesday should be interpreted as a tour de force of sovereignty.

  The address, significantly, marked the first anniversary of Russia’s official recognition of the Donetsk and Luhansk People’s Republics, only a few hours before 22 February, 2022. In myriad ways, what happened a year ago also marked the birth of the real, 21st century multipolar world.

  Then two days later, Moscow launched the Special Military Operation (SMO) in Ukraine to defend said republics.

  Cool, calm, collected, without a hint of aggression, Putin’s speech painted Russia as an ancient, independent, and quite distinct civilization – sometimes following a path in concert with other civilizations, sometimes in divergence.

  Ukraine, part of Russian civilization, now happens to be occupied by western civilization, which Putin said “became hostile to us,” like in a few instances in the past. So the acute phase of what is essentially a war by proxy of the west against Russia takes place over the body of Russian civilization.

  That explains Putin’s clarification that “Russia is an open country, but an independent civilization – we do not consider ourselves superior but we inherited our civilization from our ancestors and we must pass it on.”

  A war dilacerating the body of Russian civilization is a serious existential business. Putin also made clear that “Ukraine is being used as a tool and testing ground by the west against Russia.” Thus the inevitable follow-up: “The more long-range weapons are sent to Ukraine, the longer we have to push the threat away from our borders.”

  Translation: this war will be long – and painful. There will be no swift victory with minimal loss of blood. The next moves around the Dnieper may take years to solidify. Depending on whether US policy continues to cleave to neo-con and neoliberal objectives, the frontline may be displaced to Lviv. Then German politics may change. Normal trade with France and Germany may be recovered only by the end of the next decade.

  Kremlin exasperation: START is finished

  All that brings us to the games played by the Empire of Lies. Says Putin: “The promises…of western rulers turned into forgery and cruel lies. The west supplied weapons, trained nationalist battalions. Even before the start of the SMO, there were negotiations…on the supply of air defense systems… We remember Kyiv’s attempts to obtain nuclear weapons.”

  Putin made it clear, once again, that the element of trust between Russia and the west, especially the US, is gone. So it’s a natural decision for Russia to “withdraw from the treaty on strategic offensive weapons, but we don’t do it officially. For now we are only halting our participation to the START treaty. No US inspections in our nuclear sites can be allowed.”

  As an aside, of the three main US-Russian weapons treaties, Washington abandoned two of these: The Anti-Ballistic Missile (ABM) Treaty was dumped by the administration of former president George W. Bush in 2002, and the Intermediate-Range Nuclear Forces (INF) Treaty was nixed by former president Donald Trump in 2019.

  This shows the Kremlin’s degree of exasperation. Putin is even prepared to order the Ministry of Defense and Rosatom to get ready to test Russian nuclear weapons if the US goes first along the same road.

  If that’s the case, Russia will be forced to completely break parity in the nuclear sphere, and abandon the moratorium on nuclear testing and cooperation with other nations when it comes to the production of nuclear weapons. So far, the US and NATO game consisted in opening a little window allowing them to inspect Russian nuclear sites.

  With his judo move, Putin returns the pressure onto the White House.

  The US and NATO will not be exactly thrilled when Russia starts testing its new strategic weapons, especially the post-doomsday Poseidon – the largest nuclear-powered torpedo ever deployed, capable of triggering terrifying radioactive ocean swells.

  On the economic front: Bypassing the US dollar is the essential play towards multipolarity. During his speech, Putin made a point to extol the resilience of the Russian economy: “Russian GDP in 2022 decreased only by 2.1 percent, estimates of the opposing side did not become reality, they said 15, 20 percent.” That resilience gives Russia enough room to “work with partners to make the system of international settlements independent of the US dollar and other western currencies. The dollar will lose its universal role.”

  On geoeconomics: Putin went all out in praise of economic corridors, from West Asia to South Asia: “New corridors, transport routes will be built towards the East, this is the region where we will focus our development, new highways to Kazakhstan and China, new North-South corridor to Pakistan, Iran.”

  And those will connect to Russia developing “the ports of the Black and Azov Seas, it’s necessary to build logistics corridors within the country.” The result will be a progressive interconnection with the International North South Transportation Corridor (INSTC) whose principals include Iran and India, and eventually China’s mega-trillion-dollar Belt and Road Initiative (BRI).

  China’s plan for global security  

  It’s inevitable that apart from sketching several state policies geared towards Russia’s internal development – one might even compare them to socialist policies – a great deal of Putin’s address had to focus on the NATO vs. Russia war till-the-last-Ukrainian.

  Putin remarked on how “our relations with the west have degraded, and this is entirely the fault of the United States;” how NATO’s goal is to inflict a “strategic defeat” on Russia; and how the warmongering frenzy had forced him, a week ago, to sign a decree “putting new ground-based strategic complexes on combat duty.”

  So it’s no accident that the US ambassador was immediately summoned to the Ministry of Foreign Affairs right after Putin’s address.

  Russian Foreign Minister Sergey Lavrov told Ambassador Lynne Tracey in no uncertain terms that Washington must take concrete measures: among them, to remove all US and NATO military forces and equipment away from Ukraine. In a stunning move, he demanded a detailed explanation of the destruction of the Nord Stream 1 and 2 pipelines, as well as a halt to US interference in an independent inquiry to identify the responsible parties.

  Keeping the momentum in Moscow, top Chinese diplomat Wang Yi met with secretary of Russian Security Council Nikolai Patrushev, before talking to Lavrov and Putin. Patrushev remarked, “the course towards developing a strategic partnership with China is an absolute priority for Russia’s foreign policy.” Wang Yi, not so cryptically, added, “Moscow and Beijing need to synchronize their watches.”

  The Americans are doing everything to try and pre-empt the Chinese proposal for a de-escalation in Ukraine. China’s plan should be presented this Friday, and there’s a serious risk Beijing may fall into a trap set by the western plutocracy.

  Too many Chinese “concessions” to Russia, and not as many to Ukraine, may be spun to drive a wedge between Moscow and Beijing (Divide and Rule, which is always the US Plan A. There’s no Plan B).

  Sensing the waters, the Chinese themselves decided to take the offensive, presenting a Global Security Initiative Concept Paper.

  The problem is Beijing still attributes too much clout to a toothless UN, when they refer to“formulating a New Agenda for Peace and other proposals put forth in Our Common Agenda by the UN Secretary-General.”

  Same when Beijing upholds the consensus that “a nuclear war cannot be won and must never be fought.” Try to explain that to the Straussian neo-con psychos in the Beltway, who know nothing about war, much less nuclear ones.

  The Chinese affirm the necessity to “comply with the joint statement on preventing nuclear war and avoiding arms races issued by leaders of the five nuclear-weapon states in January 2022.” And to “strengthen dialogue and cooperation among nuclear-weapon states to reduce the risk of nuclear war.”

  Bets can be made that Patrushev explained in detail to Wang Yi how that is just wishful thinking. The “logic “of the current collective western “leadership” has been expressed, among others, by irredeemable mediocrity Jens Stoltenberg, NATO’s secretary-general: even nuclear war is preferable to a Russian victory in Ukraine.

  Putin’s measured but firm address has made it clear that the stakes keep getting higher. And it all revolves on how deep Russia’s – and China’s – “strategic ambiguity” are able to petrify a paranoid west flirting with mushroom clouds.

  Tyler Durden
  Thu, 02/23/2023 – 19:00

• Explosions In Iranian City Which Hosts Nuclear Facility, Air Defenses Activated
  Explosions In Iranian City Which Hosts Nuclear Facility, Air Defenses Activated

  Reports are emerging of a possible attack on a military facility in the city of Karaj on Thursday night, at a moment tensions are boiling between Tehran and Israel over the Islamic Republic’s advancing nuclear program.

  The BBC’s Persian-language service reported that widespread gunshots and and explosions were observed in the area, which lies just west of the Iranian capital. Anti-aircraft fire was also seen in multiple circulating clips, which remain unverified. 

  این ویدیو که گفته می‌شود امشب در منطقه عظیمه کرج گرفته شده به دست بی‌بی‌سی رسیده است.
  دقایقی پیش برخی کاربران شبکه‌های اجتماعی در کرج از شنیده شدن صدای شلیک ممتد و انفجار خبر داده‌اند.
  برخی شاهدان گلوله‌های شلیک شده را به پدافند ضدهوایی تشبیه کرده‌اند. pic.twitter.com/Foo3uerDl9

  — BBC NEWS فارسی (@bbcpersian) February 23, 2023

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  However, the Iranian government is denying that it was a hostile attack from a foreign force, instead calling it a live-fire defense exercise. 

  Iran’s official Islamic Republic News Agency tweeted a video describing military training in the area. 

  Israeli media has also picked up on the claims of an attack, while noting that a key nuclear facility is located in Karaj. As The Jerusalem Post recounts: 

  Defense facilities in and near Karaj have been targeted by attacks repeatedly in recent years.

  In July 2021, Iran blamed Israel for a sabotage operation that targeted a building belonging to Iran’s Atomic Energy Organization (IAEO) in Karaj the month before.

  #BREAKING: explosion and antiaircraft fire emerging over Karaj tonight in #Iran. pic.twitter.com/T8RSxRmaYl

  — Jason Brodsky (@JasonMBrodsky) February 23, 2023

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  One journalist and observer of the region described that “An unofficial report circulating online says that a depot of IR-6 centrifuges in Kondar village, 24 km from Karaj, Alborz province, was targeted Thursday night.” However, there’s no independent confirmation of this, despite the widely circulating videos.

  Bloomberg reported Sunday that Iran has currently reached an 84% uranium enrichment level, a new high. While Iran has all long claimed it is only for peaceful nuclear energy purposes, the number needed for achieving an atomic bomb is 90%.

  Tyler Durden
  Thu, 02/23/2023 – 18:40

• Does Gold Really Preserve Purchasing Power? The Case Of The High-End Suit
  Does Gold Really Preserve Purchasing Power? The Case Of The High-End Suit

  Authored by Michael Maharrey via SchiffGold.com,

  One of the characteristics of gold is that it preserves wealth in a world of constantly devaluing fiat currency.

  Put another way, it preserves your purchasing power over time.

  If you hold onto dollars for several years, they will buy less stuff at the end of that time period than they did at the beginning. This is especially true when we have rapidly rising prices as we do today. But even when inflation is “under control,” Federal Reserve policy is to devalue the dollar by 2% every year.

  It simply doesn’t make sense to hold onto dollars for any length of time.

  We can demonstrate this in a tangible way by pricing a good or service in gold and examining the change in price over time.

  As an example, let’s consider a high-end men’s suit.

  In 1900, the average price of a high-end men’s suit was around $35.

  

  At the time, the price of gold was set at $20.67 per ounce. That means a high-end suit priced in gold would have cost around 1.7 ounces of gold.

  

  Today, the average price of a high-end suit is around $2,000.

  Obviously, prices vary depending on the brand, region and other factors, but this provides a fair average. At the time I’m writing this, the price of gold is around $1,840 an ounce. I’ll use $1,800 for this calculation to keep it simple. That means a high-end suit priced in gold today costs a little over 1.1 ounces of gold.

  As you can see, the price of a suit in gold has dropped a little over 35% since 1900. This is what you would expect given advances in technology and productivity. But priced in dollars, the price of a high-end men’s suit has increased by 5,614.3%.

  Looking at it another way, if you had stuffed $41.34 under your mattress in 1900, today you might be able to buy a couple of Polo shirts if you find a deal. But if you had bought two 1-ounce gold coins and stuffed those under your mattress in 1900, today you’d be able to buy a fancy suit and have about $1,600 left over.

  Of course, the price of gold fluctuates day to day, month to month, and year to year. In some years, the price of gold even falls. But over time, it has historically maintained its purchasing power even as fiat currencies lose buying power year after year.

  Added to the fact that it carries no counterparty risk, gold is an excellent way to safely preserve wealth and mitigate risk in your portfolio.

  Tyler Durden
  Thu, 02/23/2023 – 18:20

• Toxic Wastewater From Ohio Train Derailment Headed To Texas
  Toxic Wastewater From Ohio Train Derailment Headed To Texas

  Recaptured toxic wastewater that was used to extinguish a fire after a Feb. 3 train derailment in East Palestine, Ohio is now headed to a Houston, Texas suburb for disposal, according to a top official from Harris County.

  

  “I and my office heard today that ‘firefighting water’ from the East Palestine, Ohio, train derailment is slated to be disposed of in our county,” said Harris County Judge Lina Hidalgo in a Wednesday statement on Twitter. “Our Harris County Pollution Control Department and Harris County Attorney’s Office have reached out to the company and the Environmental Protection Agency to receive more information about the timing, transportation mechanisms, and contents, as well as to ensure all regulations are being met.”

  I heard the news today about East Palestine “firefighting water” being sent to Harris County and will continue pushing for information for our community. pic.twitter.com/lMyJYPtTdT

  — Lina Hidalgo (@LinaHidalgoTX) February 23, 2023

  https://platform.twitter.com/widgets.jsFurther details were not provided, though Hidalgo said that her office is working closely with the mayor of Deer Park, Texas.

  “I have communicated with Deer Park Emergency Management and Mayor [Jerry] Mouton and am very sensitive to the concerns that this news naturally brings to our community,” Hildago’s statement continues. “We will keep residents informed as we learn more.”

  The wastewater is headed to Texas Molecular, which has a process for injecting hazardous waste into the ground for disposal. This comes on the heels of a statement by Ohio EPA officials, who said that the chemicals used to put out the fire may have seeped into the Ohio River – partially forming into a plume of chemicals that is moving downstream.

  According to the Texas Commission on Environmental Quality, Texas Molecular “is authorized to accept and manage a variety of waste streams, including vinyl chloride, as part of their … hazardous waste permit and underground injection control permit,” which includes vinyl chloride – one of the ingredients carried by the train when it derailed.

  

  “Our technology safely removes hazardous constituents from the biosphere. We are part of the solution to reduce risk and protect the environment, whether in our local area or other places that need the capabilities we offer to protect the environment,” Texas Molecular said in a statement to KHOU-TV.

  The company will inject the water extremely deep into the earth.

  “This injection, in some cases, is usually 4,000 or 5,000 feet down below any kind of drinking water aquifer,” said George Guillen, the executive director of the Environmental Institute of Houston who holds a doctorate in environmental science, who says the risk to the public is minimal despite it being “very, very toxic” material.

  More via The Epoch Times,

  Transportation Secretary Pete Buttigieg, who visited the derailment site Thursday, has warned the railroad responsible for the derailment, Norfolk Southern, to fulfill its promises to clean up the mess just outside East Palestine, Ohio, and help the town recover.

  While in East Palestine, Buttigieg, who has faced criticism for his response to the disaster, joined members of the National Transportation Safety Board. The agency released a report on Thursday about its findings.

  

  The three-dozen Norfolk Southern train cars that derailed earlier this month had “11 tank cars carrying hazardous materials that subsequently ignited, fueling fires that damaged an additional 12 non-derailed railcars,” the National Transportation Safety Board said Thursday. Five of the derailed cars were carrying about 115,580 gallons of vinyl chloride, the report found.

  The five cars with the toxic substance “continued to concern authorities because the temperature inside one tank car was still rising,” which could have resulted in an explosion, the report also found. When the controlled release and burn were initiated, officials forced locals in East Palestine to evacuate before allowing them to return days later.

  Tyler Durden
  Thu, 02/23/2023 – 18:00

• "Colossal" Tidal Wave Of New Container Ships About To Strike
  “Colossal” Tidal Wave Of New Container Ships About To Strike

  By Greg Miller, of FreightWaves,

  Here it comes. An unprecedented flood of new container ships is about to enter service. The pace of deliveries will pick up in earnest next month, surge much higher in the second quarter, go higher still in the second half, even higher throughout 2024, and stay strong in 2025.

  “The colossal orderbook is like a sword of Damocles hanging over the market, with a raft of new ship deliveries in the next months inevitably triggering a return of overcapacity,” warned Alphaliner in a new report on Tuesday.

  “The change will be obvious from mid-March,” Alphaliner analyst Stefan Verberckmoes told American Shipper, adding: “This newbuilding wave is coming at a time of shrinking demand.”

  Maritime Strategies International (MSI) estimates that deliveries will total 717,900 twenty-foot equivalent units in Q2 2023, up 62% sequentially from the current quarter, with deliveries rising to 764,800 TEUs in Q3 2023.

  

  Mainline vessel deliveries per carrier

  The overall orderbook stood at 7.69 million TEUs as of Feb. 1, just under 30% of the on-the-water fleet capacity, according to Alphaliner. Of the total, 2.48 million TEUs (32%) was set for delivery this year, 2.95 million TEUs (38%) next year, and 2.26 million TEUs (30%) thereafter.

  In Tuesday’s report, Alphaliner analyzed deliveries of new ships to be deployed in mainline trades by the top 11 carriers. These numbers are particularly important to importers in the U.S. and Europe served by mainline vessels.

  The stats show 89 new mainline vessels for delivery in the remainder of 2023, followed by 130 next year and 96 in 2025, for a total of 315 over the next three years. (Including newbuildings for non-mainline trades, Alphaliner data shows these 11 carriers have a total of 499 newbuildings on order.)

  Mediterranean Shipping Co. (MSC), the world’s largest ocean carrier, is taking delivery of by far the most mainline capacity through 2025. It has 92 such vessels in the pipeline, including 33 in the remainder of this year.

  CMA CGM has the second-most mainline vessel orders, at 38, most for delivery next year. Cosco (including OOCL) has the third-highest tally at 32. OOCL held a naming ceremony for its newest ship, the 24,188-TEU OOCL Spain, at China’s NACKS shipyard on Feb. 16.

  

  Mainline vessel deliveries by size

  Alphaliner also looked at the size categories of these newbuildings, dividing them into three categories: “Megamaxes,” with capacity of 23,000-24,000 TEUs, vessels that will be deployed in the Asia-Europe trade; “Neopanamaxes,” ships with capacity of 13,000-15,000 TEUs that can transit the Panama Canal; and other mainline vessels, with capacity of 7,000 TEUs-plus. Deliveries of Neopanamaxes and other mainline vessels will impact the U.S. ocean freight market.

  Neopanamaxes are by far the largest category, representing 60% of the total mainline newbuildings to be delivered through 2025. Megamaxes account for 23% and other mainline newbuildings 17%.

  MSC is heavily focused on more flexible Neopanamaxes. They represent 62% of its mainline vessel deliveries through 2025, according to Alphaliner data. Neopanamaxes account for 58% of CMA CGM’s mainline vessel orders.

  

  In terms of delivery timing, the largest wave of Megamax arrivals (60% of the total) is arriving this year, raising concerns on imminent Asia-Europe overcapacity.

  Alphaliner cautioned that “an armada of Megamax newbuildings” is set to join the Asia-Europe trade “at a time of weakening demand.”

  Deliveries of Neopanamaxes and other mainliner vessels will be heavy throughout 2023-25, but particularly so next year (44% of total deliveries), implying heightened capacity pressures on trans-Pacific rates in 2024.

  

  Effects on carrier strategy

  Matt Cox, CEO of trans-Pacific carrier Matson, addressed the orderbook dilemma during a quarterly call on Tuesday.

  “What I think will happen and what should happen is that the international ocean carriers, operating through their global alliances, will ultimately resize their fleets in the trans-Pacific and globally,” Cox said.

  “There is a large orderbook. Those vessels are going to be delivered. Some of them will be delayed. We will also see an advanced level of scrapping. And for vessels that are chartered — which represent about 50% of the global fleet — many will be returned to the vessel owners when the charter periods are over.

  “You’re going to see a combination of resizing [strategies] that are going to occur, even potentially laying up vessels,” added Cox. He expects these strategies to intensify “over the coming months.”

  Differing views on order splurge

  The overwhelming consensus is that carriers will face a tough few years as a result of their ordering spree. But opinions diverge on just how bad it will be, and just how rational or irrational carrier ordering behavior has been.

  At one end of the spectrum is the view that carriers have stupidly shot themselves in the foot yet again, succumbing to the classic boom-and-bust shipping cycle pattern, over-ordering and locking in losses for years to come — that their ordering behavior is “madness.”

  According to this view, the capacity on order is far more than the global market will ever need. As vessel supply exceeds demand for an extended period, at least some carriers will go for market share, creating a lengthy rate depression that will ultimately erase much of carriers’ COVID-era windfall profits.

  At the other end of the spectrum is the view that ocean carriers need new ships. Pre-COVID, there was a long period of extreme under-ordering when carriers were under severe financial stress. The global fleet became old. According to VesselsValue, the average age of the world’s container ships is now 14.6 years.

  Newly constructed vessels are much more fuel efficient than older tonnage, and fuel is one of carriers’ top costs. Newbuildings can also incorporate dual-fuel capabilities, allowing carriers to “future proof” against environmental regulations.

  Container lines order new ships when the freight market peaks because that’s when they have the financial wherewithal to do so. Shipping-line balance sheets have never been stronger than they are today. This has allowed them to easily finance newbuildings to replace older tonnage and lower their future operating costs.

  As newbuildings are delivered, carriers will scrap the older ships they own and let older chartered tonnage go off-hire. The portion of carriers’ fleets that is chartered as opposed to owned is far higher than new capacity on order. According to Alphaliner data, on-the-water chartered tonnage of the top 11 carriers is currently 76% or 4.6 million TEUs times higher than the aggregate tonnage on order by those carriers.

  Many of the charter durations will extend beyond newbuild delivery dates, meaning there will be a temporary overhang and legacy chartering costs will eat into some of the carrier profits earned during the boom.

  But ultimately, after a challenging transition period, carriers will end up with a new, fuel-efficient fleet that’s right-sized to demand, and they’ll still have some of that pandemic windfall on their balance sheets — or so the optimistic theory goes. 

  Tyler Durden
  Thu, 02/23/2023 – 17:40

• Retail Investors' Most Popular Stocks Of 2023 So Far
  Retail Investors’ Most Popular Stocks Of 2023 So Far

  According to VandaTrack, retail investors are still a force to be reckoned with, adding an average of $1.5 billion each day into U.S. markets.

  As Visual Capitalist’s Marcus Lu notes, this is a record-breaking level of inflows, which raises the question: what are investors buying? To find out, we’ve visualized the 10 most popular picks of 2023, as of February 15.

  

  The Top 10 List

  Most of the names in this list won’t come as a surprise. They represent eight of the world’s largest and most well-known tech companies, as well as two highly popular U.S. equity ETFs.

  

   

  Looking closer at the numbers, we can see that Tesla’s net retail flows of $9.75 billion are greater than all of the other individual stocks combined ($8.5 billion). This is a sign that investors still have plenty of faith in Tesla, even as its market share is beginning to shrink.

   

  We recently covered Tesla’s profit margins (net profits per vehicle) in a separate infographic.

  Perhaps the least common name on a top 10 ranking such as this is AMD. The chipmaker has made for a compelling underdog story in recent years, gaining significant market share from its long time rival, Intel.

  What About the Meme Stocks?

  Several meme stocks made it into the broader top 100 list. This includes Bed Bath & Beyond, which ranked 47th with $114 million in net retail flows.

  The retailer has been struggling to avoid bankruptcy, recently raising $225 million through an underwritten public offering of preferred shares. A further $800 million could be coming, if certain conditions are met.

  The company says it’s committed to paying down its overdue debts, and will be closing stores to reduce costs.

  AMC Entertainment, which saw extreme volatility during the COVID-19 pandemic, ranked 52nd on the list for retail investors with $90 million in net flows. The stock has generated a 27% return YTD (as of Feb. 15). The cinema operator’s revenues have been recovering since the pandemic, but they’ve yet to reach pre-2020 levels.

  Tyler Durden
  Thu, 02/23/2023 – 17:20

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